MWA - Earnings call transcript Q2 2022 | Mueller Water Products, Inc.

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Operator

Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. [Operator Instructions]. Today's call is being recorded and if you have any objections, you may disconnect at this time. And I'd like to turn the call over to Mr. Kincaid. Whit

Whit Kincaid

This for Thank XXXX us our A Conference reporting of everyone. Products Mueller press copy for March results Quarter ended release Second CFO, being Scott Call. our our discussing second operations and of you results the morning, and available muellerwaterproducts.com. yesterday President on is CEO, be Hall, on joining on the our was and Water release will and outlook XX, press Good XXXX morning's for webcast live XXXX. current our recorded website quarter Martie call afternoon. the We Zakas, our Internet. issued quarter

our to have posted in disclosure statements We accompany today's non-GAAP website address slides forward-looking discussion and on our also to requirements.

our reporting October reporting and time, reasons and This Slide forward-looking review X slide with their identifies X-K could and measures our cause changed actual new materially press statements management in is Solutions. included from referenced call. differ This includes slides, entirety. of our investors. filed the we supplemental information that statements. on the an Slides on within forward-looking provide It in Reconciliations discloses XXXX this refer factors second As results release, made information structure non-GAAP financial cautionary X, this and January measures We the are quarterly Slide please Please addresses to At slide on financial why website. in X call. and quarter in included identifying believe press a between effective our Solutions information that and GAAP provided This historical X. XXXX. our Management in useful these that recast measures to non-GAAP we important Water those and our X to our on segment segments, XXXX. for reminder, results Water Flow this have release

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

Scott Hall

you everyone Thanks, healthy. is hope us Whit. call I Thank for the safe today. and joining on

getting around indirect is started, which like and Before comment would direct having crisis on I the terrible in effects the to many world. humanitarian Ukraine

we and quarter. double-digit of global see While importantly, or I supply with With our fourth and our to our quarter recap of We that, net turn net to record quarter by achieved our those the sales second Most have the we no sales conflict. growth. second delivered effects Ukraine, sales consecutive will chain. short on thoughts Russia prayers a are impacted

in Our consolidated was continued quarter realization both net sales growth by strong of demand. supported the price XX% and improved

market end growth, replacement We of experienced end with more are than remaining residential the of backlog the pleased growth needs year. for realization and continue materials municipal offset We in construction. for secure they and our expected sales net quarter, of record and for Overall, net in and our serve repair focus increases, challenging this during our growth. at the sales diligence again manage first our our quarter time annual with realization expectations record as operating the robust both strong order in activity the of more teams customers price we am environment. are from backlog raising production, encouraged than the I new With inflation and solid to price another that a quarter

address were quarter margins later which will operational to I primarily due second challenges call. expectations, below conversion in Our the

margins in of to conversion improved the EBITDA year, for we the delivering adjusted the However, leading second year. growth half anticipate

teams execute help challenges our and the confident are we margins beyond. that XXXX, operational will to While the balance through offset initiatives continue for them year the we could of believe and increase

Before and our turn I'll quarter updated details guidance, Martie to results. over call to quarter on our second more providing second discuss the

Martie Zakas

Thanks, Scott, everyone. discuss performance liquidity. and quarter second review will morning, and GAAP start with good cashflow our will After our non-GAAP that, and segment XXXX financial results. I and consolidated I our

XX.X% sales higher compared the $XXX.X most During year, this $XX million across segments Water product both net quarter Management net volumes. increased second Solutions We Solutions generated Water consolidated of in sales which last increased increased our quarter and lines from benefiting pricing of and year. with with second we of the both Flow million or of

includes as of $X As result plant to in year. $XX.X SG&A $XX.X million prior leverage compared the the The by closures. and million the of the sales T&E of or lag as the relate the to in Operating for announced improved one-month previously XX.X% Gross year quarter Operating million million a profit elimination in reminder, $XXX,XXX net a a the increased and of year gross the this decreased compared investments, the X% from a iXO. general a higher higher to inflation margin result benefits Selling, quarter with XX.X% to trade unfavorable as $XX.X prior of strategic net other increased as the was quarter or activity, of expenses the $XXX,XXX of sales. the which of prior year, pricing year due reorganization primarily Krausz. benefited inflation, $X.X increased percent and the $X.X quarter, X% quarter compared the yielding quarter million were prior administrative year. in by with reporting of increase compared with sales points with X.X% income or show charges income to with volumes higher manufacturing $XX million addition the offset in compared primarily the prior in increased and than quarter margin XXX Gross million associated performance. more basis prior XX.X%. and and in costs higher of

our year. increased and of to or costs Adjusted expenses. unfavorable the in volumes compared operating flat nearly with than income were higher decreased $XXX,XXX performance, to more non-GAAP X.X% higher pricing consolidated the was now million SG&A with prior EBITDA Adjusted Higher associated million results. offset inflation, manufacturing of year million by $XX.X $XX.X $XX.X Turning and prior quarter.

Our adjusted than margin is XXX basis prior EBITDA the was XX.X%, points which year. lower

million was for in the For in EBITDA $X.X expense adjusted decrease XX the adjusted with notes. to last expense Net million in prior compared months, interest in of X.X% refinancing resulted income the year. year. of net associated X.X% with We quarter senior diluted XX.X% primarily share million sales. $XXX.X $X.XX $X.X net the quarter per declined compared The quarter prior the the from increased interest with our notes the to with X% lower or senior $X.XX

of Turning Brass performance, valves, segment sales products. pricing specialty volumes Net the year Water $XX.X and XX% to valves, of million across now starting prior million Flow with Solutions, line. most segment’s due to gate the higher or compared Service and consists increased iron which our $XXX.X increased of with product

double-digit gate the Our net and experienced valves prior specialty year. sales growth to compared valves

segment. as and shipments with $XX.X were costs or pricing manufacturing supply chain income equipment of impacted adjusted the inflation, unfavorable or product ongoing leading X% and million SG&A million manufacturing $XX.X service XX.X% Adjusted of by challenges increased increased increased XX.X%, brass disruptions. offset associated operating the volumes $X.X an partially higher inefficiencies quarter with to the higher impacting margin compared Despite of from in $X.X by expenses. EBITDA However, million X.X% for were last conversion performance, increased the downtime Adjusted our was million manufacturing EBITDA year. costs, operational and higher XX.X% margin

increased which of control, software segment’s a Moving on Water product metering, million addition $XXX.X hydrants, Net sales of primarily to installation, iXO. due consists across gas, the lines repair million to of X.X% pricing or Management with of increased fire higher most natural volumes and detection, products. leak prior Solutions year compared the pressure and the $X.X and and

net net year the increased sales one-month hydrants, benefit double-digit lag, XXXX quarter the the gas, products for experienced year. compared second growth and Excluding and the Fire repair XX.X%. one-time natural prior sales installation to prior reporting from

supply million by million manufacturing income Additionally, Adjusted million $X.X performance, increased decreased and meter offset higher of continued $XX.X margin in EBITDA of to XX.X% with to Adjusted expenses. than the SG&A control $X.X costs and quarter, as more were unfavorable inefficiencies. higher leading associated with products XX.X% in disruptions the the pricing quarter $XX.X last manufacturing inflation, operating adjusted volumes be million ongoing chain EBITDA and by year. compared higher sales an of decreased constrained valve and to

sales with primarily year. higher Net activities $XXX,XXX by provided on The by cash million quarter employee XX.X% was method incentives. months cash and Moving a was the taxes, six payments, compared to improved $XX.X as for capital period with XX.X% year. inventories and of of last the including percent to net customer driven compared income second the prior the using rebates, net in Average X-point working flow. decrease operating in

months six months period, million million six expenditures cash primarily invested $XX.X million in for period $XX.X million in the in $XX flow in with used year, the in the due to negative we prior second Free prior year. have spent the compared the capital $XX.X compared activities the For cash operating was quarter. with

the positive positive, year, year. half operating we in full provided the be be cash flow will will that second and cash free by For of anticipate activities the

higher to resulting However, be investments to inventories and XXXX due from primarily we expect inflation. it below

XX, have we quarter. of nor million. of As agreement X.X quarter, and under $XXX.X net cash borrowings end our total debt not amounts of ratio quarter, of the any debt ABL the total under had any our leverage At $XXX.X we We during the our did was the ABL XXXX, March did borrow times. the at second outstanding end million of

As a June before XXXX. currently no have we debt reminder, maturities

notes is unless data, of exceed to on covenants the ABL excess our maintenance Based have million. maintenance March XXXX availability financial agreement, availability XX, brings total we ABL to had senior approximately X% million no any $XXX.X agreement liquidity covenants not the which thresholds. we and financial $XXX.X minimum our under Our subject

to priorities. liquidity balance capital We strong, to allocation to maintain support a continue back flexible and you. Scott, with our sheet ample capacity

Scott Hall

touch on will we'll I our for and Martie. XXXX. quarter After call that, outlook second performance updated the for up questions. Thanks, open

teams second quarter the backlog. was significant of our sequential the working realization improvements We through in highlights price One saw our pricing. in our quarter as continued from

the execution to past we level. chain continue winds. we to acceptance inflation took supply ongoing and and experience, remain encouraged our our quarter help made of pricing steel for our majority level the pricing during pressures the see actions were inflationary to and we've pleased We the progress the on products again the address head Given market's of actions with team's

from performance manufacturing As were inflationary challenges unfavorable a pressures, quarter variety effects of materials, Russia's at our parts. below to the Ukraine indirect chain The freight, purchase foundries. faced global challenges material through referenced continue increasing supply earlier, costs We our chain, exacerbating from expectations. second the conversion for and the margins ongoing ripple disruptions, raw supply invasion of operational availability quarter in energy, and and

scrap a During experienced the in quarter, prices sequential raw steel. we material most increase notably

We metal, scrap and year. expect in brass throughout to experience materials the inflation ingot, to continue other

addition higher challenges to continue costs, availability. we In face material material to with

As remains we our timelines, project the premiums highly the on Overall, of needed costs. meet access and focused needs serving freight impacted the remain customer disruptions our The environment have to have supply teams also chain paid uncertain. materials. working to

energy costs to that and foundries costs failures. unplanned unfavorable was our increased Manufacturing at equipment of this led well these The equipment utilization will quarter as we're our beyond hopeful increased performance some not as due high foundries at to extend XXXX. labor downtime. However,

term, Our up improving outsourcing anticipate initiated and efficiencies. that maintenance do logistics, action experience we we supply continue have In operational programs improving time, the with driving teams and rest the to year. increased chain counter measuring near are and elevated costs costs of for the will associated

of of in as materials half our pleased this I secure production, environment. our levels of the demand they and We our the we manage am serve year manage to our as levels. the focused and production operating improving customers In diligence teams continue challenging summary, with backlog backlog, needs are on strong during the for focus second and

year. from higher actions offset the price in and pricing realization manufacturing elevated the margins our help We of the second costs sequentially expect improve that will half

will pressures. offset environment inflationary and We take to help additional monitor as increases to closely we'll continue needed cost the price

at end the for again the end and over our cycle, XXXX. cover increases will larger from We goal quarter with preserve robust. second updated and to market municipalities. The activity budgets, continue saw especially outlook in market healthy I order price healthy briefly markets more than entire a now expenses As margins. our inflationary municipal remaining to review and activity have is reminder, inflationary benefit replacement repair

benefits assumptions increase in housing we construction residential infrastructure the XXXX any bill a quarter, market-maintained the end The reflected our have in As in new second for momentum in guidance. total XX% reminder, included from the not starts.

for new in for primarily return more to due the residential activity half interest of Our to expectations second to a higher are normalized construction rates. year, the level

again, our and for We the consolidated growth now strong be, are sales increase to will sales XX% account growth for raising net guidance we our expectations and pleased for consolidated into current anticipate year. end Taking quarter net markets, second XX%. annual between

X% expect gives to margins to and XX% second prior expected We second the in year. EBITDA the EBITDA adjusted half and improved year. with us year forecast. backlog of record anticipate between our increases confidence net Our for growth We compared in increase for now conversion realization price the the adjusted leading as half delivering sales

challenges Our pressures, In continue environment. expectations unfavorable our members of dedication rest supply continue summary, chain and an inflationary I impressed they as updated unprecedented margin with operating conversion be manufacturing assume throughout disruptions, perseverance team of the associated with navigate performance the the and to the the year.

a prioritize we to right serving to water in expand initiatives growth become and also creating provider strategic they on remain to in focused stronger future continue they a place the have our business. and grow customers, presence our solutions as executing for enhance foundation While our technology-enabled the market to companies. strategies our We're

technology, engineering, gap and responsibility the between manufacturing We and keeping design, to at our processes. innovate, continue bridging of and forefront sustainability the infrastructure

ESG goals and a we environment aligned that will Our contribute I confident together to future. more a safer our with strategies business am creating are in sustainable

XX the four of delivered consecutive We including have net sales growth. over last growth quarters adjusted net sales and EBITDA months double-digit

growth our government on accelerating Our stimulus from for impact capital improving product from investments. operations, focused benefits given well-positioned water aging portfolio networks and is continued including repairing infrastructure,

our a strong We strategies. and cash liquidity, have sheet, balance which flow, support

to approach to continue share balanced allocation focusing acquisitions, a cash strategies, growth disciplined take through quarterly accelerating on our shareholders cash through our repurchases. and and reinvesting in We to dividend returning our business, and

And to capital this confident and strategies, EBITDA that open are initiatives We enable growth Operator, will growth. with and for further adjusted call operational deliver sales investments, our that, us questions. please

Operator

[Indiscernible] The open for are [Operator question, Instructions]. now

is first The open. in Baird, now is Jake your queue from the question line Jernigan with

Unidentified Analyst

Mike Halloran Hey, everyone, good Terry morning, I'm today.

to terms here, just the then start just Why cost, and improvement some turn continuing question, to implied and on there the segment? margin first So, notable of positive. to here normalize sequential is looks attributed accurate, sequential improvement in any primarily by of price that second, are divergences

Scott Hall

No.

available, chain think I as material it's at that up have machine run machine anticipate that that around we when said supply when things is comments, to machine the as ensure do initiatives that. in to out around the we logistics ensure time, is is prepared man available of to the I like the

manufacturing think the in my whereas to liked comments, performance, disappointed be little it's from I on second which better a performance. some price there We some half conversion improvement, Certainly, it I had but little have implied QX margin, said, the costs, knew as as prepared have the improved is improvement will manufacturing sequential a year. challenges, the implied but also the in in you our of said we

Unidentified Analyst

a planned. or return favor. kind equipment has little with with potentially -- swing a of is down CapEx chance knew there question expectation out of right should a or modernization of in directionally lower cash had levels already now next visibility lower We maybe the theory the then so you more Is the headwind. that some Got here then, you. swing And And times you kind of And It's in thinking and inventories versus become conversion maybe terms be into should here, things and to was positive anticipated. CapEx see outside we have other I to CapEx free just inventory like what that your the the opportunities history? second flow normal year this these higher the obviously, some it. part then of of Thank mean, there that. materialize increased year the would

So, be any two great. those would color on

Scott Hall

but cash said the I'll come to equipment the Martie I to Well, what let some just operating and flow about it Okay. handle for we when reiterate challenges. -- of question downtime the

issue? if OEE or you shortage is a labor I about the than is demand think from things is down? got first. Those think that second that, Maintenance causes all what quarter and is or are, the machine there better operable it in the it the broken costs, like

out in levels, than think worse was second smoothed from staffing quarter I but said past. the things downtime the have Sorry, I've the the

operate really, that hand? got schedules processed? Have equipment do place can we And have in it first on, those so material there as second we having two improvement with said do there, the to on chain we is bigger the it we can and our are think supply some question I its the logistics so when I focused in And expect there so with we're the that maintenance challenges in it now operate? have material half. issues be guidance preventative in implied

free the for flow, Martie. As cash

Martie Zakas

Yeah.

the that for will free the payments will second that activities We operating look half in from we year, flow as of cash think cash that provided made. the be the where million anticipate out well do certain said, positive flow, inventory full we looking we stood about first we six were the that for year, So, look levels when below free months higher was XX have year. our as due prior I you of largely that cash the to at at And the as When year. we we positive. be

full-year with that we'll XXXX cash below etc., XXXX, opposed about when be investments discussed the levels will where being levels inflation. we purchase inventory parts, from higher making of and the some to resulting for be as we XXXX, we we're the in flow as think the some reasons as well free we the for However, around of as think

Additionally, out XXXX, in than XXXX. when for for we at higher current those look where are capital expenditures came expectations are where we our

Unidentified Analyst

it. Got jump back Appreciate you. the it. into I'll queue. Thank

Scott Hall

you. Thank

Operator

question is Brian with next Goldman Lee from Sachs. Your

is line now Your open.

Brian Lee

missed more morning. you did quarter? the out with on for you to saw pricing taking actually in bit the on-demand give timing detail you the price impacted good you this, us have and then magnitude? if the any And actions, future of I respect of pricing questions. everyone, if what ahead at call And also on saw pull-forward might kind all. QX a can then Hey, actions, Thanks that the but and

Scott Hall

This steel is as But Russia, customers. to One into pig impacts a iron as -- during took the two result separate actually increases then related scrap actions quarter. and pricing couple price reminder. but of none that really actions. having say steel don't We a of the led I of manifest related current so a first shortage of in with price brass those without themselves pricing to can market over the perspective the Ukraine, actions published we QX, and retrospectively announce a were

backlog out. stepped such the up that to realization previous announced to due is months Our price from actions. think lag four price is quarter anywhere I But sequentially three

sales half down of single-digits, in realization the think I about is growth. organic QX high net

I post is order growth, quarter end have price to total both continue in encouraging. of pre of and resulted think which QX, record which We increase, another backlog

older continue that realization environment. orders of in as throughout and older an will price we ship we orders ever-increasing are the improve we our have think purged will I some backlog, against realization those price to that year

to we environment if of take and some couple managing progress we we the teams cost with the help monitor pressures. inflation in a of additional so think and lot increases, But backlog closely to price offset I will the less need obviously others. continue a in areas

entire I our so and the think cover want is to prices I margin, effect. no than remind inflationary preserve more to goal everybody over cycle, dilution have inflation

half lag of market, lot through I do but on that's a in this second in year. back bullish climate we're why we're we believe the the we're and period of so, that the that remain And getting

Brian Lee

on That's guidance. look super that just the and right. point, All -- the of if year, just second half And helpful. then your I at Scott,

kind of fiscal guys second top X% grow half You basically bit of first and kind price does of year. half trend first try different reconcile -- a on or the of little rest seeing comps saw 'XX, half implicit being at for the are levels, on steady versus half a versus basis, year, the line starting grew your it slow X%, imply half half but year-on-year in of of out with to back second the those sounds you're I still second guidance you're the it in half the that, in your to the to you're mid-teens last know with volumes reading price like. going of what you in at back, the sort

Scott Hall

observation. I think that that's good a

that be think you think to supply of shipment think plus half operating of when to environment QX expect the anticipation going we've we up-time in more for the the I our remain I that last had. second these in strongest we're think year, challenges with the volumes complexity the these QXs of and Well, our lapping rest the chain. frankly, year, I challenging one about

strong in these units prior challenges. a the year than to bit actually last half volumes and little the year due Second ongoing lower is operational half second

units or think one the QX more headwinds. I virtually that was because we known months shelf. recall And we on so, our operational actually had of have in better you'll XXXX And

into last were of than goods actually you you it. half of for as inflation produced we result we of bigger inventories realized these a if So actually as we the more year inventories in adjust that to finished went increases, having sold second

a availability year. will will I we think for bigger in last QX XXXX, is be for year than be material challenge much a while this it so, challenging And lapping us

it supply to guidance the going correctly And have second so to in be And we and issues improvement, say these year our volume sequentially maintenance units. not of any surmised, related. in previous the as have of that as in us will implies is you That will half continue but team is won't to most some not and as the improve. strong of have price basically, the we're really front

Brian Lee

enough. Fair then just And helpful. maybe Okay. That's one. last

seasonality,,you to than will QX is QX? where but terms QX the of should seasonality normal around from sequential expect see see Thank little time QX QX or a improvement actually and mentioned In softer because QX, of have that, could bit better where than some is obviously you we you, what sequential up seasonality of we abnormal improvements you.

Scott Hall

Well, QX is always, it's not can how face just many seasonality, it's people also we have. availability

our your very produce of so have hot projects needs gist bunch what of backlogs in summer whole sales what we're really and about absenteeism, question now that But construction are shutdowns, there's at I can during is looked the peak boundaries. completed it's reasons. we strong, the the our We getting general just We focus a for internal think months.

majority always, expect ending our have I second as place will will the XXth, think half, days, September quarter we of that I so but vacation comparatively in lower have, time, QX, you'll will that the throughput. from muted the take in period And than see seasonality the production etc.,

Brian Lee

it Thanks, sense. Makes right. All I'll guys. pass on.

Scott Hall

you. Thank

Operator

[Operator Instructions].

is question RBC Markets. Next Capital Dray Deane from with

open. Your line is now

Deane Dray

morning, Thank Good everyone. you.

Scott Hall

morning, Deane. Good

Deane Dray

this last was let's margins the reading we be it the -- costs going backlog for on. that time like us backlog. really was, I perspective positive implied I all significant From give that's it you price through implied hard helpful worked margin you're much what's versus from of this price, sounds give on -- was -- your this about how our in current if And a know where in implied interested quarter upside And perspective, backlog. should to and but something really know terms say, the was in not the in you if surprise. I could comments so -- year. And have

Scott Hall

lapping inflation don't side have number, get we to even I we time first had in the double-digits a improvement. break the right margin, news. us know low that than I know from And do year, we the would the in call, price backlog the into high in what Deane, of that this implying the second I more when would the the I get the quarter have Yeah. the ledger thought that the was good guidance, our the we year you is takes but as exact believe single-digits half get of on though for last assuming

improvement get implied if you're QX about that's then mathematically partial from the the with that associated costs Ukraine. two produced It think saw second manufacturing iron world's scrambling in countries. half invaded is scrap when improvement the costs know performance actual aware, of with don't price the associated metal of a as our partial margin in result outsourcing. which I those and XX% in the line, Russia I but frankly the to pig gets saw

increased costs. in that now. was certainly, we've -- those the in And so, But half. it dash. We a mad performance yield margin implied manufacturing in bit of have supply secured price all got second a improvements We will think think the we

Deane Dray

pre the expect brass steel -purchased just How the the the and materials? committed much much to demand quarter? you current of ingot scrap you on How for raw have or

Scott Hall

Yeah.

current home the so five at Scrap the days we have virtually for covered of it. all way XX% three brass least to we're visibility quarter right days, think I So, in three now. to steel,

so, And out been that cost, an not that's supply day, was on every focused focused this taken philosophical, on but I we've get interesting our is to in chain. point organizations think price

where get price their have of for to was and tomorrow career for We meeting it more reason every about today thing. professionals and team whole and logistics, find day of was steel capable savings the that the do years very and lower find we existence savings of than a whose many carriers of is steel? when And and all out run now, of do we get kind

Deane Dray

Virgin. of scrap, to steel can't imagine you you since I'd go some though is have to your get

Scott Hall

busheling using Yes. the now, busheling de minimis. some there utilization in thankfully, QX was We've been in here

yards, have it it So, some you been a then virgin we shred the as pig. rail and able of And to get could premium. fortunately, by know, much from plate. you the costs as time as freight be actually But

be We the the lot mix, keep some XX% hydro benefit, shape plate So, to us about we've got to of valve and as ladle. balance pig be virgin in And good XX needs mix about and think got scrapped pig we've creates the that's of slag source to in thinner the material for that everybody's and for the a high-quality for needs then a iron. of the opposed shreds to days.

Deane Dray

have and simple, and changeovers All commentary it And like if And manufacturing to like it actually staffing Is And revisit just a the level you've machine differentiate, And you issues. failures? its maybe failures. also is equipment what right. sounds for outdated keep equipment? I'd we actually machines startups then me, versus about when broken. But are to had problem? maintenance inefficiency it is inefficiencies

Scott Hall

Okay, very for brass Obviously, facilities was of foundry. poor that's I old equipment. years in particular. got quarter but won't old OEE name at names, XXX two the one them so some the It's old. is

I think the the due to equipment all foundries. issues primarily have utilization been increased at

So constricted increase starting in a as for making at two window. failures more as maintenance times to preventative see particularly are increase we We're more time unplanned plants.

the that actual initiated And on been includes teams have us around maintenance programs more have measuring to I preventative all programs. think the and the structure counter improving of uptime. briefing

having machines getting like be we quarter. lot might that, get on faster try from week Some maintenance comments, more can continued process going coverage critical third as where in gone normally in board of are get and said to some take mornings the we our eight which parties the outsourcing of some the on so a spares dramatically and so take Deane, reliability across Workforce of prepared delivery these and it. Monday because gearbox several the costs in we've XX-hour a a times. maintenance used arrangements ensure do increase to is we And elevated maintenance We those that hopefully things fix, critical of would to anticipate, spares I spare were now of for Sunday. hours my to increased critical-to-success that and to we're overnight turnaround so to parts the because weeks examined inventories that the back all a machine

as up basis, So does but an does different of a to the of of done time when the back ensure on the when maintenance is we we lot norms not go so thinking the does ways we've that near -- that can seen only opposed something get it to it and cycle outliers result have unplanned a down in running back some difficulties supply the chain. of as get usual that

Deane Dray

Thank helpful. really you. That's

Scott Hall

Thank you.

Operator

Our with Joe open. now is next your line question is Cowen, from Giordano

Michael Anastasiou

Good in Joe. is Michael for morning. This

Martie Zakas

Morning.

Scott Hall

ahead Go Michael.

Michael Anastasiou

question. my infrastructure included Thanks bill you impacts guide. for in taking realized haven't any the I

pockets color of any there is could on this to provide opportunity related front? However, you

Scott Hall

Rule. in people is. and it the easiest very, like most what think or Lead fourth press got going at There It's the some they're as that's Copper being are are are the rumblings I whatever made and I the all muted. municipalities. here some sitting it's is be the for going to are one But very what There's going and Looks evaluated. XXXX, third that we visibility projects that to to the or be. it qualify think rules maybe to that's even is

shovels have for things got to being in, used. approved, so, in the for to going allocated And fittings project to grow to actually and months that ground, we've like seven

that see I in you current infrastructure meaningful think in of year will highly from impact the bill. way unlikely demand to the the much it's

start And remind everybody away million of loaded XXX, you on the in I it these where X.X the things go. X, back I re-authorization years to dollars XXX the take maybe stimulus and real the think 'XX would whole you X. is and which get when X, that remind everybody is to trillion and dollars, bill, beyond

the an So X, and bulk program have years funding. eight-year of and the X, X it's

Michael Anastasiou

may. just I if more That's And helpful. Thanks. one

construction? how to towards housing you As link, you? market we are guys new about other are thinking on the any the seem interesting And Resi front that look there KPIs

Scott Hall

everybody interest I think deployed we're being itself what when going lots the products front what next be the as our though and four use early and of to five with in we really for Remind developed. inflation the are that RESI in or really, to we be. cycle, as is numbers the that in response a large RESI get interesting see quarters will proxy. rates But and happens

in was QX of in any I our see didn't think signs which slowing QX, we orders. So, reflected

second strong units as X.X I And rate think cycle. in consumer -- the Single-family in of end have been we're while increases where think million like can new has said, the demand the especially future of increase quarter many months I, a through markets the total market-maintained a as remained March. role in relatively And starts housing over key momentum think I play XX% the XX were starts. lot many, residential early construction a result developed I strong strong. last in as had, I quarter play we the believe the I inventories

lot get do when see -- Ls gets builders not in So, makes it the lot that lots to pulled, we the to necessarily our inventory of start homes. permit a -- difficult sell light impact for there developed, when

think is lot the development we of a so, in subdivision future. still And

relatively bullish. remain we so, And

Our irrespective of to start see part RESI we rates. what with of interest

things of Street that Wall very, and journal very close. are morning's this watching like them Although, aware articles were it certainly

the think above could beyond And levels construction -pandemic XXXX I so, activity us. for residential remain pre

that think seems rate these really, interest really to fundamental and to due I what inventory X% even demand, consumer lot be levels. that low good

Michael Anastasiou

That's Thank helpful. Great. very you.

Operator

question John next D.A. is with Davidson. Ramirez Your from

open. now Your line is

John Ramirez

John morning. This Good Thank you taking Thielman. questions. Brent for is from my Ramirez

Scott Hall

morning. Good

John Ramirez

into your prices gas are Jumping how have question, hedging facility? for you first natural margins? higher impacted And those costs the

Scott Hall

are They're gas the power we our of To none foundries extent gas. that natural coal generation, Yes. all less. have

they're electricity. induction, all so So, all

is our But think in districts. knock-on some natural it's a that Most small Authority So operating. had energy Yelp I has capacity effect in our the Tennessee Valley in gas really of costs. our number

of facility. two-power by plant And fairly not Auburn, and Amarin [Indiscernible], lot Tennessee intensive. those is the Alabama Amarin generation. those generation a the I'm then served Decatur But plant, gas electricity natural maybe not substations. from our So, in source nukes, natural a familiar question but enough believe the buy to they gas of to generation the off directly. their exposure I answer there. off to do Exelon of is, not so lot know Illinois some what power main

John Ramirez

second Thank look work solutions costs are that question, break the being or more you. budgets at constrained And fix utilities and prioritized? inflationary environment is the for more to the more

Scott Hall

flush fairly of I $X.X the I grants that CARES are Act really a into with hands. started put think think billion and municipalities with money lot it municipalities mostly

examining And of more so those kinds solution things. larger municipalities, the think, of are I

on in know some it, be I hydro in Just that spark to trials running active days, touch Texas. we McKinney, some we'll boulder have in coming

So, these of many of talked versus for that receptivity efficiency is the part other said, we to years on I out back have with that we But how about cautious those times. of [Indiscernible] question, we that very talked talked with ready. that there. and that tracking for there many, years, for bit to increases. look it's think industries accelerating signs road break talked is your break there's to full-scale I adoption, and failure to double-digit rate say, the a the larger they three me think and been to have I in four see last communities we continues can kind make better little big be go -- putting their year old it's fix the with a tell more about But watch infrastructure toe think as your their those and looking And water I we few call track the for ago about the things will anticipated several about fix on is us and as that workforce XX

both storm. the perfect And RESI of so, good. is parts

fixes operations You break growth you digits XX% a and That's and be double need row. why for quarters to post money for in maintenance up and sales four increasing. have

John Ramirez

I'll the queue. you. Thank jump appreciate back time. in I the

Scott Hall

Okay.

And So, everyone for thanks. call. thanks you. Thank today's joining to

we're the manage half managing with world been price unprecedented are ability further will some in. coming, and kudos team the gives a first in to we external challenges the are the this pretty, environment any of for through think that and it. Look, -- that pretty if can the I even market curve through think really post-pandemic help confidence team’s can me balls more It operating has that we're through I both very inflation. pleased few to we get the there what where in we offset the challenges supply given year,

place of to out with getting it I on think I people trials relates at around it And business going to make to processes right good your good levels, to meaningful see what's even that are relates the ground as in having the we're place the there. economics starting decisions. are customers placed the in think discussions traction the as

our testament in again. growth be and a in spec I well-positioned annual order to think sales are market. the net the health continuation our to raising sales of we're end markets. the And our believe position I pleased is of guidance products very

faster then get we'll and reversal a equilibrium. And the do P&L have purged I with to challenges think sales up of that than opportunity is out-quarters this back lock have are environment and us that growth that our we net to normality backlog and keeping environment grow order the from that. annual the uncertain I adjusted the of more EBITDA those little showing and step in EBITDA current the we've will sales of in year. increasing the will some in think some as guidance But getting

the to for and challenge to focused position margins next improve I bullish the countermeasuring rest we're offset, believe price support I year the realization. think operational with continues sequentially the for year. from And improve on for remain our the of foundation

the I'm So, I'm beyond really on this market. our infrastructure growth about year. looking excited potential water

see I leave state. leader in good think on us capital path our in from benefits the all a water investments large sustainable the to the from will we're become infrastructure

call. interest. would I thank for the And that ask please continued so, your you you Operator, And conclude

Operator

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

at time. disconnect may You this

Mueller Water Products (MWA) 3 May 222022 Q2 Earnings call transcript