Mueller Water Products Inc (MWA) 2023 Q1 法說會逐字稿

Welcome, and thank you for standing by. (Operator Instructions) This call is being recorded. (Operator Instructions) I'll now turn the call over to Whit Kincaid.

歡迎，感謝您的支持。 （接線員說明）此通話正在錄音中。 （操作員說明）我現在將電話轉給 Whit Kincaid。

Good morning, everyone. Thank you for joining us on Mueller Water Products' First Quarter 2023 Conference Call. We issued our press release reporting results of operations for the quarter ended December 31, 2022, yesterday afternoon. A copy of the press release is available on our website, www.muellerwaterproducts.com. Scott Hall, our President and CEO; and Martie Zakas, our CFO, will be discussing our first quarter results and outlook for 2023. This morning's call is being recorded and webcast live on the Internet. We have also posted slides on our website to accompany today's discussion, which address our forward-looking statements and non-GAAP disclosure requirements.

大家，早安。感謝您加入我們的 Mueller Water Products 2023 年第一季度電話會議。昨天下午，我們發布了截至 2022 年 12 月 31 日的季度運營業績報告新聞稿。新聞稿的副本可在我們的網站 www.muellerwaterproducts.com 上獲取。我們的總裁兼首席執行官 Scott Hall；我們的首席財務官 Martie Zakas 將討論我們的第一季度業績和 2023 年展望。今天上午的電話會議正在錄製中，並在互聯網上進行網絡直播。我們還在我們的網站上發布了幻燈片以配合今天的討論，其中涉及我們的前瞻性陳述和非 GAAP 披露要求。

At this time, please refer to Slide 2. This slide identifies non-GAAP financial measures referenced in our press release, on our slides and on this call. It discloses the reasons why we believe that these measures provide useful information to investors. Reconciliations between non-GAAP and GAAP financial measures are included in the supplemental information within our press release and on our website.

此時，請參閱幻燈片 2。這張幻燈片確定了我們的新聞稿、幻燈片和本次電話會議中引用的非 GAAP 財務指標。它披露了我們認為這些措施為投資者提供有用信息的原因。非 GAAP 和 GAAP 財務措施之間的對賬包含在我們新聞稿和我們網站的補充信息中。

Slide 3 addresses forward-looking statements made on this call. This slide includes cautionary information identifying important factors that could cause actual results to differ materially from those included in our forward-looking statements. Please review Slides 2 and 3 in their entirety. During this call, all references to a specific year or quarter, unless specified otherwise, refer to our fiscal year, which ends on September 30.

幻燈片 3 闡述了在此次電話會議上所做的前瞻性陳述。這張幻燈片包含警示信息，確定了可能導致實際結果與我們前瞻性陳述中包含的結果大不相同的重要因素。請完整查看幻燈片 2 和 3。在此次電話會議中，除非另有說明，否則所有提及特定年份或季度的內容均指我們於 9 月 30 日結束的財政年度。

A replay of this morning's call will be available for 30 days at 1800-876-4955. The archived webcast and corresponding slides will be available for at least 90 days on the Investor Relations section of our website. I'll now turn the call over to Scott.

可撥打 1800-876-4955 重播今天上午的電話會議，為期 30 天。存檔的網絡廣播和相應的幻燈片將在我們網站的投資者關係部分提供至少 90 天。我現在將電話轉給斯科特。

Thanks, Whit. Good morning, everyone. Thank you for joining us for our first quarter earnings 2023 call. I'm pleased with our solid start to this year. We again generated a double-digit increase in consolidated net sales as we benefited from past pricing actions taken to help offset inflationary pressures. The improved price realization was partially offset by a modest decrease in overall volumes in the quarter.

謝謝，惠特。大家，早安。感謝您加入我們的 2023 年第一季度財報電話會議。我對我們今年的良好開端感到滿意。由於我們受益於過去為抵消通脹壓力而採取的定價行動，我們的綜合淨銷售額再次實現了兩位數的增長。價格實現的改善部分被本季度總銷量的小幅下降所抵消。

Although our brass production levels did improve sequentially, lower production levels compared with the prior year contributed to the decrease in volumes. We believe the municipal repair and replacement market remains resilient and helped partially offset the slowdown in residential construction activity.

儘管我們的黃銅生產水平確實有所提高，但與上一年相比較低的生產水平導致了產量下降。我們認為市政維修和更換市場保持彈性，並幫助部分抵消了住宅建設活動的放緩。

As our end markets evolve in this economic environment, we are working closely with our channel partners to manage inventories and order levels. We sequentially improved gross margins in the quarter as higher price realization, combined with a lower level of inflation and better manufacturing performance more than offset lower volumes. While the inflationary pressures have eased, they are still elevated compared with the prior year, leading us to implement additional price increases.

隨著我們的終端市場在這種經濟環境中不斷發展，我們正在與我們的渠道合作夥伴密切合作，以管理庫存和訂單水平。由於更高的價格實現、更低的通貨膨脹水平和更好的製造性能，我們在本季度連續提高了毛利率，這足以抵消銷量的下降。雖然通脹壓力有所緩解，但與上年相比仍處於高位，導致我們實施額外的價格上漲。

Our teams remain focused on delivering the benefits from our large capital projects, particularly the ramp-up of our new brass foundry. We are seeing operational improvements at our Kimball facility as our specialty valve products delivered the strongest year-over-year growth in the quarter. We believe we are on track to achieve the operational improvements needed to increase margins in the second half of this year.

我們的團隊仍然專注於從我們的大型資本項目中獲得收益，尤其是我們新黃銅鑄造廠的擴產。我們看到 Kimball 工廠的運營有所改善，因為我們的特種閥門產品在本季度實現了最強勁的同比增長。我們相信，我們有望在今年下半年實現提高利潤率所需的運營改進。

While we are pleased with our first quarter results, we also remain vigilant in this environment and are reiterating our annual guidance. After Martie discusses our financial results, I'll provide more color on our first quarter performance, end markets and outlook for 2023. Now I'll turn the call over to Martie.

雖然我們對第一季度的業績感到滿意，但我們也對這種環境保持警惕，並重申我們的年度指導方針。在 Martie 討論了我們的財務業績後，我將提供更多有關我們第一季度業績、終端市場和 2023 年展望的信息。現在我將把電話轉給 Martie。

Thanks, Scott, and good morning, everyone. I will start with our first quarter 2023 consolidated GAAP and non-GAAP financial results. After that, I will review our segment performance and discuss our cash flow and liquidity. Our consolidated net sales increased 15.6% to $314.8 million compared to the prior year, with growth in both Water Flow Solutions and Water Management Solutions. The increase was primarily due to higher pricing across most product lines in both segments and volume growth across most products and Water Management Solutions.

謝謝，斯科特，大家早上好。我將從我們 2023 年第一季度的綜合 GAAP 和非 GAAP 財務業績開始。之後，我將回顧我們的分部業績並討論我們的現金流和流動性。與上一年相比，我們的綜合淨銷售額增長 15.6% 至 3.148 億美元，水流解決方案和水管理解決方案均有增長。增長的主要原因是兩個細分市場中大多數產品線的價格上漲以及大多數產品和水管理解決方案的銷量增長。

These benefits were partially offset by a decrease in volumes at Water Flow Solutions. Gross profit of $93.2 million, increased 6.4% compared with the prior year. However, gross margin of 29.6%, decreased 260 basis points compared with the prior year as benefits from higher pricing were more than offset by increased cost associated with unfavorable manufacturing performance, inflation and lower volumes.

這些收益被 Water Flow Solutions 的業務量減少部分抵消了。毛利潤為 9320 萬美元，比上年增長 6.4%。然而，毛利率為 29.6%，與上一年相比下降了 260 個基點，這是因為較高定價帶來的好處被與不利的製造績效、通貨膨脹和銷量下降相關的成本增加所抵消。

We sequentially improved our gross margin by 380 basis points in the quarter. The unfavorable manufacturing performance, which includes the impact of outsourcing, machine downtime, supply chain disruptions and labor productivity, was primarily driven by our foundry operations. The negative impact of inflation improved sequentially. However, we continue to experience higher costs associated with raw and purchased materials, utilities, freight and labor relative to the prior year.

我們在本季度連續將毛利率提高了 380 個基點。不利的製造性能，包括外包、機器停機、供應鏈中斷和勞動生產率的影響，主要是由我們的代工業務驅動的。通脹負面影響環比改善。然而，與上一年相比，我們繼續經歷與原材料和採購材料、公用事業、運費和勞動力相關的更高成本。

Our total material costs increased around 8% compared with the prior year. Our price realization again improved sequentially, more than covering inflationary pressures for the fourth consecutive quarter. Selling, general and administrative expenses of $62.9 million in the quarter, increased 11.7% compared with the prior year. The increase was primarily driven by personnel costs, third-party services, inflation and T&E expenses, partially offset by foreign exchange gains.

與上一年相比，我們的總材料成本增加了約 8%。我們的價格實現再次連續改善，連續第四個季度超過通脹壓力。本季度的銷售、一般和管理費用為 6290 萬美元，比去年同期增長 11.7%。增長的主要原因是人員成本、第三方服務、通貨膨脹和 T&E 費用，部分被外匯收益所抵消。

SG&A as a percent of net sales decreased to 20% as compared to 20.7% in the prior year quarter. Operating income of $34 million, increased 17.6% in the quarter compared with $28.9 million in the prior year. Operating income includes a net benefit of $3.7 million from strategic reorganization and other charges in the quarter. The net benefit primarily consisted of a $4 million pretax gain on the sale of the Aurora, Illinois facility. This gain was partially offset by transaction-related expenses.

SG&A 占淨銷售額的百分比從去年同期的 20.7% 降至 20%。本季度營業收入為 3400 萬美元，較上年同期的 2890 萬美元增長 17.6%。營業收入包括來自本季度戰略重組和其他費用的 370 萬美元淨收益。淨收益主要包括出售伊利諾伊州奧羅拉工廠獲得的 400 萬美元稅前收益。這一收益被與交易相關的費用部分抵消。

Turning now to our consolidated non-GAAP results. Adjusted operating income of $30.3 million, decreased $1 million or 3.2% compared with $31.3 million in the prior year. The benefits from higher pricing were more than offset by increased costs associated with unfavorable manufacturing performance, inflation, additional SG&A expenses and lower volumes. Adjusted EBITDA of $44.2 million, decreased 6.9% in the quarter, leading to an adjusted EBITDA margin of 14% compared with 17.4% in the prior year.

現在轉向我們的綜合非 GAAP 結果。調整後營業收入為 3030 萬美元，與上年的 3130 萬美元相比減少 100 萬美元或 3.2%。更高定價帶來的好處被與不利的製造性能、通貨膨脹、額外的 SG&A 費用和較低的產量相關的成本增加所抵消。調整後的 EBITDA 為 4420 萬美元，本季度下降 6.9%，調整後的 EBITDA 利潤率為 14%，而去年同期為 17.4%。

As a reminder, adjusted EBITDA was also impacted by a year-over-year increase in pension expense of $1.9 million in the quarter. Net interest expense for the quarter declined to $3.7 million as compared with $4.3 million in the prior year. The decrease in the quarter primarily resulted from higher interest income. For the quarter, we generated adjusted net income per share of $0.13, which was flat compared with the prior year.

提醒一下，調整後的 EBITDA 還受到本季度養老金支出同比增長 190 萬美元的影響。本季度的淨利息支出下降至 370 萬美元，而去年同期為 430 萬美元。本季度的減少主要是由於利息收入增加所致。本季度，我們的調整後每股淨收益為 0.13 美元，與上年持平。

Moving on to the quarterly segment performance, starting with Water Flow Solutions. Net sales increased 6.9% compared with the prior year, primarily due to higher pricing across most of the segment's product lines. We experienced lower volumes primarily for our iron gate valve and service brass products, which were partially offset by higher volumes for specialty valve products.

從 Water Flow Solutions 開始介紹季度細分市場的表現。淨銷售額比上年增長 6.9%，這主要是由於該部門大部分產品線的定價更高。我們的鐵閘閥和服務黃銅產品銷量下降，部分被特種閥門產品銷量上升所抵消。

Adjusted operating income of $24.2 million, decreased 22.7% in the quarter. Benefits from higher pricing were more than offset by increased costs associated with unfavorable manufacturing performance, primarily at our foundry operations, lower volumes and inflation. Adjusted EBITDA of $31.9 million, decreased 17.6%, leading to an adjusted EBITDA margin of 19.3% compared with 25% last year.

調整後營業收入為 2420 萬美元，本季度下降 22.7%。較高定價帶來的好處被與不利的製造性能相關的成本增加所抵消，主要是在我們的代工業務、較低的產量和通貨膨脹方面。調整後 EBITDA 為 3190 萬美元，下降 17.6%，調整後 EBITDA 利潤率為 19.3%，而去年為 25%。

Turning to Water Management Solutions. Net sales of $149.2 million, increased 27.1% as compared with the prior year. This increase was primarily due to higher pricing across most of the segment's product lines and increased volumes, mainly in hydrant and water application products. Adjusted operating income of $19.6 million, increased 70.4% in the quarter, benefits from higher pricing and volumes more than offset increased costs associated with unfavorable manufacturing performance, primarily at our foundry operations, inflation and additional SG&A expenses.

轉向水管理解決方案。淨銷售額為 1.492 億美元，比上年增長 27.1%。這一增長主要是由於該部門大部分產品線的價格上漲和銷量增加，主要是消防栓和水應用產品。調整後的營業收入為 1,960 萬美元，本季度增長 70.4%，受益於更高的定價和銷量，抵消了與不利的製造績效相關的成本增加，主要是我們的代工業務、通貨膨脹和額外的 SG&A 費用。

Adjusted EBITDA of $26.6 million, increased 38.5% in the quarter, leading to an adjusted EBITDA margin of 17.8% compared with 16.4% last year. Moving on to cash flow. Net cash used in operating activities for the quarter ended December 31, 2022, was $6.5 million compared with $19.8 million of net cash provided by operating activities in the prior year. The decrease was primarily due to an increase in inventories. Average net working capital using the 5-point method as a percent of net sales increased to 28.2% compared with 25.4% in the first quarter of last year, primarily due to higher inventory levels.

調整後 EBITDA 為 2660 萬美元，本季度增長 38.5%，調整後 EBITDA 利潤率為 17.8%，而去年同期為 16.4%。繼續現金流。截至 2022 年 12 月 31 日止季度，經營活動使用的現金淨額為 650 萬美元，而去年經營活動提供的現金淨額為 1,980 萬美元。減少主要是由於存貨增加所致。使用 5 點法計算的平均淨營運資本占淨銷售額的百分比從去年第一季度的 25.4% 增加到 28.2%，這主要是由於較高的庫存水平。

During the quarter, we invested $9.9 million in capital expenditures compared with $11 million in the prior year. Free cash flow for the quarter was negative $16.4 million compared with positive $8.8 million in the prior year, primarily due to the decrease in cash provided by operating activities, partially offset by lower capital expenditures. We did not repurchase any common stock. And as of December 31, we had $100 million remaining under our share repurchase authorization.

本季度，我們投入了 990 萬美元的資本支出，而去年同期為 1100 萬美元。本季度的自由現金流為負 1640 萬美元，而去年同期為正 880 萬美元，這主要是由於經營活動提供的現金減少，部分被資本支出減少所抵消。我們沒有回購任何普通股。截至 12 月 31 日，我們的股票回購授權剩餘 1 億美元。

At December 31, 2022, we had total debt of $447 million and cash and cash equivalents of $125.6 million. At the end of the first quarter, our net debt leverage ratio was 1.7x. We did not have any borrowings under our ABL agreement at quarter end nor did we borrow any amounts under our ABL during the quarter.

截至 2022 年 12 月 31 日，我們的債務總額為 4.47 億美元，現金和現金等價物為 1.256 億美元。第一季度末，我們的淨債務槓桿率為 1.7 倍。我們在季度末沒有根據我們的 ABL 協議借款，也沒有在本季度根據我們的 ABL 借款任何金額。

As a reminder, we currently have no debt maturities before June 2029. At December 31, 2022, we had $288 million of total liquidity, giving us ample capacity to support our strategic priorities, including acquisitions. Scott, back to you.

提醒一下，我們目前沒有 2029 年 6 月之前到期的債務。截至 2022 年 12 月 31 日，我們擁有 2.88 億美元的總流動資金，這使我們有足夠的能力支持我們的戰略重點，包括收購。斯科特，回到你身邊。

Thanks, Martie. I'll now comment on our first quarter performance, end markets and full year 2023 outlook. After that, we'll open the call up for questions. As mentioned earlier, we are pleased with our solid start to the year. While we sequentially improved gross margins in the quarter, our margins were below the prior year. We continue to be pleased with our price realization, which more than offset inflationary pressures for the fourth consecutive quarter.

謝謝，馬蒂。我現在將評論我們第一季度的業績、終端市場和 2023 年全年展望。之後，我們將打開問題電話。如前所述，我們對今年的良好開端感到滿意。雖然我們在本季度連續提高了毛利率，但我們的利潤率低於去年同期。我們繼續對我們的價格實現感到滿意，這連續第四個季度抵消了通脹壓力。

As expected, unfavorable manufacturing performance, primarily at our foundries, partially offset the benefits from higher pricing in the first quarter. Unfavorable manufacturing performance was impacted by lower production, primarily at our Chattanooga and Decatur foundries, leading to under-absorption of labor and overhead. Our Chattanooga foundry, which is focused on gate valve production, delivered lower volumes due to fewer production days relative to the prior year, primarily driven by increased planned maintenance over the Christmas period.

正如預期的那樣，不利的製造業績（主要是我們的代工廠）部分抵消了第一季度價格上漲帶來的好處。不利的製造性能受到產量下降的影響，主要是在我們的查塔努加和迪凱特鑄造廠，導致勞動力和管理費用吸收不足。我們的 Chattanooga 鑄造廠專注於閘閥生產，由於與上一年相比生產天數減少，交付量減少，這主要是由於聖誕節期間計劃維護增加所致。

Brass melt production at our Decatur foundry increased sequentially. However, it was more than 30% below the prior year. Our teams made progress on the operational challenges at the foundry with improved machine uptime contributing to the sequential increase in melt production. The ramp-up of our new brass foundry is well underway. We have 2 lines working through the production parts approval process, prioritizing our highest volume parts, including parts used in our hydrants and gate valves.

我們迪凱特鑄造廠的黃銅熔體產量環比增長。但是，它比上一年低了 30% 以上。我們的團隊在應對鑄造廠的運營挑戰方面取得了進展，機器正常運行時間的改善有助於熔體產量的連續增加。我們新的黃銅鑄造廠的擴建工作正在順利進行。我們有 2 條生產線通過生產零件批准流程，優先處理我們產量最大的零件，包括消防栓和閘閥中使用的零件。

We are working through the new casting and machining processes and expect to begin shipping the initial parts using the new alloy later this quarter. I am pleased to share that Mueller product utilizing components manufactured at the new foundry will continue to be certified under NSF 61 for drinking water system components through Underwriters Laboratories. This certification is crucial to ship products containing parts with the new alloy to customers.

我們正在研究新的鑄造和加工工藝，並預計將在本季度晚些時候開始運送使用新合金的初始零件。我很高興與大家分享，使用新鑄造廠製造的組件的 Mueller 產品將繼續通過美國保險商實驗室 (Underwriters Laboratories) 獲得 NSF 61 飲用水系統組件認證。該認證對於向客戶運送包含新合金零件的產品至關重要。

With elevated backlogs, our teams remain focused on improving production levels to reduce lead times and satisfy orders, especially for our hydrants and brass products. We continue to experience higher costs year-over-year, primarily related to outsourcing materials, machining and maintenance. We expect these headwinds to carry on into the second quarter as well as the second half of the year.

由於積壓訂單增加，我們的團隊仍然專注於提高生產水平，以縮短交貨時間並滿足訂單需求，尤其是我們的消防栓和黃銅產品。我們的成本繼續逐年上升，主要與外包材料、加工和維護有關。我們預計這些逆風將持續到第二季度和今年下半年。

Increasing brass production levels from both foundries will ultimately allow us to bring some production back in-house and lower costs. As backlog levels normalize and our new brass foundry begins shipping product, we anticipate decreasing the use of outsourcing. Additionally, we are working to add shifts at our Albertville Foundry to increase internal production for key hydrant parts. We've already mentioned the sale of assets associated with the closure of our Aurora facility.

提高兩家鑄造廠的黃銅生產水平最終將使我們能夠將部分生產帶回內部並降低成本。隨著積壓水平正常化以及我們新的黃銅鑄造廠開始運送產品，我們預計會減少外包的使用。此外，我們正在努力增加阿爾貝維爾鑄造廠的班次，以增加關鍵消防栓零件的內部生產。我們已經提到了與 Aurora 工廠關閉相關的資產出售。

We are pleased that we now have completed the divestment of all the locations from which operations have transitioned to the new Kimball, Tennessee facility. Our specialty and large valve CapEx investments are continuing to ramp up this year, and we expect the margin benefits to follow accordingly. During the first quarter, our specialty valve products delivered the strongest year-over-year growth of all of our product lines, which resulted in a sequential and year-over-year improvement in gross margin.

我們很高興我們現在已經完成了所有業務轉移到田納西州金博爾新工廠的地點的撤資。我們的專業和大型閥門資本支出投資今年將繼續增加，我們預計利潤率收益也會相應增加。在第一季度，我們的特種閥門產品實現了所有產品線中最強勁的同比增長，這導致毛利率環比和同比增長。

I will now briefly review our end markets. As mentioned earlier, we believe the municipal repair and replacement market remains resilient, helping partially offset the slowdown in residential construction activity. For the municipal repair and replacement market, we remain excited about the benefits of the Infrastructure Bill starting to take effect later this year. The first wave of distributions have taken place with additional guidelines from the EPA regarding the Build America, Buy America domestic sourcing requirements.

我現在將簡要回顧一下我們的終端市場。如前所述，我們認為市政維修和更換市場保持彈性，有助於部分抵消住宅建築活動放緩的影響。對於市政維修和更換市場，我們仍然對今年晚些時候開始生效的基礎設施法案的好處感到興奮。第一波分發是根據 EPA 關於“建設美國、購買美國”國內採購要求的附加指南進行的。

This further supports the strategic rationale for all 3 of our large capital projects. As domestic sourcing requirements for iron and steel products increase, we believe we will be well positioned with our increased domestic capacity for our larger valve and service brass products. Looking at the new residential construction market. Total housing starts were down 15.6% year-over-year during our first quarter with around 1.4 million seasonally adjusted annual rate in December.

這進一步支持了我們所有 3 個大型資本項目的戰略依據。隨著國內對鋼鐵產品採購需求的增加，我們相信我們將在更大的閥門和服務黃銅產品的國內產能增加方面處於有利地位。展望新住宅建築市場。第一季度新屋開工總數同比下降 15.6%，12 月份季節性調整後的年率為 140 萬套左右。

We expect construction activity to pick up in the spring relative to our first quarter, which is the typical seasonality of our core products. For fiscal 2023, we continue to forecast that total housing starts will be in the 1.3 million to 1.4 million range. While we expect higher interest rates and economic uncertainty to continue to impact residential construction, we believe lot inventories remained relatively low.

我們預計春季建築活動將比第一季度有所回升，這是我們核心產品的典型季節性。對於 2023 財年，我們繼續預測新房開工總數將在 130 萬至 140 萬套之間。雖然我們預計利率上升和經濟不確定性將繼續影響住宅建設，但我們認為地段庫存仍相對較低。

Moving on to our outlook for 2023. As expected, we experienced a slowdown in order activity during the first quarter. While our total backlog decreased sequentially, we continue to have an elevated backlog, especially for shorter cycle products like service brass and hydrants. With product lead times and project time lines improving, we anticipate our backlog levels could normalize over the coming quarters, depending on end market activity. We expect to get a clearer sense of sell-through channel inventory plans and order levels as we move into the upcoming spring construction season.

繼續我們對 2023 年的展望。正如預期的那樣，我們在第一季度經歷了訂單活動放緩。雖然我們的總積壓量依次減少，但我們的積壓量仍在增加，尤其是對於服務黃銅和消防栓等周期較短的產品。隨著產品交貨時間和項目時間線的改進，我們預計我們的積壓水平可能會在未來幾個季度正常化，具體取決於終端市場活動。隨著我們進入即將到來的春季施工季節，我們希望對銷售渠道庫存計劃和訂單水平有更清晰的認識。

As mentioned earlier, we are reiterating our guidance for 2023, which we provided with our fiscal 2022 fourth quarter earnings. We anticipate that our consolidated net sales will increase between 6% and 8%. Our backlog at the end of the first quarter and the expected realization from higher pricing position us to deliver net sales growth again in 2023. We expect our adjusted EBITDA will increase between 10% and 14% as compared with the prior year, primarily driven by benefits from higher price realization and operational improvements in the second half of the year.

如前所述，我們重申了我們在 2022 財年第四季度收益中提供的 2023 年指引。我們預計我們的綜合淨銷售額將增長 6% 至 8%。我們在第一季度末的積壓以及更高定價的預期實現使我們在 2023 年再次實現淨銷售額增長。我們預計調整後的 EBITDA 將比上年增長 10% 至 14%，這主要是由於受益於今年下半年更高的價格實現和運營改進。

In closing, our teams continue to focus on maintaining our strong customer relationships while executing our top priorities for the year, which include achieving operational improvements, delivering benefits from our large domestic capital investments, accelerating development and commercialization of new products and generating ongoing price realization. We are on track with the ramp-up of our new brass foundry, which will have significantly more capacity to deliver the best long-term manufacturing solutions and advance our sustainability initiatives with a new lead-free brass alloy.

最後，我們的團隊繼續專注於維護我們強大的客戶關係，同時執行我們今年的首要任務，包括實現運營改進、從我們的大量國內資本投資中獲益、加速新產品的開發和商業化以及持續實現價格.我們的新黃銅鑄造廠正在步入正軌，這將有更大的能力提供最佳的長期製造解決方案，並通過新的無鉛黃銅合金推進我們的可持續發展計劃。

We are in a transformational period for Mueller with our large capital projects in various stages of ramping up. We believe the benefits from these projects and ongoing operational improvements will greatly enhance our position in the market. These investments are especially important as water utilities increase needed repair and replacement projects supported by the Federal Infrastructure Bill and the requirements for domestically manufactured products.

我們正處於 Mueller 的轉型期，我們的大型資本項目處於不同的加速階段。我們相信，這些項目帶來的好處和持續的運營改進將大大提高我們在市場上的地位。這些投資尤其重要，因為水務公司增加了聯邦基礎設施法案支持的所需維修和更換項目以及對國產產品的要求。

Our broad portfolio of products and solutions enable us to help water utilities address growing challenges from the aging infrastructure, climate change and workforce demographics. While uncertainty from the external environment has increased, we are a much more resilient organization supported by a strong balance sheet. This gives us liquidity and capacity to continue to reinvest in our business while returning cash to shareholders, primarily through our quarterly dividend.

我們廣泛的產品和解決方案組合使我們能夠幫助水務公司應對老化的基礎設施、氣候變化和勞動力人口結構帶來的日益嚴峻的挑戰。雖然來自外部環境的不確定性有所增加，但我們是一個在強大的資產負債表支持下更具彈性的組織。這為我們提供了流動性和能力，可以繼續對我們的業務進行再投資，同時主要通過季度股息向股東返還現金。

We are confident that our growth strategies, capital investments and operational initiatives will deliver both further net sales growth and a return to pre-pandemic margins in 2025. That concludes my comments. Operator, please open this call for questions.

我們相信，我們的增長戰略、資本投資和運營計劃將在 2025 年實現進一步的淨銷售額增長和大流行前利潤率的回歸。我的評論到此結束。接線員，請打開此電話詢問問題。

(Operator Instructions) The first question in the queue is from Deane Dray with RBC Capital Markets.

（操作員說明）隊列中的第一個問題來自 RBC 資本市場的 Deane Dray。

Maybe we can start, Scott, with your perspective on the demand dynamics in the quarter with respect to some of the order slowdowns. We're hearing lots of commentary across the industrials about destocking, and we can see what's going on in the resi side. And in particular, you had a -- there's a pipe manufacturer yesterday that was seeing some of the same dynamics and their outlook was a lot more dire than what you're talking about today.

斯科特，也許我們可以從您對本季度一些訂單放緩的需求動態的看法開始。我們聽到了很多關於去庫存的行業評論，我們可以看到 resi 方面的情況。特別是，你有一個 - 昨天有一家管道製造商看到了一些相同的動態，他們的前景比你今天談論的要可怕得多。

So just kind of frame for us the order slowdown, is this destocking? And I know there's going to be offset from the muni break and fix, but just very specifically on the resi side.

訂單放緩對我們來說只是一種框架，這是去庫存嗎？而且我知道 muni 中斷和修復會有所抵消，但只是在 resi 方面非常具體。

Yes. So I think that the dynamic is, is much as you described. But if you recall my comments in previous quarters, there is a big piece of this theme that is DRP driven or distribution resource planning driven. And it's this notion that as the lead times collapse that you'll kind of get here with this double whammy. One, the sell-through may have slowed as housing goes from that 1 5, 1 6 down to the 1 3, 1 4 range, but lead times are coming down as well.

是的。所以我認為動態就像你描述的那樣。但如果你還記得我在前幾個季度的評論，這個主題有很大一部分是由 DRP 驅動或分銷資源規劃驅動的。正是這種觀念認為，隨著交貨時間的縮短，您會遇到這種雙重打擊。第一，隨著房屋從 1 5、1 6 下降到 1 3、1 4 範圍，銷售可能已經放緩，但交貨時間也在縮短。

And so the amount of material that's needed in the channel continues to decline. And so what's necessary and what's not. So I think the end market evolution work closely with the channel partners to look at sell-through and to manage inventory and order levels will be key. And I think that everybody is kind of looking at this spring construction season, and saying, is it going to be even further down? Or will there be enough resiliency? I think that there is a tendency to be overly bearish once you start to see the negatives.

因此，渠道中所需的材料數量繼續下降。所以什麼是必要的，什麼不是。因此，我認為終端市場的發展與渠道合作夥伴密切合作，以了解銷售情況並管理庫存和訂單水平將是關鍵。而且我認為每個人都在關注這個春季施工季節，並說，它會進一步下降嗎？還是會有足夠的彈性？我認為一旦你開始看到消極因素，就會有過度看跌的傾向。

But I would also point to the January jobs report, which would indicate that employment levels and potentially income levels could be rising for the average American, which I think would be kind of the counterpoint to the housing starts where these people enter the housing market. I think that remains to be seen. But what's most important to us in the last 6 months is watching the balance sheets of the municipalities and how flush they are with cash still 2 years later.

但我還要指出 1 月份的就業報告，該報告表明普通美國人的就業水平和潛在收入水平可能會上升，我認為這與這些人進入房地產市場的房屋開工情況形成了對比。我認為這還有待觀察。但過去 6 個月對我們來說最重要的是觀察市政當局的資產負債表，以及 2 年後他們的現金狀況如何。

And I believe that, that is the counterpoint along with the emergence of more interest in the drinking water stream from governments that is going to kind of offset the kind of that demand profile reduction that we'll see from the housing market. So we remain, let's call it, cautiously optimistic.

我相信，隨著政府對飲用水流的更多興趣的出現，這將抵消我們將從住房市場看到的那種需求減少的情況。因此，我們仍然保持謹慎樂觀。

That's all really helpful. And we've heard that whole dynamic about the slowing the pace of orders as lead times normalize. So that's getting to be pretty familiar for us as well. All right. So a follow-up question for Martie. Can you talk about the impact of your inventories on free cash flow because that was really well below your typical free cash flow use? Is that inventory? Is it still buffer inventory? Is this a supply chain issue?

這真的很有幫助。我們聽說隨著交貨時間正常化，訂單速度放緩的整個動態。所以這對我們來說也變得非常熟悉了。好的。那麼請問 Martie 的後續問題。您能否談談您的庫存對自由現金流的影響，因為它確實遠低於您通常使用的自由現金流？那是存貨嗎？還是緩衝庫存？這是供應鏈問題嗎？

Scott just talked about how there's less inventory in the channel, there's destocking going on, but you're taking on more inventory. So just walk us through that, please.

斯科特剛剛談到了渠道中的庫存如何減少，正在進行去庫存，但你正在承擔更多的庫存。請帶我們了解一下。

Yes. So I'll say certainly looking at the negative free cash flow that we had in the quarter, as you pointed out, was driven by the higher inventory levels. As we work through our 2023 and certainly consistent with the guidance that we have reiterated with respect to full year free cash flow being in the 40% to 60% of our adjusted net income, that improvement year -- through the year, we expect to be largely driven by working capital improvements, and that's going to come from inventory turn.

是的。所以我肯定會說，正如你所指出的，我們在本季度的負自由現金流是由較高的庫存水平驅動的。隨著我們在 2023 年的工作，並且肯定與我們重申的關於全年自由現金流量占我們調整後淨收入的 40% 至 60% 的指導意見一致，我們預計這一年將有所改善很大程度上是由營運資本的改善推動的，而這將來自庫存周轉。

So I'm going to say, as we -- as our production teams are focused on improving the lead times, as Scott just talked through, lowering the backlog levels, particularly with the short-cycle products that we've had and with the outsourcing, I think that as you -- we've had more of that philosophy of we're going to bring any inventory in the needed parts just in case rather than just in time, all the supply chain disruptions.

所以我要說的是，我們的生產團隊專注於縮短交貨時間，正如 Scott 剛才所說的那樣，降低積壓水平，特別是我們擁有的短週期產品以及外包，我認為就像你一樣 - 我們有更多的理念，我們將在需要的部分中提供任何庫存，以防萬一，而不是及時，所有供應鏈中斷。

I think we're going to -- we are going to look to sort of transition to that as we begin to see some improvements in the supply chain. We're going to look to shift that focus and certainly look to bring down these inventory levels through the year, which will help with that. There will be some -- as the new brass foundry is coming up, we will have some elevated inventory levels associated with that.

我認為我們將 - 我們將尋求某種過渡，因為我們開始看到供應鏈中的一些改進。我們將尋求轉移這一重點，當然希望在全年降低這些庫存水平，這將有助於實現這一目標。會有一些 - 隨著新的黃銅鑄造廠的到來，我們將有一些與之相關的庫存水平升高。

Scott referenced in and around destocking activity and what we could see from distributors through the balance of the year. And I would say, certainly, if the destocking is greater than what our estimates are, that could impact our overall inventory levels and our free cash flow guidance.

Scott 提到了去庫存活動及其相關活動，以及我們在今年餘下時間可以從分銷商那裡看到的情況。我肯定會說，如果去庫存大於我們的估計，那可能會影響我們的整體庫存水平和我們的自由現金流指導。

Martie, that's real helpful. And I probably should have prefaced it with that throughout the industrial reporting season, most of the companies have underdelivered on free cash flow, I think, versus expectations. So you're a good company here. It's just -- we're all anxious to see that working capital come down. But I think what we're all learning is it's going to take longer throughout the year to see it. It's not just a 1-quarter flush. So I appreciate the reference about the time frame for you.

瑪蒂，這真的很有幫助。在整個工業報告季中，我可能應該以此作為開場白，我認為大多數公司的自由現金流都低於預期。所以你在這裡是一個很好的公司。只是——我們都急於看到營運資金下降。但我認為我們都在學習的是，全年需要更長的時間才能看到它。這不僅僅是 1 個季度的同花順。因此，我很感謝您提供有關時間範圍的參考。

And just last question for me. Scott, it's been a while since we had an opportunity about a potential guidance boost. So we saw nice results first quarter out of the year. It's still early, I get that. But when you're not boosting after a quarter like this, does that imply a lower outlook? Is this -- are you a bit more cautious? Just help us frame the idea of reaffirming guidance and not boosting it here.

最後一個問題問我。斯科特，自從我們有機會獲得潛在的指導提升以來已經有一段時間了。所以我們在今年第一季度看到了不錯的結果。現在還早，我明白了。但是當你在這樣的一個季度後沒有提振時，這是否意味著前景較低？這是——你更謹慎一點了嗎？只是幫助我們構想重申指導而不是在這裡加強指導的想法。

Yes. So I think that the -- there was some definite difference in how the first quarter came out external estimates to internal. So I think that our timing may have different from the market's timing. So when we talked about on our last earnings call, where we provided the initial guidance for 2023, we talked about how the timing of the ramp-up of the new brass foundry was important to our improved margins in the second half of the year.

是的。所以我認為 - 第一季度的外部估計與內部估計存在一些明顯差異。所以我認為我們的時機可能與市場的時機不同。因此，當我們在上一次財報電話會議上談到我們提供了 2023 年的初步指導時，我們談到了新黃銅鑄造廠的擴建時機對我們下半年提高利潤率的重要性。

And then if you just were to take that improvement and say, where was your starting point for the year from earnings versus where the externals were? I can't really speak to that. What I can say is that the start to the year was solid with the sequential improvement in margins. But I'm mindful that we're still early in the year. And additionally, we're still in the ramp-up period of the new brass foundry improving those -- improving those PPAP processes.

然後，如果您只是接受這種改進並說，與外部因素相比，您今年的起點是哪裡？我真的不能這麼說。我能說的是，隨著利潤率的連續提高，今年的開局很穩固。但我注意到我們還處於今年年初。此外，我們仍處於新黃銅鑄造廠的升級階段，正在改進這些 - 改進那些 PPAP 流程。

And I would also say there remains a fairly high level of uncertainty in the external environment. So residential construction has slowed. Product lead times and project time lines are improving. I expect that the backlog levels could normalize over the coming quarters, depending on end market activity. So I expect to get a clear sense of the sell-through in the channel and the channel inventory plans as we move into the spring construction season.

我還要說的是，外部環境仍然存在相當高的不確定性。因此，住宅建設已經放緩。產品交貨時間和項目時間線正在改進。我預計未來幾個季度積壓水平可能會正常化，具體取決於終端市場活動。因此，隨著我們進入春季施工季節，我希望能夠清楚地了解渠道的銷售情況和渠道庫存計劃。

I think that will be a critical time being as we look at what happens with the sell-through in the channel inventories. And I think that will set the pace for the balance of the year. So I think we elected -- when we look here, certainly a little better first quarter than anticipated -- but we elected to kind of keep our powder dry as we look at the rest of the year, I think there's a couple of ways this can go.

我認為這將是一個關鍵時刻，因為我們正在研究渠道庫存中的銷售情況。我認為這將為今年餘下的時間定下步伐。所以我認為我們選擇了——當我們看這裡時，第一季度肯定比預期好一點——但我們選擇在今年剩餘時間裡保持火藥乾燥，我認為有幾種方法可以去。

And I would speak to everybody and say, the most important elements for our guidance to be met is to hit our throughput numbers at our own facilities and not hit throughput by using other people's materials or outsourced materials. And those are going to be the keys for execution. And I think it's just too soon to say where we are on that path.

我會和每個人說，要滿足我們的指導，最重要的要素是在我們自己的設施中達到我們的吞吐量數字，而不是通過使用其他人的材料或外包材料來達到吞吐量。這些將成為執行的關鍵。而且我認為現在說我們在這條道路上的位置還為時過早。

Next question is from Bryan Blair with Oppenheimer.

下一個問題來自布萊恩布萊爾和奧本海默。

Solid start to the year, good to see that price continues to outpace inflation being 4 quarters into that catch-up process. Are you now at a point where price/cost is margin accretive year-on-year? Or is that still pending?

今年開局良好，很高興看到價格繼續超過通貨膨脹率進入追趕過程的 4 個季度。您現在是否處於價格/成本同比增長利潤率的地步？還是仍然懸而未決？

Well, year-on-year, I guess, you could argue that it is accretive. But as you know, Bryan, we don't measure it that way. We go back to the trough. We know that the entire inflationary cycle is multiple years on. So when we said in our prepared comments at the end there that we expect to be back to pre-pandemic margins in '25. We are looking at the rate of accretion. So we're still not accretive to inflation over the entire cycle going back to 2020, but we expect that we will be back to breakeven on the dilution effect at 20 -- sometime this year if the price that's trapped in the backlog and the throughput assumptions we have in there, we'll kind of get back the price piece sometime in 2023.

好吧，我想，你可能會說它是增值的。但正如你所知，布萊恩，我們不會那樣衡量。我們回到低谷。我們知道整個通貨膨脹週期已經持續了多年。因此，當我們在最後準備好的評論中說，我們希望在 25 年回到大流行前的利潤率。我們正在研究吸積率。因此，從 2020 年開始的整個週期中，我們仍然沒有增加通貨膨脹，但我們預計我們將在 20 的稀釋效應下回到盈虧平衡點——今年某個時候，如果積壓和吞吐量中的價格受困我們在那裡的假設，我們將在 2023 年的某個時候收回價格。

We believe that we'll be at pre-pandemic margins in 2025. So the price piece of it is one part of it, but the actual throughput and getting rid of the outsource and getting rid of the other things won't have us back to pre-pandemic margins until 2025. So I hope that answers it. We'll be accretive year-on-year, but we still got a ways to go to get back to when the inflationary cycle began in 2020 and the headwinds associated with the outsourced and the other product inefficiencies or manufacturing inefficiencies, we won't have those out of our system until we can close that second foundry until we can hit all of our production targets internally, and we anticipate everything to be back to pre-pandemic margins by 2025.

我們相信我們將在 2025 年達到大流行前的利潤率。所以它的價格部分是其中的一部分，但實際吞吐量和擺脫外包以及擺脫其他事情不會讓我們回來到 2025 年大流行前的利潤率。所以我希望這能回答這個問題。我們將同比增長，但我們仍然有辦法回到 2020 年通脹週期開始的時候，以及與外包和其他產品效率低下或製造效率低下相關的逆風，我們不會將這些排除在我們的系統之外，直到我們可以關閉第二家代工廠，直到我們可以在內部實現所有生產目標，並且我們預計到 2025 年一切都會恢復到大流行前的利潤率。

Yes. I appreciate all the color there. I guess to simplify that progression, it would be getting back to recovering margin price/cost this year, stamping out inefficiencies into next year and then allowing for the read-through of the projects once you are past completion and at that full run rate, driving the -- I think it's $30 million or so in benefits that you've called that would be '24 into '25. Is that kind of the step forward?

是的。我欣賞那裡所有的顏色。我想為了簡化這一進程，它會回到今年恢復保證金價格/成本，消除明年的低效率，然後在你過去完成並以全速運行時允許通讀項目，推動——我認為這是 3000 萬美元左右的收益，你稱之為 24 到 25 年。這是向前邁出的一步嗎？

Yes, yes. So if you were to look at us to be at a high level, like 2019 19%, 20%, call it 20% in the EBITDA margin, and now we're in the 14%, 15% range, we will get that 500 to 600 basis points in '25. And it's a combination of a lot of things. The biggest two things, though, as I've been saying repeatedly, is the brass foundry, the elimination to outsource and getting throughput levels back to -- at our own foundries. Those are the 2 big movers. It really is. And that's -- we will end up with as long as the end markets hang together, we'll be fine.

是的是的。因此，如果您認為我們處於較高水平，例如 2019 年 19%、20%，稱其為 EBITDA 利潤率的 20%，而現在我們處於 14%、15% 的範圍內，我們將得到25 年 500 到 600 個基點。它是很多東西的組合。不過，正如我反复說過的那樣，最大的兩件事是黃銅鑄造廠、外包的消除以及將吞吐量水平恢復到我們自己的鑄造廠。那是兩個大推動者。確實如此。那就是——只要終端市場保持一致，我們就會結束，我們會沒事的。

I think the other thing I'd point out for everybody here is, I think the end markets are conducive to us to continue the growth, but we're probably going to have to look to the IIJA timing to carry us through what will likely be a temporary housing slump.

我想我要為在座的每個人指出的另一件事是，我認為終端市場有利於我們繼續增長，但我們可能不得不尋找 IIJA 的時機來帶領我們完成可能發生的事情算是暫時的樓市低迷。

And that's actually a perfect segue there, Scott. Any other color you can offer on IIJA impact to date, I assume minimal. More importantly, your confidence in there being a tangible impact looking to the latter part of '23 into '24, '25. Just looking at SRF funding data and specifically the awarded funding and it's somewhat underwhelming right now seem to do a lot of administrative issues at hand and a lot of work that remains just to coordinates the project funding before moving forward with a lot of this.

這實際上是一個完美的 segue，Scott。到目前為止，你能提供的任何其他顏色對 IIJA 的影響，我認為是最小的。更重要的是，您對從 23 年後期到 24 年、25 年會產生切實影響充滿信心。僅查看 SRF 資金數據，特別是授予的資金，它現在似乎有點平淡無奇，手頭有很多行政問題，還有很多工作只是為了協調項目資金，然後再繼續推進。

Just curious your perspective on that. And then again, level of confidence or incremental confidence in this being a real catalyst going forward.

只是好奇你對此的看法。然後再一次，信心水平或增加信心，這是一個真正的催化劑。

Well, I think it will be a real catalyst going forward. I think you're seeing whenever we have some of these government programs, you're seeing the sausage-making process. There's going to be all these new rule sets like give you an example like a fastener, is it fastener have to be American made? Is it part of the American iron and steel? Or can we use imported fasteners? Well, how many fasteners are there being manufactured in the U.S. that meet the stainless steel, all these things.

好吧，我認為這將是未來真正的催化劑。我認為每當我們有這些政府計劃時，您就會看到香腸製作過程。將會有所有這些新的規則集，比如給你一個緊固件的例子，緊固件必須是美國製造的嗎？它是美國鋼鐵的一部分嗎？或者我們可以使用進口緊固件嗎？那麼，美國製造了多少符合不銹鋼的緊固件，所有這些東西。

And so the EPA is working through all those rule sets to say what the exemptions are, what they're not, what materials have to constitute the bulk of the cost with the labor content. So all those kind of sausage-making has been going on for the last 9 months. And you saw some funds released to California, some of the bigger states. And as you said, it was a small piece of the $100-ish billion that we expected to see. And so I would say that the money is going to be set. I believe it will be a catalyst for '24 and '25 and beyond. But any project that got approved, let's say, today even, let's say with the [Ambrell] today, none of those installs are going to happen in '23 or even the early part of the '24.

因此，EPA 正在研究所有這些規則集，以確定哪些是豁免，哪些不是，哪些材料必須構成成本的大部分以及勞動力內容。所以在過去的 9 個月裡，所有這些香腸製作一直在進行。你看到一些資金被釋放到加利福尼亞州，一些更大的州。正如您所說，這只是我們預計會看到的 1000 億美元的一小部分。所以我會說這筆錢將被確定。我相信這將成為 24 年和 25 年及以後的催化劑。但是任何獲得批准的項目，比方說，即使是今天，比方說今天的 [Ambrell]，這些安裝都不會發生在 23 年甚至 24 年的早期。

By the time those jobs are engineered, those builds and materials are cut, the water system is in a position where the install could happen and the labor is available, these are multi-month projects, not to mention the size of the backlog in the specialty valve business or the large gate valve business. So I do think, yes, I'm very, very bullish as a result of the funding, and we can see the need for where these dollars need to be spent in both the storm water, wastewater and drinking water investment opportunities. Yes, we think it's actually going to have a meaningful impact on the size of the served market for products that Mueller makes. No, I don't see it happening in the next 3 quarters.

當這些工作被設計出來，那些建築和材料被切割，供水系統處於可以安裝並且勞動力可用的位置時，這些都是數月的項目，更不用說積壓的規模了特種閥門業務或大型閘閥業務。所以我確實認為，是的，我非常非常看好這筆資金，我們可以看到需要將這些美元花在雨水、廢水和飲用水投資機會上。是的，我們認為它實際上會對 Mueller 生產的產品所服務的市場規模產生有意義的影響。不，我認為未來 3 個季度不會發生這種情況。

The next question is from Mike Halloran with Baird.

下一個問題來自 Mike Halloran 和 Baird。

It's Paz on for Mike. So another question on backlog. So how are you thinking about backlog duration at this point versus normal? Obviously, a lot of puts and takes. The backlog levels are elevated. We talked about the numerous puts and takes on the manufacturing and outsourcing side. But then also on the flip side, we talked about an opportunity to normalize backlog levels this year.

這是邁克的帕茲。關於積壓的另一個問題。那麼，與正常情況相比，此時您如何考慮積壓持續時間？顯然，有很多投入和投入。積壓水平升高。我們談到了製造和外包方面的眾多看跌期權。但另一方面，我們也談到了今年將積壓水平正常化的機會。

And then secondarily, based on the answers to Deane's question, I suspect I know the answer here, but I'll ask anyway. How much if any backlog normalization is assumed in the current guidance?

其次，根據 Deane 問題的答案，我想我知道這裡的答案，但我還是會問。如果在當前指南中假設有任何積壓正常化，則有多少？

Let me hit the first how I think about it. I probably think about it a little differently than the analysts on the call because I'm keenly interested in knowing where our sector competitors are in their lead times. And I think we're advantaged in our lead time at gate valves right now. The Chattanooga plant has done a great job of plowing through the backlog there. But I believe we're disadvantaged in hydrants right now. I think our lead times are too long compared to our competitors.

讓我先談談我的想法。我的想法可能與電話會議上的分析師略有不同，因為我非常想知道我們的行業競爭對手在他們的交付週期中所處的位置。而且我認為我們現在在閘閥的交貨時間方面具有優勢。查塔努加工廠在解決積壓訂單方面做得很好。但我相信我們現在在消防栓方面處於劣勢。我認為與我們的競爭對手相比，我們的交貨時間太長了。

When I think about our specialty valve business, I think we're near par. But we should -- with the investment and we can get the throughput, we should be advantaged, we're domestic. And we're not as dependent on that China supply chain as some of the competitors in the specialty valve market. So I want to see improvement there on what that backlog reduced in terms of days of production because I think it's an opportunity to take share.

當我想到我們的專業閥門業務時，我認為我們接近標準。但我們應該——通過投資，我們可以獲得吞吐量，我們應該有優勢，我們是國內的。而且我們不像特種閥門市場的一些競爭對手那樣依賴中國供應鏈。因此，我希望看到在生產天數方面積壓減少的情況有所改善，因為我認為這是一個分享的機會。

So I know you're asking me, and I'm kind of evading the financial answer to your question. But that is how I think about the backlog, and I want to be honest with you about that. I don't think about it in the context of how much price is trapped there, although there's a considerable amount or what an optimal number is.

所以我知道你在問我，我有點迴避你問題的財務答案。但這就是我對積壓的看法，我想對你說實話。我不會在有多少價格被困在那裡的背景下考慮它，儘管有相當多的數量或最佳數量是多少。

What I do think normalization looks like though is that what we call the short-cycle business, the smaller gate valves, let's call them 4 6 8s and the 5.25% Super Centurion or the couple of the wet barrel size hydrants, those have to get inside 2 weeks because that has to be the rapid turn for the channel. Those are probably the most competitive markets for the channel, and therefore, they need to turn that inventory rapidly. They don't want to be sitting on months of gate valves or sitting on months of hydrants.

我確實認為標準化看起來像我們所說的短週期業務，較小的閘閥，我們稱它們為 4 6 8s 和 5.25% Super Centurion 或幾個濕桶大小的消防栓，這些必須得到在 2 週內，因為那必須是頻道的快速轉變。這些可能是該渠道競爭最激烈的市場，因此，他們需要迅速周轉該庫存。他們不想坐在幾個月的閘閥上或坐在幾個月的消防栓上。

And so with our channel partners, we have to get that supply chain balanced out, which is -- continues to be out of balance today. So ideally, we would see that continue to shrink and get back inside of a 30-day backlog by the end of the year for the short-cycle business. The project business, I expect that those lead times will continue to grow. But as IIJA money puts more of these bigger projects out there that we and our competitors will start having more and more, a, engineered valves and b, longer and longer lead times on those engineered valves.

因此，與我們的渠道合作夥伴一起，我們必須使供應鏈平衡，這是 - 今天繼續失衡。因此，理想情況下，我們會看到短週期業務的數量繼續減少，並在年底前回到 30 天的積壓狀態。項目業務，我預計這些交貨時間將繼續增長。但是隨著 IIJA 資金投入更多這些更大的項目，我們和我們的競爭對手將開始擁有越來越多的工程閥門和 b，這些工程閥門的交貨時間越來越長。

If anybody remembers back when we did the large casting foundry, we put in a 20-foot x 20-foot bed for a 3D printer for tools, so we can make large tools for Build America, Buy America products. We expect that our cycle time to engineer will be better than the competition, but that our throughput times will be on par. And so we hope to be advantaged there.

如果有人記得我們做大型鑄件鑄造廠時，我們放了一個 20 英尺 x 20 英尺的床用於 3D 工具打印機，這樣我們就可以為 Build America，Buy America 產品製造大型工具。我們希望我們的工程週期時間將優於競爭對手，但我們的吞吐時間將與競爭對手持平。因此，我們希望在那裡獲得優勢。

So I know that's a long-winded answer to say expect backlogs to continue to fall, and it's more important, I think, in the market for us to be competitive or advantaged even than to worry too much about where we are in context of days.

所以我知道說期望積壓訂單會繼續下降是一個冗長的回答，而且我認為，對於我們在市場上具有競爭力或優勢甚至比過分擔心我們在幾天的背景下所處的位置更重要.

No, absolutely. That's incredibly helpful, Scott, and a much better answer than it was question. So thank you. I'll switch gears a little bit. The balance sheet is in good shape. You called out ample capacity to pursue the strategic priorities. Can you maybe just provide a little color on what the M&A landscape looks like? Is there anything out there that has you excited right now?

不，絕對。斯科特，這非常有幫助，而且是比問題更好的答案。所以謝謝。我會稍微換檔。資產負債表狀況良好。你調動了足夠的能力來追求戰略重點。您能否提供一些關於併購前景的顏色？現在有什麼讓你興奮的嗎？

I mean, there's always properties that we're constantly evaluating our pipeline and, I would say, our pipeline is fulsome right now. I think that the opportunities that you see where the investment dollars are going probably over the next 6 to 8 years offers some adjacencies for the Mueller line valves or bolt-ons that perhaps we don't offer today that we think will gain money.

我的意思是，我們一直在不斷評估我們的管道的屬性，我想說的是，我們的管道現在很不錯。我認為，您看到的機會可能會在未來 6 到 8 年內為 Mueller 管線閥門或螺栓連接提供一些鄰接，我們今天可能不會提供這些我們認為會賺錢的產品。

I would say that if you look at the conversation in the country around what water retention looks like especially on the West Coast, you see the water crisis around Lake Mead, around these are declining aquifers, I think there's going to be massive amounts of investment needed to move water from where we have plentiful water to the areas where we seem to be moving and getting population concentrations.

我想說的是，如果你看看這個國家關於蓄水情況的討論，尤其是在西海岸，你會看到米德湖周圍的水資源危機，周圍的含水層正在減少，我認為將會有大量投資需要將水從我們擁有豐富水源的地方轉移到我們似乎正在移動並使人口集中的地區。

So all of those things, I think, drive and feed our acquisition pipeline. And we continue to be fairly bullish on our ability to get some of that done. But nothing is in the next quarter, that's for sure.

因此，我認為，所有這些都推動並為我們的收購渠道提供了動力。我們繼續相當看好我們完成其中一些工作的能力。但下個季度什麼都沒有，這是肯定的。

The next question in the queue is from Brian Lee with Goldman Sachs.

隊列中的下一個問題來自高盛的 Brian Lee。

This is Miguel on for Brian. We just had one question. I wanted to touch on the channel inventory dynamic again. Could you go into more detail possibly on the -- on that dynamic that you're seeing. Is there a way that you've been able to estimate how much is out there for the key products that you're monitoring, maybe in terms of number of weeks or months, and to what level the channel is trying to get down to?

這是布賴恩的米格爾。我們只有一個問題。我想再次談談渠道庫存動態。你能否更詳細地介紹你所看到的動態。有沒有一種方法可以讓您估算出您正在監控的關鍵產品有多少，可能以周數或月數為單位，以及渠道試圖達到什麼水平？

Yes, it's a hard question to answer because I think if you were to ask the channel, they would say a lot of the inventory is committed inventory. And so if you look at what's happened with price, so you take your baseline going in and you add -- I'm making this up, don't take this by 30% to 40% of the increase in inventory that you've seen in the channel is just price driven. So units are constant. And the balance is the increase as a result of the inflationary pressures that we see in price increases taken in the water space.

是的，這是一個很難回答的問題，因為我想如果你問佢道，他們會說很多庫存是承諾庫存。因此，如果你看看價格發生了什麼，那麼你將你的基線納入並添加 - 我正在彌補這一點，不要將其占庫存增加的 30% 到 40%在渠道中看到的只是價格驅動。所以單位是不變的。平衡是由於通貨膨脹壓力而增加的，我們在水域價格上漲中看到。

So you say that's 30% to 40% inflation. Then the balance of, let's call it, ballpark, 100% increase is units. That 60% or 65% of increase that's in units, there's a huge portion of that, that is committed. But waiting on pipe or waiting on labor or waiting on -- and -- but the -- when the distributor took the order for that contractor, for that municipality, it was earmarked. And so there's a fairly high backlog now measured in weeks of what's just logistics backlog.

所以你說這是 30% 到 40% 的通貨膨脹率。然後餘額，讓我們稱之為，大概，100% 的增長是單位。 60% 或 65% 的增長是以單位為單位的，其中很大一部分是承諾的。但是等待管道或等待勞動力或等待 - 而且 - 但是 - 當分銷商為那個承包商接受訂單時，為那個市政當局，它被指定了。因此，現在有相當高的積壓，以幾週的物流積壓來衡量。

So the speculative inventory would be the balance, right? Let's call it 15%, 20% of channel inventories are on the speculative basis. I would expect that that's the piece that would get targeted quickly. And so I think that, that's the at-risk. The other part for the channel to add value, they have to serve those contractors and those municipality jobs. Those are almost always delivered a job site. They're not going from the distributors' warehouse to some municipality work center and then being loaded on the truck again.

所以投機庫存將是餘額，對嗎？讓我們稱之為 15%，20% 的渠道庫存是在投機基礎上。我希望那是很快就會成為目標的作品。所以我認為，這就是風險所在。渠道的另一部分要增加價值，他們必須為那些承包商和那些市政工作提供服務。這些幾乎總是交付到工作地點。他們不會從分銷商的倉庫運到某個市政工作中心，然後再次裝上卡車。

Some of that -- a lot of that inventory and a lot of that backlog for the distributor is when we have the crew there, we want you to deliver this and this simultaneously for install here, here and here. And that piece of it, I think, has left because it's been -- the lease times between pipe valves and other fittings have become so disparate between one and other that we end up with a much larger inventory needed to support the logistics piece.

其中一些 - 很多庫存和分銷商的大量積壓是當我們有工作人員在那裡時，我們希望您同時交付這個和這個以便在這裡，這里和這里安裝。我認為，這部分已經離開了，因為它已經存在——管道閥門和其他配件之間的租賃時間已經變得如此不同，以至於我們最終需要更大的庫存來支持物流部分。

And I think that, that -- as that shrinks, then you'll start to see that inventory shrink as well. And so if you use the 30% price kind of, let's call it, 30% logistics, 30% speculative, as you see the lead times trash, you'll be able to use one. As you see the prices increase, that will be an upward pressure. And as I said in my prepared comments, we increased prices last quarter again.

而且我認為，隨著它的減少，你會開始看到庫存也會減少。因此，如果你使用 30% 的價格，我們稱之為 30% 的物流，30% 的投機，當你看到交貨時間垃圾時，你將能夠使用一個。當你看到價格上漲時，這將是一個上行壓力。正如我在準備好的評論中所說，我們上個季度再次提高了價格。

And then as you see the other part, though, it's -- it too will drive down channel inventories. And I think you have to look at all 3 elements and then make the timing piece of what you can of that mix of their inventory, what's driven it?

然後，正如您看到的另一部分，它也將降低渠道庫存。而且我認為你必須查看所有 3 個元素，然後對他們的庫存組合進行時間安排，是什麼驅動了它？

The next question is from Joe Giordano with Cowen.

下一個問題來自 Joe Giordano 和 Cowen。

Can you talk about price realization in the quarter and what's embedded for the full year? I assume that like -- how much of the full year expectations like baked based on actions you've already taken? I assume it's probably a little bit harder to like incrementally do this, given inflation is like moderating sequentially, right?

你能談談本季度的價格實現以及全年的嵌入情況嗎？我假設 - 有多少全年預期是根據您已經採取的行動制定的？我認為，考慮到通貨膨脹就像順序緩和一樣，逐漸喜歡這樣做可能有點困難，對吧？

Yes. Look, I think the sequential increases in price realization in Q1 was something we were very pleased with. We're benefiting from the multiple price actions taken over the past year with price realization in the mid-teens for Q1. I think that improved price realization. As I said earlier, more than overcame the inflation, and it was not dilutive, but it's necessary in order to get us back to that kind of pre-2020 dilution that we've seen from inflation.

是的。看，我認為第一季度價格實現的連續增長是我們非常滿意的。我們受益於過去一年採取的多項價格行動，第一季度的價格實現在十幾歲左右。我認為這提高了價格實現。正如我之前所說，不僅克服了通貨膨脹，而且它沒有稀釋，但為了讓我們回到我們從通貨膨脹中看到的那種 2020 年前的稀釋，這是必要的。

I think in the first quarter, total material cost inflation, keep me right here, Martie, but -- it included purchase price remains elevated and was somewhere around 8% year-over-year versus approximately 14% a year ago, while negative impact of inflation improved sequentially. We continue to experience higher costs associated with raw and purchase materials. So to answer your question, I'm not trying to -- there's a lot of pieces moving there to say will it be dilutive or -- and it really depends on how quickly we can ship the backlog, how much of the price that's trapped in the backlog.

我認為在第一季度，總材料成本通脹，讓我留在這裡，馬蒂，但是 - 它包括採購價格仍然很高，同比增長約 8%，而一年前約為 14%，而負面影響通脹環比改善。我們繼續經歷與原材料和採購材料相關的更高成本。所以為了回答你的問題，我並不是想——有很多人在那裡說它會稀釋還是——這真的取決於我們能多快運送積壓的訂單，有多少價格被困在積壓中。

Obviously, shipping sooner is better as evidenced by our Q1 having kind of that mid-teens price in it. So I -- it's hard to say. I can tell you what's in our guidance is that we get back to kind of flat level with 2020 in terms of price to inflation. So it's no longer dilutive this year, but that will not offset all of the inefficiencies and costs associated with outsourcing and the other problems that we talked about. So we won't be back to pre-pandemic margins contributed by price and then the efficiencies until 2025.

顯然，越早發貨越好，我們的 Q1 的價格是十幾歲左右。所以我——這很難說。我可以告訴你，我們的指導意見是，就價格與通脹率而言，我們回到了與 2020 年持平的水平。所以它今年不再稀釋，但這不會抵消與外包相關的所有低效率和成本以及我們談到的其他問題。因此，到 2025 年，我們不會回到大流行前由價格和效率貢獻的利潤率。

But within that, like full year revenue growth guide, is it fair to say that the price contribution is higher than the overall growth guide? So like in contemplation price...

但在其中，就像全年收入增長指南一樣，可以說價格貢獻高於整體增長指南嗎？所以就像在沉思價格...

Yes, perhaps you missed it. Yes. No, That -- when we did the guidance, we were explicit. The actual unit volume, we expect to be slightly down in all of our growth, all of the 6% to 8% growth that we talk about is being driven from price.

是的，也許你錯過了。是的。不，那——當我們做指導時，我們是明確的。實際單位數量，我們預計我們所有的增長都會略有下降，我們談論的所有 6% 到 8% 的增長都是由價格驅動的。

Yes, that's what I feel, okay. With respect to the new -- the ramp-up of Decatur and things like that, like -- what do you need to see to kind of know that you're on the right track? Like how far into the year or like what kind of trigger points along the way kind of give you comfort that, okay, like this is progressing, how we need to see like this is going to work?

是的，這就是我的感覺，好吧。關於新的——迪凱特的加速發展和類似的事情——你需要看到什麼才能知道你走在正確的軌道上？就像今年有多遠，或者一路上有什麼樣的觸發點會讓你感到安慰，好吧，就像這正在取得進展一樣，我們需要如何看待這樣才能奏效？

Yes. I mean we meet every week, how many parts are PPAP, where is that on our PPAP schedule? Of those parts that are PPAP, what's the machining trials going like? If you look at our 4K process, you start out kind of with a dimensional answer and Gate 2, you get into whether it's form-fit-function, porosity, all of those things in machining and then you get to Gate 3 of the (inaudible) that some significant volumes and then Gate 4 is machining and significant volumes and looking at tooling wear, things like that.

是的。我的意思是我們每週都會開會，有多少部分是 PPAP，它在我們的 PPAP 時間表上在哪裡？在那些 PPAP 零件中，機加工試驗進行得怎麼樣？如果你看一下我們的 4K 工藝，你會從一個維度答案和門 2 開始，你會了解它是否是形狀配合功能、孔隙率，以及加工中的所有這些東西，然後你會進入門 3 (聽不見）一些重要的數量，然後 Gate 4 正在加工和大量數量，並查看工具磨損，諸如此類。

So we know where we need to be to get those top 170-ish parts that I talked about in our last quarterly call through by the end of March. In my prepared comments, I said we're on track for that. But there's a thousand things that can go right and wrong in these next 90 days. But at the end of the day, our exit rate at 2023 of pounds produced past to approach somewhere between 50,000 and 70,000 tons a day.

因此，我們知道我們需要去哪裡才能在 3 月底之前獲得我在上一次季度電話會議中談到的那些前 170 個部分。在我準備好的評論中，我說我們正朝著這個方向前進。但在接下來的 90 天內，有一千件事情可能是對的，也可能是錯的。但在一天結束時，我們以 2023 磅為單位的退出率過去每天生產接近 50,000 至 70,000 噸。

And we get into that [60,000 tons] range at the new foundry and we can afford to then shut the existing foundry and satisfy all of our customer demands and all our internal demands. So I don't know how to really answer your question other than to say, one thing gone right, another thing will go wrong. At the end of the day, you would react and adapt, react and adapt, react and adapt to ensure that you get to the capital project targets and throughput. And that's what we're focused on.

我們在新鑄造廠進入 [60,000 噸] 範圍，然後我們有能力關閉現有鑄造廠並滿足我們所有客戶的需求和我們所有的內部需求。所以我不知道如何真正回答你的問題，只能說，一件事是對的，另一件事會出錯。在一天結束時，您將做出反應並適應、反應並適應、反應並適應以確保您達到資本項目目標和吞吐量。這就是我們關注的重點。

And so yes, there's a huge part of our margin improvement. It comes from avoiding the outsourced premiums we're paying because of our inability to produce brass. And that's job 1 in this project execution.

所以是的，我們的利潤率提高了很大一部分。它來自避免由於我們無法生產黃銅而支付的外包保費。這是該項目執行中的第 1 項工作。

Can you maybe speak to like what the cost differential is between these outsourced products that you have to bring into what at scale the cost would be internally?

您能否談談這些外包產品之間的成本差異是什麼，您必須將這些外包產品大規模引入內部成本是多少？

No. Absolutely not. And it's not because I wouldn't it's that, obviously, you have multiple partners, and I don't want people trying to infer you're paying this premium here and that premium there. They obviously know what we're paying. So no, I'm not going to get into the spreads of premiums. I'm sorry.

不，絕對不是。這不是因為我不會，很明顯，你有多個合作夥伴，我不希望人們試圖推斷你在這裡支付了溢價，在那裡支付了溢價。他們顯然知道我們付出的代價。所以不，我不打算討論保費的利差。對不起。

And last for me. You mentioned your expectation for housing starts for the year. Can you kind of maybe compare that to what you think lot development will look like this year?

最後對我來說。您提到了您對今年新屋開工的預期。您能否將其與您認為今年地段開發的情況進行比較？

Yes. As I said in my comments, look, we still believe that a lot of inventories and even options on lots. I know a lot of the builders are talking about in their prepared comments now what their option portfolio looks like. It's still, I think, if you think about a 1.4 million housing start year and then you try and back into that, which we try to do, but it's more art than science, unfortunately, because people don't publish the numbers.

是的。正如我在評論中所說，看，我們仍然相信很多庫存甚至很多期權。我知道現在很多建築商都在他們準備好的評論中談論他們的期權組合是什麼樣子的。它仍然是，我認為，如果你考慮一個 140 萬的住房開工年，然後你試著回到那個，我們試圖做的，但它更多的是藝術而不是科學，不幸的是，因為人們不公佈這些數字。

We still think a lot of inventories are relatively low and that there's not a huge backlog of developed lots for the builders to sell either spec or custom order or homes into. And so I guess the way I would describe it is after living through the 2007 overhang as a business, I wasn't here, but certainly, lots of people work and how long to work off that overhang, this one looks like it will be measured in days or even weeks, but it's not going to be measured in years. And so the inventory is I think at a much, much lower level than it was in 2007 by a factor of 2 or 3.

我們仍然認為很多庫存相對較低，並且沒有大量積壓的已開發地塊供建築商出售規格或定制訂單或房屋。所以我想我會描述它的方式是在經歷了 2007 年的業務過剩之後，我不在這裡，但當然，很多人都在工作，需要多長時間才能解決這個過剩問題，這個看起來會是以天甚至數週來衡量，但不會以年來衡量。因此，我認為庫存水平比 2007 年低了 2 或 3 倍。

(Operator Instructions) The next question is from Walt Liptak with Seaport Research.

（操作員說明）下一個問題來自 Seaport Research 的 Walt Liptak。

I wanted to go back to Deane's question about the -- where you commented about the forecasting and you said you had the internal forecast versus the sell-side forecast and that we were just -- they were wrong. So the question is, I thought that the first half was going to be weaker, and then the second half was going to be stronger. And so I guess the question is -- so that this is helpful to everybody is, how are we doing on the second quarter like, seasonally, you typically have a pickup going into that spring selling season, are you expecting that? Are we going to see sort of a sequentially flat quarter? What are you thinking about?

我想回到 Deane 的問題——你評論了預測，你說你有內部預測與賣方預測，而我們只是——他們錯了。所以問題是，我認為上半場會更弱，然後下半場會更強。所以我想問題是 - 所以這對每個人都有幫助，我們在第二季度的表現如何，季節性的，你通常會在春季銷售旺季開始，你期待嗎？我們會看到一個連續持平的季度嗎？你在想什麼？

Okay. Well, it's hard to get it. Gross margin expectations around Q2 is kind of how I -- and I don't want to get into giving quarterly guidance, but I will say this in general. Look, I think our annual guidance implies year-over-year improvement in adjusted EBITDA margins of around, I don't know, 70 basis points at the midpoint. I think it was driven by improvements in gross margins, which are approximately 190 basis points with headwinds, I think, from the pension expense and higher total SG&A.

好的。嗯，很難得到它。第二季度的毛利率預期有點像我——我不想給出季度指導，但我一般會這麼說。聽著，我認為我們的年度指導意味著調整後的 EBITDA 利潤率同比提高大約 70 個基點，我不知道是中點。我認為這是受到毛利率改善的推動，我認為毛利率提高了大約 190 個基點，而養老金支出和更高的 SG&A 總額帶來了不利因素。

And so you know that, let's call it, 70 basis points improvement. I think the inflation pressures and manufacturing performance headwinds will have to continue in Q2. We certainly are going to be dependent on the outsource. And I think we're going to be dependent on third-party maintenance services indicator for all -- certainly all of the quarter. So I think the timing issue with our capitalized variance and the inventory write-up associated with the inflation that took place believes that says that gross margins ought to be kind of flattish in Q2 with Q1.

所以你知道，我們稱之為 70 個基點的改進。我認為通脹壓力和製造業業績逆風將在第二季度繼續存在。我們當然會依賴外包。而且我認為我們將依賴第三方維護服務指標——當然是整個季度。因此，我認為我們的資本化差異的時間問題以及與發生的通貨膨脹相關的庫存增記認為，這表明第二季度的毛利率應該與第一季度持平。

And then you won't start to see the step-up of improvement that will generate the leverage on the volume growth until you're actually able to start impacting those 2 things. Does that help your model, Walt?

然後，在您真正能夠開始影響這兩件事之前，您將不會開始看到改進將對數量增長產生影響。這對你的模型有幫助嗎，沃爾特？

Yes, that does. And on the revenue piece for the quarter, the second quarter, I think what you're saying is that you've got to -- if you get that regular seasonal uptick, you've got to wait and see because you don't know how the channel inventory is going to be. Is that fair?

是的，確實如此。關於本季度、第二季度的收入，我想你的意思是你必須——如果你得到定期的季節性增長，你必須拭目以待，因為你沒有知道渠道庫存將如何。這公平嗎？

Yes. I think we have a big enough backlog that we should be able to hit our sales number. I'm not as concerned about that. It's more concerned about the margin flow-through and getting the throughput up sequentially. So as I said in my comments, we had fewer days in gate valves in our Q1 because we took down the Chattanooga facility for an extended period of time versus the previous year so that we could do some [AUTOPERF] realignings and some other maintenance that needed to be done. And so we had fewer days in Q1.

是的。我認為我們有足夠大的積壓，我們應該能夠達到我們的銷售數字。我不那麼擔心。它更關心保證金流通和按順序提高吞吐量。因此，正如我在評論中所說，我們第一季度的閘閥天數減少了，因為與去年相比，我們關閉了查塔努加工廠的時間更長，這樣我們就可以進行一些 [AUTOPERF] 重新調整和一些其他維護需要完成。因此，我們在第一季度的天數減少了。

We expect that we'll be able to get gate valve volumes back up in Q2. We expect improvement in throughput in Albertville for hydrants in Q2. We expect the continued improvement in throughput from Kimball and they've been quarter-on-quarter-on-quarter improving since we've opened them. So pleased with that. So I think that's really where you think about that implied improvement in adjusted EBITDA.

我們預計我們將能夠在第二季度恢復閘閥數量。我們預計第二季度艾伯特維爾消防栓的吞吐量會有所改善。我們預計 Kimball 的吞吐量會持續提高，而且自從我們打開它們以來，它們一直在逐季提高。對此很滿意。所以我認為這才是你真正考慮調整後 EBITDA 隱含改善的地方。

We're only going to get clawing back some of the inefficiency we had in manufacturing in Q2, but we still got the bulk of the heavy lifting to do in the second half, which will only come when we remove be outsourced and we start producing meaningful pounds at the new foundry.

我們只會收回我們在第二季度製造中的一些低效率，但我們仍然需要在下半年完成大部分繁重的工作，這只有在我們取消外包並開始生產時才會出現在新鑄造廠有意義的磅數。

Okay. All right. Great. I guess another one for me is last quarter, I think one of the big takeaways was that activist that you guys are working with. You didn't comment on them at all. Are you still thinking about it the same way? Has anything changed?

好的。好的。偉大的。我想對我來說另一個是上個季度，我認為最重要的收穫之一是你們正在合作的激進主義者。你根本沒有評論他們。你還在這樣想嗎？有什麼改變嗎？

Yes. I mean we're still thinking about it the same way. I think that the committee is off and running with the 2 new Board members, but I don't want anybody to be misled or -- we don't speak to the activist. I mean, they got independents that were associated with the company. Part of our agreement with them was that we would have new Board members. And I think that the integration has gone well, but we're not in contact with Ancora any more than we are with any other shareholder. And certainly, we don't comment about our discussions with shareholders.

是的。我的意思是我們仍在以同樣的方式思考它。我認為委員會已經關閉並與 2 名新董事會成員一起運作，但我不希望任何人被誤導，或者 - 我們不與活動家交談。我的意思是，他們有與公司相關的獨立人士。我們與他們達成的部分協議是我們將有新的董事會成員。而且我認為整合進展順利，但我們與 Ancora 的聯繫並不比我們與任何其他股東的聯繫更多。當然，我們不會對我們與股東的討論發表評論。

So I think the committee, though, is we've had our inaugural meetings, and we've had our discussions about capital allocations, about operational improvements. And I think we have alignment in what the priorities for the business are. And those priorities are, as I've been talked about them from the large CapEx projects. So I feel good about it.

所以我認為委員會，我們已經召開了首次會議，我們已經討論了資本分配和運營改進。而且我認為我們在業務的優先事項上是一致的。正如我在大型資本支出項目中談到的那樣，這些優先事項是。所以我感覺很好。

Well, I think we're at the top of the hour, operator. And I just want to thank everybody for staying with us and sitting through the call and joining us this morning. Look, final things, though, I want to remain focused on our customers while delivering and the benefits from our capital investments, we will continue to outsource not to preserve us but to preserve our customers and keep our place with them because I think shareholders terribly important in these times of uncertainty.

好吧，接線員，我想我們正趕上時間。我只想感謝大家今天早上和我們在一起，參加電話會議並加入我們。看，最後的事情，雖然，我想在交付和從我們的資本投資中獲益的同時繼續關注我們的客戶，我們將繼續外包不是為了保護我們，而是為了保護我們的客戶並保持我們在他們中的位置，因為我認為股東非常在這些不確定的時期很重要。

I'd like to thank our teams for their continued dedication, especially as they deal with the ongoing uncertainty in the external markets. I think the transformation that Mueller is going through and the water industry is going through at this time is going to be a remarkable and exciting time to be at Mueller and to be invest in Mueller. I think we are well positioned to continue to grow net sales and get those margins back to pre-pandemic margins in 2025.

我要感謝我們的團隊一直以來的奉獻精神，尤其是在他們應對外部市場持續存在的不確定性時。我認為 Mueller 正在經歷的轉型以及水行業正在經歷的轉型將是在 Mueller 和投資於 Mueller 的非凡而激動人心的時刻。我認為我們有能力繼續增加淨銷售額，並在 2025 年將這些利潤率恢復到大流行前的水平。

And I expect this improvement to be driven by the ability to get priced more than the -- in the inflation cycle, our increased volumes, primarily from growth in muni repair and replacement, improved manufacturing performance and the realization of the benefits from the large capital projects. And so I don't want to be pollyannaish and rosy that it's nothing but blue skies from here because there's certainly a lot of work left to be done. But I want to thank you for your interest, and I want to thank you for your continued support here at Mueller. With that, operator, we'll end the call.

而且我預計這種改善將受到定價能力的推動，而不是 - 在通貨膨脹週期中，我們增加的數量，主要來自市政維修和更換的增長，製造績效的提高以及從大資本中獲益的實現項目。因此，我不想過於樂觀和樂觀，認為這裡不過是藍天，因為肯定還有很多工作要做。但我要感謝您的關注，我要感謝您在 Mueller 的持續支持。有了這個，接線員，我們將結束通話。

This concludes today's call. Thank you for your participation. You may disconnect at this time.

今天的電話會議到此結束。感謝您的參與。此時您可以斷開連接。