Pentair (PNR) 24 Oct 232023 Q3 Earnings call transcript

Good morning, and welcome to the Pentair Third Quarter 2023 Earnings Conference. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Shelley Hubbard, Vice President of Investor Relations. Please go ahead.

Thank you, Anthony, and welcome to Pentair's Third Quarter 2023 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 third morning's today's in as provide release. outlined call, our details

GAAP can and Investor slide not be release and of provide is to of a you which measures remarks prepared should between our financial supplement we earnings measures or reference. reconciliation for will On the our financial website, during in find Pentair intended accordance Relations and measures deck, non-GAAP as non-GAAP today's differences with The considered superior GAAP. financial that prepared the substitute a provided to performance call

in clarifying to these further as impact investors on included items and additional are events They financial items to addition results. have the company's aid performance, the in understanding the

that Before our about which predictions, we projections during or forward-looking presentation today, events. remind let statements statements, me will make are begin, other you we future

statements to factors These differ risks our predict our can these the We most from Pentair. and Form of that to to expectations. cautioned actual XX-Q review listeners results control carefully cause are Form advise generally difficult current and are certain uncertainties, and risk of are and subject materially Listeners beyond which many the to risks recent uncertainties in XX-K.

to A hand that you to to Please Following ask opportunity your our X, call prepared before to quick remarks, reenter for which allow up we reminder I in will order ask we note limit an the we questions. John. will over open the to everyone after call questions. the queue questions then

social galnce, Pentair. through work Essential, overview has are have our included to better recent which slide for making see Strategic at slides in Similar X its titled that more of X, to the Pentair recognitions for and Slide received we provide a Pentair ESG. earnings share responsibility proud a and Framework, quarter, making to in included Slides Pentair In essential deck, information. we reference X Battery brief Please X last overview

of Index evaluated for XXXX our relation of profile good recognized to been environmental environmental This and industry, Newsweek factors, to water from performance America's and as have emissions, a constituent our named waste We've in progress against commitment we usage, the one recognition Greenest Pentair's Companies, sustainability by disclosing been FTSE greenhouse Newsweek. and series data. including key gas assessing

Pentair's into our our product more innovation, of as John. social reduce achievement now XXXX sustainability turn look guided strategy. water Responsibility for for supports smart, our Corporate I our the impact sustainable on people refer responsibility strategic We over our purpose planet published Please sustainability will Report the and world solutions. environmental operations by further better to continuing to the call create through to integrate our a targets. to in forward to information

Thank you, Shelley, good and morning, everyone.

Let's on begin with Slide X. the executive summary

adjusted We our over third the of margin which very sixth of the expansion. last with earnings our QX guidance quarter $X consecutive marked pleased that surpassed consecutive sixth we are on the sales and provided billion call. quarter quarter results,

prior points. was was flow Segment free our million, income $X.XX our EPS XXX XXX% $X.XX $XXX and by increased up X% year-to-date cash $X.XX. to basis expanded over worth And versus guidance of previous the Adjusted year.

our to want EPS which end we As adjusted reflects previous $X.XX guidance I of guidance. celebrate the range results these our strong employees. to high updating XXXX $X.XX, we look full year, the to our with are to

during for macroeconomic of our a our Your your customers and global a difference. year shareholders you resilience uncertainty dedication for value making and delivering is to Thank serving leadership.

the core sustainably and and to right world are deliver mission help enabling both titled driven the X, Technologies, deliver our XXXX. enjoy we & investments profitably Slide across future, in Solutions X and Water to productivity water, Focus. profitability Flow Pool have Let's core, drive the our Strategic all to move Industrial and for the And long-term Through we move, improve build shareholders. segments, value to

also and and sustainability, we the build talent focus planet for a in products through solutions We investing develop have with our a making our people essential higher and performing have been in to better on been people culture.

focus strategic and further In accelerate build of Another transformation, we is to innovation to ours our have in XXXX, M&A. performance. future invested

In read across these launch our Manitowoc year new exceeding our coming is results products new all innovation Ice of areas have X to transformation having seen this with out segments. all fact, acquisition great exciting with we expectations. And and in X begun

businesses in meet high-efficiency XXXX, to the designed icemaker for and regulation products. for fast EPA stores convenience new XX Examples restaurants, new launched in advance future have our innovation, Regarding refrigerants. include, a casual

Expansion of series, STAR continuously IntelliFlow filtration with Smart ENERGY award higher beer the and of our levels X winning smart advancement pump solutions and membrane operate to automation. our of

great make commercial to In our centered future, and industrial they on addition new strategy longer-term treatment launches, the to as innovation solutions. water future our the progress teams our growth our theme waste-to-value these residential build reimagining on continue focus of advancing to Pool product

have products. Over the over XXX last X new launched years, we

our to Transformation years of the Updates. nearly business for XX embarked journey We titled Slide on X transformation ago, with turn intent to future. the the Let's this transform Pentair

evolved and company. has a leading diversified then substantially separation water with nVent company evolving of the Our to

excellence our organizational drive tools pricing, to sourcing, Through productivity. more in our we add and capabilities, and themes, additional our transformation which operational growth and key including toolbox are processes X building effectiveness, streamlining

the scale year, this QX, initiatives remained a pricing we in increase implementing the to In that note begin in transformation and our of After track. gained from expect in sequentially sourcing, to both substantial second drove and X to QX. pleased we are half on Transformation productivity, Transformation momentum and Wave

with ]. delivered turn ROS CEO Slide Let's expansion. quarter titled XX, significant to [ Submarine another strong We

to Manitowoc continued exceed Our expectations. Ice acquisition

segment initiatives Water decline volume drove Pool's IFT margin our offset more and Our than and expansion. Solutions transformation

EPS growth profitability, drive our across adjusted update Our guidance. portfolio. Water XXXX Diverse resulted in All we strong to a QX to building in, performance and long-term through are positive foundation another

updated $X.XX. to range We of to from adjusted range have full the $X.XX, the EPS of year to $X.XX a guidance $X.XX previous

the of global mindful we and macroeconomic closely and are monitor across to macroeconomic the geopolitical landscape where developments when strategies continue necessary. We mitigation and implement risk and uncertainty

have investing growth focusing continue initiatives, in funnels the continued while We transformation We return. accelerate drive to our on Water shareholder confident long-term model, long-term to expect diversified Business company. of and to transformation our our remain which we in strategy

generating We consecutive allocation. teens years have targeting flow are of strong being ROIC. and increases achieved dividend capital disciplined track high XX successful We and a cash with long record of

will financial to Bob, over a will the I track balance financial We call and discuss now sheet strong pass more enviable have an performance in and who Bob? our detail. X-year record. results

John, you, morning, Thank and everyone. good

Pentair delivered Performance. expansion, another Let's Slide strong despite significant being X% down margin on QX of XX, quarter start XXXX year-over-year. sales We titled

more lower The down continued QX volume Core margins. impact offset residential year-over-year, diversification of X% were Pool's transformation our on sales driven portfolio to than initiatives businesses. and our for our by

industrial businesses quarter. and in commercial well the performed Our

primarily While the Pentair and negative to Pool, QX declined QX. volume sequentially the in headwind Pool volume from due sales improved impact on

from and cost and increased points improvement on driven expanded $XXX by This from Transformation, versus acquisition Third productivity accretive to some XXX Ice year-over-year million to sales Manitowoc X% was margins the XX%. price quarter benefit. basis primarily segment income return

count million. during $XX EPS and million delivered $XXX.X the rate was adjusted a XX% share with We was our $X.XX. adjusted expense of quarter of nearly Net tax interest

Which Please & sales year-over-year Flow turn performance. than labeled Technology and Technologies of growth to sales Flow Industrial offset sales more QX growth X% XX, commercial by decline Slide industrial residential XXXX sales Industrial XX%. increased in a & X%. X% driven of of

sales return expansion fifth greater was strong basis our to or on of initiatives. progress a and consecutive of Segment marking XX.X%, on improvement. income than points expanded result equal of margin XX% transformation grew points XXX basis quarter to The XXX continued the

years. IFT's underway driven a industry revised leadership continued over last success that been partly was the X go-to-market and strategy by has

For businesses, our to industry above strong ease solutions, on with primarily pandemic. away business our to and We've of industry expertise growth. doing in example, reinvest standardized distributors lines within project-led focused key product moving industrial the accounts begun is have from driving reputation sustainable business been following our and

business as businesses and our centers space and data buildings. government commercial focused beyond are and Within such hospitals, IFT, on driving airports, warehouses to in universities, institutions, office we

in believe driven as in water, investments also the Act Jobs there control clean Legislation and large Investment municipal infrastructure focus in broadband. Infrastructure on and by We are with a opportunities flood U.S. the

equipment of one drilling Interestingly, our customers the in for leader directional fiber cables. is optic

product We continue good aftermarket the of growth, base. for a significant installed our future believe to because opportunity is

a strategic in businesses America as When Act Lastly, compliance brakes, a to products to fixed. us normalization. and America Build return is to give our well IFT, we benefit Buy advantage. are typically we we discretionary a have Recall strong it pump seen not it's the are Within from to a spend. these expected that believe our pump residential or critical get a a position sump

Please return labeled XXX million, Manitowoc Performance. turn sales productivity price. sales by Manitowoc income grew Segment our to QX, to our QX by Slide XXXX Water to acquisition on $XXX driven XX% acquisition Ice million XX, Water driven Ice In basis primarily initiatives. and and accretive X% increased Solutions XX%, our $XX Solutions transformation and points expanded from to

stabilize. that Water last QX last XX% This evident was the quarters, seeing residential Solutions, Within our in in of as over in North from of QX expanded XXXX. are have we improved noted X sales QX. America and and from Business sequentially to quarter XXXX Margins XX.X% QX, Residential decline we

expectations. filtration QX business Manitowoc labeled and exceed our Ice sales Slide in strong. Please continued Pool Performance. our remained America Solutions, turn to to Commercial And XX Water XXXX Within North

XXXX a to channel And in XX of significantly In decline The volume Sequentially, primarily points continued inventory from XX% QX comparison. reflects QX. QX, the due volume Pool improved quarter. was strong the sales corrections impact declined million. of negative $XXX to

turn our Pool volumes pricing our rightsize and price illustration initiatives. ultimate the to lower basis partially in Despite XXX a points The driven initiatives to points, lower to initiatives. Please QX, due of expansion. XX, inflation, on prior X goal margin and direct of driving to transformation with expanded transformation labor last our this by Similar actions of volume Slide sales sales quarter, benefit slide believe provides offsetting helped labeled productivity improved decline. good transformation align we offset to return

excellence transformation our effectiveness. on initiatives X themes: operations reference, For excellence, pricing focus organizational strategic sourcing, and key

strategic expect of line to in pricing mentioned X we we've quarters, benefit past segments. all top the of actions our As

other expect X structure. improve help overall to transformation We our cost our initiatives

ROS Expanding points we XXXX. As targeting of are fiscal to the approximately of end by basis a XX% margins XXXX. XXX compared over fiscal result, as

Runway. Please labeled to XX, Transformation Slide turn

As in various you can work within of the each initiatives the at transformation different you these key that see look X is themes, stages.

readouts we early X For begun see pricing, from within have to example, in operations. and wave sourcing XXXX,

to benefits margin Wave within out beginning X read X these are themes expect of We in each XXXX. and

see how just strategic has can categories. expected expected been wave You is Excellence, developed, which playbook the is through segments expansion compound others beginning and beyond. on drive In XXXX to margin and to the each new across out year-over-year roll to Pricing pricing

For example, select in we segment. Pool pricing our actions QX, strategic products to across implement began within

actions, price evaluate price are these annual our price to price cost note while our from actions strategic differ these material determine increase the increases. basis, that we Typically, both Please across these on appropriate Within products. annual price in overall increase. inflation, actions and reflected recent annual an

the approach. reading strategic With a is evaluated which we In that pricing Recall identifying out. cost-plus through of for currently actions, savings Excellence, and all through a have regards ones evaluating past, with products model opportunities underway Sourcing primarily are price Wave the X to in adjustments. implementation we value-based

As included maintenance, motors, electronics, X packaging operation repair a as logistics. and reminder, such spend, materials Wave and

supplier Wave with show. this Additionally, off summer attending we X our XXX over kicked successfully suppliers

metals, Wave goods. and resins, For include finished molding, ocean reference, materials X purchased freight

to a We is Incremental process, sourcing out seen benefit waves, part our renegotiation beginning from we begin expect sourcing Wave our our X transformed of to XXXX. in excellence read work. rapid strategic have to that

to our the Effectiveness, Operational stages while and these to begin in of earliest Due benefits read we and Excellence, transformation execution to across X Organizational margin to we consolidation nature X our Organizational initiatives, lean facilities, Effectiveness. in Operations beginning In In Wave with completed on plans X Excellence have the be are sites. XXXX. post we Wave realized XXXX staggered continuing the expect of transformation out in expect

early from Overall, can particularly remain waves on execute we are have about to sourcing. we begun savings and and realize savings, have our actions that pricing the excited we teams identified, in confident the

sheet up reflecting $XXX balance labeled million, flow in we flow, XX, year-over-year. Slide to QX, $XXX turn In free Please nearly cash cash up XXX% nearly million another quarter. flow. free was Year-to-date, XXX% and strong our generated cash year-over-year,

X.Xx, was from ratio X.Xx in down debt net X.Xx in QX. Our leverage QX and

rate stack billion, and is average very less is X.X%. Our debt $X than the is maturity manageable. approximately Total now

includes the cost Manitowoc exceeding capital Our Ice debt and ROIC was acquisition. of our XX.X%, from

target Teens in continue We High to long term. ROIC the

with capital debt disciplined rate remain to interest continue and plan our environment. the amid We on to higher focus reduction

Slide to Full XX, Moving Pentair and XXXX outlook. Year titled QX

guidance For the previous $X.XX our our adjusted full to $X.XX, year, we approximately to from $X.XX EPS are updating $X.XX. range to of

segment adjusted for sales $XXX XX%, full expect count tax XX% $XXX the a million X%, roughly and million. $XX increase down income expense million corporate Also XX% to year, with of approximately $XXX to to we rate of of be interest of expense Net million. million and roughly to to $XX approximately share

now the and business, X%. of sales is quarter, fourth lead Pool the For X% normalized. have we in mainly to expect seasonality This to expected lower that our year-over-year be down attributable times volume return approximately to

quarter roughly to rate million. Net of roughly a increase with fourth XX% of expense expect income approximately $XXX X% expense tax million. segment An count $XX $XX million of to million. to X% and We interest of adjusted corporate $XX share

EPS are fourth also quarter introducing guidance We the of to for $X.XX approximately $X.XX. adjusted

Full titled at XXXX XX, Midpoint. Slide Guidance Year to Moving

We fiscal billion $X.X sales continue approximately XXXX be Pentair or down X%. expect to total about in to

be We sales to up high up digits continue to to expect be Water teens. and Solutions sales IFT mid-single

XXX a XX% points expansion the guidance expected XX% to down high mid-teens teens to Segment is over basis ROS For we of increase from range. income of XX.X%. at made the pool previous to adjustment with slight of end to have approximately and sales, high down

to Moving QX XX, Progress Slide Summary. titled

pleased We and are with very performance. our year-to-date QX

third expansion. quarter of and margin our billion marked earlier, mentioned over sales sixth consecutive John sixth quarter As of the consecutive $X the adjusted quarter

dynamic executed and on environment well a We our have delivered in commitments.

Water margin our driven have volume Specifically, diversified expansion and despite portfolio transformation Pool's significant decline. initiatives

our exceeded Ice has acquisition Manitowoc Our expectations.

organization, key We performance which accountability the across metrics. through is have measured instilled being

a have aligns for and few closing strong line cash capital now open High disciplined to the very a which strategy, remarks. over target. a ROIC John sheet have Thank operator have We allocation the turn for you. balance flow will the Anthony, to that generation, after our I'd free teens like questions. and we to please call Q&A,

Brett [Operator first from Linzey Instructions] Our question Mizuho. with will come

is pricing question First just Pools. on in

So like sounds X here. you're different to it going have actions

top of share you then anything the So you're just of one being some the surgical, then magnitude comment? if the normal square that, And course actions of that of on terms And contemplating could that can in business. you there?

No.

inflationary would already would we to on I what increase, only covering think counting just clarify, normally we're have price anything than aspects. prior as normalized which modest go into us of next price higher incremental but have slightly the price Not than in and which year, announced we And have that. increases occurred, a years, to said would more be increase a the been is those aware market. compared

Yes.

certain adjustments included based inflation. the product all a that But in for to value-based that went Jan model, is comment effective we Our that be looked X. at lines, on was use only approach that an but not pricing did out looked at

new within focus? around this market size And back those to Understood. It's verticals, will opportunity given total wanted to to this new the increase commercial. traditional just to then comments IFT circle reach, is see market the addressable here there the quantify way some any that great outside extensions

least But Brett. No. our we billion a opportunities. up I I opens for particular estimate, be mean conservative think would $X would what at say it that's And plus

Our come Andy Citigroup. will next with from question Kaplowitz

million Maybe color bigger QX with in Pool update looks a you And how give to. slightly guide Pool you give on It could interest what inventory then your sets that the that. in you us more XXXX, correction given guiding on us, color seeing the some you're do were rate like think more higher you up for John, you're can $XXX suggesting market. especially us environment?

Yes.

QX the and was So to expected. we're generally way I we predict unfold it pleased that as played all, think, first that able we were out going to of

and on metrics on think focused I then we also partners. channel data the our sell-through focus of

of what's is I that clarity on. going data And think providing

us. the generally think I represents. what that's think is inventory I don't QX behind

is I and rates would aspects it's position what helping on say think the market. we have the best sell-through higher it And within represents the that could reflecting ourselves possible for QX can we XXXX to impact interest the the have.

ourselves it's So early buy. we're XXXX. participation up really sure good a modest that not of build in it's And It's a continuing setting to making ahead year. next inventory for

beat you then And think John. forecast I with for helpful, expecting QX sales you're to your It's down X%, X%. down overall

you're or but would to you than current but question effect from at other anything be conditions, which you imagine whether all. seeing that raising any -- to the we segments? my just about, want IT stopped Solutions, Pool, forecast conservative there talked anything change how color didn't you is You on more as in your Water other talked I economic they

think I came how mean we're has Water has Manitowoc in performance pleased at significant really benefited I acquisition and and No. Ice that with from Solutions performed.

to we're reminder, prior good a years. Just going though, delivered the comparing in quarters against start really

And performance going moderate. is so year-over-year to that

I that put of to think numbers the be market on those continues strong, be going outlook hard it's a to for to types continue basis. consistent but up business to

anything in IFT, you're of And or destock seeing terms channel anything like then in that?

higher and/or we're against expansion up reflecting to forecast think elevated I productivity-based our revenue it's investments interest And But only in we particular that No. that to make hurdle as be go going fair are sure for higher that suggest longer rates. forward. projects

with Brian Sachs. will come Lee Our Goldman next question from

like macro the but lot throw in there still around a of all time a there, is of and destocking about I'll we Because and complete. here, can of end one provide parts think another guys 'XX of sort there's just by sounds get a know right, is is moving fully Pool. if it for the to I lot to Pool? questions goes you uncertain, framework us channel

prices elevated kind digits. in the of mid-single seasonality You've still got normal returning,

So in I that 'XX guess, first off, see side? holding do on the you price

And here those destocking, expect, channel perspective, about next think Pool be of thinking in volume we the play outlook the things terms seasonality? of should a we kind XX then about you all months? from the assuming volume what do framework as out to just is XX Like as framework

Yes.

diversified overall growth mean, our the we're think I we're the XXXX had the strong the to up performer we markets do year, to not tailwind And looking end the pick be. closer the good that Pool predict has But and as First, raise I consistent XXXX, continued the about hoped we market Pool. framework feeling larger. And in we offsetting think really wasn't of worse ability having a a going years. and we through that what anticipated we'll from head really was was the guidance get as inventory this have for to portfolio us as of correction. inventory income being primarily into would generated coming lot then over little year, to into be. we as And it bit the the because are that as I year it than at

to of I see think overall say we're purchases, nondiscretionary little do a we growth overall we to we which it a years remodeling accelerated plus think overall inventory. tailwinds get benefit potential think of a will the that but lot from And now the be aftermarket, here. was thinking expands, those the normalized. of prior of and not we're into think it's that are fair that going and back Builds I And expand think in bit to recovery don't Pool I

and when And can speak of of and in level? meant end And business a kind getting of any of little that enough. it environment a are think beyond you here financing of having I just constraints Makes exposures, your anything capital you resi then focus just what around maybe for cost that market to here. on spending, all kind conditions a interest comes sense. impacts long. Fair or kind Pool to year seeing lot of bit Anything up tougher sort at are it high your backing the with macro, the Okay. rates sector

I it are Yes. reminder, as to their higher we're be bit. a to honest a I XX% little get I trade our think harder of professional capital mean end access to and calling think and small customers I and you mean, channel capital. is dealers you're seeing everywhere, and borrowing people with of in

they that down think of slows some were projects we the working I on.

hundred see million, We're to million to commercial you're not or on side. the but of buildings than I think be more $X exposed tougher financing a going building couple

a an we're and that effectively understand to so interest making selectively, on long within pricing services environment, have, the really accelerate sure sure higher transformation rates the we putting at we're that is then produces way industries. making think, company. the is sluggish that how initiatives looking the structure just, for elevated our back it. market Which I And cost managing we And well we're the in and position products why

question Oppenheimer. from Brian will Blair come next with Our

like Just Solutions It underlying solid. pretty remains hoping on sounds to activity Commercial trends. a more drill market down bit little Water

outlook is curious team lot team we leveraging into basis. strength to on shift QX for environment, your or in already seeing have backdrop. if XXXX, sequential that rate I you've Higher questions Specific anything your get a macro been Are that your et the in concerns for asked anything of you terms of cetera. recently? Just of longer know a the that platform. as been terms seeing

to America market well has been with the Ice we've done services end-to-end There's in had an no has excellent water has and of very excellent North Manitowoc doubt that filtration. an had going XXXX, solution Water year, quality, Commercial Solutions and compelling.

solid us. markets tough that challenge against staying are us the the But So serve up service for is restaurant market for we well. The overall, the bumping next compares we primarily to see year. continue doing the within quick restaurants, space, overall,

higher from their this that really of to progress. we're give than end the in X%-ish XXXX the -- that. CAGR business Manitowoc the slightly to have. higher mean, than point-to-point, shipments to forecasted despite digits indication overall and you fact is than year bit some little or going about or be to slightly good I The mid-single about we Which a that XXXX normal significant Just had feel see of

a just in continue to participate globally, recovery. markets, Bob recovering the that as that So reminder are and mentioned, they

very I appreciate The helpful. color. That's

that You value Nance, Everpure, mentioned demand traction you Ice? the resonating doubt and base. ] been to combining the platform, proposition no the KBI, your that's businesses, speak Intent legacy [ cross-selling for what's not the Solution lift with just there within direct is customer realized Can date your to

Yes. I mean in I Everpure would the quantify that the are commercial those realize value putting is overall from a shows an lots the next both. vice excitement and trade customers, couple synergies. to and our a I which of the in promoting points installer, Water benefits versa. mean, of incremental distributor of Ice helping growth Manitowoc of as from business and Solutions And

we And services filtered service solution against. to you're it the can up those fact of capabilities then more extending with the I the leads service that the good an think And and to we ice a Ice when providers the just on you machine, or offer have have understand also of machine. some life importantly,

we also for end partners get in and redesign out with service So help those to that markets our faster. of them and can work

X strategies there's the couldn't lot the and more mean put and go-to-market together. and businesses excitement, be of a pleased energy of these I So with we synergies

Halloran question come Our next with from Baird. will Mike

ones quick X So here.

at this changed on Or that destock still thinking we about? all? the be has impact on you First, about last million Is the that year. impact should $XXX destock number quarter, talked

think played there's nothing as I changed out said, that expected. as it we No, that's in number,

Whether the the interest rates, just debt there the on still or kind levered leverage balance M&A a the sheet where of your are, your using at shift how or before you're levels would basis. on aggressive now, been given buybacks, would levels whatever things, there what you pay Xx talk down, -- is you more you for it priority. then And has talked going put, Maybe sheet. leverage to net balance in in of forward any you're -- you maybe to better could terms looking see want became side to, what it's of changes financing is? Bob a kind

promised target give myself wouldn't a I Mike, I today.

I now be I we have the of And capital to access it. capital down is right mindful paying think and managing think with think good all framework. now, right use our of debt I to

at seeing business got we're looking how current those strategic you're market their complementary question environments moment. assets businesses And rates though not at even business. always the interest availability, when you've units. to The is robust, Obviously, to our affect

So you're transactions seeing happen. not

and next I the debt maximum focused just are of remainder right Bob and paying is think giving So the ourselves for this flexibility and the down I where now year into year.

would I Yes. just us. grade to that, hugely is investment important add to that staying obviously,

undertake rates variable the swap have collar. the rate did As crept up. interest We the in

fixed. a you be to effectively, out move, -- is debt turned that where smart So when include collar, the our XX% of

the weighted X.X% quarter, us going X.X% a to brings of in average forward. maybe rate of That kind

done and overall debt, down the environment within perspective. things manage we've certainly overall, helped some So an good this paying to from

will next come Mitchell Our from Barclays. question with Julian

bit on of the to sort profit wanted little up just from Maybe follow Slide a XX. bridge

picked sort versus a up bit prior the year-on-year number close I see price of net was quarter. headwind as a inflation the So X. to inflation

kind next understand QX? early in year? to it inflation sort be us should help And of that maybe in QX the So like close into inflation part price was X we moving number net expect of of to

it's a bridges, would way observation. -- inflation, remind So as our in that we year-over-year. I is good show in the I think you

we some elevated on of be had necessarily this could we So year. the buys some that inflation year. that last It reflect doesn't sequentially it saw

our to slightly that then moderating we the productivity overall from So think neutral to are model And contribution, that's obviously coming neutral. more focusing forward. we price initiatives. or That's on close versus being cost going the transformation

go more transformation you recall, the benefiting cost. I And add a on of price substantially if year last benefit you forward. were we versus Bob, we earlier know and that's to now as to If shifting year don't quite in want anything.

moderate that. I price was Yes. We do inflation to versus QX, that, inflation where in about nice that. tracking beginning the did we and X.X% the that fourth inflation . At of cover And in of towards inflation. to significantly the the right change in talked to QX exceeds the being that year, was add while just we're inflation really thing around certainly, increase expect price would quarter, able sales.

in team understanding impact job that. inflation nice and a the has factoring of So done the of

So seeing, quarter. and with that in what will fourth we're the pleased moderate overall,

as larger and segment helpful. of of that said, in, next savings hopefully, driver how transformation roll driver. savings Wave you year? where sort becomes a a we Transformation was income the on substantial from maybe That's piece of year, And sort X together refresh as when It are just that incremental of substantive already should productivity sort next be you productivity number from as kind

that we And is as about then very that a productivity drives our ROS story, important margin price important that expansion. equaling of that talk inflation, Yes. it's expansion part

$XX So terms up the single And in significantly Wave from digit in out fourth benefit were the transformation a have within significant XXXX. million readout reading pleased we We're X to expect really in QX. see the to in in third of the quarter, quarter.

each We've built X around the healthy Transformation. some of funnels of pillars

that will extent next year. read to out start greater to so And an even

with going pleased the overall, XXXX. So into momentum

be year, the expect on those to at comps the get of productivity. half next sort maybe the should And of bit your first that Got least it. run steady of suppose? And a rate through savings second half for we of tougher then I sort sort

Julien. Wave and that's Well, kicks X when the in, then

supply took to long material resupply community. realize the had we do a of engineering time the to all work you're and So -- right, that efforts because but the the with

X year So those benefit a to year standpoint. in starting rate that we're over into run will next from next second half in Wave and take sourcing go of the QX, to starts then from

give engaged close be the We'll through of our some exercises about in X/X pricing you XXXX. the that XXXX. color, in way business in X/X To is to of

So that's kind benefit that the to of inside and start the performance we how to the from mentioned Bob start businesses. waves unfold,

come with question next Saree Boroditsky Jefferies. Our will from

should the ] half the Could benefit the Just about from just going how you second contributing initiative of we Wave you on discussed in margin Transformation performance? [ comment, quantify year. that as think next X

on focused very Well, expansion. we're ROS's

year, this said linear ROS improving being back-end versus And XX% a XX% done about way being think you it the about we've around if loaded. that to talked So by we've all us XXXX. in finishing

ROS we that head year as expect to we towards So improve next XX%.

you as maybe Then but of thought talked ] just today, early of versus is that back of having way think sell participation [ there. for And about XQ delivery comes buy how there done lot appreciate Pool, you delivery going color. programs think to about in some the to I about what questions about modest kind patterns you a ]? [ those XQ, for any the we've

we'd shipment I mean believe see I higher unfold would perspective and QX to to from QX, like is, can a QX be we we expect for be think, Yes. than what then would And normal then being which pattern, a QX. the we the year, pattern quarter in seasonal normalized of be the would finally be next than full better of then QX year. strongest Pentair

is in as then reminder, modestly starts preload And for again, less QX XXXX than season. that. a And QX to

we've that to get into again. got now this more we've so through seasonality we business. this, like really sell-through forward situation keeping eye normal in on feel worked a our don't with So inventory sight line channel of And our and going clear the we

Next question will Jeff Hammond with Capital Markets. KeyBanc come from

the but it talk rate. don't seemed trends about can like growth orders step was IFT, if about you on wondering there the a really And was seeing. there? just kind a the know the comp just down telling I'm you go of in Just you're what are it I order issue, forward like

Jeff. year-over-year at looking we're infrastructure again, really businesses just our mean XXXX. solid a I And had Yes. comps,

rates some prior so And these of the XXXX. against quarter reflect of growth

to market mid-single-digit indicator, comparisons We're And orders I on as with aftermarket. mentioned, be really Bob nonproject-related going distributors are recurring to go our the We're year-over-year streams But the focused wins. revenue We're key we focusing and providers, strong, we forward. be on on are service. a tougher. Jeff. as from think continue focusing focusing on end

you a then that rates with called their maybe to also to tough starting you equipment picking the in dynamic. well? this channel of normal in as see kind order markets think kind more of Okay. Ice, out lot of just going just the but this in I Great. the Manitowoc tough drawdown talk And back think a on synergies, backlog there about are up about on what's been issue. just comp Can some commercial -- and growth of food comp We're success

levels. have returned Yes. more normalized to say I would backlogs

have roughly the reminder, XX% or year, in And second a grow as for be the XX%. grew Will Manitowoc XX% full in roughly the Just quarter. quarter. up did third grown Manitowoc will

So look you from sitting that's X%. they've the had CAGR roughly point, when XXXX, a very strong year. To at John's at

against market up very resonating approach more expect next The Overall, do terms we to year, But bump in is as growth. is the normalized healthy. we a well. XXXX of remains end-to-end business going XX% year So

in business. the Manitowoc confident very So

you're hoped to. Jeff, a This are is And growth high we right. our level that, when would business. isn't growth I the rate that have data mean, single that linear get Ice your more mid- to for points digits, we sustainable

and someone And sure into is we're machine restaurants. a Ice obviously, that Manitowoc demand satisfy putting going their make that it's to the

But with us is gives it this relationship said service So as all the that we've ongoing customer. normal and year. not

with will Krill question Deutsche Bank. next come from Andrew Our

go the I want prebuy. to back to Pool

think prebuy expecting you a say like might you year. modest I this were

part more So years? to of assuming you to versus incremental you sales normal can Pool that just more be try as the on that insight and guide? give clarify, how quantify Or to the are just that tracking guidance? any XXXX would And maybe

shipments we're is our to do view just it's quarter, sure to our employment grouping. do any No, everybody, our the taking try of load what one factories And included in remind all make our of in we QX. business that in level current not what to will level down beyond

a you duly in it. take And if those [ next incentivized then And as don't, modest channel is. prudent at through the take year's season know, that us is think standard and level that right? to the ] term where for if we by ahead So and obviously they discounts Pool become of We're they're buy more to orders encouraging buy the next that's now offer year. the we would extensions, we're more channel

have always that's do, in interest. so, And what we the to forecast best it's our is reflecting economic and

a do a buy. our growth Our would and right in best it's interest. us early more channel of up normal is the And we XXXX economic set say seasonality Which feel guide normal more we'd now, reflection nicely best year. partners what for our their

XQ marked guidance, the Got a it. for margins total And the implied step the company pretty sequentially. just meaningful down for

think a isn't historically, to more with you've I been the know but come flattish little conservative, it cost necessarily I through. starting just from year, a normal XQ seems to especially actions perhaps this XQ.

unpack think in you like XQ. could if the and segment normal if margins that I than maybe are weaker particular, any So for

that levels. a our is in expansion significant year's come QX. but implicit that ROS seasonality, of sequentially, We When to look is guide does normalized does of a returning down, you reflect some back the lot more versus last it

So it momentum the overall, year's pleased QX, QX we need year. in be ROS exiting with last expansion versus the and the will

next Cowen. Giordano Our will question come Joe with from

I want for to a keep mean splitting hairs XX%. margins not bit, went start there margins a on probably below it I but second. and little Pool

a And were enough like into next that's the good I close where just is you're floor. that bottom quarter about of probably from here kind level? of feel XX% talking is a new statement. a still fourth of into year, think we kind kind XX% being still like But

think think having part I in say, I'm of I on And proud we're the And of margins is despite the mean, volume, did yes, Let's I the decline year-over-year most accomplished. delivering your question. do the yes, what hairs. we splitting second team

they're getting good obviously, as here a spot is growth think model, directionally a nicely. going leverage up business to in from really and I

similarly because that then that third and right? commentary the to think of of And margins up did out pretty It I down opposite were Water sequentially. talking on sequentially in the quarter XQ you were happened, the coming Manitowoc went going Solutions, about was deliveries the step last quarter if Okay. like decently in the

So margins about level Manitowoc the like high a still how know at and think XX% we how there? level, about should XX%, there we this but margins delivering should think I sustainability there? sequential of

Water And and Solutions remind would water we're I going you solutions offering have a they lot that when higher the the have residential products commercial, business. what components Yes, the is really systems commercial try we up businesses, residential that we're profile. to on and towards mix doing we also side, on that margin being and selective mix a has very we're to

And overall on so mix helped in lot revenue residential the the and that the of actually of the side a positive. to the was the decline business

one And sense. I in makes one That volume. if just could Okay. sneak last on just

fourth in we third are came spoke dollars thinking what your months levels quarter up commentary their this ago, to inventory quarter. than for going distributor quarter, go when volumes X pool largest your and the better your mean about, like were we from calls I So from

they Pool But kind of implies Pool kind they So guys. that look If growth it's seasonality quarter? like implies of the you do modest more could of do less, like think maybe into digits, like for normal where for fourth you growth growth. high in how growth would single if about

think Well, a piece their of I we're puzzle.

revenue I regional it think how start numbers best sequentially, that a discussion much exactly really do and really our And we there. to are business our getting the we probable. it's that accuracy I we'll and more, isn't do think that QX. dollar then to of do So predict we go think indicating with up And from

got think we say really in really about feel would QX estimate I we QX, our I moment. at revenue so And and good close this

will Graham question Research. from Seaport with next Scott come Our

the help maybe obviously from better some So How external? supply sort jump productivity of meaningful. X.X% that of chain was a much was

think coming we've to most demand from think the of and on with more caught aligned I I up seamlessly mean, our we're Obviously, a chain our that, Well, them lot supply is with I working channels. Scott. today.

deliveries chain across a from substantially benefiting more are of seamless lot we today. the supply so entire And

Back as $XX on aftermarket. the these of of numbers $XX the of shook and kind maintenance to sort sorry. million, historically, then Pool, out remodel But new

-- a are kind numbers at look you estimate we an at? Is As kind the what that end that of week is those what make? of can XXXX, year

Yes.

in what to think I that the builds we line -- I overall levels, definitely prepandemic argue the mean but a I could prior seen going generally had think ballpark. generally to in they're we pandemic. with in week be XXXX are And

area. normalized more in we're a think I So

impacting high-end more the built. is low continuing I to rates the be are to the think pools -- is interest and across learning the mid, Scott, there's pools, highs channel and there's the definitely to mid-market low are

the to break But still to I the all it So refine generally, numbers to demographics is I think start try it's we'll that the think that serving. model by working. probably out

Okay. John. one. Last

kind You of period of builds to longer the than flattish then you referring or that? time you and a are aftermarket Were assuming indicated quarter modeling up. fourth or flattish

XXXX would season, the likely No, -- if about, talking generally our into about that's suggest. expectations we heading we're Pool think current we're what

Okay.

So that. year be based plus going to next long-term thinking not on on mid-single-digit that it's your pool,

We'll share next remind market to we in get and And then that correction you But guide. we'll inventory addressing. with XXXX when giving some general there's that were year, January, which Scott, creates benefits. QX that overall an earnings, I'd update there's give conditions our the we

Our from next Dray come will question RBC Deane with Capital.

is XXX product for innovation, typical on a on targeting This differential And the the new Is Maybe margin year the XX is for Are you my products Dean. you internal an new last Jeff vitality. metric your new you talked Reive this XX over question, about months. products? target? quarter, there first what the

Yes. do. we mean, I

to have year those we model see from they're takes Not tend create to is recognize, in that its line. probably line X by the it initial valuable for we When we vitalities. lift all product that product those the at our products. right usually to. new market work usually want, that products Obviously, stage, the We or margin but customers

infrastructure then a made that where you're where offer aren't? So the America business? the spending. competitors of And there is meaningful you you Build XXX% And provision quantify. IFT, products nothing mentioned virtually of to maybe that America in -- or America kind Are your any piece Buy on

in add here. We for of United been the States. of specified They've the years a lot in to here where originated Yes. America And long born XXX, brands, XXX old that manufactured time. have they're historic periods our

And so really employees brands. those are our proud of

when are least at to opportunity give those a those of win ability customers proud have brands, to to and to the market. jobs really us Our tend we fair go they those

with Jones Nathan from come will question Stifel. next Our

on questions of couple Water A Solutions.

I I think shipped think have this first of out guys you one is year. probably Ice, Manitowoc on backlog

next couple of that not year. a You projects repeat large had might last maybe

you You plus, in do putting pluses number should the that actually talked you lower mid-single-digit of grow up thinking from long-term go be XXXX? than can about what mid-single-digit XXXX? you're think being we Or of in number as done we that XXXX you've into but

we'll going share XXXX. be do yet. the That's trying that a and think to rest now, an for we're into We're we'll our and we year, then. prepared not try then of Right go we to are, satisfy where nice there the customer demand assessment head insight with we to as of you

Solutions, I Water next Residential go of looking Water as Can In XXXX? have enough. the business, impact might in Fair fundamental against Treatment think without you've outlook some destocking Okay. inventory that into talk had at the some comping also we that year, other businesses. you about

Yes.

we lower year Solutions, did up business, as and we been this against comparisons we've reminder, we as those those margin go a of in exited comparisons a Water in year amount into As direct-to-consumer next fair away. what XXXX head we

little less less acquisitions, from so is little have took we this bit exits next from Water bit this a on get contribution And in and we included obviously, year. business we year. a And this Solutions that all headwind year, the

come Bank from Obin question Andrew Our will final with of America.

Obin. on You have Andrew for Sabrina Abrams

the questions but full about guidance? been has to a year $XXX there you still wanted are Manitowic, Just to I know ask, couple million committed guys of

easy be commit. It an would

had done grow better year. Now XX% and the that, than we'll talked the the has of this roughly beginning significantly business million, year but that of at we $XXX

should going if regular ask on the on and Got you XQ. color pricing prebuy? Pool in another it. discounts number. returning -- having not give were couple normal years, what the I just that you color Any past the maybe in pricing of the some 'XX, think about to know XQ And then we one to could given about you're

think a answer to our we mean don't price the for I as increases I reminder, I question. season. know put how in Yes, the

that in do more we take usually year, next to you flattish discounts pricing the the Over QX, and year-over-year. so

a increase but to price extensions, be. what So would price there don't a are the because there's necessarily they term prebuys the discount include increase

having like sell discounting it. prices product early in we're So not getting we're raise buy. not -- full just We're the to it's that not to just

Okay. Thank you Okay.

call In today. expansion key you Slide closing, thank And I on joining So to diversified portfolio First, our in to drive want solid QX. themes for significant some initiatives reiterate and continue XX. margin the transformation within execution

to in strong XXXX due our guidance year-to-date and Second, we strategy. performance updated our confidence

the XXXX, of have remainder momentum XXXX Third, with in gained and our transformation beyond. for expected benefits initiatives

to continue finally, creation. and And great expect everyone, day. deliver you, we a long-term have value to Thank

for concluded. presentation. now The today's conference has attending you Thank

disconnect. now may You