PNR - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Pentair’s Q1 2022 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Jim Lucas. Please go ahead.

Jim Lucas

Thanks Jay, and welcome to Pentair's First Quarter 2022 Earnings Conference Call. join could you glad us today. We're Lucas, Jim Senior VP, Relations. Investor and FP&A Treasurer, I'm today Stauch, Financial is Chief me with And John and Fishman, Executive our Bob our Chief Officer. Officer; and President will provide in outlined press On today's morning's call, details our performance this first on release. as quarter we

the actual control are Form recent our many listeners factors from to Listeners expectations. to of can Pentair. Before that risk These are risks release. most difficult during advise results our you these XX-Q we of and uncertainties and We certain to will cause beyond the we our materially statements remind me carefully today, begin, subject Form review to risks cautioned XX-K uncertainties, differ and make in which let today's are current and generally and that presentation forward-looking predict statements.

certain of of most found We measures. section Relations directly will GAAP non-GAAP the in measures comparable non-GAAP also can be Pentair's measures Investor to reference Reconciliations website. the these

will over be I the to turn and questions now will prepared for call after time our John. answers remarks. We to reserve sure

John Stauch

further any headwinds. even and showing price moderating, of signs exceeded Sales we Thank see Inflation continue price a summary. first to titled encouraged first is previously to We pleased Please increase And deliver is we which the morning, quarter, expanded to expectations. were our XX% that unfortunately to in cover executive slide were quarter communicated to good read you, not turn incremental expect positively. Jim. why to X out solid everyone. the inflation

adjusted a believe acquisition our a will at is remains Ice, later growth. detail acquire $X.XX. year We guidance $X.XX a great which Bob our our water announced And on enhance we quarter, little the this the guidance During EPS reflect to full to agreement range are unchanged full But details we help commercial business. the shortly. in more more Manitowoc give I’ll more top little updating it solutions bit our call. strong year complimentary will that line discuss first to

record track global our entering companies many growth a positioned most inflation strategy, beyond. margin growth. chain for deliver are that core sales, momentum. consistent with or growth, record continued a slide must labeled in facing. is is We building a we Growing of building Pentair are of one despite number external and We quarter believe Please consistent and we believe seasonally the expansion, challenges our turn is X, Whether that track strongest to well we XXXX And areas. all supply are it income in priority. and our

and positioned We residential and continue serve are businesses. be our well Water quality, a growing is which benefiting water in benefits pool installed both from large consumers to to base. on focusing leader a treatment commercial

several business We and have suppression, in positions fire strong disposal, water areas a flow flood sizable such water as with supply, control.

is doing focus This future. But in best Our value margins. sustainable of its this is and and the it will we Rather about continues and things not Pentair. business filtration, transformation believe opportunities biggest the possible about and just is opportunities, membrane biggest touch on industrial solutions I a two to gas. moment. one around optimally, for long-term for Pentair more unlocking positioning better improving

Manitowoc currently with to our Our are the Ice. of in acquire announced the has agreement strengths, we it balance sheet one of been process and biggest using

turn Pentair. of improving costs. focused labeled the remind of consistently from is built enhance going value there's to record need the that believe we business. about improved Transformation on the are do the comes taking is we does creation. what right we we team ahead not mean much transformation an to we because way it. processes have vision to a long for couple are the our it. then plan carefully done just Please is current these runway Transformation and of Transformation track way lean chose I celebrate we methodology. a the out word But not the It growth be doing X, better slide you While been about we we past transformation have state and still future in forward. successes creating have building therefore your that identifying to and that state, the recognizing achieve can years,

and distribution We are pricing, transformational operations focused four sourcing, on areas, organizational and effectiveness.

about now are moving planning, execution the we to While was phase. XXXX

opportunities pricing us processes. transform sourcing and we help outside to biggest in two are Our partners key these where brought in

funnels as to how build within partners help areas. to our value build, train continue seeing and targeted our unlock additional on outside momentum we're We us four

and are bringing decision greater drive data using and we're making. prioritization our to focus analytics We

many anticipate these a maintenance water end bring building We our can mid-XXs announced expect to preventative updating to total predicted total Together, before have well platform. management solutions a the made be make customer a commercial commercial and customers their with more our focus address that a detail high creator digit a million us targets business, business such projected are a providing to allow $XXX to beyond $XXX through it's projected In to for turn three on that three high million filtration margin, margin categories. deliver businesses our On customers arise. Everpure with We a issues stronger expand KBI opportunity seen $XXX And targeted $XXX nearly is is a infrastructure and strides a known March, water complex all ice our customers. solutions improving Ice. dependable advancing to provide early brand and believe water lower forward commercial agreement water acquire will look solutions and industry of different business business growth for identify commercial offerings. at as water and offer solution people machines. Combined, our more that water Transformation by one kind has and brands commercial needs. ice we great for management to a providing ice services sharing projected growing up of and our and sustained our us with basis, we flow respected of our growth leader million water we Manitowoc forma for year. solutions pro XXXX Manitowoc record cleaner Pentair for in along water expectations now and margins can the great specialty slide later they quality and the is that in million labeled turning term, a X, you value is and of key high for we margins, Please longer opportunities. they to creating the that margin solutions, service, foodservice around customers, and service double better revenue end water very and allows important businesses reputation significantly proven world. track delivering to service food a but we

the financial discuss Manitowoc the and closing quarter, would the third our approvals. occur more to or subject Bob I over turn regulatory expect our second performance in detail. results Bob? now to in to to transaction the to We call like

Bob Fishman

with We Please John. slide with XXXX price XX% deliver to core strong contribution. XX% X, Thank sales growth performance. of turn first Pentair increasing QX quarter sales you, labeled

of continues inflation Technologies Consumer year. offset Segment in impact to and lower the growth were sales time to for almost margin Solutions return the on decline inflation a core contributors encouraged principal sales basis first While X% Industrial of strong recent and core income revenue points contribution. inefficiencies return accelerate, We chain to see price to sales to declined were improve and margin elevated we on with XXX delivered price the X%. increased XX.X%. grew sequentially acquisitions, were supply XX% The see pleased Flow while inflation.

While second moderating and we inflation chain of $X expect to debt improvement return Below expense quarter. just net into line interest is strong showing sales disruptions the no supply was the million. remain, under show sequential on signs

of thing Solutions to our do. related fulfill. performance. its Solutions Exiting XX%. contracts XX% business we $X And no This XXXX Consumer amounts. charge and were what exit Consumer longer positive Adjusted know Pleatco resulted $X.XX very the sales inventories guidance grew in Our X% in the share business rate was a exceeded count decision top we small strong right to tax exit was and relating and the that with that KBI to before of sales been the made receivables, line. and turn has were cost quarter will growing contributors and other million, XX%. to EPS We was the and to to to core immaterial Russia. quarter. Please related labeled our the for the acquisitions write-off both sales QX XXX.X our to The adjusted delivered X, increasing million another a slide costs

effortless X% see this beginning today inflation at is catching However, in up, levels. and see XX% on price shape we than the return pool Within quarter, sales. in line resulted momentum season. a the focus Pool, pressure are continue experience this income as both And our with that And better more do on entering they Pool grew quarter year relentless the still strong we last businesses in nearly on in strong seeing in within and in an to this the we continue operate channel for the solutions. consumer season is more readout sales even offset are some of quarter historical inventory We while grew commented creating margins. categories much lower Segment entering last. we channel to customers. have

greater order status order new have making a launched portal customers recently have on that information visibility to allows We without status calls.

also alike proper dealers phone support that easier consumers needed. receive navigation for We when enhanced resource ensure and have the our advanced to system and

in differentiators loyalty One Pool’s our our success dealers. of long-term is key from

enable industry long to help of benefits and technical focused on products to an training installation leading learn facilitate have our process. dealers our and sales the We easier

dealers We a training centers service products. have experienced in well invested to and more builders as allow learning as to our of intimate companies have

customers, to and advance is of to our areas dealers of One their businesses. key both distributors enable our focus

on to continue We focus innovation building pipeline. our

pump flow a efficient more our launching new are experience. X We management IntelliFlo create to

their good the also version dealers seeing on automation end with strong to are functionality demand is with board a Pool consumer from of season. of higher We pump, control XXXX with Overall pool. builders provide enhanced system through mini visibility this and launching and a the

a carry healthy in Pool. to backlog continue We

short Although historically cycle with lead low business a has been times. this

see to core continue capacity, a contribution once KBI end we affiliated markets, and to strong to inefficiencies the dealers some sectors focused continued business Treatment through Everpure through we stores double come business of Residential in again. and included addition supply starting healthy again complexity were convenience a and water the more. Water Solutions and improving year. with the treatment to up service from of The in customer the expect quick once consumers down and healthy recovery digit course for which components. relationships. margins. increase backlog in mid-single rebound signs restaurants growth to hopefully our chain on many KBI. easing, XX%, improved see As enjoyed in both Sales residential brought Water be in digits The continues contribution from Commercial its reduction, positive resulting traveling of of has hospitality with start come has improvements as sales

We with the the commercial nature most of encouraged water have been recovery global solutions. in

the management residential Flow and to equipment XX, standards funnel seeing slide important increasing headwind to also segment solid making X% cycle IFT backlog are to benefited XX% and industrial X%, reading sustainable grew quarter. of hopefully as all has complexity orders increase included move demand factor we line with productivity row worked new with its see new quarter serve design Industrial particularly is from their Industrial installations service new to increasing restaurant return shortages, to current labeled inefficiency, historically dealers and industry sales business year addition sales existing This out budget, being ease in and X% The Pleatco. to it and adapting and progresses. business to sales for expect expect Overall, and nicely a QX driving reduction business. solutions business flow we grew small quick reconfiguration balance new shape. performance. with backlog that in revenue manufacturers in the backlog. see and continue balance for beginning an strong business strong customers. our quarter is food opportunities flow continues the within and progress being margins. of sales good is order continues the orders to begin core in quarters restaurants, of flow larger continue X% a demand longer this supply to and seen XX, X% flow a along And sales Flow has to Please Technologies The residential which but momentum income restaurants. contributing as as seasonally price a a business. for divestiture to XXXX from first supply improving in global as strong and as addition seen progress Overall, opportunities healthy is Please distributors, Commercial Residential strongest as result. businesses labeled inefficiencies be resulting and The we Technologies we have increase quarter. of CapEx the engineer in in and strong to this sales strong Overall, on out improvement grew cash beer and our chain The grew be greater fuel as product growth of demand cycle slide generating sheet also and with instead by efforts, very chain focus Industrial reduction, sheet water efficiency turn and in the margin business gas shorter us and this ended year model. the has enters the the on are on plan more to We're line a total reduction. progresses. and configure solution labor the top order to year for In as continues impacted the in have resulted complexity of saw improvement solid flow. to in in several turn made

in quarter remained slow Free that due had on quarter we quarter. sales To ended in one was invested of just cash related the strong of saw leverage experienced teens. linear a that last in should start many and through the in the capital second at our than that over what usage time factories. in the start in resulted of when line with year absenteeism We Omicron last a the quarter month our Our high we in quarter. receivables the in trends more start return XXXX, we part particularly to more January collect higher flow were historical

higher manage of through addition, In we key components inefficiencies. chain supply than level have we buying been usual today's as advantageously

the For free in the and labeled, to outlook. QX year XX, to trends. we year, and cash should turn second slide free strength historical continue to line flow quarter traditional expect flow generation approximate XXXX net full Pentair cash with income, and Please see

we adjusted to quarter, introducing $X.XX For XX% the $X.XX a of increase to second guidance year-over-year are of represents XX%. which EPS

the showing, grow XX% We same to particularly we sales to expect given to total period is year. difficult comparison a which XX%, strong believe last the

$XX tax of XXX.X count $X million, and XX% to coming and million with around adjusted in $X We rate XX% XX%, interest share a expense of net to million expect to of increase XXX.X to segment income corporate million. expense

year, range For in XX%, are continued anticipated X% our top the the we slightly first line guidance of better quarter a in to modestly showing to inflation. offset increasing higher addition reflecting further a price to action full to

the $X.XX, to interest be expense of XX% and X% expect tax of $XX million, rate million. of around shares Below we around to to increase XXX million approximately to adjusted XX% year. XX% million in to XXX $XX segment corporate $XX and EPS to expect to to the line, be or continue $X.XX net million expense adjusted range We of increase to XX%. income And the an for

Jay, expect I'd will net free previously, we line after for income. a the you. stated now over to approximate the to we flow John like to cash Thank remarks. turn as questions. open few Jay have call Finally, Q&A which please for closing

Operator

Instructions] comes [Operator of line question Our first Giordano Cowen. with the from Joe

Joe Giordano

IFT to little negative, there wanted was morning, Hey, a actually, start on just bit maybe surprising. guys. I volume number the which good was

of just kind volumes the to that. accelerate price end downside obviously, as that offsetting quarter? is that of How through did like kind at But to the So read it's did therefore on color looking? there, you forward? go What's of going any and the the view

John Stauch

From the business. there. What our slow our saw within really a of business volume the is what just challenges challenges. residential, quarter. the in associated there we to flow flow within it and That we like the demand labor off perspective, strong, remains got us was backlog some shortages is And start was with a the supply chain

challenges, was to a those through starting So then of year. from perspective, throughout more matter grow significantly of and it battling some our more the

Joe Giordano

Okay, finished that is you go out? get, on the are inventory product just up for hard waiting like still components like Or ready this semi-finished stuff like great. follow that still then build. that And to Is that's to inventory have?

John Stauch

it Yes, is, built that goods. product meet waiting finished can advantageously raw demand be latter its we so into that's is products to material really the for that buying

it a quarter it and managing reflection we the So but face. the setting we're a that for is headwind of and chain supply is challenges us first in targets actively that

Operator

comes Mike the of of line Halloran question Next Baird. from

Mike Halloran

morning, gentlemen. good Hey,

and cadences to another manage On quarter, from you up good how that cost the that about in guidance through thinking towards the any quarter is on going you that thoughts inflation peak about thinking pain in and Is obviously, or first the the are year? it incremental how you're catching in and how inflation. price side, current see the to the even increase here? price being Obviously, put forward

John Stauch

not see price of year, QX we half, of roughly We're will throughout will the better the inflation difference that amount our a so -- that reading cost margins our improve I the from $XX half margin the second was versus at help and out, But high, million. looked expansion to margins is news continue year. basis. will second the stay prices any balance From we're quarter, good And around year-on-year story. gets should in that on sequentially, assuming perspective, improving first the the inflation and which both in positive increase in significantly the

did battle, So quarter. like it than just price in offsetting start cost first the we the winning we rather

to were of So number there. improved QX that versus very our inflection QX, where we're had perspective, we quarters we margins encouraged a we and declining. much point, previous was From an showing margins of

our challenge. having with continues expansion biggest from QX been perspective, from So the here, margin

Mike Halloran

And in that. of that Manitowoc remarks, thinking expectations, for that is synergies margins, some Ice, help you out timing Thanks just on about call? growth just thoughts digit anything's part then maybe versus these a parse growth on targets conference prepared market close, changed just you on mid-XX% if side, acquisition mentioned the out the how that from with you double can side? of and revenue kind laid the are second then on the question on of you of And the the

John Stauch

Yes.

on anywhere I talked the where to bring the that them I just we're don't So that they been volume global recognition alone. you to still about, mid our to today, we lines. digit if two were one we're to have we that obviously, to the categories of And occur. But we're expansion occurs, single mean, a third And take really waiting going our portfolio always waiting when we of like, confident in performer that itself high continue we're filtration for whenever still still cure near markets three pre-COVID. have And mean, see has the hospitality full in. recovering

been has then business type to partners, digits key took And service primarily that a double maintenance acquisition, Manitowoc for at and Everpure. has around opportunity, plan and look the of to similar profile growing due installation see it when diligence, continues growth a we KBI Our domestically.

low that, we you of that have absent And KBI these synergies margin I been the by to any digit digits. service that's then said are And growers. margin So think deliver and a to synergies blend, high prospective very of you double then offset Ice at how between add we some mid-single on all, hope businesses the get offering. when then margins product as the Everpure

Mike Halloran

timing And of change just any then there? close,

John Stauch

Yes, QX, targeting I QX. mean, or were clearly we we've QX said

being processes, partners through our, We early expect would get big then and to do taken to case that work than two the is deal side more we through between it's and on the longer we've through regulatory yes, think to continue a of so there's larger that got they've get best QX the that we it this got QX,

Operator

of the question Deane Next RBC Markets. comes Capital Dray of from line

Deane Dray

morning, without early that and of issue, commented start look How in impressive Good we you. seen very everyone. channel channel with product the about any grow tough was normal an be that inventory. Thank degree ago And a confidence I you've comps. about there growth. ‘XX pool, and then to Hey, you availability? know. how's an of issues the you strong confidence Remember started products, just And able year degree in buy a to year despite can

Bob Fishman

I can start one. with that

We are historical is seeing level. line more in channel with inventory

doors are categories the of that within still catching Some up.

to but continuing lines good in XXXX. the we a what pool as focused really in shape season enter be product very robust be should So very there overall across

we're to grow Our in pool good business. with with and the shape demand the continue the very that to view backlog is

we previously, guidance, our revenue single to consumer of for mid digits high guide. raised guidance had and have We we solutions,

towards really So digits consumer solution single more trending with leading way. pool is the obviously, high

we're start the We in to the will ourselves the don't the that to more of of to ourselves, business. continue, our we we're couple side pools growth a of as on up there, why driving our another XXXX we would get year year ourselves I the want underlying more to ahead growth get for guide replacement this underlying to demand of larger last a So the builds want that homes, want the confident say installed people QX. focused for The people ahead good realistic, more which strong well. pool and to for business, buying we set base, pool ourselves new factors over for be is putting is of season optimistic. due second years, of is expect growth of

very I optimistic So think we've forecast, very balanced got remain the business. pool about and a

John Stauch

Deane, add, time. mean, followed can for if I you us just I some

are through I are the products, chain. by excited products and the the hardest the that that think supply ones we're automation are get most to they

desires encouraged to we're consumers pads. pool consumers their make can the automation the and like for and automation by we drives fighting add those more And of the so And want sure to best we pool we're got doing long-term satisfying but needs. we and to chips we're everybody, the products to their

Deane Dray

successfully on Yes, price And great so hear. will on guide? your and by that do in hearing offline it seen that that ’XX, that's based specifics costs. comment I IntelliFlo I added. we've start features I'll was outside but from other really question value is follow just this about And to consultants into your systems for functionality. the that work interested wanted do -- take you've intrigued I'm additional and the pricing -- companies a really baked up the Thanks. take the like I'll just Jim, pricing. on as analytics forth, automation you I pricing? And to impressive you're with additional, data and that expectation benefit getting on on to

John Stauch

historically blind is more actual an let mean, in distribution what give to dealers, the inside to market done crazy, like Deane. that paying. me you view primarily we and working I price the And we're prices we've here. consumer Yes, to

obviously, value spending understanding space to us the the what that's end the we're customer getting doing, effectively of important in and price Deane. our market that competitor what And alternatives is to thoughtfully. very for time is versus so And products, regarding

our our fair share think And get the that. can of end-to-end proposition So that we products. value of of core

So is been really most catch and price working it going just that up today, what of to the on it do with is we value think we've to want of product provides we're the done forward now. categories only inflation, three right pricing effectively, trying to

we're that about lines on. We XX product have focused

quickly that accelerate as to possible is goal this year. our as So

make So year's that utilize analytics season. pricing to into sure we that next

Operator

Sachs. Brian Next Lee question the of from comes Goldman line of

Miguel Barrio

morning, Miguel good segment And I back is increase, seeing growth guidance the on just revenue for it but seems a real guidance to unchanged, deflection more think kind guiding of from suggests But that side? is is Lee. to else more the all anticipated fair, first that the the was wanted cost margins inflation what there a the more you. on result full out go prior, for is income, like Brian say commentary reading anything the and nice based Thanks. or just year that I quick. and bit Hi, pressure segment is everyone. growth on than pricing is or challenging The well the this the a Thank of incrementally quarter. the was of become price on income I'd cost

John Stauch

assumption. I that's fair a think Yes,

that And a and of the that working with season chain availability have product it's comes is the of we're markets, And is to into what's going get And is observation responses And right and correct. a more incremental is the we that yes, the than that on to through. heading recover familiar us but product it's to our guide. QX. which necessary it. product COVID the China kinds season demand where is in. to be with that's global from, it catching even price necessary oil freight. that there's going not inflation worse to costs all what get the If ahead in season, and But of supply took obviously, going because primarily we is partners optimize be what's that associated means in And there into deliver that. little supply we're in the freight now. a And QX with had to inflation product, over. the to And play. working where some we're you're chain to do within that, feel season, early think pessimistic at I we of coming going bit your up we'll incremental cost that think that is And I a able we view look given the end based to

Miguel Barrio

follow a Thanks. quick if just I I up, have may. a

go and to there? on guess, wanted Just color they based Are the any would chips, just that for back the build. more materials inventory I on related on to the Are IFT, related products the great. commentary or just segment be another like one

Bob Fishman

The solutions broad IFT. really and is across based consumer increase really cuts in both inventory and

So across our category, from it's no our perspective, really businesses. it's one

John Stauch

the the for chain products that And semiconductors, that our drives chasing whole supply product chips, their right, entire as it's global same the hands motors on. is to the been drives we've same and last it's And trying get quarters. five

Bob Fishman

challenges, look chain Yes, motors, side, our drives, molding. sprayed electronics and motor you the inflation metals, it's electronics, if its on residents, at supply castings,

So getting across board, easier. the nothing's

big off our teams month in supply to of ops So and you job, incredible especially March COVID. did because an we the slower to got after of that thank a start

Operator

comes Next of line of Markets. the question Jeff KeyBanc Hammond from Capital

Jeff Hammond

are forms Pool if wondering buy Hey, of indeed taking means seeing kind release, earlier. an benefit well, they good if assume Hey, And day five I'm of in that and extra morning, is contractors talked and kind Corp’s ramp you're just place. taking early as a then from of XQ I how product guys. about which kind point that

Bob Fishman

nothing outside We're no really significant seeing and buy early what we've really done not or that, historically. of

unless color. bad So nothing more some get there really we could

John Stauch

most to April and And then is QX, that do at obligations on are and mean, that season we Pool start and a coming better channel of slow I we ramp confident because the forecast than ends partner to for QX. identify that got dealers fulfill end those start And inventory at year's is moment, off are Corp very in take QX what's And continue then QX we look end from. we that's fiscal Jeff, meet seasonal XXXX. the pool growth remind our like to a we we we're to and at and year where the assumes needed so with of needs out that you, Hey, that. figure on January then our next in pool our about a we

buy at all didn't as the the we So because a we're do that's demand early of working and And through how backlog. reminder, much it.

So sell-through building right now what we're demand. doing is

Jeff Hammond

your at our just be I rates of you're higher. the just and we've just own to kind that the kind then seem understand the any pull obviously high the any been inflation but consumer tone you we've back on, home of And to around services shifting changing. find some tons to step in haven't from really evidence as areas, is looking of abnormally kind but consumer. for is seeing great. you're cracks, and wondering, Thanks. I'm able People stay kind of cracks seeing checks channel did of Okay, early backlog seen if

Bob Fishman

to cracks Yes, can obligations customers I will word with their because channel, think in within I use doing fulfill to they're their everything they year's the right season. now dealing the pool this

et points, historical rates, at you think interest look if I cetera, data housing the cetera. starts, et

I'm right in anticipating residential you're Jeff. impacts, fulfillment didn't that'll these just still satisfy to mean, to I did warm that. like what the supply state. And it's and levels at their they're going that's work needed from it's of trying movement think ultimately decline, to out seeing I though, a starts -- think my don't weather to be because And and bubble, a Fed we in have signs historical housing there's I tightening we view steep overall what's the the to are in slowdown starts constraints of to not through we and desire be ’XX think deliver a And to housing now. play that ’XX. a the the XXXX. could the tightening I a going don't have

in think they I replacement housing sense about pool industry moderated that starts the are significantly. the and And towards the aftermarket, they're water and skewed residential in the treatment, where were new we're in So we're historically.

And so not up significantly. up a a pools are percentage as little of they're but those houses, bit

Operator

Next line Citigroup. from question Andy the of of Kaplowitz comes

Andy Kaplowitz

good guys. morning, Hey,

see helpful. of rates, any be are this hold the So sort that about, why I John, reasons more color renovation, out you some then that signs how Any have would the demand into more pent-up color after market thought sort pool evolving would demand. that think to you last and you of for guys to of given there, one and responding you of eventually question of as more up that talked demand that sort interest

John Stauch

quarter of percentage in a historically is that mean, candidly and that I’ll no we is to the think need this became do the take to that, I the they a need pool right. Pentair and disclosing backlog, the have because the I stop started overall reminder, and revenue I'll Yes, reason with the part, the every started backlog in first across as the Bob, guidelines, under second. business take SEC the businesses

because chain making product looking every residential we because then fulfill customer needs, also ability you that the those demand at back the and we work every some point. partners, inventory, historically That's sell- book that's has it's the we're do to state we're get those to through five Right same to end states, constraints. ship quarter our partners product working everything quarter. think there of have rates, that with fulfill you can holding days at So the our and by a for right demand. orders supply because more single requirements And and when of pent-up now, the of But single our right the the and in stock sets. through would day all all we we get a get most of different our into going state been are and distribution lot nature channel distributor channel to those within businesses, have

requirements meet know eventually to expect of I get don't will that meaning we then so Bob, be nothing to to the in add moderate, day continuing if this And our And, channel. area. backlog anything. that you we'll want to And

Bob Fishman

day to because Other than we there that are inefficiencies. forward look

backlog for in the And the efficient were in creates an of Some it and in confusion orders only managing ourselves the process. dealers not July August. of terms for but put and distributors

more we times. on business shorter lead orders those forward comes days backlog looking based and as are And becomes current. the drive and down to we're So

John Stauch

you component the than actually inflation. dollars to when over the you more sales because look the trying is we see to normal side a years, you capture And trend last three we're take pricing on at reflect you other at a look And two the when then do and product value and unit unit all sales.

categories I now we've said that we a often more path. heaters So acting think out level based ultimately, up. that's the feel the is have caught Everything sell- full And upon we on demand more there. as pool heater normal the like else generally through is

Andy Kaplowitz

know now the in some on color the productivity in can execution transformation. a Thanks, give in on quarter ‘XX itself. just you phase your us in update low. you're tailwind was John. your the transformation. I more maybe quarter obviously, bit And that's then inefficiencies it’s to Maybe little the But

the but to effectiveness, seeing you've So of stuff? terms of talked organizational already about? in sourcing, major update improve you what sort We've are on about a an this talked ability areas operations, your any of pricing lot,

John Stauch

supply current things Yes, I that and expect appreciate I think so you working just sourcing by We to mean, I chain, an excited. got be going I'm But transformation. unit day single him on. a the Obviously, are meet driving who's CEO and demand. got to teams I'm question. two initiative, the the excited ops the every business would we and

to offset to reflective in doing then strategic, their What's transformation And everything That's do how how of with in attack inflation. And each XXXX world to just trying opportunities. is is class business we spaces. Ultimately, become we're you're not seeing become our so generally those saying what of class? needed world right. units

perfect we we distribution challenging very think but put supply far meet a that's Think region shipments. that a today, what out need to probably cost landed we source reflect need China. the to but our Think was as as So about from perspective, daily issue. base ago, chain by supply And for doesn't where demand. centers region become of being also about that fact our of base the supply XX years

solve we So also, there's where business and in do the geographical enable we digital call supply quite do in our have Bob we how and How How business then customers? all challenged to by But as should do more as consumer we price Pentair? we also do lot his So where opportunity do a mentioned of give what to we build think through mentioned. class current as I needs? said, opportunity that it really complexity a with by interfaces, it's about state? our future significant share year do been vision? I we And then we'll you do I'd business. has self not the relates service eyes, transformation strategically, transforming. and in for easier be really be all make to remarks, it customers’ which business world is to what appropriate shareholder customers’ eyes. beyond What's state but lean we the of this ‘XX as is with to ours, value, And later value, transformation And targets. that our plan based methodology, And excited the unit, shareholder add to you how

Operator

Bryan Oppenheimer. Next from of of Blair the question line comes

Bryan Blair

Thanks. morning, Good guys.

full XX% guide Now that? modest about sales If pushing range to and incremental volume single deal flattish way there price, XX% to for on think contribution, high we X% based the that nuance think the and is digit, year is revised about to your price. maybe performance or framework? is XQ mentioned You the right more

Bob Fishman

price majority volume. small seeing a that from it, That from growth with the of we is were coming about contribution

Bryan Blair

Okay, year? is little for to the potential now? expansion And that's ROS variance segments the a confirm is outlook Or both full there more for just outlook fair. still in the in

Bob Fishman

cost No, inefficiencies again, in the supply contribution margin that segments, these the would progresses, as some that of of be in chain. both then it price from driving doing as year are better and think through

margins. actions improve segments benefit So their those and with both will

Operator

comes Next line Nathan of from Jones question the Stifel. of

Adam Farley

the wanted on some about the you just worse to same through is for if or I Adam supply on better, supply got Could questions. This Nathan. Farley on chain follow stays Good give the quarter? morning. color chain the up

John Stauch

into categories. the better. it break is I One in have two January think I got say to and would you'd out, Omicron

on think We're capacity linearity supply as QX, I QX our QX well. versus seeing we're QX. our like increasing basis, a chain just there versus accelerate linear

COVID. and have in that's China port. off So the could I challenges by what part QX And in we're encouraging starting here on QX part, with And hit the discouraging impact the the we think that was COVID. got

it's So is chain fair every took think those if definitely challenge. getting say quarter, to that supply there's the But new better. I you out, challenges

Bob Fishman

start little color. just of in off a I’ll April. here nice to bit add a We're

Operator

question comes of from Scott Loop Markets. line Capital Next the Graham of

Scott Graham

comment Yes, about question. John, if your tightening question certainly if starting were emerge being some the maybe moving a just ‘XX, for indicators to are market of about resi with you just clouds the answering talking Pentair. wondering about I'm and hi the earlier in or morning. down the resi other were and direction. you taking in Thanks potentially maybe if talking bit on good things little

John Stauch

clear channel that guidance we in mean, the year towards talking the wasn't bit little mean, too either, I think needs I their predict. I the I we in inventory, is we of a as the of correction reset when correction in catches in far end expect that up. distributors very supply to about our are XXXX channel chain timeframe February gave No, full year

still that we it's happen. expecting guide, So that's been guide, in our to and are our in

you not want because growing aftermarket overall base see our base continues to If And residential I think space. spending, install and across have slight housing high we're the isn't new constrained That starts, availability slowdown. comes there, of been the at of entire you I overall back focus growing opportunity enthusiasm is for or home itself. we it purchases, just even business. which historically, of higher which the said, which be enthusiasm the install don't a we've which within very we slowing that clear, for the small electronics and North And connected the on treatment, has not within And being more and there's that on go rates some are slow capacity see. there foolish some constraints interest the would levels now right if expect builds, that of designed that to But house to no sell-through we'll to down flattish be consumer the consumer also has have part market, water got been American we us automated to for be globally, that. the new the demand, more helping fulfill is sell-through, solutions,

of Pentair, to QX about I get am in the there's growth we're don't I'm way to I anything XXXX, but going or be legs growth saying and just shape, to I before going to to signaling industry. the in settle I to not, through think no enough down. continue or think residential the that form, talk go. year, related mid-XX% will and or perpetuity So it's mean, we rest Scott, I'm continue that

Scott Graham

all think that. that. we Thank agree with you I Yes, for

one ask just other Let in year automation product question me was Pentair this a Pool. launches big for

being Is could there. us not, is Sounds chain out really of reception Thanks. distributors on slowed just color just you down? little you the disappointed with chain are that? it Are some is you if maybe Maybe give slowing shed that the maybe rollout by positive? excited I'm like that on really a the a light supply wondering little and the products what just bit.

John Stauch

first we we're more technology. that in coming big excited pump. mean, because of variable I it I speed all ones modern QX, our by And IFX, got in used new think Yes,

is modern more that much to had. of older some we technology some the base get than And of easier technology

You're right.

growth customers. of ease newer not always technologies. And They're that busy. starts But are longer-term out constraining the now become better And all dealers we're trying upgrading Scott. there and get solutions. use that We're that's people moving chain, to more right sell new and moving is the only as thing will end the supply of your to when cloud to think technology. platforms based to I normal selling more for

Operator

the Morgan. line JP from Tusa comes of question of Steve Next

Steve Tusa

bit Good Hey, one number for do just help with me you quarter? expect with on what little that the year? $XX the can bridge? morning. you guys. that And The Hi, was this million inflation the

Bob Fishman

of Steve, rest Yes, proxy think for pretty the that's we good the quarter.

inflation see really moderating. don't So we

So you could that's by it a pretty multiply indication. four, take that good million, $XX and

Steve Tusa

great. Okay,

John Stauch

Steve, stunning question, That's solved wild, great. but you okay. number, know not that’s your just it's No, I a

Steve Tusa

the detail. saying That's for Thanks the back. was I on guys sorry. you Yes, patting great.

kind something do know with inventories But your, like performance to I there? kind sales -what I But that do when line for were Obviously, differences in the for their is inventory thanks the XX%, details. comes that then great it your performance how reconcile the being How their you guys. sales So and or reconcile year-over-year be of they up not of I about pool’s could that. like move with Is yours. with performance? reconciling

John Stauch

lead times. their position even a know start lag more XXX would I me moved the as said had first that Let fulfilling have earlier, lag, then inventory we're into exasperated I part, sell-through and a and Steve, XX build I five there's times always that. and because lag is days think and you now lead say

So supply overall result of the and the chain. that's

dollar So about sell-through the back inventory we feel where right are, now the on levels. on we're a levels versus to historical basis

season like Steve. start I or appropriate without demand. fixed nobody think demand, QX then the be that in and where And the caught or to can to inventory a moderate will always vary get meet that'll start the to in QX QX,

Steve Tusa

question can Okay. tell the the for And into obviously in then in you you half. is second or And price back us you. basically what the we then just expect expect second one What half, second just the more quarter?

John Stauch

in will in backlog QX. be QX, still price some issues primarily we're the through think higher QX because we mean, of than working I

anticipated on this just than it'll higher that's So And natural go the we've higher. raised we year. then pricing, prices even

QX. higher the and in contribution will be QX And sequentially it QX so you price be in to could expect than

Operator

Barclays. comes line question the from Next Mitchell of Julian of

Matthew Shaffer

stocks on. back will or quarters, any Is under am the it through similar Matthew Julian This been Shaffer for prices that Mitchell's guys? curious, pressure, management next remain up the deal two reason how's at not just Hi, not set is I buybacks? going, for so management buying team should levels?

John Stauch

in not and to quiet the associated deal at market that. periods the all should with we be were the assume to You due the working on allowed

Matthew Shaffer

great. QX think by over you how it's guide implies we are that should I'm sequential so And Okay, how XX% about the confident guide? in division? that incremental. And guide then, curious QX

Bob Fishman

biggest guide. typically is quarter, our confident QX we're in the

Operator

line question comes Wertheimer of Research. the from Melius Next of Rob

Rob Wertheimer

built you options. not think the that housing and under big Yes, upgrade new before, repair as normal about obviously, to about on you maybe There's and consumer hi. subject just within talked severely more How return lot and Thanks replace mix. volatility John, the to side? for do a answers. all a the

more and space? as cycle the And same customers ask to automation given mentioned consumer? you. But as within their from offerings. You an second attractive now, the consumers just one you right restaurant up lot think volatility of spend, down do on how that any indications your about Thank concerns propensity then overriding my I'll a

John Stauch

newer Yes, opportunities home. I come for the new to think don't mean, is I need want think income that I their cycle you have I do do. pool, to varies homeowners you need keep spend. to the into along And maintenance the once overall to always keep reason you experiences a to desires running, on believe an replacement want pond, And I Do The a your going the it I turn you're within abilities works and that to that discretionary of existing do they mean, discretionary pool those non-discretionary are as depending improve instance, think I overall to have their not. and consumers going. cycle more to purchases, or automated or spend, I of it automation?

becomes be then do associated tends has they to generally higher a be and the in you things market One off communities same that individuals, go with that of the then the pool thing. awareness, is neighbor it economic, and and something tend wealth and to

cycle with because a based up down need, do group more treatment. one For that more and ability that is think purchasing is spend, treatment, water upon water and I economic to varied

get to figure into water it replacement tend working and and/or whole time more we being, treatment fix later. So and out break to turned of see the the good enough home for of a be remodeling, then it

see So an if on the think see water little we're more I side. bit to we'll impact, going it a treatment

XX% of business XX% that in being than is we've cool. a what more And so today, said, it aftermarket, to seen replacement that's

Rob Wertheimer

on helpful. spend? that’s And Okay, restaurants just thoughts any

John Stauch

we continue I Yes, with demand the that to space, up. the we pick and to things see think traffic in see I continue mean,

earlier, could three moment faced give have answer I that was comments been don't times. I think making you because COVID a that's different think where on I I regions consistent all at the at my global

in So of John is question their up Europe right turn have closing China I and America while relative as COVID little There slowing over in at to of are we in domestically where pick bit for comments. and no journey. further to a on bit now, this US we see the North a they like would there slowing time, to call are Stauch the little

John Stauch

in and us efficiency stakeholders you. employees waste and Thank we today, or value, it. sustainable biggest offer. are while we And you the to inspired bottles, of do how be through focused environmental our joining the the helping some our Whether energy turn or thank through single plastic to into And helping consumption increasing of we solutions today. on challenges gas working to reduce we to continue about products solve engaging use the business of are we for

Our products and better world make solutions place. are a the helping to

of how to ESG on the forefront make we how the and planet continues to operate work work on be and Our better. social we responsibility

issue look pleased of who we which grateful I'm this the what in helped our our directors. Pentair on Pentair to all and start, We ESG first accomplished dedication forward more which and employees. Corporate for the I'm is the of end of year, are the from testament guidance Responsibility I our continue Contributions We of deliver stakeholders extremely as through of it. continue by excited with our and great quarter were XXXX in proud momentum month. share report, various commitment to to board XXXX. plan have our a employees the we this about past to to we

gives XXXX. confidence further delivering in in us quarter first growth The

gives are future. us call. great of Ice. transformation and our confidence We building in closing in processes conclude our you combined Manitowoc our with This momentum can intended Jay, the

Operator

This Thank joining you today's concludes you. conference call. us for thank And today.

may great You disconnect. Have now a day.

Pentair (PNR) 21 Apr 222022 Q1 Earnings call transcript