Zurn Elkay Water reports Q3 EPS 29c, consensus 27c

Reports Q3 revenue $398M, consensus $396.4M. Todd A. Adams, Chairman and Chief Executive Officer, commented, “The third quarter represents the one-year anniversary of the Elkay transaction and we’re delighted with the progress we’ve made on the integration not only operationally, but also with the strategic growth opportunities we’ve invested in and see benefiting our growth moving forward. We delivered an exceptionally strong third quarter, as our adjusted EBITDA(1) margin of 24.1% improved by 410 basis points over the prior year, demonstrating the execution and sustainability of the integration work we’ve accomplished over the past year. Our free cash flow(1) continues to be robust, and we’re again raising our free cash flow(1) outlook to approximately $230 million for the year, against our original target of $200 million. We continue to leverage our substantial free cash flow(1) to invest in our business and return money to shareholders, having repurchased $13 million of shares in the quarter, bringing our year to date repurchases to $100 million, while increasing our dividend by 14% and reducing our net debt leverage(1) to an all-time low of 1.2x. With respect to our end-markets, I think it’s fair to say the market has more uncertainty in it than any point over the past year. Despite some of the market uncertainty, we feel like we can continue to drive superior results in any market environment based on the inherent resilience of our business as well as the improvements we’ve made to better position ourselves strategically over time. That’s not to say we won’t be impacted by the market, but only to highlight the relative outperformance opportunity we see based on our true end-market mix exposure, retro-fit and replacement business, and perhaps most importantly, the underlying demand growth we see for filtered drinking water. As we look ahead, we have high confidence in delivering an incremental $25 million of synergies in 2024 along with robust free cash flow, which only enhances our ability to generate incremental shareholder value.”