Pentair (PNR) 23 Apr 242024 Q1 Earnings call transcript

Hello, and welcome to the Pentair First Quarter 2024 Earnings Conference Call.

As a reminder, this conference is being recorded. I would now like to hand the call to Shelly Hubbard, Vice President, Investor Relations. Please go ahead.

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

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

that and Relations deck, can supplement which a GAAP. remarks and today's as performance Investor non-GAAP financial be for release our prepared our of financial or Pentair of during slide reconciliation and is call superior the website, in will measures non-GAAP GAAP we find reference. The you earnings prepared differences On with should between provided financial not a measures accordance provide measures intended substitute considered to to the included as further items financial are the in additional They the aid clarifying these investors understanding addition items in and impact performance on to events have the company's results. to

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

website after click turn overview. I this earnings Pentair previously have allow to Following Presentations IR slides to Note presentation. on now included questions. quarterly questions. which John. order over Events X the website our opportunity limit the we new our our which we reenter Please and Pentair and you queue Relations open to includes we our our questions an now Investor Please Investor visit prepared will in for your call ask overview Overview published in remarks, call to note to that on find the up we will will that we everyone the ask to

Shelly, Thank everyone. morning, and good you,

go Day Investor XXXX path our insightful potential We deeper the for last the of to provided in to and into month. you thank year we XXXX First, by who appreciate all I and your as full with New business want your attended ROS time York upside. XX% questions, our

We begin let's inventory In exceeded also segments. drove income EPS guidance QX, The consecutive Slide points segments. our our quarter expanded segment continued adjusted quarter, despite XX to challenges the eighth as expansion. our in we quarter, Pentair results execution QX margin X. our on first drive Residential Now and across channel ROS all first slightly peak down solid teams sales strong with In basis against being year-over-year. increased X

Our remain initiatives Approximately strategic and implemented on highlighted pricing expansion transformation total Day. XX% value-based part margin deliver our Investor of at revenue we has of track initiatives. our as recent our adopted as pricing to

term expect into our of larger footprint wave streams and and well half are continued to optimization we We forward. which recently sourcing identified we Pentair's this And revenue begin X this training year have to introduced XX/XX have to some initiatives, in to to drive benefits opportunities. quick operational going and of second drive XX% have we and continue plan of wins the

trend Both normalizing Lastly, and more our our line a for in with order to has environment we expectations. the signs we by in and operating X nearly have been first are are been backlog encouraged normal that years. time lead returning our our rate times

within and return Industrial operating our a verticals Residential, have As more our trends Commercial we environment, a to to we segments. X of mix expect seen across normal

our improve impact Residential commercial Within performed hospitality and in foodservice higher will verticals challenges believe as For Water and the continue Commercial example, verticals servicing while We verticals. expected. moderate. performed Solutions, Residential Industrial rates businesses interest and well Flow, in QX, Agricultural as to year-over-year

is exception revenue we're and our California, with appear services of high-rent the majority with a survey, Sunbelt remodeled resilient where From high-rent in-ground the QX, Sunbelt optimistic we in aftermarket. pools remain focus and Pool, be states projects of slight to Pool pools. states about increasing the recent dealer in on weather In a Lastly, a the our impact. had surveyed

Responsibility to Karla team our Slide our our and last turn published teams our on doing XXXX this and are of the our XXXX X. our a the and week, we proud sustainability, strategic results Let's work I'm Last of on At targets. Investor throughout provided company with Day sustainability preview ESG slide. of Robertson, very making our an update Karla Corporate month, against Report progress. leader the progress our are

I it with earnings delivered turn Bob, quality another quarter to Slide over let's better-than-expected of We to Before turn results. X.

Our track. Investor on remain key themes Day

Our a to and who to Bob? in believe continue the and diverse workshops with build year period are long-term guidance. introducing promising compared same foundation readouts. in, XX% strong an our the our And are All early strong and Bob, performance are XX/XX training our will we we over year. what while to QX up adjusted growth call EPS XXXX underway discuss more midpoint as full outlook reiterating portfolio. I drive across pass last we detail. now will profitability water to results with financial

everyone. morning, good and John, you, Thank

in QX down October. down offset QX XX Pool strong in in Return sales X. sales turn guided sales Flow basis were than we as which QX growth another exceeded start from by was on expanded driven by last Slide we to sales despite and Let's segments QX. last across sales, billion, sales, X% in more Pools. Solutions, $X or of ROS, year-over-year, on delivered XXXX slight declines and had quarter Sales Water XXXX year's primarily Core QX. X% record being X points all versus earnings. exceeded sequentially which sales increased With quality over

the $X.XX, which and from inflation more of XX income EPS First year-over-year points mix, guidance X% offsetting to expanded segment to These delivered as driven our sales up ROS than return and million XX.X%. year-over-year. X% improved exceeded were on well QX approach favorable quarter We results increased transformation. record was by as adjusted QX of XX.X%. and $XXX basis sequentially price XXXX

are excited As year-over-year, to in believe residential a X%, of Flow environment more offset John declined time more growth sales X Slide decline first than industrial X% a sales mentioned, be normal previously sales entering what years. Please operating X% in X. to we growth of nearly sales turn for be the commercial we to of and were XX%. by

by revenue progress the drove commercial Solutions, XX%. QX residential a sales and doubled efficiencies. XX% reached driven in has continued in first expanded business of was continuing $XXX more consecutive QX, price $XX marking favorable to XX. and Within inflation to and result sales to services sales expansion filtration on XX.X%, turn driven to overall were markets. improvement for XXXX. Within continued time the have return ROS X% agriculture declined points points return strong sales was and basis X% cycles. Please Ice slightly ROS margin of project offset $XXX XX.X%, X% exceeding XXX turn which XXXX Pool rate income grew Segment Water Water to year-over-year closely In last to and on Solutions, the and see growth, lower Slide XX.X% business our to in is on have operational sales approximately life and primarily to to margins mix QX Our up housing grew basis transformation expansion, XX. quarter our by and to sales income Solutions are XX.X% QX, commercial we tied Segment X sales to by our sales our residential up million, This expanded residential The down in Slide in or exceeded XXX due million from nearly transformation mix X%. In to initiatives. Please approximately both million. eighth quarters. the and drive sales Water

as from expected. as and improved down prepared points. nearly season $XXX decreased income Due costs the volumes on QX in lower Segment in million, investment sequentially transformation. an return for However, peak and X% in increase X% basis we was pool sales XXX XXXX QX sales to QX

in strong cycle XXXX, year our XXX pricing, is continuous sourcing, each prior runway year initiatives; transformation transformation year This in to generation points with Slide to year our approximately expand remainder continue drive XX. to and to a and by we targeting from a by with by wave begin our the our our quarter. achieved all With do highest to as to by repeat expansion we for margin ROS our quarter cash we of contributions creating to of entire expansion XXXX, X XX.X% predominantly Note in basis and wave when to to XXXX. Please margin turn consistent we In In XX. QX, $XXX deliver extending million of XX% benefit context XXXX compared full that operations which year-on-year to followed each full quarter reflect we additional in ongoing cash, expand to updated reported even XX% through We turn the to as plan cash Day our margin to to key margins Investor Investor a discussed each used organization, and XX. the savings. Please a expect QX, the expect Day. we to we are year. turn process typically X-year of year-end. Please full opportunity Pool At expect during our quarter. ROS expansion results. Slide seasonally better have and March, XXXX, of in margin compounds expect provides is use QX to Slide targets

leverage debt ago. a net in from down QX Our was ratio X.Xx, X.Xx year

XX%. was ROIC Our

along to focus disciplined the invested on a repurchases We returns. capital flexibility share environment, ratio target with strategically high we debt amid our rate to with additional additional to dilution. reduction on capital continue offset to shareholder interest to We and areas higher debt target highest within to have our with With plan the teens range, return remain capital. continue leverage allocate net

Moving to XX. Slide

roughly X%, year, approximately full be year. up year, we the of is Solutions the sales low are and X% Flow for with flat be Also to sales to be $X.XX For at approximately Water for approximately full guidance approximately our full which to to up $X.XX, range the Pool adjusted XX% midpoint. to expect to single continue up the digits, sales maintaining to we EPS X% be sales

XX%. to segment to X% also We income expect increase

to X%, expect to QX. approximately we to quarter, X% sales second the compared record be last For year's up

challenging growth Water Solutions strong QX, somewhat our Pool expect in in in offset sales We by segment. compares

XX% We income segment to XX% significant second to expansion. quarter ROS expect increase with

you. Thank call introducing will We After have please midpoint. I to strong $X.XX, turn for would the a like for second Operator, roughly XX% also Q&A. now to are John adjusted to open the which, quarter $X.XX up remarks. the line few of questions. operator approximately the guidance over at EPS the for closing

[Operator question first Instructions] with Mike Halloran comes Today's from Baird.

X So here. questions

First is top work the unchanged. about -- the how the thinking are one, as line end just year? really rest I guidance markets of you the overall you through mean

you So the anything here I the today your across question a were sequentials are And thinking guess markets? back? thinking seeing you than how end from are is, months few about different you

So generally and year. the little Ag-side out that, in our far, things Other within and Mike, hoped with progress the I of maybe thought we the would previous for Flow our being playing of a we end the as like side exactly say segment, the weaker is exception everything through line are than with expectations. Residential

the different than awfully have would impressive and certainly seems a And seasonally. little Flow expected I then margins, on

work here, think you are to not in this those doing build else? the right quarter So foundation margins a sequentially or of how example maybe particular, [indiscernible] mix anything from perspective anything you from first with work that's just in is And some an repeatable on guys the the internally? all thoughts

It really is.

of And with they On expansion that side, program. of extremely in were be said the the one we main Flow the beneficiaries will again, QX. we've pleased transformation the ROS

expect the the to the ROS is lot expand to around footprint continue basically there play. play strategic complexity segment year-on-year of pricing their excellence, reduction because I So operational a and sourcing, the the

from Lee comes Sachs. Goldman Brian question next with The

the I transformation XX% question. I Kudos rate like here. this. of price this is as How much on to right else this look or you coming transformation Mike's more, as and I maybe or in think follow-up think little the in outline solid run to benefits driving most kind QX? I off particularly what we historically, but segment were the just think cost result Flow, guess and for it's definitely mean, of if ROS execution eye-catching anything in a guess, we about price metric Flow? was bit -- improvements year-on-year cost the ROS, of want a know I both lumpy a to looks lot

we've the had Flow. Bob Yes. is think think that a inside I and thing gas our a mean just job kind is, really It's transformation. to reiterate helps business and favorable nice to, last year. which let's One we've There very about year-over-year single-digit if are I those business of losing you margins. able performance several driving project business been refocusing getting bring those business, done to and last that Flow. what back sustainable said, of against year But low larger up we call comparison projects, a it, rightsize executions

do performance. and we through manage transformation the to pleased point. drive the starting going the good we're as this move think and So continue is a year, the programs to with we Flow And really mix

quarter-to-quarter, sort can basis know second Helpful. And productivity point headwind when just of the then XXX tailwind. QX, fluctuate, I Great. reversed versus I Okay. at again, of kind but look in question, this Pool,

few was for saying we same quantify break Pool How quarter? Is all XXX you're positive big this does you it the margins in quarters? write kind about is this we quarter. much growth sequentially I as like been points. should a ROS expect or better last basis throughout a in down back ROS, investment? Or And You send more which know year. saw guess, cadence? think might was Can this it quarter, up go It how the about have seems year-on-year? I the specifically, about, drag of

mention of prepared year. year-on-year will and that my the Pool increase balance did Yes. the In for remarks, I ROS

that see ROS expansion comfortable within Pool the business. So we'll

QX think growth the but bit have was was I that in volume significant a we unusual QX. little declining, in

QX, damper on the margins put And strong of of obviously some so the ramp-up costs, to cost the the a first the in service quarter.

continuing pay we to to We needed will growth off are expansion business. drive down it and further But transformation investments invest wasn't within and the road. Pool also to those be where ROS the

expansion the leverage again, growth play manufacturing ROS the significant with in well. Pool, ramp of as comfortable the become will remainder to that big QX, again, So we year. as And in a

The next UBS. with question comes from Karas Damian

My first the Pool is on business. question

are kind down for in your you in inquiries up. also just how You that your end your the are digits across still remodel that slide the kind much we like sense low the side the single us was on board? is for that remodels here? high mentioned a give for had Or expectation of of talking market? Could year of And guidance? Is

start do Yes into orders, second and feeling give dealers to the us there's one. But extend will which will we 'XX. feel some take more encouraging trends our would that to that 'XX

with aged being the Pools. much think probably more primarily remodel sequenced we're that I key our is think states this the of to being built, now part wasn't Sunbelt customers. from there seeing Pools new some in all And on attention encouraged we're completed. get the spent and market demand again, the as get And I that and

could year-over-year. second segment, then and And thinking just you Water about segment hear. terms the X% that to How in you the think about are both the Solutions in comp top quarter of encouraging of line for That's margin? Okay. help kind us

a what top line QX important large everyone remind From was a year, it's business. especially to within perspective, the last Ice quarter

we bump tough a within that decline Solutions up Water So against year-on-year compare. they do as see

and headwind business then and to think of nicely. services continuing grow bit the So a business a the Ice having of filtration

with Andy from next The question Kaplowitz is Citigroup.

Obviously, guys about. following have [indiscernible] as John a comps Solutions. and you in would -- Water just Bob, up than is talked you just bit little more are maybe Look on hanging there Manta thought.

was And as what single then expect services? you year digits in still that would I up? for what year. water back sort And guidance is? come this low for that happened it of Is think up to your commercial goes the

Yes, on Ice.

come with way BU is our think end in to going has said, I the think with And penetration, in to. to still compare the our going play reminder, to Ice overall, And it's that and expected industry, as QX. now resilience Bob I combined good filtration drive line feeling as about out right a we in we're tough it it. expectation. But

We are we larger the services business companies. our dial going doing of fast profitable with we into were food more to exited some as of the some services that annuity-based large programs

of and mix throughout those business as simpler the some that the a into well. we very want we lumpy of to so not were install, more And little the profitable, be to geared we that a year see refocus service, products and will

Bob, are pool $X still QX? thinking million $XX for productivity the million year in then, in helpful. with It's start-up the And productivity total you this and slower and even

Water the feeling it quarters. still fairly and somewhat X with $XX and by over Yes. the as pool as and were with of pleased think comfortable for Again, readout number transformation up offset Flow the million negative the but ramp was productivity being we that in Solutions, very we linear next

next The Tusa with is question from JPMorgan. Steve

up follow cost then on what the that price a spread for just on you're us the just and to bridge update and for year? inflation Can the you year. price thinking and question Just price on

Yes.

get still start I we to cost. a we're inflation hopeful see think to QX price little can QX. offset I incremental into we enter did mean

freight it's think what specifically we'd probably call around I and copper. primarily

monitoring goal could and cost. a to out would year, see we offset is go the needed, we're full And back recover that, Steve. and what So our we to, price from price try If for standpoint.

in Okay. quarter? in price -- X that the you first X%-ish the Or for did at Is there? year. kind of And still what

X% think Those on dollar Yes. the base. roughly a from We're still in that offset cost X% perspective. and for X inflation would price about

Oppenheimer. Blair question next The comes Bryan from with

read-through. transformation and A quick follow-up on productivity

to the somewhat X for up to the $XX get quarters million. ratable step said You next

drop-through we for in the how parts of divergence moving shakes that segments? about should how segment out and contribution, think the Given QX

to significant product its the a growth the mentioned, QX. and ship to to very in Bob some that We we, we fact have prepared in expect QX contribution investments rate Pool had as given incremental of get

And flat a being so from more QX. think about that roughly revenue in but labor getting lot QX to as QX,

timing would always QX a industry. run be that, that Corporate Also, So corporate higher expenses that in huge the typical didn't have issue. a in is contribution. Bob we mention but

get Pool. comes the usually rate think -- be the as so And the it QX step-up we But and heads in into segments, the that I down of will then contribution other for well. same as

Yes. I understand capital the debt term reduction priority to appreciate with deployment. near the is detail. regard And I that

second July your flow, be of Any with on suspect to and M&A for back Although color cash this may any Xx quarter your deal levered. to you'll better by whether offer lever you see that timeframe? XXXX June, timeframe, the growth year, anticipate it's you half under pipeline can second more we get

agree be expense, strong cash $XXX of guidance optionality the that cuts. interesting the is thinking What I for would flow X comment us. started of we our providing million no now into cuts. built with rate We've was is rate year there the interest

So expense earlier happening cash free our interest were able that's flow the guide, the is the we to as the in We because keep previous prudent. primarily think same year.

the So of we're shareholder share remains we cash think drives optionality target to what the within there there highest to in play QX help We dilution. repurchases point, offset then your in reduction terms our look debt right forward continues be And to the strong restart a We'll free a value. to EPS. range. flow. To

from is Julian question with next Barclays. Mitchell The

guide. second Maybe just sales quarter finer a on that wanted point to put

flattish down Flow total, it's may Pool then and plus. up Is comments, X be points up sales? to X is right right in your QX it year-on-year. framework about the Waters of Based got is So think on sort digits, you've XX% mid-single that to for Bob,

Julian. would agree numbers, with I those

the sort Second would very And That's be around just my question then really inventory helpful. situation. of

we inventories kind own lot where own kind assess sequentially think a channel you sort versus I of year? rate inventories you're flattish of in your for are and understand And how level? Maybe help your assessing the history of year-on-year. inventory how March, in customer are down do the partner us on

go segments That From down being from a hand perspective. we to has still hand XXXX room significantly and back improvement. each higher. inventory see We from of on for said, our roughly were the perspective, days on is XX days an year-on-year, inventory

right the it the certainly down not be. to quite To So volume quarter, we're in bring we're inventories, where moving help second want those in the we but direction. will

think normal And the we're levels. at then on I channel side,

our same shipping we're right generally partners, the quarter with being think I with channel through we're working now, bought. and in

I feel here that's in like So behind us all the QX.

from Jeff comes Markets. Capital Hammond next The KeyBanc with question

Just I up, seem John, added think on survey And ramp. Pool, you you I the to from least these how kind a more work. in of talked at about confident shaping little things are mean, having costs

expectations start takes early was then Pool I for on of And weather last so kind of disruptive there? the lift guys you wondering any just pretty just to know it what And year. season the here, also read

reminder, Pool question. mid-single Jeff, are markets down mean, it'll on Yes, mean -- I basis, just the a I still a be digits. appreciate I it's market normal and sell-through --

sell-through. have the So like we're compares insights days, no the from can as we're tying in got get sell-throughs feel the X way year-over-year to into ramp now better out longer shipments benefiting and up then those I we that to those the easier headwinds. where work And we've shipments inventory and those and we

of more it word feels like So it which normalized feel for a yes, use better the and period normal, why does we is time.

where about that. Interest working good getting to I of feel be financing to industry. rates challenge financing. from, the water And and their are invest the I their are movement don't tends people and dealer system. it's to you water think a they're are husky. also, capital same is filtration taste from rates the this, And see sense going doesn't going house the loans then when our house, the affecting So it we another affecting selling in to It's interest and what business buying like which like continue

we signal that of we're cost challenged in current if year see those the confident -- the to I that's lower we And and have we through Jeff, things of hold reflecting to rates gaps make to be in we up think brighter. could head what the And continue send are then forecast. the full our we year. to initiatives use at transformation So half that, interest out we as the feel some back a have going this point be

Okay. in And just wondering the player I'm of Pool. if behavior of #X any kind change And kind then just you deal that is buying -- of kind Depot drives think customer any or tougher to with [indiscernible]? Home in

short this deal the they're think that saying Clearly, Home and going Depot we impact on to the take And continue right to we we anticipate. is no. see Heritage that and all the and not while think their now what is pro I a service year, for that's take expect can term, to now complete. is mean I right short-term therefore, words SRS run it and unfolding channel. would a they -- now, independently to way do

next with Nathan The question Stifel. is Jones from

Question Water Solutions. on

sequentially Is just as improve verticals expected an challenges by moderate. to easier you just in the of that are demand here? some actually Is there the comparisons those improving You there expectation that into and the second easier half run some that talked that as goes get comparisons is year year-over-year about year? comment a

residential they rates market with latter, homes end -- it's in side. overall and can't interest people new perspective, much are not an Nathan, buying on of ahead too get I more terms the say the way ourselves would From of the we

that is be. robust quarters. again, X it as the as or year-on-year decline improving it's last But X we So see not to pleased for would to the like

I Okay. have talked about reducing parts guys Solutions And seeing those channels? the further. the channel. channel at a we've inventory? I still are Water any their that talked of Any reducing about Pool inventory might you lot you know be part inventory own your mean of

destocking Water is the I or, potentially, any channel, Solutions whether any there guess, So still in across continuing portfolio? it's

generally aware Nathan. we're sell-throughs industry. sell-in that the mean that would say we right across now, I Not matching of,

next The is Dray Deane Markets. RBC with Capital question from

to Would the through on and on halfway value-based I about we the a guess on read love opening comments, talked that And Can thing you pricing. any you're of hear related whether circle some XX/XX. back the the disruptions? same early question, it's traction then

product product any might there color Any Just kind helpful. And be of any success that would lines shakeouts, stories be there? deemphasized?

Yes.

to pricing get a is being I job I'm playbooks strategically and said pricing. kick just in So can have. I this And Investor I said, top having of myself mean, too customers, you thoughtful affect your XX-XX utilizing tool more utilizing lot we now parts the strategic business. in tools the those drive equally, either a I get end top that full I'll about our impact to this. should going lower-end that parts of efforts have. those this and treat And Because we're focus growth we're secondary gone training. pricing have of businesses and the customers more for through what proud that their it's That we customers at Day, not really you and best doing from resources a really right? how complexity I of good mean, get sooner. organization And and top we're that. Deane, our you to regions, the I on drive a regulatory really there's time, again, what value-based value outcomes that more comes our to session done give it's allow learning have from from treatment, complexity differential being because the innovative have with our of we and that us treated parts the complexity pricing you top introduced sourcing markets what and A going over your to equally. products that's top thinking to we parts focused you the about into companies, where think portfolio to your all think do to reduction, the XX/XX double is effectively. And be to the it complexity the just our really So of that many down customers. think in any energies spend the but top we we need most can is And then or can like little very be think more we secondary top or parts that call our to it innovative. all That's for you where where top I the is customers getting change

That's real helpful.

about at Is it's lines talked growth. less that cutting we think and about it optimizing right? Day, it's the about Analyst more I

That is correct.

then of automation, all is of the just the All in side rate forth, the and about on any in right. this terms the customer kind Pool stand And operation where customers? the of Good. your asked voice can this the because equipment? and extent interest chemicals of on in I sort before I've the Just automation of which updates just to take Pool testing you automate does so

it as what learn customers it's about help dealers our think. be, think mean we they year have need. higher be then this used still And level think And will and -- they more of a time people the time to and penetration to Deane. caught in I get get I how end where up have to be productive

will right think out then about accelerate the we I how make to to we have things and and simpler really I bring value penetration those And as help complexity take rate. overall it have of think that pad. think us portfolio to X we think we I the also And do the have that proposition change well.

question next Linzey Brett from The with comes Mizuho.

come to Pool. to back I want

visibility the that and fourth out feather the most first quarter, second about or to have there? of some into try just do has the you in received, revenue any think shipped some just preordering activity So of

this QX, for in be second, QX about will be which then Pool strongly balances mean, adjusting It's the QX it out and be which in the QX honest. of season, us. but servicing and between season, within channel I the is most would to

to are allocation, 'XX guess Or we event? if as Okay. capital do back HX Is point just think repo? bit And at repurchase do an you a lean for but more assess aren't little and you think heavier 'XX a view, then the of I into incremental M&A deals that of you into certainly, should of what event? episodic, coming deals course

do. then to got if capital seasonally in Bob that's least part things the we things then potential transact ultimately, we're performance got we're we're or looked I back I And as be excited determined. to and them think bolt-on buyback the And we has flow looking think we've we're expect, them just now seeing get first is at going over normally M&A step finish dilution that QX, to line, offset be in and we reinstate strategy. and at as got at at. some valuations, have we Well, always that we're allocation that get that strong cash mentioned, at we our But can least looking to And to again. pleased yet of

question The next from Andrew comes with Paribas. BNP Buscaglia

resi than different, Flow wanted had mentioned -- kind us concerns down And expected, just leads just about any of that check what's you that behind markets what's the remind driving are I then into to weaker Can but side, other that on XX%. you your areas? that?

well it. pumps ground pivot which America, That's water is particular disposal. is you'd in supply, specifically say markets: and what Two spray irrigation. water it's North

I and stock to dealer to the thinking to drive need. softer was or have running softer that within market us that or to just just understand not specials outs levers any going think be the it about market the transformation that that worth promos work is that within we clear we it's really quarter

weakness guess... sounds strong, all of And in then Flow, I on outside areas of resi but of the topic

then got tailwinds, still Pool outlook And treatment in Pool's saw the severely digits year-over-year and jobs perspective. -- inventory residential again, a their from the yes, which are down year. got mid-single water helpful, market last severe

sequentially really which the seeing substantially. But down of signs improvement moving they're of as so those flat higher-end move not of financing systems year sign you here, said positive, And some either that's as throughout if not more they're a require they're to they're them.

next from question Boroditsky The with is Jefferies. Saree

was Pool. So update you you just made remodels year? you're aftermarket how Pool the positive on us thinking about comment new Could for the construction and that on

historical versus update Right perspective, now, as our time. it's overall, in think original at we're But thinking from we're guide. and context standards. that I about exactly within no this same working down industry the an And

realized given guidance benefits. second have transformational your Pool of then guess the you slightly but recovery implies be I expected And to XX% and I about would earnings half, higher

that, offset second half of the to the be earnings half? that's driving first what's to So kind to similar

down point the and on XX-XX. roughly first earnings at pleased in we're we're call, Again, at being the Yes. last half, -- the now our where slightly about EPS we talked it's

reading the strength strongly So feel again, with how half is will momentum And of is continue in we first in operated, business line out. the that the half roughly the the second XX-XX. that's traditionally

Krill Andrew Bank. Deutsche from is with question next The

of follow-up seasonality a the Just on kind question. EPS wanted quick

it I split. the sense on think XX-XX makes

any maybe somewhat we Just wondering Or flow versus those XQ, think historically, XQ Should expecting be the more more heavy transformation little that? there is through? are a reason as it's for I XQ benefits similar.

QX, we normal to The ship will don't have skew Pool by is have is more of holidays. and I see people normal year. earlier push is cycle a end think at versus that sometimes to everything the which be generally homes say businesses, shipments don't the going then season year. we bit close for business that's QX this or like look I them that the there's QX. Most their what the a idea year. things on the And cadence not same stage. XX% a would during then skewed our trade more stronger to we to would little the what dealer industrial leads want subsequent if the no of inside very Most do, the And strong to depending that of don't our of in what that just or where

a [indiscernible] Very just of lot a just et helpful. a then book-and-ship that cetera. more And I patterns, kind quick Great. but normalized a cycle for backlog, more Okay. of know you're business, follow-up of [indiscernible]

you like segments expect be small exiting reasonable should the and to Just are this backlog XXXX? is that kind into think normal have the it of rate year lower now the run more

that, year more cycle continue. lower We the that agree operating majority of and is conditions backlog end would that at the as the normal shorter be this would the with

with Research. Scott question Seaport comes from The Graham next

X them. have of I

on notwithstanding is finer bleed guide suggests a in course, one initiatives? that to gave first point, Does here The In off the strategic is what strategic little on pricing, the pricing you've with you that the pricing of for that the bleeds the balance sustain off earlier, increase year, maybe a given for say X% number? bit prices, the of if year. more the pricing you a let's due bit the rest -- year, of pricing little that pricing other next call the to of to words, X% into

X Strategic things. Yes. do would pricing

is helps price confidence right all, features accordingly. the have that you priced it the of should you First set the you you that meaning value at you looked expect, and

rebate on it second The allows structures. thing you hold your is to do firmer

net So pricing that's on. where the comes usually benefit

as take and to when Bob pricing said, look enough X along would don't what there's realize costs, to usually pricing, price offsetting at higher. to if we it which or neutral I And usually be, you but be you in material we year's list drive dialed next have So try did then those elements. And drive cost. is inflation at we're to going a net actions we know least yet,

you yet really transformation, necessarily wondering wasn't mix Pool, fairly get really It's follow-up with quarter bit benefit just quarter material just from just easily. rest is is volumes. -- the of it I'm be a savings, -- I a So should around My Okay. potentially? margin the of higher the have you you year, no know margin seems building was than no if have thinking little to like benefit strong of that you you building Are mix first the could had and -- but which be from strategic volume, guide. there XX%. XX% right? in Pool, able sort the

the that there's the that ROS for you reasons suggest the XX%. And our expansion. we're mentioned, potential overall, would I on midpoint guide start by does upside saying of slightly than higher

like that drive lower in a an but So offset We some is a ROS to going minus. example. idea profitable having can that mix -- that's expansion. it, Ice And got inflation, play favorable then as saw mix business, the in business then I price or transformation QX, slightly plus we

transformation out improved could ROS So reading factoring story. price better offsetting potentially mix an and inflation, expansion then in drive

Cowen. The with next question comes Joe from Giordano

of regulations on have asked been and how your thought out that already. in product. things This have most kind [indiscernible]? I picture, market? for PFAS. the real And how just bigger of about questions curious But kind curious, XX/XX something just weigh thinking wanting largely the you a that potentially doing how comes those kind like focus like out of simplicity dynamic play those and strategies, I'm guys were an like is think of in-home with against know to you you does EPA process kind on that

question. I think great it's a

see to And I revenue XX/XX on projects. to system about streams think get I believe but it think And are impactful current get more you they're working we're impact I homes, what a better I we're apply and for the the today. regulatory to people we And behind the out whole better on. drinking, and that's with fewer, on running concerned that think strong I is innovation don't on make the in pounding progress and And now that. what we that there's optimize more a current that awareness in also or larger people to the we the can you side helps water needs problems think choosing the buy actually don't future. what the your focus have, that the the you products have home movements all reason around more we're getting at just consuming table us. The solve do I'm doing do right still create

I look else get term, be energetic. to has you the consumer So the very And something occurs focused. longer that at there think to we're as

optimistic to think the shorter-term a shorter I that we're impact. we're going term, less see

Today's final a question Tusa is Steve follow-up with from JPMorgan.

quick last one. one Just

million $XX effectively entire, just to assume call the the that the million transformation from don't it, do that's that basically XQ, $XX XQ? we On know, I for

Yes.

And captured million of million the linear $X $XX out, fairly quarters. the we've remaining is million. $XX our reading next view that terms of then over the X -- is In

Right.

So the quarter? accounts year-over-year profit the all second that basically for like for improvement, roughly

not you're Solutions, by off. being but volume incremental year-over-year Pools a bit impacts the little Water far With in Yes. offset growth

would question-and-answer conference for to back concludes now John the This like turn remarks. to closing today's session. I over Stauch

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

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

which landscape. full and XXXX to strategy geopolitical our we our guidance the continuing Second, year macroeconomic uncertainty confidence across reflects in reiterating are while monitor

where risk are more and performance agile to can drive value. We new as achieve expect shareholder we mitigating being we in and XXXX long-term records

we continue year. Thank pleased our Third, to and you, And a drive we are expect expansion. deliver have finally, the on to to to expect we day. everyone, which our great beyond value transformation strong initiatives, fiscal with continue margin progress XXXX creation

Thank concluded. participation. now your has conference for you The

lines. now disconnect your may You