- Earnings call transcript Q4 2022

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Operator

Welcome, and thank you for standing by. [Operator Instructions]. And now I'll turn the call over to Whit Kincaid.

You may begin.

Whit Kincaid

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

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

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

John Hall

sales call. Thanks, Whit. net joining our year second quarter Good consecutive Thanks for were of earnings us double-digit for growth. to fourth pleased We deliver our morning.

in activity healthy We price in end the net of driven Our testament during backlog. ended the macro by expectations, the orders higher increase a fourth environment. sales quarter and saw continued of the year to record order is demand face growth realization. evolving an quarter sequential a market with our exceeded resiliency The

results fourth than lower-than-expected products shipment sales. the inefficiencies higher at brass foundry manufacturing and of disappointing brass volumes service quarter our Our offset as were more net

price improved of to current While enough has pressures, offset been headwinds. has helped all the of realization offset level the not inflationary it

pressures, Although their continue inflationary large headwinds from ongoing disruptions we focus executing the capital experience our supply maintain to chain on our teams and projects.

including deliver do, members. including but changes, benefits of We have of the work several announced will our new X investments. appointment the we are month, key domestic more a capital governance to confident corporate lot Last initiatives our we Board large

also Directors. announced a our refreshment Board process accelerate Our Board of the to of

Board of value. We Mueller the support commitment Board. best-in-class from Board and of its benefit bring and valuable in will and experience insights stockholders the Our including process Both our to ongoing shareholder their engagement. enhance a to refreshment company's of new our having operating importance the supply and believe members perspectives shareholder management proactive Board believes and governance, corporate new members chain

for of drive led Emerson is Paul of Before President Mueller's to X Operations which recently has Operations, past execution served years. new the of facilities. President the XX turning Cofield, operations agreed Chain, operations our started has it Bill Vice evaluate Martie, most thank performance to and during and recently announced more all kindly notably, manufacturing the I just Global leadership Paul his stay than McAndrew and to Commercial areas of safety, program, tirelessly on Residential brings of to over our to retirement. Bill our years new Senior across support as development who leader. safety worked to excellence transition and want and to Most used our Vice he improvement Bill environmental and in leadership. services. experience Supply as process

Now our results. I'll over Martie turn financial to to call discuss the

Martie Zakas

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

of Our primarily consolidated water a both decrease increase year was the to in lines, higher partially due to net solutions growth our offset our mainly The brass to increased $XXX.X and products. sales XX.X% million which across service was solutions. in flow pricing with management prior compared most volumes, in by product water

XX.X% million points compared decreased by supply driven primarily increased brass Gross net and and chain utilities, our the which we labor valve purchased profit basis increased and sales as lower XX% compared prior with compared pricing more downtime, costs around higher Inflation machine from freight increased chain sequentially higher outsourcing, For inflation, as decreased challenges material margin volumes. The manufacturing of impact specialty our the disruptions XX.X% disruptions with the total associated supply and Gross includes higher XXXX, of our continued than increased unfavorable X.X% year. associated cost, materials, higher operations. experienced due to tariffs, labor. both foundry which raw prior with were $XX.X and to consolidated impact and of year was performance, with by offset pricing benefits performance the volumes. unfavorable XXX costs with prior The year. manufacturing

XX.X% Operating show to quarter restructurings. $XX.X and which in of announced However, compared the a $X.X prior decreased the expenses T&E, of expenses in in $XX.X increased our the than again compared charges net in prior Operating quarter, to as professional was price covering SG&A quarter million transaction in primarily million income primarily year XX.X% Selling, more activity other the in previously XX.X% income the driven the reorganization realization year. quarter. strategic was of million includes with as million relate of plant The and year. with inflation, general and sales percent administrative compared $XX.X inflationary increase improved by XX.X% prior personnel, fees. and pressures. trade sequentially, investments

we wrote a our off million. goodwill relating the expense to product noncash $X.X line, specialty of which valve Additionally, was

$XX with income decreased Adjusted from million with prior lower the EBITDA costs pricing by non-GAAP expenses of inflation, and the of offset in unfavorable performance, XX.X% Turning higher million Adjusted volumes. associated EBITDA to leading higher benefits compared XX.X% of results. $XX.X than the million manufacturing now adjusted margin in decreased with SG&A The were in an year. XX.X% more quarter, prior year. our operating to XX.X% consolidated compared $XX.X

declined yielding $X.X prior million an year. to higher The declined income. interest the for adjusted compared X.X%, For $XXX.X of XX.X%. the interest million resulted as in XXXX, in decrease quarter with primarily Net quarter million EBITDA expense $X.X million of EBITDA margin the or adjusted from $X.X

XX.X% year, full from in was prior due the XX.X% to benefits compared the foreign as rate tax tax For with year, R&D rates. credits and primarily our effective tax lower

net $X.XX the quarter, compared in with income we year. adjusted per $X.XX the generated share prior of For

income $X.XX For X.X% per in year, adjusted our to share increased the year. full share the per compared net share prior with $X.XX per

of compared Moving valves most in lines. products quarterly with resulting compared iron primarily by XX.X% brass with as Solutions. Water unfavorable segment gate an $XX.X and starting across higher our performance, benefits higher specialty pricing lower performance, costs more due EBITDA foundry from margin segment's volumes. Double-digit XX.X%, Adjusted sales year, offset the more of the income than higher associated adjusted the with to on Flow operations, pricing volumes of EBITDA product inefficiencies. of valve manufacturing XX.X% sales specialty service the to brass were from primarily of growth to offset Net prior at lower $XX with valves manufacturing than million inflation last increased decreased year. million decreased and Adjusted X.X% and operating XX.X% leading

margin was For adjusted the full year, EBITDA XX.X%.

higher million XX.X% Adjusted installation year, growth Net in compared primarily costs product inflation, the quarter, XX.X% associated manufacturing income and compared gas X.X% benefits as decreased repair compared Management an sales to of products were year, experienced Hydrants, Water EBITDA higher by to with net with million expenses pricing quarter of adjusted due with last pricing more $XX.X offset SG&A higher EBITDA leading performance. to prior XX.X% of and increased increased as volumes. increased million across $XX.X double-digit increased and driven the year. now to lines. and in operating volumes this than X.X% $XXX margin Turning of prior from Adjusted Solutions. higher pricing by and unfavorable sales segment's the the

For the EBITDA year, margin adjusted full was XX.X%.

XX.X% in provided XXXX in with inventories Moving September higher operating inventories. a driven on sales in the percent to inflation. year, as activities year. to volumes $XXX.X supply net primarily increased million as prior flow. The XX.X% increase compared by the compared fourth for Net an cash primarily to to decrease and with method chain due higher Average of disruptions X-point ended quarter cash million was the net due year of by the as $XX.X last working the was capital primarily using XX, well

year, in by Free partially the the with capital by compared expenditures. due $XX.X million million we the the prior compared decrease flow During with in cash prior year, invested year. $XX.X $X.X activities, cash million expenditures the was capital primarily year $XX.X lower in negative operating offset million for provided in to

we total year quarter, $XX bringing repurchased to $XX common the during in full our million Additionally, million. stock,

fourth and debt the repurchase XX, any year-end the ABL quarter, cash and XXXX, at we of the X.Xx. our our We of any not end As September year. September share million. total agreement At At did did net under borrowings our had $XXX million authorization. we remaining million of XX, nor amounts under of was cash ratio under $XXX.X leverage during ABL had debt our have borrow equivalents we $XXX.X

we total Scott, the ample $XXX.X strategic maturities year, With reminder, of support continue our liquidity and before currently back to capacity have to have including we a the to XXXX. end debt at As you. priorities, liquidity acquisitions. of June no million

John Hall

provided we in million, was points, call. and expectations last margin anticipated XXXX basis the After The not brass and with were and improve Thanks, gap the below manufacturing gap for XX% was to the than year the our gross disappointing questions. The XX% primary did gap challenges sequentially our by on last challenges down gross to primary margin on open was and end earnings as forecast. year. offset manufacturing downtime call more primarily below prior foundry, to The at foundry performance due more of about melt quarter, foundry. our our $XX our machine expectations brass for Martie. was fourth the The versus SG&A. adjusted around conversion I'll EBITDA markets August we'll full downtime partially Similar driver that, for our Due our the production September. up XX% than performance, a EBITDA our production touch lower reason quarter compared XXX of adjusted the around outlook.

unable been and impacted in have While machine costs. periods we amount of uptime our get brass a up service had has foundry led levels. Lower to overhead production and labor XXXX quarter under-absorbed production to foundry improvements, of to significant shipments the

to Additionally, foundry other as we supplies to outsourcing parts for this needs costs our parts. incurred brass purchase brass our meet facilities, higher

we production manufacturing run rate us are foundry continue of the get in into the we solution can brass the for The the inefficiencies. it the half XXXX start-up While to and critical best second XXXX, progression the long-term for to as new levels expect is we believe challenges full foundry back year. to

We this quarter. we to process year, start-up part the new later the are expect begin on the production to phase track begin. approval initial In

to more the contingency developing than first. have We for capacity highest parts for provide brass will volume maintenance lines and planning. will tools new The X production prioritize foundry

iron the markets hydrants. will foundry. brass year. the historically to product also has some service outsourcing significantly and and added backlog to for ongoing the will material and With valves and pressures. continue other the is for The to these briefly unfavorably over parts until our since costs parts. hydrants, valves at review of with manufacturing outlook iron I quarter costs compared price additional We impacted took foundry inefficiencies take new gate pressure This updated prior more able brass, higher due for made gate new we the have foundry now record needed in end has to outsourcing the We capacity XXXX. used these have plants the our production inflationary during anticipate actions

activity order was healthy quarter. a slower repair replacement believe activity, residential We municipal due and offsetting strong to this new construction. saw we earlier, the mentioned during again primarily As

they to healthy We activity water try address maintenance as expect infrastructure, replacement like remain utilities while aging repair municipal proactively with in main unplanned to and breaks. the deal XXXX issues water also

initial we for As labor phase provides into a of believe the ongoing benefit resiliency related supply that replacement to reminder, XXXX, X/X and timing the our sales improvements net availability our could flow until infrastructure which the utilities, repair funding estimate expect in in of chain bill projects, XXXX. we approximately activities could from of projects challenges of We later are meaningful improve the business. the and to new while see don't

end For lot housing that anticipate the will to and continue lower lot to specifically the demand. levels interest development new market residential land rates we lead land to market, construction adjusts lower as the activity, development of activity higher and

As expect result, we see XXXX. in activity a residential slowdown to a in construction

inventories, However, we construction above and levels due population level do normalize relatively a new shifts. demographics expect to low activity residential at pre-pandemic to

consolidated in short-cycle higher in our XXXX. did sales to record and X%. The X% on pricing activity across in updated outlook end anticipate net slowdown between expected us that deliver XXXX XXXX. We our and realization backlog position to Moving increase the order growth of net from our for a We at see currently October. sales will products the

However, our the this in evolving environment. timing recent price in surprising most given isn't of August the macro increases

As outlook adjusted a increase expense, with year. EBITDA headwind a this will due the result the that the or sales will as includes negative from of we year. and forecast XX% higher primarily to approximately XX% million We our prior improved and prior expense the versus compared between expect operations $X.X of performance. growth million Note $X.X market stock pension a swing estimate execution, be

XX% increase Our with year. which pension prior impact of excludes more income, adjusted operating than is expense, expected the the to compared

flow percentage our addition water anticipate capital associated the both spending free with utilities labor demographics. infrastructure, completion the and positioned new continue we change as from XXXX. of Taking well challenges compared a of This adjusted in net carryover capital increase XX% These are flow supply to between higher solutions, flow with assume higher investments. this cash XX%. As and includes expect free to operations, the in workforce we and With be help income will cash forecast of climate cash increase we improved challenges result portfolio inflation, to as expenditures a water products other into XXXX. from infrastructure brass of disruptions and account, aging foundry address availability expectations from chain to broad and

Our of investments, XXXX realization. products executing and top accelerating large improvements, benefits domestic generating capital operational priorities development and delivering commercialization price for include from new our ongoing

address With the key for in are production for business cash are strategies include through water shareholders customers challenges for in and another also and driving we sheet, will reinvest water returning share increased Our water, We to demand products focused help increase infrastructure on repurchases. infrastructure. which capitalizing need our growing qualify on to federal with that while our trends announced products and quarterly liquidity solutions balance the continue to the the domestic cash to our technology-enabled dividend. strong quarterly recently dividend aging trends our flow, requirements. the Key

we continue repurchased to million balance million share That to Operator, my business. our to support key With repurchase open questions. grow will in remaining please cash authorization, year, past our $XXX $XX allocation for stock. we the this comments. this strategies During our call of common concludes

Operator

Instructions]. It [Operator with from question our like comes Brian Goldman first looks Sachs. Lee

Miguel De Jesus

Miguel could on is all XXXX. there. Maybe the guidance start Brian. appreciate I This just I if around for

a implying year? the there? as in thinking the a fairly through margins should maybe of about up adjusted EBITDA EBITDA How guidance should fourth EBITDA about picking like fourth things of coming quarter margins challenging on adjusted off the margin of we we sort And cadence from the and bottom for be steep adjusted XXXX, looking think it's the quarter. it's On ramp more

John Hall

Yes.

that that we in outsourcing with you're midpoint. of think to we XX% correct first be you you're in some ramp about absolutely than would There and second it's here the half as -- the conversion The in seeing transitory. the some to what that implied range, second expect math as XX% the to half to the is XX% in indicate, the will going the operational about Due noise higher the So half. margin in have. issues, is be

year in-house of the new as less and with the make more do foundry. we So brass progresses, the will outsourcing

progresses, shifts have year will our we to recall a plants will we regular basis. that us foundry our the signed As start everybody on unions agreements -- and that will allow with avoid weekend

As they year. get staffed, as that we half expect over comes disappear would to the premiums up, second the the outsourcing of

there in year the as year-over-year that the of pension change an The something [indiscernible] some baseline EBITDA other expense goes our is like is of benefit thing to on 'XX. improvement $X about 'XX expense of million mutes result that from $X.X that a the to kind million, and a

the of weekend our So associated getting associated as the pounds the more the language 'XX believe work the as with brass through it. challenges for middle turning of and staff has point and comes I equipment associated fewer fewer restrictive these and get in going outsourced, we with with facility uptime

described problems brass can For its but some outsourcing, current performance everybody had predictable the that's as coming our foundry from foundry, call, for the year be the the challenges, unexpected. from many best primarily on and

is facility new little rate, primarily closed it I up and closed. am Aurora comments, I then And run is report from I Western specialty. a with in be as if And was with most the better performance think for closed, of closed, though, really a message expect the outsourcing, is lack that bit and of mostly that of of Kimball Hammond pleased that is that word, Martie's process will manufacturing the at bring is heard the as the Surrey I main foundry lost issues is to because associated brass downstream associated think transitory. we gets absorption, is you to the here, the material foundry those shortages and they brass

being progress I is it's concede made. think I slower. So

Miguel De Jesus

Yes, the appreciate Great. there. additional Okay. I color all

guidance. question The Second think switching not last included was year and gears. the I in bill, infrastructure

You of maybe available? is to flow into the that terms XXXX What starting revenue to And the part are the how you're growth you some called it funds latter of embedding of seeing some seeing growth in in translate expected maybe guidance? if of becoming for terms XXXX out much of that this of in through year. -- into

John Hall

Yes.

overall I mix remain IIJA the think is excited. that we around

-- projects. that it's the funds to think to for new through to I time take the going flow

tasks agencies. the I think and in ARRA caused dollars. lag with saw sorry, the are utilities EPA as We to the the state AA timing which back processed of XXXX in out money through a the lot get stimulant figured delays requirements for starting project the approval --

availability that will the face. supply utilities gone But first be have of benefits don't who that we for challenges believe we'll next ongoing annual the and meaningful projects. bill infrastructure due for started later limited The anticipate chain the that constraints this labor to beyond that phase largest year time many to to to the from appear and benefit will states, approve I like expect primarily period, California, through appropriations has really spending. year benefit

that that indicate. and infrastructure more half the is could I slowdown as 'XX residential make through funding the -- the I accelerate with construction do some benefit But think those of feel would period 'XX-'XX think second labor and the in of appropriations profile starting bill projects. the to help residential for headline available construction

Operator

with question Markets. from RBC Dray Capital Deane next Our comes

Deane Dray

of its for the to set plans own challenges. plant comes this like operational with I'd because the with new start ramp

You've labor on. going duplicate got

guidance, plants right like color, You've timing will in bit the into it not play. that just things I'd with your more you know, raises expect a got come be. more working contingencies? foundry a for that baked little prospects going this or exactly new higher especially like Ramping capital what's to regarding into like needs to

So of working into higher your guidance well flow? on just capital for what's impact contingencies kind cash these as baked the as

John Hall

first So is I think the with easiest capital. one deal working to the

million our of can about we've see everybody inventory sheet, year-over-year. As in added $XX balance

of as lot us. So by much hand behind that units a actual like of it balance is the in that of the how I the driven of result on being with outsource. a as of hand. of it on has think been associated Those units third-party amount driven About material think -- inflated and inventory, transit being inflationary X/X things

believe without second contingency the come call, the there already I think think to And what competitive the demonstrate so should specific in that and the we inventory have think baseline. forecast. pain the working in I for from an the with from associated XX% pounds giving most little is capital that to on but we regard is about question, is probably I With there reasons perspective, of a more at machine it what

our If you probably QX, was listen closely that foundry below and then sequentially where year-over-year lower she XX% at would XX% Martie's to comments the expectations, that's said, the below XX% you basically in realize end.

risk the some is get we through. there can't anticipated if pounds So

our next commissioning begins hot actually So week.

and because that all production we'll start its be process, the it PPAP were the through away new way labor, melting won't math through that earn be then be key that about around to melt any it we'll in the we'll it start a parts will running those then really first pouring metal of is of So XXX operational forms absorption leverage. parts start absorbing first you and to absorbing overhead, and basically of sudden into And any the will process. getting and the We foundry XXX the the talking get of instead won't get process.

duplicate through the us, quarter So really have for know our we numbers. I gives to getting enough of guidance. Deane, costs without into that that color, in for if specific don't kind that you first work

Deane Dray

framing does the really kind your what's I of No, also dynamics. help, especially contingencies. And competitive appreciate it

so map forth. All is helpful. right. the and here So exact you're But to going give not poundage road

change you now that of, operating how some activist, second what maybe there capital members a expectations you, are in was give baked that We going work? for big that, that change is in, restructuring this there some that context saw and you Is So please. an the and you all that is into coming bath a could Scott, prior that works us there the new Is some a in just is an gears, but there's to -- already coming activist a coming? portfolio? allocation deriving? And co-chair scale have there, of the big committee expectation set through question, is shifting if can here. coming lot as this got take the So you've potential board to this impairment

John Hall

Well, question. context that things couple in that we your I think there's of of a here have the

number I discussions. message So had is a main think of the one, that that the settlement number came, we've

the I to as think it to fast why heavily their what they as the were reached specifics. ours collaborative Their mostly not. understand into and it to the is view share was was as and Board invested. enough ongoing we've share refreshment to views Board or an won't have our with process. agreement Ancora invested going accelerates I get pleased that to -- I ongoing as can we've whether But

to things our valuable experience I think benefit. operating already chain see But at any major bring supply nature, a and of our will management and Nicholas foreshadowing that rebalancing Brian of And that. portfolio don't diverse and stockholders of think I to Board. restructurings I this time, as

We invested. message a X in of goodwill. up with X think, let where majors. I up. of agreement, referenced ramping period that Martie They're you I'll that is on the investments I this fully the we vulnerable probably the months the byproduct having almost have basically But the issue is macro environment, of investments. Ancora left ended changing think goodwill just but we're on the handle made We're

on this the we dilutive progress duplicate in about I flexibility said period most magnitude, the of casting earlier the we which new are get become the Kimball get foundry, this, these transitory. But in will labor in the call, progress start we the contracts, of think with I not Certainly, time. where in other of outsourcing they're as large expect did I as and to the we anticipate, expect. side the

benefit our to from I shareholders Ancora And both will so that. stand think other and

sure in is making interest goodwill. execute their Martie that on that. think we the I on

Martie Zakas

Yes.

primarily quarter. in we with Let Deane, go had the $X.X me just relates took noncash XXXX we impairment talk It specifically a back ahead, and this about It of expense acquisition Company. an was million. Valve Lined goodwill to

use. So have our product units is our reporting an largely an as we we goodwill rates with was as valve line. to why basis, That that this to we determined of and the this to part any reason of primary respect the On to annual million test discount for write-off $X.X we potential in increase needed that needed quarter. specialty impairment we the that

Operator

from comes question with Cowen. Giordano next Our Joe

Joe Giordano

comment Can X% in is much in contribution how quarter? just the was And on X% what over you price that carrying growth to revenue guide?

John Hall

Yes.

I think the our quarter. was that the above expectations price in

XXXX, more in, effect. the And it still early inflation still covered we're than say began track So everybody we're to the dilution dilutive. we're of that late cycle keeping and I'd the inflationary XXXX. that kind of

-- but material in get the increasing elevated, than to remained kind I inflation price currently and continue QX, that inflation, to cumulatively, into to for we're expect The price purchase price mid-teens. total. more But XXXX. some included total it and covered have improved cost in the which still down we parts, quarter, still realization more So of third

your we'll what's for maybe and with and to from down with the volume going volume, the slightly As the part leave regarding implied the associated are market, of the have tailwinds second would question muni to by market as flat. headwinds the units implied the indicate offset the guidance this the year-over-year slightly environment us break/fix in resi that associated less IIJA,

Martie Zakas

that experience increases a and when the through we realization the that were we clear, of that at taken. backlog being that price knowing price increases backlog XXXX, of work price as higher series series very look we took, short-cycle But Yes. continue we into the we'll we have to with go

Joe Giordano

but been Perfect. you projects. on the up there. know like quarters, several a you you're foundry, level just over week lot you're like happening starting And starting all brass capital commissioning set then the us in I can the there's last said, a

what, going kind to on are million updated happen? any, if of 'XX. fiscal $XX to still the done Just to your Like and by that? we -- then? line where where at $XX so stand. million in time going we everything maybe projects major be You're end like an all spend Are needs we What's still to of

John Hall

Yes.

So I but facility, think and and capital the remind was casting large to everybody, multiyear ballpark-ish The the foundry Chattanooga. that Hammond, Woodland, Decatur associated, foundry projects the least, It's in million is maquiladora at Kimball last major nearing of Surrey, into then spend play the move facility Aurora completion. X Mexico of some $XXX Decatur. consolidation last not

the completing process which margin customers X the by of is investments, the half XXXX advancement new end the free XXX% second closed as Aurora XXXX. will in CapEx large run sustainability and of at and The of of benefits lead completely the facility in allow of the pour manufacturing of an users, up accordingly the following ramp transition Aurora processes in with rate are be completed. in for the now, there lead-free think, valve will investment achieve September. manufacturing us nobody now it foundry, will be XXXX year ramping confident Kimball. We So for that will we brass in kind is Kimball. with the remain up majority brass, in the to which to and We're I first especially vast the lead-free by

We've the that. punching done unknowns. it's patterns, some things like the commissioning it the doing I We cold molds, is turned risks moving We've power some that of execution today on. some around as on. lights think one with the got

projects answer is are for I question combined, to through. your about all accounting their XX% think, of X spending specifically,

new always in I you I that $XX of million, is that. And maintenance not has scope of million years things X the think CapEx come we've X% and if see that year anything budget year, capital believe efficiency, then next XX%, when question were $XX of the be the with Certainly, since off with XXXX, things course, done. and think of projects, that to capital projects. on that then look if the X position budget, path. kind range a capital Yes, said, are since $XX.X every valve. ago that CapEx done? of $XX So to should what of had and the around guidance was, we could subtract to X% are that kind of end, day we the we been you in the Board maintenance this sales nature around large innovations. approved set [indiscernible] things of large you next that as range and see one large a the associated end to the these you projects I at we scale $XXX the in say the you'd we with million always this I'm But subtracted conceived as [indiscernible] there's energy There's of But the say million, in of the million there's mostly that took If in.

Joe Giordano

if And I color. great That's in could one. sneak just

somewhat Just internally? mention strategically, is didn't being as we once metering it today, like deprioritized

John Hall

No, I not that deprioritized. say metering internally would is

that investments space. I think product that in still have development in we significant

in the focus have to lot a of market it. continue with We

pressure WesTech recently, around our valves Sentryx, the I integrated control think at uptake the of equipment and pressure Singer. metering, the around was main was leak solutions our booths detection, IXo if around with and introduction the around anybody from

I zones for so compelling pressure solution we using integrated on most economic control think an have and basis our remote user And the management pressure that interface.

time discussion a done. clockwork, we'll on Halifax. But the trials zone recalls, as of like City that these field management at these we with had with but a right pressure that Anybody deprioritized, the less that the going made have we a lot X back expect of investors would when bigger to we've last discussing up Canada in have become start noise I not the become getting so execution with And has manufacturing now spend we certainly progress quarters of problems a focus.

have We pending other think trials that pressure going particular a start will we traction couple couple more to give zone and to of solution. management a that for

Operator

from Our next question comes with Bryan Oppenheimer. Blair

Bryan Blair

and construction resi in top 'XX October? and diverge what's in rates How exposures trends 'XX? your new in fiscal in contemplated to And those trends back Circling your between muni and line replace outlook? fiscal growth what order did outlook, repair were

John Hall

by single fiscal offset growth, resi at kind in in What mid spending double-digit is the going easiest be the Those of are the world, we number. see anticipate marketing. digits. So is right double-digit break/fix MRO what 'XX, to X answer. to there we in construction

recollection from the as it number low is goes be X.X-ish X.X. actual But million-and-change, to think my numbers. at Martie back could I X.X has as

negative that will slightly in units pricing come down to our lift flat to have for on power that which is So why the and the probably have that's to impact we from a going offset, MRO spend. backlog. They that's implied remain is the guidance

what think market be is choppy. that but is And long go MRO of in associated happening healthy, become on result hydrants manage construction subdivision pole with originally more extremely visibility, the current the inventory more trying also if to should model. associated opportunistic is choppiness new that it's and were itself said as The it's partners MRO. forward. it purposes, hard extremely their channel And is still is, what which differentiate in manage the versus really to believe the channel their I tent, how hand so a In for earmarked construction, is the about and the the that flexibility investments segment, pipe our new that's then channel with distribution could you for in chief that is

the Bryan, new up placed, because to other very continues showing X, redeployed for to MRO part but So which tended they be a been the of what's materials. as going it's Y being on subdivision, becoming us. for have more it wait may But the is as and new it's break/fix the healthy business construction say, what's difficult, as order was to in which home

Bryan Blair

on be should XQ. et 'XX/'XX for million there, outsourcing cetera $XX progression 'XX I full then us all appreciate profitability the a detail. more to that set it's your That's fair. and can fiscal place around bit the us headwinds, It thinking year? in a the help took level what like sounds And production little in about Okay. for you impact of dollar give downtime,

fact, what place on year. what of rate out major to roll then provide trying assumed tailwind took your into to Just you in gauge transitory, 'XX going projects here 'XX benefit should and off a run further and getting if have the it during into the is,

John Hall

Yes.

And that our a I'm EBITDA that the have pat years 'XX. to as of even is, XX.X% I think obviously, set XX.X%, straight we or of I said here but far our I points it sight guys. amount, I kind that margins would I've got level the everybody XX before think towards we from I over away investors year But a expand this basis think, EBITDA of XX% that next EBITDA the about a are think lost seems said could dollar back XX%. fairly in we I And not fact have way, baseline Bryan, prefer margin I until that that forgetful. of it not margins. right high XX%, as you couple on with been always that know there we now. I

is of performance. it Some from going to come

Some avoiding that as tools things within productivity the of these house come it's years it But did manufacturing some X some our that Six firmly -- start from these outsource. and believe I are said piece concepts. to could grasp. go a I believe this within believe build And grasp. of that in years the implementing Certainly, I these our Sigma of was I still so get going think X big and of from CapEx we just And come going the as management. through I is path lean a order to projects they're to implementing I ago, ago price start of culture we year

the so of possibility. And believe still within I definitely that's realm

these to with some didn't say certainly them, did foundry But we door. team previous coming. really order outsource able the the in the They and are, exceeded were and sure brass lose yes, our sure certainly selling difficulty share, and to adapt I what ship demand. number. some setbacks, I see The customers make I the them do things production the the satisfy I'm to auto we did we numbers, else think meeting still more in pour down, to adapted. because [indiscernible] we we made they ability commitments. quarter, proud one -- just something of met it was think associated but they I'm have wasn't that, problems happened, down, the I the could have lose temporary that they at going these team we of made got had of They customer because not most of didn't And going didn't up see we've the for trying of fact had

that where for in stead us were X growing. and we And of so ago think we where I margin those pieces years good leave today, are EBITDA

year that the of is I the on a let's way think year year's chart, the the about total should in the think outsource quarter. for that XXX%, you fourth XX% occurred if though of XX% performance in say the our problems somewhere was around it's performance

Operator

[Operator Instructions].

question from next comes with D.A. Thielman Brent Our Davidson.

Brent Thielman

some you of just market? the any the seeing into given housing among unusual are customers caution the distributor Scott, rebalancing sort inventory year-end of around growing

John Hall

Yes.

there's level. things channel current inventory in certainly be going that think to I the

going delivery to were orders and contractors closely their to maintain to make get work chain to day penalties. to some if higher sure the That to distributors manage on commitment many meet inflation dates think the is disruptions. due we dynamic inventory sell-through, jump I with believe higher their supply of satisfy to levels expected distributors have bundle time, things I of day. don't into understand they we so continue able and

I much think lead remain than the pre-pandemic generally projects times longer for levels.

they receive pipes if also the to into to lead good inventories. the no all schedules availability. And hook as installation running to labor lines far they're And tent they that to to. availability long is, pole that to have account with my there the match their of them to whatever take manage times so lines is and lines from valves They service distributors of to that product out and constructions hydrants for in don't home for, don't do. due going as extended not long accumulating is time contractor need new exist something stuff Conversely, a wait it's my up

you if variants, noise move lead will, the is too. there the the various out, more of some channel as so inventory, times and And in

expectations levels inventory leads have pressure slowing So those the could we on were that see additionally, as depending about, customer you times. added for on is housing to market backlog I partners' think the of channel demand certainly, on distribution some towards talking lead dependent we But our destock. some

why what I think macro noise the will don't getting in I the is kind and of do become quarters in into to the why years it the level prefer guidance specific fluctuations. like and in quarterly at the precisely is we -- So at differences channel why look timing in the precisely

Operator

showing I'm time, questions. this at further no And

John Hall

everybody for like I'd well, joining to us. thank Operator,

get the I we're getting the to what activities we I'm about achievements, to and fourth and place our setting continue. have about sober the Very about and pound foundry. casting quarter excited where some records numbers large our the in think meet I'm grow to the our continue to fact in in forward in our of to making in we the are, looking about progress Kimball. foundry. order But the third too acknowledge and of excited business. do quarter actions to that new excited I'm I'm

time like you Thank So all us to look forward to this you, spending everybody with morning, again talking to operator. quarter. I for next and thank I'd

Operator

time, you. thank lines. today's Thank you you this And participation. this At does conclude disconnect conference. We your your may for

Mueller Water Products (MWA) 8 Nov 222022 Q4 Earnings call transcript