MWA - Earnings call transcript Q1 2018 | Mueller Water Products, Inc.

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Operator

Welcome everyone and thank you for standing by. At this time, all participants will be on a listen only mode until the question-and-answer session of today's conference. [Operator Instructions] And now I would like to introduce our speaker for today, Yolanda Kokayi. Please go ahead.

Yolanda Kokayi

Good morning, everyone. Products Quarter Water Call. Mueller to XXXX Conference First Welcome of release the yesterday We press results afternoon. operations XXXX issued our XX, reporting for December quarter ended A website, on copy is our of it muellerwaterproducts.com. available full-year results the our and and CEO; quarter Discussing Zakas, CFO. this President our fourth Martie are Scott morning Hall, and and is the live Internet. morning's call webcast This being recorded on

slide X. and made this address Reconciliations website. in financial this the these the could release investors. included have Slide time, call, in information Please and our financial disclosure call. results GAAP our results that as quarter's statements information our review cautionary and also illustrate press on statements. help identifies the to non-GAAP to their useful discloses posted forward-looking are This on We between refer our as please slides supplemental addresses and forward-looking This measures materially to non-GAAP to requirements. on measures release, slide Slides reasons within forward-looking press and slides X believe and to provide entirety. referenced on includes non-GAAP factors At X why Slide identifying we X on our website our statements measures this cause those in differ in actual from included that important well information

the XX. and section available specified During XX XXXX-XXX-XXXX. available this September call, of call of to at archived will The corresponding website. replay refer otherwise, unless fiscal Relations XX in slides be year to our which for a our quarter, all at will on days A least references this or days year, Investor ends webcast for specific be morning's

Scott. prepared Form a morning. will copy later to turn the of furnish this we call addition, remarks over on our I'll now X-K In

Scott Hall

was I additional Overall, joining Martie give call. an quarter results. follow key We'll finish of XXXX. today in by indicators improvements addition X.X% shipment consolidated with in business. discussion had the on net overview growth favorable in strong sales, We by higher Valve with Thank as further some a increase this offset for quarter. outlook operating we first a Yolanda. the perspective, for from then driven were you you and will volumes the provide up and will productivity our of color factors Infrastructure discuss our meter volumes, I'll then analysis. lower pleased XXXX performance Thanks, we in quick I us net ongoing quarter primarily updated pricing. Singer by later X.X% manufacturing sales. From an Technologies of partially benefited the These

to increased continue X.X% particularly rise we XX.X% year-over-year. costs which in brass However, in material and sequentially a experience

will You've earnings our legislation we benefit will an heard quarter about on ongoing new time be much first and spend The improved liquidity tax tax providing morning. by additional this it earnings. legislation and and

XX% inflationary increase Scott, impact current initiatives. over and a general during million our primarily of decline I'll first to remain in was results XXXX from and Zakas first or for offset were year. the on ability environment. ongoing and quarter quarter to to healthy the of We capital in confident administrative our improvement declared due in SG&A to turn growth Infrastructure, With $X.X then our $XX.X repurchases quarter increased of the to our will then $XX.X with returning performance. tax Thanks, consolidated review start was sales last which our The this the consolidated and million Martie. and first increase that million $XX.X quarter our addition Technologies partially margin legislation. million, increase expenses strong Martie by million in at will Selling, allocation due the quarter to million. X.X%, growth Consolidated new $XX.X million investments $XXX.X Singer sales at to the million the and and $XX.X continued net and I for Operating was segment quarter $XX.X Most the for of XX.X% to $XX.X shipment move both we XX first by worth to lower share XXXX to to XXXX and among financial which first dividend. operating million We shares of income income basis gross strategic margin call repurchased and volumes profit markets Valve improved strategic to quarterly strengthen quarter morning. we balance points expenses. improved $XX.X conversion given by good XXXX, personnel and execution increased driven I'll million at Mueller by end the in and Gross time first this same million business, XX.X%, see continue related $X.X were while and net in Systems. cash through recently million and the dividends. the $XX adjusted We shareholders pleased to the grow quarter. the deliver was

Our quarter, gain an excluded $X X.X charges. facility expenses sale to on the and and idle adjusted million of of other results of related this a million strategic reorganization

first compared other personnel staff engineers. XXXX. manufacturing before, and higher cost expect the EBITDA related to which were report offset in Operating productivity to higher entirely $XX.X improvements increased which to with material XXXX discussed expenses XXXX. expenses, we for throughout our performance was impacted SG&A, million $XX related reorganization includes favorably quarter strategic by by almost R&D Adjusted and we previously and million As announced price, volume,

$X.X this year. quarter the XX to was EBITDA decreased XXXX the sales. higher expense interest by For months, trailing primarily million or of $X.X $XXX.X income due XX.X% adjusted million, Net million to first interest for

to of tax hauling tax to enacted on federal included legislation significant was tax X, States fiscal our effected rate These subject XXXX. XXXX. from made income legislation, tax January blended rate income tax earned limiting was the to of XX% XX.X% revisions United XX%, on the we're The changes taxation throughout eliminating Therefore, that change and XX, outside Now the a to of deductions. or over December the certain tax XXXX income federal corporate laws. date lowering rate

using million, net is by lower million a recognize transactions. a tax differed tax to expect quarter, tax expense earnings. expenses net which million income $X.X the first XXXX this liabilities the related stock related the at Also $XX.X $XX.X before of driven discreet tax rate compensation when not enacted for on we than reasonably effect our this a tax so of the due was tax effects tax estimable The to provision amount income impact benefit this is subject income foreign reported re-measurement XX.X% legislation, of this benefits. benefit tax of largely during not the statutory income transition re-measurement we of which time one was the of income rates Other a or in taxes, particularly this to benefit, or time, under certain items we've recorded of undistributed tax. to than quarter, we're For yet

We expect to record XXXX. tax tax in expense transition for later this

adjusted net XXXX. our from $X.XX deduction. which such $X.XX share, the from corporate the benefit certain available to Although in the net for we we blended was re-measurement our us tax income rate from The of manufacturing XXXX with the in currently compared impacted or that will tax tax was benefit differed XXXX reduction liabilities income lower elimination per by deductions of quarter domestic expect the be as are a rate, excluded to and unfavorably also

million Adjusted or performance pricing. favorable million, to Valve year-over-year We turn quarter starting Singer higher I'll and primarily million due first X.X% increased shipment sales operating by the of sequentially. to for XXXX Infrastructure. productivity million, cost quarter the both and X.X% increased Now, to were X.X% to pricing the $X.X addition offset $XXX.X due improvements, Adjusted million $XX.X first first favorable versus to XXXX shipment increased and with EBITDA manufacturing the million XXXX XXXX Net partially in first material material $XX.X higher million volumes, the or higher segment quarter $X.X cost. increased experienced quarter. $XX.X for for primarily $XX.X to which volume, income

sales million this our million. quarter, sales on increased to in $X.X quarter. Moving Technologies, decreased $XX.X first Echologics' XXXX to net net

this ago. by decline that more Systems shipments due difficult to than Mueller a a offset However, was primarily comparison year a was growth relative metering with

months at net were when with over through last sales large up XX% compared the As six or XXXX near Systems' of were deployment. peak remainder, a year, several Mueller as first

not Given This primarily million $X.X the comparisons meaningful. Adjusted project for lower are losses nature to previously adjusted due mentioned. necessarily results operating and quarter. quarter-over-quarter was the were operating $X.X million of XXXX shipment the Systems Mueller first decline in quarter business, first for volumes XXXX the

flow, the for December cost of LIBOR plus this senior The last and the million interest higher November from cash review equal term is term We payments less of was At productivity due was capabilities debt drive XXXX was the with and XX, $XX.X floating improvements points. million and negative across million working to $X.X I'll activities which accrues lower XXX tax liquidity. million upgrade quarter further expenditures, $X.X loan total a of management to our quarter quarter secured continuing this equipment Free and operating the at Infrastructure XXXX at for Now, quarter. negative prior operations approved year. expenditures, largely $X.X other. capital million loan in cash to our comprised for cash a capital flow year organization. $XXX.X manufacturing Free first due and first the largely to compared of rate quarter savings basis margin XXXX, quarter, income invested capital flows of

borrowings swap Net now We was than the $XXX results the XXXX. million our Scott, loan term excess under Agreement the September updated availability have and contracts ABL at to of $XX leverage talk ratio about rate I'll call to on and our rate million. about outlook. our XXXX X.X% through was fix less interest more XX, turn interest X debt that effectively

Scott Hall

environment performance, quarter, allocation. cost, was I'd Thanks, quarter with on key net healthy at outlook. throughout then sales major to Starting residential growth a and net talk being which but market on full Martie. look driven We're favorable demand take and five about all both across our and hydrants first lines, year markets net for a then fundamentals growth to seeing our At capital good us move first that XXXX. products. our finally to by Infrastructures all growth, that dynamics and growth operating very end the includes of to the indications like valves, are pricing material areas we'll brass sales sales are municipal point, now product for X.X% and in

decreased $X.X in assessment year-over-year, metering services. Although by sales solutions volumes was more first sales and detection leak in offset of decline than increase in fixed pleased mobile net This to condition see the pipe Technologies quarter. we quarter were increase and our million

business several when new sales large earlier, a under the more course Technologies ago. projects detection leak peak and focused ended a of AMI difficult this mentioned fixed and over quarter is in contract with shipment continued of were year decline at its As AMI to than Technologies solutions growing with metering leak business the due year. detection improving primarily the to comparison ago deployment. performance and the operating win Technologies on was a quarter year

cost the year but prior compared material the than cost a in quarter. improvements still to We the impact in the the half front, delivered rose as lowered the encouraged first our offset be higher sequentially, X% material X.X% as with gain about more that continue at savings unfavorable in improvements, to the higher conversion On the of the be compared XXXX with quarter first ago. meaningful quarter. by less year, these of performance material We're an half Infrastructure, productivity we from I cost experiencing margin cost second still believe manufacturing about environment which quarter than operating year-over-year year and or

cost We offset higher improvements pricing. with these improved expect productivity and to material additional

First material year-over-year up fully but to offset quarter to not the sequentially, and pricing enough increase was solidly costs.

price stated material yields increases pricing We pricing products gas we three in tends satisfactorily and Overtime, actions we costs. price valves, address import second Canadian changes changes US inflation. for improved markets. each the quarter in quarters. cost with can As cost in overtime. we increases like the we before, the pricing December, hydrants exceed appropriate basis announced expect we have believe On material effective a sequential to of our in over and last In

enhancing water company on for as shareholders. allocation, our Moving position adding capital value on and strategy capital to focused remains a allocation Infrastructure long-term our our

to and legislation realize We new returning capital allocation more tax of to and and backdrop shareholders. the our In strategy strategic believe to investments. innovation, business grow the investments among will accelerate enhance these will provide balance to continue productivity product with the our some the to benefit strengthen of cash we provisions conjunction from

our lower the rate as well cash to will the income assets US corporate For related service strong placement further as immediate enhance example, tax Federal deduction tax capital already position.

product and that are additional initiatives. broaden help opportunities portfolio, We support capabilities investment analyzing the growth manufacturing expand will us and efficiencies

near As than I discussed previously support help be to higher strategic term I have capital to historically our expect they growth been expenditures initiatives. have

to have of have continue footprint. will worth as re-purchased to strategic portfolio program. our buyback ongoing we and we look our Additionally, remaining product and acquisitions geographic of XXXX, shares part Since $XXX January million expand million $XX for

to Additionally, in the years. we quarterly recently declared dividend our This fourth a is in our last XX% increase increase dividend. quarterly three the

which dividends. shares the in outlook through return of continue expectations like digit on in markets for waterways, a up balanced seek our growth future in single the range, indicators full for single and results. key will the now As I low will take seasonally I'd adjusted State tax a confident our the we front, mid buy in range. and increase allocation in back to our digit local we in current opportunities good for receipt as with have unchanged, M&A call consolidated repeatedly remains our residential to XXXX, of reinvest wrap growth. be year-over-year municipal remain approach to growth both earnings capital will spending mentioned year the be market shareholders end percentage that to continue while the construction to we expect business, review

remain Our expectations unchanged. performance operating in XXXX for our

sales the to in X% net will We grow anticipate consolidated range. X% the continue to

not XX% we margins range expect continue our from conversion conversion strong XXXX. we margin in to Although, did quarter, see XX% will this to

while Martie on provide outlook. strategic deliver comments new formal track re-organizations investments our product XXXX We now are in on initiatives. increasing will to productivity cost the from anticipated engineering resources also development, savings our some and

Martie Zakas

Scott. Thanks

XXXX of performance, some are our expenses other be to corporate the million. between to million Turning $XX expectations $XX for expected and

to $XX depreciation million, million. between million be to amortization expenditures expense $XX $XX from from million and net $XX range range and million $XX expect to We to million to and interest capital $XX

As capital are XX% income adjusted anticipate our additional between full evaluating tax we expenditures will the rate XXXX. Scott XX% for We and effective for that outlined in year possibilities excluding With higher operator, one-time for the Based expenditures questions. to on for net adjusted we transition current open expect our please flow than capital expectations be call tax. income. free cash that the be

Operator

question Nomura Instinet. first coming from from Our is line open. your Instructions] Wood queue [Operator Mr. is Mike now in Mike

Mike Wood

Hi, taking good morning. question. Thanks for my

called margin, to all hikes the may to able First, be those happy that see are it's confidence the to start you talk you the you December guidance are specifically across on on that, that announced achieving you year. evidence the your in price product seeing reiterate conversion Can categories out? that about in

Scott Hall

remain confident Yeah, seen that we I because think strength sequentially. have we this

January We booking continue the see through period to strength.

now. we once we has brass the slowed I believe see in I that deal the and scraps think steel and - So, slowing

that pass along. are to continue we'll We that able confident to be

So, spreads are the with I think good. price

are that factories the actual getting the good. think in efficiencies are we I

think Martie takes side bit towards that we little in and of comments. The bubble related experienced, kind a that those SG&A important are I we her expenses, things the to personnel the recognize the basically them our duplicate of get first kind system. through we some, of costs some through through had had with had we associated that to quarter call let's re-structuring still XXXX, pointed

is go done as basically all and into So our of us. we QX, that behind

that a wasn't SG&A within of out were piece number. the that So, lot working people adjusted

that to Chattanooga especially Albertville year that line confident margin So, could in XX% Indicators, manufacturing they guidance range. leave especially in really should with volume, good especially the conversion in XX% our price, productivity, up full Foundry, good and at especially me

Mike Wood

that your be how should that related pre-buy now? there that would we impact quarter quarter, second current a question, And, to here fiscal this hearing growth in in are

Scott Hall

limited that expect would customers important basis. before of we new have to two formulate the some to give will Yeah, our releases price make their be pay we'll products that they window on

So, timeline should the us on shipments and our be our to get have they'll order books through. swell

we last before. little uptick year from you'll we look like through don't I distribution what to So, that, weren't sure - that was gotten want when I a less recall they've going burnt went am the about excited because process,

XX. So, we XX efficiencies forecasted. amount a if it pre-buy still haven't and if to we more some We'll we gotten be huge from of able level the to get forecast, than right of are get are kind muted manufacturing have this we we'll that we in now, deliver anticipating

Mike Wood

just about attributing Great, be fast in general. ask is softness growing sounds to think this segment a can remarks the to tough large your - Technologies, the I supposed business like comps just finally project I sales pretty in you're

you it? activity, longer patience what just talk can in backlogs you in your seeing is this about are in confidence your So, what in term and business order

Scott Hall

we talk. Okay, meters in knew we in disappointed are so it's I the not to coming, going so Were were. we quarter, volume yes in

work now I strategy. if scale there than little can't business we've be we we the or But, we continue the these is fundamentally believe to continue believe in contracts few efficiently We in announce here win able to business then running that a run meaningful scale the or business. will been the to be we And, will we three next business weeks. to are little meaningful think point; have that or technology, more the I have to and whether win contracts the XX not in right to win XX here it. the have - the And,

cost to not can go a have do of selling with there to I cities lots point things I still think is have business open the structure are why they we from to view, better But, advantageous these of with larger architecture with think we way. have to job we do so job a do proposition, a better it results. our understand

think better was I in quarter. with the problem. part problem the a we volume But, we the problems done job containing have the of saw volume given cost, could

want the I So, selling love don't technology proposition. the to it, still talk love I and I on still

about cities, you the to I think water a combination then mid-sized it if and kind authority areas. think and large actually winning networks area about the for need and fixed a to of think areas your is you then and showing need networks I your think rural denser your address think that and them, BARB you about open networks all areas, wide populated have like area your wide both of cities networks

proprietary of and you're are kind rural when to areas, of all your time, are and all the detection. network people lead got you the You've network, in through umbrella same it only at have software integrate kind it then over we of all the of out formally provide cellular an integrate can that interconnecting and

down So, don't, this because path. we out, to going you'll in I I when know still we we'll the believe continue take it, believe engineering but are

the I We are have wins but some certainly I wins, of the that is would team path am and signature had. believe having on rate by not encouraged them, they the right at like I the

we yet. So, up not are giving

Mike Wood

there. your you. appreciate time I Thank Okay,

Operator

from Our Mr. Nuby coming line next Bill open. question Bill, is is from now D.A. Davidson. your

Bill Nuby

on Good for thanks Brent today, Thielman morning questions. my Bill guys. Nuby for taking

bit the on Just are more get a responding for other increases many, the hoping price similar seeing the you market? price to competitors the end increases across little color

Scott Hall

I our with say. pushback not going even they how what's in in and I understand a lot I to they've went don't where doing lists of in on we'd and on. position seems know not December, seen We we respond, can am really are and comment distribution a what

some imagine other. but other to not would try they comment options way I had So, they we if one the or would,

Bill Nuby

understandable. That's

Scott Hall

shrink; so material everybody that and see by have got cost order to anybody cover to our think definition action costs. to are pricing higher though material margins we is to think wants higher some unless take I in experiencing I the

Bill Nuby

comfortable recently mean price pretty guys increases further recover it with you a or sounds a stand to this there you pretty announced might where your I price like material chance Is fully are year form able increases. later comments increase Okay, are the you entertain being you guys with earlier that there? comfortable

Scott Hall

you one, that wrong and It's tough grab full more with are know I if to but we going would come like wrong back to you we pricing, you be. always are mean, are look we markets the answer are

going of the from we to we away materially, at given out if the to look the this you have as to yeah, you we well were run would copper change But, action forward, market. think timing and that because us. look appropriate make we've some content let If not taken changes and position are

Bill Nuby

I'll Right, queue, thanks guys. in so back join

Operator

is from Brian from line Sachs. open. your Our Goldman next now Lee Mr. is question coming Brian

Brian Lee

there have about thinking we year, may maybe be here Infrastructure is here be cadence would maintaining X. because its questions. guys pretty would I not better of we Hi quarter for that in one wondering know the on you've the doing that just forward momentum just implication in seems robust fiscal this we 'XX. Infrastructure context just straight targets should so, anticipating anticipated? progression of first neither the into how some continues think I or Maybe moderation of the thanks on some some be the to got X taking growth be sitting suggest is Technologies to Scott; But take the because grow. Infrastructure, foot, to than But, year-on-year, into should overall context to you second sort you're heading how your the through

Scott Hall

to we costs Right, pure right we don't well February, quarter, off quarter to think , the then first I market, drop think Obviously so the see not We growth like it top we guided. cart well is off foremost. guide the up the and I than comeback acquisition, be the have that I this there than then June from yet, moderate pick think of rate to will would organic any organic. But, you the lot and then that I this are Singer the see seeing so us where are expect back know we'll larger and Infrastructure the we of in gotten here, the so, and I've a drop that you to growth Singer have and in at timeframe in in something seven. you not end partially it once kind we are are more number

Brian Lee

fair fiscal May for grow Aqualogics there? the Technologies talked 'XX, you to Mueller trends year goes to also topic. you Are the and which you secondarily streams couple there's are be to persisted this of a in quarters. you is of enough. what But, Okay, AMI seeing something expecting versus some can good mix also talk

Scott Hall

continues Yeah, so the mix be good. to AMI

new continue to All to yes I of it our winds be in that technology expect and grow.

I need a flawless areas in-house pretty will that or the think win, should more we targeted hit couple order to got schedule we that have much on growth though projects number. we in maintenance we

to or have push, can things, shipments, you negotiating think about I'm some if zero this revenue in be year so they at works, - is right fiscal of will in in on business on nobody my now, right basically in fiscal everything the So, this 'XX. when contract way will will probably have pull the you all basically look two now, negotiations or three

to which date not less I some around due growth means municipality changing. to is because, what a of we that push that perfectly, front I have also me, on started the projects so when So, have anticipate of never little these execute ride to we the has I or funding to in be going push

try and going in So, provide growth. the go to in order out market and have some we orders distribution hassle to the the market, to are to into

business now. are where that's think with the I right we

Brian Lee

we about 'XX on is down a are half very of Mueller bit that fiscal drill much end not be talking in if into towards say, Technologies may returning just it? growth back a are the the to of So, if it fair thinking more, you pretty

Scott Hall

to technology in first Yeah, quarter-quarter-quarter you Aqua in growth see continuous business. the expect would I side

top business we the I then about why the into get think X. business another this. think to with and I the That's to quarter I my would have comp grow and this I how and expect through QX want it's didn't in business Mueller Mueller

to quarterly we a to I get it's view. recall, to into we be still structure have I I there. knew point I would cost want you to guidance, If from knew mean of wanted lumpy didn't where going and get because be

Brian Lee

me. one enough, fair last form Okay,

I flows thinking on delineated line and sort extension margin on you the gave bit last know you about like it a danger can the here? be you haven't the are just of two of as you initial it Just margin expectations? are What rate and maintain when guidance target obviously then across sale growth What quarter per specific sounded should item you conversion are to the moving a specific metrics but, we we year? operating see if productivity it more seconds targeting the that could detail you margin

Scott Hall

I'm not sure.

Martie Zakas

just addressed Brian conversion the part of you're that standpoint in we've question the the think I is way margin about that thinking from operating of margin.

benefit an are So, basis. do we where that what on grows take operating we projecting we full that that growth the from said is we see the year-over-year, incremental income

Scott Hall

my have accretion would margin accretion XX.X becomes you XX.X%, you're XX.X. going remember right, If EBITDA it I ballpark that then XX% in the the all Yeah be numbers. and are making I'm look comes making, as say if a let's new stuff to a at even I'm you to so say can't or then

productivity. are falling basis to question. then in have with some that points, we product and do think part that between, to So, add I somewhere going year bottom-line. to But, your way, still full productivity, from of threw business math think assets a some XXX every to And, in through and basis skills all know people, XX back points terms we of around Yeah, know, in dilution place. the that the you somewhere development that the you we you and right answer And, and break it takes to of then line. continue re-investment of as other and XX kind easy I'm new some

Brian Lee

that's alright. thank Alright you,

Operator

from next Our Joe, from question Cowen. Tristan coming your open. now Margot line is is

Tristan Margot

gain morning. you is share Hi muni or bit, Joe. just or your how for guys words a can This business good other in to is Tristan less business If at taking larger hydrant sticky that for question. different talk more in my I likely we at Thanks municipalities. little about are municipalities guess, small for sizes?

Scott Hall

sure it think it it the country, in that about do smaller large but you present distribution. the partnership think reference territory are to where on we spec, position, competitors. tight or know, know, water MSA's then I our in where we goes I building - big MSA's, water thousands territory something our you of facilities proposition Yeah, positions. tend it and distribution and top the with small is handles, our by dependent we we are them about where on to then country on of then think all And don't we larger for break, relationship MSA's, are the is ones the think how or get making with XX as it you work is know the distribution we handles and That's focusing position, open to spec in. we so or XX where ones, generic, we very have spec mean it we position basically very cities there's in and rather we rely positioned, of do specific our the on is them know, is basically is around and terms have easy selling you spec really authorities comes

no around will to going quarter other discounting been you know $X.X look notion like on three there no, and is like it say there know million to of quarters that. some say, so of to how think if as of you there So, nosed is is to price it each the stickiness than out there them, I has kind that you target. don't the or and I in around the account say discounting up don't I and a anything volume look at last

You we price some the know we discount. increasing not are of volume we in prices doing kind getting because are because are market

Tristan Margot

quarter. then the the about the for Valve the just I during Singer from asked the contribution second Thanks detail and

Scott Hall

around for in some counting is came quarter Yeah, the business Singer growth ahead little performance if X.X on expected thinking as like a our been think was expectations - I about had organic we like but for more X.X, not and of let's business our something with they that have revenue accretive, the right might target. right the And purchase you're was call of it but or million, that X.X Infrastructure associated

Martie Zakas

consolidated probably on was X.X% or basis. X% That a about

Operator

next from is from your Mr. now Our line Gabelli. is open. Garza Jose coming Jose question

Jose Garza

Hey, guys. good morning

Scott Hall

morning, Jose. Good

Jose Garza

could you Just in may of that terms into the valves versus been just products you and waste that just be following market? doing Infrastructure guys of have the water on be volume, side, just some hydrants deviate may

Scott Hall

specific. stakes Sure, business so probably of you there segmented in Infrastructure the giving without kind the

brass you in while say put would way gas the I price of business and with sort know, price the there. business we combination of followed the link that by of and led growth, businesses, was in part and was brass, brass the had the really of very volume that So, resolved growth the largest Singer. crack increases on much That

next amount. if most special think was business up deal our the the about So, you valve business have, we

and in then the hydrant digits valve double been know gate just the business. under have slowest and growth You would

in would So, the which and specialty and project when growth and hydrants average been gas, of driven then have about kind valves, think their business for below then brass segment. Infrastructure the

Jose Garza

Okay, beyond assumption may of What's of of XXXX. and just then reasonable Martie, kind I I rates, the even be guess for a takes for Martie of kind And this on that's the tax to may utilize? be kind kind guess is I us and put helpful. XXXX looking

Martie Zakas

you XX%, look want range is at is everybody first thing out to I gave clear XX%. sure make as Exactly, one to our an on, want we we of of I all, look XXXX; point was expected fiscal year enacted that But, effect for entire year, legislation have the is blended for in us we the a Xst, our fiscal of our January when because tax fiscal which when year effective XX.X%. at you is

So, subject are the corporate fiscal talked to us, point some 'XX we to have that the will manufacturing tax We and in available XX% help be go I those 'XX, in fiscal are of deductions 'XX. will don't XX%. it, these fiscal out cash for about that on sort and XXXX, forms about just our yet of rate for before specific I rate basis that XX%. deductions domestic for our away there to will primarily, outlook but we the being think you will to guidance

the that benefit we a had legislation. that's that of past So, the in tax as is part eliminated

into difference benefitting a go as full expect be probably the not will bit that because go 'XX, blended lower little would to between probably So, rate corporate the but we fiscal we the away. for rate somebody's and of deductions

Scott Hall

talk read is you would things little understanding there, taxes much are lack else can chiming on how Income that recently bit. supplement Jose, I've State something it indicate a of a about some that collected. that there may that Martie, of being be There's

you about XXK, X% in you about year, gets there. from tax Federal take I think you have our the that every rate your then if to tax we reconciliation there, year added last think deductions reckon there if So, guidance state rate is was look your and a our

our the you written So, to lot able our, if go look look of our some you'll be things but you to and see there is these Income XX-K you puts a if at around and certainly take. at tax reconciliation,

Martie Zakas

Yeah, we State as X.X% rate. tax you look are probably X%, around

Scott Hall

in our as that's And, well. guidance

Jose Garza

on actually of elimination? taxes, negatively terms is continuing in saying anything the customers there positively guess I salt that or Okay, the are

Martie Zakas

question, I it's corporate say don't on I reckon basis, would that a

Scott Hall

End user?

Martie Zakas

user? From an end

Scott Hall

about industry It's we not really it's way going municipality talking it's you right? should tropical no, Jose. too, guess. the know, about; about think not non-tax But, And salt being think talked be of something you a perspective that today not not status. I But, to because I the the know from it it's you said is

Jose Garza

you. Thank Yeah.

Operator

Capital your from now Markets. Seth Weber Our Seth line next from question is open. coming RBC is

Seth Weber

are that to business do this up make morning. year, full comments saying year-over- think you make Are I you your revenue for you on were it's or the just at Hi, what year first point I the growth wanted you some good of guess, the ramp - with business year? sure, clarify tax Scott. the to think

Scott Hall

up year full it's year-over-year. for the think I

we the up had that of as and $X.X rest have that In projects the we I and of for the the pushback's distribution perfect of had these first cover other So, team result We and in market. a the allies some would of growth to to of but of areas, work the some the the slightly. mentioned this team be to execution QX. some earlier, not, order It is outstanding and million need we is expectations the think some project still we've miss to to outlook? we've to it's got ship. do. get we to challenge this rope up given my on I we've quarter, achieve get in now, happen can to in some Is is to the Right for from power some get can still that as

Seth Weber

as to some the think what's know, at numbers, million and you my I'm you year. sort Okay, you probably mid engineers sales an trying You understand, you number how point start here? targeting that you still level, called to think to that of at is end of do so know kind you're the a just for should $XX a visibility backing marketing? is, least right you of into have to rate of number scale, so, the it's a right just that is business adding and scale so profitability reach, the just run are and question the we is, kind for about, to out at what upscale towards

Scott Hall

software break of money. at profitable. finished answers. me million Aqua is frankly new a Yes, development. and and No, to this the it up That not let two kind kind going be product of make has to $XX business engineering, scale, has meter be into with quarter development business So, to the

if expect, So performance. would goals it that that they even were answer it's I kind a Does if this to of its year, kid it? break good completely would be

Seth Weber

you the is revenue and just remind what us Yeah. between Systems? Echo can mixes And

Scott Hall

Think it about is of it, to XX% XX% or to of XX% XX%. think

Seth Weber

so Okay

Scott Hall

piece. the meters With being bigger

Seth Weber

to but Right, to whole that's $XX run systems you be doesn't kind you but you like, know, flat it you're like million based a seem business called of doesn't on revenue growth year out to the know seem this up rate, going right? it

Scott Hall

to if get we have should I have that yes, $XX trying the of where I to trying I low at are million to then quarter are income you $XX think a group. quarter get business in I profitability in to think think, think you million or that we have profitable one range, to

Seth Weber

appreciate Okay, guys. exactly now, you where I that's thank else I it. confirm,

Operator

line next is question Connors Ryan is & coming now Boenning Our from open. Mr. from your Ryan Scattergood.

Ryan Connors

bit taking little land residential home if expand the I building a development for thanks question. Great my on can wondered side. you and

talk, residential of market minuscule terms bit on, talked seeing and expand the and a little on lot there You've you outlook? backlog touched can you're a in you about but there what order

Scott Hall

development bullish that's clear the I are than even to the Yeah, better so for mean I dynamics I that are be And say when think remain housing land good, why dynamics I stocks. year.

in that double I slope, of think the if kind you they digit realistically be see could can double number. that look development you that of XX% land low numbers kind

X. about when And, we house cash cold right it house think in need started, valves. think already and before I there's sore gets if mean went gets now, already the I you for a really land development and hydrants started.

pseudo saw municipalities number and kind you is you million And, business, actually of indicate pause been we think X.X, census disaster alley. pumps; it, of know, the because business Erma of think know recovery, with growth. this, So, right spending de-watering if so all XX% the our that I are XX%. associated I formations water think in the factors, And low, front and money you spending fundamentals shrunk have house inventories kind has a much home spent watch really On seen the data Harvey, on pumping power flooding. lot a of but are of shrinking, of in about in looks like all you not increase those the California continued stations, and know on cycle. we things been But, and line been the really X.X would November. of the that so XX%, really, good spending. actually other has for are the year that pseudo line the has Infrastructure the are line too business side, are of end this and top that water waterline And, in around we of is up, Even through running and I right

has December areas I especially see owing in to will been and think that see back term starting in in are dollars, January. come neglected, We those start again to up

along off We would are time, same we think indicate the so housing will see it's market. it and year, O&M starts, spending, the houses pause home development fairly at we I'm favorable in taken the that land I be you the number with good when activity, And, which last seeing know returning. had a formations, along

about demand. feel pretty bush I So,

Ryan Connors

Got it.

an some Infrastructure, know the with new in land future opportunity is you to they and associated can upfront, lead fitted detection development retro a Infrastructure it's having create green Echologics and for on than that, development does side, that a Because, condition material? and assessment or in new sort on does put the a a existing that field Now, particular. of Technologies just rather

Scott Hall

it far unless experience but say, some are true, to water authority. spend would money would the my to willing developers that I lot should dictated not so indicate be a of

non-rent to as water trying trying they new installations in on can, interested in water not the it. as to that tend on put authorities the they And do. the not The be hand, to to and are cheaply detection other so, using, really they are which lead focus

spend future had bundle hard of to to have extra love execute system a nobody is to and the willing idea, place. it's because I'd to yet, just approved it, in the So, we've money kind

Ryan Connors

sense. Makes

of comes and as about it my just means of to to the right of the with a more the revenue along, adding sort run get Is and of part something loved getting that that's real cost the scale rate okay, if is acquisitions, Now, scale? about prior or a there? last going discussion that talk at business a is questionnaire question something there, there? existing key to internal what the improvement, What back focused

Scott Hall

aware Well, in big and try we not are a is this, really me everybody on not that acquisitions off meter so too let of comment what But drop doing. keep it X X number trying the is say to too, and much we to market. number there between

drop and eyes then think you about the If three big outs.

the at And would of it's meaningful to were something you of to comment know we wouldn't if have are that. you'd consolidation you aware a have on or market. with so have market buy up. say, do, not the would wouldn't meter structure But, And, of do presence. the You would I to we tonic the bottom we

Ryan Connors

Okay, thanks time. got it. for That's your ample, so much

Operator

is line from Our is your Giannakouros from open. coming now Jim Mr. Oppenheimer. next question Jim

Jim Giannakouros

Martie Hi, I thanks he that good Martie, morning. Good took the but work FOXX, missed as you what so million versus it prepare last for it much, CapEx touched $XX you quarter's growth believed from I got and up a if I guidance? didn't

Martie Zakas

we've did projects. of as some what we evaluate enhance further that the We that internal the of we productivity. think some projects their looking will of we at opportunities take of it think largely or a as some up and at the because It's the we have, that's looked little matter bit,

Our look them good pay we pretty it's those a seeing we taking manufacturing capabilities, and on at. that back are are

opportunities, And, we think change out see point yes say referenced that opportunities well, we that at the continuing higher again. I it quarter. and the I'll So, additional is as of expectation I see you look could numbers expenditure was Scott at would than capital our are end to those

Scott Hall

with while is at the to treatment the asked service team favorable appreciation. we have we get one associated what look XXX% Right, of things I a balanced the to have in can do

that If versus get about you'll 'XX you on situation, XX.X% know, you blended XX. think you get our tax rate

smart know, let's be money let's about, be smart. and stupidly, spend think but not let's you let's just So,

on efficient, new can they things spend point. open our in money that true us, quality other avenues Let's that make and more for product can improve can us

Jim Giannakouros

target - or your your XX%, recall the XX% in past. productivity done out on has out to what's in What base and your number so, of to you moves there facilities know I point your issues, XXX kind the plan. okay capacity improvement XX thrown not that being Right, utilization, so caught leaning I or and you reiterated margin and

just a if have very subscription from on curious, levels runway high given you it's at just are the Thanks. perspective leverage. that notion you there, know margin moving you cost just expansion and buying So are needle to the you fixed

Scott Hall

know, where a are the fun lot But, fear days you so I'm shifts, that foundries, story week. of but here it. I Yeah, around X XX long you on a, stands a it's think everybody we it's talking that running short, hour

every front full end away need that a topped the your would with make that process load, your now in I I on XX% we logins more have I said, to probably argue some castings, That growth, paint of I you line you of might kind more So, of should take we that more unless but, that I so need so would and I capacity put would are utilization. we ton phases. it could finish the Yeah, take should bit can machining, production facing a item. have thing,

what You should produce. can the to be from able pull it away basically, foundry

And existing think so, brass, to I into. tons we grow, more could can of lots growth we melt We we have with of steel, we even and could portfolio our of room potential have we lots expand we its have more melt efficiency. improve that areas could

that's we but and think, a grow melting not capacity investment that It going utilization you would perspective from that maybe downstream initiative. could know are some to a I take I be So, forged we from. capacity think XX% we have to XX%

Jim Giannakouros

yet, as just parity you'll how I offsetting hopefully then is think didn't get understanding to to, extremely am for my full get far your it get comments there, and And I midyear timing price offset mean you or fully That's to the to correctly? understand, that was take as that to it you. FY can Thank I year, full cost 'XX price rate you can it, you the 'XX, helpful. look cost parity exit that you by FY just

Scott Hall

it million taken offsetting and the around I price; is price Have cost net around you think productivity inflation at $X.X got number around million, think Well, price I $X.X we're I where it our if Martie. was completely right you price if include what mean I somewhere $X, and was I you've right cost, performance look or. wrong now. think at

I we So were - think

Jim Giannakouros

trying You incremental think just north of XX% so - get price to headwind cost and if wasn't a

Scott Hall

got I if I've I my bucks picked material and got no would inflation, my have I conversion. million gotten like let's up price performance say X.X, Yeah, and X in no

inflation or Price As that my or was it inflation. was was and so only price got back, cover like I lost enough price just I like I not XXX,XXX of - when X.X say to terminology something of I inflation, performance price between thing. and price it a so performance maybe cost, X.X and combine

Our but we enough inflation. of the at because inflation, line had is manufacturing cover not gross performance cover margin combination and performance expansion to reason the price the was did

Martie Zakas

to with an arise certainly based comparison material see And we the year, cost we rate second expectations that are material cost. where throughout half the go, on of easier because saw 'XX our respect

Jim Giannakouros

very you, thank helpful. Understood,

Operator

line your Walter, Seaport now is next Global. Our open. coming Walter question from Liptak is from

Walter Liptak

forward there tech business shelf? question the to the issue? they wonder timing entreat a segment, and the was to or I kind take Scott, see I - some delayed of you have don't the get one want but did I issue What would if what's three these think guess for on that can a of clarify, is, Thanks the metering working book contracts sort about causing I I so I got timing just ask to metering you're to and

Scott Hall

your is so be want here, business on once scale with there business, gets follow damage just question, things, our schedule and to distribution the tell it the builds Part in of a I us of than water kind the in business have and yes, position foot the replacement more and delays part kind in, Well, observe to you. we on thousand and a then we forth. of of the because three have answer I if so out is deployment quarter. have into it several had of But that you To get we customer. you we're and and just sorry. could is increase rate booking pushed it authority, a would it

to be for big a on the So establish contracts we these we have of pursuing so position that all business. follow aggressively

I is, make there So the the that us the with like has and area selling I'm good proposition kind is things, big enough put business network we've once the our and sure in for in to it customer that making keep when in a think sure been thin, job position selling win it's proposition. incumbent replacing in nut a you the want have interest bandwidth. it's the pads put use City's other in for City's not City's best done a Walter, break to open that why or so the crack. you've is the water to you to but question of to best interest it's we And network answer best understand the authority the interest tough the almost it's and then wide when dedicated and understand got in proprietary in to bandwidth your

Mueller quarter factories our we could of to our very and the to has in about do the of with being run that, we the we understand position a the our little more out and to other we to all same of all volume, sense over job volume why why it's people understand our customer I have now, have all and year focuses that we past I will I've and things about not getting - certainly And the selling we it. of little Net, good to who'd understand think improve I things. done coming products combination message that have the My proposition, at along and stuff why XX but the we've a so Net, making don't will one My have but come Note, all these over think the of months to to there but X loss have do a know I think bit me done the aggressive still why those so be time help it a efficiently it to makes help lot

it team and I productivity, like good me all teams very happy how so I and the a performance part happy measures around to So manufacturing's like driving with quarter. Overall, to had in Overall, these the of I happy things and tend grow with was I see pleased price, the sales Infrastructure negative we that very the call. execution was get on and I to very get the was all happen. calls with quarter. into and counter for the the responded

a have we but we continue, continue have for was it So on. me, Technologies I to positive work we're quarter think be is and going to accountable to for something held to

Walter Liptak

identified - Okay, you. problem, good for It great. the was again and it's Thanks for candor excellent. something the Thank the you so luck.

Scott Hall

you. Thank

Martie Zakas

operator And thanks.

We will Thanks end point. this call the at everyone.

Operator

all participation. your conference. you today's Thank concludes for that And

disconnect may this moment. You at

Mueller Water Products (MWA) 2 Feb 182018 Q1 Earnings call transcript