Watts Water Technologies Inc (WTS) 2024 Q1 法說會逐字稿

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.

女士們、先生們，歡迎參加由總裁兼執行長 Bob Pagano 主持的 Watts Water Technologies Incorporated 2024 年第一季財報電話會議；沙尚克‧帕特爾，財務長；以及 FP&A 和投資者關係高級副總裁 Diane McClintock。

At the end, we will open the line for questions.

最後，我們將開通提問專線。

And I will now turn the call over to Diane McClintock.

我現在將把電話轉給黛安·麥克林托克。

Thank you, and good morning, everyone.

謝謝大家，大家早安。

Welcome to our first quarter earnings conference call.

歡迎參加我們的第一季財報電話會議。

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

今天加入我的是總裁兼執行長 Bob Pagano；以及我們的財務長 Shashank Patel。

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

在今天的電話會議中，鮑伯將概述第一季的情況，並討論市場的現狀和我們的營運情況。

Shashank will discuss the details of our first quarter performance and provide our outlook for the second quarter and the full year.

Shashank 將討論我們第一季業績的細節，並提供我們對第二季和全年的展望。

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

在我們的發言之後，我們將回答與電話會議期間涵蓋的資訊相關的問題。

Today's webcast is accompanied by a presentation which can be found in the Investor Relations section of our website.

今天的網路廣播附有演示文稿，您可以在我們網站的投資者關係部分找到該演示文稿。

We will reference this presentation throughout our prepared remarks.

我們將在準備好的演講中引用該簡報。

Any reference to non-GAAP financial information is reconciled in the appendix to the presentation, and I'd like to remind everyone that during this call, we may be making certain comments that constitute forward-looking statements.

任何對非公認會計準則財務資訊的引用都會在簡報的附錄中進行調整，我想提醒大家，在這次電話會議中，我們可能會做出某些構成前瞻性陳述的評論。

These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially.

這些陳述面臨許多風險和不確定性，可能導致實際結果有重大差異。

For information concerning these risks, see Watt's publicly available filings with the SEC.

有關這些風險的信息，請參閱瓦特向 SEC 公開提交的文件。

The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

本公司不承擔更新或修改任何前瞻性陳述的義務，無論是由於新資訊、未來事件或其他原因。

With that, I will turn the call over to Bob.

這樣，我會將電話轉給鮑伯。

Thank you, Diane, and good morning, everyone.

謝謝你，黛安，大家早安。

Please turn to slide 3, and I'll provide an overview for the first quarter.

請翻到投影片 3，我將概述第一季的情況。

We began 2024 with better than expected first quarter results, including record sales, adjusted operating margin and earnings per share.

2024 年伊始，我們的第一季業績優於預期，包括創紀錄的銷售額、調整後的營業利益率和每股盈餘。

I'd like to express my appreciation to the entire Watts team for their hard work that made this outperformance possible.

我要向整個 Watts 團隊表示感謝，感謝他們的辛勤工作，使這一出色的表現成為可能。

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

正如我們在上次財報電話會議上討論的那樣，本季有機銷售額增長 6%，主要是由於運輸天數增加。

We also benefited from incremental sales due to our acquisitions of Enware, Bradley and Josam.

由於收購了 Enware、Bradley 和 Josam，我們也受惠於銷售額的增量。

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

我們對這些新收購的業績非常滿意，並期望它們繼續為我們的長期成功做出貢獻。

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.

調整後的營業利潤率超出預期，主要是由於額外運輸天數帶來的增量銷售、穩定的價格實現和生產率，足以抵消通貨膨脹、歐洲銷售下降和增量投資。

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.

由於我們強勁的獲利和 2024 年剩餘時間的預期現金流，我們宣布將股息增加 19%，並從 6 月開始支付。

Our balance sheet remains strong and provides an ample capacity to support flexibility in our capital allocation strategy.

我們的資產負債表仍然強勁，並提供充足的能力來支持我們資本配置策略的靈活性。

From an operations perspective, we are pleased with the progress of the Bradley, Josam, and Enware integration efforts.

從營運角度來看，我們對 Bradley、Josam 和 Enware 整合工作的進展感到滿意。

Our teams are working together to capitalize on synergies and capture additional growth opportunities.

我們的團隊正在共同努力，利用協同效應並抓住額外的成長機會。

We expect both acquisitions to be accretive to adjusted EPS in 2024.

我們預計這兩項收購將增加 2024 年調整後每股盈餘。

Regarding inflation, we continue to see cost increases across labor and overhead, and we're seeing renewed escalation of raw material costs.

關於通貨膨脹，我們繼續看到勞動力和管理費用的成本增加，我們看到原材料成本再次上升。

While the inflation rate has moderated, it is still above normal historical levels.

儘管通貨膨脹率放緩，但仍高於正常的歷史水平。

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.

我們的團隊在提高生產力方面做得很好，不僅在我們的營運中，而且在工廠之外，這有助於抵消一些通膨壓力。

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.

我們繼續投資我們的數位策略，因為我們相信提供智慧和互聯解決方案對於改善水安全和監管、節約用水和能源效率至關重要。

We will provide you with an update on our smart water initiative later this year.

我們將在今年稍後向您提供有關我們智慧水計劃的最新資訊。

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

此外，幫助我們的客戶實現他們的永續發展目標並滿足我們自己的永續發展目標仍然是首要任務。

We'll be issuing our annual sustainability report by the end of June.

我們將於六月底發布年度永續發展報告。

Additionally, we'll be establishing new long-term goals, including an absolute carbon emissions reduction commitment.

此外，我們將制定新的長期目標，包括絕對減碳承諾。

Our team has made tremendous progress advancing our sustainability strategy and initiatives, and we're looking forward to sharing this with you.

我們的團隊在推動永續發展策略和舉措方面取得了巨大進展，我們期待與您分享。

So stay tuned.

所以請繼續關注。

As I discussed during our last call, 2024 is the 150 year anniversary of Watts.

正如我在上次電話會議中討論的那樣，2024 年是瓦茲誕辰 150 週年。

We are proud of this milestone and are hosting customer and employee events across the globe to celebrate this tremendous accomplishment.

我們為這一里程碑感到自豪，並在全球範圍內舉辦客戶和員工活動來慶祝這一巨大成就。

Our new customer training programs introduced in connection with our 150th anniversary have been well received.

我們為慶祝成立 150 週年而推出的新客戶培訓計畫受到了好評。

Next, I'd like to provide an update on our end markets.

接下來，我想介紹一下我們終端市場的最新情況。

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

全球 GDP 是我們維修和更換業務的指標，低於去年，但在我們的主要市場仍然保持樂觀。

Europe's residential and nonresidential new construction markets remain soft and continue to be impacted by the complex in Ukraine and the Middle East.

歐洲的住宅和非住宅新建市場仍然疲軟，並繼續受到烏克蘭和中東綜合體的影響。

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

德國和義大利能源激勵計劃的減少對原始設備製造商的銷售產生了不利影響，特別是在熱泵市場。

In the Americas, single-family new construction is expected to remain flat, at least until interest rates begin to ease.

在美洲，單戶新建築預計將保持平穩，至少在利率開始放鬆之前是如此。

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.

近幾個月來，包括開工和許可在內的多戶新建築指標下降了兩位數，這表明隨著 2024 年的進展，多戶新建築數量將下降。

Nonresidential new construction indicators in the Americas are mixed.

美洲的非住宅新建指標好壞參半。

The ABI has been below 50 since July 2023, and the Dodge Momentum Index turned negative in March.

自2023年7月以來，ABI一直低於50，道奇動量指數在3月轉為負值。

However, the most recent ENR construction industry Confidence Index rose above 50 for the first time in two years.

然而，最新的ENR建築業信心指數兩年來首次升至50以上。

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

工業和大型專案仍然保持彈性，預計將在 2024 年提供支撐，但將受到零售、辦公室和娛樂等具有挑戰性的子垂直領域的影響。

In the Asia Pacific region, China end markets are moderating but are still expected to grow.

在亞太地區，中國終端市場正在放緩，但預計仍將成長。

We are seeing improving markets in the Middle East due to continued higher oil prices.

由於油價持續走高，我們看到中東市場正在改善。

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

利率上升影響了澳洲和紐西蘭的新建築，但國內生產毛額仍預期為正值。

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.

我們將繼續監控中東地緣政治的不確定性，並期望在出現對我們的客戶和供應鏈產生的任何直接或間接影響時主動解決。

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

現在更新我們對今年剩餘時間的展望。

We are increasing our full year sales and operating margin outlook due to our strong first quarter performance.

由於第一季的強勁表現，我們正在提高全年銷售額和營業利潤率預期。

We expect continued weakening in Europe as new construction slows, including a decline in OEM volume from the reductions in energy incentives.

我們預計，隨著新建設放緩，包括能源激勵措施減少導致 OEM 數量下降，歐洲經濟將持續疲軟。

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.

正如我之前提到的，由於我們在歐洲的固定成本基礎較高，銷售下降將對 2024 年剩餘時間的收益產生更重大的影響。

Interest rates are now expected to remain higher for longer.

現在預計利率將在更長時間內維持在高水準。

This may unfavorably impact residential and nonresidential new construction in the second half of the year.

這可能會對今年下半年的住宅和非住宅新建工程產生不利影響。

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.

接下來，讓我將電話轉給 Shashank，他將討論我們第一季的業績以及第二季和修訂後的全年展望。

Shashank.

沙申克。

Thank you, Bob, and good morning, everyone.

謝謝你，鮑勃，大家早安。

Please turn to slide 4, and I will review the first quarter's consolidated results.

請翻到第四張投影片，我將回顧第一季的綜合業績。

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

銷售額達 5.71 億美元，按報告計算成長 21%，有機成長 6%。

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

正如鮑勃所提到的，我們受益於本季額外的運輸天數。

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

我們估計額外的天數對該季度銷售成長的貢獻約為 7%。

The acquisitions of Bradley, Josam, 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.

Bradley、Josam 和 Enware 的收購貢獻了約 6,800 萬美元或 15%，而主要受歐元走強推動的外匯交易使銷售額比 2023 年增加了約 100 萬美元。

Compared to last year adjusted operating profit of $104 million increased 23% and adjusted operating margin of 18.2% was up 30 basis points.

與去年同期相比，調整後營業利潤 1.04 億美元成長了 23%，調整後營業利潤率 18.2% 成長了 30 個基點。

Adjusted EBITDA of $118 million increased 25% and adjusted EBITDA margin of 20.6% was up 60 basis points.

調整後 EBITDA 為 1.18 億美元，成長 25%，調整後 EBITDA 利潤率為 20.6%，成長 60 個基點。

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.

額外運輸天數帶來的價格、生產力和銷售帶來的好處超過了約 60 個基點的收購稀釋、通貨膨脹和 600 萬美元的增量投資。

Adjusted earnings per share of $2.33 increased 21% versus last year.

調整後每股收益為 2.33 美元，比去年增長 21%。

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.

每股盈餘的成長主要是由穩健的營運表現所推動的，包括額外運輸天數的好處和我們收購的強勁表現。

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.

調整後的有效稅率為23.8%，較2023年第一季上升130個基點，主要是因為2024年第一季股票薪酬獎勵歸屬帶來的稅收優惠較低。

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

就 GAAP 而言，我們產生了 700 萬美元的非經常性收購相關費用。

We also recorded a restructuring charge of $1.2 million related to several cost actions.

我們也記錄了與多項成本行動相關的 120 萬美元重組費用。

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

這些費用被出售歐洲辦公大樓的非經常性收益部分抵銷。

Our free cash flow for the quarter was $37 million compared to $28 million in the first quarter of last year.

我們本季的自由現金流為 3,700 萬美元，去年第一季為 2,800 萬美元。

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

現金流量增加主要是因為淨利增加和營運資本投資減少。

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.

我們預計我們的自由現金流將連續改善，並有望實現我們先前溝通的自由現金流轉換大於或等於淨利潤 90% 的全年目標。

During the quarter, we repurchased approximately 20,000 shares of our Class A common stock for $4 million.

本季度，我們以 400 萬美元回購了約 20,000 股 A 類普通股。

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

此外，正如鮑伯所提到的，我們宣布將從 6 月開始將股息增加 19%。

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

資產負債表依然強勁，為我們提供了充足的彈性。

Our net debt to capitalization ratio at quarter end was 3% and our net leverage is 0.1%.

季末我們的淨負債與資本比率為 3%，淨槓桿率為 0.1%。

Solid cash flow and healthy balance sheet continue to give us capital allocation optionality Please go to slide 5 and let me provide a few comments on the regional results.

穩健的現金流量和健康的資產負債表繼續為我們提供資本配置的選擇權。

Americas organic sales were up 11% and reported sales were up 30%.

美洲有機銷售額成長 11%，報告銷售額成長 30%。

Both were ahead of expectations due to slightly better price.

由於價格略好，兩者均超出預期。

Reported sales benefited from better than anticipated acquisition performance.

報告的銷售額受益於好於預期的收購業績。

Additional shipping days increased sales by high single digits.

額外的運輸天數使銷售額增加了高個位數。

Solid growth in our core valve products was partly offset by declines in water quality and radiant heating products.

我們核心閥門產品的穩健成長部分被水質和輻射供暖產品的下降所抵消。

The acquisitions of Bradley and Josam added $60 million or 19% to Americas sales in the quarter.

Bradley 和 Josam 的收購使本季美洲銷售額增加了 6,000 萬美元，即 19%。

Adjusted operating profit increased by 28%, while adjusted operating margin decreased by 40 basis points.

調整後營業利潤成長 28%，調整後營業利益率下降 40 個基點。

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.

營業利潤率下降的主要原因是收購稀釋、通貨膨脹和增量投資，這些因素遠遠抵消了額外運輸天數帶來的價格、生產力和槓桿作用。

Europe organic sales were down 5% as we expected.

正如我們預期的那樣，歐洲有機銷售額下降了 5%。

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

報告銷售額下降 4%，其中匯率變動帶來 1% 的有利影響。

Additional shipping days increased sales by mid single digits.

額外的運輸天數使銷售額增加了中個位數。

Growth in our drainage 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.

我們的排水業務的成長被法國和比荷盧經濟聯盟的批發管道業務以及德國和義大利的 OEM 業務的下降所抵消，政府補貼的減少和熱泵去庫存產生了不利影響。

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.

儘管面臨挑戰，但由於價格、有利的組合、生產力和額外的運輸天數足以抵消通貨膨脹投資和數量去槓桿化，營業利潤仍增長了 3%，營業利潤率增長了 110 個基點。

It means organic sales were up 6%.

這意味著有機銷售額成長了 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 annual sales.

所報告的 43% 的銷售額成長受到 3% 的不利外匯波動的負面影響，並受到 40% 或約 800 萬美元的年銷售額的正面影響。

Extra shipping days increased sales by mid single digits.

額外的運輸天數使銷售額增加了中個位數。

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.

由於住宅地暖銷售疲軟和資料中心的專案時間安排，澳洲和中東的成長被中國的下降部分抵消。

Adjusted operating margin decreased 150 basis points as a result of inflation investments and the diluted effect of the [Andrx] acquisition, which more than offset price volume and productivity.

由於通貨膨脹投資和 [Andrx] 收購的稀釋效應，調整後的營業利潤率下降了 150 個基點，這遠遠抵消了價格量和生產力。

Slide 6 provides our assumptions about our second quarter and full year operating outlook.

投影片 6 提供了我們對第二季和全年營運前景的假設。

First, let's cover the second quarter outlook.

首先，我們來回顧一下第二季的前景。

On a reported basis, we expect sales to increase between 7% and 11%.

根據報告，我們預計銷售額將成長 7% 至 11%。

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

從有機角度來看，我們預計銷售額將下降 1% 至 5%。

Organic sales in the Americas are expected to be flat, while APMEA is expected to be up low single digits, offset by a low double-digit decline in Europe.

美洲的有機銷售額預計將持平，而 APMEA 預計將出現低個位數成長，但被歐洲低兩位數下降所抵消。

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

此外，我們預計美洲地區的收購將帶來約 6,400 萬美元的增量銷售額。

Second quarter adjusted EBITDA margins are expected to be in the range of 20% to 20.6% or down 100 to 160 basis points.

第二季調整後 EBITDA 利潤率預計在 20% 至 20.6% 範圍內，即下降 100 至 160 個基點。

Second quarter adjusted operating margin should be in the range of 17.6% to 18.2% or down 130 basis points to down 190 basis points.

第二季調整後營業利益率應在17.6%至18.2%之間，即下降130個基點至190個基點。

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

部分原因是與 2023 年第二季的利潤率超過 19% 進行比較非常困難。

Additionally, acquisition dilution of 110 basis points.

此外，收購稀釋了 110 個基點。

Incremental investments and volume deleverage, particularly in Europe, will all have an unfavorable impact.

增量投資和規模去槓桿化，尤其是在歐洲，都會產生不利影響。

We expect incremental investments of approximately $5 million.

我們預計增量投資約為 500 萬美元。

Corporate costs should be approximately $15 million.

公司成本應約為 1500 萬美元。

Net interest expense should be approximately $3 million and the adjusted effective tax rate should be approximately 25%.

淨利息支出應約為 300 萬美元，調整後的有效稅率應約為 25%。

We are estimating a EUR1.08 US dollar exchange rate versus the average rate of [1.09] in the second quarter of 2023.

我們預計 2023 年第二季歐元兌美元匯率為 1.08 美元，而平均匯率為 [1.09]。

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.

這意味著銷售額年減 1%，約 100 萬美元，與前一年相比，每股收益不到 1 美分。

Now let's cover the updated full-year outlook.

現在讓我們來看看更新後的全年展望。

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

對於 2024 年全年，我們將報告的銷售成長前景提高到 7% 至 12% 的新範圍。

Our previous guidance was plus 6% to plus 12%.

我們之前的指導是+6% 到+12%。

Additionally, we are increasing our organic sales growth outlook to a range of minus 4% to plus 1%.

此外，我們也將有機銷售成長預期提高至負 4% 至正 1% 的範圍。

Our previous guidance was a range of minus 5% to plus 1%.

我們之前的指導範圍是負 5% 到正 1%。

In effect, as raising the midpoint of our reported and organic growth range by 50 basis points based on our stronger than expected start in the first quarter.

實際上，基於第一季強於預期的開局，我們將報告和有機成長範圍的中點提高了 50 個基點。

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%.

我們將全年調整後 EBITDA 利潤率預期上調至 19.6% 至 20.2%，而先前的指引值為 19.4% 至 20%。

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

此外，我們也上調了全年調整後營業利潤率預期。

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%.

我們現在預計 2024 年調整後的營業利潤率將在 17.1% 至 17.7% 之間，而先前的指引為 16.9% 至 17.5%。

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.

調整後的 EBITDA 利潤率和營業利潤率的最新展望比我們先前的指導增加了 20 個基點，反映了我們第一季的流量優於預期，包括收購業績。

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.

我們的自由現金流預期與我們先前 2 月的展望保持一致，因為我們預計 2024 年自由現金流轉換將大於或等於淨利潤的 90%。

For the full year, we are now assuming a EUR1.08 US dollar FX rate, which is flat versus 2023 and down versus our previous assumption of EUR1.09 US dollar FX rate.

對於全年，我們現在假設 1.08 歐元的美元匯率，與 2023 年持平，但低於我們先前假設的 1.09 歐元的美元匯率。

This change reduces our sales guidance by $5 million in sales and our EPS guidance by $0.02 a share for the full year versus the prior year.

與前一年相比，這項變更使我們全年的銷售指引減少了 500 萬美元，每股收益指引減少了 0.02 美元。

Regarding other key inputs for the full year, which can be found in the appendix, we expect corporate costs to be about $55 million for the year.

關於全年的其他關鍵投入（可在附錄中找到），我們​​預計全年企業成本約為 5,500 萬美元。

Net interest expense should be approximately $12 million.

淨利息支出應約為 1200 萬美元。

Our estimated adjusted effective tax rate is expected to be approximately 25%.

我們估計調整後的有效稅率預計約為 25%。

We expect our share count to be approximately $33.5 million.

我們預計我們的股份數量約為 3350 萬美元。

Capex spending is anticipated to be approximately $50 million Finally, depreciation and amortization should be approximately $55 million for the year.

資本支出預計約為 5000 萬美元。

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

現在，在我們開始問答之前，讓我將電話轉回給鮑伯。

Bob.

鮑伯.

Thanks Shashank.

謝謝沙尚克。

On slide 7, I'd like to summarize our discussion before we address your questions.

在投影片 7 上，我想在回答您的問題之前總結我們的討論。

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.

由於價格和收購業績優於預期，第一季業績優於我們的預期，第一季銷售額、調整後營業利潤率和每股收益均創歷史新高。

As a result of our solid first quarter, we are increasing our full year sales, operating margin and EBITDA margin outlook.

由於第一季表現強勁，我們正在提高全年銷售額、營業利潤率和 EBITDA 利潤率預期。

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

我們對 2024 年的展望反映了我們對隨著時間的推移市場狀況將趨於疲軟的預期，尤其是在歐洲。

As we've said, our portfolio's agnostic end markets, and we expect our teams to pivot to growing sub verticals as needed.

正如我們所說，我們的投資組合與終端市場無關，我們預計我們的團隊將根據需要轉向不斷增長的子垂直領域。

Our business model includes a large repair and replacement component that provides a durable base and drive steady revenue and cash flow.

我們的業務模式包括大型維修和更換組件，可提供耐用的基礎並推動穩定的收入和現金流。

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

儘管市場充滿挑戰，我們仍計劃維持增量投資，以支持長期獲利成長，特別是在我們的數位策略方面。

We continue to focus on the integrations of Bradley, Josam and Enware to ensure a seamless transition and are pleased with the progress to date.

我們繼續關注 Bradley、Josam 和 Enware 的整合，以確保無縫過渡，並對迄今為止的進展感到滿意。

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.

收購後我們的資產負債表依然強勁，並提供了足夠的靈活性來支持我們的資本配置優先事項，包括我們最近宣布的股息增加 19%。

We are well positioned financially operationally and commercially to take advantage of market opportunities as they arise.

我們在財務運營和商業方面處於有利地位，可以在市場機會出現時充分利用它們。

And I'm confident in our team's ability to execute in this uncertain environment and to continue creating value for our shareholders.

我對我們團隊在這種不確定的環境中執行並繼續為股東創造價值的能力充滿信心。

With that, operator, please open the lines for questions.

那麼，接線員，請打開提問線路。

(Operator Instructions) Nathan Jones, Stifel.

（操作員說明）Nathan Jones，Stifel。

Good morning.

早安.

This is Adam Farley on for Nathan.

我是亞當法利 (Adam Farley) 替補內森 (Nathan)。

Good morning Adam.

早安亞當。

I wanted to start on Europe.

我想從歐洲開始。

Really strong margin performance despite the organic revenue decline plus given the relatively high fixed cost base there.

儘管有機收入下降，加上相對較高的固定成本基礎，但利潤率表現確實強勁。

So what was the main tailwind to margins from mix in Europe?

那麼歐洲混合利潤的主要動力是什麼？

Yes.

是的。

So it was a combination of favorable mix.

所以這是一個有利的組合。

So we had higher sales in drains where we have higher margins.

因此，我們在利潤率較高的排水溝領域的銷售額較高。

And then we had lower sales in the OEM channel, primarily out of Germany which have lower margin.

然後我們在 OEM 通路的銷售額較低，主要來自利潤率較低的德國。

So there's a double benefit on mix.

所以混合有雙重好處。

And then also we benefited, as you know, we lock in certain commodities, for example, brass in Europe and we had locked that in Q4.

然後我們也受益，如你所知，我們鎖定了某些商品，例如歐洲的黃銅，我們已在第四季度鎖定了它。

We benefited on that -- we benefit from that in Q1.

我們從中受益——我們從第一季受益。

Certainly copper and brass has been escalating, but we benefited from some of the locks we had and then productivity came in really strong as well in Q1.

當然，銅和黃銅的價格一直在升級，但我們從我們擁有的一些鎖中受益，然後第一季的生產力也非常強勁。

Okay and how should we think about margins in Europe for the remainder of the year?

好吧，我們該如何考慮今年剩餘時間歐洲的利潤率？

Should mix continue to be positive?

混合應該繼續積極嗎？

Productivity improvements continue narrowing in the price cost spread?

生產力的提高持續縮小價格成本價差？

Yes, I would say that the productivity and mix should continue a positive.

是的，我想說生產力和組合應該繼續保持積極的勢頭。

However, on the on the commodity side, as I said, we lock in for a period of time.

然而，在大宗商品方面，正如我所說，我們會鎖定一段時間。

So those locks to do a come undone, so to speak.

所以可以這麼說，那些鎖就解除了。

And we have seen escalating commodity, especially in on the brass side.

我們看到商品不斷升級，尤其是黃銅方面。

So there could be some headwind down there.

所以那裡可能會有一些逆風。

So we'll see how it plays out for the rest of the year.

因此，我們將看看今年剩餘時間的情況如何。

Thanks for taking my questions.

感謝您回答我的問題。

Mike Halloran, Baird.

麥克·哈洛倫，貝爾德。

Good morning, everyone.

大家，早安。

Morning.

早晨。

So can you just talk about guidance front half back half and just run through the moving pieces.

那麼你能不能只談談引導前半部後半部並簡單介紹一下移動的部分。

I know last call you talked about uncertainty as you move to the back half of the year and you reflected that in the guidance.

我知道上次電話會議您談到了下半年的不確定性，您在指導中反映了這一點。

I imagine that's still the case today, but would love some context on that.

我想今天情況仍然如此，但希望了解一些相關背景。

And then shipping days are probably the impact front half back half.

然後運輸天數可能是影響前半後半。

But it's certainly weighted front half from a guide perspective relative to what you would see historically.

但從指南的角度來看，相對於您在歷史上看到的內容，它肯定是加權的前半部分。

So just want to understand the moving pieces and the thought process behind it.

所以只想了解移動的部分及其背後的思考過程。

Yes, a lots -- nothing has significantly changed.

是的，很多——沒有什麼顯著的改變。

We believe Europe is going to continue to get soft.

我們相信歐洲將繼續疲軟。

We also are being conservative in the second half of the year.

我們在下半年也持保守態度。

Cautious, I should say, given we believe multifamily is going to start impacting us in the second half of the year.

我應該說要謹慎，因為我們相信多戶家庭將在今年下半年開始影響我們。

So we're watching that very carefully.

所以我們正在非常仔細地觀察這一點。

And finally, you are correct regarding the days.

最後，你對日子的看法是正確的。

The favorable days we have in Q1 get offset in Q4.

第一季的有利日子在第四季被抵銷。

So you'll see a fourth quarter be softer where we'll give up those days.

所以你會看到第四季會變得更加疲軟，我們將放棄那些日子。

So we just got to keep that in balance.

所以我們必須保持平衡。

But for the most part, it's playing out as we expected.

但在大多數情況下，一切都按照我們的預期進行。

Europe probably a little softer we expected based on current order rates even through April.

根據目前的訂單率，我們預計即使到四月，歐洲也可能會更加疲軟。

So we're watching that very carefully.

所以我們正在非常仔細地觀察這一點。

And also, Mike, we had baked in also on the noncommercial new construction side, softness in the second half because the ABI has been down for roughly nine months.

而且，麥克，我們也注意到了非商業新建築方面的情況，下半年表現疲軟，因為 ABI 已經下降了大約九個月。

And let me just follow up on that train of thought.

讓我繼續思考這個思路。

Obviously, you sell into a lot of different non-res markets, numerous commercial and institutional subsets.

顯然，您的產品銷往許多不同的非資源市場、眾多商業和機構子集。

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?

當你想到那裡的移動部分時，當我們進入明年下半年時，情況會如何發展？

How do you want to think about it?

你想如何考慮？

In other words, there's a lot of puts and takes.

換句話說，有很多的投入和獲取。

It's a really large market.

這是一個非常大的市場。

You're talking about some of these leading indicators where there's concern, but we also feel optimistic about some of these other areas.

您談論的是一些令人擔憂的領先指標，但我們也對其他一些領域感到樂觀。

How much of a balancing mechanism is it?

平衡機制有多大？

And maybe just talk about the moving pieces there and anything interesting from a subset perspective.

也許只是從子集的角度談論那裡的移動部分和任何有趣的事情。

Yes, we start, Mike, with 60% of our business is repair replace given our large installed base.

是的，麥克，我們開始，考慮到我們龐大的安裝基礎，我們 60% 的業務是維修更換。

So that tends to follow GDP.

所以這往往遵循GDP。

So that stabilizes a lot of its ups and downs.

這樣就穩定了它的許多起伏。

So you're right on the -- some of these markets, we do offset them, for example, data centers, mega projects, a little more lumpy.

所以你說得對——其中一些市場，我們確實抵消了它們，例如資料中心、大型項目，有點不穩定。

But that offset some of the softness you see potentially in multi-family and/or Europe that we're trying to balance.

但這抵消了我們正在努力平衡的多戶住宅和/或歐洲可能出現的一些疲軟現象。

So we have a diversified portfolio.

因此，我們擁有多元化的投資組合。

We move to where the work is.

我們搬到工作地點。

As I said earlier, our products are agnostic to the markets.

正如我之前所說，我們的產品與市場無關。

We're just trying to shift.

我們只是想嘗試轉變。

So we look where construction is it's going in.

所以我們看看建築正在哪裡進行。

It's still happening right now, but we can't ignore some of the leading indicators, which in the past have always held true for us.

現在這種情況仍在發生，但我們不能忽視一些領先指標，這些指標在過去一直對我們適用。

But again, our large installed base certainly helps on the repair replacement side.

但同樣，我們龐大的安裝基礎肯定有助於維修更換方面。

Thank you.

謝謝。

Thank you.

謝謝。

Jeffrey Hammond, KeyBanc Capital Markets.

Jeffrey Hammond，KeyBanc 資本市場。

Hey, good morning, everyone.

嘿，大家早安。

This is David Tarantino on for Jeff.

我是大衛·塔倫提諾為傑夫配音。

Maybe to start on the acquisition dilution.

也許要從收購稀釋開始。

Could you give some context around the expectation for the deals to be more dilutive in 2Q versus the first quarter?

您能否提供一些關於第二季交易比第一季更具稀釋性的預期的背景資訊？

And then maybe for the full year, it looks like you're expecting modestly less dilution to you some color on what's kind of the change in assumption there?

然後，也許對於全年來說，看起來你預計會稍微減少一些關於假設的變化的色彩？

So I'll start on the -- we're very pleased with the acquisition performance.

因此，我將從——我們對收購業績感到非常滿意。

Integrations are going extremely well.

整合進展非常順利。

A lot of the heavy lifting, especially on the front end closing of some sites, is going positive and some of the days favorability helped us in the first quarter because we've got them on now our [4-4-5] calendarization.

許多繁重的工作，特別是在一些網站的前端關閉方面，都在積極進行，有些日子的好感度在第一季度幫助了我們，因為我們現在已經將它們納入了我們的[4-4-5]日曆中。

But I think overall, we're very pleased.

但我認為總的來說，我們非常高興。

So Shashank, you want to talk about the dilution?

Shashank，你想談談稀釋嗎？

Yes.

是的。

So as we noted that the acquisitions outperformed in Q1, and that's why we took down -- 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?

因此，正如我們指出的，收購在第一季的表現優於大市，這就是我們取消整體指引的原因，收購帶來的稀釋現在是70 個基點，而不是80 個基點，比第一季還要少，對嗎？

So we factored that into the equation.

所以我們將其納入等式中。

But overall, for the full year, we expect 70 basis points dilution from the Bradley Josam acquisitions.

但總體而言，我們預計布拉德利·喬薩姆 (Bradley Josam) 收購將稀釋全年 70 個基點。

Okay, great.

好的，太好了。

Thank you.

謝謝。

And then could you maybe give some more color on what you're seeing in terms of underlying demand in Europe?

然後您能否對您所看到的歐洲潛在需求提供更多資訊？

Kind of with cracks becoming a little bit more evident and maybe the line of sight you guys have on the destocking trends?

裂縫變得更加明顯，也許你們對去庫存趨勢的看法是什麼？

Maybe on that.

也許就這一點。

Could you give some color on the forward view, just given the extra days dynamic in the first quarter?

考慮到第一季額外的天數動態，您能否對未來的前景進行一些說明？

I think there's just a lot of uncertainty in Europe right now with the wars going on right now.

我認為，隨著戰爭的持續，歐洲目前存在著許多不確定性。

So I think new construction is helping a little bit or slowing significantly.

所以我認為新的建設會有所幫助或顯著放緩。

We're seeing that down double digits.

我們看到這一數字下降了兩位數。

Repair and replacement other than let's call it the retrofit related to on some of the heat pump initiatives.

維修和更換，我們稱之為與某些熱泵計劃相關的改造。

There is where we're seeing destocking in the channels.

我們看到渠道中的庫存正在減少。

They were ordering a lot last year.

去年他們訂購了很多。

And if you recall, Q1 and Q2 were very strong quarters for Europe, exceeding our expectations and now we have some really tough comparisons, in particular in Europe in Q1 and Q2.

如果你還記得的話，第一季和第二季對於歐洲來說是非常強勁的季度，超出了我們的預期，現在我們進行了一些非常艱難的比較，特別是在歐洲的第一季和第二季度。

So destocking we think is going to take at least through Q2.

因此，我們認為去庫存至少會持續到第二季​​。

And then let's see at that point in time.

然後讓我們看看那個時間點。

But in general, I would say inventories have some -- need to go down, especially in that heat pump area.

但總的來說，我想說庫存需要下降，特別是在熱泵領域。

So we're cautious on Europe as we always are and are taking appropriate cost actions as we analyze where that business is going.

因此，我們一如既往地對歐洲持謹慎態度，並在分析業務發展方向時採取適當的成本行動。

Great.

偉大的。

Thank you.

謝謝。

Joe Giordano, TD Cowen.

喬·佐丹奴，TD·考恩。

Good morning, everyone.

大家，早安。

This is Michael on for Joe. You had mentioned in the slides that price realization was a bit higher than expected in the quarter.

這是邁克爾替喬代言。您在幻燈片中提到，本季的價格實現略高於預期。

What was the price component specifically?

具體來說，價格因素是什麼？

And also just for the remaining part of the year, I believe the [largest] before was about low single digit increase of inflation on the commodity front and also the same on the wage front.

而且就今年剩餘時間而言，我相信之前的[最大]通膨是大宗商品方面的低個位數通膨，以及工資方面的通膨率也是如此。

Is the calculus for the remainder of the year, still the same?

今年剩餘時間的計算仍然相同嗎？

Thank you.

謝謝。

So on the price front, we had assumed about a 1% price realization.

因此，在價格方面，我們假設價格實現約為 1%。

We actually achieved about 1.5%.

我們實際上達到了大約 1.5%。

So about 50 basis points better than we thought, obviously on the back of lower inflation.

因此，比我們想像的要好約 50 個基點，這顯然是在通膨較低的背景下實現的。

On the inflation side and on the people inflation, compensation inflation, we're running at 3.5% to 4%.

在通膨方面以及人民通膨、薪資通膨方面，我們的通膨率為 3.5% 至 4%。

On the commodity inflation all up all in, including the -- I talked about commodities, especially copper price escalating.

關於大宗商品通膨，包括－我談到了大宗商品，尤其是銅價的不斷上漲。

But overall commodity inflation is in the 2% to 3% range.

但整體商品通膨在 2% 至 3% 範圍內。

Great.

偉大的。

That's helpful.

這很有幫助。

And just a follow-up, if I may.

如果可以的話，我只是跟進一下。

But so last quarter, you mentioned like OEM destocking in Europe was about a third of the business there.

但上個季度，您提到歐洲的 OEM 去庫存約佔該地區業務的三分之一。

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?

您能否簡單瀏覽一下不同地區 OEM 的通路庫存以及今年剩餘時間的預期？

Yes.

是的。

I would think let's start with the Americas.

我認為讓我們從美洲開始。

I think the channel inventories in line with expectations.

我認為渠道庫存符合預期。

So I think destocking is done pretty much for North America.

所以我認為北美的去庫存工作已經完成。

So inventory levels are reasonable levels.

因此庫存水準處於合理水準。

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 of our business there.

歐洲，正如我在上一個問題中所說的那樣，我認為 OEM 管道的庫存持續減少，正如你所說，這大約占我們在那裡業務的三分之一。

APMEA, I think it's reasonable, very similar to the Americas.

APMEA，我覺得很合理，跟美洲很相似。

So really the issues in Europe.

這確實是歐洲的問題。

Great.

偉大的。

Thank you.

謝謝。

Thank you.

謝謝。

Walt Liptak, Seaport Research.

沃爾特·利普塔克，海港研究中心。

Good morning, and thanks.

早安，謝謝。

I'll try one on the M&A -- with the revenue, maybe a little bit better than expected in the first quarter.

我會嘗試併購——第一季的營收可能會比預期好一點。

Can you help us with second quarter revenue so we can get that number closer to right> I mean you'd is there should be some seasonal uptick, I would think.

您能否幫助我們了解第二季度的收入，以便我們可以使該數字更接近右側>我的意思是，我認為應該會出現一些季節性上升。

And you have a view on where revenue could be for M&A in the second quarter?

您對第二季併購收入有何看法？

So there's [a lot] for the full year between Bradley and Josam, we're talking about $210 million.

因此，布拉德利和喬薩姆之間的全年收入[很多]，我們談論的是 2.1 億美元。

And you're right.

你是對的。

In the second quarter, it tends to be a little higher.

在第二季度，它往往會稍微高一些。

So in that approximately $55 million, $57 million range approximately.

因此，大約在 5500 萬美元到 5700 萬美元之間。

Okay.

好的。

And then I also wanted to ask about just the Americas region and you sell a lot through distribution, but can you differentiate as products go out to single-family versus multifamily?

然後我還想問一下美洲地區，你們透過分銷賣了很多東西，但是當產品銷往單戶住宅和多戶住宅時，你們能區分嗎？

Do you have a view on what the percentages are?

您對百分比有什麼看法嗎？

And if there are any differences that you're seeing in the trends for those markets?

您是否發現這些市場的趨勢有任何差異？

When you look at our business, 35% of our business is residential, half of that single-family, half of that's

當你看看我們的業務時，我們 35% 的業務是住宅，一半是單戶住宅，一半是住宅

[multi-family].

[多家庭]。

We've seen basically flatness in the first quarter.

我們看到第一季基本持平。

We're expecting flatness in the second quarter and then we're expecting multifamily to go down in the second half of the year, low single digits, maybe mid single digits.

我們預計第二季將持平，然後我們預計多戶住宅將在今年下半年下降，低個位數，也許中個位數。

That's kind of how we're looking at it in single-family holding flat for the rest of the year in a while.

這就是我們對單戶住宅在今年剩餘時間內保持平穩的看法。

Just a correction on the acquired sales, second quarter $64 million.

只是對第二季收購銷售額 6,400 萬美元的修正。

Oh, 64, okay.

哦，64，好吧。

Yes.

是的。

Okay.

好的。

Thanks much.

非常感謝。

And as you think that the that your distribution channels already adjusted in the Americas for the multi-family?

您是否認為您的分銷管道已經在美洲針對多戶家庭進行了調整？

(inaudible) kind of pretty well pronounced.

（聽不清楚）發音相當好。

Yes, I do believe they've adjusted.

是的，我確實相信他們已經調整了。

Okay.

好的。

Okay, great.

好的，太好了。

Thank you.

謝謝。

Thank you.

謝謝。

(Operator Instructions) And with no further questions as this time, I would now like to turn the conference back to Mr. Bob Pagano for any additional or closing remarks.

（操作員指示）這次沒有其他問題了，我現在想將會議轉回鮑勃·帕加諾先生進行補充或結束語。

Thank you for taking the time to join us today.

感謝您今天抽空加入我們。

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.

我們感謝您對 Watts 的持續關注，我們期待在 8 月初的第二季財報電話會議上再次與您交談。

Have a good day and stay safe.

祝你有美好的一天並保持安全。

Ladies and gentlemen, this concludes today's call, and we thank you for your participation.

女士們、先生們，今天的電話會議到此結束，我們感謝你們的參與。

You may now disconnect.

您現在可以斷開連線。