Good morning, and welcome to the Zurn Elkay Water Solutions Corporation Fourth Quarter 2023 Earnings Results Conference Call with Todd Adams, Chairman and Chief Executive Officer; Mark Peterson, Senior Vice President and Chief Financial Officer; and Dave Pauli, Vice President of Investor Relations for Zurn Elkay Water Solutions.

This call is being recorded and will be available for one week. The phone numbers for the replay can be found in the earnings release the company filed in an 8-K with the SEC yesterday, February 6. At this time, for opening remarks and introductions, I will turn the call over to Dave Pauli..

Good morning, everyone, and thanks for joining us today. Before we begin, I would like to remind everyone that this call contains certain forward-looking statements that are subject to the Safe Harbor language contained in the press release that we issued yesterday afternoon as well as in our filings with the SEC.

In addition, some comparisons will refer to non-GAAP measures. Our earnings release and SEC filings contain additional information about these non-GAAP measures, why we use them, and why we believe they're helpful to investors and contain reconciliations to the corresponding GAAP information.

Consistent with prior quarters, we will speak to certain non-GAAP metrics as we feel they provide a better understanding of our operating results. These measures are not a substitute for GAAP and we encourage you to review the GAAP information in our earnings release and in our SEC filings.

With that, I'll turn the call over to Todd Adams, Chairman and CEO of Zurn Elkay Water Solutions..

Thanks, Dave, and good morning, thanks for joining us again this morning for our fourth quarter call. The fourth quarter ended on a strong note with sales, EBITDA, and free cash flow above the outlook we provided at the end of Q3. Mark will go through the specific numbers for the quarter and the year with everyone in just a minute.

But perhaps the most important thing to highlight right away this morning is that the end market view we laid out last quarter as it relates to 2024 is unchanged.

Steady strength in institutional, some pockets of weakness in commercial, residential flattish, essentially with share gains initiative growth and a little piece of price driving what we expect to be our growth over the course of the coming year.

Specifically, we see the opportunity to deliver positive organic sales growth, robust profitability, and significant free cash flow for 2024, and as you'll see in a few minutes our outlook for the first quarter puts us off to a good start in accomplishing those objectives.

And while there's still a lot of road to go, I think it's entirely reasonable to begin to think about and improving the end-market outlook into 2025 and 2026, coupled with accelerated momentum around our strategic breakthroughs; things like drinking water and filtration growth, the profit realization for some supply chain actions we've been working on over the past year, both of those should enable us to drive solid growth, profit and cash flow improvements from 2024 levels.

As it relates to 2023 Performance. We grew the topline 3% on a proforma core basis amidst a market that we would say is flat-to-down just a touch.

We leverage that growth into a 320 basis-points EBITDA margin expansion, driven by synergy benefits and normalizing supply chain and the continuous improvement benefits we get from the Zurn Elkay business system year in and year out. We turned that profitability into a record free cash flow of $233 million.

And throughout the year, we leveraged that to repurchase 5.3 million shares or about 3% of our outstandings. Raised the dividend 14% and de-levered the balance sheet to only 1.1 times at the end of the year.

As you may have also seen, we completed a transaction in the fourth quarter where we essentially divested the entirety of our legacy asbestos liability to a third party along with the related insurance assets and $12 million of cash to effectively remove any future risk related to asbestos.

It was something that we had managed very effectively for the past 17 years, but we also feel it’s a really good use of some cash and overall benefit to shareholders having that behind us, I think is an important milestone. So with that, I'll turn it over to Mark..

Thanks, Todd. Please turn to Slide number 4. Our fourth quarter sales totaled $357 million and a proforma core basis increased 900 basis points year-over-year. Low double-digit core sales growth in our non-residential end markets was partially offset by a low single-digit sales decline in our residential end markets.

The growth in the quarter was also impacted by the benefit from the prior year comparable as our channel partner's order patterns were impacted by our improving lead times in the prior year's fourth quarter.

With respect to demand in the quarter, pro forma orders expanded double-digits on a year-over-year basis, the non-residential growth above the fleet average, with solid growth across all of our sectors led by drinking water partially offset by softer demand in our residential end-markets, that was in-line with our expectations for the quarter.

But order growth also benefited from the prior year comparable I just discussed. Turning to profitability, our fourth quarter adjusted EBITDA increased 30% in the prior year fourth quarter to $84 million and our adjusted EBITDA margin expanded 460 basis points year-over-year to 23.6% in the quarter.

The strong margin expansion was driven by the benefits of our productivity initiatives, inclusive of cost synergies, plus the lower material and transportation costs that fully read through our financials in the second half of the year. Please turn to Slide 5, I'll touch on some balance sheet and leverage highlights.

With respect to our net-debt leverage, we ended the year with leverage at 1.1x inclusive of deploying $125 million of cash to repurchase approximately 3% of our outstanding common stock during the year and $50 million to common stock dividends.

In early October, we paid down $60 million of our term loan, eliminating all future required principal payments and generating approximately $4.5 million of annual interest expense savings going forward. Given the balance sheet position and our strong free cash flow generation, we have a lot of capital allocation optionality going forward.

I'll turn the call back to Todd..

Thanks, Mark. And I'm on Page 6, here you'll see a preview of our 2023 Sustainability Report that we will be issuing later this month. Solving for sustainability is embedded into our strategic planning process and we continue to believe it's a critical pillar and how we create shareholder value.

Just because we're checking boxes because it's ultimately exactly what we do for our customers.

As the global climate crisis has exasperated significant water challenges from excessive rainfall and severe flooding, to droughts in water scarcity, we understand our unique position as the industry leader to help our customers access, conserve, and manage clean water, while also focusing on improving our own sustainability efforts.

As part of our efforts to continuously improve our sustainability reporting, we included more data in this report than last year's, including a detailed Performance Index that presents three years of environmental data, a separate GRI Index with separate additional KPIs and extended TCFD disclosure index, more robust data on our associate demographics, a new section on water scarcity and resilience, the introduction of an enhanced supplier, excellence manual and we established products as a distinct sustainability pillar with an expanded reports section demonstrating how our solutions help our customers meet their sustainability goals.

Because of our efforts, we saw marked improvement in our scores and sustainability rating from the various agencies. MSCI, S&P, and Sustainalytics; now all rank us in the top 10% of industry and earning the 2024 region and industry top-rated designation from Sustainalytics.

We were also named America's Most Responsible Company -- one of America's Most Responsible Companies by Newsweek for the fourth consecutive year. And we aren't done there. We're setting three new time-bound and actionable targets beginning in 2024, designed to reduce waste to landfill, smartly increase our use of renewables.

And this is at least -- these are all in addition to the nearly two dozen targets we already have in place. And I'll talk about our 2023 progress towards those goals in just a minute.

If we could just move to Page 7, I think customers and consumers, often associate our Elkay filtered bottle filling stations with sustainability benefits around delivering clean filtered water and eliminating single-use plastics. What we don't usually talk about are the broader environmental benefits of our products.

Single-use plastic bottles have negative environmental impacts in their production and through the waste they generate. And the statistics are staggering, it takes 9 times the amount of water to make a plastic water bottle compared to the water actually in the bottle. Bottled water is 2,000 times more energy-intensive than tap water.

Americans alone purchase 50 billion single-use plastics annually, with 85% of those ending up in landfills or waterways and it takes about 450 years for plastics to degrade with 8 million metric tons of plastic ending up in the ocean every year.

So I guess, what we're trying to tell you is, the punch line is our bottle filling stations break what we think is sort of an unsustainable cycle. Since 2012, our bottle fillers have eliminated more than 84 billion single-use plastics, 18 billion in 2023 alone. Our installed base of filtered-enabled drinking water dispensers continues to grow.

And at the same time, customers are shifting more and more to filtered solutions. And the reason for the shift is an important one, at the heart of it, everyone deserves cleaner and safer drinking water whether at school, at the gym, in an airport, or at home.

We know that our point-of-use filtration offers a unique, immediate, and cost-effective solution to the nation's infrastructure issues. For just $1 per student per year, students can have access to filtered drinking water in schools, which is where they spend the majority of their day.

That is why we're so supportive of filter-first legislation across the country and in states, where we continue to innovate around affordable and easily accessible solutions. And you may recall that in the fourth quarter, we introduced our first-to-market combined lead and PFOA / PFOS filter for bottle fillers.

PFOA and PFOS are two of the most prevalent PFAS chemicals and have been linked to a number of serious health concerns. Last one from me is on Page 8.

And our ability to deliver tangible results that have an impact on our environment only continues to compound as we execute our fundamental business strategy, which happens to be the amazing symmetry of what our customer's goals are to do the right things for the environment.

In our communities, who identify focus areas include including -- volunteer water cleanup efforts that aid in the protection, preservation, and restoration of major rivers and their water shifts.

And through our Fountains for Youth product donation program, we're donating filtered bottle filling stations to schools where resources are low and led and PFAS levels are high. The water, we believe is the most important natural resource in the world.

Addressing the water crisis essential to sustainability and essential to how we drive our business and sustainability strategy going-forward. I'll turn it back to Mark to hit the Q1 outlook..

Thanks, Todd. Please turn to Slide 9. And I'll cover some high-level guideposts for calendar 2024 and our outlook for the first quarter of 2024. With respect to the full year and basically assumptions I'll touch on shortly. We believe we can generate positive proforma core sales growth year-over-year.

Expanded our adjusted EBITDA margin by approximately 150 basis-points and generate approximately $250 million of free cash flow in 2024. On the upper-right hand side of the slide are a few assumptions embedded in our outlook. From an end-market perspective.

Our outlook assumes our market in total will modestly decline year-over-year at a mid-single-digit decline in our commercial end-markets will be partially offset by low single-digit growth in our institutional and water end-markets and flattish conditions in our residential end-markets.

We anticipate capturing approximately point of price realization during the year and our strategic growth initiatives to generate positive core growth over the prior year, led by double-digit growth in our drinking water. Turning to profitability.

We anticipate delivering another $25 million in synergies related to the Elkay merger synergies will be realized relatively ratable over the year. We're planning for stable material and transportation costs in the first half of the year. I have assumed some modest inflation in the second half of 2024.

In addition, we have built an incremental investments for our growth initiatives into our 2024 plan. For the first quarter of 2024, we are projecting proforma core sales growth to be in the low single-digits over the prior year.

We anticipate our adjusted EBITDA margin to be in the range of 23.5% to 24% for the quarter, which is a 400 to 450 basis-point expansion over the prior year. Before we open the call for questions.

Just a reminder that we have included on Page 9, our first quarter and full-year outlook assumptions for interest expense, non-cash stock-compensation expense, depreciation and amortization, our adjusted tax-rate and diluted shares outstanding.

In addition, we've included the prior year first quarter and full year sales, adjusted for the executed 8020 product-line exit actions to calculate proforma core sales growth in 2024 million.

Note that the prior year first quarter and full year was impacted by approximately $8 million of last-time buys for products we had exited going into 2024 and 2023. The balance of the adjustment comes from the actions that we communicated last quarter. We'll now open the call up for questions..

[Operator Instructions] Our first question comes from Bryan Blair from Oppenheimer. Please go ahead. Your line is open..

Thanks. Good morning, guys. Nice close to the year..

Good morning, Bryan..

Good morning, Bryan..

To start with drinking water - hoping you could offer a bit more color, preferably some more metrics on the platform to help us think about momentum and positioning there. What was the growth rate for 2023? What's the scale of drinking water revenue now? If you could offer finer points on margin relative, to fleet average, that would be helpful.

Double-digits is, of course, attractive regardless of the specific range.

If you could offer some more detail on exactly how much growth you're anticipating for 2024 that would be great?.

Yes, Bryan. So, that platform grew this last quarter. High teens from a sales standpoint, low 20s from an order standpoint. So very good, strong exit rates in drinking water. As we mentioned, going into next year, we're anticipating that growth to continue double-digits.

I wouldn't say we're going to give an exact number, but we feel really good about everything we accomplished this year and exit the year with similar strong momentum.

When you think about from a margin standpoint, Bryan - that platform is basically overall a little bit above the fleet average with the filtration piece being a very strong margin component of it. And the filtration piece, starting with the lower base, will grow at a faster flip than that type of rate given where we're starting the year.

But I think overall, we feel next year and going forward, the growth in that platform is going to contribute. Obviously, the question you're getting at, is the positive mix impact of what that can do for margins going forward.

So, I feel like we're in a really good spot from the growth perspective, where the margin profile system, what that contributes next year and beyond..

I appreciate the detail. It's all very encouraging. And shifting to the area of concern and for some investors, a major concern, the commercial exposure that you have. I think the down mid-single-digits, there's a degree of surprise to the upside for some, albeit consistent with what you had laid out last quarter.

It would be helpful, I think, if you spoke to some of the sub-verticals there, because it's pretty diversified exposure. You have retail office, warehouse, hospitality, other.

Any nuance you can offer on where there's potentially significant weakness versus relative stability within that next?.

Hi, Bryan, it's Todd. I'll take a cut at it. I think the thing, we've tried to highlight over the last several years is, really the diversity of commercial structure taken as a whole. It's not a contiguous market across the United States. It's a series of independent markets, based on migration, industrial activity, and things like that.

And so, rather than try to parse it into, well, this is what we're assuming for restaurants or warehousing. I think you have to think about this as a massive market where there's always something happening somewhere in the country. There's a fair amount of retrofit replaced that is also sort of embedded in there.

And the reality is - it's down mid-single-digits and it's a little bit worse, nobody dies. So I think, I don't think that we're going to sort of, have anything to reconcile, or combat what others think versus what we see.

I can just tell you that there is enough commercial construction activity in this country, for us to deliver the kind of growth that, we said we were going to deliver over the course of the year, which is far from heroic. But I also think it's not the kind of scenario where the world is ending, which we pointed out last time.

So that's the way to think about it. And I think as time goes by. I think everyone will sort of gain a little bit of comfort around, the fact that it's a large, diverse end market and there's always some level of opportunity. Obviously, a little bit less this year, but going forward, a big, broad, diverse end market to grow in..

All fair points there. Last one from me, if I can, Mark. You specifically referenced a lot of capital deployment optionality and I think that's clear given your balance sheet position and cash generation. You've been active with buybacks, you've signaled that will continue.

Should we anticipate that your team returns to bolt-on M&A, during the year? If you can speak to just to readiness, to return to that growth lever going forward and anything you can offer on the composition of your deal pipeline and potential actionability this year?.

Like we said, but last year was a year we were going to put our heads down and really focus on getting the Elkay integration complete. We feel that isn't a good spot for us. A lot of success with that over the past 12 months. We feel, we're definitely in the spot, where we are ready to turn back to that.

As we've always talked about, the funnel is a proprietary funnel. You don't know when things are going to hit. But I'd say the funnel remains active. Although we were - we didn't do anything this year, we obviously stayed very close to that funnel, worked on that funnel as we were working on the integration at the same time.

So yes, it's fair to say we're back, ready to do acquisitions again. That bolt-on tuck in nature, nothing imminent that we talked about today. But when those opportunities present themselves, we're ready to execute on that again. So again, like we said, in remaining balance with share repurchase going forward.

So, I think you'll see next year and beyond utilizing that full balance sheet capacity and our ability to allocate that where we see fit from an allocation standpoint..

Yes, Bryan, maybe one thing to add was Mark mentioned that - we'd be back, but we never left. I mean, we continue to cultivate things that are important to us. Obviously, if something of high strategic value would have decided, or wanted to do a transaction over the course of last year, we would have done it.

We've got the capability, the resources to do that and integrate it extraordinarily well. I think, as we're proving with the Elkay transaction. So everything else he said is clear. I just want to make sure that the distinction is we never left..

And we didn't miss anything..

Definitely understood. Thanks again, guys..

Our next question comes from Mike Halloran from Baird. Please go ahead. Your line is open..

Hi. Good morning, everyone. [Here Pez] on for Mike. If we could maybe revisit the new filter that got released that we talked about a little bit last quarter, can you maybe talk about some of the adoption and the reception? Then I want to go back to a comment I believe Mark made, filtration being a bit of a smaller base.

When you speak to the filtration piece, is that specifically the aftermarket filter replacement piece? Or is there also a little bit of an element of attachment to the OE bottle filler as well?.

Yes. I mean, I guess in terms of the PFOA, PFAS filter it's brand new. I think we're selling thousands of them to-date. But I don't think that's something that we're counting on as being a massive catalyst immediately. But I think the slow, steady build of that amidst a large and growing installed base of units, is sort of the way to think about it.

And in terms of the size or the scale of it, obviously the way to think about it is there are units installed in the field. And then there is a normal sort of replacement pattern. And so the mix of filtered versus non-filtered units and then the rate of attachment, or replacement value against those installed bases is sort of the algorithm.

And so, if you think about more units going into the field, more of those units being filtered, and then the attachment rate moving from less than one-time a year to maybe just a little bit above that, the compounding benefit of that is huge.

So I think the way to think about it is, if the installed base grows at 10% a year, the attach rate can grow materially higher than that. And as Mark talked about, the profitability for drinking water and filtration are each very attractive..

Great. That's super helpful color. And then just one clarification. We've gotten a couple questions on it this morning. On the 2024 assumptions on the slide here, drinking water is separate from institutional, correct? We are thinking about institutional completely separate from drinking water.

We're not saying that institutional with drinking water is up low single-digits, correct?.

What we were highlighting on the institutional market, is going to grow low single-digits. But we think if you look at our drinking water franchise in the context of all of our end markets, it grows at a double-digit pace. A lot of that, obviously, coming from our actions, our initiatives versus what the market may do next year..

Yes, I mean, maybe just to touch differently, I believe that we're highlighting that inside of institutional, the drinking water business for us, will grow at a double-digit rate. So it's inclusive of the low single-digit. Institutional is inclusive of double-digit drinking water..

Understood. Thank you. I'll pass it on..

Our next question comes from Jeff Hammond from KeyBanc Capital Markets. Please go ahead. Your line is open..

Yes. Good morning, guys..

Good morning, Jeff..

Hi, just - so just following up on that, because a little confusion on the kind of the end market assumptions. I think you said, Mark, all-in, you think your end markets are kind of flat to slightly down.

Is that correct? And then institutional ex drinking water, you think is, maybe if you pull out that drinking water, it's more like slightly down versus up low single-digits?.

No, I don't think we said that. I think - I don't think there's a lot of confusion. I think we're trying to highlight the fact that agnostic from maybe how we would call the end markets. Drinking water is growing at that double-digit rate.

I think in aggregate, we still believe institutional is up - as an end market, commercial is down as we highlighted. I think that's the way to think about it, Jeff..

Okay. So, if I did the math on kind of the growth, it seems like your end markets are maybe growing to 2, 2.5 and then you get maybe a point of price and a point outgrowth.

Is that the way to think about the growth algorithm in '24?.

Yes, I mean, there's a range of outcomes in terms of your assumption. I think that the weighted end market growth next year, you can end up, at minus one, minus two, or you can do your math and end up plus one, plus two. It's somewhere in that zip code for sure.

And so, I think that, our low single-digit growth has some assumption around end market growth, some modest assumption around price. And then, obviously some assumption around share gains and initiative growth that we talked about..

Okay. Great. And then just on the margin, I think you said, 150 basis points of margin, that kind of, lines up to, $20 million to $25 million of kind of incremental improvement. And I think you've called out, the $25 million incremental synergies, the lapping of the high cost inventory, $10 million to $15 million.

Just wondering what maybe some of the headwinds are that would eat into some of those good guys?.

Yes, I mean, again, I think it's more of a function of we're sitting here on February 7 and we sort of only know what we know at this point. And so, I think that, I don't have a long list of headwind reconciliations for you. I just think we're trying to describe a scenario that we see with an enormous amount of confidence.

And you do your math and you just take the Elkay synergies, you can get that 150 basis points. And so, I think we'll sort of stay close to it and update people along the way. But I don't have a long list of headwinds to rattle off with..

Okay. Thanks, guys..

Our next question comes from Joe Ritchie from Goldman Sachs. Please go ahead. Your line is open..

Hi, this is Vivek Srivastava on for Joe. And thanks for the question. My first question is just trying to understand, what's the expectation for the portfolio apart from drinking water. So, you said drinking water will grow double-digit. It means the rest of the portfolio probably declines slightly.

Maybe just give us some color on what is the expectation with water safety, hygienic, flow system side of the portfolio and what's most pressured to lead?.

Yes. Again, I think we're going to go back to, when you look at the end market mix. You can wind yourself to an aggregate flat to up one or two or flat to up one or two. Nothing significantly different than I think, what we've been answering this morning, regardless of product category.

And so, I don't think I have anything to give you that, is sort of different than that as it relates to a product group, because at the end of the day, all of our products go into those particular end markets.

I think what we're highlighting, is the sort of secular opportunity we see in a category that's being built, perhaps to a degree outside of those core end markets. And so that's why we're, I think, highlighting drinking water more specifically than we are any of the other categories..

And that's helpful. And then maybe just on the margin cadence, looks like you ended the year pretty strong and you are starting the first quarter strong with about 400 base point of margin expansion. Is there some conservatism baked in the second half of the guide right now? Because full year is like around 150 bps.

So just any color on the cadence would be helpful?.

Yes, I mean, again, I think we're guiding to Q1 based on, a detailed forecast and process of what we see. We're giving you the full year outlook here on February 7, acknowledging that, there's a lot of road to go in the year. But also the progression on a comparable basis changes.

So obviously, having just done 23.6%, we're not going to have a 320 basis point or 400 basis point margin expansion over that in next year's fourth quarter. So I don't know that it's conservatism or anything else, but it's sort of our best view of what we think we can achieve over the course of the year..

Great, thanks..

Our next question comes from Brett Linzey from Mizuho. Please go ahead. Your line is open..

Hi, good morning all. Hi, just I want to come back to just destocking. I was hoping you could put a finer point on where you think we are from a destocking dynamic in non-res and residential.

I know you saw some in late '22 and resi and throughout '23, but are you contemplating any additional destock here early in the year, or do you think we're pretty well matched sell-in, sell-out?.

Yes, our view, Brett, is we haven't really faced that phenomenon for the last three or four quarters. So, I think our sell-in, sell-out is very balanced. Book-to-bill was above one. Inventory levels heavily across the wholesale channel, e-com channel and everything else, are on really good shape.

So I don't think - we're having any sort of conversation about inventory, build or burn..

Okay. Yes, good to hear. Just maybe shifting to waterworks, you're thinking about that market up low, singles. I guess given some of the public works funding and the Infrastructure Act and some of the fiscal support there, I would have thought maybe - it would have been a little stronger.

What are you seeing in that area? How do you participate there? And any insight on expectations as the year rolls out?.

Yes, again, I think we're trying to give you a perspective of our expectation of what the end market grows based on the funnel of opportunities that we're looking at. I guess it's a principle the federal funding to how it ultimately gets spent.

That never really translates particularly well, at least in my experience, and the length of time from when that's talked about to actually being spent is quite a lag. So I think, look, we're seeing good activity in areas where there is population growth.

And so our products really sort of attach from the primary water supply, to the developments and things like that. And so that's what we're seeing growth and opportunity. And hopefully it's a little bit better with maybe some of the stimulus that you mentioned. But I think for now, that's what we're seeing as we've talked about 2024..

All right. Appreciate the insight. Best of luck..

Our next question comes from Nathan Jones from Stifel. Please go ahead. Your line is open..

Good morning. This is Adam Farley on for Nathan Jones.

As it relates to the margin guidance, what is the level of incremental growth investments in 2024?.

And we're not giving details around the numbers. But like I said, the two things that - I called out in the back half of the year, one is going to be - we think there could be some inflation in the back half of the year and the growth investments over the course of the year. We're not going to give an exact amount.

But we are, like we did last year, we do every year. We invest in growth in the business. So that's a minor headwind. It could be, but we're not going to give exact numbers at this point in time..

Fair enough..

No, I mean, again, I think, I think if the question is, you know, if you just get the Elkay synergies, you get to maybe 150 basis points of margin expansion with the kind of growth we're talking about. So there's got to be, there's got to be some other things. And I think the point is, yes, there are lots of puts and takes.

I think, I think you got to separate what we're sort of guiding to versus what we think we can do, particularly on February 7 here. And so, as Mark pointed out, there are certainly growth investments, but it's not as if there's a list of things to reconcile for you that I would say are outsized or unexpected.

I mean, obviously, we give people raises, but we have productivity. We have material savings. And obviously, there's certain areas where we see material cost inflation. So nothing out of the norm one way or the other. I think we're just trying to give you a view with a high degree of confidence, and we'll update that as we go through..

No, that makes sense.

And then turning to capital allocation again, do you have any planned buyback activity in '24?.

Yes, we're going to do, we're going to do a buyback on a sort of regular cadence. But, nothing that we think is outsized or maybe different in scope than last year. There's a range that we'll go through and evaluate what we think fair value is and our outlook and everything else. We'll clearly do some, rather than over the course of the year.

So yes, we do have a plan for that..

All right. Thank you for taking my questions..

We have no further questions in queue. I'd like to turn the call back over to Dave Pauli for closing remarks..

Thanks, everyone, for joining us today. We appreciate your interest in Zurn Elkay Water Solutions and we look forward to providing our next update when we announce our March quarter results in late April. Have a good day..

This concludes today's conference call. Thank you for your participation. You may now disconnect..