The Company signed an agreement to acquire Pureit from Unilever for approximately $120 million, expected to close by the end of 2024. Pureit, a leading water purification business in South Asia, offers a broad range of residential water purification solutions and has annual sales of approximately USD $60 million, primarily in India.

The company is expanding its commercial water heater capacity in preparation for new efficiency rules for commercial water heaters that the Department of Energy (DOE) has adopted and will take effect in 2026.

Management expects 2024 consolidated sales to increase between three and five percent compared to 2023. This guidance excludes the impacts from potential future acquisitions and is driven by continued end-market demand in water heating and a rebound in boiler and water treatment volumes.

The company's supply chain has been relatively stable, but management continues to monitor potential disruptions and increase safety stock of key components when warranted. They remain in close contact with suppliers and logistics providers to resolve supply chain constraints.

Selling, general, and administrative (SG&A) expenses in the second quarter of 2024 increased by $8.2 million compared to the second quarter of 2023. This increase was primarily due to higher employee costs from increased wages and management incentives, as well as higher selling expenses to support sales growth initiatives.

The company repurchased 1,834,000 shares of its stock for $153.2 million during the first six months of 2024 and expects to spend approximately $300 million on stock repurchases in 2024. A regular quarterly cash dividend of $0.32 per share was declared on July 8, 2024.

The depreciation of foreign currencies compared to the U.S. dollar negatively impacted sales by approximately $8 million in Q2 2024 and $17 million in the first six months of 2024. The company's guidance assumes an unfavorable currency translation impact on sales of approximately two percent in 2024.

Despite local currency sales growth in China, the company remains cautious about the second half of the year due to continued economic headwinds. Third-party sales in China are projected to be flat to up three percent in 2024 in local currency.

The company believes that a prebuy ahead of a March 1st price increase pulled forward some demand into the first half of the year and they have seen some softness in orders in July. They project 2024 industry residential unit volumes will be flat after approximately six percent growth in 2023.

The company expects sales in China to be driven by innovative new products and resilient demand for core products. This suggests a strategy of leveraging product innovation to maintain or improve its competitive position in the Chinese market.

The acquisition of Impact Water Products in Q1 2024 and the planned acquisition of Pureit demonstrate a strategy of expanding the water treatment business through acquisitions, strengthening the company's competitive position in this segment.

The company expects to see an eight to ten percent increase in sales of boilers in 2024 compared to 2023 as they continue to benefit from the transition to higher efficiency boilers. This indicates a focus on adapting to regulatory changes and offering more efficient products to maintain competitiveness.

The lower gross profit margin in the second quarter and first six months of 2024 compared to the same period last year was primarily due to higher material costs. This highlights the impact of input costs on the company's profitability.

The company continues to monitor potential supply chain disruptions and increase safety stock of key components when warranted. They remain in close contact with suppliers and logistics providers to resolve supply chain constraints as they arise. This demonstrates a focus on managing supply chain risks to maintain operational efficiency.

Capital expenditures totaled $44.9 million in the six months of 2024 compared with $24.2 million in the same period last year. The company projects 2024 capital expenditures will be between $105 million and $115 million, indicating investments in operational improvements and expansion.

The company recently introduced its internally designed and manufactured gas tankless water heaters in North America, demonstrating a commitment to product innovation and technological development.

The company is expanding its commercial water heater capacity in preparation for new efficiency rules for commercial water heaters that the Department of Energy (DOE) has adopted and will take effect in 2026. This suggests a focus on developing and manufacturing products that meet evolving regulatory standards.

The company expects sales in China to be driven by innovative new products and resilient demand for core products. This highlights the importance of innovation in maintaining a competitive edge in the Chinese market.

The company repurchased 1,834,000 shares of its stock for $153.2 million during the first six months of 2024 and expects to spend approximately $300 million on stock repurchases in 2024. This indicates a belief that the company's stock is undervalued and a commitment to returning capital to shareholders.

The company declared a regular quarterly cash dividend of $0.32 per share on July 8, 2024, demonstrating a consistent approach to returning capital to shareholders through dividends.

The acquisitions of Impact Water Products and Pureit demonstrate a strategic allocation of capital towards expanding the company's water treatment business and geographic reach.

The company granted 29,475 and 24,580 performance stock units under the Incentive Plan in the six months ended June 30, 2024 and 2023, respectively. Performance stock units vest over three years following the date of the grant. Performance stock units vest under a set of measurement criteria which are based upon achievement of certain Environmental, Social, and Governance targets.

The company's sales projection is driven by expected continued end-market demand in water heating and the rebound that we expect in boiler and water treatment volumes after 2023 corrections in end-market inventories in North America.

The company believes that a prebuy ahead of a March 1st price increase pulled forward some demand into the first half of the year and they have seen some softness in orders in July.

The company expects sales to be flat to up three percent in 2024 in local currency compared to 2023 driven by innovative new products and resilient demand for our core products.