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Dec 31, 2023
Zurn Elkay Q4 2023 Earnings Report
Reported a 5% increase in net sales and an adjusted EBITDA margin expansion of 460 bps.
Key Takeaways
Zurn Elkay Water Solutions reported a 5% increase in net sales to $357 million for Q4 2023, with core sales also up by 5%. Adjusted EBITDA increased to $84 million, representing 23.6% of net sales, driven by improved commodity and transportation costs and cost synergies. The company deployed $25 million to repurchase 0.8 million shares and prepaid $60 million of its outstanding Term Loan.
Net sales increased 5% to $357 million.
Net income from continuing operations was $14 million, with diluted EPS of $0.08.
Adjusted diluted EPS was $0.26 compared to $0.16 in the prior year quarter.
Adjusted EBITDA was $84 million, or 23.6% of net sales, compared to $65 million, or 19.0% of net sales, in the prior year quarter.
Forward Guidance
For Q1 2024, net sales are expected to be up low single digits on a proforma basis, with adjusted EBITDA margin between 23.5% and 24.0%. The full year 2024 outlook for free cash flow is approximately $250 million, with approximately 150 bps of year-over-year adjusted EBITDA margin expansion.
Positive Outlook
- Momentum in clean drinking water platform.
- Other growth initiatives.
- $25 million of additional cost synergies expected in 2024.
- Strong balance sheet provides capital allocation flexibility.
- Ability to execute against proprietary acquisition targets.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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