Q1 2024 Watts Water Technologies Inc Earnings Call

Operator: Ladies and gentlemen, welcome to the Watts Water Technologies Incorporated first quarter 2024 earnings call hosted by Bob Pagano, President and CEO, Shashank Patel, CFO, and Diane McClintock, Senior Vice President, FP&A, and Investor Relations. At the end, we will open the line for questions. And I will now turn the call over to Diane McClintock.

Ladies and gentlemen, welcome to the Watts water technologies incorporated first quarter 2024 earnings call hosted by Bob Pagano, President and CEO Shashank Patel CFO, Ms. Diane Mclintock Senior Vice President F PNA and Investor Relations.

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At the end, we will open the line for questions and I will now turn the call over to Diane Mclintock.

Diane M. McClintock: Thank you and good morning everyone. Welcome to our first quarter earnings conference call. Joining me today are Bob Pagano, President and CEO, and Shashank Patel, our CFO. During today's call, Bob will provide an overview of the first quarter and discuss the current state of the markets and our operations. Shashank will discuss the details of our first quarter performance and provide our outlook for the second quarter of the full year.

Diane M. McClintock: Thank you and good morning, everyone welcome to our first quarter earnings Conference call.

Diane M. McClintock: Joining me today are Bob Pagano, President and CEO and Shashank Patel, our CFO.

Diane M. McClintock: During today's call Bob will provide an overview of the first quarter and discuss the current state of the markets and our operations.

Shashank Patel: Frank will discuss the details of our first quarter performance and provider outlook for the second quarter and the full year.

Diane M. McClintock: Following our remarks, we will address questions related to the information covered during the call. A presentation accompanying today's webcast can be found in the investor relations section of our website. We will reference this presentation throughout our prepared remarks. Any reference to non-GAAP financial information is reconciled in the appendix to the presentation. I'd like to remind everyone that during this call, we may be making certain comments that constitute forward-looking statements.

Diane M. McClintock: Following our remarks, we will address questions related to the information covered during the call.

Diane M. McClintock: Today's webcast is accompanied by a presentation, which can be found in the investor Relations section of our website.

Diane M. McClintock: We will reference this presentation throughout our prepared remarks any reference to non-GAAP financial information is reconciled in the appendix to the presentation.

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

Diane M. McClintock: These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially. For information concerning these risks, see Watts' publicly available filings with the SEC. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Diane M. McClintock: For information concerning these risks.

Diane M. McClintock: What's publicly available filings with the SEC. The company undertakes no obligation to update or revise any forward looking statements whether as a result of new information future events or otherwise with that I will turn the call over to Bob.

Robert J. Pagano: Thank you, Diane, and good morning, everyone. Please turn to slide three, and I'll provide an overview of the first quarter. We began 2024 with better-than-expected first-quarter results, including record sales, adjusted operating margin, and earnings per share. I'd like to express my appreciation to the entire Watts team for their hard work that made this outperformance possible. Organic sales growth of 6% in the quarter was largely driven by extra shipping days, as discussed on our last earnings call.

Robert J. Pagano: Thank you Diane and good morning, everyone.

Robert J. Pagano: Please turn to slide three and I'll provide an overview for the first quarter.

Robert J. Pagano: We also benefited from incremental sales due to our acquisitions of NWARE, Bradley, and JOSAN. We are very pleased with the performance of these new acquisitions and expect them to continue contributing to our long-term success. Adjusted operating margin exceeded expectations primarily due to incremental volume from the extra shipping days, solid price realization, and productivity, which more than offset inflation, lower European volume, and incremental investment. As a result of our strong earnings and expected cash flows for the remainder of 2024, we announced a 19% dividend increase with payments beginning in June. Our balance sheet remains strong and provides ample capacity to support flexibility in our capital allocation strategy.

Robert J. Pagano: We began 2024 with better than expected first quarter results, including record sales adjusted operating margin and earnings per share I'd like to express my appreciation to the entire watts team for their hard work that made this outperformance possible.

Robert J. Pagano: Organic sales growth of 6% in the quarter was largely driven by extra shipping days as discussed on our last earnings call.

Robert J. Pagano: We also benefited from incremental sales due to our acquisitions of anywhere Bradley and Joseph.

Robert J. Pagano: We are very pleased with the performance of these new acquisitions and expect them to continue contributing to our long term success.

Robert J. Pagano: Adjusted operating margin exceeded expectations, primarily due to incremental volume from the extra shipping days solid price realization and productivity, which more than offset inflation lower European volume and incremental investments.

Robert J. Pagano: As a result of our strong earnings and expected cash flows for the remainder of 2024, we announced the 19% dividend increase with payments beginning in June of.

Robert J. Pagano: Our balance sheet remains strong and provides us ample capacity to support flexibility in our capital allocation strategy.

Robert J. Pagano: From an operations perspective, we're pleased with the progress of the Bradley, JOSEM, and NWARE integration. Our teams are working together to capitalize on synergies and capture additional growth opportunities. We expect both acquisitions to be accreted to adjusted EPS in 2024.

Robert J. Pagano: From an operations perspective, we are pleased with the progress of the Bradley Joseph <unk> integration efforts. Our teams are working together to capitalize on synergies and capture additional growth opportunities. We expect both acquisitions to be accretive to adjusted EPS in 2024.

Robert J. Pagano: Regarding inflation, we continue to see cost increases across labor and overhead, and we're seeing renewed escalation of raw material costs. While the inflation rate has moderated, it is still above normal historical levels. Our teams have done a great job driving productivity, not only in our operations but outside the factory walls, which has helped offset some inflationary pressure. We continue to invest in our digital strategy, as we believe providing smart and connected solutions is vital to improving water safety and regulation, water conservation, and energy efficiency. We will provide you with an update on our smart water initiative later this year. In addition, enabling our customers to achieve their sustainability goals and meeting our own remain a top priority.

Robert J. Pagano: Regarding inflation, we continue to see cost increases across labor and overhead and were seeing renewed escalation of raw material costs. While the inflation rate is moderated it is still above normal historical levels. Our teams have done a great job driving productivity not only in our operations, but outside the factory walls, which has helped.

Robert J. Pagano: Offset some inflationary pressure.

Robert J. Pagano: We continue to invest in our digital strategy as we believe providing smart and connected solutions is vital to improving water safety and regulation water conservation and energy efficiency.

Robert J. Pagano: We will provide you with an update on our Smartwater initiative later this year.

Robert J. Pagano: In addition, enabling our customers to achieve their sustainability goals and meeting our own remain a top priority.

Robert J. Pagano: We'll be issuing our annual sustainability report by the end of June. Additionally, we'll be establishing new long-term goals, including an absolute carbon emissions reduction commitment. Our team has made tremendous progress advancing our sustainability strategy and initiatives, and we're looking forward to sharing this with you, so stay tuned. As I discussed during our last call, 2024 is the 150th anniversary of Watts. We are proud of this milestone and are hosting customer and employee events across the globe to celebrate this tremendous accomplishment. Our new customer training programs, introduced in connection with our 150th anniversary, have been well received.

Robert J. Pagano: We will be issuing our annual sustainability report by the end of June. Additionally, we will be establishing new long term goals, including an absolute carbon emissions reduction commitment.

Robert J. Pagano: Our team has made tremendous progress advancing our sustainability strategy and the initiatives and we're looking forward to sharing this with you so stay tuned.

Robert J. Pagano: As I discussed during our last call 2024 is the 150 year anniversary of Watts. We are proud of this milestone and our hosting customer and employee events across the globe to celebrate this tremendous accomplishment, our new customer training programs introduced in connection with our 150 <unk> anniversary have been well received.

Robert J. Pagano: Next, I'd like to provide an update on our end market. Global GDP, which is a proxy for our repair and replacement business, is lower than last year, but it remains positive in our key markets. Europe's residential and non-residential new construction markets remain soft and continue to be impacted by the conflicts in Ukraine and the Middle East. The reductions of the energy incentive programs in Germany and Italy are unfavorably impacting OEM volume, particularly in the heat pump market.

Speaker Change: Next I'd like to provide an update on our end markets.

Speaker Change: Global GDP, which is a proxy for our repair and replacement business is lower than last year, but remains positive in our key markets Euro.

Speaker Change: Europe's residential and nonresidential, new construction markets remain soft and continue to be impacted by the complex in Ukraine, and the middle East the.

Speaker Change: The reductions of the energy incentive programs in Germany, and Italy are unfavorably impacting OEM volume, particularly in the heat pump market.

Robert J. Pagano: In the Americas, single-family new construction is expected to remain flat at least until interest rates begin to ease. Multifamily new construction indicators, including starts and permits, have been down double digits in recent months and indicate a decline in multifamily new construction as 2024 progresses. Non-residential new construction indicators in the Americas are mixed. The ABI has been below 50 since July 2023, and the Dodge Momentum Index turned negative in March. However, the most recent ENR, the Construction Industry Competence Index, rose above 50 for the first time in two years.

Speaker Change: In the Americas single family, New construction is expected to remain flat at least until interest rates begin to ease multifamily new construction indicators, including starts and permits have been down double digits in recent months and indicate a decline in multifamily new construction as 2024 progresses.

Speaker Change: Nonresidential, new construction indicators in the Americas are mixed the Abi has been below 50 since July 2023, and the Dodge momentum index turned negative in March. However, the most recent <unk> construction industry confidence index rose above 50 for the first time in two years.

Robert J. Pagano: Industrial and mega projects remain resilient and are expected to be supportive in 2024, but will be tempered by challenging sub-verticals, including retail, office, and recreation. In the Asia-Pacific region, China and markets are moderating but are still expected to grow. We are seeing improving markets in the Middle East due to continued higher oil prices. Elevated interest rates have impacted new construction in Australia and New Zealand, but GDP is still expected to be positive.

Speaker Change: Industrial and Mega projects remained resilient and are expected to be supportive in 2024, but we will be tempered by challenging sub verticals, including retail office and recreation.

Speaker Change: In the Asia Pacific Region, China end markets are moderating, but are still expected to grow we're seeing improving markets in the middle east due to continued higher oil prices.

Speaker Change: Elevated interest rates have impacted new construction in Australia, and New Zealand, but GDP is still expected to be positive.

Robert J. Pagano: We continue to monitor the geopolitical uncertainty in the Middle East and expect to proactively address any direct or indirect impacts on our customers and supply chain as they arrive. Now, an update on our outlook for the remainder of the year. We are increasing our full-year sales and operating margin outlook due to our strong first-quarter performance. However, we expect continued weakening in Europe as new construction slows, including a decline in OEM volume from the reductions in energy incentives.

Speaker Change: We continue to monitor the geopolitical uncertainty in the middle East and expect to proactively address any direct or indirect impacts to our customers and supply chain as they arise.

Speaker Change: Now an update on our outlook for the remainder of the year.

Speaker Change: We are increasing our full year sales and operating margin outlook due to our strong first quarter performance. We expect continued weakening in Europe as new construction slows, including the decline in OEM volume from the reductions in the energy incentives.

Robert J. Pagano: As I mentioned before, the declining volume will have a more significant impact on earnings for the rest of 2024 due to our higher fixed cost base in Europe, because interest rates are now expected to remain higher for longer. This may unfavorably impact residential and non-residential new construction in the second half of the year. With that, let me turn the call over to Shashank, who will address our first quarter results and our second quarter in a revised full-year outlook. Shashank.

Speaker Change: As I mentioned before the declining volume will have a more significant impact on earnings for the rest of 2024 due to our higher fixed cost base in Europe.

Speaker Change: Interest rates are now expected to remain higher for longer this may unfavorably impact residential and nonresidential new construction in the second half of the year.

Speaker Change: With that let me turn the call over to Shashank, who will address our first quarter results and our second quarter and revised full year outlook Shashank.

Shashank Patel: Thanks, Bob, and good morning, everyone. Please turn to slide four, and I will review the first quarter's consolidated results. Sales of $571 million were up 21% on a reported basis and up 6% organically. As Bob mentioned, we benefited from extra shipping days in the quarter. We estimate the extra days contributed approximately 7% of sales growth in the quarter. The acquisitions of Bradley, JOSEM, and Enware contributed approximately $68 million, or 15%, and foreign exchange, primarily driven by a stronger euro, increased sales by approximately $1 million versus 2023.

Shashank Patel: Thanks, Bob and good morning, everyone.

Shashank Patel: Compared to last year, adjusted operating profit of $104 million increased 23%, and adjusted operating margin of 18.2% was up 30 basis points. Adjusted EBITDA of $118 million increased 25%, and adjusted EBITDA margin of 20.6% was up 60 basis points. Benefits from price, productivity, and volume from extra shipping days more than offset acquisition dilution of approximately 60 basis points, inflation, and incremental investments of $6 million. Adjusted earnings per share of $2.33 increased 21% versus last year.

Shashank Patel: Please turn to slide four and I will review the first quarter's consolidated results.

Shashank Patel: Sales of $571 million were up 21% on a reported basis and up 6% organically.

Shashank Patel: As Bob mentioned, we benefited from extra shipping days in the quarter we.

Shashank Patel: We estimate the extra days contributed approximately 7% of sales growth in the quarter.

Shashank Patel: The acquisitions of Bradley, Joseph and <unk> contributed approximately $68 million or 15% and foreign exchange, primarily driven by a stronger euro increased sales by approximately $1 million versus 2023.

Shashank Patel: Compared to last year, adjusted operating profit of $104 million.

Shashank Patel: Increased 23% and adjusted operating margin of 18, 2% was up 30 basis points.

Shashank Patel: Adjusted EBITDA of $118 million increased 25%.

Shashank Patel: And adjusted EBITDA margin of 26% was up 60 basis points.

Shashank Patel: And if it's from price productivity and volume from extra shipping days more than offset acquisition dilution of approximately 60 basis points inflation and incremental investments of $6 million.

Shashank Patel: Adjusted earnings per share of $2 33 increased 21% versus last year.

Shashank Patel: Earnings per share growth was driven primarily by solid operational performance, including the benefit of the extra shipping days and the strong performance of our acquisition. The adjusted effective tax rate was 23.8%, up 130 basis points compared to the first quarter of 2023, primarily due to a lower tax benefit from the vesting of stock compensation awards that occurred in the first quarter of 2024. For GAAP purposes, we incurred $7 million of non-recurring acquisition-related charges. We also recorded a restructuring charge of $1.2 million related to several cost actions.

Shashank Patel: Earnings per share growth was driven primarily by solid operational performance, including the benefit of the extra shipping days and the strong performance of our acquisitions.

Shashank Patel: The adjusted effective tax rate was 23, 8% up 130 basis points compared to the first quarter of 2023, primarily due to a lower tax benefit from the vesting of stock compensation awards that occurred in the first quarter of 2024.

Shashank Patel: For GAAP purposes, we incurred $7 million of nonrecurring acquisition related charges.

Shashank Patel: We also recorded a restructuring charge of $1 $2 million related to several cost actions.

Shashank Patel: These charges were partially offset by a non-recurring gain on the sale of an office building in Europe. Our free cash flow for the quarter was $37 million, compared to $28 million in the first quarter of last year. The cash flow increase was primarily due to higher net income and lower working capital investment. We expect sequential improvement in our free cash flow and are on track to achieve our full year goal of free cash flow conversion greater than or equal to 90% of net income, as previously communicated.

Shashank Patel: These charges were partially offset by the nonrecurring gain on the sale of an office building in Europe.

Shashank Patel: Our free cash flow for the quarter was $37 million.

Shashank Patel: Compared to $28 million in the first quarter of last year.

Shashank Patel: Cash flow increase was primarily due to higher net income and lower working capital investment.

Shashank Patel: We expect sequential improvement in our free cash flow and are on track to achieve our full year goal of free cash flow conversion greater than or equal to 90% of net income as previously communicated.

Shashank Patel: During the quarter, we repurchased approximately 20,000 shares of our Class A common stock for $4 million. Additionally, as Bob mentioned, we announced a 19% increase in our dividends that will begin in June. The balance sheet remains strong and provides us with ample flexibility.

Shashank Patel: During the quarter, we repurchased approximately 20000 shares of our class a common stock for $4 million.

Shashank Patel: Additionally, as Bob mentioned, we announced a 19% increase in our dividends that will begin in June.

Shashank Patel: The balance sheet remains strong and provides us with ample flexibility.

Shashank Patel: Our net debt-to-capitalization ratio at quarter-end was 3%, and our net leverage is 0.1. A solid cash flow and healthy balance sheet continue to give us capital allocation optionality. Please turn to slide five and let me provide a few comments on the regional results.

Shashank Patel: Our net debt to capitalization ratio at quarter end was 3% and our net.

Shashank Patel: Net leverage is 0.1.

Shashank Patel: Our solid cash flow and healthy balance sheet continue to give us capital allocation optionality.

Shashank Patel: Please turn to slide five and let me provide a few comments on the regional results.

Shashank Patel: America's organic sales were up 11% and reported sales were up 30%. Both were ahead of expectations due to slightly better prices. Reported sales benefited from better than anticipated acquisition performance. Traditional shipping days increase sales by high single digits.

Shashank Patel: Americas organic sales were up 11% and reported sales were up 30%.

Shashank Patel: We're ahead of expectations due to slightly better price.

Shashank Patel: Sales benefited from better than anticipated acquisition performance.

Shashank Patel: Additional shipping days increased sales by high single digits solid growth in our core valve products was partly offset by declines in water quality and radiant heating products.

Shashank Patel: Solid growth in our core valve products was partly offset by declines in water quality and radiant heating products. The acquisitions of Bradley and JOSEN added $60 million, or 19%, to America's sales in the quarter. Adjusted operating profit increased by 28%, while adjusted operating margins decreased by 40 basis points. The operating margin decline was primarily driven by acquisition dilution, inflation, and incremental investments, which more than offset price, productivity, and leverage from the extra shipping day. In Europe, organic sales were down 5%, as we expected.

Shashank Patel: The acquisitions of Bradley <unk> added $60 million or 19% the Americas sales in the quarter.

Shashank Patel: Adjusted operating profit increased by 28%, while adjusted operating margins decreased by 40 basis points.

Shashank Patel: The operating margin decline was primarily driven by acquisition dilution inflation and incremental investments, which more than offset price productivity and leverage from the extra shipping days.

Shashank Patel: Europe organic sales were down 5% as we expected.

Shashank Patel: The reported sales were down 4% and included a 1% favorable impact of foreign exchange movements. Additional shipping days increased sales by mid-single digits. Growth in our drains business was more than offset by declines in wholesale plumbing in France and Benelux as well as our OEM business in Germany and Italy, where the reduction of government subsidies and heat pump destocking had an unfavorable impact.

Shashank Patel: Reported sales were down 4% and included a 1% favorable impact of foreign exchange movements.

Shashank Patel: The additional shipping days increased sales by mid single digits.

Shashank Patel: Growth in our drains business was more than offset by declines in wholesale plumbing in France, and Benelux as well as our OEM business in Germany, and Italy, with a reduction of government subsidies and heat pump Destocking had an unfavorable impact.

Shashank Patel: Despite the challenge, top-line operating profit increased 3% and operating margins increased by 110 basis points as price favorable mixed productivity and extra shipping days more than offset inflation investments and volume de-leveraged. APMEA organic sales were up 6%; reported sales growth of 43% was negatively impacted by 3% from unfavorable foreign exchange movements and favorably impacted by 40% or approximately $8 million of acquired and rare sales. The extra shipping days increased sales by mid-single digits. However, growth in Australia and the Middle East was partially offset by declines in China due to weak residential underfloor heating sales and project timing in data centers.

Shashank Patel: Despite the challenged top line operating profit increased 3% and operating margins increased by 110 basis points as price favorable mix productivity and the extra shipping days more than offset inflation investments and volume deleverage.

Shashank Patel: <unk> organic sales were up 6%.

Shashank Patel: <unk> sales growth of 43% was negatively impacted by 3% from unfavorable foreign exchange movements and favorably impacted by 40% or approximately $8 million of acquired annualized sales.

Shashank Patel: The extra shipping days increased sales by mid single digits.

Shashank Patel: Growth in Australia, and Middle East were partially offset by declines in China due to weak residential underfloor heating sales and project timing in data centers.

Shashank Patel: Adjusted operating margin decreased 150 basis points as a result of inflation investments and the diluted effect of the NRA acquisition, which more than offset price volume and productivity. Slide 6 provides our assumptions about our second quarter and full year operating outlook. First, let's cover the second quarter outlook. On a reported basis, we expect sales to increase between 7% and 11%. Organically, we expect sales to decrease between 1 and 5%. Organic sales in the Americas are expected to be flat, while apnea is expected to be up low single digits, offset by a low double-digit decline in Europe.

Shashank Patel: Adjusted operating margin decreased to 150 basis points as a result of inflation investments and the dilutive effect of the <unk> acquisition, which more than offset price volume and productivity.

Shashank Patel: Slide six provides our assumptions about our second quarter and full year operating outlook.

Shashank Patel: In addition, we expect approximately $64 million of incremental sales in the Americas from the acquisition. Second quarter adjusted EBITDA margins are expected to be in the range of 20 to 20.6 percent, or down 100 to 160 basis points. Second quarter adjusted operating margin should be in the range of 17.6 to 18.2 percent, or down 130 basis points to down 190 basis points. This is partially due to a very difficult comparison to the second quarter of 2023, when margins exceeded 19 percent. Additionally, acquisition dilution of 1 in 10 basis points, incremental investments, and volume de-leverage, particularly in Europe, will all have an unfavorable impact.

Shashank Patel: First let's cover the second quarter outlook.

Shashank Patel: On a reported basis, we expect sales to increase between seven and 11%.

Shashank Patel: Organically, we expect sales to decrease between 1% and 5%.

Shashank Patel: Organic sales in the Americas are expected to be flat, while <unk> is expected to be up low single digits offset by a low double digit decline in Europe.

Shashank Patel: In addition, we expect approximately $64 million of incremental sales in the Americas from acquisitions.

Shashank Patel: Second quarter adjusted EBITDA margins are expected to be in the range of 20% to 26% or down 100 to 160 basis points.

Shashank Patel: Second quarter adjusted operating margin should be in the range of $17 six to 18, 2% or down 130 basis points to down 190 basis points.

Shashank Patel: This is partially due to a very difficult comparison to the second quarter of 2023 when margins exceeded 19%.

Shashank Patel: Additionally acquisition dilution of 110 basis points incremental investments and volume deleverage, particularly in Europe will all have an unfavorable impact.

Shashank Patel: We expect incremental investments of approximately $5 million, and corporate costs should be approximately $15 million. The net interest expense should be approximately $3 million. The adjusted effective tax rate should be approximately 25%. We are estimating a 1.08 EURUS exchange rate versus the average rate of 1.09 in the second quarter of 2023. This would imply a decrease of 1% year-over-year or approximately $1 million in sales, which is less than a penny per share in EPS versus the prior year. Now, let's cover the updated Foliar Outlook.

Shashank Patel: We expect incremental investments of approximately $5 million.

Shashank Patel: Corporate costs should be approximately $15 million.

Shashank Patel: Net interest expense should be approximately $3 million.

Shashank Patel: The adjusted effective tax rate should be approximately 25%.

Shashank Patel: We are estimating a 1.08 euro U S dollar exchange rate versus the average rate of 1.0 line in the second quarter of 2023.

Shashank Patel: Would imply a decrease of 1% year over year or approximately $1 million in sales, which is less than a penny per share in EPS versus the prior year.

Speaker Change: Now, let's cover the updated full year outlook.

Shashank Patel: For the full year 2024, we are increasing our reported sales growth outlook to a new range of plus seven to plus 12%. Our previous guidance was plus 6 to plus 12 percent. Additionally, we are increasing our organic sales growth outlook to a range of minus four to plus one percent. Our previous guidance was a range of minus five to plus one percent.

Speaker Change: For the full year 2024, we are increasing our reported sales growth outlook to a new range of plus 7% to plus 12%.

Shashank Patel: <unk> guidance was plus six to plus 12%.

Shashank Patel: Additionally, we are increasing our organic sales growth outlook to a range of minus four to plus 1%.

Shashank Patel: Our previous guidance was a range of minus five to plus 1% in effect.

Shashank Patel: In effect, this raises the midpoint of our reported and organic growth range by 50 basis points based on our stronger than expected start in the first quarter. We are increasing our full year adjusted EBITDA margin outlook to a range of 19.6% to 20.2%, compared to our previous guidance of 19.4% to 20%. Additionally, we are raising our full-year adjusted operating margin outlook. We now expect our 2024 adjusted operating margins to be between 17.1% and 17.7% compared to our previous guidance of 16.9% to 17.5%.

Shashank Patel: Raises the midpoint of our reported and organic growth range by 50 basis points based on our stronger than expected start in the first quarter.

Shashank Patel: We are increasing our full year adjusted EBITDA margin outlook to a range of $19, 6% to 22% compared to our previous guidance of $19, 4% to 20% Adil.

Shashank Patel: Additionally, we are raising our full year adjusted operating margin outlook.

Shashank Patel: Now expect our 2024 adjusted operating margins to be between $17, one and 17, 7% compared to our previous guidance of $16 nine to 17, 5%.

Shashank Patel: The updated outlook for adjusted EBITDA margin and operating margins represents an increase of 20 basis points from our previous guidance and reflects the flow-through of our better than expected first quarter, including acquisition performance. Our free cash flow expectation remains in line with our previous outlook from February as we expect to deliver a free cash flow conversion of greater than or equal to 90% of net income in 2024. For the full year, we are now assuming a 1.08 euro U.S. dollar FX rate, which is flat versus 2023 and down versus our previous assumption of 1.09 euro U.S. dollar FX rate.

Shashank Patel: The updated outlook for adjusted EBITDA margin and operating margins represents an increase of 20 basis points from our previous guidance and reflects the flow through of our better than expected first quarter, including acquisition performance.

Shashank Patel: Our free cash flow expectation remains in line with our previous outlook from February as we expect to deliver free cash flow conversion of greater than or equal to 90% of net income in 2024.

Shashank Patel: For the full year, we are now assuming a 1.08 Euro U S. Dollar FX rate, which is flat versus 2023 and down versus our previous assumption of 1.09 Euro U S dollar FX rate.

Shashank Patel: This change reduces our sales guidance by $5 million in sales and our EPA's guidance by two cents a share for the full year versus the prior year, regarding other key inputs for the full year, which can be found in the appendix.

Shashank Patel: This change reduces our sales guidance by $5 million in sales in our EPS guidance by two cents a share for the full year versus the prior year.

Shashank Patel: Regarding other key inputs for the full year, which can be found in the appendix we.

Shashank Patel: We expect corporate costs to be about $55 million for the year, and net interest expense should be approximately $12 million. Our estimated adjusted effective tax rate is expected to be approximately 25 percent. Additionally, we expect our share count to be approximately 33.5 million. Capital expenditures are anticipated to be approximately $50 million. Finally, depreciation and amortization should be approximately $55 million for the year. Now, let me turn the call back over to Bob before we begin our Q&A.

Shashank Patel: We expect corporate cost to be about $55 million for the year net interest expense should be approximately $12 million. Our estimated adjusted effective tax rate is expected to be approximately 25%.

Shashank Patel: We expect our share count to be approximately $33 5 million cap.

Shashank Patel: Capex spending is anticipated to be approximately $50 million.

Shashank Patel: Finally, depreciation and amortization should be approximately $55 million for the year.

Shashank Patel: Now, let me turn the call back over to Bob before we begin Q&A Bob.

Robert J. Pagano: Thanks, Shashank. On slide 7, I'd like to summarize our discussion before we address your questions. First quarter performance was better than we anticipated, with record first quarter sales, adjusted operating margin, and earnings per share due to better than expected price and acquisition performance. As a result of our solid first quarter, we are increasing our full-year sales, operating margin, and EBITDA margin. Our 2024 outlook reflects our expectation of softer market conditions as the year progresses, especially in Europe.

Robert J. Pagano: Thanks, Shashank on slide seven I'd like to summarize our discussion before we address your questions.

Robert J. Pagano: First quarter performance was better than we anticipated with record first quarter sales adjusted operating margin and earnings per share due to better than expected price and acquisition performance as a result of our solid first quarter, we are increasing our full year sales operating margin and EBITDA margin outlook.

Robert J. Pagano: Our 2024 outlook reflects our expectation of softer market conditions as the year progresses, especially in Europe.

Operator: As we have said, our portfolio is agnostic to end markets, and we expect our teams to pivot to growing subverticals as needed. Additionally, our business model includes a large repair and replacement component that provides a durable base and drives steady revenue and cash flow. Despite the challenging markets, we plan to maintain our incremental investments to support long-term profitable growth, notably in our digital strategy. We continue to focus on the integrations of Bradley, JOSAM, and NWARE to ensure a seamless transition and are pleased with the progress to date.

Robert J. Pagano: As we've said our portfolio is agnostic to end markets and we expect our teams to pivot to growing sub verticals as needed or business model includes a large repair and replacement component that provides a durable base and drive steady revenue and cash flow.

Robert J. Pagano: Despite the challenging markets, we plan to maintain our incremental investments to support long term profitable growth, notably in our digital strategy.

Robert J. Pagano: We continue to focus on the integrations of Bradley, Joe Salmon anywhere to ensure a seamless transition and are pleased with the progress to date our.

Operator: Our balance sheet remains strong post-acquisitions and provides ample flexibility to support our capital allocation priorities, including the 19% increase in dividends that we recently announced. We are well-positioned financially, operationally, and commercially to take advantage of market opportunities as they arise. And I'm confident in our team's ability to execute in this uncertain environment and to continue creating value for our shareholders. With that, Operator, please open the lines for questions.

Robert J. Pagano: Our balance sheet remains strong post acquisitions and provides ample flexibility to support our capital allocation priorities, including the 19% increase in dividends that we've recently announced.

Robert J. Pagano: We are well positioned financially operationally and commercially to take advantage of market opportunities as they arise and im confident in our team's ability to execute in this uncertain environment and to continue creating value for our shareholders.

Speaker Change: With that operator, please open the lines for questions.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. And your first question comes from the line of Nathan Jones with CFOL. Your line is open.

Speaker Change: Thank you and we will now begin the question and answer session.

Speaker Change: If you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Speaker Change: If you would like to withdraw your question simply press Star one a second time.

Speaker Change: If you are called upon to ask your question and our listening via speaker phone on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Again press star one to join the queue.

Speaker Change: And your first question comes from the line of Nathan Jones with Stifel. Your line is open.

Adam Michael Farley: Hey, good morning. This is Adam Farley on for Nathan. Good morning, Adam. Good morning. Wanted to start on Europe, really strong margin performance despite the organic revenue decline. Plus, given the relatively high fixed cost base there, so, you know, what was the main tail end of margins for mix in Europe?

Speaker Change: Hey, Good morning, this is Adam Farley on for Nathan.

Adam Michael Farley: Good morning, good morning.

Adam Michael Farley: Wanted to start on Europe.

Adam Michael Farley: Really strong margin performance, despite the organic revenue decline.

Adam Michael Farley: Given the relatively high fixed cost base there.

Speaker Change: So what was the main tailwind to margins.

Speaker Change: The mix in Europe.

Robert J. Pagano: Yes, so it was a combination of favorable mix. So we had higher sales and drains, where we had higher margins. And then we had lower sales in the OEM channel, primarily out of Germany, which had lower margins. So it was a double benefit in terms of mix. And then also, we benefited, as you know, we lock in certain commodities, for example, brass in Europe, and we had locked that in in Q4, and we benefited from that in Q1. Certainly, copper brass has been escalating, but we benefited from some of the locks we had. And then productivity came in real strong as well.

Speaker Change: Yeah. So it was a combination of favorable mix. So we had higher sales in drains are they have higher margins and then we had lower sales in the OEM channel primarily out of Germany, which have lower margin. So there's a double benefit on mix and then also we benefited as you know we lock in certain commodities for example, brass in euro.

Speaker Change: And we had locked that in in Q4, we benefited that we benefit from that in Q1, certainly copper brass has been escalating, but we've been at a pet it from some of the locked in the AD and then productivity came in really strong as well in Q1.

Robert J. Pagano: Okay, and then how should we think about margins in Europe for the remainder of the year? Should NICs continue to be positive? Productivity improvements continue? Maybe a narrowing in the price-cost spread? Yeah.

Speaker Change: Okay, and then how should we think about margins in Europe for the remainder of the year should mix continue to be positive productivity.

Speaker Change: Productivity improvements continue.

Speaker Change: Maryland, and the price cost spread.

Robert J. Pagano: Yeah, I would say that productivity and mix should continue to be positive. However, on the commodity side, as I said, we lock in for a period of time, so those locks do come undone, so to speak, and we have seen escalating commodities, especially on the brass side, so there could be some headwinds down there. So we'll see how it plays out for the rest of the year. Okay, thank you for taking my question.

Speaker Change: Yes, I would say that productivity and.

Speaker Change: Productivity and mix should continue a positive however on Nick on the commodity side as I said, we lock in for a period of time, so those lots to do.

Speaker Change: Come on down so to speak and we have seen escalating commodity, especially in on the brass side.

Speaker Change: So there could be some headwind down there. So we'll see how it plays out for the rest of the year.

Speaker Change: Okay. Thank you for taking my questions.

Speaker Change: Thank you.

Michael Patrick Halloran: And your next question comes from the line of Mike Halloran with Baird. Your line is open.

Speaker Change: And your next question comes from the line of Mike Halloran with Baird. Your line is open.

Michael Patrick Halloran: Thanks. Good morning, everyone.

Michael Patrick Halloran: Hey, good morning, everyone.

Michael Patrick Halloran: Good morning, good morning.

Robert J. Pagano: So, can you just talk about guidance, front half, back half, and just run through the moving pieces? I know on last call you talked about uncertainty as you move to the back half of the year, and you reflected that in the guidance. I imagine that's still the case today, but we'd love some context on that. And then, you know, shipping days are probably an impact factor front half and back half, but, you know, it's certainly weighted front half from a guide perspective relative to what you would see historically. So, I just want to understand the moving pieces and the thought process behind it.

Michael Patrick Halloran: So can you just talk about guidance for and half back half and just run through the moving pieces I know last call you talked about uncertainty as you move to the back half of the year and we reflected that in the guidance I imagine that's still the case today, but would love some context on that and then.

Speaker Change: Shipping days are probably an impact front half back half, but certainly weighted first half from a guide perspective relative to what you would see historically so just wanted to understand the moving pieces in the thought process behind it.

Robert J. Pagano: Yeah, Mike, lots, nothing has significantly changed. We believe Europe is going to continue to get soft. We also are being conservative in the second half of the year, or cautious, I should say, given that we believe multifamily is going to start impacting us in the second half of the year. So, we're watching that very carefully. And finally, you are correct regarding the days.

Speaker Change: Yeah, Mike Lotz, nothing has significantly changed we believe Europe is going to continue to get soft. We also are being conservative in the second half of the year are cautious I should say given that we believe multifamily is going to start impacting us in the second half of the year. So.

Robert J. Pagano: The favorable days we have in Q1 get offset in Q4. So, you'll see, you know, the fourth quarter be softer where we'll give up those days. So, we just got to keep that in balance. But, you know, for the most part, it's playing out as we expected. Europe's probably a little softer than we expected based on current order rates, even through April. So, we're watching that very carefully

Speaker Change: We're watching that very carefully and finally, you are correct regarding the days the favorable days, we have in Q1 get offset in Q4, so youll see the fourth quarter be softer where we'll give up those dates. So we just got to keep that in balance but for the most part it's playing out as we expected.

Speaker Change: Europe is probably a little softer than we expected based on current order rates even through April so we're watching that very carefully.

Robert J. Pagano: And also, Mike, you know, we had baked in also the non-commercial new construction site softness in the second half because the ABI has been down for roughly nine months.

Speaker Change: And also Mike we had baked in also on the non commercial new construction site softness in the second half because the Abi has been down for roughly nine months.

Robert J. Pagano: Thanks for that. Let's follow up on that train of thought. Obviously, you sell into a lot of different non-res markets, you know, numerous commercial and institutional subsets. When you think about the moving pieces there, you know, how does that play out as we get into next year, to the back half of the year, however you want to think about it? In other words, there's a lot of puts and takes. It's a really large market.

Michael Patrick Halloran: Well, thanks for that and let let's follow up on that train of thought obviously, you sell into a lot of different non res markets.

Speaker Change: Commercial and institutional subsets.

Mike: When you think about the moving pieces there how does that play out as we get into next year to back half of the year. However, you want to think about it the other way.

Speaker Change: Words.

Speaker Change: There's a lot of puts and takes it's a really large market.

Speaker Change: Talking about some of these leading indicators where there's concern.

Speaker Change: Also feel optimistic about some of these other areas how much of a balancing mechanism as it.

Speaker Change: Maybe just talk about the moving pieces, there and anything interesting from a subset perspective.

Robert J. Pagano: Yeah, I always start, Mike, with 60% of our business is repair and replace, given our large installed base, so that tends to follow GEP. So that stabilizes a lot of these ups and downs. So you're right, on some of these markets, we do offset them. For example, data centers, megaprojects, a little more lumpy, but that offsets some of the softness you see potentially in multifamily and or Europe that we're trying to balance.

Robert J. Pagano: You know, you're talking about some of these leading indicators where there's concern, but you also feel optimistic about some of these other areas. How much of a balancing mechanism is it? You know, maybe just talk about the moving pieces there and anything interesting from a subset perspective. Yeah, I always start, Mike, with 60...

Speaker Change: Yeah, I always start Mike with 60% of our business is repair and replace given our large installed base. So that tends to follow GDP. So that stabilizes a lot of its ups and downs. So youre right on the some of these markets. We do offset them for example data centers Mega projects, you know a little more lumpy.

Speaker Change: But that offset some of the softness you see potentially in multifamily and or Europe that we're trying to balance. So we have a diversified portfolio, we moved to where the work is as I said earlier, our products are agnostic to the markets. We're just trying to ship. So we look where construction is is going and its still happening.

Robert J. Pagano: So we have a diversified portfolio. We move to where the work is. As I said earlier, our products are agnostic to the markets. We're just trying to shift. So we look where construction is going, and it's still happening right now, but we can ignore some of the leading indicators, which in the past have always held true for us. But again, our large installed base certainly helps on repair and replace.

Speaker Change: Right now, but we cant ignore some of the leading indicators, which in the past have always held through for us, but again, our large installed base certainly helps on the repair and replacement side.

Speaker Change: Thank you.

Speaker Change: Thank you.

Jeffrey David Hammond: And your next question comes from the line of Jeffrey Hammond with KeyBank Capital Markets. Your line is open.

Speaker Change: And your next question comes from the line of Jeffrey Hammond with Keybanc capital markets. Your line is open.

Speaker Change: Okay.

David Edmund Tarantino: Hey, good morning, everyone. This is David Tarantino. I'm on behalf of Jeff.

Speaker Change: Hey, Good morning, everyone. This is David Tarantino on for Jeff.

David Edmund Tarantino: Morning. Maybe to start on the acquisition dilution, could you give some context around the expectation for the deals to be more diluted in 2Q versus the first quarter? Then maybe for the whole year, it looks like you're expecting modestly less dilution. Could you give some color around what's kind of the change in assumption there?

David Edmund Tarantino: Good morning.

David Edmund Tarantino: Maybe just start on the acquisition dilution could you give some context around the expectations for the deals to be more dilutive in Q2 versus the first quarter and then maybe for the whole year. It looks like you are expecting modestly less pollution.

David Edmund Tarantino: Some color around what's kind of the change in the assumption there.

Robert J. Pagano: So I'll start, you know, on the look at, we're very pleased with the acquisition performance. Integrations are going extremely well. A lot of the heavy lifting, especially on the front end, the closing of some sites is going positively, and some of the days favorability helped us in the first quarter because we've got them now on our 4-4-5 calendarization. But, you know, I think overall we're very pleased. So Shashank, do you want to talk about the dilution? Yeah, sure.

Speaker Change: So I'll start on the look at we're very pleased with the acquisition performance integrations are going extremely well a lot of the heavy lifting especially on the front end closing up some sites is going positive and some of the days favorability helped us in the first quarter, because we've got them on <unk>.

Speaker Change: Now our 445 calendar <unk>, but.

Robert J. Pagano: I think overall, we're very pleased so shashank you wanted to talk about the dilution yes. So.

Shashank Patel: Yeah, so, as we noted that the acquisitions outperformed in Q1, and that's why we took down the, you know, the overall guide, the dilution from the acquisitions is now 70 basis points versus 80 basis points, and it was less than that in Q1, right? So we factored that into the equation. But overall, for the full year, we expect 70 basis points of dilution from the Bradley-Joseph McClintock acquisition.

Shashank Patel: We noted that the acquisitions outperformed in Q1, and that's why we took down the <unk>.

Shashank Patel: The overall guide the dilution from the acquisitions is now 70 basis points versus 80 basis points and it was less than that in Q1, right. So we've factored that into the equation, but overall for the full year, we expect a 70 basis points dilution from the Bradley Joseph acquisitions.

David Edmund Tarantino: Okay, great. Thank you. And then could you maybe give some more color on what you're seeing in terms of underlying demand in Europe, kind of with cracks becoming a little bit more evident, and maybe the line of sight you guys have on these destocking trends? Maybe on that, could you give some color on the forward view, just given the extra days dynamic in the first quarter? Yeah, I think there's just a lot of unspoken...

Speaker Change: Okay, great. Thank you and then could you maybe give some more color on what youre seeing in terms of underlying demand in Europe kind of with cracks, becoming a little bit more evident than maybe the line of sight you guys have on the Destocking trends maybe on that could you give some color on the forward view and just given the extra days dynamic in the firm.

Shashank Patel: Quarter.

Robert J. Pagano: I think there's just a lot of uncertainty in Europe right now with the wars going on right now. So I think new construction is, you know, halting a little bit or slowing significantly. We're seeing, you know, that down double digits. Repair and replacement, other than, let's call it the retrofit related to some of the heat pump initiatives, is where we're seeing destocking in the channels. You know, they were ordering a lot last year, and if you recall, Q1 and Q2 were very strong quarters for Europe, exceeding our expectations, and now we have some really tough comparisons, particularly in Europe in Q1 and Q2.

Speaker Change: Yes, I think Theres, just a lot of uncertainty in Europe right now with the war going on right now so I think new construction as you know is hoping a little bit or slowing significantly we're seeing that down double digits repair and replacement other than let's call. It a retrofit related too.

Robert J. Pagano: Some of the heat pump initiatives, there is where we're seeing destocking in the channels.

Speaker Change: They were ordering a lot last year and if you recall Q1, and Q2 were very strong quarters for Europe.

Shashank Patel: Exceeding our expectations and now we have some really tough comparison in particular in Europe in Q1 and Q2. So destocking, we think it's going to take at least through Q2, and then let's let's see at that point in time, but.

Robert J. Pagano: So destocking is going to take at least through Q2 and then we'll see at that point in time. But in general, you know, I would say inventories have some need to go down, especially in that heat pump area. So we're cautious in Europe as we always are and are taking appropriately cost actions as we analyze where that business is going.

Shashank Patel: In general.

Shashank Patel: I would say inventories have some needs to go down, especially in that heat pump area. So.

Shashank Patel: We're cautious on Europe as we always are.

Shashank Patel: And are taking appropriate cost actions as we.

Robert J. Pagano: Analyze where that business is going.

Speaker Change: Great. Thank you.

Robert J. Pagano: Sure.

Joseph Craig Giordano: And as a reminder, press star 1 if you would like to ask a question. And your next question comes from the line of Joe Giordano with TD Cowan. Your line is open.

Robert J. Pagano: And as a reminder, press star one if you would like to ask a question.

Joseph Craig Giordano: And your next question comes from the line of Joe Giordano with TD Cowen Your line is open.

Shashank Patel: Okay.

Michael: Good morning, everyone. This is Michael on for Joe.

Shashank Patel: Good morning, everyone. This is Michael on for Joe.

Michael: Morning. You had mentioned in the slides that price realization was a bit higher than expected in the quarter. You know, what was the price component specifically and also just for the remaining part of the year? I believe the logic before was about, you know, a low single-digit increase in inflation on the commodity front and also the same on the wage front. Is the calculus for the remainder of the year still the same? Thank you. It's on the price.

Michael: Good morning.

Michael: You had mentioned in the slides that price realization that was a bit higher than expected in the quarter.

Michael: What was the price component specifically.

Michael: And also just for the remaining part of the year I believe.

Michael: Largest before was about low single digit increase of inflation on the commodity front and also the same on the wage front is the calculus for.

Michael: For the remainder of the year is still the same thank you.

Shashank Patel: So, on the price front, we had assumed about a 1% price realization. We actually achieved about 1.5%, so about 50 basis points better than we thought, obviously on the back of lower inflation. And on the inflation side, you know, on the people inflation, compensation inflation, we're running at 3.5% to 4%. On the commodity inflation, all up, all in, including the, you know, I talked about commodities, commodities, especially copper, and brass

Michael: So on the price front, we had assumed about a 1% price realization, we actually assumed about one and a half presents a lot 50 basis points better than we thought obviously on the back of lower inflation and on the inflation side.

Michael: People inflation compensation inflation.

Shashank Patel: Running at 5% to 4% on the commodity inflation, all up all in including the I talked about commodities commodity, especially copper brass escalating, but overall commodity inflation is in that 2% to 3% range.

Michael: Great, that's helpful. And just a follow-up, if I may, but last quarter, you mentioned that OEM destocking in Europe was about, you know, a third of the business there. Can you just run through, perhaps, the channel inventory at OEMs from the different regions and just kind of expectations for the remainder of the year? Yeah, I would think, let's start with the Americas.

Speaker Change: Great. That's helpful and just a follow up if I may but.

Michael: So last quarter, you mentioned like OEM Destocking in Europe was about a third of the business. There can you just run through perhaps like the channel inventory at Oems from the different regions and just kind of expectations for the remainder of the year.

Robert J. Pagano: Yeah, I would think we should start with the Americas. I think, you know, I think the channel inventory is in line with expectations. So I don't, I think de-stocking is done pretty much for North America, so inventory levels are reasonable. Europe, as I said in the previous question that we just had, I think there's continued de-stocking in the OEM channels, which is exactly what you said is about a third of our business there. Apnea, I think, you know, it's reasonable, very similar to the Americas. So really, the issue is in Europe.

Michael: Yeah, I would think let's start with the Americas I think.

Robert J. Pagano: I think the channel inventories in line with expectations. So I don't I think Destocking is done pretty much for North America. So inventory levels are reasonable levels Europe as I said on the previous question that we just had I think there's continued destocking in the OEM channels, which exactly what you said is about a third.

Robert J. Pagano: All of our business there at me I think the.

Robert J. Pagano: Its reasonable very similar to the Americas, so really the issues in Europe.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Robert J. Pagano: Okay.

Walter Scott Liptak: And as a reminder, it is Star One if you would like to ask a question. And your next question comes from the line of Walt Liptak with Seaport Research. Your line is open.

Robert J. Pagano: As a reminder, it is star one if you would like to ask a question and your next question comes from the line of Walter Liptak with Seaport Research. Your line is open.

Walter Scott Liptak: Good morning. I'll try one on the M&A with revenue maybe a little bit better than expected in the first quarter. Can you help us with the second quarter revenue? So we can get that number, you know, closer to right. I mean, you know, there should be some seasonal uptick, I would think. Do you have a view on where revenue could be for M&A in the second half of the year? So, so awful.

Walter Scott Liptak: Yeah.

Walter Scott Liptak: Hey, good morning.

Walter Scott Liptak: Good morning.

Walter Scott Liptak: Good morning, I'll try one on the.

Walter Scott Liptak: The M&A.

Walter Scott Liptak: The revenue, maybe a little bit better than expected in the first quarter can you help us with.

Walter Scott Liptak: Second quarter revenue, so we can get that number.

Walter Scott Liptak: Closer to the right.

Walter Scott Liptak: There should be some seasonal uptick I would think.

Walter Scott Liptak: Do you have a view.

Walter Scott Liptak: Where revenue could be for M&A in the second quarter.

Shashank Patel: So Walt, for the full year between Bradley and Joseph, we're talking about $210 million. And you're right, in the second quarter, it tends to be a little higher. So in that approximately $55-$57 million range.

Speaker Change: Yes, so for the full year between branded and Joe said, we're talking about $210 million.

Speaker Change: And youre right in that.

Shashank Patel: And in the second quarter it tends to be a little higher so in that approximately 50 $557 million range approximately.

Shashank Patel: Okay.

Walter Scott Liptak: Okay, and then.

Shashank Patel: And then.

Walter Scott Liptak: Also wanted to ask about just the American region and you know you sell a lot through distribution, but can you differentiate as products go out to single family versus multifamily, you know, or, you know, do you have a view on what the percentages are? And if there are any differences that you're seeing in the trends for those markets? Look at when you look at our business, you know, 35% of our business is residential, half of that is single family, half of that is multifamily. We've seen basically flat growth in the first quarter, we're expecting flat growth in the second quarter, and then we're expecting multifamily to go down in the second half of the year, low single digits, maybe to mid-single digits. That's kind of how we Hey, hey, Walt, just do it.

Speaker Change: Also wanted to ask about.

Walter Scott Liptak: Just the Americas region.

Walter Scott Liptak: You.

Walter Scott Liptak: You sell a lot through distribution, but can you differentiate its products who aren't too.

Walter Scott Liptak: Single family versus multifamily.

Speaker Change: Do you have a.

Walter Scott Liptak: On what the percentages are.

Walter Scott Liptak: And if there are any differences that you're seeing and the trends for those markets.

Speaker Change: Look at when you look at our business.

Walter Scott Liptak: 35% of our business.

Walter Scott Liptak: Residential half of that single family multifamily.

Walter Scott Liptak: Multifamily.

Walter Scott Liptak: We've seen basically flatness.

Walter Scott Liptak: In the first quarter, we're expecting flatness in the second quarter, and then were expecting multifamily to go down in the second half of the year low single digits, maybe mid single digits, that's kind of how we're looking at it and single family holding up flat for the rest of the year.

Robert J. Pagano: Hey, AWOL, just a correction on the acquired sales, second quarter, $64 million.

Walt: Well just a correction on the acquired sales second quarter $64 million.

Shashank Patel: 064. Okay. Yep. Okay, thanks a bunch. And do you think that your distribution Channels have already adjusted in the Americas for the multi-family outlook? I think it's been, you know, kind of pretty well pronounced. Yes, yeah. I do believe they've adjusted. Okay. Okay, great.

Speaker Change: 464, Okay Yep.

Speaker Change: Okay. Thanks, so much.

Shashank Patel: And do you think that the.

Shashank Patel: Your distribution channels already adjusted in the Americas for the multifamily.

Shashank Patel: Pretty well pronounce.

Speaker Change: Yes, yes, I do believe they are adjusted.

Speaker Change: Okay. Okay, great. Thank you.

Speaker Change: Thank you.

Shashank Patel: Okay.

Walter Scott Liptak: And as a reminder, please press star 1 if you would like to ask a question. And with no further questions at this time, I would now like to turn the conference back to Mr. Bob Pagano for any additional or closing remarks.

Shashank Patel: And as a reminder, please press star one if you would like to ask a question.

Walter Scott Liptak: And with no further questions at this time I would now like to turn the conference back to Mr. Bob Pagano for any additional or closing remarks.

Robert J. Pagano: Well, thank you for taking the time to join us today. We appreciate your continued interest in Watts, and we look forward to speaking with you again during our second quarter earnings call in early August. Have a good day, and stay safe.

Robert J. Pagano: Well. Thank you for taking the time to join US today. We appreciate your continued interest in watts and we look forward to speaking with you again during our second quarter earnings call in early August have a good day and stay safe.

Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Speaker Change: And ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.

Operator: Okay.

Operator: Okay.

Operator: Yeah.

Operator: Okay.

Operator: Okay.

Operator: Yeah.

Operator: Okay.

Operator: Yeah.