Zurn Elkay Water Solutions (ZWS) 25 Jul 232023 Q2 Earnings call transcript

Good morning, and welcome to the Zurn Elkay Water Solutions Corporation Second 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 Pauli, Vice President of Investor Relations for Zurn Elkay Water Solutions.

This call is being recorded and will be available for 1 week. The phone numbers for the replay can be found in the earnings release the company filed in an 8-K with SEC yesterday, July 24. At this time, for opening remarks and introduction, I'll turn the call over to Dave Pauli.

Good morning, everyone, and thanks for joining us on the call today.

press like statements everyone the as that language in I'd contains this safe in begin, issued contained forward-looking we the certain are the our we filings to as SEC. that remind call harbor yesterday with Before afternoon that well release subject to

refer In will measures. to addition, some non-GAAP comparisons

certain investors to Our they and SEC we are SEC in these corresponding release we and why measures, of and Consistent not earnings understanding as quarters, filings why review we non-GAAP measures about for our our with earnings reconciliations release we substitute to metrics to use they're believe information and GAAP information. and to will GAAP, helpful we non-GAAP the provide a contain filings. GAAP additional our contain them a These in encourage prior information feel operating results. you better the speak

turn of I'll that, the Adams, to Water Todd Elkay With Zurn and over CEO call Chairman Solutions.

everyone, Good and this morning. calling in morning, you for thank

the said, our only whole, line half. earnings a and as much taken very really were they our released Dave but for QX internal expectations, with we for last not night As first in

with transaction Elkay benefits both essentially from did simplify all the initiatives beginning see the It's behind been now the to perspective months we've since business us, the a integration been XX and the the we is accelerate working work and to and and on. profitability we're growth

obviously Mark we've the XX.X% another our growth progression about over been later. second the so high rate with little ahead bit the talk in in then about. change half Sales And step more the of Profitability single-digit were guidance that a you'll talking and even will of see orders quarter quarter. order showed

levels repurchase million total it cases, to very the service us leverage actually shares to flow quarter, to bringing better down shorter even or free repurchases chain levels back X to our enabled again ticked strong, as in our supply and million many our pre-pandemic year-to-date and and cash now With was X.Xx. in $XX

expect around the on to also right cash a end year X.Xx. that We to half decline flow second expectation strong the based continue and free over

turn it through he'll With and take that, you to the over Mark, I'll quarter.

in turn our quarter On line X% prior #X. and a core XX% second sales year-over-year outlook our $XXX Please the and Slide Todd. end On core sales Elkay prior XX% high basis, year forma merger from year-over-year. Elkay for quarter of $XX million. outlined, the including quarter the our the decreased from reducing Thanks, second have that year. above we those and basis, to the year-over-year for increased the X% were The sales at impact exits sales product a growth, decreased pro contributed million

the our last discussed orders we quarter, down the of on timing As was in the call down nonresidential declined markets. to a which residential end by substantially year-over-year we'd was forma increase mid-teens offset Breaking sales core prior quarter second quarter year-over-year and single-digit XXXX. sales, core in working in end pro as we those core second our sales year by of our to in the elevated as backlog sales markets an began expected, growth our impacted shipments low

the anticipated at growth declined, high outperforming a fleet While increased average. with pro forma orders water modestly rate forma core drinking sales core we single-digit pro as

to profitability. Turning

than first quarter of outlook initiatives, The quarter merger. quarter. offset sell-through of Elkay $XX productivity our quarter growth each for margin that our purchased in the over was of end more the second Investments cost little inclusive last quarter. second EBITDA million prior initiatives the year, and a higher in in chain was at of of our during above compares -- year realization EBITDA quarter, the by second which was are in was million to $XX the complete Our the the and $X This and benefits supply XX.X%. the cost XXXX adjusted million as synergies price impact high as and XX.X% inventory the calendar adjusted well year our

some When we of our in and turn and from the to margin balance leverage sequentially, Please quarter year. expect margins highlights. fiscal of further the we second of Slide basis and XXX sheet touch stepped X, looking half first at I'll up expansion points XXXX, on the the

With of the repurchase the XXXX. million $XX to in the million debt respect half quarter with started since deploying stock X.Xx, fourth to XXXX of we $XXX leverage, ended net of we repurchasing inclusive in first common our cash of quarter leverage and at shares

that, I'll to back the Todd. With call turn

Mark. Thanks,

We also addition that an drinking continue end the the aspect sometime advancing water with on drinking and our selling to of in fourth a the filtration expect commercial installation begin the We've product higher-ed and campaign, investing maintenance quarter. massive in awareness based we see and been the PFAS of simpler filtration resources, top water opportunity to for prioritize grading growth in offering markets. filter we and K-XX adding

we'll we engaging we'll on In we're -- that. spent legislation administrators, as school-by-school as mandating parents time and faculty is have K-XX at do do to to water educators a continue and continue quality days, X or that doing that we've to XX blitzes work that advanced district-by-district continue with game teams, states that will where last more access, as filtration. as require the across reporting well

be higher-ed the We $XX their grow years by seeing hope prioritize see ed this over growth only continue funnel both our we're million universities traction a significant us, higher higher sustainability for several for we not private plans. to in tremendous we level, -- saw At public opportunity that, as And and but alone. come. master that year for sustainably ed in will to

well the in a markets. the within us just as that continue all the as all Sustainalytics to shareholders front of of compounding and center -- companies That's and all our rate. front rated benefits the top suppliers As XX,XXX over sustainability they in X% employees, report of customers, issued top in in and X% end companies we our stakeholders, keep of products.

As I've us borne fundamental believe to of asset before, any our it's business facet adding It's a our to into business advantage it's through target -- said business, every and marketplace. of isn't and every truly our out motions. the to integrated this we system, the competitive in go

to who that, it outlook. take I'll you our turn through over With Mark, back will

to turn X, quarter. for Please cover I'll of our the third and Todd. Thanks, the highlights outlook Slide

$XXX the margin million last to For the in the trends third growth in quarter range of of million range and of be better XX.X% in Like $XXX are to projecting help the sales XXXX. adjusted in EBITDA quarter, XX%. to XXXX, business to we understand the our

the quarter plus of presented sales the executed. impact the of have pro third On and chart, we we sales for of the for Zurn of XXXX product last quarter the reported forma our right Elkay the takes third have year, side XXXX which exits year-over-year line

market on With of year and sales page to in you forma year-over-year can timing growth of work quarter pro residential average high expand in quarter for is elevated last year-over-year we third assumptions growth the the We markets, by mid- end and below see respect to the our the quarter. to for continue the forma in above an the end to XXXX. impacted third range which average orders nonresidential residential the with the in anticipate and shipments outlook, single-digit the growth as market end backlog pro orders nonresidential down our

to profitability. Turning

points benefit XXX points to Our basis lower and XXX fully margins commodity to sequentially we've from XXXX expected experiencing. of the begin quarter from basis are third XXX and year-over-year as quarter costs to been to XXX transportation the second expand we

the to range in have our million, year now expect XXXX least consolidated Turning to outlook expansion $XXX half to XXX points. up year-over-year sales to Page the billion basis points of range in $X.XXX $XXX calendar EBITDA to a adjusted $X.XX full resulting our for billion XXX adjusted of calendar and X. at behind million and be of us, the in With to of margin basis year be we year

quarter Similar to the third outlook.

reported full expected impact and growth forma we exits XXXX have the line the pro our first executed. calculated markets, nonresidential year the for half year sales end of XXXX plus sales which We provided prior for product sales of have is off less the our residential Elkay

increased $XXX million. our approximately flow million outlook addition, free we've cash the In for to $XXX approximately calendar from year

comp the we our just We'll for X, Before call open and a we quarter third and outlook tax stock rate diluted depreciation our have assumptions, for outstanding. amortization, reminder year the expense, X questions. Page interest up call that open noncash shares now questions, included expense, full and respectively, for adjusted and on

Instructions]. [Operator

question from first Oppenheimer. comes Blair from Our line of the Bryan

bit you if sequential how year-on-year trend, the growth. think the seasonal it know more. comp thinking there's amount little noted backlog revenue challenging year-on-year, QX lot guidance, more most in forma in know stacked Solid QX, a that typically perhaps quarter. is you're With order but a us difficult regard conservatism QX, I unwind lift sequential a out pro like solid we little I could you noise. the hoping walk parse to in baked a some through there's of revenue of was about seems progress. But fair about your I

XX think I board. we've conservative year days outlook going we've more all a been kind Bryan, with our Well, the as next Yes. the been little of long, into across

you accurate. what So I said that think is

quarter tends a similar par. a could look bit to it you from historically, quarter be standpoint, be could If bit third to up, be be revenue yes, our second could down, a it little back on the little

conservatism our practice seen in of as think you've guide, I been yes, a this that's there's bit year. the

different there. nothing So

we the or you that I trends, the work the last had growth, quarter. think continue, impacted by in out, revenue second is order clearly year. to as The expect third backlog down like the you're in quarter we right pointed those we on saw

historically laid -- cautious So think a not more proxy change are year. see what But you trends sequential that's there's this we've you've and would think I But approach of the our what a seeing we're orders to taken standpoint. yes, better can you demand a we know, out just I that of that imminent outlook as I anything the that. that see of from

developed Elkay, water perhaps on your current key Understood. forward pace team activity, Zurn and the the has how opportunity? pipeline and seeing your institutional pipeline influenced project specific a commercial provide color to And Okay. platform verticals your little in what and drinking is your has more how year-to-date of your

Yes, Bryan.

is and our care. health split education revenues, total primarily notionally So between of institutional half

current country institutional positive. X end very in And you market, in indicators from be if across So -- state the follow that leading I perspective, to the a the quite verticals backlogs been some of continue high. think really they've in those

I us think continue the provides to something comfort specifically, adding diversity think, is into the lot long can water, for of we of drinking a this we educational obviously, pretty the that adding grow time. So that that sustainably business, a filtration vertical

there's country, of end There's the strength go throughout in there then activity, the pockets less that really of beginning just the obviously. when where is of pockets but institutional it's you nothing unusual since year. And market

Drinking talking by our an per is on is colleges water that and can combination solid prop drinking because for time. university by for legislation is getting certainly really schools K-XX year, my So district track. sustainability is long going K-XX, going with of we're really then traction and clean amazing much I level to helping and just think important doing, district which and a students student out and which in when we provide what to a $X proposition said per the very is as resonate increasingly we're we're communicating to value school value water we essentially, school comments, at universities

not guide that one. $XX XXXX you you're point? Absolutely. I incremental this providing before. guidance, had Is any out in at shift One last synergy put there know the but million to

very it's much I think No, on track.

facilities. of the course sink the X of some our and That's that us. work wrapping of into to have different are announced of around X consolidation up There majority behind closure the we're the of primarily the X over is think we that Elkay facilities manufacturing. one next obviously I things months,

So is that work underway.

running $XX we'll our another on with so rate. run ground into X/X/XX earnings the hit And million

comes Our the next line KeyBanc. from from Jeff of Hammond question

a within then better? little it are different than So pretty just there it sounds you in just is broad-based? or maybe better like bad? expected. Can to coming rates the outliers, were speak bit product the good And what's categories, Or you order

to out snap quarter. a the of of fourth more Yes, a begin I us that think We for residential that sort quarter two were improving. the back. started seen We've performance little in see to into the resi areas bit third combination and deteriorate

but I filling And filtration. seeing The of a obviously, seeing drinking stabilize in is backlog reduction, think significant and as housing given well starts then begin as there. the improve, growth units comparable easy bit water. to both bottle we're traction order little the as we're

So fleet great those are is our sort in our is job average. very of around some systems saw outliers. sort And We do X of flow in continue and encouraging. else the control. a then Everything we which safety business, just in strength water to the

broad-based, and then combination was the it sort water residential So relatively but of a outperformance. of of were areas drinking

Okay.

Just kind expectation? on given typically the of And kind you of you it see what about seems clean a very versus from just sales local water can initiative, just momentum talk cycle regional.

life. our of specification is, the on is significant. country across share K-XX It the Obviously, particularly side

place. retrofit, good or the built And in really we start so schools a game as get

But correct. of district time. it. do do and access by benefits when understand in what is of inside over of by we're to it particular are schools, to it a mean, solution you getting more points drive school There's I the a to these locking of a sort think do mandate an school, period overarching them of obviously, trying how to not I filtration is district.

work added And competitive out period what's go we're works where the with over internally are what reps, the where really so to influencers, our how we and are them. get time the that with do for districts, understand the third-party then them we've and for our of -- that's sort partnering resources commercial position school big able done that along

I students think in which unique little relative is thing to the in a higher there bit is one that's the summer. that not ed, K-XX, are

would are spring, as school. bit a so So then say, gets the the in vast majority winter, done of late the kids it's into over summer. little I that work planned, it gets back And quiet

obviously thing that's sort day of every universities year. the almost breathing living, think I a of

So gets that time. done work over

that So K-XX, do greater to some we're think even year what I on long-range I benefit momentum the think this as right, from doing. particularly us begin year, next a school will perspective, they're more building into on planning they

upgrade XXX I'd They're the where to also remainder say, replace time. case in and school a over A, may at district school or these they're going to to going B a units, not Jeff, that time. do all then and have C, do going one they're

is others. opportunity, just business get one we'll it's and the you really the huge. given things And it's where those So of when end, to the to and be the schools XXX,XXX just retrofit ready replace the

far So process, but really, I think a more over really longer of it's has period durability a long one that time.

Okay. one on buyback. Great. Last

You $XXX kind the of to for guys running pace be million. ahead the seem

you're the if just different or same buyback, wondering given Just move? around thinking stock

at -- I put to we're number that us point this not did. at place least We'll to for million. new prices buy was and the at the not half as going time in it year, year opportunity on that first a next Yes, for sticking $XXX the allocation into a to time. going over this balanced continue in But I us capital We're well. keep stock strategy just positive to the it's think with but the really been we think

Our next line Andrew the from question from Krill Deutsche comes of Bank.

wanted free I cash on to flow. ask

of drivers want think helped any above inventories guess, just of nicely how were for it of the rest like cash thinking flow, to that the expecting like free was that what this I seems quarter. see, maybe year? the you're big it I about I we and strong

Yes.

down been inventories in trade managing this levels us, really free capital last working has cash a the positive the the team The year. business a the for year. year, from elevated job nice has think this I working with done flow

the know, think the will standpoint. quarter quarter day, a uptick as $XXX I some we it So third $XXX phasing balance a at to end of million. probably fourth of timing the bit reduce you our year, at the as think million from on look payments. I a Based and outlook the up of took in the the again from timing we from But standpoint, then in

a flow, next strong we momentum It be see year momentum. into good year of good going lot a as of will cash well. So and

times is they think half supply lead of Andrew, the make overall a I chain our were one in roughly year ago. point what to are our

on obviously, that you that So high-cost were that. the and do a view in we to a to had through demand that we've us a saw able be to selling of back is that view then on going And half. obviously, first inventory get function

So in in a better. sort we're seeing it maybe what little with that are demand terms broadly of of all expecting, sort of we the line works bit together

chain prepandemic it service and what of half notionally ago. XX supply months levels, levels then Our was are high. back is to our where

So the very that with nicely net of the that margin the we tracks cash flow. communicated progression effect is

from were, current understated accounting that purchases say, margins were we relative our an making. So basis, I would to the

as you'll half. majority margin the in Mark So pointed see outlook, that the drives the second that up out of that, step in vast

Okay. on for What the the to like would you like Great. And guide. push major maybe guidance something of XXXX the versus makes is follow-up, end the for the and puts All range? takes sense. higher my just low more and that

range us mean specific that I really think of going I well, X let the comment months think left another. outcomes There I I'll way or year. in don't as to would but is there's it's one Mark always be Well, push a anything

appropriate of confidence through in would that the us we've year. think range left I definitely the here the seen is length given July time order trends give that the

We a of -- the agree. into outcomes broader range just accommodating would I earlier, Yes, outlook. just

several order in be in pointed July. October the quarters. for what a good But staying is out, So and report. we're That remain in with early back doing case we'll rates as been spot consistent we've Todd

line from question Joe Ritchie from Sachs. of the comes Goldman Our next

My backlog growth I'm year what just and have in you question, experienced standpoint comps last on referenced baked a you for first the comp just of kind do impact maybe just issue backlog curious last that on the from that you in quarter. of what like rest guys the tougher year?

Yes.

if you in the $XX So reduction over and million in the back XX-Qs went core quarter. the year, was our last business looked third at backlog

$XX $XX think quarter. I'll it another in to call fourth and million the I close million

standpoint, So that's sales we were a last reduction year. through kind from backlog of that the working

think answer going months I the always be to will, X. Joe, our is around next book-to-bill, to somewhere you question, the think, over I maybe if X order

I we post pandemic, of think through times behavior. forced lead a saw, years order as extended different couple that

think you just at low where And levels. when a are the traditional I sort around X, we to book-to-bill the half would the maybe of relatively better. sort get second today, right a of touch imply backlog sits

Okay. specifically XQ, And your margins point. in downtick into implies around was what margins better the I helpful. something Great. guidance comments year. I XQ then because curious That's heard XQ sequential of in the but at half like experienced a seems is we've it really earlier around historically, this the accelerating back versus

maybe of kind the exiting what's driving margin that? the year. And So some just around that, thoughts

Yes, margin Joe, the versus I would would in fourth say, modest I think quarter a expect the still we decline third.

from modeling that of as would in put anticipate in you Just than that traditionally sequentially I a earnings because margin fall based as see seasonally. be a pressure would generally see -- better see those sales normally step I your But from bit or upon But an a see you'd we standpoint, of I down we'll point, that the to expect the a think decline cost those environment still on always modest guiding. the margin. to little think decremental decline that the margin will what sales would where we're seasonally

Maybe makes I that Got in more just Yes, Elkay. on one squeeze sense. could it. if

clearly, some I'm seems -- business. it at in product guys around just of simplification profile you the just and So just line org doing. that that profile that margin left are exits some thoughts you look kind curious, maybe product guys through what's how as changing the of and going line now like Elkay that on kind are you that's of the with business,

if -- and the you think guidance then profit cleanest our the to it way observe think at Well, what really I look implies. I margins year-to-year gross obviously, is with

XX%, the that And approaching we're in back into aggregate, we've in year. over somewhere obviously, synergies range so got next And half.

the I profit ago. the a from And business of remaining across so at last which to that communicate of that look great part when level. obviously, we sort simplification materially Elkay, over improved think the gross at profit year. gross of lengths try is But And obviously, existing overall profitability the to from months has driving to went improvement standpoint and XX company that the you margin course

quite speaks was it think a that is done I work impact. dramatic having to simplification the

of Our comes the from line from next question Mike Baird. Halloran

a Just here. couple questions of

Obviously, funnel efforts underway. feel you where about least or of business are from integration things I'm to the perspective an willingness the how is comfortable First, well lot bring M&A smaller guys pipeline. thinking with in. at simplification the given Elkay you a very there's guessing

Just curious how that actionability looks. and you pipeline looks think how

Yes.

the like long over deal of we think take great I things think, always, on cultivating Mike, time M&A spend and a view years. I

think board. that think I a new funnel have think so things don't that anything taken I And that have there's from anything would the off I from transactions changed that occurred don't materially has in. standpoint,

develop have several to complementary think XX bring which opportunities I of course certainly to probably the We continuing we matter months, relationships, that to better so a of of categories. in some the -- a about. remainder it's us areas we're And think, the our those what maybe is last going the in strengthen horizon just the than fill existing think and things do, some think are that product to over next to year I of

remarks, in PFAS then filter. mentioned briefly a the And sense. you Makes prepared

a for efforts bit of services Just bit seems more, relative seen in remediation a lot I categories the that to know, product manageable little more context it we've little so a PFAS don't and far.

just there, some thoughts please. So

Yes.

production into of be through some that eliminate We've integrated will then third-party filter bottle We're the the PFAS. the and to develop that market with sort of in internally working been fourth pilots. a the we'll been we've ramping kind think some and filler I getting something be in can partners quarter.

those I good relatively water drinking idea. just things kids seems amount for school, for like and And of think PFAS so one where the you lead can if it at of it's pretty a money in low a eliminate

on is, it's our free, say, kids these that the the actually a things that making value ensure when it's good would think have of the are are strides market. drinking I lead-free going if one the value a of bring So the and PFAS the we're every things on understanding resonate quicker I day. million to great on facilities, an the Gain that we're the done that you ensure it to in time, can that and water product to is things things, administrators, incremental sit to And all easier doing side team also excited life and front one and filter pretty you and of add with and filtration we're schools people all seeing of and to make it proposition install.

Our Brett Americas. from line next comes of Mizuho from question Linzey the

back in price year? what your Just curious you're and competitors on out want year, Curious taking on contribution state hold? come actions of you to terms this of are to your there pricing the this is what for and or the assessment price. seeing expecting Just

pricing over modest the seen pockets to remotely we've Yes, the close industry, past nothing been this compartment across I'd There's actions price in very what certain has taken say several but been the years. some stable year.

as normal. of a So very I stable would back characterize to environment it sort

I There's think price the to in been not continued stick. environment environment. pricing giveback has this

from looks kind given stable that we've year call normal beyond So normal a like next it into in X.X think I historically where feels I'd -- range basis, back points to think we on price Brett. going always generated back trends it's like go-forward year, to it's X.X getting and of it a of a

But X-year And your least you to efforts to relative progressed Yes. the just It ahead original but over or to $XX or period. has the frame. I how synergy the the versus looking million Okay. the like expectation achieve integration curious consolidation actions. a does at were just believe little cost schedule, time curious maybe shifting there. a my of sound thoughts originally,

when $XX another plus we got announced this of last aggregate, think back We year year, million. and $XX over million the got million. the I a targeting in running outlined year. start We transaction a Brett, we're we $XX ago, obviously half

in will a little originally the same but we So essentially it's $XX than on being it end up more aggregate, probably bit that contemplated, the million timeline.

to an of just felt of that get it only think a through that we've everything would to quicker, facilitate set moves. internal was that it announcement was organization, next July chain, the might work that since really we we be, like behind was be got because of of our ahead needed early I the whatever sort simplification supply did done it that work else, but then, we whether piece been from December hitting getting marks or whether acceleration us some on sooner aid whether

a the track, little much last taken as bit year. on last very So whole probably X of months ahead a early

Nathan comes Stifel. from question Jones final the of line from Our

or A with XX.X% in all stuff. for Are kind freight is half that should there environment costs what XXXX back Are of looking those of year still normalized a going be we are XXXX? of a lot and Guidance back follow-up half there we logistics transient on integrating that of of disruptions Obviously, or over and through inventory in meaningful benefits plus. the we in of hits the supply and away basically half margins the last the back and the the to year, all at high-priced Elkay here. been question chain about cost? XX there's and thinking months

know, that's transient material a don't nothing Nathan, is I there cost. really

think to in the see run half you the into normalized I rate that starting back year. getting margins of are

next away things business initiatives. point there's in initiatives go $XX an year our that in that outsized we're and the as to next the about But we nothing in year, to going doing talked there's an next to and is chain year into year, always as repeat. go grow business of into synergies benefit the the back our growth doesn't outsized have obviously, you As that well investment half would unusual invest our cost We supply or million.

So I'd the that nonrecurring the say next year. unusual nothing impact would half back in

would today, the going what container I $XX,XXX obviously, I couple we know tripped. now envisioned only to a mean, from is thousand round Nathan, costs say and based on nobody bucks thing

So right. are think I see comments and think assuming I challenges, event specific we what given no Mark's

of the of think have run high run also environment. confidence a assumes which obviously, And muted inflationary it a relatively that degree sort I in we rate the in. sort is rate. pricing a environment, is synergies of And reflected muted got we've

things all So considered.

I we second into can well deliver half it bodes if projecting, heading I XXXX. like were think the think we

And why next question I then plus? million were basis follow-on expecting that another XX.X% should of plus. we for any XX% the margins synergies on points we if XXX expecting a $XX is year, XXXX guess is be be to to reason Is there which about XXXX not

and to of talk the is is But a But sort your the yes. think and taken as puts thesis continue given comparables should obviously future? I of obvious to see whole, think investments. We're whatnot that about I with going we environment. to algorithm the Well, margin we in growth continue into make right will XXXX. growth and answer XXXX the takes

we'll QX deliver talk going QX not XXXX. guide October. we're to We're in and and back going for come So about to

one on there. on follow-up conditions Bryan's seeing a the about if and just He one, I comment the institutional Final you're market you of wonder commercial side. enough. asked could questions. backlogs Fair

a was I We on the banking collateral commercial of think world market. been regional started an year. and impact or and the falling as year, the the downstream crisis it's interesting function apart the

So very, very tell I end Embedded that market office the the hospitality percentage you amusement, other a are our in commercial commercial business. is specific there like would -- and small of retail, things. things

I so any wouldn't it's say the outsized imagination. of by And drag an stretch

continue activity watch. a are to we're of I because nature going There Obviously, activity. what it's doing pockets sort always the the risk hyper of to there something pockets be local But lot across are of absorbs we of think of that country. that

office about a worried in particularly example. vacancies So as Chicago specific we're not

there's of spreading whole it's country So doing. across across is really MRO what of a aspect we're verticals it different then the bunch the the always and risk

particularly really commercial there's And therefore, opportunity a better to And our appreciation specific that next look fill to the think happens. call the not exposed there for so other is business office. I out if than we'll now nothing to that divot

for I remarks. would Pauli to now over Dave closing like call to the turn

in forward interest everyone, October. the for We Water September and everyone. we Elkay update Thanks, Thanks, when today. us joining call quarter appreciate in Solutions providing our your look on next results announce our to Zurn

and conclude Thank you, Thank for your you ladies This does call. today's participation. gentlemen.

disconnect. now may You