And as we called out in our script, we do think as a result of the price increase that we announced in February, importantly, our ability to manufacture and ship product with shorter lead times, we think that caused a little bit of a pull forward of some of the shipments into our second quarter. So I think pricing, I would say we would expect to continue to benefit covering inflationary cost and preserving margin as we go forward. I think with respect to gross margin, I think we will continue to challenge ourselves for — to improve our operational efficiencies where we can. We did see some of that benefit during the quarter. I know we also called out some of the lower outsourcing costs that we had, I think we will be at a point where we’re pretty much anniversary that as we’re moving into the second half of our year, but I think that was a benefit where we look to improve our overall cost structure.
But I would say we do continue to see opportunities to improve our material, labor, and freight efficiencies and certainly volume leverage can also help us as we move forward as well.
Operator: Our next question comes from Joe Giordano with TD Cowen. Your line is open.
Joseph Giordano: Hey, good morning, guys. So I wanted to just ask on like if you look back over the last year, there’s just been huge volatility in the guides, both directions. I mean, we’re happy to see it in the positive direction this time, but both directions has been huge up and down moves. And then also like the actual performance relative to the guide, there’s been huge volatility. So you’ve had quite extenuating circumstances over the last year with what’s going on internally and the inventory situation at channel partners. But like can you kind of talk through the internal modeling process and how you feel the comfort level you have about the ability to forecast the businesses from here?
Marietta Zakas: Certainly. So I’d say, look, overall, one of the areas that we’re certainly going to try to do is to give you the explanations for why we have the guide that we have as well as to provide you insights into what our performance was and why our performance was what it was. Look, I think as we take a look at our outlook for 2024, I think importantly, as we move from our first quarter, and I’ll remind you, we did see our net sales down about 18% in the first quarter. And certainly, the explanation that we provided then is we were still experiencing in our 2023, servicing a very elevated level of short-cycle backlog which was a situation that I will say we had not experienced at the company. I think as we look at where we are today, most of the destocking that we felt had been done largely with distributors was behind us.
Our short-cycle backlog at this point in time with the exception of service brass, we would call pretty much back in the normalized level. Now I’ll remind you, on a year-over-year basis, hydrants was still elevated, in our prior year, and that’s why you’re seeing some of the differential in the net sales performance between our Water Flow Solutions segment and our Water Management Solutions segment. But I think as we move through the year, it was pretty much towards the end of the third quarter into the fourth quarter of ’23 by the time we’ve gotten that hydrant backlog down. But I think as we look at where we are today, a lot of those disruptions from supply chain, from COVID, from the very elevated and fast rise in inflation. I think a lot of those factors were caused some of the challenges that we had.
But I’d say destocking is largely behind us. The service brass backlog is still higher than what we would call normalized, but importantly continued to reduce that short-cycle backlog this year. I would say, our delivery times are back to normal with respect to our iron-gate valves and hydrants. And we have continued to reduce the delivery times across most of our service brass products. So I think we’re seeing some of that return. And I would say the guidance that we have just provided for our 2024 certainly reflects what we have seen in the order patterns as they have progressed through the first six months of our year. I hope that answers your question, Joe.
Joseph Giordano: And just to follow up on the portfolio question from earlier. I mean, we’re bringing in new Board members and there’s a refresh going on. Just curious is like as you think about where to go as a company, should we be on the lookout for kind of departures or kind of pivots anywhere? I know we talked — you mentioned linking infrastructure with your technology — with your technology products. I mean we’ve talked about that in the past. I think the reality of that has probably been slower than people have liked to see. I’m just curious as to how you think about like now that you’re in the permanent role, is there like a pivot somewhere coming? Or how should we think about that?
Marietta Zakas: So look, I think with respect to the leadership changes that were just announced, we’ve got nothing else planned at this time. I think importantly, as I referenced, the team, we have made some changes over the last eight months. We had an internal realignment. And with that realignment, our focus was looking to invest further in and around our customer experience and in and around our customer relationships. Additionally, as I just said, we have looked to enhance our overall operational expertise and investment there. And I think sort of the other area that we said is internally and from an employee culture perspective, we have really looked to emphasize more collaboration across the company with real emphasis on performance and accountability. So I think a lot of that is what we have been working on internally across the company. And I think you were — we are realizing some of those benefits as we look at the performance that we had this quarter.
Operator: Our next question comes from Bryan Blair with Oppenheimer.
Bryan Blair: Thank you. Good morning, everyone. Excellent quarter. I guess, somewhat of a follow-up to Joe’s question in terms of guidance visibility, maybe we can level set a little bit more on back half expectations. I appreciate the color on Q2 pull forward. Can you give some finer points on how that influences your team’s Q3 and Q4 expectations, both top line and EBITDA margin progression?
