MWA - Earnings call transcript Q1 2020 | Mueller Water Products, Inc.

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Operator

Welcome, and thank you for standing by. [Operator instructions] Today's call is also being recorded. [Operator Instructions]

I would now like to turn the call over to Mr. Whit Kincaid. begin may you Sir,

Whit Kincaid

yesterday Welcome We Water reporting issued the website, XX, operations everyone. is of XXXX on available results first conference for our XXXX, December ended call. our quarter A to morning, copy Products' it Mueller muellerwaterproducts.com. quarter of afternoon. Good press release

internet. call our live Discussing CEO; our Zakas, and and XXXX is recorded Scott webcast outlook morning's and being first the the results Hall, are on Martie CFO. for quarter our and This President

have on well illustrate to our We slides Slide the quarter's this address and X. help posted website to to At also our statements please requirements. results as non-GAAP refer time, as disclosure forward-looking

and these between non-GAAP in information release press measures included and on This slide Reconciliations our financial measures to identifies website. supplemental why investors. financial GAAP press release, our in non-GAAP within we believe the the provide discloses information reasons this useful that slides are measures referenced call and on and our on our

Slide actual and X identifying could review forward-looking X this Please that call. their important in materially factors forward-looking cautionary cause on slide statements. includes This to those included information differ Slides from in statements entirety. X results addresses made

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

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

Scott Hall

for to XXXX. first joining you results discuss Thank for our today Whit. Thanks quarter us

consolidated We had quarter. to and EBITDA increased solid a adjusted good as sales on organic XXXX the start improved generated growth, net margins we very

and gross in basis margin increased driven addition products organic our cost sales XX.X% mix by core increase. than XX% our and X.X%. shipment benefit by inflation. pricing We our infrastructure to increased over sales of net volumes organic more and points drove by increasing tariffs Krausz Krausz quarter, Both acquisition increased sales XXX offset with higher of the net of increased our Our from the pricing, favorable the product net the

and infrastructure in see margin to to was nearly quarter. EBITDA technologies pleased EBITDA of contributed deliver help Both adjusted achieve in addition adjusted breakeven technologies This the quarter. improvement gross XX% especially the and consolidated the the Krausz growth. performance I

Energy significant we million Walter liability IRS. four payment and During the the After past one-time can this our regarding behind $XX.X complex put finally parent resolving us. situation company, the the the matter we with a over quarter, years to of tax a settled effort obligation managing a

favorable driven see we expect For our health residential spending and improved end by continued to markets fiscal XXXX, municipal in demand construction.

in more However, increasing due we for global net I to will remain continued in detail XXXX, EBITDA the growth call. expectations domestic we uncertainty and adjusted our discuss sales start fiscal to a both for and After are year, cautiously solid from which optimistic later the matters.

over will turn to call that, I With the Martie.

Martie Zakas

Thanks everyone. Scott morning and good

I performance. will segment our quarter consolidated our non-GAAP financial Then results. GAAP begin with and first review

$XXX.X and Krausz as million. net increased of as million consolidated the XX.X% sales acquisition primarily the pricing infrastructure. $XX.X increased driven at for shipment Our or increase volumes quarter to by This well was higher

of organic mentioned, growth Scott we sales the As X.X% net quarter. achieved in

in improved Gross over prior this quarter million basis pricing, gross with year. to higher offset of costs by a and due to improvement $XX.X the points Our XXX to XX.X% $XX.X This margin or profit was XX.X% increased tariffs million. our primarily expansion associated casting of costs and higher Krausz addition inflation startup large product with approximately foundry mix and and partially associated the was $XXX,XXX Chattanooga.

addition general administrative was primarily were from which prior the about to in and first and SG&A million fees. year. half net the over a the quarter SG&A and due XX.X% quarter an of The for increase increase $XX.X was in Selling, of percent expenses million $X.X XX.X% Krausz, the activities, the of professional year. sales IT-related as personnel-related compared increase, in costs accounted the to prior

million Our in be income prior Operating $XX.X in for expenses of reorganization year. Operating the income included year. full prior to for million total the strategic to in first the to million $X.X and XX% net other quarter versus current expectations quarter year XX.X% in of million sales. SG&A are XXXX increased compared about consolidated $XX.X charges $X.X the

results, our technologies Turning and quarter quarter. increased the XX.X% $XX.X non-GAAP partially offset higher in performance adjusted by million expenses. was to million $X.X now which or the SG&A to Both operating corporate infrastructure increased consolidated adjusted income operating in

margin to Adjusted EBITDA the EBITDA in adjusted conversion or Adjusted increased million. $XX.X for XX.X% was $X.X Consolidated XX%. XXX quarter basis EBITDA points million to XX.X%. improved margin

million months, $XXX.X XX.X% For was or sales. XX last net EBITDA the adjusted of

with the latest period, adjusted prior and basis or margin adjusted million EBITDA EBITDA XX compared As points. months we've improved XX XX-month $XX.X increased XX.X%

$X.X lower decreased Net a to $X.X interest capitalized lower in with in resulted quarter in XXXX prior interest million due adjustment interest as interest for the and expense and interest the the balances year non-cash expense rates. quarter. income increase from net first million quarter was cash The compared to

are for and year million expectations full million. net $XX updated interest Our be expense to $XX XXXX between

prior $X.X $X.X with XX.X% income Walter on income of XX.X% benefit included tax Income prior an the tax as million the tax or in before quarter of accrual. tax loss quarter. Energy was benefit before expense million of tax $X.X million a or compared The year year

effective expect and XX% for tax to be our XX%. between XXXX continue rate will We

to $X.XX the net prior for the share to compared adjusted increased income in Our per $X.XX quarter year.

starting quarter. in million and $XXX.X of by sales organic to XX.X% increased due increase the Krausz segment Turning shipment in increased this higher from core $XX.X and million quarter, X.X% primarily pricing increase a volumes products. or in was now was our to infrastructure. net to driven sales performance net million Infrastructure This with $XX.X sales which

product was of income Krausz due to associated the costs higher primarily offset quarter $X.X higher and for shipment previously costs million partially of by The operating with expenses million. SG&A and and approximately to XX.X% inflation, mix, $XXX,XXX inclusion pricing, increase tariffs volumes Adjusted increased the or startup increased increased $XX.X mentioned.

Adjusted quarter. the XX.X% the yielding million margin EBITDA for quarter of margin or a EBITDA XX% XX.X% to million of $XX.X conversion $X.X increased adjusted in an and

primarily volumes to Moving $XX.X decreased in driven in higher Metrology, by pricing, and on million shipment the offset to were product higher $X Echologics. technologies year, the $X.X and from mix loss by Adjusted which volumes due the improved to net associated $X.X million technologies; loss operating by lower of million shipment partially costs volumes at partially offset quarter inflation. lower at with million prior higher sales

cash from the million. and million quarter cash with million Technologies the improved $X.X also impacted Including operations flow prior were cash of tax year. payment associated flow in flow in million for loss cash of $XX.X adjusted with was $X.X with free operating the million quarter EBITDA $XX.X settlement. a activities free by Walter the in break-even used with Both to negative compared liquidity, as the first $XX.X

the the quarter second of a cash We the $XX.X business. generally stronger was which in to prior first similar invested seasonality capital the expenditures period of to half of year our due the reminder, million As is our in year. in fiscal our generation

of will our to end equivalent XX, capital million. be debt million the continue XXXX, million $XXX.X At $XXX.X expect quarter, net million leverage $XX XXXX. we was cash in for total X.Xx. We between cash our At of the debt $XX expenditures ratio and had December of and first

adopted we accounting Xst, October new for leases. on Finally, requirements

result, the our of leases, balance a sheet. been approximately assets we related which each on As operating previously million had and recorded not reported liabilities $XX to

the to outlook to our results talk back turn call Scott I'll about for XXXX. more and

Scott Hall

Martie. Thanks,

outlook. on will some year areas I up After and full comments call then the into that, for insights open questions. key provide our we'll XXXX additional

forward, Going infrastructure integrated accelerating technology developing manufacturing for our to on executing product our These modernizing operational development, excellence, a new continuing platform driving strategic monitoring, are fully key include facilities. we priorities. and focus

net growth organic improvements to cost above is initiatives price in and continued goal our sales and realization. from margins Our deliver productivity market

quarter volumes well pricing products. from Our detection and performed valve hydrant and organic well higher leak sales as higher core as in the our first net as in we benefited

experienced our During metrology the gas quarter, natural and sales versus prior headwinds year. products the

sales. Our in natural slow gas product sales temporary experienced what down we is believe a

that improve We our as through of sales expect balance year the the will markets normalize. red

XXXX benefited For from Metrology sales the a products, entering our stronger year. backlog significantly

inconsistent backlog year to pipeline of than the meaningfully due an large orders. current Our is lower prior

channel. result, we years, we have expect this the to on As in partnerships our sales a stronger be year. flat focused recent developing In distribution Metrology

greater a for through channel. customers As we percentage of our sales have Metrology Metrology products our one our largest result, have Ferguson, their partnership and seen a with many of of distribution go enhanced our

win year. Virginia. combination fourth to Recently are $XX with quarter. our we with differentiate how benefiting Ferguson some pleased hydrants, associated margin water we News, price margin of was volumes valve by from meter win we technology an example This a We contract of orders for our AMI ourselves is million remote contract to were worked able meters. with disconnect could multi-year start for with Newport in of driven This core the of and higher products contract this realization. increased quarter I improved improvement gross generated a of which the the was in our and this

iron carry over products February included We price announcements two more pricing, many announced year. products, these than which impact in quarter, increased effective offset Canadian and increases timing in first and the comparable will from During recently of to and infrastructure tariffs our U.S. be The the the costs price March. for additional we the prior of of which and increases inflation. is from for benefited markets

this inflation contributing the in help Although and year. material the will we costs anticipated to for increases not higher inflation, are material costs other expect raw pricing offset balance the currently of

capital the investment of accelerate equipment, to projects of well key is underway. execution facilities, and The our manufacturing processes our modernization

product order margins. have capital sales spending our in above expand deliver growth projects market and driving historical levels by broadening gross to We major both capabilities above

discussed, Illinois, Tennessee; XXXX in transformational a projects capital a grew specialty timelines, we expect and including gross will profit Kimball, three that to manufacturing As $XXX in foundry approximately we both on we and Tennessee. operational new incremental have casting large have of current sales Based large valve in underway of in million projects projects million new these growth. forecasted facility $XX approximately Decatur, efficiencies previously foundry These drive expansion are spending. brass the for together Chattanooga, account

percent we expect a previously, of capital X% than XXXX. in mentioned decrease consolidated as As sales to net expenditures less fiscal to

the We casting large foundry Chattanooga. expansion nearly in completed have

the product We expect of to second with begin by castings our the own producing quarter. end

in of Chattanooga valves technologies the a capabilities additive manufacturing domestic multi-year was expand printers marketplace. world, to XD large to decrease This this reminder, one a manufacturing new turnaround times This help and As further our us tooling for to foundries. large will help introduce facility our largest in investment includes our and develop in shortened will the for differentiate which customers. time the investment ourselves

we greater are driving on as inches more Historically, valves, have are and frequently. focused density Increased urbanization valve for which less are population sizes. much used than small XX they a large need

gate Although of market for today in XX% large the valves than is the market. gate America less valve North

rate We faster small a expect large gate valves valves. to at grow than

customers. result, As and to of flexibility will capabilities development our for additional this provide new a a us broader help investment and range product add products

China. In more helps specifications from and will on reliance customers with provides less satisfy through which insourcing our valve America made it sourcing in product bodies addition, efficiencies with products

we up costs will ultimately new of with any these The benefit is and and of large startup there ramp $XXX,XXX quarter. until this in that this of guidance up ramp we anticipate operations to project annual the As impact the capabilities, new XXXX. year included recognize and be our full project in was this fiscal expect a

results. a updated up I expectations will XXXX full year comments wrap of my review with for our

continue favorable to data growth wide housing by appears early fiscal first for in to It's start in The spending our During the residential and to driven markets year a reported still construction. be municipal residential construction XXXX, see predictions based on see end the and demand housing our in of we quarter. we range for healthy market expect XXXX. improved improving

of For our in the fiscal we construction municipal be markets our low-single-digit spending anticipate which continues range, year, to accounts the majority residential end healthy. growing for

range. the our we grow For will expect fiscal end municipal market low-single-digit year, in the

and uncertainty continued global Despite domestic matters. from

Krausz increase sales at shipping driven end market net We EBITDA growth volumes fiscal on current the anticipate X% both growth in for will year that consolidated in pricing, XXXX. are sales for high-end expectations our previously and first the from be net increasing for we X% we contribution and the the provided. growth full XXXX of Based adjusted expectations will higher range, our by be growth, quarter. our This

we at I high company X% X% are to residential become end in we municipal growing a limited adjusted wastewater with range previously a infrastructure. the faced confident our to Additionally, their the position percentage EBITDA many growth challenges of to to transformation that from and be and of provided. to resources, water am expect we accelerate not utilities are more to using benefits digital our products tools the open traditionally incorporating stakeholders with conservative increasingly significant The to aging more deliver mention to solutions technology.

rates enabled to water products than We products growth utility expect some traditional of significantly in technology the the achieve higher industry.

is at XXXX digital market rate and grow expected to Bluefield as X.X% by In between overall XXXX forecasted fact, the growth water annual a compound Research.

is number asset With forecast set leading water and and infrastructure positions trends. quality Echologics assessment products, strategies growth monitors platform. our positioned addressing segments and segment's have extensive network our pipe recently equipment, installed communications leak detection advanced most to our market and our we services fixed well grow we meters pressure Today, condition advantage relevance a these The take software Sentryx information and products of of management, solutions, base Metrology's these hydrants, faster. smart of are to and to even most like including

our well our are technology infrastructure way incorporating into and we while summary, modernizing on also In manufacturing to our facilities operations. products,

we earnings cash to market be also growth believe above shareholders. result, to and deliver a while will As we return margin able expansion to continuing drive and growth sales

call questions. the open please for operator, that with And

Operator

first question The queue with in Instructions] is Michael Wood Nomura from the Instinet. [Operator

line open. now Your is

Michael Wood

can job you so there? it typically stepped up the unusual gross decline, sustainable great despite quarter. love a drove they're A whether morning. last versus profit slower compared I your and higher, expectations? what I'd about sales. experience good gross you talk this Hi, there Infrastructure margin margin quarter seasonal if that seasonally anything how know to margins just Was

Scott Hall

largest I combination said that we we larger mentioned hydrants prepared the pricing, a two Certainly infrastructure, think a in items. then, comments, And driving sales of As along and mix also portion we margin. impact with the was R&D with [indiscernible], got things. skewed the of the it that Krausz probably the

the as long have sustainability, those talking I as we keep with as we will of favorable So, kinds then trends as about believe mixes long throughout we're IVH year.

Michael Wood

margin a $XX it three you one we than Is each the about or roughly should XX projects can think about deficiencies? up get to the how And long the smaller larger takes million contributing the million gross And and running once how of to plant's improvement? plan other? just talk it

Scott Hall

Yes.

I project bulk coming result fuse from year. the you in the foundry that the Kimball. lumpy And first large going Chattanooga the with Decatur casking to half And coming the that and the with a a midway piece longer virtually is of through brass the it having of about the much a should is foundry by largest frankly as be million three. think of and improvement this Decatur back balance result certainly the as of and Kimball think fairly then, being complete the $XX savings

Michael Wood

Got it.

wanted to It ask increase Just year the the early finally guidance. in guidance. fiscal seems to

So just one wondering in the seeing you Thank maybe gives two you. shed more the you could light the visibility. some you're or if things that confidence on that top

Scott Hall

we at of confident for and of biggest come you when the given year, range the you able organic rest rates X.X% maintain is, thing bookings feel market. the the growth should average be X.X%, and that you that the I out X.X the the to right. state think you of weighted in the gate know, I do know, implied math

global we put cautiously that, be also days that in that language uncertainties. And of of optimistic impact. early there given the as we're the some the domestic in We there certainly recognized supply chain some we're could coronavirus the

the months. same nodding horizon. a some to so, But the And there's through order on at book or been five four first what's the time, risks recognizing strong

Michael Wood

Thank you. Great.

Operator

Brent in Davidson. DA the from is question queue from Next Thielman

line open. Your is now

Brent Thielman

at particular just Scott, I'm you're the anything or change in to point, Thank guidance, you're no just that risks that up. mean, supply assuming want, I it show see curious you where looking last maybe you. in you with but related might Hey monitoring? on touching if disruptions

Scott Hall

Yes.

national of in other the we all how them, uncertainty with supply association change like That Hubei of province, Hubei think what produce, in that dependent they the especially how supply I one what a on what of the So month running they China. handle our dependence what's China, province have and may your components facilities on being think from at risk, a timeline have chain. organizations I chain apply of foreign in about supply is great in. is manufacturers for produce, foreign And is in look you the domestic

figure the two are I that And chain. manufacturing the to weeks. the in it we're think part all So think supply lies that's that's to components steps next, out in that XX the real resource scrambling call where or risk frankly I to let's back three XX where

Brent Thielman

Yes.

Okay. kind how of growth. I business integrating them? about the and talk seem Krausz And pretty Mueller? they are of is kind the benefiting you've mean, seems just integration Are in seeing benefiting can brought distribution -- of sort you in like growth from their the core faster channel then, good it or and to synergies from

Scott Hall

the good still sales and done very of the a for give of tracked aggregate, performed, a to across identified customers, to products. improvements that Krausz programs gotten very base. good room pleased very customer it where of we're A, case Yes. the and integrating traditional an in teams on I job we quarter team's very conversely, say our of the in job have we've with the But, the think some Mueller harmonizing to quarter continue in existing to is another measure and with And how introduction it's manage, get acquisition, manage that fully by made Mueller all exposure I the I would growth, the until pleased year would we've to which integrated customers aggregate. synergies measure our I going when everything and believe we way the question we measure process away. without the our manage, we that We're through and and stake, acquisition, at

Brent Thielman

Yes.

which attached larger of based see to to Okay. And built then, products expectations what stronger going and this is to, in views are larger or be projects, a guess can valves any I of kind CapEx municipal your related you on some today? year

Scott Hall

So, thanks into to it. for get that and the happy

I think of to valve kind be that project will base. the more large thing. of routine in maintenance market going It's see the you of not kind far kind

And so, things And be timeline. fuse some to much longer in that. the there lumpiness tends be will on these

XX a are valve that for in XX jobs So to months another base even for be sometimes are today an bidding XX longer. going not to inch installed likely and

behave business projects. a fuses forward And and on so fairly we like large longer big butterfly significant have where backlog valve the capital of the much expect valve gate Henry the we carry with large very Pratt market to

are a so fiscal and think that we I we meaningful misnomer more valve -- it XX. XX-inch at And current they the call a things be or in fiscal the bidding being a now, a in in installed XX, impact XX-inch would year, look it,

valves. huge for So this I year anticipate large do lift not a

Brent Thielman

Yeah.

it. you. it on. appreciate I'll Thank I Okay. pass

Scott Hall

you. Thank

Operator

Markets. from Capital is RBC Dray Next Deane question with

Your open. line is now

Deane Dray

you. Thank Good everyone. morning

Scott Hall

morning, Deane. Good

Deane Dray

know it overhang. and that tax resolving and annoying but that congrats do it it, just resolved. to was take Hey cash is did I on

thanks. appreciation just moment of for a that So

Scott Hall

Thank you.

Deane Dray

regarding Sentryx. at different you today you're Echologics, the Metrology, So between in was technologies smart Scott, when interested the more hydrants, listed and that hearing the Mueller all developing really I

say how these contribution of and growth next in What's the the will you to this and deployment the of the going growth, either is like this ramp years? rate the manage? through. take measure where of our you the technologies? to be, margins is the What's and that So come you these? higher couple would will of What's year perspective higher them all I from each know is but the one different,

expectations of maybe contribution and can and So, take start maybe rates most the there growth terms of in and ones, triage, important please. just we

Scott Hall

Okay.

that's, So a that's quite lot.

follow me in -- you questions. speak can and let So we general can ask up Deane then

from XX:XX management to that AMI municipalities. the deal technologies read project where mature think being about has call visual years most business AMR we it That software, right that most I three let's fair between there of dependent, to mature now AMI have of to in revenue the now my has and water business XX% obviously transitioned a the kind take dependence. is relate -- AMI majority by dependent

of from next in [indiscernible]. have And we our about is more when the think most mature, this bigger so, condition radios, forward. talking pipe fix which it When all about we're you talk meter a the portion assessment to being so business, leak about most the collectors be both going mature, really and detection the sales would

Yes. think kind of exploding. are But I of those of two in kind stage things nascent their in particular

next that today estimate million between over people growing to uses Bluefield $XXX to think and the I market XX. be $XXX XX million

So that. we'll use

in for mature that be really aspects, repair near the the huge to to expect condition the And, next XXXX. and of five to something two have But does $X.X the its of the include business and starting numbers with could billion it's of at by we're years most is term. relatively small but going that that look include if kind we not So, technologies by pipes? you you the assessments other numbers. Doesn't impact and services of related pipe every will be so those double as three to north

as needs. monitoring the relates the it But potential revolution, I last least and will this you not flushing take but stations say quality things of sampling and least, what or relates it of to all those kinds as if water stations, water flow, water in most piece smart would hydrants, then it has smart pressure, mature. bringing to, And quality it's

five to what deployed values maybe people people's infrastructure XX the view owned I looked be at wireless multiples, we in years. wireless for the will there being utility generations, continue large reiterations think or to that, going four And some we to see deployed say are of if paid, technology. there four, are you've out being you three by says a prices Certainly network utility that would that more is owned,

And power we And probably what we a maybe that that's has vast hydrant connected in of why through in two amount left the tremendous us one that we that more its be or the realize understand multiple of kind a in with data we bandwidth believe XG even in back devices. more bandwidth mesh that water at environment cellular networks put requirements mesh and can for of points XG of X and its to adoption generations think of and and G will change an world. with a once kind step hauling over a people could available potential network hub smart could it that have number be XG

[ph], over continue we betting to with both a we both will over AMI, not over one we of unique mesh backhaul believe, because on which solution AMI are in [LAN] business the backhaul to so, cellular, develop backhaul continue And win. and

along And will have where you kind that's a our max so And invest flexibility take. date. open at architecture future we've maintained of been the you if solution all where

leak look like? does on detections. you as had the So question, we of what take large the Sentryx customers in successful your now with rate fix Well, know, launches have second part we've

our pipe assessment acoustics and the well basis. technologies condition establishing assessment to of way non-evasive more customers. than on XX We're by have We a condition on broad

think a them of I it's our now economically to obviously and these customers And matter so educating adopt for want viable technologies. really to being,

it health of methods let's the both most, we case utilities. the the And business best for that think we determine implementation was the what risk and call to have

So, we feel it. very bullish about

translate over -- sky, looks in very also expansion. to would will absolutely. interest But the should say gives times X%, what yes, on the people that growth of to normal [ph] I've rates [trees] like. phone, say environment, an a about XX% us rates, what we'll bullish the And XXth X%, we're spending into, as That look year the interest the So, In said it. be long-run we pause rates? many economic like, I now

bit. have that guidance. we've little a so, But we given And tempered not multi-year

Deane Dray

know I the the Thank pretty exciting this story to there. complex all the asked different and clicked we I'll I of I I but you answer you. question, do how admire stop be and the Scott, thoughtfully technologies. really through part a appreciate consider

Scott Hall

you. Thank

Operator

Next Blair question is Oppenheimer. Bryan from with

open. Your now line is

Bryan Blair

Nice Good the morning everyone. year. start to

Scott Hall

Thanks Bryan.

Bryan Blair

I was relatively easy And the baked we flat quarter, your guide seems half. very to your hoping know had back first strong could quarterly quarter some on I in circle down it, you and on back guide but touched operating contemplates into this, you've of a cadence comp. then second it the profitability like

specific conservative points that into conservatism that. two your drives case, are is the stance? I admittedly One, of what correct top So am what to parts that, that, third more difficult fourth of looking comps, guess I the in two, if and is on the assumed quarter, in guidance fiscal the what and but structure

Scott Hall

Martie. Bryan, I'm going to to give that

don't guide we to guide know, you quarters, As years. to we

the the mathematical room. higher So to in the Martie? that I'll brains sure I'm what and is leave not inference

Martie Zakas

just is understand quarter the think off, in quarter think I last piece have I'd one Well, starting our I additive is Krausz first year-over-year that certainly on base. as a we a

our move the second results. year, our the quarters sorry, Krausz of year's the year, last half will So we been have as three prior of into in

sort think you've net I of in growth with going that baked on organic forward. I of now with that sales. quarter with addition guidance towards what in range the So the gave quarter growth certainly, And upper to saw we as end think the rate the this that heard the first portion we sales net continued Krausz of implies sales a net

than, guidance to to of business. from And EBITDA due to seasonality know, our say growth respect perspective with it second continued going we our the as year the as without that, well you Other half any typically of also implies particular would the quarters. stronger an with we're growth adjusted see in

Bryan Blair

you've that offered that detail then, color investments. year an you on And normalized gross the Okay. the incremental additive step progression basis more wanted in improvement truly I look to points I XX of also gross a particularly XX just XX margin to of initiatives via I'll to profit additional clarify And up there? we are -- productivity you've the and the XXX incremental up. is the margin out appreciate large to as project there. upward million appreciate typical as each spoken

Scott Hall

Right.

a coming that and of it kind -- kind that, question that additive from absorption say because Think it's volume I as and from me let about thirds it So efficiency. two incremental on coming of there's mostly expected it's third operational of -- so of it profit that. of think

So could I as is other answer XX-ish the million slight it and of after basis is, if things. some productivity a the I XXX of net, XX points the basis Can XX asked, you points overlap. the basis reinvest is cumulative points the restate outline and question there use engineering And overlap? in points net or being a there year, XX you some basis amount is

there has incremental place. about offset going If and it the you you appreciation is with math with about the think productivity and that and depreciation on to definition take then about what's by think you think

kind the baked the for for the productivity projects the can see find fully think not initiatives I the out be confident my we us I to of in capital XX XX that then to you it savings think doing No, think trust other -- will -- improvement can noise, say should of there available I will odd way of that projects about that I this but years and million. allow years that that today we still $XX this cost will basis that out am we of other modeling, if purposes net are see is And and the you from have in us it. that

Bryan Blair

decent Okay. have Excellent. shape the deployment, large is And me, balance have these good still on do projects in one but capacity. sheet underway, you capital last from your obviously

deal be capital, along, able that I you that complexities the this terms So it Krausz you on could assume the take to stage came and in deploying of if size in pull another it? of that Krausz something would trigger with at come on integration

Scott Hall

Yes.

are that deals until an on everybody saw and I that the that at we to deal -- the eager it's team world when exercise both feel days bought with XXX right I right be I'm where whole will the playbook those would the muscles is what on the how as But, we be integration not said now. the think to we XX to And like to integration I for do price. got again. Krausz from organization we

that. so nothing would yes, disclose we And to to

Bryan Blair

Got it. Thanks again.

Scott Hall

Thank you.

Operator

Joseph Giordano from in the question Cowen. queue from Next is

is Your open. line now

Unidentified Analyst

as guys. for of longer [indiscernible] morning term Joe. profitability is outlook guys tech outlook Good year? actually for your What's for you on a well? have This for And the the rest

Scott Hall

Yes.

segments of a do the past. not guidance and kind by we in trap found give be to So, I it

pricing I perspective continuously that of and through show taking am to do in meter to And am march. it. I a interested operational and not improvements, making to interested so in did on I'm the going money. largest floor going get from are improve it the quarter-over-quarter-over-quarter-over-quarter we actions a market any quarter, to tech manufacturer in make what which say point in not But will not being do deal expect sure back from manufacturing necessary to being that profitable the exactly world I is and both we profitability. continue view the that I the first in and

at [indiscernible]. steadily time, We've from I think down since the steadily merge we've launched million been same I've and we the here. down. gotten We've a gone loss that launched launched We've Sentryx. $XX-ish merging network. that of really we good I the multiple good think the infrastructures done that job apply can to out in that the group a showing technology progress. gotten team of We've has lot and good a We've radios LoRaWAN

scale we to again, the We'll investment going eventually her to in And then would know we've have get be profitable. and profitable, we got order point to ways whole listen of that think Echologics be will in segment get that's to invest. than continued to why we're section, I time has the good. you there. some But of if less I course, think go I out, in It Martie

Unidentified Analyst

then planned year? do the last And from impact the the have price any encouraging does Great. fade And that to for I the infrastructure price out? answer year you certainly to improving margins when increases detailed there. appreciate in increases and guys start see more

Martie Zakas

Yes.

you got of the a as well to we've last of give a one XX, benefit sort just two is quarter XX. with lot the this we reminder, September of products, the of So, where the February our increases, price back as of implemented in

products we of number increases price sort February, in our forward, infrastructure March a have for of that announced timeframe. So going

reasonably the you'd a I'd but piece, would basis, be where the on this see a couple price last so from say of comparable increases. benefit And that of year-over-year

Unidentified Analyst

for you. just exactly increase? I'm Thank it outlook million Okay, cash great. it's what driving last higher Is interest quick expense, than one is noticed what could X to related quarter. capital squeeze or the If interest one interest or this was on the I the about in lower

Martie Zakas

I'd interest. I outlook forward. looking income just lower the say small piece think then, capitalized interest going quarter the And adjustment at for largely certainly -- just non-cash a for well, as with

Unidentified Analyst

Okay. you Excellent. Thank your answers. for

Operator

from Goldman question Lee Sachs. is Brian Next with

open. line now is Your

Brian Lee

you above level, view? comp just Hey several just guys, questions. for we [indiscernible], decline technology, starting the obviously do to the year-on-year. at quarters wondering the Good then, appreciate be morning. But in higher X% line below technologies, thanks how quarter. I in I the [indiscernible] the revenue to be easier or so you for next fourth XX% here the conference guess I taking growth until get getting seemed was the with thinking should least in And QX consolidated can expect about segment guess

Scott Hall

Yes.

that perspective a backlog the recognized from performance, an lower prices. from we've recognized improved both got and hunting said we're in comments, we've to year-over-year. we model perspective. the I at Ferguson you what our -- distribution lag of I improved discussed, we've transition prepared going lower So and And was to should as Metrology, more the kind expect a ceased we've performance And the business operating of as think cost elephant

we're continue way. to So going I think business the to run that that

flat about should of the meter So you the business year. kind being for think

The we're focusing start leak we're marketing base DX assessment product business. to be where our That's growth can sales Aquasure part our so our broader detection pipe focusing the resources. condition people ought acceptance where of get resources in technologies and a That's of line. fixed selling to

we've in kind much technology acceptance San into getting got Connecticut it leaks and a that other years Jose, broader penetration network. at using And this their to arena. of quick And successfully the out this'll big of customers, customers be are marquee find

be. what slower which disclosing for growth the won't should number, is but that We're the not And is the meter reasons. any run. we'll of that be of of So, that that bulk of today which -- the long bulk I the growth relatively because think obvious have the business, segments flat in

Brian Lee

number historical line, a and the the Appreciate is through Helpful. And any in the something the it's I wondering moving pass the have in question the different on just I'll initiatives XX% about the of of sounds if that and the conversion the might've you XX, the to like year get it on. our correct, thoughts color. moving in of plus, we of you trend quarter, Okay. then, margin through your missed targets kind EBIT have year. this, right like second and but context if ballpark if rest so math

how wondering amount? that should margin conversion be about So Thank you. we thinking

Martie Zakas

about find you basis. you Look, on look, I think it overall, as we some lumpiness think as absolutely about conversion a think quarterly can margins,

you've conversion sort certainly the of lumpiness. quarterly I'd guidance on given basis, a that. with implicit we've I there But -- from falls can margin be where think got So, out the

Brian Lee

guys. Fair Thanks Okay. enough.

Operator

Liptak question Seaport Global. Next queue from Walter from the is with

is line Your open. now

Walter Liptak

either thanks. this in what quarter. think since the get where whatever last the guys we for or can I the it's out morning And and to wanted if Good I is didn't one, All incremental, number? I ask percentage call everyone. Krausz right, about that you contribution wonder was

Scott Hall

Yes.

I pockets decidedly that, equal. to EBITDA about think disclosing where what -- But you are should consolidated and business products what in, pieces be that. not negotiate we'll would think getting of said it the continue trading into into not for as we margins we're say we is about we're as

of context in par I be at it the about So pretty Walter, close. you think the of results, think, kind consolidated if with you'd

Walter Liptak

down right, the extra on was they cost, got a great. Is that $X.X but And in the this lumpy in the million this back incremental called quarter? second quarter where continues startup All you first then Okay. costs the something and I that out, of costs or quarter. CapEx we then third think ramp

Martie Zakas

provided. And we production say which for said, as large start out to the What this casting our by I quarter. startup is of we the roughly $XXX,XXX depreciation. called year includes for costs expected the into second end And would -- say did, we costs we the would of we quarter foundry, what expect incorporated balance are the I the guidance startup that have

Walter Liptak

more the guess Okay. then the is and $X.X another ramp is, the Yes, or continuing that. I heard to ramping. second Like, $X.X million question quarter year? through I million in keep it

Martie Zakas

We quarter. just we in Yes. guidance the the What do in out have we incorporated more balance first the and that that year provided. -- amount the we is have of dollar called expect the through

Walter Liptak

Okay.

and the visibility just to one better something Okay. there ask structural is where last have with Got Ferguson relationship segment could the now? on the it. that If in changes tech you the Ferguson I profitability margins, tech

Scott Hall

No, I away or better go that visibility wouldn't that. say anything the or the like lumpiness it's of jobs will

what used it. that, do I think afraid is, I'm the way we it is it's to

business better you It's better multi-year say elephant to significant going market in on go contracts much, You yield I'm you price how business. for perspective, from but look contract, flow average these price from -- replenishment at business a the not at a the perspective. point it's there's hunting better spread. a and just and the look point a it's and average

distribution of And take I'd be complexity so yes, we more and some business. it. would more it's got of now to have happy the

Walter Liptak

great. Okay,

Sounds good. you. Thank

Scott Hall

Thank you.

Operator

question last is from the Gabelli. in the And of queue Jose Garza

open. Your now is line

Jose Garza

Hey, guys. morning good

Scott Hall

Jose. morning, Good

Jose Garza

JV. noticed bought Pratt I you that Scott, in Hey guys

are Just kind I difference that undertaking that if amount? guys you any small guess of of structural that kind guys now talk in bought about you

Martie Zakas

Yes.

me let just So start off.

venture that in So we this into entered was XXXX. a joint

into consolidated entered since within joint from we we financial clear, think perspective, operations. always it to the Just about statement venture, that have results a you be as our

our need five good acquire perspective. the So, a brand last Pratt part business opportunity. business. the was integrated to of amount of that It's It's little as a business. of think factored watched segment the and us the and that the see to the balance, about It's years. the non-controlling anything had small a small sale that grow million. we over that did continue we've It as out. just in equity to. you different for was business look it, we It capabilities it's you largely at look certainly And interest we won't from $X that a industrial was we'll just XX%. gives But interest we And

Jose Garza

So strategic I nothing guess difference?

Scott Hall

that bump be successful Well, cetera? we of in the not have et to I doing the liked in think control No, it control will We certain against would the that too it. in product to say to also capabilities. we the to offering. into the was think bring the long-term There and me, going are both strategic we industrial space. applications an are some technology can rationale go over And take there growth brand the industrial us ability Emerson's asking interested traditional flow are we you against give But, be competitors. that and

some got why believe we niche. out. have We attractiveness it's bought it We to it our that's

Jose Garza

quite could introductions. infrastructure bit product this if pipeline into I year enough. the this a about going talk guess and about new talked of to where product side And technologies you new fair then compared been? then on Okay, you've kind you the and your

Scott Hall

Yes.

I I'm ACEs, seen to at of plan tremendously. announce or you've something say that some ACE something, here that working the not think last we think couple we've I at to going restraints. but been announce new or

and of valves integration the integration of you're products, products. Krausz some You've gross hydrants the seen seeing some and

that go at have and or up That year. There's has team for some pipeline we'll than many we some be you launching when that we set is we have early development many, the that, You've next. have is of you say engineering the look with ACE, you insertion that come review the what for things infrastructure is, process to to more have been valve. full come projects That we currently our year resource things the pipeline not see we through products hopefully working come to a the And over seen resources obviously availability, the we have on and three new four been our our WesTech, we windows prioritization past product seen launched. deficit. you'll indications entry a And at before.

Jose Garza

Then we would be guys. Thanks there. very much

Scott Hall

Thank you, Jose.

Martie Zakas

Thanks.

Scott Hall

can Operator, thank believe the that's up I queue you and you. now. wrap end of

Operator

call. Thank today's you your concludes This for participation.

You may disconnect at this time.

Mueller Water Products (MWA) 5 Feb 202020 Q1 Earnings call transcript