Watts Water (WTS) 2 Nov 232023 Q3 Earnings call transcript

Good morning. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Watts Water Technologies Third Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Senior you Investor may McClintock, Planning and Diane Analysis, and begin Instructions] Vice Relations President, Financial [Operator your conference.

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

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

will will call, overview an of on of our recent also discuss update Bob quarter markets and Bradley of of acquisition will details current you the our state fourth During performance the third discuss full Corporation. our and and provide for today's outlook the the quarter quarter operations. the Shashank for He and third year. our provide the

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

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

begin, be actual to risks, this and remind differ I'd are subject that everyone numerous Before comments to information concerning statements. materially.For statements to during call forward-looking cause or publicly could to whether information, or SEC. any the certain constitute see obligation or over making filings otherwise. forward-looking events uncertainties that like These as we future may results risks we will any these call, The disclaims the to Bob. I company available Watts' a turn with result new update that revise statements, intention of that, With

including operating per another free quarter flow. and provide markets. delivered Thank Please better-than-expected to and the an results, you, turn I'll X, overview Slide and of record share our margin, Diane, and quarter cash everyone. sales, good We earnings QX with morning,

valve due sales in where XX%. our quarter operating double-digit by of than applications a core full XXXX, our to realization, third products in as been Americas volume result, were tough offset organic expectations in expected gas heating year free cash cash more we connectors, free our a Organic up through has Strong sales was XXXX we and As strong, radiant to favorable growth declines to was Year-to-date solid strong comparison prior offset margin by flat price a year outlook. productivity, nonresidential expect we're margin raising and and marine supported to investments. year-end. mix which flow and inflation, lower flow instrumentation.Adjusted XX% incremental and exceeded operating generate commercial were solid

disciplined dividends with of Our priorities. acquisition which top a affords balance than high capital CapEx allocation and ROI competitive healthy our ratio M&A, less sheet remains post us X.Xx, capital Bradley leverage strategy.Strategic flexibility allocation in net our ongoing remain

Moving to operations.

to speak more and our previously market collaboratively of in than well acquisition acquisition October. going a closed synergies is working and integration Australia our continues Zealand more the acquisition, ahead Enware APMEA minute.The is be half With about on this and in acquisition addressable highly market. the represent schedule. our region. of underway opportunities. and teams Corporation of to Bradley are now we New of I'll strategic expands announced, is acquisition This Integration and As capture our

in on repair our to remained this and Europe, in some and markets, continued replacement GDP continues In positive provide France markets our our Germany, quarter update and key be Next, the I'd like to an supports growth as end activity. in markets. solid Benelux.

and out. the have slowing Americas, to construction new bottomed of a residential by the new changes energy and Italy.In driven to softening see do construction residential appears incentive the program in impact market single-family nonresidential we However,

supportive Momentum have months fell offset remains in are new improved in to verticals by uptick residential Asia declined several XX Index The further declines industrial building and activity. We declines Australian has into in year-to-date.In in mixed. institutional China strengthening However, multifamily in activity months and despite new being seen and XX X to construction East prices. ABI an The expansion. The back rate head industrial activity. due to starts institutional due Pacific continued September healthy permits, decline Nonresidential construction continued Dodge the market The as which solid, September it's and markets in oil may slowing in we recent center interest region, the remains Middle saw remained after of sequentially but below signal after indicators data increases. August higher XXXX. of

on a for fourth expect be challenging strong Due organic the also outlook we due dilutive investments, to quarter decline as operating and full the our result Enware of transaction-related volume anticipate customary to update impact year. fourth amortization. our XXXX, fourth our quarter of quarter and in deleverage result as an a normal than prior sales incremental and including acquisitions Now comps in costs, to margins of the a year.We Bradley lower sequential seasonality, a

performance full year-to-date to While strong anticipated channel margins we favorable QX, margin specialty the offset due solid, year expect we to business operating expect due be outlook but nonresidential continuing products. in fourth by certain comps America's quarter our in remain difficult are higher and increasing to in mix.We softness

split front-of-the-wall business Annual washroom recently an which anticipate softer eyewash to include includes faucets, in safety Please turn hand X, Bradley is washing rates Watts impact is and plus Slide employees. and and safety are create significant be offer highly addition a customers.It network and our which to and portfolio us cost is also comprehensive and with and America growth you of Menomonee and million, institutional leverages greater $XXX to a on products, an the scale relationships accessories It macros. sales Falls, North QX to which Wisconsin, privacy sales interest through for and in with enables channel specialties, of also give showers. capture syncs market addressable to our include safety and strength accelerate The XXX-year-old acquisition lending expected evenly the products opportunities. stations to XXX approximately commercial of between solutions broadens may headquartered value products, our approximately Europe of and emergency Corporation.Bradley weakening our the complementary, to tightening The cross-selling industrial We acquired markets. also and synergies. to combined washrooms new overview to Bradley due industrial the Higher more I'll applications have total solution construction. exposure expands leverage

key with you'll If The nicely strategic institutional adds and markets.Bradley X, back-of-the-wall to acquisition our of slide, known with M&A applications I'll aligns our front-of-the-wall it is to Slide acquisition Bradley innovative, exposure equity. acquisition differentiated side as for our The market communicated stated how high-quality, increases you turn leader brand products also and share criteria. industrial the fits to the the high-value and a industrial solutions M&A tremendous previously left our portfolio strategy.On a see our recent align conservation has trends which Enware, supplier end plumbing with Bradley's is expands products portfolio safety is complementary acquisition The and code Bradley's markets, Watt's our priorities. with specialty long-term on with of of and that portfolio. in are builds highly product and safety portfolio commercial offerings growth and water used specification-driven solutions regulation. with products leading efficiency, that water innovative equipment of institutional, our and secular Australian attractive comprised and of energy

$XX including and realize adjustments. by interest is of savings cost to to to be through adjusted accounting global reach our system savings.We of expense The approximately run end Watts by expect modestly million normal meaningful One operational synergies sourcing accretive XXXX, in purchase expected leveraging the in commercial performance factoring rate XXXX. annualized We initiatives, expect and to acquisition EPS incremental

borrowings to margins EBITDA adjusted cash credit. and XXXX. funded be a expect We with the of We accretive our on line transaction combination of by

basis, our fourth With previously outlook. on and quarter the Shashank? let As Shashank, will capital X.Xx, allocation address strategy. flexibility results our and quarter the our that, full me a mentioned, is turn implement including than leverage revised over pro third less transaction, ample to us call leaving our to year forma who ratio

Bob, was Thanks, on million X% APMEA the a and were Sales Europe. growth X% decline Slide everyone. turn organic by to quarter's Organic will organically. basis results. Americas and of third in morning, up reported and a good offset $XXX X, in review of and I flat X% Please

contributed exchange, acquisition operating from inflation, million Enware the the of profit X%. to year-over-year basis XXX $X.XX.Adjusted and incremental APMEA Foreign XX% comparison deliver third dilution in quarter XX% share despite or million, of points the compared expansion and favorable X stronger margin operating XX.X%, and able $X.XX expense mix up favorable than the adjusted versus the tax investments. was earnings $XX a prior to increased basis up to a or XX% XX sales by was driven adjusted per Inver last within year.The XXX lower million the and more income was offset quarter. share XXXX. Sales year increased Interest margin exceeded Adjusted interest volume acquisition as region. in $X quarter effective the tough primarily to incremental euro, per of of XXXX and reported and by points price, our We're quarter added third productivity are roughly an rate to $X the of points basis points

first Our free of The cash lower flow net due and to last capital compared X investment. to cash a increase million amount year. million in working flow higher of months $XX primarily as income was year-to-date the was $XXX

or a ample goal reiterate solid net of more with fourth flow achieving income strong previously quarter balance expect free XXX% and cash free flow communicated.The We year in sheet flexibility. us of cash provides the and our remains conversion full as of

debt capitalization end to Our XX%. negative quarter net was ratio at

when is last at healthy acquisition leverage mentioned, adjusted forma X.X. Bob still the for closed that Bradley pro As net the week,

$XX common XX,XXX have on better Class XX,XXX stock million under X%, due remains repurchase During available organic A comparison. the our turn stock XXXX authorized remaining There and million. for we me the repurchased under current million than the repurchase X, for million. expected year let and A a we stock program provide to approximately is comments And a Class quarter, the up to of $X stock shares XXXX.Please we that results. Americas authorized $XXX approximately July in $XX sales Slide in repurchased slightly of tough was few common were regional program approximately prior shares year-to-date,

As a XXXX. third reminder, Americas grew XX% the quarter in of

was in connectors, gas commercial rated Solid core by products nonresidential declines offset applications heating valve marine instrumentation. growth largely in and our

of contributing sales more a new the driven the by fourth increased by price, China underfloor offset was volume Europe XXX was productivity, XX% data provides reduction than were XX comps, and growth France which in which dilutive decline in negatively were were points.The Benelux unable Reported volume, incremental wholesale in and investments subsidies Growth delivered offset by factor. X% and was affiliate increased an In mix German quarter Australia inflation, business X% margin and the OEM residential in and of by foreign Middle by and productivity the organic operating impacted business fully acquisition. impacted exchange to our than as X% expansion Adjusted declines, due than outlook. Italy about year of East margin basis project with unfavorable by inflation positively investments Scandinavia weakness by volume sales sales down points favorable residential a XX% and basis $X by to and organic declined more was points single-family addition and our acquired favorably Reported double-digit in productivity, margin margin offset our foreign investments. XXX adjusted a from impacted Enwave full deleverage. and more assumptions increased timing exchange tough operating movements growth. basis favorable than as of due our million XX% profit government effect declines more in operating from construction movements. was by expected. offset had impact.Operating sales to and in inflation Double-digit unfavorable weak and Slide growth and X or to and price higher Enware offset heating APMEA X% price centers.Adjusted sales.

quarter outlook. First, let's the cover fourth

organic consolidated down a we'll fourth strong we tough XXXX, may to mentioned, X% Bob in by where have XX%. organically We comparison grew sales quarter X%. estimate be down to As a

in may digits down Europe. anticipated digits, single growth Americas low offset to partly market expect down due Europe be low to conditions is reduction of by single-digit rates underlying the high We softening in mid- APMEA.This growth single and in

fourth mix in offsetting are versus increase operating from of $X Note year favorable incremental is the typical range from fourth investments our million margin Bradley to in Watts price, prior the expect mentioned could points we quarter, XX% impact and from fourth for the million up that is acquisition expect dilution of to to contribute radiant primarily productivity margin year. is contribute instrumentation. in approximately a approximately sales is $XX In continued in expected the basis Enware The to quarter. that Enware approximately investments, volume, acquisitions. seasonally sales. driven of expected of decline prior The acquisition connectors, and XX.X% the Bradley to QX dilution applications heating as reduced the deleverage, Bradley million of points As and of XX slower XXX marine the versus due and and Americas, quarter.We volume in APMEA, to similar the lower operating margin incremental by adjusted the operating the seasonality we more XX estimate In commercial gas is and Bradley than sequential weakness the basis points previously $X Americas, seasonality basis

expense, including Corporate income effective be depreciation costs borrowings fund and Interest interest purchase rate We tax also approximately for to of million. approximately expect million the adjusted $X incremental approximately XX%. million. $X.X should approximately expense acquisition.The amortization interest be with to the should our should customary million be of including Bradley associated accounting quarter, net $XX $X

the of EPS of dollar are of European $X.XX rate the X% quarter approximately This equates versus We increase the QX which rate for quarter and a in $X of fourth implies year-over-year, fourth share FX sales average X.XX year. in in a to euro-U.S. XXXX. increase the million an a versus average prior assuming X.XX

updated the Now let's year outlook. full cover

approximately our from XXXX, to Bradley. midpoint with which year guidance, was sales our the a be we X% previously growth sales minus mentioned, we range expect organic of previous full of $XX consistent X%.As the flat, For plus of million to estimate

now In guidance. Enware our of we million of slightly expect ahead addition, approximately previous acquired $XX sales from

to investments adjusted guidance. XXX XX.X% partially basis quarter our Bradley a year-to-date operating our XX year XXXX solid XX results We XX.X%.We in to points of expansion the XXX of plus XX the points outlook mitigate operating basis to to fourth the dilution of range basis compared our represents previous lower Enware approximately due now to seasonality, expect the from This are of points We increase an also of to our between basis will expect acquisitions. volume margins XX incremental be full increasing and our and basis the to margins previous and margin plus points basis deleverage, points. midpoint

expectations net anticipated should with or Our be to line are free previous our flow cash income. in outlook meet and exceed of XXX%

for now the full the Bradley million our million year, to for assuming dollar in a with X.XX for income fund the rate $XX year in are interest year This of borrowings should $X.XX be corporate rate of Europe versus full full We year, X.XX of XXXX. and sales interest increase Interest approximately year.Regarding be euro-U.S. $X other and expense the approximately imply share an in inputs net including to an for versus X% cost EPS average FX to year-over-year associated equates would average a prior key EUR the million sales in the acquisition. the the full year. we for of expect increase $X

incremental effective for adjusted estimated including depreciation the $XX for tax expected and and million XX%. from between the approximately should acquisition. approximately rate amortization be XX% be should Capital to Bradley XXXX $XX amortization be year, spending the million. Our Depreciation is and

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

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

The your to our before about well offer to and progressing front-of-the-wall turn and Bradley excited our acquisition customers. of Please Integration our brands. enables addressable addition X. the family our discussion to market like expands I'd underway We're is Slide to us to solutions we nicely. address Shashank. questions. Thanks, summarize of

monitor price was The economic staying continue Due better our third global year-to-date the our close are to we anticipated outlook.We earnings per performance, by quarter and strong share operating than sales, margin to are favorable and margin year slowing full we with to customers. operating mix. indicators record our and supported increasing

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

provide execute free flow strategy. for disciplined sheet to balance With please lines generation capital strong open our questions. to cash operator, that, continues the flexibility and Our allocation

question line of Instructions] first [Operator with you. Baird. today Halloran Thank Your from Michael the comes

start more the look is, the and the question my portfolio. little let's philosophically, the you in at front So relative on bit wall content, a acquisition, product Bradley it's of core maybe to

looks area. I solutions how much broadly I'd the you're Now what little you're the how like. and how thinking you with you see more Basically, can complements front the with fits then in you that do business work thinking have think on wall room-type of the offering certainly curious in overlap more this a have the existing today understand that and already? what about of to and you a lot just be maintenance But this content are if you more detail

Mike. Yes,

like certainly, really inside of great and expands markets. content wall opportunity in products And allows Bradley. front it yes, of some our us the building. It's we in acquisition So specifiable yes, commercial the with a more

excited we're are way, of on I'm and to have well Teams them excited our about So acquisition. portfolio. the their part

has realized? bit the bit, been that Just mean does has that relative acquisition little a perspective works than expanding Bob, this for a I a you're look from longer to Or what at been history? on widening an little for in this aperture little broadening you the out that

in No, safety. industrial to markets, light portfolio. at commercial we'll to related I core look and continue our our expanding it's right think Again, residential,

think I and see industry. So us up the gas and yes, we're opening our oil wake apertures but to be you'll in that, don't

So the closer to again, us. more to core

mid-late activity newer the the Certainly you prepared the the made project just comments project about life going to you backlog all life? at And see to be twofold. activity this what would look how where head the along a is the you starts next think that and then play I'm how are And that, thanks in when my do perspective, out. recognize early project look within we Okay, that. going remarks, side thinking for one sit the in but of to year? question is you like you to One, the be more for curious cycle cycle from second business. then secondarily, can non-res as

Yes, Mike.

certainly end look I when of in that end beginning, portfolio, on So middle stuff. very the Bradley we're that at segment to our every with the and from closer

Remember, business is XX% it. the repair to of watching replace. XX% our we're So

our nice But busy are we're looking we in So especially contractors, that's they to a North indicators have. you watch at America. watch how steady be her, annuity with And same the very base. installed the busy. large indicator this, as that all other as we But seem

Our is product market. a agnostic particular to

office if to example. centers as down, the maybe we So is shift data an

is. wherever construction So where understanding our backlog there's watch the customers and that we construction of and

America, little really North some which healthy.And saw drains, again, a that. We And you softness in know, indicator. bit bad. that's September, So as in but not in leading is a

watch holding these is particular, So think everyone up. now, North indicators. like America we just in all right again, leading I But else,

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

XX level point that long-term potential that maybe with this the Thank a impact? deliver to Farley XXXX Have on to long-term first point? target believe as My rebased can reset of new in starting plan. basis you, do question bar recession outside Nathan. you Margin XX is been margins. you higher than the expansion for a And much we level has a is margins on Adam on launch's

good volume that looking expansion a certainly, And driven margin years. term, last X X last And at the obviously, long you're leverage. the I by, over we've over very was years, had think the

pandemic is year. since significantly volume Our XXXX up the

then we got and margin cost. good good volume We've expansion had that. productivity from price we've So leverage, good and had over

productivity we case again, we're the cost margin years, over future, points that's we the driving to target. leverage As still And still to basis inflation. going that the and expansion. be volume to make price over XX look That's our X next and XX of

on then a M&A gears. for very need healthy. could you shifting Bradley, right Okay, Is and of synergy thank you sheet there immediately? period Or still integration And that. where be balance the generation? Post potentially is your back you focus to the in acquisition market

you M&A. further I'm predict Well, certainly listen, the But the do afraid M&A. to balance can have to sheet timing not do never of M&A. we

We team organization a our have great of side that's our of in capable more. doing

acquisition. one just is Bradley So

full. So still and nurture our continue is to pipeline pipeline the we

So monitor. can and you never we'll as But continue you to predict watch acquisitions. know,

So we'll keep see happens. what monitoring that we'll and

with next North from the Your Coast comes question line Ryan Connors Research. of

question, well you're realization, gross that in talk you've wanted go price how price to capture continued years question of terms on of stacking even top each standpoint prior the do of at other that to about, and from to I margin, on price there though multiple look back now. of price increases and the

side Can very about been on can Is does moderated bit, has little that? so in you at up well? just demand really what's just impressive. the the seem least you give it's it that give color side us the us market of how has perspective So because a pricing terms held in enabling some residential. Any supply tight like

Ryan, we've we're been one a that in investing higher products, the to having value and customers. we've things smart on, our proposition focused significantly really connected and of

have that the a So differentiated our pricing customers. of things solution we the drive marketplace is to because us that's in to one allows

been support that. that's think big is I the So helping which focus,

that's margin side, other think is also commodities thing, commodity has other than But has have if we this on on certainly well. still softer inflation Freight had benefited That's costs, thing you softer anticipated. the the labor been anticipated. helped story the inflating. about as Ryan, us the cost we the side, than been And year, had logistics they're

residential view, than lower always last a point commercial. the And margin is, I add to mix from is of thing want

and residential favorable having we're has that mix commercial OEM or business business up, been and steady held down margin. in has a our our so So

watch coming to residential starts that as got we So back.

color. good That's Okay.

product is the channels products partners that, synergies line? words, there? to distributors there set trying on are how can other Secondly, Anything you there on differs legacy from potentially back how that. existing hand, versus different market all going of or just at Are there? channel go your to Or your and complications Bradley, of the your these In to that portfolio? market Bradley to Bradley looking perspective similar more about other from us integrate there there with to are and tell

of which through same deal wholesalers, with wholesalers. single We goes are it lot the every day. a Well,

some So channel different, especially channels those of what rep different the are maintaining done. and the on side. channels safety rep we've but safety The traditionally is we're from

feel we very to this overall, we're sales believe again, very much don't what is complementary in sales So doing. synergies synergies. And built we haven't I purpose, on

if team hold for based So happen, they but we'll synergies. them, they do happen, our accountable don't sales I on deals

driven So is cost by this synergies.

your good prudent for approach. time. That's Thanks appreciate Much a it.

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

Tarantino looks what attack Bradley competitive win on you little to it talk the is about the relative for front of to Jeff. how in a how in and landscape different a back way. This of the market? David Could positions Maybe you that there like maybe wall you bit on guys and it

Well, Bradley higher It's the market. similar the which Watt's is its high that a leading quality, products for product, portfolio. known and to end the of is innovative very brand in

been So quality, are XXX over a brand and what is old. years they innovation exactly that's

we its the So leader a a following, what acquisition liked area. prospective large really that's again, in and as about

show and opportunities through with sticking little the could maybe biggest you cost where them then And to Great. about cadence the synergies bit you and more talk a expect are? the Bradley,

our lean probably have next focused about of very which in year, and think on those XX% noted and we remarks, obviously. at performance I the that is chain the prepared XX% then sourcing, $XX A really cost Watts synergies, million my One end. We supply said system, Yes. lot as of XX% are, global we

are have to attributes. are The now, key to of all those teams and we them right them. hard of So sight working line getting

there. last the Could color some ground implies guide And Europe? resilient to you're seeing the one think I could give what like It I in. the moderation on results date? if maybe on surprisingly there little bit in have Great. maybe you a one seems And sneak been more

well, Yes. softening subsidies was the call Europe leveraging those in half new Italy. in first year I market. side in of starting October, seeing We're on slow the saw the of some lot to very what the construction especially of September we subsidies, and further performing some of down. that And a

pleasant them we So that than closely. see to, It's But slow held we're a has very starting we're surprise. down. to expected it which been watching up longer

is how they're I cold to think have. a a Last lot a winter. had winter dependent on going they mild year,

we're So excess products next to see work we'll in on funds September those off, think energy-efficient October order I put But input, now, incentives are homes. cautious new tailing people if Europe And why year. had on in are right incentives and but we're based in cautious a our their being is inside little being particular, on right now.

up quarter we outlook. in as our strength the Germany, but what anticipate that's well, fourth OEM softening started and area, saw that in we other And channels in

next line comes [Operator the Instructions] of with from TD question Cowen. Your Anastasiou Michael

hit to wanted Bradley Just more one time.

mentioned provide into front, connected just some the on your smart strategy. specificity if asset curious any you this but specifically value-add how there's there? could you distribution channels, new exposure fits Just potentially know on just curious just I

for Connected their that's Spartan our They the On products, Bradley. an But to I front, touchless what think Bradley bring obviously, I have connected we'll smart with think bases, cetera. strategy. opportunity is et

them, their strategy that with can we'll think initiatives further and our connected leverage I area. around we

area. key leveraging already our capabilities and focus that. already teams that that's So have on discussing a been We've

can ecosystem. into our overall and that's believe I exciting So tie

it's in dive you geography the specifics, end little a could of deeper any maybe provide industry, or breakdown. like bit market aftermarket Are like And Great. profile? just terms to whether you able

Yes.

is liked. we half say the is channels, highly construction, new industrial So primarily we institutional all about as half in before, And which they're would North America, and works which I public basically favorable, and repair were replacement. in talked

are play nice markets So nicely those that into. we

if in more, but I the I may. covered for the what earlier one just contribution forgot quarter? And price this was Great. call, was

third single digits in quarter. low It's the

Deutsche Your Ahlersmeyer line Joseph of the comes question Bank. next with from

customers about indices? here this and outlook nature business. on and you rhyme pointing in the seeing But I add My well. Does are could going as further you're that first conversations those fully your at ABI, with understand I there how year? into Just short-cycle commercial your point? to any your is one parts with next early the Dodge of the that color appreciate what the

Yes.

think a out, what near our backlog. I less concerned on of they're the especially busy. is they're they're hearing have we're in what customers GCs way got their concerned although based is, They've now. the backlogs term And from right strong they

area one side and the and we're watching of coming still watching, noted healthy region good, is of region backlog, the but in the each strong, there's very look So to Again, online, I business by so whole bunch watching but that I been the a but because we're that's far, thing. you we're some regionally. same capacities probably the reading have so area carefully.So it's we're area especially think multifamily

watching So been on this don't also sooner hiring, We major later, to decent. we or see and expect that's is of that would are believe going new also based some drop. and construction we slow. backlogs I a

months it proxies So all those could watch again, for XX we X, leading as be out. what X, indicators

things with particularly backlogs We've the of Right. possible that you dynamics your I And timing most some calling you potentially that later maybe costs. now the even of agree multifamily. that then for it's if question you're others appreciate get that, on multifamily? would stage for XXXX. just follow-up the a you seeing in with starts Curious heard out from will through

that if you little deflation in turns are would the your think bit a out just since should next year wondering improving? expect inventory inflation quarter. called turn and that I to if faster you to hit I'm

there's I maybe confidence to point, front, institutional. think construction year. quarter into everybody multifamily and come continues look their off at into the of are the I next on think think multifamily At go first that whether I of what they'll and a backlogs

are. shifts again, to where the labor So construction and shifts markets

but their it So and not they're hearing backlogs again, are we're saying directly it's as not was down. robust as coming multifamily,

compensation there. expectation certainly, et next but be question, inflation the lower be On inflation out so there'll as as inflation year far will our still benefits, is cetera,

used highly copper that's think lot deflation on point I and Chinese dependent in I of recognizing a and that China. on on is steel think other economy China your commodities, does,

excluding that So of see react. that. lower do we We'll the expect how I we inflation. on think don't the know level for answer that's markets something But commodities, a just

There any will further at over We time. to Pagano, questions. questions Instructions] moment the [Operator Bob I are loss for this turn no pause call back you.

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

call. conference today's concludes This