MUELLER WATER PRODUCTS

Welcome and thank you for standing by. I would like to inform all participants that your lines have been placed on a listen-only mode until the question and answer session of today's call. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Whit Kincaid. Thank you. You may begin.

Good morning, everyone. Thank you for joining us on Muir Water Products' first quarter conference call. Yesterday afternoon, we issued our press release reporting results of operations for the quarter ended December 31st, 2023. A copy of the press release is available on our website, MuellerWaterProducts.com. I'm joined this morning by Marty Zaktis, our Chief Executive Officer, and Steve Heidrichs, our Chief 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 in 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 the 30th of September. A replay of this morning's call will be available for 30 days at 1-888-566-0411. 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.

Thanks, Wes. Good morning, everyone. Thank you for joining our earnings call today. I'll start with a brief overview of our first quarter performance. We delivered a solid start to the year as we expanded margins versus the prior year quarter, despite the expected decrease in net sales. First quarter net sales, which exceeded the high end of our previously announced expectations, were down year over year as we lapped strong sales in the prior year, which benefited from elevated backlogs, mainly for iron gate valves and hydrants. Additionally, we believe that channel and customer inventory levels were largely normalized by the end of our first quarter. Our municipal end market remains resilient, and the new residential construction end market appears to be stabilizing relative to a challenging 2023. Our operating and corporate teams worked tirelessly to recover from the cybersecurity incident announced in October 2023. We believe that there was a small impact to net sales, mainly associated with the timing of shipments for some specialty valve products. Our first quarter results have been adjusted for the costs we incurred relating to the incidents. Going forward, We have made and expect to make further investments to strengthen our cybersecurity resources and processes, which are reflected in our annual SG&A guidance. I am grateful to our teams who worked tirelessly to support our customers and helped quickly return our business to normal operations. I am also grateful to our customers and vendors who likewise supported us during the aftermath of the incident. Our ability to expand gross margins despite lower volumes and the challenges associated with the cybersecurity incident reflects our improved execution and agility. The team's focus on customer service and driving operational and supply chain efficiencies led to a 410 basis point improvement in gross margin compared with the prior year. During the first quarter, we benefited from labor and material efficiencies along with lower freight costs. We also benefited from price realization, which once again more than offset inflationary pressures. We generated strong operating cash flow in our first quarter, reflecting our improved execution and some benefit from the timing of payables resulting from delays caused by the cybersecurity incident. Our initial fiscal 2024 adjusted EBITDA guidance reflects higher margins despite a forecasted decrease in net sales versus the prior year. Our improving operational and commercial performance leads to our expectation that our consolidated gross margins will improve relative to the prior year, even though we face lower volumes resulting from lapping the elevated short cycle backlog, mainly for iron gate valves and hydrants. We expect gross margin to continue to benefit from operational and supply chain efficiencies, which will help offset the headwinds from expected lower volumes. With price increases recently announced for the majority of our iron, specialty, and gas products, we anticipate that price realization will continue to more than cover ongoing inflationary pressures, including higher labor rate. Our teams remain focused 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. I am proud of our brass foundry operations teams as they continue to sequentially improve operations in the new foundry, which utilizes state-of-the-art equipment and a new sustainable lead-free alloy. We continue to ramp up volumes in our new brass foundry as we look to return to normalized lead times for all of our service brass products. We continue to target to have it running full steam by the end of calendar 2024. The external environment remains uncertain, especially considering the ongoing Israel-Hamas war. As a reminder, we have operations in Israel through our Kraus Repair Products business, which accounts for less than 10% of our consolidated sales. This did not have a material impact on our first quarter results due to our strategic level of finished goods inventory for our Kraus Repair Products. However, We expect to see higher manufacturing and freight costs resulting from the war starting in our second quarter. We have made incremental operational investments at Krause to help ensure we meet customer demand. These include labor and supply chain investments to return to normalized production levels. These costs will be a headwind to our margins in fiscal 2024 as production levels ramp up. Our team in Israel has done a remarkable job adapting to the impacts of the war, and we will continue to support them in our business as the situation evolves. Overall, I am very pleased with our start to the year, especially considering the headwinds our teams faced during the quarter. We are on track to improve our gross margin for a second consecutive year, despite expected lower overall volumes. Our performance is a testament to the operational investments and improvements we've made over the past year as we look to deliver more consistent execution and further strengthen our customer service to drive future sales and margin growth. With that, I'll turn it over to Steve.