PNR - Earnings call transcript Q2 2024

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Operator

Good morning, everyone, and welcome to the Pentair Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please also note that today's event is being recorded. At this time, I'd like to turn the floor over to Shelly Hubbard, Vice President, Investor Relations. Ma'am, please go ahead.

Shelly Hubbard

Thank you, and welcome to Pentair's Second Quarter 2024 Earnings Conference Call.

me and Stauch, Financial Bob with Chief President Officer. call Officer; Executive Fishman, the are our John and On our Chief quarter On on this will we press performance second morning's today's in as provide release. outlined call, our details

reference. GAAP can that and Investor slide release of provide is to a you which we remarks prepared between our supplement earnings reconciliation On the our website, and during find measures Pentair's intended Relations will non-GAAP and financial deck today's differences call

financial should to to a measures financial and items in provided non-GAAP items substitute investors further for are on of results. have prepared to events as The be considered clarifying in They understanding measures not performance as impact GAAP. or the accordance the addition the the these additional aid in included company's superior with financial performance

you we these difficult risks projections are during many are that to our me presentation of other which of generally the Pentair. and Listeners predict or cautioned control let statements events. Before we statements, to beyond predictions, which certain make are future subject are begin, forward-looking remind uncertainties, will and today, statements about that

differ These factors recent advise cause can and results from and Form the actual XX-Q We Form risks current our in expectations. listeners to review uncertainties carefully most to materially risk our XX-K.

the overview on to find [Operator Following will Relations Please our investor prepared Day our John. a materials. and Presentations website Events Investor As Instructions] questions. you over our turn & to call will reminder, reference visit open for remarks, Investor IR Pentair now and I we presentations up Pentair can call our click these the website. on

John Stauch

and good morning, Thank you, Shelly, everyone.

executive Slide QX our results and record with begin summary on the X. Let's

XXXX. we and cash in the achieved on nVent adjusted operating following sales, sales, EPS return from flow, the free Pentair of record second adjusted separation income, quarter, During

value XX,XXX-plus remarkable period. thank would And on from like the tirelessly we of year record our worked top income for Pentair We their deliver our to expansion. towards our continued impressively and results margin growth a commitment employees and prior shareholders. I delivering delivered for creating these quarter and another for to of customers

QX, you. expansion adjusted ROS operating we capital was free second and disciplined Adjusted all of cash the XXX EPS million. strengthen X basis by and we by million in worth to a by allocation expanded continue and increased increased over driven record income XX% $XXX purchased Driven In points, stock Thank flow, across free flow and the balance strategy rose X%, sales margin segments. cash XX% $XX quarter. sheet

continued also We to elevate our dividend.

dividend a to have XX for aristocrat, As we consecutive our dividend years. increased shareholders

half the guidance. ROS increasing As the macroeconomic in this first continued remainder strong major This while our confidence year, results we of our in of adjusted look and the is execute and geopolitical we year executing our to on ability initiatives. our EPS dynamic to by a implementing driven and are and in environment,

inclusive XX/XX. now Transformation, of

later end the water to in Solutions segments. the our Pool. performance provide as strong Flow, second as quarter guidance. our the previous Our across will EPS approximately portfolio details $X.XX. execution all well XXXX We balanced increased and record and Bob high Water more X of represents expected our sustainable call. believe This power of demonstrates

its like world help the now's to resource to strategy improve water, sustainably resilience. move, prove Our continues and essential enjoy

contaminants, and clean, quality. and impacting taste trends awareness growing capture we availability to water composition, we well access concerns and are water as reliable water led growing concerns around to secular favorable safe over positioned opportunities water challenges increased water, And and by believe with from such human-made

people municipal infrastructure. are consumers and represents interested on commercial, and living pool as large impact footprint to the at have housing and exercise, states, public carbon health sales. a our are the fun migration environment, Growing aging to gathering looking of favorable stay environmental Sunbelt in their which pools and to concerns and as cool reduce Outdoor mix

Slide Let's X. turn to

XX-plus of remainder of we've a slower seen last suggest throughout reports the growth continuation Over that global days, the the year.

at to X of each, we we verticals can opportunity is water where As to portfolio each remain risk and segments that enables slightly we of pressured. in, some the All and where look the possible. there that diversifies balanced our our mitigate believe control are believe what and expect and we us areas challenges this within great we

higher some Flow, to infrastructure delay housing in impact vertical example, IIJA rates by on residential experienced in industrial activity key and interest has record in Higher For reached funding we a spending vertical commercial CapEx our customers. seen projects. some from have slow continued and within sales our market

Within been commercial we North launch performed impacted first QX, product PFAS certified America said, business by our lines. That Water existing strong, our further about business our expected, the excited commercial international really has higher impacted our in are filtration Solutions, pressures. while ICE and remains as Residential filtration product of PFAS continued be expanded commercial filtration which by to interest certified rates. economic

interest wanting this learn to Customer more in product. about strong showed

awareness see term. We water interest long that are line in we are this filtration, innovation proud to teams product and excited grow of With new brought quality this this to heightened point-of-use product on market. the and

housing in have and a Lastly, to in remodeled market interest and demand, higher pools. slower sustained rates impact predominantly Pool, new continued pool

near XX,XXX in built pools now expected in are and to in XX,XXX roughly to roughly XXXX XXXX range the in-ground compared XX,XXX XXXX. be pool New

slightly industry ago. Given lower our days weakness, this growth it economic than noted the recent expecting survey dealer that XX-plus did is

pool performed growth remain growth business the we pool drive drove economic sales which Pentair. ability in Despite Pentair's near-term industry, and double-digit QX, to for challenges expansion. part the in well for confident margin aftermarket our long-term However,

higher that with the family migration remains lifestyle friends, from exercise in attractive weather. our it to A X our which very and warmer and are is also in trend wellness gathering We to revenue for with a industry and of outdoors trends a favor. states, towards pools majority We're and believe mega have are benefiting concentrated fun. Sunbelt seeing

and Pentair products. well for positioned preferences concern, change trends sustainable secular is climate remains smart, a The for top

the pioneers speed and are in which We variable pumps, money. save energy introducing

Let's Last transformation to pricing strategic that I as initiatives quarter, margin on has March value-based our our initiatives. Investor total highlighted adopted expansion mentioned Slide track our Approximately at of of we turn deliver revenue pricing and X. remain implemented our to as part Day. XX%

and are quarterly is productivity. We X going in to have drove our of results. drive our forward. to optimization Wave In to which continue continued record And sourcing well initiatives, this footprint financial transformation beginning drive plan QX, operational benefits we into

XX-XX. XX-XX, we about for businesses on core of lower premise the Pentair's doing the are we transformation higher of larger, term. X,XXX of revenue low-value our quick XX-XX trained longer by further up reflecting enable do execute customers about rates core growth value is continue in that customers to resources opportunities employees core as reducing complexity some to products and is freed XX% products. see We're expect success. allow When for streams. we It longer-term to expect see our our we perform should wins this, By recognize to starting Additionally, on that important this, to better us to

the that focus analyzed, core. am complexity the I to I'm and we excited and fact-based their data the encouraging initial have on leaders to move business about exit quickly

further on the end after and the a the on We expect the have complete initial and we portfolio, XXXX actions entire the update implemented we XXXX. expect completed have our of across to Pentair impact to training progress which by

to let's Slide Bob, Before turn it X. over I to turn

We continue to drive operating strong and income margin transformation through dollars weakness. expansion economic despite

underway, and strategic stages. well in early XX-XX actions are transformation months recent our are off kicked in Our initiatives analysis that the with

creation, expect than deliver approximately We previously XX%, about of basis increased points XXXX. XX% EPS ROS have guided growth and in XXX long-term confidence our higher about and in to adjusted we value

that a we discuss across we and performance now in, more long-term portfolio. to will pass financial over diverse expect who call growth detail. continue our to and to results profitability Bob, All will our drive in build I foundation Bob? water the strong

Robert Fishman

morning, Thank and you, good John, everyone.

ROS quarter earnings. XXX driven sales start post metrics rose Pentair nVent new the points quality of All record of another separation We adjusted X% Sales Slide million. growth to Let's to operating increased XX.X% X X. from billion, $X.X by $XXX achieved expanded on transformation. strong and in while to income XX% basis delivered XXXX.

Core which to prior Water year in ship decline somewhat to by pool, sales by in X% due a record was in improvement large backlog XX% X% and decline in X% and orders. sales growth driven were Both chain period up portion of supply ability year-over-year, offset our the Solutions reported Flow and a Water a Flow Solutions.

segments X Sales from increased across QX sequentially as all expected.

sales quarter sales quarter year. second typically have Our of our highest the been

second first X the very to margin pleased see quarter. All significant time return in expansion to for drove X are growth Pool the quarters. We segments in

the Lastly, of end of by year-over-year. record the $X.XX high our EPS XX% exceeded post was guidance we $X.XX up delivered adjusted and split, nVent which

Please Commercial discontinue longer a record prior sequentially the but that quarter X% sales flat from Slide year. rose year X% an certain prior quarter, in year-over-year sales sales QX. compared projects compared to compared year. decision to X. Industrial record to met our profitability no turn last criteria. a to declined our XX% to declined reflecting Flow as reflected improvement Residential QX, sales were

expansion time reached XX.X%, marking XX% XX%. or expanded has points on strong return to of initiatives. margin Segment exceeded income on progress a was continued our result sales grew The and basis first XXX the ROS transformation

million, QX, and to X% sales declined Water $XXX both XX. declines driven turn Please to Slide residential. Solutions commercial in In by

down in backlog filtration ability Ice's driven Manitowoc through were We business with comparison expected portion of by pleased prior significant to We commercial QX. a to in orders. year record strength our sales be work light of a

expanded operational ninth to basis mix. quarter transformation, over have years. million Margins the X XXX to This and as was which expanded last nearly points XXX consecutive continued of primarily by efficiencies ROS on X% the points to return declined expansion. income drive Segment sales basis XX.X%, well driven $XX as

$XXX Please turn to XXX In our growth XX%, and income driven increased X-year on March, sales return to to target. Slide Day to up increased XX% we Slide Segment margin million. sales Pool Investor Please was XX. in million, turn updated points by XX.X%, At and XX. shared sales transformation. $XXX our basis QX,

sourcing, X ROS Investor as March driven key and points we transformation we initiatives, XXXX to over by discussed have XX%, expand as pricing, XXX to basis even do to better expect operations the And all Day. at our compared We contributions to opportunity organization. from of our XXXX,

continue ROS guidance. and we XXXX, to of year-end XXXX, basis from of an Please In to previous XXX approximately points drive turn nearly achieved expect to to expansion Slide XX. margin XX.X% by increase XX% our

complexity. reduce Day, our It's another businesses expect customers XX-XX help initiatives. uses accelerate transformation strategy at and the we mentioned customer experience in March As and XX-XX our we tool our to products. assess our The Investor and to enable to toolkit analysis quadrant-based a enhance

Simplistically, the profit. the first XX% represent revenue that products, quadrant total which Conversely, majority serve. to and but customers fourth reflects customers to reflects and the and drive products combination includes cost of X% quadrant revenue, of XX% roughly of a of

customer enable strategies product over We segmentation each on on expect segmentation to to quadrant. implement based to customer focus us

and result, date, a To our circumstances. time. take are make the but and decisions. assessed frees higher objectiveness about the we quadrant can of over XX% The As to is right tailored differently the on more data currently drive this actions total XX-XX to and about we revenue to each using have developing specific fairly, analysis the action our profitable customers growth XX-XX evaluating of organization plans. depending treating

the We see expect from XX-XX to benefit in operations. largest

and we impacted due required be believe also product effort new introductions quadrant serve. to the by G&A the fourth will However, to

analysis to our as is excellence We benefit efforts the expect program. a complement our organizational XX-XX We well. great to this transformation believe

to our out. expect Please process Slide flow to QX, dividend. to repurchases our In transformation we long-term XXXX the noticeable free XX. larger and capital and achieved opportunities. We plants contribution cash rolled of turn quarterly the about lead are debt, record findings, pay in lower expect million. deployed share a I $XXX it to and restart I'm see excited We to these as

shares XXX,XXX million. for During total of the $XX quarter, a approximately we repurchased

have additional We share program. million on repurchase an $XXX our available

ratio leverage from significantly debt X.Xx, was net year period. Our X.Xx in the down prior

Our was nearly XX%. ROIC

to plan to Long term, interest our environment the and capital. disciplined and repurchases. on capital to continue we rate target reduction return with higher amid share We continue high-teens on invested focus debt remain

additional capital debt As our range, to additional with last net the we target I ratio with the flexibility within allocate areas quarter, shareholder return. have mentioned strategically leverage to highest

to Slide XX. Moving

Also end economy. to the for For to the guidance we high the to driven XX% increasing our full of down is a EPS is at by year, up we which X%, are year-over-year adjusted continued expect and approximately sluggish previous guidance approximately full our range. sales roughly $X.XX, flat be year,

anticipated global half reality The reflects the rate a continued and of higher XXXX environment economic the impact second landscape. of on its interest

in markets Flow about and means around this is in back million water expectation higher pool, our by Pentair, half this is revenue and more of About lower-margin to For drive recurring guidance. Solutions projects commercial delayed industrial the at we profitability. million and treatment is the $XXX slower About about being midpoint Water global expectations which in and primarily of are end million $XX in to pool the builds primarily reflects $XX is and focused $XX related residential, revenue and standardized of lowering offerings remodels. million services

Flow, digits single digits mid-single high to single as be Within and expect selective and flat sales now be expect Solutions be certain residential for approximately continue Water approximately approximately the digits, to mid-single Pool to low be to approximately roughly year. Flow industrial We around and be projects. we we commercial up to full down up sales be to digits down

Solutions, commercial primarily to We're single to down operating and Water also be to expected low we approximately due to be mid-single XX% adjusted residential down updating services. increase expect to XX%. income approximately digits Within to low digits approximately

lower to despite We revenue. are our EPS the able increase guidance be pleased to adjusted

We are previous $XX million savings $XXX XXXX increasing guidance, million in expected to productivity. driven higher approximately as by for to compared transformation our

to to sluggish our We we quarter, our X% increase economy, but inflation. to businesses be down our continue sales initiatives expect XX% expect pricing to to continued income for higher-margin on Due mix approximately X% offset operating improve the of to and third XX%. focus to adjusted

strong the guidance approximately XX% introducing $X.XX, third adjusted quarter also at the midpoint. of EPS to up are for We $X.XX roughly

our questions, quarter pleased I I performance. how call record we over second to say operator turn with the for the Before to want are

working been financial global our economic strong continued Our working pressures, XX-XX. effectively to mitigate to teams have now executing which results and transformation, and initiative while diligently like risk uncontrolled deliver major includes

the and proud very Pentair dedication of team. are hard our We work entire of

like would to questions. a will after John call for please over few now the the Operator, closing for to you. I Q&A, Thank have remarks. which turn operator open the line

Operator

[Operator Instructions] question And our from comes Andy Kaplowitz from first today Citigroup.

Andrew Kaplowitz

break in can or us you your remodeling. assumptions Bob, and John what fiction seeing give Pool, more regarding color for you're

talk in you're We are mentioned thinking remodeling. I pools. But a assumptions your think selling weaker you strong what at 'XX? about aftermarket, the you for new obviously for How know to you could this point inventories are what channel for channel? concerned you or baking

Robert Fishman

pool I'll Yes, grow year. full started perspective, that the go question. year thanks start saying to mid-single Andy, up that ahead for from with now we Again, our would X% the We've one, digits. guided approximately and

an and digits. be that that assumption significant of a As of happening not inventory is a reminder, mid-single from last the growth this is overall then market points roughly plus of down price will couple correction the a piece our fact coming year, year's says

get that's seen build bit call, year. a new to the remodels, last brought guide earnings why the how reason for and pool little we our mid-single-digit Pool growth was we have And that From and for we pressure of so our our season. down the on

John Stauch

year. easy just a that versus I reminder, add really low compare number we Andy, as had really a in last QX would a

is in last outside reflective anything QX rate than growth this is of the performance so year's of And is performance of it more the that year.

Andrew Kaplowitz

you've the then for 'XX? How and million. year is talked got all days. like It to transformation early is in for that target of seems $XXX much sort your of the But 'XX. you impressive this And guys. XX% it's And XX% helping about helpful That's target impact XX-XX. raising obviously, productivity it

little upside thoughts it does that bit any you case give So as impact go confidence you could XX-XX for 'XX, a how more towards example? 'XX, maybe on into

John Stauch

Yes.

included half of the in on of we'll training not guidance. the So streams. was fact-based it sessions roughly the have first update days. Investor our roughly completed and other done is the XXXX Very all, next little targets. And longer-term our of XX-XX revenue half XX Day in our We analysis XXXX in

learning to it we can encouraged what and very and go that give we're improve we're forward. So us does continue as margins finding with we confidence

Robert Fishman

be very increase from $XXX as that Think to million. also our of coming were to well. with transformation $XX pleased piece our We from savings to org as able the and manufacturing million primarily sourcing helping excellence savings

Operator

Blair from Bryan Our next comes question Oppenheimer. from

Bryan Blair

in benefits the have transformation, up stepped To on up you obviously, accelerated the quarter, year full follow guide.

that primarily sourcing. it's mentioned Just from

waiting step the terms we we think just to in it's that overall, there's waiting? of the So And how think half should contribution? segment back pool should QX in QX, somewhat that up, with

Robert Fishman

From and the significant ROS QX, the perspective, main expansion gave we guide in Solutions. then we'll both quarters. QX and Water the business think be our back in Yes. the Pool We terms followed for Flow for the do by in guide will see half implicit of that beneficiaries

Bryan Blair

And was the the QX a you're Understood. I and We and challenging said, commercial you could in what revenue know Menis out then QX. if anticipating in half across very Solutions KBI, back Water decline wondering parse in I and business by particular, in comp Everpure, line.

you're curious outlook factored there and the Just what's into now? what seeing

John Stauch

service $XX to adjusting our Solutions decline most million contracts our a mean we're the Water be services I in participating would within for year. from that adjustment seeing that. That and of not revenue is arm, Yes. in reflect KBI the coming down low-value we're roughly

$XXX low under digit XXXs it perform year. were And And year. rest Ice just to expectations. as a Manitowoc last the in we of a having this revenue filtration strong in double We'll reminder, million business the really year. just be continues to is of grew they're The QX and

despite up ended having we backlogs decent record last that So we're year shipping. execution through managing those a really

feel good I Solutions business. Water really about

We treatment and think of are half but think the global year. improve revenue residential lower I of it's tweaking don't business, those a that's adjustment small our non-U.S. reflecting back related some that the water here, in streams we And businesses. that the reflected will

Robert Fishman

filtration Yes. North America And the reminder, businesses a very the business, us. are for business, just as ROS Ice profitable those

So Gap] certainly [Audio the work mix

Bryan Blair

pricing and year. over know you're of maybe year. like should the to looks for out It I don't -- how seeing about assuming you're points that X environment there the course Talk the the that X trend

John Stauch

expect And of Steve. that correct, should to That is we think the the year. don't now I and rest we're between outperform that going

we're pockets to we don't pricing. inflationary being there's incremental go enough -- that of round think another able I is some areas, of out but significant recover inflation the to feel with of

the So that prices. doing think we're the best can good. I And far, so and original generally we list so

C. Stephen Tusa

Do you, and going all? flat in at see price like at time, pool point any to down

Robert Fishman

out, At not and I X something the price of point, We halfway we No. that do see we -- happening. half. expect in back the reading similar have the have of year, points

C. Stephen Tusa

this for these on million for think year? then before. on year that was are numbers the $XX some And number? you now do bridge, was the productivity of it you What Great. the around the guys just I but like Okay. pretty expecting expect quarter. what solid guys it,

Robert Fishman

and $XXX prepared and -- split roughly now about can as between between million think QX remarks, you that in my QX. evenly

Operator

Lee Sachs. Our from next from question comes Goldman Brian

Brian Lee

maybe guess one. on a the I follow-up last

some it any, to initial in XX-XX You know XX-XX you this from do to the impact sort would but you million $XX million? the give what million of you've kind initiatives 'XX read into of how been of if year from with you $XXX transformation $XXX able to compare any contrast sense, your and of sense much, I kind when of transformation $XX to have compare going on just 'XX, raised don't the million. us benefits the can

John Stauch

Yes.

transmission Let me quickly. hit the real

are say confidence was most I funnel had reflects fair had we And now that the of that the always think with an than side. internal in now the we of think had to that beginning what year the in higher programs $XXX internal being internal it's funnel million realized. I we the

where we confidence QX. level is so that's And our exited as

Quad note QX, in that in that expectation at year-over-year had important in what a the and we had difficult is. reminder, the what I we math When and the confident now lowest very works QX, which performing it's feel we strong way is to transformation we look quadrant. X, think that is call year full we As a XX-XX,

products lesser to customers. These around would desirable revenue. of X% roughly be less That's usually desirable

possible to structure. So be the billion-ish scenario. stream, reflects frames $X quadrant same about cost of usually about XX% company's revenue that at would that, think walkaway what a worst number just revenue the on generally That its

utilizing Now but going XX% X. all of it's Quadrant you get nonprofitable people's how work being starts clearly efforts, not pieces it because that to to out tell you're about

you're or to gives overserve So top to as you better customers, labor should service to reduce the from sales time your rates. spending your be of Quad NPI your that yourself products marketing you generally redirect which lot and able release and your you or efforts better X an overall to a your ultimately and on, level a core reduce create

another out ideas figured lot don't any Pentair to through we whole and the as is XXXX. list And the us it going everybody all have goes not encouraging yet, optimism but than the math businesses of into who else transformation gives of it's program. for for that the we is that really be a So different for head

Robert Fishman

that perspective, complexity with allows and my the QUADRA brings products simplify reduce quad us to perfection and it business X. really things best X best tremendous to really our to From matter be seek in in Yes. the focus and customers

Brian Lee

profitable out these it of to And Bob, walk the some market Okay. kind a on which revenue coming structuring business Appreciate just at is more driven? less just this that's Is midpoint the approach prior percentage guide. all helpful. $XXX the there on then, million year Super the any of you're being driven The revenue. how guidance being of versus for proactive lines, exiting by versus goal color. that, mentioned you

Robert Fishman

commercial profit Flow XX-XX. overall selective comes there's we're I the helping more down, be the lower streams would in say to to yet services XX-XX. revenue would significant as mix. be nothing nothing related within relating happens directly But reduction, those as to There revenue

Operator

question Jeff Capital from comes Markets. next Our Hammond KeyBanc from

Jeffrey Hammond

of questions. foodservice. it more a the In is kind from than general, just something And seeing Water broad speak Starbucks, weaker of general on consumer commercial what out One, synergies out Solutions, a et strong. Is or that just or then you that? we're filtration, commercial is cetera, you're seeing Just called attachment results of mixed to in there? couple

Robert Fishman

I the Ice coming would and starting Yes. talk of say benefiting the from that breadth about have Manitowoc really we our North our synergies dealers acquisition opportunity we're distributors America filtration and Again, business. visit offering. the to

cross-sell opportunity filtration the to in all different the have business a have benefits that accruing up and it's Ice. We this the a setting at trade way, to are opportunity and selling Everpure we both products. whether Those are go And show an year. to to market

John Stauch

the step-through think products. it's be I traffic time, serve. John. we do challenged even comes may Jeff, this your more to industry. replacement is little And from lot to though our of the stable And and the to related side it relatively for a quick question, a answer a time when I mean,

Jeffrey Hammond

a put Okay. post destock some just little me on color little it's if getting more just kind bit of of less And you're a a the of or absence feedback just this point pre-announcements, on what a then and inventory levels, finer sense, give that. Pool, on just to

John Stauch

we're and 'XX-'XX where near disappointed pool to for Jeff. lows the we're the Yes. in new crisis, financial mean, close pretty I'd were historical say, build I we all, in mean, of almost the I year. first

of really about begin looking mean people spur to I the start remodeling for movement part So in and to pools get interest move to and homes rates the we're attachment. hopefully think to as that side

segmentation home way high and dream to we -- they're do That's is the in of retirement the or buy funds states. utilizing retirement generally and income end a still the on to Sunbelt works, the on buyer, cash end really high Overall, strong. the

the really we has and the remodeling slowed. some It's believe of that mid-market

suggest dealer a is that in year, a here by little downward the adjusted remarks, in we optimistic why And first we would guide it's of half of so the we than enter we our saw the less points. which of as half couple the our mentioned second as our year pulse

Operator

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

Deane Dray

mentioned Flow the -- in of there? the you any provide was color some It's prepared Can remarks stimulus seeing that government coming you through.

John Stauch

just and some that right been a Yes. spend that segment got overall, And feel I it's we mean the expansion now. we're there's I activity really we're we of solid fair focused had infrastructure in is. think on participating to that our an programs pleased pleased with marketing where really amount there, think that I fact focus

Deane Dray

of you Got in it. contribution And what the are kind for expecting stimulus? second half that

John Stauch

infrastructure in. Yes, the to of of the struggling that little getting as not spot a invested I'm in in nice but a to as interest construction spending the area, government from at we it's continues been lack it construction that And and summer here the participate of that modest. all rate some we're out which We well all. season, called bright sure in of offsets and see are be elsewhere. benefits much It's as particular area economy you're with some that road funding

Operator

comes Our Jefferies. Saree next Boroditsky from question from

Unknown Analyst

on Saree. James This is for

kind So Pool touch on I of wanted here. to

down growth XQ. strong the and in what very through? break Can what's -- was like kind you So by from contribution of selling it the sales alibi, like

John Stauch

And correction year for in generally what at sell-in last there inventory us. this in about year-over-year sizable a rest QX of Sell-in the math year, the quarter Yes. X% happen, was and was the was which really wouldn't the sell-out. in comparison sell-through flat happened

Unknown Analyst

I Got the wanted understand to it. better. of Pool And kind guidance a bit little

XXXX. in prebuy a of lot second you So delivered quarter like

prebuy? should think the how guidance the does XQ to Like what we about So year? this

John Stauch

we is residential a forward normalized across and really interest half for businesses second modestly that Right look and of lower So we say as take what Pool a the reminder, we'd of we the increases have the probably environment prebuy down next starts the of in we that as the think XXXX, orders price year, QX XXXX. rates QX won't reflecting previous those in ahead from now, to benefits we year. see

Operator

Paribas. Our question Andrew Buscaglia BNP comes from from next

Andrew Buscaglia

Just wanted versus costs you like, to XX-XX that where segment, X for pool about other? maybe to more those regard? in about in in any you And accelerating this costs details, beneficial you're within finding segment just transformation specifically talk or talking particular, specifically are each more -- then if could pool

John Stauch

different. want has X% we the your it stream X% is it look got math-based just there. to straight mean of the equation I is lesser again, start at. that revenue is, revenue roughly quadrant, in And same be desirable every falls for which math, the products Yes. I to to less-desirable customers. and same. it be It the lower won't any will right It

to It's execute in pool of Quadrant what harder significantly the for because they're higher their on some than margins seeing reflective we're overall is other of businesses. a margin X a

gets it in quadrant exit because more that you in in challenging quickly to love fact bit you with money fall a the little a business that Pool. like still making So are

quadrant, produce new The taking reality taking away new and to from serving top is and that from to your that products you're performance away programs top products. by and those marketing your sales customers, you're your around ability

profitability and eliminate to is the a will would deal in answer right it have So that can your Does pool are other entire with I challenged X little the lower the now, businesses bit to move more same question? Quadrant who in a across how X. organization. impact say faster Quad standpoint

Andrew Buscaglia

helpful. very Yes. Yes,

M&A? a and really there? this of this in a What as terms seemingly And point? flow then cash year. about Any thinking quarter Yes, strong we are you your capital little interesting. that's anything thoughts at buyback changed -- Has there more and/or exit the Okay. allocation on profitability was

Robert Fishman

million. debt allowed flow us half first close We've I'll of $XXX Yes. What that's is to pay also million Again, of with do second quarter, cash pay the free the restart in in the share pleased over the very the been able continue down dividend. to in And our repurchases quarter. $XXX to to generation year. our

drive about XXXX, value. the in a created of delevered of when Ice If our you leverage now we the shareholder think down lot for acquisition optionality and closed back X.Xx in to Xs. high the company July back was Manitowoc to We've

sense have the target have dilution. we're our debt we'll at year the that to make interest nice a net come of variable end down obviously we But EBITDA. paying where continuing rates So to see continues to the problem to debt offset below

lots around bolt-on again, options accelerating So repurchases share M&A. potentially of or

Operator

Stifel. Jones from comes next from question Our Nathan

Nathan Jones

I the couple of wanted XX-XX to on initiative. a questions ask

just on -- it what focus more comments versus what the products? made you're Is it to about at going decision, to little segmentation. goes how like into a guys one versus a you bit Pentair? focus into manifests that that bit itself So little product You easier was of decision? Can you talk customers customer just on goes segmentation

John Stauch

talked because customers self I parts way parts. And the it's appreciate you're is it's think do your only I question. those we what actually. all No, selling XX-XX Nathan, parts. and do the harder complexity. create and ultimately, these Yes, determining to you're we own about, and to why really introduce this selling mean usually it I the way did right your are design

accountability we're take going basically customers Bob treat to said, to and that. for fairly them. have we differentiate how But really, our serve So we as

buying buying are all not all so customers quantities and of levels our And expectations. and are same the customers transportation not our

It fair So pricing harder. customer have to and it the is across transparent because and base. honest have takes we longer

same what give to the then notify to We And but at we really that's accordingly, right day, we're volume the work everybody purchases its obviously, which the time the way them the work the buying doing, same it we on do complex quantities. because not going of and everybody have someone can't gets to to end we legally who's that we're that give delivery. compliantly, can't the it, rebates discounts volume takes And making sure and we're through. and

Nathan Jones

question, target to I may Quad 'XX down think a near-term that create It than next some same guess lower get that the some but near-term targeted? the revenue. that's sense. case around getting got and create the FY different revenue XXXX with bit. to in with about for growth out headwinds point somewhere Should a long a will and typically to flat revenue, increase usually to start little originally term, XX-XX pathway reached we margins higher X where but to base that quite Makes revenue guidance the headwinds

John Stauch

in X% away would What term and therefore, a I know it, possibility, yet That lift. the answer don't little we margin is be you total don't I question bit revenue. usually to obviously. we be could a there and out framed I'll X% but period, Quad know short-term pullback, is any with a I from the the of would cost get walking quickly. mean of you near yet, your that X Nathan. shared that in

this able because across a though growth core and we're increases same we and confidence to not would top ROS yet could certainly, we be. some we dollar on give is it customers to our the time, be fact to looks greater rate. like think than customer math historical level rate hope And What be that might faster you're the that have could grow the growth probably what products feel experiences don't at like wrong what forecasted go lower. our our to know I of our and growth leads will of the do that that XXXX additive I this portfolio. -- in Bob

Robert Fishman

agree I that. would with Yes,

think quality X, improve on-time with higher quality, Quadrant delivery. focused I remain We up we on lead higher fanatically times, we end margin revenue, and revenue.

teams growth service How our have We best drive working with can not Quadrant that best in customers. our help X.

X. we overall the our to top is reducing Quadrant expansion view up net on then So ROS the and costs and continue better end drive line through

Operator

from Julian question comes next Barclays. from Our Mitchell

Julian Mitchell

just Maybe of levers. around the first operating some profit a

good you've XX-XX. of I transformation plus productivity the quarter understand, $XX to then just year assumption in think savings still the it's got would second So waves next into half. a million the be And

out So next starting is sort million that quarter reasonable $XX year. rate placeholder a a of run

check right. I ahead just wanted to that

inflation that unrelated And quantum op a net year-on-year headwind profit price in through sort Is half? steady to QX. expected of of back the remain to was headwind of

Robert Fishman

second below at would versus mean inflation. I million. turn I out read year-to-date, take around Prices price $XX $XX inflation the I'll say one slightly we're at first. million, the Yes.

to higher continues little running inflation a be So than what we thought.

back I end roughly catch equaling our half, goal price would inflation. the say up is to year, in and the speaking,

the rate certainly significant that, help in be early but will expansion into and accelerate goals. transformation, of our give year too to XXXX us of On transformation going calendarized next for next view year a run kind ROS

Operator

question Our Damian next comes from from Karas UBS.

Damian Karas

progress. transformation the on Congrats

John Stauch

you. Thank

Damian Karas

of a just for Pool, underlying markets comments still of less an to suggest being or earlier do up presumably first now, of kind you years, extended rest just or X-year like which normalized on the for some first, more the more market business curious, down given what the the time So of I'm year, being in year-over-year your follow-up in cycle down of XXXX? few but less, a kind channels looks kind Pool would recovery like think a for

John Stauch

earlier look agree it's type it's has yet. your agree to I don't anything And point, too a or early point comments. with pull-in in tell of all cycle. X-year there's to which been quite when X yet any Yes, I It to think been we do frankly, related that you COVID.

year, to And a in think We level, XX,XXX get and XX,XXX which ease. beyond. of lead increase 'XX seeing interest this and by starting somewhere pool kind more aided rates be that XX,XXX, as historical around definitely -- hoping to the level new forward would we're just that from builds to we'll head we start

growing that we from this we're I forward, to year-over-year point think still the we're pleased despite growth. I think returning overall, think challenges. And

Damian Karas

as opportunity. your the put product maybe PFAS you appreciate sales thoughts. know of product as necessarily just there there? that's the I I a you the is maybe expansion haven't speak firmly number And you Okay. some that, to out upside PFAS Or if say first over target commercial your PFAS of launch then the line. well existing you've could in around your medium term? would But mid-single-digit called

John Stauch

helps. it think I No,

propositions slightly mid-single all of to reason make continue working us value service-related high-quality going value the a of our our our I the customers gives to in been It with digit. be I hard mean, that it's it's strong think food of understands the industry. and in And customers brand it. water. definitely think a want partner to We've to market that. in I to that sure that segment understand and

to drinking make start we expand as and a want that Ice our also adjacencies value all of footprint. We to filtration the water higher the sure footprint But other capabilities. certainly our expand understand

very sure ones we're the value about a beverage. we coming directly proposition that for in that starting excited or who's drink and to serving to make customer title food-related that So aren't we're the offering, a

I the institutions think think about as schools, that backdrop.

Operator

Bank. question comes Our from next Duetsche from Andrew Krill

Andrew Krill

the and you for X%, the down us to I quarter? to touched but really growth, being it's a of believe just can don't Flow, by sales guidance segment now for little with kind low Solutions Water growth from think help X% been and much there expectations obviously, flowing I XQ into the sales third is And single-digit inflection what's that that area. as that maybe the down surprising, say down for Pool

Robert Fishman

Flow Water and that down be to up Pool X% for slightly. to expect down X% Solutions slightly For and QX to guide, and we be

Andrew Krill

And Great. quarter, impressive. margin Pool very of for helpful. in then Very thinking second were

that to each coming level of bit you all you those factors trend trying do X savings in but year? tend offset have the that I other? you transformation lower, how seasonally, know maintain to expect can through, Just they half a margin the might back the of see

Robert Fishman

Pool have of for the to in expect half similar do expansion the We ROS year. story Yes. back

we executing very some growth again, see, slight well. able So They'll the back they're impressive get story. half, ROS to be should so in again, and expansion

Operator

from from next Research. comes Our Seaport question Scott Graham

Scott Graham

been questions, Two answered. have mine most of

get of par? does to the On work Is the have prices get for the to for anywhere that sort to to to there? price X half second cost year. parity to Do catch X math -- the get you up increase increase to that the

Robert Fishman

base. half the around of X% That's points in we think will couple out. us cost million Again, gets remember, is Yes. to $XX of turn. read what a at Again, the about close very the back price of inflation inflation

think out. to inflation. seeing play we space. be But the freight goal, very commodity our Again, and equaling inflation similar something space, close so price we're will And we the overall, should in

Scott Graham

At price plus think I X%, saying you're yes?

Robert Fishman

That That's price X%. running right. about

Scott Graham

And question, an easy the one. second it's

in from first second higher? know the quarter a just used is maybe to more restarted go the number, we good wording share You events the that did time while. here some means, number for this repurchase that Is repurchases. quarter what a use share maybe that that don't you I

Robert Fishman

offset is think our Again, dilution. good use. purposes, for goal number modeling We it's to a to stated

quarter $XX what year. the we've million built a the is kind the balance of of guide overall So for into

Operator

from comes Our Joe from Giordano next Cowen. session

Joseph Giordano

that a So because and how price anyway. prebuy? in can on of you level just maybe curious out does on up productivity trajectory give or to seem margins costs in of I like future volumes bit pool, much you're that out know are organization a of you taking on like of little like getting good calculus the your willing put willingness you're around desire the to the you keep

you more flexibility to take otherwise like So would share? you volumes than some just to and to give have release maybe more protect

John Stauch

and in want just Yes. I QX and to have it's is really and QX factory. Otherwise, more little I QX QX our make just -- in and a and buy all QX very done sure, we'd the revenue early mean, of QX.

that as make we decent a employment into that make also level. can we and level level consistent the still a head maintain comfortable we decision we're based keep year So upon profit of revenue to with what sure

So that's It's early season decision. that now. that approaches, the call how And right too as discussions the the make team. we with make that's to we have Pool

Joseph Giordano

treatment. another PFAS the want that's like on removing to multiple then product ever like this of solution is this an I kind commercial And of customer solution a Like top -- have? Or multiple just secondary pure clarify, enough. contaminants? Fair an on that is a here. would just doing integrated is this

John Stauch

add-on answer Yes. currently yes. to is an is we That have. what The

Operator

Tusa next And Steve from JPMorgan. follow-up from a is our question

C. Stephen Tusa

I think what just trying It into you I Pool kind the of you guess, increases like in maybe, that? the so driving Just delve what's inflation by wanted into wanted comp that guys? more other I Like question, And went to mean as and and nature? could benefit sourcing sequentially. you're stack pricing seeing looked was this for whole that like number? would a to category disaggregate just inflationary in versus Just to follow-up be cost inflation on like wondering, what pricing. a basic maybe to touch delve just just the down really

John Stauch

Yes.

do year, in commodity still of inflation suburb high, that have the the being inflation especially materials labor higher that overall labor little inflation. Mexico areas we everybody that couple of a than this Also the remain U.S. one saw Steve, our is experiencing is So raw core a expectations. some areas. significant

say, the are abnormal inflation in the those year. I the So

far have distributors, it levels discounts work also feel look and out. pricing do to year on a But dealers, as the at As because give all give full aspects, it basis, rebates we within overall, do it in when a like comes you But usually we little we on the through you abnormality the quarters. bit could to of as you forecasted number. right periods,

Operator

like Officer call and be John closing gentlemen, conference Executive Chief President session. over with to the question-and-answer concluding today's ladies that, turn Stauch, to for And we'll I'd back remarks. and

John Stauch

you Thank our us. I key closing, want reiterate for themes. to In joining

across water margin portfolio expansion consecutive ninth significant the drove execution our solid quarter. balanced for First,

dynamic Second, to and we environment. guidance, ROS our EPS and maintain in and continued where in agility risk a ability our reflects can we are XXXX strategy which adjusted our increasing mitigate confidence

and transformation expansion. drive continue our to XX-XX initiatives strong to effect we Third, margin

fiscal water beyond believe a foundation solid deliver day. finally, strategy year. the execution great to to have continue XXXX a focused And Thank value you, our we and creation are building everyone, and

Operator

for attending concluded. now We has today's Ladies presentation. and the conference gentlemen, thank you

You may your now lines. disconnect

Pentair (PNR) 23 Jul 242024 Q2 Earnings call transcript