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spk00: Welcome and thank you for standing by. At this time, all participants are in a listen-only mode until the question and answer session of today's conference. At that time, you may press star 1 on your phone to ask a question. I would like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to Whit Kincaid. Thank you. You may begin.
spk03: Good morning, everyone. Thank you for joining us on Mueller Water Products' fourth quarter and fiscal 2023 conference call. Yesterday afternoon, we issued our press release reporting results of operations for the quarter and year-ended September 30th, 2023. A copy of the press release is available on our website, MuellerWaterProducts.com. I'm joined this morning by Marty Zakis, our Chief Executive Officer, and Steve Heinrichs, our Financial Officer and Chief Legal Officer. Following our prepared remarks, we will address questions related to the information covered on the call. As a reminder, please keep to one question and a follow-up, and then return to the queue. 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. They also address forward-looking statements and our non-GAAP disclosure requirements. At this time, please refer to slide two. 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. Slide three 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 forward-looking statements. Please review slides two and three in their entirety. During this call, all references to a specific year or quarter, unless specified otherwise, refer to our fiscal year, which ends 30th of September. A replay of this morning's call will be available for 30 days at 1-800 819-5743. 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 Marty.
spk01: Thanks, Whit. Good morning, everyone. Thank you for joining us for our fourth quarter earnings call. I'll start with a brief overview of our fourth quarter and fiscal 2023 performance. We executed well to finish the year despite a challenging external environment. While our fourth quarter net sales exceeded expectations, we experienced a mid-teens year-over-year decrease in volumes. As a reminder, this decrease was due to the ongoing channel in customer inventory destocking reflecting normalized lead time, mainly for iron gate valves and hydrants. Additionally, higher interest rates slowed new residential construction activity, especially land development. Continued benefits from price realization and improved execution by our operations and supply chain teams led to higher gross margins compared with the prior year. This includes strong margin improvements for both segments on lower volumes. Our supply chain team helped drive productivity improvements in the quarter, including reductions in outsourcing and freight costs. Waterflow Solutions specialty valve operations had an outstanding quarter, reflecting the successful ramp-up of our new manufacturing facility in Kimball, Tennessee. Improved production for service brass products and better flow-through for our iron gate valves also contributed. Water Management Solutions' improved execution helped offset lower volumes and a warranty charge in the quarter. Lower SG&A spending, which includes benefits from our previously announced cost actions helped increase our adjusted EBITDA margin to 18.4% for the quarter. This EBITDA margin is the highest quarterly margin since the third quarter of 2021. We are on track to deliver the remaining portion of the $25 million cost savings program in 2024. Our free cash flow improved by more than $60 million in 2023, exceeding our expectations as inventories declined sequentially and we normalized our capital spending. I'll now provide an update on the cybersecurity incident announced on October 28th. We have made substantial progress in recovering from the incident. Team members across the organization have worked tirelessly to support our customers and restore operations. Our incident response teams quickly took action to implement response and containment protocols. With the help of leading third-party cybersecurity specialists, we have largely restored the impacted applications and systems. All of our facilities are operational, and the unauthorized activity has been contained. The company's investigation and remediation efforts remain ongoing, including the analysis of data accessed, exfiltrated, or otherwise impacted. Our teams continue to focus on closing the gap on our ongoing business processes while also addressing additional work associated with the incident. We continue to evaluate the business, financial, and related impacts of the incident. We have worked closely with our customers, vendors, and employees throughout this process and have been able to take orders and ship products. Therefore, we expect a minor impact on our consolidated net sales in the first quarter. We appreciate the patience and understanding of our customers and vendors as we have worked through the restoration process and, of course, that of the investment community as we're having this call later than usual. As we enter the new year, we will continue to focus on delivering the benefits from our strategic capital investments in specialty and large gate valves and service brass products. These products are poised to benefit from the increased federal infrastructure funding beyond fiscal 2024. We believe our transformational, state-of-the-art brass foundry, with its sustainable lead-free alloy, will set a new standard for utilities and the communities we serve. We continue to make progress on the ramp-up of the new brass foundry again this quarter. We expect to install the remaining foundry pouring equipment over the coming months, which will allow us to complete the new tooling while ramping up the volume of finished parts. At the end of the year, we still had an elevated backlog for service brass products. With channel partners and end customers our highest priority, we will continue to utilize both brass foundries throughout the year. This will also allow us to improve lead time, maintain customer service, and reduce our backlog while ensuring we complete the ramp up of the new foundry by the end of calendar 2024. As we move forward, we will focus on minimizing the impact of the duplicative costs of running two foundries. Following this transition, we believe that we'll be well positioned to increase gross margins beyond pre-pandemic levels. Looking ahead, we believe there remains a meaningful level of uncertainty in the macroeconomic environment with our end users as they continue to adjust to higher interest rates and elevated project costs. We also anticipate that the Israel-Hamas war will create headwinds for the global supply chain. We have operations in Israel through our cross-repair products business. While repair products account for slightly less than 10% of our consolidated sales, this is a headwind for one of our fastest-growing product lines. Over the last several months, we have worked closely with our teams and experts to ensure first the safety of our employees and to continue operations effectively. We have normally carried an elevated level of finished goods inventory for repair products. Due to the extent of the war, we have made incremental operational investments to continue to help ensure we meet customer demand. The cost of these investments will impact the company's first quarter results and are likely to continue for the foreseeable future. Before turning it over to Steve, I want to say how grateful I am for all of our team members around the world. Their dedication to and passion for the business is inspirational. I thank them for helping us to deliver results quarter after quarter as we focus on continuing to improve our productivity and efficiency while strengthening our customer relationships. On to you, Steve.
spk07: Thanks, Morty, and good morning, everyone. It's great to be with you this morning for my first earnings call as Mueller's CFO Although this is my first earnings call as CFO, I've been with Mueller for over five years and am confident that our future is bright. Mueller has a leading array of products and brands, coupled with deep industry knowledge, strong channel presence, durable customer relationships, and dedicated and passionate team members. I'll now turn to our fourth quarter and full year results. Before the quarter, our consolidated net sales decreased 9.1%, to $301.4 million compared to the prior year. Lower volumes, mainly in iron gate valves and hydrants, were partially offset by higher pricing across most of our product lines. For the full year, our consolidated net sales increased 2.3%, driven by higher pricing, partially offset by lower volumes, mainly in iron gate valves and service brass products. In the fourth quarter, gross profit of $88.4 million increased 3.3% compared with the prior year, gross margin of 29.3% increased 350 basis points compared with the prior year. Benefits from higher pricing, improved manufacturing performance, and lower freight costs more than offset lower volumes and warranty obligations. As part of a regular assessment of our warranty obligations, which includes an assessment of our warranty experience and replacement costs, we increased our warranty accrual by $5.7 million in the quarter. Excluding this charge, Gross margin was 31.2%, with a 540 basis point expansion versus the fourth quarter of 2022. We were pleased to see improvements in gross margins for both segments despite lower volumes. The benefits from price realization were sequentially lower in the quarter as we lapped price increases from the prior year. However, inflationary pressures lessened relative to the third quarter, especially compared to the increases we experienced over the last 12 months. The level of total material cost inflation improved relative to our prior quarters and was nearly flat compared with the prior year. Our supply chain team helped to drive improvements in the quarter, including lowering our outsourcing costs. For the quarter, SG&A expenses of $54.2 million were $9.4 million lower than the prior year and were $6.4 million lower than the previous quarter. The decrease compared with the prior year was primarily driven by lower personnel-related expenses and incentive costs, favorable foreign currency exchange expense, and reduced third-party fees, partially offset by inflationary pressures. Operating income of $24.9 million increased 114.7 percent in the quarter compared with the prior year. Operating income includes strategic reorganization and other charges of $9.3 million, which primarily consisted of expenses associated with the leadership transition and restructuring costs related to severance. Operating income also includes a $5.7 million warranty charge of water management solutions. These items have been excluded from adjusted results. Turning now to our consolidated non-GAAP results for the quarter. Adjusted operating income of $39.9 million increased 81.4% compared with the prior year. This increase was primarily as a result of benefits from higher pricing, lower SG&A expenses, and favorable manufacturing performance, which more than offset lower volumes. Adjusted EBITDA of $55.4 million increased 43.5% in the quarter, leading to an adjusted EBITDA margin of 18.4% compared with 11.6% in the prior year. As a reminder, This includes $900,000 of pension expense other than service compared with the benefit of $1 million in the prior year quarter. For fiscal 2023, adjusted EBITDA increased $7.6 million, or 3.9%, to $202.1 million. Our adjusted EBITDA margin improved 20 basis points to 15.8% for the year. Net interest expense for the quarter declined $600,000 to $3.3 million compared with the prior year, primarily as a result of higher interest income. For fiscal 2023, our effective tax rate was 21.6% as compared with 22.3% for the prior year. This decrease was primarily due to higher benefits from R&D tax credits and lower effective state tax rates due to state apportionment changes. For the quarter, we increased adjusted net income per share by 90% to $0.19 compared with the prior year. For the full year, we increased adjusted net income per share by 8.6% to $0.63 compared with the prior year. Turning now to quarterly segment performance, starting with water flow solutions. Net sales decreased 10% compared with the prior year. This decrease was primarily due to lower volumes at Irongate partially offset by higher pricing across most of the segment's product lines. Specialty brass products saw a double-digit increase in net sales compared with the prior year. Net sales for iron gate valves were down double digits compared with the prior year, primarily due to channel and customer inventory destocking, reflecting normalized lead times and lower end market demand. Iron gate valves' sales in the prior year quarter had benefited from serving an elevated backlog and improved production levels. Despite lower net sales, adjusted operating income of $27.5 million increased 34.1%. Benefits from higher pricing, favorable manufacturing performance, and lower SG&A expense more than offset lower volumes. Adjusted EBITDA of $36.6 million increased 30.7%, leading to an adjusted EBITDA margin of 22.7%, compared with 15.6% last year. For fiscal 2023, adjusted EBITDA margins decreased 400 basis points to 17.7%. Turning now to quarterly results for water management solutions. Net sales of $139.9 million decreased 8% as compared with the prior year. The decrease was primarily due to lower volumes in hydrants and water applications, which were partially offset by higher pricing across the segment's product line. Repair products saw a double-digit increase in net sales compared with the prior year. For hydrants, however, net sales were down double digits compared with the prior year, primarily due to channel and customer inventory destocking, reflecting normalized lead times and lower end market demand. Hydrant sales in the prior year quarter benefited from serving an elevated backlog and improved production levels. Despite lower net sales, Adjusted operating income of $21.9 million increased 58.7% in the quarter. Benefits from higher pricing, lower SG&A expense, and lower freight costs more than offset lower volumes. Adjusted EBITDA of $29.1 million increased 32.9% in the quarter, leading to an adjusted EBITDA margin of 20.8% compared with 14.4% last year. fiscal 2023 adjusted EBITDA margin improved by 660 basis points to 22.3 percent moving on to cash flow net cash provided by operating activities for the full year of 109 million dollars increased 56.7 million dollars compared with the prior year the increase was primarily driven by improvements in working capital compared with the prior year including a sequential decrease in inventories during the fourth quarter. During the year, we invested $47.6 million in capital expenditures, compared with $54.7 million in the prior year. Free cash flow for the year of $61.4 million increased $63.8 million compared with the prior year, and was 62.7% of adjusted net income, which exceeded our expectations. During the fourth quarter, we repurchased $10 million in common stock, And as of September 30th, we had $90 million remaining under our share repurchase authorization. At September 30, 2023, we had total debt outstanding of $447.4 million and cash and cash equivalents of $160.3 million. At the end of the fourth quarter, our net debt leverage ratio improved to 1.4 times. We did not have any borrowings under our ABL agreement at year end. nor did we borrow any amounts under our ABL during the year. As a reminder, we currently have no maturities on our debt financing before June 2029. With $322.7 million of total liquidity at the end of the year, we continue to have ample liquidity and capacity to support our strategic priorities, including acquisitions. I will now review our outlook for fiscal 2024. We anticipate that channel and customer inventory levels will be substantially normal the end of the first quarter of fiscal 2024. Our consolidated backlog declined about $400 million during the year and was approximately $326 million at the end of fiscal 2023. This decline was primarily due to our short cycle products, mainly iron gate valves and hydrants. Backlogs for iron gate valves and hydrants have normalized, while the backlog for service brass products remains elevated. We are now emerging from the significantly elevated backlog levels of prior years, and we expect a softer macro environment going forward. In light of our backlog and expectation of a lower demand environment in fiscal 2024, we anticipate that consolidated net sales will decrease between 3% and 8% in fiscal 2024 as compared with the prior year. For fiscal 2024, consolidated net sales seasonality is expected to be closer to pre-pandemic pattern. For example, net sales for the first half of the fiscal year for the five-year period from 2015 to 2019 had an annual average of approximately 45% of consolidated net sales. For the first quarter of fiscal 2024, we anticipate consolidated net sales to range between $245 and $255 million, which is in line with our expectation that we will return to historical seasonality levels. As Marty mentioned, we continue to evaluate the business, financial, and related impacts of the cybersecurity incident. At this time, the full costs of the incident have not yet been determined. However, we anticipate the incident will negatively impact our results. Due to the ongoing evaluation of the impacts of the incident, we are not providing profitability and margin guidance for the fiscal year at this time. However, we currently expect margins to improve in the second half of the year, primarily due to continued operational and supply chain productivity With that, I'll turn it back to Marty for closing comments.
spk01: Thanks, Steve. Before we open it up for Q&A, I want to share some final thoughts. Since taking on the CEO position, I have spent substantial time with our employees, channel partners, and customers. I have visited most of our facilities and spoken with many team members to better understand the opportunities for the business moving forward. It is very clear to me that we have a strong foundation built on our talented and committed employees, industry-leading brands, and deep distribution channel and end customer relationships. Our broad portfolio of products and solutions allows us to play a critical role in addressing the challenges and opportunities facing the water infrastructure industry. We believe we are at an inflection point with our strategic investments and operational improvements. Despite the current external headwinds we are facing, We are well positioned to deliver long-term sustainable organic growth and margin improvements. The municipal water end market is poised to benefit from the increased attention and investment towards the aging water infrastructure, while water utilities face a growing set of challenges requiring trusted partners. We believe we have the products and solutions that are positioned to benefit from the infrastructure bill once funds begin to flow. Additionally, our strong balance sheet liquidity and cash flow allow us to continue to deliver shareholder value by reinvesting in our operations and returning cash to shareholders. This year, we allocated $48.1 million to shareholders through share repurchases and our quarterly dividend, which was recently increased for the eighth time since 2014. We are confident that the actions we are taking to execute our strategy will will further strengthen Mueller for the long term. That concludes my comments. Operator, please open this call for questions.
spk00: We will now begin the question and answer session. If you would like to ask a question, please press star 1. If you need to withdraw your question, press star 2. Our first question comes from Brian Blair from Oppenheimer.
spk02: Thank you. Good morning, everyone.
spk01: Hey, good morning, Brian.
spk02: I appreciate the guidance on revenue cadence through the year. I was hoping you could offer a little more color and expectations for resi land development and repair and replace demand, respectively, and along those lines, what factors may drive upside or downside relative to the assumptions you have baked into your guide?
spk01: Certainly. So, as we're looking out to our I think overall the volume expectations are certainly one of the drivers as we look at it from a year over year. We do think that the end markets are generally healthy, specifically looking at the muni repair and replacement market. We think it was overall pretty resilient in 23. we think that that could still have some low single-digit growth in 2024. But as you said, sort of the benefits that will ultimately come from the infrastructure bill, we really don't expect to start seeing them either until late in our fiscal 24 or thereafter. With respect to residential construction, we saw that single-family starts were down in our fiscal 23 about 16%. And we expect that some of the lower end market volumes that we're looking at are primarily going to be reflective of the slowdown with residential construction activity. And a large reason for that has been the higher interest rate environment that we have been in and, importantly, the associated mortgage rates. So, you know, as we think about this a little bit more, we... We believe that these higher interest rates have impacted some of the land development, and that's typically where we come into play, is when that horizontal infrastructure begins to be built. But overall, you know, there are pockets of growth that we see across the U.S., but certainly with the decision and commentary from the Fed yesterday, where they have indicated that they may slow down, didn't have a rate increase, and even highlighted that there could be some rates cuts looking into 2024. I think certainly seeing where interest rates go, but importantly, how that impacts mortgage rates could affect the residential construction market. But right now, as we're looking at it, We continue to expect a more modest slowdown in the resi construction market and sort of maintenance in and around the municipal repair and replacement market.
spk02: Understood. Those dynamics make sense. And if you're willing to provide the number, what was the expense related to outsourcing and other inefficiencies with the foundry transition? in the fourth quarter and remind us where that peaked and how you're thinking about those one-time-ish kind of inefficiencies phasing through your fiscal 24.
spk01: So let me try to hit that. So I think overall we have identified some of the outsourcing costs that we have had and how that's impacted us due to the period of ramp-up with our new brass boundaries. I would say a couple of things. Our outsourcing costs have improved on a year-over-year basis, and they improved sequentially. I think this was in large part due to some of our supply chain teams overall and looking at the outsourcing costs as well as what we've been able to do with our other purchasing as well. We expect to continue to see some improvements with that as well as overall freight. Additionally, what we're seeing is we're adjusting to the different volume levels as we have brought down some of the backlogs, particularly with our hydrants and iron gate valves. Although we do think that we'll have a lower level of outsourcing and continue to see that improve throughout 2024. With respect to the grass foundry, we did talk specifically that we're continuing to see improvements as we ramp up our new grass foundry. And with the existing grass foundry that we have, we do expect to continue that to be operational through calendar 2024. It does cause us to have some duplicative costs with both of those foundries. But importantly, as we look out with the higher backlog levels that we still have with our service brass products. We think it's important to work to continue to lower that level of backlog. Additionally, when we look at the infrastructure bill and specifically where we expect some of the earlier spending to be, it's certainly associated with the initiatives and allocations around lead service line replacements. And I'll remind you, with the lead service line replacement, that's where a lot of our service brass products can go. So our focus is on continuing to keep the improvements going with our new brass boundary, working to bring down that service brass backlog, and to be prepared as well for where we think that will be one of the benefits of the infrastructure bill.
spk06: Yeah, the IIJA has a fair bit in it for replacing lead service lines, and we're expecting to see that at the end of the year, so it's not coming in the immediate term. And so we hope to see the benefit of that and the benefit of the reduction in operations at our old salary to improve our results.
spk02: Understood. Appreciate the color. Thanks again.
spk00: Our next question comes from Joe Giordano from TD Cohen.
spk04: Good morning. This is Michael on for Joe.
spk01: Good morning, Michael.
spk04: Thanks for taking my question. Um, so last quarter you mentioned you were around, uh, to the, you know, the tooling of your highest volume products for the new foundry operations and, and we're beginning to focus on the production side. Can you dive into just the remaining timeline of, of capital projects and, the areas of the portfolio, you still need to ramp on the production side. Thank you.
spk01: Yeah, so I want to make sure your question is really around sort of the CapEx spending going forward?
spk04: Yep, on the CapEx side of the foundry operations.
spk01: Okay. Yeah, so overall, with respect to our capital guidance, We are seeing, I think we had indicated overall that once we got through the three major capital projects, we did expect to see our capital expenditure levels falling below 4% of our net sales. As we look at 2024 specifically, we still do have some capital expenditures associated with the new brass foundry. We referenced some of the additional machining that would be coming online in our 2024. You know, some of that, as I say, as we've seen some of the extended supply chains, that has certainly extended to some of the machinery that we purchased. So that's part of what we've got encompassed in our 2024. And then, you know, with, you know, other than that, I would say we continue to have investments, you know, with our other operations. Some would be along the maintenance line as we are largely vertically integrated and operate foundries both on the iron and on the brass side. And additionally, we'll look to make some investments in our facilities that will just overall enhance our operational efficiency.
spk06: Yeah, and as we've said, our expectations for capital spending in 24 is around 4% of net sales, or between $25 and $50 million. And, you know, as we were concluding these major capital projects that we've embarked on over the prior years, we expect it to decrease a bit from there.
spk04: Great, that's helpful. And just one more, if I may. You mentioned last quarter restructuring of the sales and marketing organization. Can you just give some color on the nature of those changes and how far along you have been through and how much has been realized? Thank you.
spk01: Yeah, so overall, in terms of the SG&A, and there were a couple of areas across our selling general administrative expenses. we did have some reductions. We identified that we expect to have about $25 million in annual savings from that. We have realized some of those savings in our third quarter as well as in our fourth quarter and have realized almost 30% of those savings in our fiscal 23. A lot of those savings are really coming from lower personnel-related expenses as well as third-party fees associated with that. As we move into 24, we do still expect to realize the balance of those identified savings. Some of those savings will be offset by looking at some additional investments in personnel. Importantly, some inflation as well as some of the additional investments we'll make in and around cyber structure related infrastructure costs. Also in 24, we do expect it to be offset. When I said personnel, what I really meant was some of the incentive costs that we will have in 24 relative to 23 in terms of projections.
spk04: Great. Thank you.
spk00: Our next question comes from Dean Dre from RBC Capital Markets.
spk05: Good morning. This is Jeff Reeve on for Dean. My first question is kind of regarding the cybersecurity incident. I think it's great to see that it's mostly contained and limited impact to the fiscal first quarter. But first, can you confirm that you're not really expecting any lost or deferred sales at all from this? Also, will there be a free cash flow impact in the first quarter, like any delayed billings leading to delayed collections on accounts receivable? And regarding the cost associated with remediation, do you have any business disruption insurance in place to kind of recoup some of that?
spk01: All right. So let me go through and make sure we hit all of your questions on this. And if we didn't, certainly come back and please ask them again. So, you know, let me just sort of start off with a bigger picture, and then we'll get into some of the more specifics. So for the cyber incident that we announced on October 28th, you know, very quickly after that, we implemented our response and containment protocol. We also engaged in third-party cybersecurity specialists to help support it. We were focused on containment protocols. but importantly also how to continue to run the business and servicing our customers. Although most of our facilities were impacted to a certain degree, we were able very quickly to, with most of our facilities, to maintain our operations and to continue to take orders and ship products to our customers during this time. I would say we have learned a lot through this event. Unfortunately, we're seeing across the U.S., and I'd say overall, even more concentration in the manufacturer industry that these cyber attacks are increasing, which is certainly regrettable. But I know we referenced in our prepared remarks that certainly the team of cybersecurity specialists that we engaged really worked very quickly and effectively to not only address the incident, but to continue to service our customers. We adjusted our processes where we needed to, but I think, importantly, that allowed us to largely be operational in servicing them. So I think hitting some of your other specific questions in and around insurance and free cash flow, I'll turn that over to Steve.
spk06: Yeah, we do have cyber and business continuity insurance, but as we mentioned in our prepared remarks, the full cost of the incident have not yet been determined and we're assessing and still working on our position with respect to that right now. We anticipate that the incident had some negative impact on us, but it would have been relatively modest for the first quarter of 24. That's kind of where we stand with respect to the estimation of the cost of the cyber incident.
spk01: With respect to free cash flow, I would say we don't expect any meaningful impact in our first quarter. Thank you.
spk05: Okay. That's great. Thanks. Just maybe a broader question, but do you think there needs to be a larger internal investment into some of your software systems? I don't know if maybe some of these systems were old and this could be part of it, but is there any plans to kind of upgrade your systems internally?
spk01: So what I would say with respect to that is maybe taking a different, I think, and this is one of the comments in and around our SG&A and our outlook for 2024. I do expect that we will be making more investments in and around cybersecurity. So I do expect that we will have more investments in our 2024.
spk05: Great. Thanks.
spk00: As a reminder, if you would like to ask a question, please press star 1.
spk01: All right. Well, look, thank you all for being on the call this morning. You know, when I stepped into this role as president and CEO and joined the Mueller Water Products Board of Directors, I did so with a commitment and conviction that I would lead Mueller on a path to continue increasing margins, improving its operational performance, and enhancing our positions with our customers, suppliers, and employees. We have made progress and we continue to execute on our strategic plan and initiatives. Our challenges over the last few months have only highlighted what a terrific, dedicated group of employees we have, as they most recently showed their agility, focus, and determination to service our customers and run our business as we navigated these challenges. We play a critical role in helping to improve our aging infrastructure and I am privileged and honored to lead this team. Our employees make a positive difference each and every day to serve the water infrastructure industry. We are seeing operational improvements across the business, and I am confident in our future opportunities for growth and margin expansion. Thank you all.
spk00: That concludes today's conference. Thank you for participating.
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