Welcome, and thank you for standing by. Your lines have been placed on a listen-only mode until the question and answer session. At that time, if you would like to ask a question, you may press star one. Today's conference is being recorded. If you have any objections, you may disconnect at this time. And now I'll turn the call over to Whit Kincaid. You may begin. Good morning, everyone. Thank you for joining us on Mueller Water Products, Inc.'s first quarter conference call. Yesterday afternoon, we issued our press release reporting results of operations for the quarter ended December 31, 2024. A copy of the press release is available on our website, muellerwaterproducts.com. I'm joined this morning by Martie Zakas, our Chief Executive Officer, Paul McAndrew, our President and Chief Operating Officer, and Steve Heinrichs, 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 and a follow-up, and then return to the queue. 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 thirtieth of September. A replay of this morning's call will be available for thirty days at 1-866-511-1891. The archived webcast and corresponding slides will be available for at least ninety days on the Investor Relations section of our website. I'll now turn the call over to Martie Zakas.

Thanks, Whit. Good morning, everyone. Thank you for joining our quarterly earnings call. I'll start with a brief overview of our first quarter performance. We are very pleased with our strong start to the year. We achieved record first quarter results for adjusted EBITDA and adjusted net income per diluted share. Our net sales growth of 18.7% exceeded expectations as we experienced healthy order levels supported by resilient end market demand and our focus on delivering outstanding customer service. Our disciplined execution on higher volumes led to a record first quarter adjusted EBITDA, and a 340 basis points year-over-year improvement in our adjusted EBITDA margin. We achieved a record first quarter adjusted net income per diluted share of $0.25, an increase of 92% compared to the prior year. We generated $42 million of free cash flow in the quarter, after allocating $12 million towards capital expenditures. These results were due to great execution from our teams as we lap an abnormally strong first quarter of free cash flow generation last year. We are increasing our guidance for 2025 net sales and adjusted EBITDA, primarily to reflect our strong first quarter results and benefits from recent price actions. Our guidance delivers gross and adjusted EBITDA margin gains this year, supported by our operational and commercial initiatives, including the anticipated benefits from the recent closure of our legacy brass foundry. Our updated guidance does not include any potential cost increases or impacts associated with the recently announced tariffs. Our latest price actions were communicated prior to the recently announced tariffs. As a reminder, more than 90% of our annual sales are in the US, and we are largely vertically integrated for many of our major product categories. We believe the proposed new tariffs would be a headwind that we could manage through with a combination of price actions and efficiencies as needed. With our teams continuing to execute at a high level, including delivering benefits from our manufacturing and supply chain efficiencies, I am confident that we can execute our key strategies while managing external challenges. I am excited that our new CFO, Melissa Rasmussen, will join Mueller early next month. After a comprehensive search, we are confident that she will help deliver long-term value to shareholders. As a reminder, upon Melissa's arrival, Steve will transition to a consulting role through the end of fiscal 2025 to help ensure a smooth transition.

I'm excited about how we started the year, mainly for our short cycle iron gate valves and hydrants. With normalized lead times, the strong execution of our commercial and operations teams enabled us to do a great job fulfilling these orders during the quarter. We achieved an exciting milestone at the end of the first quarter when we ceased melting and casting operations at our legacy brass foundry and transitioned production to our state-of-the-art foundry. Our teams are working to decommission the foundry site, which drove the inventory and other write-downs at Waterflow Solutions in the first quarter. We continue to expect the closure of the legacy foundry to generate an 80 to 100 basis point annualized improvement in our gross margin starting in the second half of 2025. Thanks to our team's great execution, we largely worked through our elevated backlog of service brass products in the first quarter. With normalized lead times for these products going forward, we anticipate that we will experience year-over-year volume headwinds over the next few quarters as our channel and customer inventory levels normalize. We remain excited about the multiyear volume and margin expansion opportunity in front of us as we ramp up our capabilities and efficiencies at the new foundry. As expected, during the first quarter, we continued to experience headwinds for our Kraus repair products relative to the prior year quarter as a result of the Israel Hamas war. Our teams' focus on improving our supply chain partnerships and ramping up production levels has helped us to decrease our lead times, and we are beginning to reduce elevated backlog levels. With our customers and employees as our main priorities, we expect to continue to experience margin headwinds throughout the year as we reduce backlog through increased production. With a focus on delivering outstanding customer service, our teams are improving operational excellence, increasing supply chain efficiencies, and developing advanced manufacturing capabilities to drive productivity across our facilities. We are poised to benefit from disciplined investments in our commercial and operations capabilities, along with the closure of the legacy brass foundry. For 2025, our increased expectations imply more than a 200 basis point year-over-year improvement in gross margin at the midpoint of our annual guidance. With that, I'll turn it over to Steve so he can take you through the financials.

Thanks, Paul, and good morning, everyone. For the first quarter, consolidated net sales increased 18.7% to $304.3 million compared with the prior year. This increase was primarily due to higher volumes mainly for iron gate valves, hydrants, and specialty valves, as well as higher pricing across most of our product lines. As we've mentioned in previous quarters, our lead times and backlogs for iron gate valves and hydrants have normalized, so year-over-year volume increases at Water Flow Solutions and Water Management Solutions include the benefit from lapping the channel and customer destocking in the prior year. The increase in specialty valve volumes benefited from lapping the production challenges we experienced in the prior year. In the first quarter, gross profit of $103 million increased 19.4% compared with the prior year, and gross margin of 33.8% increased 10 basis points year-over-year. Benefits from higher volumes, favorable price cost, and improved manufacturing performance more than offset write-downs associated with the closure of our legacy brass foundry at Waterflow Solutions, as well as impacts of the Israel Hamas war on repair products and Water Management Solutions. Excluding $3.3 million in write-downs associated with our legacy brass foundry closure, our gross margin was 34.9%, a 120 basis point improvement compared with the prior year. For the quarter, total SG&A expenses of $53.9 million were $3 million lower than the prior year. This decrease was primarily driven by lower amortization expense and favorable foreign exchange, partially offset by inflationary pressures, higher third-party fees, and personnel-related costs. Operating income increased 107.9% in the quarter to $47.4 million compared with the prior year. Operating income includes $1.7 million of strategic reorganization and other charges, primarily related to the leadership transition and severance. Additionally, we incurred $3.3 million in inventory and other asset write-downs associated with the closure of our legacy brass foundry. Both of these items have been excluded from adjusted results. Turning now to our consolidated non-GAAP results for the quarter. Adjusted operating income in the first quarter was $52.4 million, an increase of 78.2% compared with the prior year. The increase was primarily due to higher gross profit and lower total SG&A expenses. Our adjusted operating margin improved 570 basis points to 17.2% compared with the prior year. Adjusted EBITDA came in at $63.5 million, an increase of 41.7% in the quarter. We achieved an adjusted EBITDA margin of 20.9% in the quarter, which was 340 basis points higher than the prior year, and slightly better on a sequential basis. These are first quarter record levels for adjusted EBITDA and adjusted EBITDA margin. For the last twelve months, adjusted EBITDA was $303.4 million or 22.3% of net sales, a 560 basis point improvement compared with the prior twelve-month period. Net interest expense in the first quarter declined $1.7 million year-over-year to $1.6 million, primarily due to higher interest income. Our effective tax rate increased for the quarter to 22.9% as compared with 15.4% in the prior year. As a reminder, our income tax rate in the prior year benefited from a $1.6 million income tax benefit associated with the expiration of an uncertain tax position. This tax benefit was offset by the release of a $1.6 million indemnity receivable in other expense. Excluding the tax benefit, our effective tax rate this quarter was comparable to the prior year quarter. For the quarter, we increased adjusted net income per diluted share by 92.3% to $0.25 compared with the prior year. This is a record for our first quarter. Turning now to quarterly segment performance, starting with Water Flow Solutions. Net sales increased 23.6% to $174.6 million compared with the prior year, primarily due to higher volumes of iron gate and specialty valves, as well as higher pricing across most product lines. With normalized lead times, strong net sales growth for iron gate valves benefited from healthy order levels as well as lapping low orders and shipments in the prior year, which were primarily due to channel and customer inventory destocking. Specialty valve volumes benefited from lapping the production challenges we experienced in the prior year. Adjusted operating income increased 40.9% to $38.6 million in the quarter. The benefits from higher volumes, lower amortization, and favorable price cost more than offset higher SG&A expenses and unfavorable manufacturing performance. Manufacturing performance included the inefficiencies associated with operating two brass foundries and prior year benefits associated with serving an elevated backlog for service brass products during the first quarter of last year. Adjusted EBITDA increased 21.8% to $44.7 million, and adjusted EBITDA margin was 25.6% compared with 26% in the prior year. Turning to quarterly results for Water Management Solutions. Net sales increased 12.7% to $129.7 million compared with the prior year. This increase was primarily due to higher volumes of hydrants. Similar to iron gate valves, strong net sales growth for hydrants benefited from normalized lead times and healthy order levels, as well as lapping low orders and shipments in the prior year, which were primarily due to channel customer inventory destocking. Adjusted operating income increased 82.8% to $27.6 million in the quarter due to benefits from higher volumes, favorable manufacturing performance, lower SG&A expenses, including benefits from amortization and foreign exchange, and favorable price cost, which more than offset the impacts of the Israel Hamas war on repair products. Adjusted EBITDA for the quarter increased 47.5% to $32.6 million, with adjusted EBITDA margin improving 590 basis points to 25.1%. Moving on to cash flow. Net cash provided by operating activities for the quarter was $54.1 million, a decrease of $13.8 million compared with the prior year period. The decrease was primarily driven by changes in working capital, including other current liabilities such as incentive compensation, partially offset by higher net income. As a reminder, our payables increased in the first quarter of last year largely related to delays caused by the cybersecurity incident. We invested $11.9 million in capital expenditures in the first quarter as compared with $5.7 million in the prior year. This increase was primarily driven by increased expenditures in our foundries and timing of spending in the prior year. Our free cash flow for the first quarter decreased $20 million to $42.2 million compared with the prior year due to the decrease in net cash provided by operating activities and higher capital expenditures. For the first quarter, free cash flow as a percent of adjusted net income was 108%. At the end of the first quarter, our total debt outstanding was $449.5 million, and we had cash and cash equivalents of $338.2 million. We continue to have a strong and flexible balance sheet, with a net debt leverage ratio below one, no debt maturities until June 2029, and $450 million senior notes at a 4% fixed interest rate. We did not have any borrowings under our ABL at quarter-end, nor did we borrow any amounts under our ABL during the quarter. We ended the quarter with half a billion dollars of total liquidity, including $163 million of excess availability under the ABL. I will now review our increased outlook for 2025. We are increasing our guidance for both consolidated net sales and adjusted EBITDA. We now expect consolidated net sales to be between $1.37 billion and $1.39 billion, which represents a year-over-year increase between 4.2% and 5.7%. This guidance takes into account our first quarter performance, expected benefits from recent price actions for many of our products, and current expectations for end market demand. In addition to raising our net sales expectations, we are increasing our guidance for adjusted EBITDA to reflect our first quarter performance and updated expectations for net sales and total SG&A expenses. We now expect that our adjusted EBITDA will range between $310 and $315 million, reflecting year-over-year growth of 8.9% to 10%. This achieves a 22.6% adjusted EBITDA margin for the year at the midpoint of our guidance range, reflecting a 90 basis point year-over-year improvement. We continue to expect our second half adjusted EBITDA margin to be higher than the first half. This is primarily driven by the seasonality of net sales and continuing manufacturing performance improvements, including anticipated benefits from the closure of our legacy brass foundry, along with operational and supply chain efficiencies. We are maintaining our free cash flow to be more than 80% of adjusted net income in 2025. This outlook continues to assume our capital expenditures are between $45 and $50 million for the year. As Martie mentioned, our updated guidance does not include any potential impacts from the recently announced tariffs. While the tariffs may impact our supply chain and increase costs, we would seek to secure alternative sourcing to mitigate costs or increase pricing as necessary. With that, I'll turn it back to Martie for closing comments.

Thanks, Steve. I want to provide a few closing comments before opening it up for Q&A. Thank you to all our employees around the world for their focused execution to start the year. Their continued dedication and passion for helping our customers and communities is the engine for our future success. While we are pleased to be increasing our annual guidance for 2025, we are mindful of the uncertain external environment, including potential policy changes. Thanks to our team's disciplined focus on serving our customers and delivering on our key strategic priorities, we are poised to drive net sales growth and future margin improvements beyond 2025. We have positioned ourselves to accelerate sales growth and capture the benefits from favorable long-term end market growth trends through product innovation and service. We believe we can capture the benefits from the investments needed to address the aging North American water infrastructure and the expected incremental spending associated with the federal infrastructure bill, particularly with lead service line replacement projects. We are continuing to drive operational improvements to deliver the benefits from our capital investments and expand our capabilities. We are increasing collaboration and teamwork throughout the organization to create a culture of talent development, enabling us to execute on our strategic opportunities and make Mueller a preferred place to work. With these strategies, I am confident that the actions we are taking will further strengthen Mueller for the long term. This concludes our comments. Operator, please open the line for questions.

We will now begin the question and answer session. And record your name clearly. To withdraw your question, you may press star two. Our first question comes from Joe Giordano with TD Cowen. Your line is open. You may ask your question.

I'm just curious, like, how are you thinking about, well, one, what's the price embedded in the guidance and then like how are you thinking about volumes from here? Comps get very, very different now that the lead times have normalized. And you kind of get past those big declines from prior?

Let me start off. So as we look at the guidance that we have given for sales through the balance of 2025, our sales guidance does assume benefits from both volume as well as price. As we look at our 2025, we think we'll have normal seasonality, and that normal seasonality is a reminder sort of between the construction and the non-construction seasons tend to see lowest sales in Q1. Sequential increase in Q2, and then higher again in Q3. With respect to carryover pricing, which certainly benefited our first quarter as well as the price actions that we just announced. We do think that we'll benefit from price realization probably somewhere in the low to mid-single-digit range. In and around volumes with respect to our guidance, we expect growth from both IronGate valves and Hydrants. As we said, we're back to normalized lead times which helps us convert any order level activity into shipments. That said, we do expect some headwinds as we're lapping record consolidated sales in the second quarter. Additionally, we benefited from some of the elevated service brass backlog in the prior year and expect that will be a headwind. We think overall as we look at our end markets, looking at residential construction, as well as the municipal end market. We think that they will be primarily resilient, but I will note that there's a lot of uncertainty in and around the external environment. Certainly, with what we see in and around mortgage rates, tariffs, inflation global tensions, labor availability in any potential policy changes. I think the last comment I want to give you in and around the guidance is just a reminder that in the guidance, we have not assumed any meaningful impact from funding from the infrastructure bill.

Interesting. That was gonna be my follow-up on the infrastructure funding. Like, even though that how do you get a read on your customers, like, for projects? Are things moving or is there fear that, like, I don't even know if some stuff can be changed, but, like, the thought of maybe we go in there and we change we stop funding for, you know, lead pipe removal or we change implementation dates. Is it impacting the timing of, you know, breaking ground on certain new projects at your customers?

Good morning, Joe. We continue to monitor the infrastructure bill and how many RFPs continue to come through that avenue. And we do see a trend of increasing infrastructure bill activity but it's not that meaningful or material change from the prior quarters that we've discussed. I think the positive here is we are very well positioned to supply from being a US vertically integrated company and we don't anticipate any changes from the administration in and around the infrastructure bill.

Great. Thanks, guys.

Hey, good morning, everyone. Thanks for taking the questions. Maybe just follow-up on the previous question. Just you said at the outset, Martie, that order levels exceeded expectations. Sounds like the outlook obviously appearing to be more robust given the guidance increase and, you know, specifically called out short cycle iron gate valves, hydrants. Can you kind of talk about, you know, what you're seeing there in the ordering environment? You know, how much of this is just the inventory cycle playing through, how much of this is just, you know, new organic demand, you know, upside to whatever expectations you might have been anticipating coming into the year?

Yes. So I think importantly and if we look at what have been our, excuse me, which are our short cycle products, largely, we'll note that we have been back to normalized delivery patterns with respect or lead times, I should say, with respect to our iron gate valves and hydrants. And to dimension that, that really is sort of that turnaround primarily of, I'll say, sort of two to four weeks between orders and shipments. So we've had that in place for a while. Looking at the service brass products that we have, which are a short cycle product, we certainly throughout our 2024, we knew we had elevated backlog levels but worked throughout our 2024 to improve the lead times and bring down those backlog levels with respect to our service brass products. And have pretty much moved back those backlog levels to being more normalized. That said, as we look out at our 2025, given that we were servicing orders from our backlog in 2024, we could see that as being an impact for us in 2025. A little bit similar to the impact that have discussed with you all with respect to iron gate valves and hydrant when we were still working through that piece of it. In and around sort of overall, I'd say, stocking levels, from our distributors. I'm gonna let Paul step in and comment on that.

Just to before I go to that, just to add some color. You know, we took $60 million of service brass backlog out in the prior year and that's predominantly to get back to the normalized lead times that both our customers and our end customers anticipate where we should be at. In terms of channel inventory and stocking levels, we believe they are back to normalized levels. But there may be a short-term headwind in terms of lapping from the service brass backlog reduction.

Okay. Great. Super helpful. I appreciate the context. Maybe a quick follow-up on Martie, your comments around pricing. I think you said low single-digit to mid-single-digit pricing in the outlook here and part of the commentary on the improved outlook for the full year was on pricing. So if I recall, I think pricing typically you're more in the low single-digit range historically. So has something changed in the mix or is there something happening on the pricing strategy? Or are you just getting, you know, more price realization, I guess, heading into this year than you might have been into anticipating and historically have seen? Just trying to understand that a little bit better. Thank you.

Yeah. No. Certainly. So in and around the pricing, I would say that in terms of price realization, I would say no. We are not projecting anything different from what we have experienced in the past. Now I'm certainly gonna call out the period where we were in the rapidly rising in inflation, the very high levels of inflation, certainly all the challenges in and around, you know, COVID delivery times, etcetera. And, you know, certainly, we'll remind you that we implemented a series of price increases a few years back as we were, in essence, catching up to what we were seeing in and around inflation. But, no, with the commentary that I have just given, I would say in terms of what we have seen in and around price realization and what we have built in as that sort of low to mid-single, I would say that is fairly comparable to what we've seen outside of that unusual period.

Okay. Fair enough. I'll pass it on. Thank you.

Thank you. Good morning, everyone.

Good morning, Bryan.

As your team has framed the, you know, 80 to 100 basis points gross margin benefit from ramping the new brass foundry and closing the legacy plant. At least run rate looking to the back half of this fiscal year. Maybe touch on the commercial benefits of the new foundry. It seems like you're gaining share. Order book perhaps. Furthering pricing power. Is that the case? And if so, what role might the new foundry be playing in those dynamics?

Good morning, Bryan. You're right. We quantified the 80 to 100 basis points in terms of operational improvement from closing the legacy brass foundry. Thanks from a commercial perspective, the advantages of the EcoBrass and how that translates into a much more efficient foundry and our ability to service the customers in a much more improved manner. Those two things going together are gonna allow us to be well-positioned particularly for the lead service line replacement as that rolls out in the future.

That's helpful color. And then just to level set, understand that day by day, hour by hour even, you know, things change in terms of the, you know, tariff backdrop and dynamics, but just the level set. Prior to mitigation, be that pricing or otherwise, what would the potential impact of announced or threatened tariffs be at this point?

Yes. So let me address sort of how we are viewing tariffs and what we would see. First of all, I think to level set we'll remind you that in 2024, 92% of our net sales were in the U.S. And we are largely vertically integrated for most of our major product categories, and that includes iron gate valves, hydrants, and service brass products. As we look at sourcing, we do have a facility in China. The facility in China supports our specialty valve business. And we do have a small amount of supply chain exposure to Mexico and Canada. I think importantly, with a lot of the discussion and announcements in and around tariffs, our teams are working diligently through various scenarios that include the most recently announced 10% tariff on Chinese goods, again, specifically addressing Canada. Canada from a net sales perspective was about 6% of our 2024 net sales. So I want to emphasize again that with the timing of the tariff announcements, the guidance that we have just provided does not include any potential cost increases or impact associated with those tariffs. We'll also reference that the price announcement that we just made, that was communicated prior to the announced tariffs. While we believe that any tariffs could increase costs, we think that our exposure is manageable, and we certainly think our competitors would certainly have to feel some impact as well. I will tell you we have experienced this before. Certainly, if we go previously, when there were the Chinese tariffs were implemented, during the previous Trump administration, we did see elevated costs associated with those prior tariffs. And as part of the mitigation efforts, we increased prices for certain of our products, particularly specialty valves. We also executed some strategic sourcing initiatives. Our Kimball facility, which I know we have talked about, has been one of our recent capital investments. That facility has been open for a number of years. It is focused largely on our specialty valve product. And that does increase our domestic manufacturing capabilities. We're gonna continue to monitor what we see from our channel partners and end-use customers to see what impact that there is. But I think overall, our sector's had an industry of passing on cost increases over a period of time. And although we do see any potential tariffs as being a headwind, we will certainly work to and are working through to manage them through a combination of pricing actions, as well as strategic sourcing initiatives as we need them.

Appreciate all the color. I'll pass on.

Thank you. Good morning, everyone.

Good morning, Deane.

Hey, I'd like to talk about the impact of the closure of the old foundry and don't know if you had a closing ceremony, but you probably should have because it's a big deal. It's a big accomplishment to have gotten that done and the timing that you said. And can you just clarify for the quarter, was there any outsourcing that was still done and as that rolls off, can you just directionally tell us how much of that expense goes away? And then related to the closure of that facility, I mean, it was operating for so many years. Are there any remediation risks that you have? Have you taken any reserves for that? Is there any reason that that might be a concern? So kind of near-term price cost relief and then longer term, are there any liabilities that we should be aware of?

Hey, good morning, Deane. This is Paul. In terms of the outsourcing, if I take that question first, no, we've been reducing that throughout the last twelve to eighteen months as we've been ramping up the new foundry. So that in essence has all been eradicated over the last two or three quarters, which is part of the margin improvement we've seen there. So there's no real outsourcing going on now from a service brass perspective. The ability of closing the South Foundry, there were some inventory builds during that period last quarter in terms of some products as we transition to the new foundry as we spoke about some of the lower running parts as we transition all that tooling. In terms of legacy cost or outstanding liabilities, we took about $3.3 million of costs in the quarter around inventory and asset write-downs. And we are gonna be starting and working on the decommissioning of that old legacy facility. And right now, we don't have a specific estimate for any future one-time cost at this point. Good. Alright. Future remediation expenses, decommission and possible demolition, but we are not estimating them at this point. I believe you know, provided as incurred. So they'll expense will be recognized when we incur.

Got it. Alright. That's helpful. And then second question, and Martie, I really appreciate all the details you've given around the tariffs. And in the scheme of things, you guys are really well positioned there and you've already done all the kind of thinking where there might be some very modest exposure. So I appreciate how you calibrated that. And just related with the new administration, the focus on government spending, most of the municipal world is exact is county and state. But just if there's pressure on government spending, how or how not is water infrastructure impacted?

Very good question, certainly. And I think overall, we do have, as we all know, was passed a few years back. And I think importantly, that bill had bipartisan support. And in and around aging infrastructure and in and around specifically, water. I think just the growing awareness challenges that a number of cities have faced, you know, continues to emphasize the importance of the investment with respect to that. You know, the gap has been there. The gap is widening. And so I think that certainly does lend support for the continued need. On top of that, I know the lead service line replacements again, I think it continues to be an area where there is at least near-term focus and that's largely because consumers and communities really appreciate the health risk associated with that. You know, I think given the new administration and certainly given a number of the policy changes, certainly a great question to ask. I think our belief is that overall that municipal can will continue to be resilient. As you know, we have not our guidance doesn't assume a meaningful impact. From the infrastructure bill funding, we are continuing to watch it. I know Paul shared earlier on a call today that as we look at the number of projects and the, you know, documentation and support they're seeking around this. So I think you know, is there a near-term impact? Hard to tell if there will be, but as I said, we don't have any specific infrastructure spending. And I think when you assess the bipartisan support, as well as the need due to the impact on water and, importantly, health risk, I think, that even if there are a few short-term bumps, over the longer term, we think this will still be an area where we will see investment.

That's great. Thanks for all that color.

Good morning, everyone. So two questions. First, when you look at front half, back half, in your comments you made earlier about margin acceleration in the back half. Is the equation here just simply seasonality plus timing of the cost benefits from the facility closure and then, you know, any sense for the magnitude front half versus back half on that margin? Ramp that you expect?

Good morning, Mike. We do expect the back half margins to be better in the first half. In terms of seasonal reasons, as you mentioned, and we do expect in Waterflow to benefit from the closure of the legacy brass foundries as we've already referenced and water management we expect year-over-year improvements in our repair products business, which is the one impacted by the Israel Hamas war. Even though we anticipate some elevated cost there, we'll continue the performance there as incrementally better.

And then second one then is just could you give some thoughts on how you're looking at the land development side of your business? What are your customers saying? You know, certainly heard the prepared remarks, but any nuance from a customer level and how that what the prospect of development is this, you know, rates kinda stay where they are.

Yeah. We see continuously demand for new homes has been resilient. Despite the elevated mortgage rates, and other factors including low inventory on existing homes, and we still believe and as we talk to our customers, homebuilders have strong balance sheets and they continue to manage their large investments and inventory levels at a disciplined pace. So for our sales guidance, we assume a lot of land development growth level modest growth in terms of how that's anticipated into our guidance going forward.

Hi, thanks. Good morning, and thanks for the good color so far. Let me just ask a follow-up on the tariffs issue and just your I recall from the last time around with supply chain that there were issues with some of the material that goes into the foundries with some of the pig irons and some of the other things that, you know, was impacted by international pricing. I wonder if you can just review for us kind of in advance of these tariffs, like, you know, your supply of raw materials, and, you know, how the pricing works, you know, from your suppliers.

Good morning, Walt. The supply of raw materials is predominantly domestic. So we don't anticipate any issues from the tariffs from the raw material supply. Basically, what Martie anticipated and shared earlier around where we may have some other components that may be impacted by these future tariffs.

And I think in and around that, Walt, it's sort of the specific on, you know, the cost for imports and exports and how that is impacted directly by tariffs. And then just are there other more general impacts in the economy as a result of the tariffs?

Okay. Got it. So you're saying, now in issue with is there overall more, you know, as you hear discussed, could there be overall more inflationary pressure as a result of implementation of the tariffs?

Yeah. Because our total material costs are influenced by purchased parts, that suffer from potential labor inflation and other inflationary pressures. It's not just raw materials.

So let me dimension that a couple of different ways. So just as a reminder with the short cycle products, which is certainly the largest percentage across our portfolio is that includes iron gate valves, hydrants, service brass repair, and other. That is where there tends to be a very short shorter lead delivery time under normal conditions. And as we said, we're pretty much back to the normal delivery times for most of those products, you know, outside of repair that Paul addressed earlier. So with that, we generally see with respect to orders two to four weeks between order and delivery. In and around some of the comments that we've made with respect to what we're seeing on projects that could receive funding from the infrastructure bill, I think that's where we are seeing we wanted to comment that we are seeing some of the projects that are going through the requirements needed to qualify for the funding and verify that it meets the requirements designated by the different agencies for funding coming from the infrastructure bill. But as a reminder, we are not assuming a lot of those dollar expenditures in the guidance we provided. Does that address your question?

Well, yeah. I think it does. I think it does. Thank you very much.

Walt, I would just add I think in terms of the investments we've made around operational excellence and service levels, lead times coming back to normalized levels. We are well-positioned then as the construction season starts, particularly in the northern part of the country as it comes up the winter period.

Very good. Thank you, operator. We appreciate everyone taking the time to join our call today. We look forward to speaking with you again when we announce our second quarter results and that will be in early May. Hope everyone has a great day. And operator, with that, if you would please conclude our call.

Thank you. This concludes today's conference. You may disconnect your lines at this time.