Watts Water (WTS) 6 Aug 222022 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2022 Watts Water Technologies, Inc. Earnings Call. [Operator Instructions] It's now my pleasure to turn today's call over to Diane McClintock, Senior Vice President, FP&A and Investor Relations. ahead. go Please

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

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

and quarter an During sustainability markets for the efforts. our and the the Smart year. operations. provide update discuss of will and call, also our the details provide Shashank third will second on today's the state will Bob and quarter second for of our you and and He of Connected discuss current initiatives performance overview outlook our quarter our full product the

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

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

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

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

an morning, overview and Diane, good Please I'll everyone. QX of our turn X, performance. provide you, Thank Slide to and

COVID China who the executed record the Ukraine disruptions. inflation, Firstly, chain Europe's war the I our of lockdowns challenges and want through effects the the in to supply around economy, have thank continuing employees of world on

team of of the our Our success is customers. dedication to our serving result a

significantly to our the our better year continued results with We we expected. than quarter strong second start

to to our better During decision the in incremental allowed which to customers. benefited our invest serve inventory, us sales due we from quarter,

lower subsides investments benefited volume the and from second productivity, our incremental which were increased freeze the in This comparisons of to Americas favorable the price. quarter anticipate the pricing cost the difficult We free dynamic needed costs growth team year We at capital flow with inventory. despite the more in organic of half key in top mid-single-digit despite and Russia Central our of the team Adjusted the in to U.S. slow escalating impacted markets, than and more and still Europe normalization. of when another growth proactive war, half to quarter in the of year. due exit inflation, has expectations prior our offset parallel deliver the growth APMEA, inventory impact through due first operating Our sequential able to year of in We delivered additional seasonality. cost the in South business while the the impact investment in double-digit second demand several the investment become improvement last supported cash Year-to-date delivered half inflation. due in to price, meet of exceeded line lockdowns balanced. margin working by current quarter. seasonally the And normal Ukraine been the in

sourcing and supply great in a beginning some easing see We're teams chain supply Our cost in managing have job increases. securing chain. components to done our

challenging. still component However, electronic availability is

are and our We committed an and our to Smart to during future investing benefit $XX strategy. million incremental XXXX Connected

Americas, an mixed. continue markets. to are construction In update the new The provide Momentum our to nonresidential like on be ABI Index Dodge and indicators I'd positive. Now end

downward market GDP. industrial up but North and shown have revisions slowing well holding is repair they retail, of and recent positive, remained there Institutional hotels despite in America is The replacement office building moderation. However, subverticals. and currently

construction and residential material to effect. are inflation rates take interest New rising starting single-family slow as to is beginning

rental demand. in the GDP of bolstered solid be affordability potential costs war triggered to a rising continue energy and starts concern multifamily In a declining and have reduction However, Europe, forecast has home recession. as both single-family

than of markets half we communicated, previously approximately second the have will first negatively for region, the the $XX to Pacific the by The particularly impacted business. second million quarter. XXXX in We our $X lockdowns, shipments In approximately direct half our European our anticipate be heating annualized sequentially As slower the Asia China our were estimated COVID Russia. business. million stopped and to impact be that is

the lockdowns As resuming. business lifted, is have activity

as impact sites in slow continuing are However, reopen. there could the quarter to job be some third

on third Now our and of year. outlook for the an update the quarter the remainder

the any year impact and Price third sales more improvements the from productivity and organic margin prior growth quarter. war should in incremental investments. and the expect in inflation versus offset We than Ukraine,

our of expectations, and we result our outlook. full are quarter third increasing start solid a As our year

our solid war driven against update demand Ukraine. expect in Americas could the economy of anticipated the in We the Smart initiative. Slide Connected European and on impact the buffer by X, I'd to slowing you like On

you grow focus our in new smart like As and connected couple a part to them we're strategic of organically, of with today. and share investing I'd products, innovative to

the of to full compared sequentially XXXX. increased as connected the second well as quarter, and sales the to year smart percentage quarter the first total During sales enabled as product

XX% We by sales our enabled and continue XXXX. progress connected smart to of make towards goal product

monitor additional is a alert will peace business, detects significant The and flow probes to proprietary a and smart home system The valve certain water drainage or or close water to resulting a and from ice system exceeded. thermodynamic helps app notification roof designed also if provides snow notifications system rooftop The levels and water controls. The flooding. flow the reducing defense system costs of valve and readings to blockages early mind preset detect detection prevent pipes the via in leaks prevents The and will the are detects leak preventing sent and potential flow. sensing in BLÜCHER melt parameters trigger damage temperatures drain in damage property and providing of connected employs insurance a building notification owners. management app Sentinel or send capabilities levels. to temperature or exceed to if ice are enable snow Our

providing solutions problem-solving value in are As our see, and Smart great real-time you can customers. our and Connected investments to

Slide Now like our report, reduce some sustainability In I'd our to environmental XXXX sustainability we and efforts. longer-term on highlighting our goals impact. issued X, our establishing to you accomplishments update on June,

XXXX, labor environment Compact, of and worked joined to XXXX, to into Nations and and as proudly During In and opportunities incorporate committed early corporate we further ESG distinguish our advance the our anticorruption strategic operations. ourselves aspect UNGC's finding strategy. United and commitment human rights, standards culture we a the Global reaffirming strategy, on citizen, each principles responsible to our

use and XX% greenhouse gas intensity by XX%, waste by XX%. intensity improved we year, intensity the water by hazardous During

We our and for our and are and theme customers products based conservation also on by solving water regulation, designing and safety solutions efficiency. of triple-play sustainable energy sustainability challenges commercializing

X XX We safer and we U.S. sites, targets hiring established injuries provide disadvantaged areas. with continue drinking families to collaborated sites at in water In responsibility. diverse at Planet focus achieved recordable XXXX, clean, to on social XX to Water

is Watts. In to key With results journey forward core do retain as talent formation address overall to different and the of outlooks. at and support our commitment is quarter what We component the addition, attract, groups we encourage is that, revised call ingrained Watts. me over at who we inspire and our third in and our X furthering Shashank, turn part sustainability a Shashank? to continuing our employee our It culture. let to second quarter full our our our will look communities. year and and Sustainability work improving strategy to of of resource

quarter's in Bob, consolidated Thanks, turn million everyone. Slide and I We Central XX% tough and second good benefit were freeze saw the Sales the double-digit the results. saw XXXX of $XXX mid-single-digit United a States. the and in quarter growth and that up morning, quarter the Europe. on included in up strong reported X, from XX% South review had Please a We growth very Americas second a to organically. will comps X% basis despite

XXX or last normalized $XX million offset driven XX% million, inflation, year roughly $XX spend. EPS and sales productivity XX% year-over-year. more operating for and adjusted primarily XX.X% and Acquisitions reduced volume up of sales to Adjusted incremental $X.XX. year-over-year points operating price, was up investments compared accounted incremental than by basis exchange, to Foreign Adjusted up weaker was a X%. was profit margin by million euro, of as $X

proactive As than decrease was rate Bob indicated, in inventory the supply to higher our lower our primarily relates quarter at XXXX. tax investment lower The price. cost operations. of margins with Mexican combined from of our the basis quarter chain benefited points the second effective in adjusted XX%, The restructuring XXX

higher due higher second cash offset in was free spend, quarter Our year-to-date million capital $XX restructuring which was payments invest to in to employee and as income. and inventory, cash and proactive million of compared flow decision to than $XX the last more customer incentives our year. The flow net net higher decrease

our improvement X.Xx, was and We drive Gross and leverage flow, in strong. sheet expect to free of goal The remains year flow net net negative XX% of free leverage conversion sequential income. approximately was cash is X.Xx. our cash balance full

expansion the debt at I'll that growth South organic adjusted The provide common impact platforms realization more Acquisitions price, repurchased also Please was resulting points. reported costs. profit despite was of results. ratio included of and second the growth U.S. $X by increased $XX comments capitalization and million and at Central stock offset region price net negative and approximately turn by of regional which Slide approximately net million. by and quarter to inflation, our the with than strong in normalized The X, all a comp up the for incremental The have Adjusted XXXX. in strong to quarter tough shares margin saw had X%, to by sales business XX% productivity, very XXX a all X% XXX,XXX XX% investments on Our demand. increased margin from basis or driven was freeze in operating end of the channels. approximately X%. and volume Americas quarter of we Year-to-date, a underlying approximately return few the sales. operating market the added We driven

price in solid Germany negatively cost robust. in from had saw food growth Scandinavia incentives. OEM inventory with Reported combined with quarter up beverage also higher growth investment to X%. business We HVAC approximately sales be expansion. unfavorable XX% strong and by exchange organic markets contributed We due was also our government as Italy, and to and impacted continued proactive platforms. growth organic drains energy movements. growth a to Europe foreign saw at our Our margin lower plumbing, saw end by driven sales solid the in

primarily XXXX. offset in volume, fully affiliate compare by third APMEA quarter. second assumptions our full price quarter impact Operating million was the we the our Organic margin impact down to be operating low to due decreased data in productivity to X% investments in quarter expenses. continued demand X%. XX were of and valves affiliate were due year second unable Reported provides and reduction As and we due shipments from the investments. digits, sales in declined unfavorable of sales heating to foreign our primarily to offset margin quarter. organic China's freeze points $X productivity Bob, to the grew the single and direct lockdowns X to the and to China digits. U.S. exchange Adjusted inflation, outside volume a have center sales XXX inflation commercial about China price normalized tough basis were operating declined into China up Russia, rising as X%. outlook. unable estimate and business Slide the a declined stopped in XX% organically single grew second mentioned due high as points basis approximately sales of Underfloor market. by movements

cover let's First, quarter the outlook. third

in sales grow XXXX. third is X% over are of due the rates XX% consolidated We to to moderation organic third for growth at estimating to quarter quarter X reasons. the This

declining the Ukraine market by conditions Europe are order the underlying as of impact war. a starting evidenced result Firstly, to soften May patterns as in of expected direct the in

X have months increases to multiple first XXXX. we in price due more of challenging implemented Secondly, comps the the

a exit Russia of the from our sales we $X to approximately headwind from decision Lastly, the expect also loss direct million. market

The second deleverage million. We the XX% of drop from We and by from with sales margin volume incremental and XX.X% prior for range expect between the quarter through prior third driven spending volume could price investments. year. approximately by quarter, prior year $X operating million XX% increase We $X to versus estimate acquisitions. investment in to the is estimate operating our productivity offset XX.X% and and incremental decline of incremental the primarily driven partially adjusted versus sequential by from margin

previously effective costs as XX%. million. the $X be line in quarter headwind be favorable approximately as looks the the be addition, price/cost expense adjusted the Interest should The with price/cost second rate mentioned, second more should tax in Corporate second In should $XX a half becomes approximately to dynamic half. balanced. million. Currency at in approximate normalizes

FX We average the reduction are euro-U.S. average of now million the versus third to rate X.XX year. of share a $X.XX equates XX% in implies rate and assuming a $XX which for year-over-year, EPS EUR a the sales dollar in quarter a versus X.XX prior This third reduction XXXX. of quarter in of

Now let's year cover outlook. the full

first year and weakening in weakness we X%. sales half to business overall expected that We Europe the the third more believe from global outlook X% macros. in half, organic to in to of stronger-than-expected growth Russia our exit our second expected XXXX, offset will increasing the X% be quarter full to in of the and are For our start able our outlook XX% than

also We margins expect our operating increasing of XX.X%. operating to We XX points between basis be to margin adjusted our outlook to expansion now a of are year to our XX XXX and full XX.X% points. compared basis range XXX previous points to basis

inflation increase and more incremental in will be We price than by expect investments and the offset productivity.

free approximate previous and our XX% to expectations in are should with outlook in income. April Our be net cash of flow line anticipated

to to in our we plan incremental chains reminder, a do and As and XXXX expect levels reduce restructuring we as CapEx supply payments begin compared inventory to XXXX, normalize.

should approximately million dollar assuming $X.XX equates FX a full for the imply prior reduction we versus year. $XX million for and year, XXXX. XX% year. versus be the year, expect in reduction euro-U.S. other for a the full average would now year-over-year a Interest are the and $XX a $X X.XX rate costs EPS we in in the could the average rate X.XX EUR of share corporate This the For million key of year. $X range be expense in And regarding million of full sales for year of inputs to to

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

We be the XX.X expect to year. for count our share approximately million

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

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

strong investment anticipated, was in double-digit quarter second The with we a as stronger result than inventory. lower proactive of and organic cost our growth drop-through

are expect on dynamic top We staying of price/cost the and tougher second half compares.

quarter, third sequentially down solid a expect although We from QX.

outlook which based increasing and GDP. Ukraine offset are year able start, war in the be We softening full from on our should our to strong headwinds

in We and are ability monitoring this in uncertain confident markets to execute our are our environment.

for our that, for framework, including We driving profitable and investing continue line against by strategic focusing innovation and to on our execute the strategy. future the With please open Smart and questions. Connected growth operator,

[Operator KeyBanc. from with Instructions] of Your Hammond first question Jeff the is line

that you second half. have push into and cost gap So won't inputs price. inventory a low-cost and Is normalizing just seems are you Or in the working the some like it bit continue through this you XQ to price had on that? largest delta

Just more color there.

second was that quarter. that about parallel the it. and of million net we to we the benefit Jeff, It's lower $X the in -- cost the -- with the Yes, price we $X is had inventory. got amount The got million in

you're Okay. Asia can all looking Or differently Great. year revision And isolate revision, same? just then at just is on you or on and Americas? it the the just full a how EMEA

digits. believe APMEA going think our down you numbers, see at, inside Europe QX, is digits. be mid-single to Well, to digits. we be And North is up low up America Jeff, We for going when single of double look

cautious, we're of now. For QX, now really in because right Europe being

As know, business a we're a for visibility us right time short you lead concern the Europe is and for now.

doing is but it, a we're the closely. of team job watching it's managing So good something

given is cautious and on overall, So APMEA in well Americas lockdowns. we're coming being But based back doing QX is that. the

on -- you Europe a the versus bit forecast the so quarter? of kind par, lowering So previous you're

Correct. Yes.

order And that's rate in Okay. up showing the May? since

rates about. Shashank declines May. seeing Yes. Yes. order We in in started talked

of and inventory being cautious going everybody the front there's given cautious recession destocking and some is significant the because nature of the of now in potential just think a it on just increases channels right in of I that's them. energy

inventories need last then and North And channel just Maybe to Okay. one. the or talk in destock in about restock America.

Yes, own. North America holding its is

think inventory. I beginning discussion. there's some are People about to talk

the also the inventory gets we because as know, So Whoever did And in we're you the have has inventory. But watching benefited we ship it's book I quarter that order. a the think and closely. business. second

think that we're it's North So in decent I I the watching levels closely. But -- America. think inventory

Your of Giordano Joe with line is the Cowen. question from next

This is for you bit price volume dive you're Perhaps Joe. a the the and just for the sustainability segment. Thank inventory particular Americas guide little declines on on of that if Michael for into can the build any on your in you color cost. margins, contemplating

Yes.

So to in we about the lower balances basically inventory half. in said that because $X talked about, obviously, second cost $X I million million was second And there and the quarter, of out position.

half well half in do come leverage volume standpoint, down. quarter. Americas, then in we've the as volume the as second second in first got margin investments we have is coming The a in from the As And through tremendous well volumes incremental the as less the versus the leverage second half.

from question is with Jones Your Stifel. Nathan next

-- would the better half to where points, had quarter. is really the what to XXX second quarter be to is would points to like guidance beat guess second you which where basis second full back extremely XXX by, high. before, quite margin basis guiding back upside. the would the cost because, were back the we down guidance XXX why If basis was of XXX go only And the here XXX half drop by, points. year? quarter XXX I the at you to you the implies why that that was XXX, it in second back to in $X XXX That guided down price pretty going down came I'm you half XXX imbalance million XXX wondering to you XXX much than the obviously, in margin I'm of that dropped more of the back the that for

Yes.

in part was volume volume as got much we That second leverage in So half. tremendous Nathan, the it, isn't of second leverage the quarter.

think you dynamic, when as was well first from a perspective. the As pricing, from perspective, year-over-year the half pricing best had pricing -- and we about right, a comp

realization so price half approximately we out And QX, But second QX second until a Obviously, in the there's half the from because we the XX% talk is tougher year got in marketplace. don't pricing expectation is it the elasticity second in versus quarter. comps perspective. it about happens last

bake in So the in about as you well. that of first second And I higher earlier the half spend the some last investment point, is half. versus made point

spend Is what was second it planning than you half? the it previously, -- higher than were in the investment

It's same. about the

I sheet just balance talk the capital to here. wanted Okay. and about allocation And then

You're net cash M&A much years of executed the in hasn't company the over in the a way slight position, here. last few

your acquisitions how the cash on if get sheet? sheet off patience it's what some do or larger to you intend Just maybe for balance with to here, the balance outlook waiting that

as But we're we on at cetera. always -- et you dividends, So we CapEx, disciplined. know, the look balanced M&A, have a allocation strategy, Nathan, right? we Well,

predict it, is of disciplined. you at pipeline when acquisitions know, happen. as but the never Our will We can timing look We full. we're

capital So how at we'll our strategy. we that's maintain and look discipline allocation

be what there. is we'll for out patient and look So

talk us But cash investment the year, quarter. million, $XXX and And over mean, point, the in allocation. certainly the about I that never second helped in been last people as in inventory it's Nathan, last

the line Michael of Your Baird. with next from comes Halloran question

or the just of could whether kind about talked the new the leading deck your what side. certainly dig stuff? some of of Maybe construction and into of you had Bob, what the just So some And indicators or customers it on are? larger macro channel some those saying that's you

Yes.

of are Dodge those So Mike, all Momentum, That's positive. ABI, good.

multifamily, think that's we're starting but seeing also seeing all positive. single-family come we're housing I to down,

So balanced. North America I is think

that biggest and off particular, I and of for wildcard their -- As Germany, full right We now. the energy costs if the don't just the significant they know Europe in said the in shut the us earlier, point in is gas war at implications impacts time. the impacts of

So watching. that's we're where

mix. their think I

and ties Some our that Normally, of replace, of is to to XX% are well. XX% these signals coming about That down. holds which up repair business, GDP. our

get So more we're watching -- general, in balanced. supply watching chains that. also to We're are starting

So we're positive us. general, a for people of issues together. the of APMEA. chain I mean down. with America coming and watching -- offset about we Europe the bunch come all and is fear biggest I of supply lead how inventory things times to in think feel North those I concern think having It's But they

Yes. I makes I lot you clear. that. about curious that certainly Americas, have No, a was but touched the more been should sense. of on

you are the weakness in seeing the actually of a So single-family more comment? prospective today, business

like said, Yes, we're we're offset But some seeing in seeing I that. multifamily.

where is thought No, in sense. seeing are from inventory And a question is -- main makes Americas. levels they partner a And then at? maybe on focused channels? channel head then on their that perspective, your And

when to when you Channel, still get all the busy. into contractors, you channel, especially Yes. they're the talk

be so their look, optimistic, future, the later think, I all but on So they're it's be about same for a they're long. hearing, hearing things believes to downturn, we're nobody the America concerned don't this part, recession point or cautiously a stuff. more at But potential in they're very to certainly if a and it's going -- North most there's believes going nobody

period. right the So cycle now be It extend labor they're right fulfill issue getting to optimistic. longer labor. is issues, I over which it, this Their think a continues labor helps to biggest

inventory on comment to just the levels? then And

of inventories come seeing they because rumors want reducing think, inside that We've to to America. Inventory starting with caught of be levels, and to commodities beginning heard people down, about are don't they're inventory. think stable North I or higher

time, it. have we significant but not at this we're seen it's So point -- -- in but a not monitoring shift

though spectacular. ask question, even but were pretty the Americas won't I margins they And Great.

appreciate time. the So really thanks, guys,

Research. Your is Northcoast Connors the line with of from Ryan question next

of to like think which operating wanted And perspective, I kind from Bob. pretty We of market that's a were and margin I years it's margin ago, just picture bear the bigger reasonable a it's margin think margin a you look the for we talking will back at back about step target remarkable. industry. the I -- this question few XX%, think interpreted

sort So you all if of been we look perspective, this run obviously, if think cross-cycle of upward natural what to to mean, revert margin for for you're, space. at things this big try this down. equilibrium the I materials you curious structural back? industry? do on has that hold it think in Or will come raw just But margin rate done Do do picture gradually, -- from perspective fact, you to going price the not? there's in a I'm believe your shift that

Ryan, talked about always Yes. we've mid-teens.

we driven So great investing growing talk XX still I of in our Every XX but future. we mind, XX, it the to in couple while to XX just basis a year We've about We've our factories. question But a focused on of think automation got timing. for chain. productivity. margins was always things. supply general, it's not And points in XX,

you and lean So as know, I we're journey. think our continuing --

smart But connected and believe So higher to and which and customers to contributed we costs higher area, of take to our overall. margins. add margins our value I those think in to try the drive all differentiate commands out products, our we especially ability

not that be, -- handling All has there's just and companies you made over you order. the a there some hold related a And that and think market and of could faring and effectively believe share couple whoever damage maybe years share any going more to head maybe issues comment inventory would suffering well above follow-up any that others yourselves process? chain because mean forward? maybe supply been shifts reputational the the right. some that gets the has last you earlier Do the of as in water I been shift

Yes.

depends and that the right? bounce inventory shares on around, the has It of who timing think I inventory.

longer. environment especially our of where paid think chains integrated ship are in we certainly, like vertically where supply much I off, times strategy overseas an has lead this from manufacturing

in So of I saw because back think benefit the there normal inventory of But all supply our in to that benefited levels took -- was with we believe and the we QX our really chains competitors. fair out was there. levels are us, share market, shortages what we and coming

So have QX, I we're performance because investment really do in and it we that had that. to our I in going best inventory And was continue off. inventory pushed -- paid we to our it, but abnormal strategic the and great think think we

Lee the from is question next Sachs. Goldman line Your Brian of with

This is Miguel Brian. two on for I had just questions.

The first around the back wanted on just one conversation I to was touch channel inventories.

how to expectations And your if on way the the through a a inventories basis, year much in or if channel, more of destocking hear there, talk way a on that the how months wanted and that work measure possible? far? those there's weeks? way your next wondering there's Just year? to think is out into visibility commentary what How little are if specifically their inventory And on to bit much do about regional you a channel rest has so occurred

difficult. that's Miguel, very

of thousands have right? we have And that customers, not visibility. We do

to channel do have we checks, cetera. et So

is As is I destocking, that's said as in see king, earlier, makes the seeing cash think which I sense, imagine. to especially can wholesalers, smaller channel you Europe I place And the think important. -- biggest we're beginning that

of think point visibility view. limited I again, North also But in our true is that America. from holds

chain be come as a leads supply times get better, I would down. comment general think

manufacturers it the inventory to to contractors and think and less ship them. the will I the because channels, on wholesalers hold they'll wholesalers be the relying

say, a over think general, timing will would in predict. So it's that, coming I year down. of that longer I begin or difficult But to X, term, a

question, That's pass on. very helpful. I'll And then Okay. it second

the balance this margins XQ adjusted to get Is year. the to that you're also those the of beyond you how more as of right to not guiding and The inventory way think this the Just the about cadence hoping it? commentary that on on about operating is normalize? on costs XXXX, margins guidance know suggest low lower but operating guidance the actions for general year point I pricing margins. And think just

say about given time. when in But European would volume. this just stated I European about We're at QX XXXX previous being general, questions, margins, talking one in the point not earlier of at margins and we're cautious in in as you I look

had the of and we costs have thing, out. as can takes a a think to take you fixed in imagine, high those it we've regarding while I costs discussion Europe, lot

it the inside years deleverages, X abnormally of volume of to order and over from last slowing. if we're with So that's Europe, benefiting really our starting hurts we've an point been strong margins. view, And see volume

again, cautious visibility ship have to We that don't book again, about we're So future. we're the business. significant a because, and a

update better it a you a take the quarter give update at at So we'll us we'll next -- and and the guidance our quarter We'll time, you. into future.

from next line Seaport is Walt Liptak with [Operator Your question Global. of the Instructions]

prices? increases? I the bag. help of taking wanted some what take a costs cadence ask selling quarter? still to of them the up us can a bit up if with of Like Did in mixed you the price are of the you you about prices, Are some commodities was

numbers that based the every before, We'll Yes. do And period, cost on end so was that. Walt, we which cost updating increases of we evaluation in before all of of at total time our Look, we've analysis was the price our on the August. be sold. inflation as an goods May XX talked days last did,

routinely So days. again. That's that something XX every it do a look at we we'll take

I if looking back things I'm clearly Great. means some you materials out. be and for sounds that That deflating they're some costs, inputs others about Okay. And like might your But piping are some copper and good. talk of and there could that of what just wonder that, and half? at when the the

So we ourselves well, the of on of one in things pride this. is staying front

things we're So we'll of front cost of other et with cetera with there's in of see through look we the But turns, many benefit inventory fall seeing on. that XXXX. -- always will price and at et in the -- overhead, still we But stay labor, the benefit cetera, see costs, our one inflation cost.

on as very it, the and reading pricing Shashank said. watching but a take we'll net-net, overall, carefully, we're we'll So put in, appropriate it

inflationary price and in So we're to need market, to -- that. do because we drive continuing this

over further I turn will time. this the no are call the CEO, Mr. Pagano. back There now questions to at Bob

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

Ladies this and concludes today's call. conference gentlemen,

disconnect. now may You