Watts Water (WTS) 8 May 212021 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Watts Water Technologies' First Quarter 2021 Earnings Conference Call. [Operator Instructions] I'd now like to hand the conference over to your presenter today, Timothy M. MacPhee, Treasurer and Vice President, Investor Relations of Watts Water Technologies, Inc. Please go ahead.

morning, good and you, everyone. Thank first Welcome conference earnings to our call. quarter

CEO today and are me and Bob Joining CFO. Pagano, President, our Shashank Patel,

today's year quarter current quarter outlook provide quarter During will the discuss and will second of of Shashank XXXX. provide Bob first our for our details the for first our an operations, revised and and of the and state overview the our the full the performance markets discuss call, outlook

address questions the website. will Investor to the is Following by during we our of which the related information covered found call. accompanied our remarks, Relations' section in webcast Today's can a presentation, be

will non-GAAP the We Any presentation. throughout is remarks. appendix prepared reference financial to this to reference reconciled presentation our information in the

I'd numerous that of everyone that begin, and we constitute during be certain remind to to call, could this actual statements. to comments like subject risks course forward-looking are making differ that will materially. we results uncertainties cause statements the These Before

information update or For disclaims will obligation information, result events see or new filings that, available With call forward-looking intention any The publicly to the of Watts' SEC. now revise whether with turn as Company any future statements to a these I the over otherwise. or concerning risks, Bob.

and circumstances. trying our teams. I first very logistics thank must like turn Thank to organization an quarter. the executing supply Slide especially good under manufacturing, Please Tim, morning, everyone. and to provide our you, of X and chain overview I'll I'd for applaud global

of caused freeze a year. start were and customer market ongoing demand.We bottlenecks, X%. with estimate we in our quarter, together around first availability, issues stronger pandemic. how U.S. fulfillment The sales solid benefit had an anticipated. was South in transportation had affected unexpected to worked experienced Europe mid-February APMEA and the positively customers' teams conditions plumbing serve needs about the The dealt that the in underlying we global they to severe numerous During the problems widespread the infrastructure consolidated I'm and Central winter proud by than component

driven operating continued Lastly, part of XXXX.Adjusted expectations impacted in the easier margin supported of comp by upside which actions heavily in exceeded COVID year-over-year and QX incremental by APMEA, was cost by sales. an was

delivered market also flow and through strong shortly agreement extending the of terms quarter, credit completed cash ended, conditions. after the We we March the in amending mirror XXXX our current facility to the and quarter renegotiation

We a affords capacity, have flexibility. of us lot which ample

half us meet price of well Entering component driving the issues. which the constraints review detail levels, announced These maintained XXXX. We real allowed inventory us first dividend driven we will in Supply supplies quarter, demand. see additional will momentarily.Operationally, Finally, that in benefit financials quarter. logistics until won't in in potential the freeze increased we in go price and availability higher have to chain increases later of the steel announce copper, to Shashank double-digit the commodity more a increases, the coupled have June. the especially effect costs packaging second increase starting increases increase heavier significantly proactively into with as globally. product and

and incrementally was However, invested we of to sell close small We year from constraints quarter for million our products. continue the to supply and higher in or million increase $XX million the chains future. a costs.During the over half in are which now the resulting in in Mery, proposal We productivity local We invest for approximately to global additional in to support spent smart $X investment full France. spending a projects. announced to $XX connected plant plan primarily growth

be and local the making close a determined yet sell for final decision the or with We works plant to approved. currently councils or authorities, to costs timing consulting government and are so have related

goal to the to plants France. other existing is Mery Our move operation in

I'd On provide Canada upwards and Our Europe by we employees. approximately we and markets areas GDP Italy mix for in a end and last forecasts anticipate people.Now, been the Pacific XX submarkets. and while in February, reduce. approximately have France, impacts including by downsizing parts the Germany perspective, Asia key a new GDP have seen XX spoke an basis construction to be vary of in in to continue markets. both other U.S., residential update expectations Americas expectations revised since From like Market net in macro proposal on commercial the our

housing New are new residential residential for construction XXXX.We recently postponements XX% diverging and year-to-date up with although of March challenged XXXX, March year growth growth on We single-family new to least a June constructions with showed still end survey X,XXX recent prospect and to noted period. that saw XXXX the A sequentially. non-residential lumpy depending seeing starts see remain cancellations project either buoyancy contractors multifamily further the will through XX% over AGC for starts market. the at positive steady anticipate starts XX% look continues some or about postponed or in recent and January canceled projects

which that lines construction we continued as head installed projects indicate early are commercial during negative construction sales into latest new quarter. indicators growth commercial been more the saw have XXXX. product drain industry may The growth positive, in Our

drains, expect well we for inventory we has levels, freeze and That during non-residential the Canada the freeze second caused continue demand has GDP South and into quarter. tailwind we be have Europe, expectations well. of in channel in is the and replacement repair and market that and positive air South to underlying that in reduced increased, construction.As in In channel as mentioned, in for the to and wholesaler the many restocking Germany support the see from continue better. stronger drive continue freeze with foreseeable new up is at continue offset be there'll marine in up the expect challenged except Americas least in energy will Certainly second sudden France, and helped the Government the pocket we contractors also to that in solid commercial impact look has Central the drains future. markets so for the to U.S. quarter the picked business to term. activity business, now, our very and look U.S. expected anticipate home For near Feedback should so sponsored holding market replacement repair subsidies provide Italy activity. the QX central region QX.In

last and performance quarter the year, expect the remainder The where June, is have XXXX.Regarding year However, the across given still and the unclear. half protecting been job and had concern the by has that the channel Europe through Strength is second good expansion balance in Pacific successful there East vaccine minimal impact pandemic. government-sponsored Middle second region, the as U.K. In expected the employment progress have the especially Asia governments challenged the markets China and the come of and restocking. markets valve of positive a the freeze strong being driven the lagging impact are year-over-year implementation commercial U.S. QX we place countries a in Australian our Italy COVID from the growth both in we by negative a outlooks and COVID and for of for in still controlling in done and Zealand New see in the is sales, are programs our year we many expect still strong back market the

and disruptions, inflation, still issues increasing air logistics outlook roll our than are pocket, being We the the second concerns chain the of full vaccine year first expected and the outside commercial the given about supply stronger U.S. main construction We some half. with have impact the final half new

want along ESG points Finally, to we journey. as mention our I a few continue

a employees, Masks, protocols of social operations. health remain distancing and and in First, remains towards we priority. remain which vigilant embedded the our safety our sanitation

sponsored water more Vietnamese drinking and the Foundation. in with Water the Since part we XX we beginning water. Second, students of integrated education partnership and partnership Planet for small Water health approximately with with in funded in hygiene of recently clean took XX,XXX our Project Planet installation safe, water system a XXXX, an program people in the countries in provided than nine XXX town. a We

will Annual some in the and quarter enhanced turn let who over Shashank? goals. and we'll address outlook. second full our that, revise With Shashank Sustainability the and be me accomplishments report call latest our to ESG issuing our near-term will Finally, Report our first year results discuss important The June. quarter

up Thanks, basis X% consolidated Bob, on and first good were reported and to of Slide X, morning, turn everyone. the I a Please X% million results. $XXX organically. up and Sales review will quarter's

Europe, and in Price than South in and the we during organic approximately sales expected. was Central of favorable volume the discussed, estimate APMEA an States. because had Americas increase easier we the both and As was by freeze in the compare X% United stronger Europe's quarter

adjusted points XX% actions XXXX. Adjusted and increased divestitures accounted up compared million driven tax roughly inflation sales XX.X% the of euro, to The cost price, were comparable sales $XX year-over-year effective for $X.XX. was million to volume, was of up and profit or operating by XX% Foreign adjusted incremental Adjusted of exchange, of operating rate investments. year, XXX up $X million, last share margin primarily the a by quarter as per was earnings XX% net and first X%. year-over-year. to strong incremental basis offset more productivity Acquisitions $XX than

of to capital net million less to Our cash due spending. The higher management, million in net and free income, flow was capital better negative XXXX. compared first cash flow for $XX the the quarter quarter was as $X improvement working

for drive Our XXX% cash of at income net year. goal is to or flow conversion free more the

Absent APMEA's expansion of dividend. due the a on was sales. quarter quality partially X, freeze only and sales by for hot me delivered Americas $X.X South We offset XX%, a we let were profit growth electronics, first growth stock expected the actions quarter the regions points. offset by by and solid cost by year's water in rates. increased both the The in which growth posted expanded lesser by turn and New by double-digit negatively favorable sales including shares and valve in from in inflation by quarter with softness OEM Europe these driven heating driven driven foreign regional sales in tailwind million, from to than estimate organic grew Slide exchange the than price, a was sales, cost continued is to year-over-year announced by where and was a and channel, almost the adjusted Adjusted the benefiting driven points driven Germany have China Scandinavia, acquisitions XX,XXX a supply and The in platform provides percentage and plumbing freeze-driven from growth we and by by offsetting the been growth by XX% provided lower cost as business. operating East. being Central and price, perspective, expectations. HVAC Reported line was approximately sales incremental up Reported basis government impacted Adjusted softness increased acquisition from offset China. the foreign XX% outside X%. marine margin pre-buying better margin XXX and solid and inflation. movements. with and in X%, repurchased expectations. our Zealand by X% Middle China volume, centers. was in of commercial flat of In million also in XX% COVID Italy, than by China's would U.S., mentioned, growth, was from the organic growth. continued extent This and sales water our in in $X provided in offset data During of stronger being from increase AVG commercial expanded Organic we From margin sales growth Australia our operating second our movement. margin saw comments sales offsetting operating were due to results sales continued approximately and inflationary a productivity impact, outlook. productivity and first by few sales from operating from as residential increased XX% the in that Region soft a offset Sales the last quarter, Organic inflation organic with than common up lower in contraction and provide heating in partially party comp of subsidies. organic from and quarter and X which primarily approximately more investments. and our plumbing we The sales volume, higher net more in easier sales which to Please XX% favorable wholesale products partially incremental actions points. results. were operating and margin our by activity productivity with increased freeze was higher operating quarter to concerns. Bob the chain saw XX% intercompany third approximately investments. anticipated U.S. increased demand. actions about in basis intercompany exchange up with XX.X organically XXX France by electronic Slide Adjusted adjusted assumptions customers volume, line sales primarily plumbing demand

expect market. given We U.S. second of we a the quarter continued in the COVID's Further, year-over-year year. approximately the anticipate Europe X% in on wholesale and the additional from freeze an Americas restocking expect the strong sales impact compare impact major actions last in and benefit of

offset supply These will have quarter In XX%. consolidated may a total, and we have a impact. grow estimate we to in commodity minimal As organically effective so Bob become second the later and globally second price inflation. increase XX% chain between and mentioned, sales announced

In should partially for spending growth second $X by million. addition, estimate approximate quarter. we offset investment quarter will and to $X of reductions Corporate XX%. estimate incremental We expect from for through incremental by approximate incremental operating spending acquired margin million All-in should $XX the range XX.X% our driven drop could million XXXX and volume cost we $X to the the temporary that XX.X% cost adjusted second and of volume to related XX% between return million in

rate old we we the about adjusted have of or year half XX%. second expense which interest rates, agreement, in the charge. interest approximate The are what approximate under quarter in were we less should Under last the debt year's debt tax $X outstanding current agreement as million well. than locked expect lower market effective new than and We paying should last

the quarter should the year be a euro-dollar last exchange compared to Foreign tailwind given current exchange second when rate.

X% outlook non-residential X higher for of in let for XXXX. for Group. which February Americas review the me We the of acquisition Sales as from of stronger anticipated as the freeze benefit Now by increase revised our the X% growth neither repair our well to the by replace and $X expectations. second to million the outlook let's was organically increase estimate Detection year in price turn should driven full GDP that and year about in increase Slide due full and may to sales range the XXXX,

the on should if year. million higher, intercompany organic depending savings operating operating of and by from by cost slight In We increase the half. Watts' now the AVG driven and The a expect XXXX, as acquisition the XX% also expect initiatives. due the inflation sales operating not growth X% than adjusted the market basis, Europe, and the margin Adjusted freeze, slightly of the Americas maybe similar the increase in XX% the margin be range than energy between be adjusted $X Sales year. organic as productivity to we in We cost drop-through the on increase more growth in driven we sales by the on reductions. freeze price initiatives.For residential approximately along of and X% second half may up incremental the to year X% from sales and This from grow This anticipate in be marginally the consolidated United the increases, price second primarily is we in and volume, Italy versus increase XXXX, margin approximately our are to underlying for France, expected well to by drop up first organic anticipate to the in volume savings key in States, up through Central in with X% from expectations is X%. outlook will for and markets benefits the driven region impact better forecasting government XXXX. Germany previous regions. of end to price GDP South initiatives. our incremental to higher will offset to APMEA, in driven second Overall,

XX there half construction cautious United the still in air Also States. are chain about incremental the volume, pocket of of up our maybe basis to for robust drop impact adjusted the and supply the and we consolidated market. from retrofit through year. estimate to than the points in the the XX by price, issues primarily Europe, margin date to in new We This repair driven the is headwinds potential the the partially key impact more more due restructuring rollouts. potential general impact have However, of offset inflation. million, second incremental $XX shutdowns offset due by in million, by these And $XX the cost investments delays productivity cost and savings of of inputs. being other XXXX To of risk is been $XX and vaccine risks the regarding million, of a and operating freeze

will Interest costs corporate for the expect million We year. expense roughly be the $XX $X for should approximate year. million

effective spending million should million amortization estimated to the Capital $XX is $XX rate Depreciation tax XX.X%. adjusted in XXXX expected year. for the for approximate and should approximate Our be range.

continue expect of flow greater We XXX% to to or net free than equal drive cash to income. conversion

in the is EURX.XX movement by Please euro-U.S. now in X.XX for EPS assuming recall the every rate, our rate are impacted that dollar our impacted and European rate by of versus million $X sales XXXX. are We FX the for full average annual average euro-dollar up year or a approximately $X.XX. exchange down $X.XX annual

year. count XX share for approximate million to expect We the our

Now before Bob? let to begin back me we Q&A. over turn the Bob call

Slide On address discussion to questions. your before we Thanks, I'd summarize Shashank. X, our like

that freeze compare regions in aided all with U.S. we and was quarter unexpected first than APMEA. in the an in easier tailwind The was better an anticipated growth by

second our in in Inflation basis. offset beyond a minimal the daily Supply see we on quarter, and quarter benefit help that QX cost is increase chain well. team were increases. and from is first the issues operations we've issues but announced expect We accelerating second freeze as to in price the the to a in potential impact managing our also

matters closely. are and monitoring We top of on both

February are fueled weak is controls. and demand, with focus freeze, market. increasing cost end are which inventory term, channel We growth stronger the is our residential construction on to XXXX the outlook markets Near for in better, for our the overshadowing Market consistent expectations investments by repair while non-residential continuing and new commercial restocking, replacement outlook.

half air pocket Watts cautious supply and still to is new due starts, because the indicators impact the non-residential progress construction XXXX. we'll chain in are rollout We The about the suggesting constraints, vaccine leading in of are capitalized. non-residential second see growth lower well construction U.S. outside

We capital strategy. to liquidity ample have deployment drive our

The second and easier this quarter COVID benefits year. should given to be due compare freeze the strong last year

have the strong We full half. to year the prudent outlook remaining year second concerning given our start increased the while

to basis questions. supply Finally, to With our financially, positioned and on day-to-day of the we take line to company managing needs execute operator, challenges. chain commercially that, customer open through continue advantage meet market the and both for a The please pandemic ongoing well opportunities. while operationally is

[Operator Stifel. our first Instructions] line And with question comes Nathan Jones the of from

This final year is for at the to of expect rest called deep the through in that restocking inventory impact quarter the do Southern carry U.S. of be all? the XQ, to Related Adam Nathan. Farley it be in you the should that on or out freeze you

quarter? to shortage happen just of get in right area. a Could quarter. into there's depends and on the quickly in believe some the Maybe. running we going fall second plumbers how now they it's third can of It now and up the Right it

done complete our all much will is quarter. are but second bigger being So in it the pretty quickly assumption be the things

margin side the of Okay. of to specific related And in parts the were to related concentrated it then the higher-margin deep freeze? portfolio, that, products and is sales on

cetera. was favorability It We black in had our -- et Yes. irrigation, heavy kits, testable into backflow back and flows. fittings regulators

of So average absorption. from on but the was slightly average, below again volume drove I factory view would point say margins it the our

So net-net it favorable. was

with Jake line Jarnigo Our next is question of from the Baird.

of of This structural of is talked today. the just want team. in largely as Question sure actions Mike about on last Halloran's is with that that near-term I still versus Yes. or temporary on results make we cost came quarter. to kind kind the of from that, the Jake same kind

actions. year So incremental was million that does XXXX with I that last about I where back $XX recall, today? guess by largely temporary coming this of stand savings it offset being basically from structural

Yes, $XX $XX million was second $XX out $X in and in talked Jake, second million about half. so the the we million it about of the had and quarter million

is still latest So that outlook. our

million the savings Now offset and it was might the quarter that COVID be of was in lockdowns, restructuring that by then with restructuring of second offsets markout. get that. quarter, Obviously the million we incremental of that part less travel savings as than being the -- through second go $X roughly number we $XX

another Got you seems Thank kind question in of it so price like year, like where quarter, then it pretty seems catch-up cost in the and quarter what terms And it. of was timing was some quarter. hit is Perfect. so for here, quarter you. then then impact fourth second most margin a the third good, the first

on positive a basis, year thinking to kind potential net there is are we or that there too? get of neutral in full So

get in curve some and certain we in do slightly of of periods. few that for we But a and announced cost we lock and why commodities Europe, the lock in stuff. in ahead our reason longer do Yes, a like positive Europe January even -- price for for that's the of locked And the months try also net is we've in to for in in and we brass kind can U.S. increases.

had we in positive. gotten kind overall now period. and of out are But announced year full February basis obviously increase anticipated because we've we've a on second time inflated a more it commodities of price obviously, have the So than slightly

of to perspective, that year. still to rest heater going quick the I and here a seems outlook kind hit and more America. and for and business of of business kind from is is other bottom, And how this North margins like assume commercial you. the your off to relative pieces kind one comps water of the segment? of that mixed again be here we're the guess the then impact, Americas in Thank boiler on mix does for the easier that It what's kind coming I one secondarily, would more Great. the relate starting of one around then

No.

you're So They mid-single down the quarter. yes, were right. first overall in digits

We expect that for will the the have rest compares of easier year.

I at So down overall, right down. will with the believe the year, our look EBITDA though When -- I think still we expectations. you from be an slightly line margin that on in it's for all so point our think of view,

Our of Ryan from next and Scattergood. Connors question comes line the with Boenning

Great.

First the something did first just there basically a of material Did say freeze on there, was negative mix hear off, you I question was clarify there, I you was that Southeast Shashank. not idea -- I that basic wanted said that get impact to really right?

it's and how margin is No. lower slightly impact it a margins, the It the This and the mix. Bob. was regarding mix standard was did from question probably given --

of hit overall P&L overall it was margins. the the absorption given However, our because to favorable

Okay.

Okay.

any lot Okay. conducive And about different the affects I two sort markets increase, very between environment not your right I housing you environment the commercial commercial red how that a to going in my other and of question, mean for someone of hot a you this and price and that through be in set? tougher price in but your can at then this way that's if markets like would if we right it, price -- the look and at mean is putting is capture you up sure resi price development getting talk what kind it pretty and resi, to seems this capture sail to if that I'm how delta manage look pricing non-resi housing but

Yes. Yes.

price all matter trying the So what. to we're markets, no drive in

some it of have we quarterly we materials. OEM and that segments, our adjustments on the, we contracts have contracts longer-term Now of inflationary let's some in call based adjust retail

one full given most so the supply we're on speed that we're the price given every marketplace, of of the markets chain all in and ahead the seeing driving issues, said, in commodity that. So we're importantly, increases

Okay.

last you was leave company the back getting how to swan is do the and where at if too not quickly going normal world keep to the last goes temptation yourself manage mean, big year black so here risk first strategically from you Okay. outlook forth. manage the mean then but ever there is of Jake's sitting or of we're you turn to organization is sort on happens. the -- in of XX line at just picture, things go, South, my a I then point I and And an through COVID do Bob. the and cost-cutting with it just real reductions sort talking how just quarter one whatever mean I thinking ago positive how question and us initiatives months got your all later record we've the Fed this walk cost-cutting -- systems about headcount sales, sort and a in and cycle? about see,

you from conservative of we view. Well, in -- look be as a topline know, point tend to

costs So control. under we our keep

in contingency the detailed plans marketplace. have We based what's happening on

going take So we know right actions to away. we're

are back, careful about because -- we're still we uncertain. so cost So very bringing

However, relative what's control is labor given we right can't given inflation also. commodity to happening the the inflation volume, There now, prices.

So the we're growth balancing those and again, right, of long strategy. things going focus all costs overall connected smart to in in on our but run and to we're continue

it's -- in we the now -- heard say and In that times do right. in particular, to me keep facility much We're in trying and we're we're too trying cost you've growth many end, looking Europe have again, one for right invest So our at costs. to France.

our our cost So portfolio invest structure and as we'll to continue the for continue future. continue look we'll we to that, manage at to

-- is look at you're business, this our the so of indicators we're aware Ryan, input. And, ship order so tracking book only we we're but a leading not daily that and

of coming but plan meter we in. million to the and how depending that back back, cost the on is that that come So $XX yes, orders

So be. we're a daily we on top of basis have this like because on to

comes and with Giordano question next Company. from of line Joe Cowen Our the

it kind Is getting what how of the how head Just at from XQ around through kind today curious are is? like point triangulating Texas? impact just of you you've impact seen this your you're kind of like like like what from that

this freeze about? Is talking the you're

coming Yes, how the you've from is you out of like freeze, so exactly XQ this in what extrapolating the in kind up XXX far are through that seen with just kind of it Yes. basis kind quarter? of benefit region point into

above, in teams inventory channel the we're all of our marketplace sales at in April, combination the and happening best where a talked we to we what at estimate our there. customers, looked It's did we've what's right, of looking

So a again, now. point right best that's we're this time at it's and in -- estimate at this where

is as to Are you like about curious I'm but specifically of these of there inventory of ahead guessing of people know types products like seeing as elsewhere, are see parts are we're for mentioned I'm hearing talk what that seeing in you the the risk -- the like other now -- your because mindset customers there this stocking of maybe is you supplies. customers world? not much low kind about of of overstocking like I let's up channel inventories anything excluding

Yes, raise a you I think good point.

all ship almost in of brought South was in channels really region every being this all from So regions. products the inventory the freeze pulled through because to availability Central

some we So of that watched happen.

chain, especially is because number case worried in orders availability. thing incremental early is given just their customers one, the two, and get of placing about the pulling pricing supply and future other products, seeing they're other and The there line concerns to in projects number in we're chips

projections, second going this to year those and point both know this because That's we're little don't half why we're seeing on been now in interesting right how forward is sure we're that's game. concerned time. and latest based like be chain there our why to of a the into are concerns in but So of just us. ordering we at pulled ahead concerned We're the of we're more QX supply make has much QX

So point. me just from last the that on

second a how forward world worried logistics you I on experiencing here? like you incrementally the on thinking this from know of I already kind couple You right much are here second is actually mean, mean I worse that on mentioned are of concern over logistics gets times, now definitely everyone's from the mean into -- into you worse side, gets tough that now pulled understand what being half? I this pretty half but you're

a down, cetera. trying I with drawing rebuild in we've allocated at inventory some And everybody, we're getting think back the that started beginning position we quickly. we're think the products, I been like strong and et year plastics, to of our chemical-related of products

about takes concerned tornado marketplace something. in And uncertain about a QX our good is another it's we're forbid, like happens feel God and that. but again, something out the that very aggressive supply chain or thing and So

So again, chain potential real because another and time. disaster don't now this tight is cautious we right in in we're everything need point at the supply

with Our KeyBanc. of next from line Jeffrey the Hammond question comes

Tarantino Jeff. David This on is for

maybe dig a could guide, So to given full QX? what the are dynamics seems what you year more you little dynamics in seeing of bit the of cadence into be kind better

Yes.

February increase freeze about if most guide. about of top Bob repair expectations topline. the basically of drives happens it's versus a the said, United induced, the how we GDP points Germany and then remaining the and between price in stronger new And contemplated the So X%, activity, was in of incentives. first of speak. up had increase Italy guide, the the X% about as the because but then with France government then a second now came in so in that impact Out from and impact inflation that's our which not all is And is line which the the the freeze in X% markets X.X% basically the X.X, previous think to increase, split underlying higher -- basically balance is midpoint and half midpoint we minus that that is couple it which of previous is States, you the in was and February replace and

and was kind how but out drawdown ahead Great. that of as there know then demand you a mentioned increases kind inventory pull taxes, go? just does far forward is of far inventory how out follow lot a of I up, of And that price was rebuild there from any

on a as chain in but we're constraints. price quarter forward increase probably first based well the pull the the little think in less of supply I So as this quarter second new expecting more

quarter. The third supply will chain we're the end internally, goal the of Our be caught up modeling. by

all best from just point but that's what in So we're that our time our best time. partners in this point channel estimate that's this at hearing our -- estimate and that's at

with the And Nathan comes Jones of line from our next question Stifel.

air Yes, thanks construction new for the relates just as could get pocket. the I follow-up. I U.S. the it was wondering on if more to a little in the color

for XXXX? back are to leading you what called little that come you gives that, so XXXX, will think favorable a I confidence start more out in indicators

indicators looking Well, you're same dodge for see ABI again, been -- that leading we now to momentum, we're positive row. last X right, at, months a has in the starting the

turn see signs are to here back. some so are there today, and feel both rates. X Starts leading pocket. and we in of still and biddings are showing coming of happening down I in months I certainly, products down. that. starting related, what headwinds going lumber, talking, Certainly, QX more the So that interest skyrocketing at to is versus all are is more too soon new costs costs air low nice now. least are the and track new a those and it's it steel of leading that again, our are a of the that But ago, as indicator drains construction. But you're turn that that to up saw have indicators in the part and starting still are the we see 'XX again, building tide predict They're it's We marketplace. of construction now, quotations right the sit people copper But the to are

talked momentum just it's the so It's by the we've offset And call other about all here. on previously down. being

gears in in guys The renegotiated the tax M&A And potential given could the you willingness increase? seen gains capital then good Okay. you shifting sheet the shape, acquisitions. maybe the for really your have and any prospects balance sellers is towards so for financing, increase for accelerated you describe on terms

is M&A always look difficult. so Yes, hard always to is predict, the timing

the Our are of to is that's it. of so and that because high. some smaller part valuations because the all We'll still be of tax the ones recently pipeline continue acquisitions, -- benefit strong. disciplined was TDG we've Yes,

be still the that's to always in companies to high, their mindset, predict size on but it's think so disciplined. and we'll difficult smaller continue I valuations are again

this And there Bob like Pagano in CEO, some questions back to for at over are no I'd to time. further remarks. queue turn closing the call

second call in taking us. again earnings August. a with early speaking you at interest day, and Have stay in and time Thank continued quarter healthy. for to you look to today your We the appreciate forward Watts, our good join

today's concludes This conference call.

You may disconnect. now