Zurn Elkay Water Solutions Corporation (NYSE:ZWS) Q4 2022 Earnings Call Transcript

Todd Adams: as a country and really, really sort of had a timeline. Yes. And that’s a conversion that’s over I wouldn’t even big to guess the number of years, but it’s 10 plus years, but it’s a big number. Yes. It should continually be refreshed over time. So, it’s a TAM, it’s going to continue to grow as we install more units. But that’s a big number for sure.

Nathan Jones: Got it. That makes sense. Okay. So, I’m going go back 12 months to the announcement of this Zurn Elkay deal. The deal deck that they had 2023 EBITDA target of $425 million to $450 million. Obviously, a lot has changed over the last 12 months. High rates, versus resi you’ve got — this year, you’ve got some price cost stock in the first quarter. Can you talk about the things that need to happen to get back on to a path to that kind of number, whether they are recovering end markets, things that you guys need to do internally, or whatever else the contributing factors are to get us back onto a path to that kind of target that was laid out a year ago?

Todd Adams: Sure. I think the biggest is obviously the embedded run rate. In 2002, for Elkay frankly was behind the curve, and I think it’s been a well-traveled story really since we announced the deal. The combination of the change in the rep network, in the lead times coming down and a lot of different things created a little bit of a hangover in ’22 that we’re going to think about ’23 is a really strong down payment on getting that back on track. And I can tell you that we feel very good about that. The residential piece of both our business and the combined business, we certainly didn’t have that dialed into what we thought ’23, ’24 could look like back in February of ’22. So that’s obviously a piece, but I would say the vast majority of things to get us on that trajectory are in our control.

There’s nothing structural, there’s nothing permanently off track. The $50 million of synergies are on track. Obviously, we had a double-digit top-line growth plan for Zurn at that point in time we don’t have that today is what talked about, we’ve got a more conservative growth rate. And so, I would think about ’23 is sort of a strong down payment on getting back on that kind of trajectory and obviously, a lot of it has to do with the macro side of life that is out of our control.

Nathan Jones: Great. Thanks for taking my question.

Todd Adams: Yes.

Operator: And that will conclude today’s question and answer session. At this time, I’d now like to turn the call back over to Dave Pauli for closing remarks.

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

Operator: And that will conclude today’s conference. Thank you for your participation and you may now disconnect.