Q1 2024 Zurn Elkay Water Solutions Corp Earnings Call
Good morning, and welcome to the Zurn, Okay Water Solutions Corporation first quarter 'twenty 'twenty four earnings result conference call with Todd Adams, Chairman and Chief Executive Officer, Mark Peterson, Senior Vice President and Chief Financial Officer, and Dave <unk>, Vice President of Investor Relations for Zurn L K water.
Our solutions are.
Replay of the conference call will be available as a webcast.
On the company's Investor Relations website at this time for opening remarks, and introduction I'll turn the call over to Dave Poly.
Good morning, everyone. Thanks for joining us on the call 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.
In addition, some comparisons will refer to non-GAAP measures our earnings release, and our 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.
I'll turn the call over to Todd Adams, Chairman and CEO of Zurn L. K water solutions, Thanks, Dave and good morning, everyone and thanks for taking the time to listen this morning, and hopefully everyone had a chance to go through their released last night I'll start on page three to cut right to the Chase we had a solid start to 2024 with Q1 sales earnings and cash flow all ahead of our.
Expectations heading into the quarter.
From our perspective, the end market view that we've had for 2024 for the last six months or so continues to look the same with steady strength in institutional some pockets of weakness in commercial and residential roughly flattish with share gains initiative growth and a little bit of price driving what we expect to be growth over the course of the coming year.
<unk>.
Our margins and cash flow to continue to expand as the compounding benefits of the early integration, we did to bring zurn LK together read through the results with more room to go as we delivered the yield on the synergies throughout the balance of 2024. The reality is we've totally integrated the businesses and truly operate as a single business. So all of the productivity.
<unk> supply chain benefits pricing are all rolling in across the overall business as are the compounding benefits of all of our continuous improvement activities that happen day in day out as part of the deployment of the Zurn LK business system.
As you'll hear a little later when Mark goes to the outlook, we have high confidence in the margin profile, we've established and we will continue to drive.
And as a result, we're raising our outlook for the full year margin expansion from 150 basis points to 150 to 200 basis points with Q2 margins in the range of $24 525%.
Strong margins, coupled with our flexible business model drive consistently high free cash flow and with the $50 million, we generated in the first quarter, we used $19 million of that to repurchase about 600000 of our shares with a plan to continue to do that over the course of the year now I'll turn it over to Mark. Thanks.
Thanks, Todd Please turn to slide number four.
Our first quarter sales totaled $374 million and increased 400 basis points year over year on a pro forma basis.
Mid single digit core sales growth in our non residential end markets was partially offset by flattish year over year sales to residential end markets.
With respect to demand in the quarter year over year order growth was in line with our sales growth as our book to Bill ratio was one in the first quarter.
Todd mentioned earlier and market trends in the quarter were consistent with our expectations. When we did a bit better with our growth initiatives, which drove our sales performance slightly above our outlook 90 days ago.
Turning to profitability, our first quarter adjusted EBITDA increased 24% from the prior year first quarter to $90 million and our adjusted EBITDA margin expanded 460 basis points year over year to 24, 1% in the quarter.
The strong margin expansion was driven by the benefits of our productivity initiatives inclusive of cost synergies plus lower material and transportation costs compared to one year ago.
For calendar year 2024, we believe our year over year margin expansion will be a bit better than we discussed 90 days ago and I'll cover more details of that later in the call.
Please turn to slide five and I'll touch on some high level balance sheet and leverage highlights.
With respect to our net debt leverage we further reduced our leverage of one one times at December 31, 2023 nine.
Nine times at the end of the first quarter inclusive of the additional $19 million deployed to repurchase shares in the quarter were.
We continue to have excellent capital allocation Optionality and as we have discussed we will remain focused on a balanced capital allocation strategy going forward I'll turn the call back to Todd.
Thanks, Mark and I'm back on page six.
Over the course of the last year, we've tried to communicate the significant opportunity and competitive advantage. We have in the clean safe drinking water category as a quick Q1 update we're very much on track to grow the overall drinking water portion of our business at double digits from a topline perspective.
And continue to grow the number of filter units installed while capturing recurring revenue from filters.
Some of the questions. We got over the course of the year have been so what else is happening besides drinking water. Here's just one great example, amongst the dozens and dozens of things that are moving the needle for us from a growth market share and profitability perspective, Here's the Hydro Act sensor flushed valve. We've just recently launched within our hygienic and environmental category, We would estimate that it is a 450.
Market category, including the retrofit replace market, where we have a decent number two share position.
We're the only one in the market with a unit that is hydro powered with no solenoid because the two biggest pain points in the field are replacing batteries and solenoid failure, we saw bulk with the hydro X.
The diaphragm gaskets and seals are made of and elastomer that last eight to 10 times longer than traditional rubber components and taken as a whole we're talking about approximately 10 years of maintenance free operation as a unit is how is powered by hydro <unk> technology eliminates constant battering changes, which saves building owners, both labor and battery cost the other key is that it.
Designed with architects in mind, they wont expect something that look stylish as well as functional and it's available with Bluetooth Bluetooth has a full connected solution, which helps in remote monitoring troubleshooting line Flushing and predictive maintenance, we're winning with this and large national accounts, where reliability and sustainability are critical and it's just one more thing we have in our unrivaled portfolio.
Folio and ability to deliver content to both new builds and the retrofit replace market.
On page seven you can see our Q1 sustainability impact and progress toward our targets. We continue to elevate our sustainability efforts and are proud of the positive environmental impact our products deliver each day to building owners throughout the U S. The vast majority of sales in the quarter came from products that deliver a sustainable attributes to our customers' products that.
Reduce water consumption protect the potable water supply and buildings reduce energy or GHT consumption or made with high levels of recycled content, whether it's reducing water usage filtering out contaminants from water. We're eliminating single use plastic bottles, we continue to innovate to address both water related challenges to public health and <unk>.
<unk>.
Water is so important and we continue to see growing and new challenges around this vital natural resource that we will continue to address as a sustainability as sustainability is central to how we operate and drive our business.
Last one for me is on page eight and it's really just more of a reminder, over the past several years, we've been really intentional about defining our strategy and then going out and executing on it here.
Here. It is on a single page starting on the left as a pure play North American water business. We've been laser focused on the end markets product categories customers and geographies that we want to be in and then cultivated layers and layers of competitive advantages within our current business with room to expand upon that both organically and inorganically over the <unk>.
<unk> years in the middle the relentless deployment of the Zurn LK business system provides us not only superior execution capabilities, but a common language and approach to running our business that drives above market growth above market organic growth exceptional incremental margins and substantial free cash flow.
Since we've deployed Z evs to LK, we've seen over a 1000 point margin expansion in the first 18 months with faster growth better customer satisfaction and and highly engaged team that really has embraced Z evs and finally on the right. We're measuring outcomes and course correcting where necessary. This is something we talk about <unk>.
Internally to drive both simplicity and focus and to be able to communicate what's truly a priority or in some cases, why we arent doing things hopefully this helps frame what to expect from us over the coming years I'll turn it back to Mark to hit the Q2 outlook.
Thanks, Todd Please turn to slide nine I'll cover our outlook for the second quarter of 2024, and an update on our high level guideposts for calendar 2024.
For the second quarter of 2024, we are projecting year over year pro forma core sales growth to be in the low single digits and we anticipate our adjusted EBITDA margin to be in the range of 24, 5% from 25% for the quarter, which is a 290 to 340 basis point expansion over the prior year.
For the full year at this point, we see no changes to the sales assumptions, we outlined 90 days ago and still believe we will generate positive pro forma core sales growth year over year with respect to our adjusted EBITDA margin. We now believe we will expand our margin between 150, and approximately 200 basis points year over year, our fleet, our free cash flow expectation for the year.
Before we open the call for questions. Just a reminder, that we have also included on page nine our second quarter assumptions for interest expense noncash stock compensation expense depreciation and amortization, our adjusted tax rate and diluted shares outstanding.
In addition, we have included the prior year second quarter sales adjusted for the executed 80 20 product line exits to calculate pro forma core sales growth in 2024, we'll now open the call up for questions.
Thank you the floor is now open for questions. If you have dialed in I would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
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We do request for today's session that you. Please limit to one question and one follow up.
Your first question comes from the line.
Bryan Blair with Oppenheimer. Please go ahead.
Okay.
Thank you good morning, guys.
Hey, Brian.
Good morning, Brian.
You noted continued double digit growth in drinking water and further rollout of filtration.
Are you willing to offer any finer points on the growth rates, you're seeing both with the platform overall and infiltration and as there's intense focus.
And you know for the public and now let's have some government action federally and state level.
On latchkey thoughts other issues.
Your team is thinking about the.
And a multiyear.
Yes, yes.
Speaker Change: It's very much the same Brian that we've we've communicated in the past I would say that when you look at the filtered units growth.
That is going to move around a little bit quarter to quarter, but over the course of the year that should absolutely be in the double digit range I think the algorithm really requires it to be in sort of the high single digit growth in terms of filter units growth over a long period of time, and then obviously filtration is growing significantly faster than that.
And thats sort of what happened in the first quarter and what we see.
Sort of the rate.
Right.
Algorithm for us so as you point out I think that the the drumbeat around legislation in filtration and everything else continues to to ramp I am not sure that we are seeing much of any benefit of that but at this point.
It really is just that core strategy that we've had and I think over the coming.
Over the balance of the year and into next year and probably the year after.
That's when we'll start to see the benefit I think that while some of these things have passed the implementation path is awfully awfully challenging I think.
Speaker Change: Not to say that we are all concerned that it's going to happen. It's just the rollout takes time and so what we're seeing today is really just the core business and the core strategy that we've had continuing to have success and we expect it to I think get amplified a little bit as this thing that ultimately gets implemented.
Okay that makes sense I appreciate that.
Color that.
Very strong margin performance in Q1 pretty robust guide for Q2, so on an LTM basis through Q2, implying a little over 24%.
Margin nothing to push back on there.
It doesn't imply when your current guide for full year 'twenty four there is some moderation in back half margins.
Can you walk us through what your team is contemplating on the progression for Q3 Q4.
What may drive that moderation or if it's.
It's more so just conservatism baked into.
And the guide one quarter out.
Yes, I think it's certainly the latter I think.
Speaker Change: The approach that we've taken.
For the second quarter guidance as it relates to tell you what we're seeing over the next 90 days I don't think that Theres anything that I can communicate that wood.
Sort of give you.
Less comfort about the back half.
We're just trying to be a little bit conservative.
To start the year.
Obviously.
The sales come in in the second half will be important, but I think from a cost structure and our gross margin, which is what you're seeing flow through this year, it's all gross margin improvement.
That kind of improvement is going to sustain through the through the balance of the year and.
And so I don't think theres anything that we're going to point to from a.
Inflation or.
Things that we see on the horizon and Theyre going to.
Give us less confident about that sustainability of the margin in the second half I think it's more just a function of we're only 90 days and I think we're really happy with what we're seeing.
It's all permanent set of stuff, we're giving you a look at what Q2 looks like and then we'll revisit the second half, but nothing discrete from from that perspective.
Understood against a solid start to the year. Thanks, guys.
Your next question comes from the line of Andrew Buscaglia with BNP Paribas. Please go ahead.
Good morning, everyone. This is Ed Maggie on for Andrew.
Ed Maggie: I wanted to ask so the outlook for interest rates as we kind of change in recent weeks I was wondering if you could help us square some fatone and reset at the federal reserve commentary with the outlook and gradually in non res construction not changing.
Yeah, I think I think it helps to understand that when you look at our overall mix roughly half as institutional and then beyond that roughly half of the total is retrofit replace and so while I think on the margin.
A lower interest rate environment helps the commercial aspect of our business as part of the residential.
That.
I don't think that the catalyst that we thought in the second half.
Of having our interest a couple of interest rate cut was going to ignite any sort of significant growth and so the fact that it's not.
Likely to happen or happen to the same level I don't think really changes our view on on that I think the thing to think about is it's a very hyper local market and so what's happening in one part of the country and the commercial or residential spaces. It could be the exact opposite in another part of the country and I think as you go through that.
Year, we've been absorbing some of this commercial bad news for the better part of 18 months quarter by quarter by quarter. I don't think there is a cliff in commercial coming I think we're just absorbing that bad news, obviously, you've seen continued strength in institutional and then as we've talked about share gains and some initiative growth, particularly around drinking water and things like the hydro.
<unk> are what we see and what we're doing to come back what I think everyone thinks is sort of a lousy commercial market, but I think.
That's how we see the interest rate environment.
Ed Maggie: Obviously somewhat sensitive and if it was lower it would probably be better, but I don't think we're talking about.
Material changes to.
To that in our second half outlook.
Very helpful. Thanks, and then.
<unk> leverages, taking below one the cash flow engine is driving I was just wondering if you could update us on what you are looking at with the pipeline and the outlook for M&A.
As it goes into the second half or two years.
624 thanks.
Speaker Change: Yes, I mean, we've.
<unk> always maintained that proprietary funnel in process.
That is continuing I think whether or not something converts over the course of the year is still to be seen.
But from a cash flow perspective, I think that we're off to a really good start with $50 million I think last year in the first quarter, we were roughly flat and ended up at $2 30, So I think that from a cash flow perspective, we obviously in a great position.
But I think we're going to continue to cultivate things on a proprietary basis.
C.
When things convert but I do think that we have.
We are going to continue to generate a significant amount of cash and so I think that.
All forms of.
Uses of that cash are on the table, we're obviously going to invest in our core business.
Continue to cultivate M&A, but as we've talked about we've got a buyback perspective.
That we're going to continue to execute against and then we can review the dividend like we do every year. So I think.
All in all I think we're in a really good spot.
But we're going to continue to work the funnel and then try to get some high priorities to convert.
Speaker Change: Yes.
At the right time.
Very helpful. Thanks for taking my questions guys.
Your next question comes from the line of Michael Halloran with Baird. Please go ahead.
Hey, good morning, everybody, you've got pads on for Mike.
Maybe thinking.
Different perspective on the performance in the quarter, obviously called out the healthy drinking water, but if we look at the other three product categories.
Flow safety and hygienic is there any notable variance between the three one to kind of get to that net number we're getting to and maybe if we can exclude the calling of revenue.
And from that discussion that would be helpful.
Yes, Luke this is mark I think when you look at those other categories. There is not a meaningful difference in the quarter and the growth rates.
So they're really to employ systems voltage control.
Environmental project when you back out what we did as far as <unk> 'twenty exits like this on a pro forma basis. There is not a material difference in the growth rates in those categories in the quarter and we don't expect that over the course of the year to be very.
To deviate very much either.
Speaker Change: But it easy enough Bob.
Then.
Quick clarification Todd when.
When you are speaking to filtration are we speaking specifically the aftermarket tail in terms of this specific filter sale or does that are we including the filter units in that discussion when we're talking about the filtration growth rate.
Todd: Well the filtration growth rate would be the discrete aftermarket replacement event.
That's a growth rate, that's well above double digits.
The filtered unit would be in that high single digit to low double digit range on an annual basis and are filtered unit basis.
Understood. Yes, we've had a few questions on that I appreciate the clarification and I'll pass it on and get back in queue.
Your next question comes from the line of Joe Ritchie with Goldman Sachs. Please go ahead.
Hey, guys good morning.
Good morning.
Can we maybe just talk about your.
The differences in your regional growth right now I recognize that the SKU rationalization is impacting the U S. But it also looks like outside of that you've got the US You guys are growing faster. So maybe just talk about what youre doing to spur your E. Whether it's your distribution strategy outside of the U S for Ted to achieve.
What you are achieving today.
Well I mean, when you say outside of the U S. It's really talking about Canada.
<unk>.
And probably a little bit of Mexico from LK perspective, and again I think it's just a function of.
<unk>.
We've gone through created a new Rep network, we've got some terrific.
And those geographies that were supporting really well they are winning in the marketplace. So I don't think that theres any magic to it. It's just it's a small number.
Todd: <unk>.
But we're pleased with the performance and progress and we expect it to continue.
Okay now that's good to hear and then I guess, maybe just talking about the the margin expansion and you took up the guidance for the full year.
Can you, maybe just give us a little bit more color on what drove the increase in the guidance does that is that.
Pricing is it productivity like what what specifically is making you feel better about.
Getting a little bit more margin expansion for the full year.
Well I think again we.
We came into the year I think we tried to provide an outlook that we felt was going to be pretty durable.
We had a list of things that we were we were working on both from a synergy perspective, and then some other things around supply chain that are going to be really important for us maybe a little bit this year, but more so next year.
And we were just accelerated some of the progress into 2024.
Todd: <unk> dot sought read through really through gross profit in the first quarter, we see the same thing in Q2.
We've done a terrific job with our sourcing teams.
To put ourselves in a great spot from a cost perspective over the balance of the year.
And then the biggest thing is really just we've got 2500 people that have bought into continuous improvement.
And I think that you can't underestimate.
That compounding benefit year day in day out and that's reading through in the first quarter I will absolutely read through the course of the year and so we're taking it up just a touch.
From what we see today.
And then we'll revisit where we are in the second half. So I don't think there is any.
<unk>.
Any big news here other than sort of what we what we thought we could do for the year I think we're just sort of pacing ourselves in terms of.
What we communicated externally.
Got it thank you.
Your next question comes from the line of Nathan Jones with Stifel. Please go ahead.
Todd: Good morning, This is Adam Farley on for Nathan.
My first question relates to good morning, first question relates to your free cash flow guidance I appreciate the unchanged $250 million.
Guidance on a year.
Really strong cash flow conversion in the quarter driven by significant improvement in working capital. So my question is.
Todd: No.
Are there any further opportunities to optimize working capital through the year.
Speaker Change: Well, Adam I think that.
There always are going to be.
Speaker Change: And obviously, we saw a solid first quarter.
Speaker Change: We've not changed the full year at this point, but I think.
It would be difficult to convince you that theres not theres not a bias to maybe do a little bit better than that.
Obviously some of it comes from working capital.
That we just work at day in and day out and so.
We're off to a good start.
And I don't know that Theres I don't know that I could sit here and say that there is a $100 million opportunity in.
Trade working capital, but I think on the margins, we're going to we're going to work to optimize it and get it to a level that we think.
Makes sense for our business.
Okay. Thank you for that and then in the quarter there was a noncash restructuring charge.
What was that related to and are there any expected savings related to that.
Yeah, the restructuring charge in the quarter was related to the synergy actions that we're working through there some facility things that we're doing this year. So it's it's all it's all pipe.
It's all tied to the 25 centers that were generating in fiscal 'twenty four.
Alright, great. Thank you. Thank you for taking my questions.
Your next question comes from the line of Brett Linzey with Mizuho. Please go ahead.
Good morning.
How would you characterize the channel inventories in the tone in that part of the business and then as you look on the other end of all the moves you've made how does that how does the margin profile relative to the to the rest of the portfolio are we running at corporate average fell a little bit lower just any any context would be great.
Yes, I mean, I think the E.
A slice of the overall pie is yes, I think roughly 12% growth.
Speaker Change: From a channel inventory perspective, I would say that is super low I mean, theres nothing theres nothing in there anywhere so it sort of.
Nothing but upside if we see some some recovery.
But in terms of margins it is not at the corporate average it is below the fleet average so when you when you look at that piece, but it's not miles apart.
But it's a good five points or so below the.
The corporate average, but its come up nicely because we're sort of sticking to parts of residential that we think we can build a competitive advantage and we want to be in and so.
That wasn't the case 12 to 18 months ago, So the margins come up nicely.
No channel inventory.
Okay, Great and then maybe just a more strategic question on the election and tariffs.
Obviously, we don't know what the outcome is going to be but zurn does have a heavier outsourced manufacturing model. Maybe you could just talk about how nimble supply chain configuration is if you can flex it up and down different regions and so on.
We do have turned other tariff regime.
Speaker Change: Well I think we certainly feel like that I think that some of the conversations around.
Newer tariffs related to steel and aluminum.
But we don't impact us, we don't import any steel or aluminum.
I think from a supply chain perspective, one of the things that we've been working at really for the course of the last 12 or 18 months is to incrementally repositioned some of our supply chain to capture the benefit of avoiding tariffs. So I think that when you dial back to 2016.
When all of that happen I think we showed incredible flexibility in moving volumes around to minimize the.
Speaker Change: The impact of those tariffs, we still are impacted by some of those were further taking action to.
To position our supply chain to avoid those and so I think we've got high confidence that.
Based on past experience what were working on and maybe some of the things that are being talked about that we will.
We have a really really good amount of success navigating forward and so it's really a testament to I think our supply chain team finding the right suppliers in the right geographies and really scaling ahead of the puck.
Which we've been doing for the last 12 to 18 months and that some of the benefit that we expect to see maybe.
Maybe maybe a touch at the end of the year, and then but certainly into 2025 and 2026.
Alright, I appreciate the insight congrats on the quarter.
Thanks.
Your next question comes from the line of Jeff Hammond with Keybanc capital markets. Please go ahead.
Hey, good morning, guys good morning.
Speaker Change: Jeff.
Hey, just I think Brian brought up kind of legislation.
Earlier in the call, but there was this specific EPA funding for safe drinking water around P fast.
Biden administration put out a couple of weeks ago seems a little more focused at cleanup at the water utility, but I'm just wondering if theres anything in there for <unk>.
Point of use drinking water or something that would affect you or.
Any kind of knock on from that specific legislation.
Speaker Change: Yes, I think that the legislation and awareness Jeff has certainly helped.
Speaker Change: Helping us.
Speaker Change: And inquire about the new P fast filtration and several of his onboard at us.
Speaker Change: So I think that that is all net positive, but I think like anything else.
It solves the vast majority of the problem was down to 20 parts per trillion, that's what our filter takes out as well as most recently micro plastics and so when you think about being able to solve the problem.
For a very low.
Speaker Change: Initial cost and decision you can eliminate the vast majority of the problem immediately and I think that is sort of the thing for us I think waiting on funding from the government to solve this at the municipal level municipality by municipality has a slow low. So I think we are doing is really communicate.
The features and benefits and value of being able to solve the problem today for a couple of hundred Bucks.
And so but the awareness certainly certainly helps drive that adoption for us, but in terms of discrete funding around that piece of it.
This particular bill there's not a ton of it but I think as as you think about.
Speaker Change: Solving the problem for a couple of hundred bucks versus waiting on.
Billions and billions of dollars to flow municipalities and that get implemented and that's a tough sell.
Long path, where I think we have a more immediate high quality solution.
Yes.
That's helpful.
Hey, just on.
Your multifamily exposure, maybe just remind us what that is and if that's within residential and just what you've been seeing there. It seems like that was a market that was quite robust, but we're seeing some some slowing there just trying to just to.
To frame your size there.
Yes, Jeff were looking on a rugby piece it's call. It 50, 50, 60, 40 multifamily versus single family I think.
When you break it down that was a small piece of the puzzle we're not seeing anything that's moving the needle for us one way or the other that's kind of embedded in that flattish outlook for us. So.
The end of the day. It is not we don't do the needle mover, one way or the other materially for the year. So basically roughly half of the residential pie would be multifamily I think is the way to think about it Jeff.
Okay, and then last one.
We've seen a little insider selling I think from from member.
Cats, some of the <unk> family and the Okay constituents just wondering.
One if they did have more to sell could you guys do kind of a buyback with that in any kind of feedback on if this is fine tuning or something leading to a bigger diversification.
Yes, I mean, obviously the the.
The lockup ended at the end of the year.
Speaker Change: Obviously, there is there is some personal financial matters that I think the family is managing and we've got no indication that there is a significantly larger amount of this coming imminently.
This was more a function of I would say just some of that initial.
Reorganization work.
But yes over time.
They've been communicated to us that intention to hold a significant portion of this for a very very long time, but I do suspect that there will be some selling over the course of the next several years that we can do a couple of things with we can certainly leverage our own buyback.
But I think there is there may be a place and time.
If they wanted to sell a larger piece to do some form of marketed offering but I think it will all be sort of really really well telegraphed.
And communicated because I think we're all mutually aligned on making sure that the stock price goes up and so I think that.
Speaker Change: But I don't think theres anything to read into it beyond just some initial.
An initial financial planning that.
As the family is doing.
Okay, Great I appreciate it.
Speaker Change: There are no further questions at this time I will now turn the call back to Dave Poly for closing remarks.
Dave Poly: Thanks, Ed Thanks, everyone for joining us on the call today. We appreciate your interest in Zurn LK water solutions, and we look forward to providing our next update when we announce our June quarter results in late July and have a good day.
This concludes today's call you may now disconnect.
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Dave Poly: [music].
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