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spk04: Good morning and welcome to the Zern LK 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 Pauley, Vice President of Investor Relations for Zern LK 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 8K with the SEC yesterday, February 6th. At this time, for opening remarks and introductions, I'll turn the call over to Dave Powley.
spk09: 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 LK Water Solutions.
spk11: 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 an improving 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 from 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 top line 3% on a pro forma core basis amidst a market that we would say is flat to downs to touch. We leveraged that growth into a 320 basis point EBITDA margin expansion driven by synergy benefits and normalizing supply chain and the continuous improvement benefits we get from the Zearn LK business system year in and year out. We turn that profitability into a record free cash flow of $233 million and throughout the year we leverage that to repurchase 5.3 million shares or about 3% of our outstandings. Raise the dividend 14% and deliver 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 of 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 the overall benefit the shareholders have had behind us, I think, is an important milestone. So with that, I'll turn it over to Mark.
spk03: Thanks, Todd. Please turn to slide number four. Our fourth quarter sales totaled $357 million and on a pro forma 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 partners order patterns were impacted by our improving lead times in the prior year fourth quarter. With respect to demand in the quarter, Proforma orders expanded double digits on a year-over-year basis, with 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. The order growth also benefited from the prior year comparable I just discussed. Turning to profitability, our fourth quarter adjusted EBITDA increased 30% from 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 five, and I'll touch on some balance sheet and leverage highlights. With respect to our net debt leverage, we ended the year with leverage at 1.1 times 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.
spk11: Thanks Mark, and I'm on page six. Here you'll see a preview of our 2023 sustainability report that we'll 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 in how we create shareholder value. Not 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 and 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, an 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 report section demonstrating how our solutions help our customers meet their sustainability goals. Because of our efforts, we saw a marked improvement and 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 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 seven, I think customers and consumers often associate our LK 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 nine times the amount of water to make a plastic water bottle compared to the water actually in the bottle. Bottle 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. And so I guess what we're trying to tell you is the punchline 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 solutions 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. The last one for me is on page eight. 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 customers' goals are to do the right things for the environment. And 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 watersheds. And through our Fountains for Youth product donation program, we're donating filtered bottle filling stations to schools where resources are low and lead and PFAS levels are high. Clean water, we believe, is the most important natural resource in the world. Addressing the water crisis is central 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.
spk03: 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 based on the assumptions I'll touch on shortly, we believe we can generate positive pro forma core sales growth year-to-year, expand our adjusted EBITDA margin by approximately 150 basis points, and generate approximately $250 million of free cash on 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 as a mid single digit decline in our commercial end markets will be partially offset by low single digit growth in our institutional and water works end markets and flattish conditions in our residential end markets. We anticipate capturing approximately a 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 LK merger, and those 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, and have assumed some modest inflation in the second half of 2024. In addition, we have built in incremental investments for our growth initiatives into our 2024 plan. For the first quarter of 2024, we are projecting pro forma 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 80-20 product line exit actions to calculate pro forma core sales growth in 2024. 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 2023. The balance of the adjustment comes from the actions that we communicated last quarter. We'll now open the call up for questions.
spk04: If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star one again. Our first question comes from Brian Blair from Oppenheimer. Please go ahead. Your line is open.
spk07: Thanks. Good morning, guys. Nice close to the air.
spk02: Good morning, Brian. Good morning, Brian.
spk07: To start with drinking water, I was hoping you could offer a bit more color, preferably some more metrics on 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. And then double digits is, of course, attractive regardless of the specific range. But if you could offer some more detail on exactly how much growth you're anticipating for 2024, that would be great.
spk03: Yeah, Brian, 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 of the year with some really strong momentum. When you think about from a margin standpoint, Ryan, 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 clip 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, to the question you're getting at is the positive mix impact of what that can do for our margins going forward. So I feel like we're in a really good spot from the growth perspective where the margin profile sits and what that contributes next year and beyond.
spk07: I appreciate the detail. It's all very encouraging. 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 MAPNEX.
spk11: Brian, 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 instruction taken as a whole. It's not a contiguous market across the United States. It's a series of independent markets based on you know, migration, industrial activity, and things like that. And so, you know, 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. And there's a fair amount of retrofit replaced that is also sort of embedded in there. And the reality is, you know, if we say it's down mid-single digits, And it's a little bit worse. Nobody dies. So I think, you know, I don't think that we're going to sort of have any thing to reconcile or combat what others think versus what we see. I can just tell you that, you know, 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, you know, the world is ending, which we pointed out last time. So that's the way to think about it. And, you know, 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, you know, obviously a little bit less this year, but going forward, you know, a big, broad, diverse end market to grow in.
spk07: All fair points there. Last one for 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 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.
spk03: Yeah, like we said, Brian, last year was a year we were going to put our heads down and really focus on getting the LP integration complete. We feel that isn't a good spot for us. A lot of success with that over the past 12 months. So, yeah, we feel we're definitely in the spot. where we are ready to turn back to that. As we've always talked about, the proprietary funnel, you don't know when things are going to hit, but I'd say the funnel remains active. Although 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 yeah, it's fair to say we're back, ready to do acquisitions, again, that both on tuck and nature, nothing imminent that we talk 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 ability to allocate that where we see fit from an allocation standpoint.
spk02: Yeah, Brian, maybe one thing to add was
spk11: 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 LK transaction. Everything else he said is clear. I just want to make sure that the distinction is we never left. We didn't miss anything. Yeah.
spk07: All right. Definitely understood. Thanks again, guys.
spk04: Our next question comes from Mike Halloran from Baird. Please go ahead. Your line is open.
spk10: Hey, good morning, everyone. You have 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? And then I want to go back to a comment I believe Mark made, you know, filtration being a bit of a smaller base. You know, 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?
spk02: Yeah. I mean, I guess in terms of the
spk11: PFOA, PFAS filter, you know, it's brand new. I think we're selling, you know, thousands of them, you know, to date. But I don't think that's something that, you know, I don't think it's something 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 you know the way to think about it is there are you know units installed in the field and then there is a you know normal sort of replacement pattern and so that you know the mix of filtered versus non filtered units and then the rate of attachment or replacement value against those installed base is sort of the 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, you know, are each very attractive.
spk02: Great. That's a super helpful color.
spk10: 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?
spk03: What we're 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 grows in a double digit pace. A lot of that obviously coming from our actions, our initiatives versus what the market may do next year.
spk02: Yeah, I mean, maybe just to touch differently, I believe
spk11: 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.
spk02: Understood. Thank you. I'll pass it on.
spk04: Our next question comes from Jeff Hammond from KeyBank Capital Markets. Please go ahead. Your line is open.
spk05: Yeah. Good morning, guys. Morning, Jeff. So just following up on that, because a little confusion on 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 X drinking water, you think is, maybe if you pull out that drinking water, it's more like slightly down versus up low single digits.
spk11: No, I don't think he said that. 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.
spk05: Okay. So if I did the math on kind of the growth, it seems like your end markets are maybe growing two, two and a half and then you get maybe a point of price and a point of outgrowth. Is that the way to think about the growth algorithm in 24? Yeah.
spk11: I mean, there's a range of outcomes in terms of your assumptions. You know, I think that the weighted end market growth next year, you can end up, you know, 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.
spk05: Okay, great. And then just on the margin, I think you said 150 basis points of margin, that kind of you know, lines up to, you know, 20 to 25 million of kind of incremental improvement. And I think you've called out, you know, the 25 million incremental synergies, you know, the lapping of the high-cost inventory, 10 to 15 million. Just wondering what maybe some of the headwinds are that would eat into some of those good guys.
spk11: Yeah, I mean, again, I think it's more of a function of we're sitting here on – February 7th, and we sort of only know what we know at this point. And so I think that, you know, I don't have a long list of headwind reconciliations for you. I just think we're trying to describe a scenario that we, you know, we see with an enormous amount of confidence. And, you know, if you do your math and, you know, you just take the LK strategies, you can get to that 150 basis points. 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 for you.
spk02: Okay. Thanks, guys.
spk04: Our next question comes from Joe Ritchie from Goldman Sachs. Please go ahead. Your line is open.
spk00: 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, hygiene, flow system side of the portfolio, and what's most pressured to leave?
spk02: Yeah, again, I think we're going to go back to
spk11: Look at the end market mix You know 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 You know, 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.
spk00: 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 points of margin expansion. Is there some conservatism baked into the second half of the guide right now? Because full year is around 150 bps, so just any color on the cadence would be helpful.
spk11: Yeah, I mean, again, I think we're guiding to Q1 based on, you know, a detailed forecast and process of what we see. We're giving you the full year outlook here on February 7th, 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. 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.
spk02: Great. Thanks.
spk04: Our next question comes from Brett Lindsey from Mizuho. Please go ahead. Your line is open.
spk06: Hi. Good morning, all. 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 res-y 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?
spk11: Yeah, our view, Brad, is we haven't really faced that phenomenon for the last three or four quarters. So I think our is very balanced. Book-to-bill was above one. Inventory levels really across the wholesale channel, e-comm channel, and everything else are in really good shape. So I don't think we're having any sort of conversations about inventory build or burn.
spk06: OK, good to hear. Just maybe shifting to Water Works, 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?
spk11: Again, I think we're trying to give you a perspective of you know, our expectation of what the end market grows based on the funnel of opportunities that we're looking at. I guess, you know, as a principle, you know, 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, you know, talked about to actually being spent is quite a lag. So I think, you know, look, we're seeing good activity. you know, in areas where there is population growth. And so, you know, our products really sort of attach from the primary water supply to, you know, the developments and things like that. And so that's where 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, about 2024. All right.
spk02: Appreciate the insight. Best of luck.
spk04: Our next question comes from Mason Jones from Stiefel. Please go ahead. Your line is open.
spk08: 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?
spk02: And we're not giving details around the numbers.
spk03: But like I said, the two things that I called out in the back half of the year, one was going to be we think there could be some inflation in the back half of the year in 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.
spk08: Well, again, thank you. No, go ahead, Todd.
spk11: No, I mean, again, I think, you know, I think if the question is, you know, if you just get the LK synergies, you get through 150 basis points of margin expansion with the kind of growth we're talking about. So there's got to be, you know, there's got to be some other things. And I think the point is, yeah, there are lots of puts and takes. I think, you know, I think you've got to separate what we're sort of guiding to versus what we think we can do. particularly on February 7th 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, you know, we give people raises, but we have productivity. You know, we have material savings, and obviously there's certain areas where we see material cost inflation, 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.
spk08: No, that makes sense. And then turning to capital allocation again, do you have any planned buyback activity in 24?
spk11: Yeah, 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 in our outlook and everything else. We'll clearly do some, ratably, over the course of the year.
spk02: So yeah, we do have a plan for that.
spk08: Thank you for taking my questions.
spk04: We have no further questions in queue. I'd like to turn the call back over to Dave Pawley for closing remarks.
spk09: Thanks, everyone, for joining us today. We appreciate your interest in Zurn LK 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.
spk04: This concludes today's conference call. Thank you for your participation. You may now
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