Zurn Elkay Water Solutions Reports Fourth Quarter 2022 Financial Results
Zurn Elkay Water Solutions Corporation (NYSE:ZWS) reported strong financial results for Q4 2022, with net sales up 46% to $340 million. The increase was primarily driven by acquisitions. Net income rose to $10 million from $3 million, yielding a diluted EPS of $0.06. Despite a 3% decline in core sales due to reduced residential demand, adjusted EBITDA increased to $65 million, representing 19% of net sales. The company announced a $500 million share repurchase plan amid expectations of $1.5 billion to $1.55 billion in total sales for 2023. Strong demand in non-residential markets and declining commodity costs are expected to bolster margins moving forward.
- Net sales increased 46% year-over-year to $340 million for Q4 2022.
- Net income from continuing operations rose to $10 million, up from $3 million in the previous year.
- The company announced a $500 million share repurchase authorization to enhance shareholder value.
- Positive guidance for 2023 projects total sales of $1.5 billion to $1.55 billion and adjusted EBITDA of $325 million to $345 million.
- Core sales decreased by 3% year-over-year, reflecting weaker residential market demand.
- Adjusted EPS declined to $0.16 from $0.22 in the year-ago quarter.
- The first quarter of 2023 is projected to show marginal EBITDA impact due to higher-cost inventory sell-through.
-
Announces
$500 million
Call scheduled for
Fourth Quarter Highlights
-
Net sales in the quarter increased
46% to$340 million $232 million 50% acquisitions, -1% foreign currency translation, -3% core sales(1)). -
Net income from continuing operations was
$10 million $0.06 $3 million $0.02 -
Completed
$25 million -
Adjusted EPS(1) was
$0.16 $0.22 -
Adjusted EBITDA(1) was
$65 million 19.0% of net sales) compared with$45 million 19.4% of net sales) in last year's fourth quarter. -
Net debt leverage of 1.4x as of
December 31, 2022 .
Calendar Year 2022 Highlights
-
Completed the combination with
Elkay Manufacturing Company , a market leader of commercial drinking water solutions. -
Board of Directors authorized a plan for the Company to repurchase up to
$500 million -
Net sales were
$1,282 million 41% from the comparable$911 million 11% core sales(1), +31% acquisitions, -1% foreign currency translation). -
Net income from continuing operations was
$57 million $0.37 $50 million $0.40 -
Adjusted EPS(1) was
$0.94 $0.77 -
Adjusted EBITDA(1) was
$265 million 20.6% of net sales) compared with$196 million 21.5% of net sales) in calendar year 2021.
Adams continued, "In the fourth quarter, we delivered
"In the coming weeks you will see us release our second sustainability report as a stand-alone water business. We continue to make enhancements to our sustainability program and our pursuit of helping our customers protect the vital resource of water has never been stronger. In the upcoming report you will see us disclose consolidated Zurn Elkay metrics, progress towards the goals we initiated in last year’s report as well as initiate several new goals primarily focused on the environment. We are excited to continue to build on the momentum we have around ESG in our company."
Adams continued, “We’re going to take a view on our external outlook that encompasses a broader range of volatility than we have the past couple of years. For the year, we believe total sales will be in the range of
Fourth Quarter 2022 Overview
Net sales were
Income from operations, was
Adjusted EBITDA(1) was
(1) |
Refer to "Non-GAAP Measures" for a definition of this non-GAAP metric, as well as the accompanying reconciliations to GAAP. |
Non-GAAP Financial Measures
The following non-GAAP financial measures are utilized by management in comparing our operating performance on a consistent basis. We believe that these financial measures are appropriate to enhance an overall understanding of our underlying operating performance trends compared to historical and prospective periods and our peers. Management also believes that these measures are useful to investors in their analysis of our results of operations and provide improved comparability between fiscal periods as well as insight into the compliance with our debt covenants. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to our GAAP results has been provided in the financial tables included in this press release.
Core Sales
Core sales excludes the impact of acquisitions (such as Elkay and
Adjusted Net Income and Adjusted Earnings Per Share
Adjusted net income and adjusted earnings per share (calculated on a diluted basis) exclude actuarial gains and losses on pension and postretirement benefit obligations, restructuring and other similar charges, gains or losses on divestitures, discontinued operations, gains or losses on extinguishment of debt, the impact of acquisition-related fair value adjustments in connection with purchase accounting, amortization of intangible assets, the adjustment to state inventories at last-in first-out costs, and other non-operational, non-cash or non-recurring losses, net of their income tax impact. The tax rates used to calculate adjusted net income and adjusted earnings per share are based on a transaction specific basis. We believe that adjusted net income and adjusted earnings per share are useful in assessing our financial performance by excluding items that are not indicative of our core operating performance or that may obscure trends useful in evaluating our continuing results of operations.
EBITDA
EBITDA represents earnings from continuing operations before interest and other debt related activities, taxes, depreciation and amortization. EBITDA is presented because it is an important supplemental measure of performance and it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA is also presented and compared by analysts and investors in evaluating our ability to meet debt service obligations. Other companies in our industry may calculate EBITDA differently. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of operating performance or any other measures of performance derived in accordance with GAAP. Because EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business.
Adjusted EBITDA
“Adjusted EBITDA” is the term we use to describe EBITDA as defined and adjusted in our credit agreement, which is net income, adjusted for the items summarized in the Reconciliation of GAAP to Non-GAAP Financial Measures table below. Adjusted EBITDA is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, non-cash or non-recurring losses or gains. In view of our debt level, it is also provided to aid investors in understanding our compliance with our debt covenants. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA varies from others in our industry. In addition to Adjusted EBITDA we also use the term "Adjusted EBITDA excluding corporate costs" which is used to described our total Adjusted EBITDA at the operating level without being burdened by the EBITDA costs associated with our corporate functions. Adjusted EBITDA should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for, analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; or (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-cash, non-operating or non-recurring charges that are deducted in calculating net income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results.
In addition, certain of these expenses can represent the reduction of cash that could be used for other corporate purposes. Further, although not included in the calculation of Adjusted EBITDA below, the measure may at times allow us to add estimated cost savings and operating synergies related to operational changes ranging from acquisitions to dispositions to restructurings and/or exclude one-time transition expenditures that we anticipate we will need to incur to realize cost savings before such savings have occurred. Further, management and various investors use the ratio of total debt less cash to Adjusted EBITDA (which includes a full pro-forma last-twelve-month impact of acquisitions), or "net debt leverage", as a measure of our financial strength and ability to incur incremental indebtedness when making key investment decisions and evaluating us against peers. Lastly, management and various investors use the ratio of the change in Adjusted EBITDA divided by the change in net sales (referred to as “incremental margin” in the case of an increase in net sales or “decremental margin” in the case of a decrease in net sales) as an additional measure of our financial performance and when making key investment decisions and evaluating us against peers.
Free Cash Flow
We define Free Cash Flow as cash flow from operations less capital expenditures, and we use this metric in analyzing our ability to service and repay our debt and to forecast future periods. However, this measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt. We define Free Cash Flow Conversion as Free Cash Flow divided by net income.
Return on
ROIC is used because we believe it is an important supplemental measure of financial performance and it is also currently a performance measure under our long-term incentive plan. ROIC is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. ROIC is also used by investors and analysts to evaluate management’s deployment of capital to create shareholder value. We define ROIC as tax-effected net operating income for the last 12 months divided by average total invested capital over a rolling four-quarter period. Total invested capital is defined as shareholders equity plus debt, less cash and cash equivalents. Other companies may not define or calculate ROIC in the same way.
About
Headquartered in
Conference Call Details
Domestic toll-free #: 888-510-2359
International toll #: 646-960-0215
Access Code: 7660247
A live webcast of the call will also be available on the Company's investor relations website. Please go to the website (investors.zurn-elkay.com) at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
If you are unable to participate during the live teleconference, a replay of the conference call will be available from
Cautionary Statement on Forward-Looking Statements
Information in this release may involve outlook, expectations, beliefs, plans, intentions, strategies or other statements regarding the future, which are forward-looking statements. These forward-looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information available to
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Three Months Ended |
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Year Ended |
||||||||||||
|
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2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net sales |
|
$ |
340.3 |
|
|
$ |
232.3 |
|
|
$ |
1,281.8 |
|
|
$ |
910.9 |
|
Cost of sales |
|
|
230.9 |
|
|
|
147.1 |
|
|
|
816.3 |
|
|
|
537.7 |
|
Gross profit |
|
|
109.4 |
|
|
|
85.2 |
|
|
|
465.5 |
|
|
|
373.2 |
|
Selling, general and administrative expenses |
|
|
72.4 |
|
|
|
64.1 |
|
|
|
309.0 |
|
|
|
239.0 |
|
Restructuring and other similar charges |
|
|
2.3 |
|
|
|
2.1 |
|
|
|
15.4 |
|
|
|
3.7 |
|
Amortization of intangible assets |
|
|
14.9 |
|
|
|
5.8 |
|
|
|
34.0 |
|
|
|
23.5 |
|
Income from operations |
|
|
19.8 |
|
|
|
13.2 |
|
|
|
107.1 |
|
|
|
107.0 |
|
Non-operating expense: |
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
|
(8.9 |
) |
|
|
(5.1 |
) |
|
|
(26.9 |
) |
|
|
(34.7 |
) |
Loss on the extinguishment of debt |
|
|
— |
|
|
|
(20.4 |
) |
|
|
— |
|
|
|
(20.4 |
) |
Actuarial gain on pension and postretirement benefit obligations |
|
|
1.9 |
|
|
|
1.2 |
|
|
|
1.9 |
|
|
|
1.2 |
|
Other income (expense), net |
|
|
1.4 |
|
|
|
0.2 |
|
|
|
1.7 |
|
|
|
(0.7 |
) |
Income (loss) before income taxes |
|
|
14.2 |
|
|
|
(10.9 |
) |
|
|
83.8 |
|
|
|
52.4 |
|
(Provision) benefit for income taxes |
|
|
(3.9 |
) |
|
|
13.9 |
|
|
|
(26.8 |
) |
|
|
(2.7 |
) |
Net income from continuing operations |
|
|
10.3 |
|
|
|
3.0 |
|
|
|
57.0 |
|
|
|
49.7 |
|
Income (loss) from discontinued operations, net of tax |
|
|
3.9 |
|
|
|
(69.4 |
) |
|
|
4.7 |
|
|
|
71.2 |
|
Net income (loss) |
|
$ |
14.2 |
|
|
$ |
(66.4 |
) |
|
$ |
61.7 |
|
|
$ |
120.9 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
Continuing operations |
|
$ |
0.06 |
|
|
$ |
0.02 |
|
|
$ |
0.38 |
|
|
$ |
0.41 |
|
Discontinued operations |
|
$ |
0.02 |
|
|
$ |
(0.56 |
) |
|
$ |
0.03 |
|
|
$ |
0.59 |
|
Net income (loss) |
|
$ |
0.08 |
|
|
$ |
(0.53 |
) |
|
$ |
0.41 |
|
|
$ |
1.00 |
|
Diluted net income (loss) per share: |
|
|
|
|
|
|
|
|
||||||||
Continuing operations |
|
$ |
0.06 |
|
|
$ |
0.02 |
|
|
$ |
0.37 |
|
|
$ |
0.40 |
|
Discontinued operations |
|
$ |
0.02 |
|
|
$ |
(0.54 |
) |
|
$ |
0.03 |
|
|
$ |
0.57 |
|
Net income (loss) |
|
$ |
0.08 |
|
|
$ |
(0.52 |
) |
|
$ |
0.40 |
|
|
$ |
0.97 |
|
Weighted-average number of shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
177,938 |
|
|
|
124,283 |
|
|
|
151,581 |
|
|
|
121,493 |
|
Effect of dilutive equity securities |
|
|
2,068 |
|
|
|
4,443 |
|
|
|
2,256 |
|
|
|
3,621 |
|
Diluted |
|
|
180,006 |
|
|
|
128,726 |
|
|
|
153,837 |
|
|
|
125,114 |
|
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Three Months Ended |
|||||||||||||||||||
|
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Reported Results |
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|
|
Adjustments |
|
|
|
Non-GAAP Results |
|
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|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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|||||||||
Net sales |
|
$ |
340.3 |
|
|
|
|
$ |
— |
|
|
|
|
$ |
340.3 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
EBITDA |
|
|
43.4 |
|
|
|
|
|
21.2 |
|
(a) |
|
|
|
64.6 |
|
|
|
|||
Depreciation and amortization |
|
|
(23.6 |
) |
|
|
|
|
— |
|
|
|
|
|
(23.6 |
) |
|
|
|||
Income from operations |
|
|
19.8 |
|
|
|
|
|
21.2 |
|
(b) |
|
|
|
41.0 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
|
|
14.2 |
|
|
|
|
|
23.3 |
|
(c) |
|
|
|
37.5 |
|
|
|
|||
Provision for income taxes and indicated rate |
|
|
(3.9 |
) |
|
27.5 |
% |
|
|
(5.6 |
) |
|
24.0 |
% |
|
|
(9.5 |
) |
|
25.3 |
% |
Net income from continuing operations |
|
|
10.3 |
|
|
|
|
|
17.7 |
|
|
|
|
|
28.0 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
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|||||||||
Income from discontinued operations, net of tax |
|
|
3.9 |
|
|
|
|
|
(3.9 |
) |
|
|
|
|
— |
|
|
|
|||
Net income |
|
$ |
14.2 |
|
|
|
|
$ |
13.8 |
|
|
|
|
$ |
28.0 |
|
|
|
|||
|
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|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
EBITDA Adjustments (a) |
|
|
|
Income from Operations Adjustments (b) |
|
|
|
Income before Income Taxes Adjustments (c) |
|
|
|||||||||
Restructuring and other similar charges |
|
$ |
2.3 |
|
|
|
|
$ |
2.3 |
|
|
|
|
$ |
2.3 |
|
|
|
|||
Acquisition-related fair value adjustment |
|
|
3.7 |
|
|
|
|
|
3.7 |
|
|
|
|
|
3.7 |
|
|
|
|||
Stock-based compensation expense |
|
|
9.5 |
|
|
|
|
|
9.5 |
|
|
|
|
|
— |
|
|
|
|||
Last-in-first-out inventory adjustments |
|
|
5.7 |
|
|
|
|
|
5.7 |
|
|
|
|
|
5.7 |
|
|
|
|||
Amortization of intangible assets |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
14.9 |
|
|
|
|||
Other income, net (1) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1.4 |
) |
|
|
|||
Actuarial gain on pension and postretirement benefit obligations |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1.9 |
) |
|
|
|||
Total Adjustments |
|
$ |
21.2 |
|
|
|
|
$ |
21.2 |
|
|
|
|
$ |
23.3 |
|
|
|
|||
| ____________________ | |
(1) |
Other income, net, for the periods indicated, consists primarily of gains and losses from foreign currency transactions, and the non-service cost components of net periodic benefit credits associated with our defined benefit plans. |
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Year Ended |
|||||||||||||||||||
|
|
Reported Results |
|
|
|
Adjustments |
|
|
|
Non-GAAP Results |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales |
|
$ |
1,281.8 |
|
|
|
|
$ |
— |
|
|
|
|
$ |
1,281.8 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
EBITDA |
|
|
161.6 |
|
|
|
|
|
103.0 |
|
(a) |
|
|
|
264.6 |
|
|
|
|||
Depreciation and amortization |
|
|
(54.5 |
) |
|
|
|
|
— |
|
|
|
|
|
(54.5 |
) |
|
|
|||
Income from operations |
|
|
107.1 |
|
|
|
|
|
103.0 |
|
(b) |
|
|
|
210.1 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
|
|
83.8 |
|
|
|
|
|
108.4 |
|
(c) |
|
|
|
192.2 |
|
|
|
|||
Provision for income taxes and indicated rate |
|
|
(26.8 |
) |
|
32.0 |
% |
|
|
(21.1 |
) |
|
19.5 |
% |
|
|
(47.9 |
) |
|
24.9 |
% |
Net income from continuing operations |
|
|
57.0 |
|
|
|
|
|
87.3 |
|
|
|
|
|
144.3 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income from discontinued operations, net of tax |
|
|
4.7 |
|
|
|
|
|
(4.7 |
) |
|
|
|
|
— |
|
|
|
|||
Net income |
|
$ |
61.7 |
|
|
|
|
$ |
82.6 |
|
|
|
|
$ |
144.3 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
EBITDA Adjustments (a) |
|
|
|
Income from Operations Adjustments (b) |
|
|
|
Income before Income Taxes Adjustments (c) |
|
|
|||||||||
Restructuring and other similar charges |
|
$ |
15.4 |
|
|
|
|
$ |
15.4 |
|
|
|
|
$ |
15.4 |
|
|
|
|||
Acquisition-related fair value adjustment |
|
|
18.9 |
|
|
|
|
|
18.9 |
|
|
|
|
|
18.9 |
|
|
|
|||
Stock-based compensation expense |
|
|
25.0 |
|
|
|
|
|
25.0 |
|
|
|
|
|
— |
|
|
|
|||
Last-in-first-out inventory adjustments |
|
|
9.7 |
|
|
|
|
|
9.7 |
|
|
|
|
|
9.7 |
|
|
|
|||
Merger costs |
|
|
33.7 |
|
|
|
|
|
33.7 |
|
|
|
|
|
33.7 |
|
|
|
|||
Other, net (1) |
|
|
0.3 |
|
|
|
|
|
0.3 |
|
|
|
|
|
0.3 |
|
|
|
|||
Other income, net (2) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1.7 |
) |
|
|
|||
Amortization of intangible assets |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
34.0 |
|
|
|
|||
Actuarial gain on pension and postretirement benefit obligations |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1.9 |
) |
|
|
|||
Total Adjustments |
|
$ |
103.0 |
|
|
|
|
$ |
103.0 |
|
|
|
|
$ |
108.4 |
|
|
|
|||
| ____________________ | |
(1) |
Other, net includes the gains and losses from sale of long-lived assets. |
(2) |
Other income, net, for the periods indicated, consists primarily of gains and losses from foreign currency transactions, and the non-service cost components of net periodic benefit credits associated with our defined benefit plans. |
|
|||||||||||||||||||||
|
|||||||||||||||||||||
|
|
Three Months Ended |
|||||||||||||||||||
|
|
Reported Results |
|
|
|
Adjustments |
|
|
|
Non-GAAP Results |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales |
|
$ |
232.3 |
|
|
|
|
$ |
— |
|
|
|
|
$ |
232.3 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
EBITDA |
|
|
21.3 |
|
|
|
|
|
23.8 |
|
(a) |
|
|
|
45.1 |
|
|
|
|||
Depreciation and amortization |
|
|
(8.1 |
) |
|
|
|
|
— |
|
|
|
|
|
(8.1 |
) |
|
|
|||
Income from operations |
|
|
13.2 |
|
|
|
|
|
23.8 |
|
(b) |
|
|
|
37.0 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(Loss) income before income taxes |
|
|
(10.9 |
) |
|
|
|
|
34.3 |
|
(c) |
|
|
|
23.4 |
|
|
|
|||
Benefit (provision) for income taxes and indicated rate |
|
|
13.9 |
|
|
127.5 |
% |
|
|
(8.4 |
) |
|
24.5 |
% |
|
|
5.5 |
|
|
(23.5 |
)% |
Net income from continuing operations |
|
|
3.0 |
|
|
|
|
|
25.9 |
|
|
|
|
|
28.9 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loss from discontinued operations, net of tax |
|
|
(69.4 |
) |
|
|
|
|
69.4 |
|
|
|
|
|
— |
|
|
|
|||
Net (loss) income |
|
$ |
(66.4 |
) |
|
|
|
$ |
95.3 |
|
|
|
|
$ |
28.9 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
EBITDA Adjustments (a) |
|
|
|
Income from Operations Adjustments (b) |
|
|
|
Income before Income Taxes Adjustments (c) |
|
|
|||||||||
Restructuring and other similar charges |
|
$ |
2.1 |
|
|
|
|
$ |
2.1 |
|
|
|
|
$ |
2.1 |
|
|
|
|||
Acquisition-related fair value adjustment |
|
|
0.2 |
|
|
|
|
|
0.2 |
|
|
|
|
|
0.2 |
|
|
|
|||
Last-in-first-out inventory adjustments |
|
|
7.2 |
|
|
|
|
|
7.2 |
|
|
|
|
|
7.2 |
|
|
|
|||
Stock-based compensation expense |
|
|
14.3 |
|
|
|
|
|
14.3 |
|
|
|
|
|
— |
|
|
|
|||
Amortization of intangible assets |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
5.8 |
|
|
|
|||
Other income, net (1) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(0.2 |
) |
|
|
|||
Actuarial gain on pension and postretirement benefit obligations |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1.2 |
) |
|
|
|||
Loss on the extinguishment of debt |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
20.4 |
|
|
|
|||
Total Adjustments |
|
$ |
23.8 |
|
|
|
|
$ |
23.8 |
|
|
|
|
$ |
34.3 |
|
|
|
|||
| ____________________ | |
(1) |
Other income, net, for the periods indicated, consists primarily of gains and losses from foreign currency transactions and the non-service cost components of net periodic benefit credits associated with our defined benefit plans. |
|
|||||||||||||||||||||
|
|||||||||||||||||||||
|
|
Year Ended |
|||||||||||||||||||
|
|
Reported Results |
|
|
|
Adjustments |
|
|
|
Non-GAAP Results |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales |
|
$ |
910.9 |
|
|
|
|
$ |
— |
|
|
|
|
$ |
910.9 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
EBITDA |
|
|
139.7 |
|
|
|
|
|
56.1 |
|
(a) |
|
|
|
195.8 |
|
|
|
|||
Depreciation and amortization |
|
|
(32.7 |
) |
|
|
|
|
— |
|
|
|
|
|
(32.7 |
) |
|
|
|||
Income from operations |
|
|
107.0 |
|
|
|
|
|
56.1 |
|
(b) |
|
|
|
163.1 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
|
|
52.4 |
|
|
|
|
|
62.0 |
|
(c) |
|
|
|
114.4 |
|
|
|
|||
Provision for income taxes and indicated rate |
|
|
(2.7 |
) |
|
5.2 |
% |
|
|
(14.8 |
) |
|
23.9 |
% |
|
|
(17.5 |
) |
|
15.3 |
% |
Net income from continuing operations |
|
|
49.7 |
|
|
|
|
|
47.2 |
|
|
|
|
|
96.9 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income from discontinued operations, net of tax |
|
|
71.2 |
|
|
|
|
|
(71.2 |
) |
|
|
|
|
— |
|
|
|
|||
Net income |
|
$ |
120.9 |
|
|
|
|
$ |
(24.0 |
) |
|
|
|
$ |
96.9 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
EBITDA Adjustments (a) |
|
|
|
Income from Operations Adjustments (b) |
|
|
|
Income before Income Taxes Adjustments (c) |
|
|
|||||||||
Restructuring and other similar charges |
|
$ |
3.7 |
|
|
|
|
$ |
3.7 |
|
|
|
|
$ |
3.7 |
|
|
|
|||
Acquisition-related fair value adjustment |
|
|
0.8 |
|
|
|
|
|
0.8 |
|
|
|
|
|
0.8 |
|
|
|
|||
Last-in-first-out inventory adjustments |
|
|
14.1 |
|
|
|
|
|
14.1 |
|
|
|
|
|
14.1 |
|
|
|
|||
Stock-based compensation expense |
|
|
37.5 |
|
|
|
|
|
37.5 |
|
|
|
|
|
— |
|
|
|
|||
Amortization of intangible assets |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
23.5 |
|
|
|
|||
Other expense, net (1) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
0.7 |
|
|
|
|||
Actuarial gain on pension and postretirement benefit obligations |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1.2 |
) |
|
|
|||
Loss on the extinguishment of debt |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
20.4 |
|
|
|
|||
Total Adjustments |
|
$ |
56.1 |
|
|
|
|
$ |
56.1 |
|
|
|
|
$ |
62.0 |
|
|
|
|||
| ____________________ | |
(1) |
Other expense, net, for the periods indicated, consists primarily of gains and losses from foreign currency transactions and the non-service cost components of net periodic benefit credits associated with our defined benefit plans. |
|
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||
Adjusted EBITDA |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income (loss) |
$ |
14.2 |
|
|
$ |
(66.4 |
) |
|
$ |
61.7 |
|
|
$ |
120.9 |
|
(Income) loss from discontinued operations, net of tax |
|
(3.9 |
) |
|
|
69.4 |
|
|
|
(4.7 |
) |
|
|
(71.2 |
) |
Provision (benefit) for income taxes |
|
3.9 |
|
|
|
(13.9 |
) |
|
|
26.8 |
|
|
|
2.7 |
|
Actuarial gain on pension and postretirement benefit obligations |
|
(1.9 |
) |
|
|
(1.2 |
) |
|
|
(1.9 |
) |
|
|
(1.2 |
) |
Other (income) expense, net (1) |
|
(1.4 |
) |
|
|
(0.2 |
) |
|
|
(1.7 |
) |
|
|
0.7 |
|
Loss on the extinguishment of debt |
|
— |
|
|
|
20.4 |
|
|
|
— |
|
|
|
20.4 |
|
Interest expense, net |
|
8.9 |
|
|
|
5.1 |
|
|
|
26.9 |
|
|
|
34.7 |
|
Income from operations |
$ |
19.8 |
|
|
$ |
13.2 |
|
|
$ |
107.1 |
|
|
$ |
107.0 |
|
|
|
|
|
|
|
|
|
||||||||
Adjustments |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
$ |
23.6 |
|
|
$ |
8.1 |
|
|
$ |
54.5 |
|
|
$ |
32.7 |
|
Restructuring and other similar charges |
|
2.3 |
|
|
|
2.1 |
|
|
|
15.4 |
|
|
|
3.7 |
|
Acquisition-related fair value adjustment |
|
3.7 |
|
|
|
0.2 |
|
|
|
18.9 |
|
|
|
0.8 |
|
Stock-based compensation expense |
|
9.5 |
|
|
|
14.3 |
|
|
|
25.0 |
|
|
|
37.5 |
|
Merger costs |
|
— |
|
|
|
— |
|
|
|
33.7 |
|
|
|
— |
|
Last-in first-out inventory adjustments |
|
5.7 |
|
|
|
7.2 |
|
|
|
9.7 |
|
|
|
14.1 |
|
Other, net (2) |
|
— |
|
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
Subtotal of adjustments |
|
44.8 |
|
|
|
31.9 |
|
|
|
157.5 |
|
|
|
88.8 |
|
Adjusted EBITDA |
$ |
64.6 |
|
|
$ |
45.1 |
|
|
$ |
264.6 |
|
|
$ |
195.8 |
|
| ____________________ | |
(1) |
Other (income) expense, net, for the periods indicated, consists primarily of gains and losses from foreign currency transactions and the non-service cost components of net periodic benefit credits associated with our defined benefit plans. |
(2) |
Other, net includes the gains and losses from the sale of long-lived assets. |
|
Three Months Ended |
|
Year Ended |
||||||||||||
Adjusted Net Income and Earnings Per Share |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income (loss) |
$ |
14.2 |
|
|
$ |
(66.4 |
) |
|
$ |
61.7 |
|
|
$ |
120.9 |
|
(Income) loss from discontinued operations, net of tax |
|
(3.9 |
) |
|
|
69.4 |
|
|
|
(4.7 |
) |
|
|
(71.2 |
) |
Loss on the extinguishment of debt |
|
— |
|
|
|
20.4 |
|
|
|
— |
|
|
|
20.4 |
|
Amortization of intangible assets |
|
14.9 |
|
|
|
5.8 |
|
|
|
34.0 |
|
|
|
23.5 |
|
Restructuring and other similar charges |
|
2.3 |
|
|
|
2.1 |
|
|
|
15.4 |
|
|
|
3.7 |
|
Acquisition-related fair value adjustment |
|
3.7 |
|
|
|
0.2 |
|
|
|
18.9 |
|
|
|
0.8 |
|
Merger costs |
|
— |
|
|
|
— |
|
|
|
33.7 |
|
|
|
— |
|
Last-in first-out inventory adjustment |
|
5.7 |
|
|
|
7.2 |
|
|
|
9.7 |
|
|
|
14.1 |
|
Actuarial gain on pension and postretirement benefit obligations |
|
(1.9 |
) |
|
|
(1.2 |
) |
|
|
(1.9 |
) |
|
|
(1.2 |
) |
Other (income) expense, net (1) |
|
(1.4 |
) |
|
|
(0.2 |
) |
|
|
(1.7 |
) |
|
|
0.7 |
|
Other, net (2) |
|
— |
|
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
Tax effect on above items |
|
(5.6 |
) |
|
|
(8.4 |
) |
|
|
(21.1 |
) |
|
|
(14.8 |
) |
Adjusted net income |
$ |
28.0 |
|
|
$ |
28.9 |
|
|
$ |
144.3 |
|
|
$ |
96.9 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP diluted net income per share from continuing operations |
$ |
0.06 |
|
|
$ |
0.02 |
|
|
$ |
0.37 |
|
|
$ |
0.40 |
|
Adjusted earnings per share - diluted |
$ |
0.16 |
|
|
$ |
0.22 |
|
|
$ |
0.94 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of shares outstanding (in thousands) |
|
|
|
|
|
|
|
||||||||
GAAP basic weighted-average shares |
|
177,938 |
|
|
|
124,283 |
|
|
|
151,581 |
|
|
|
121,493 |
|
Effect of dilutive equity securities |
|
2,068 |
|
|
|
4,443 |
|
|
|
2,256 |
|
|
|
3,621 |
|
Adjusted diluted weighted-average shares |
|
180,006 |
|
|
|
128,726 |
|
|
|
153,837 |
|
|
|
125,114 |
|
| ____________________ | |
(1) |
Other (income) expense, net, for the periods indicated, consists primarily of gains and losses from foreign currency transactions and the non-service cost components of net periodic benefit credits associated with our defined benefit plans. |
(2) |
Other, net includes the gains and losses from the sale of long-lived assets. |
|
|
Year Ended |
||||||
|
|
2022 |
|
2021 |
||||
Cash provided by operating activities |
|
$ |
97.0 |
|
|
$ |
223.6 |
|
Expenditures for property, plant and equipment |
|
|
(7.6 |
) |
|
|
(23.3 |
) |
Free cash flow |
|
$ |
89.4 |
|
|
$ |
200.3 |
|
|
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income (loss) |
$ |
14.2 |
|
|
$ |
(66.4 |
) |
|
$ |
61.7 |
|
|
$ |
120.9 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments |
|
(0.1 |
) |
|
|
2.4 |
|
|
|
(4.2 |
) |
|
|
(4.2 |
) |
Change in pension and postretirement defined benefit plans, net of tax |
|
4.1 |
|
|
|
18.6 |
|
|
|
4.1 |
|
|
|
18.4 |
|
Total other comprehensive income (loss), net of tax |
|
4.0 |
|
|
|
21.0 |
|
|
|
(0.1 |
) |
|
|
14.2 |
|
Total comprehensive income (loss) |
$ |
18.2 |
|
|
$ |
(45.4 |
) |
|
$ |
61.6 |
|
|
$ |
135.1 |
|
|
||||||||
|
||||||||
|
|
2022 |
|
2021 |
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
124.8 |
|
|
$ |
96.6 |
|
Receivables, net |
|
|
219.7 |
|
|
|
144.1 |
|
Inventories |
|
|
366.7 |
|
|
|
184.5 |
|
Income taxes receivable |
|
|
18.3 |
|
|
|
33.1 |
|
Other current assets |
|
|
28.0 |
|
|
|
16.5 |
|
Total current assets |
|
|
757.5 |
|
|
|
474.8 |
|
Property, plant and equipment, net |
|
|
183.8 |
|
|
|
64.4 |
|
Intangible assets, net |
|
|
1,009.7 |
|
|
|
179.1 |
|
|
|
|
777.0 |
|
|
|
254.1 |
|
Insurance for asbestos claims |
|
|
72.1 |
|
|
|
66.0 |
|
Other assets |
|
|
63.9 |
|
|
|
39.3 |
|
Total assets |
|
$ |
2,864.0 |
|
|
$ |
1,077.7 |
|
Liabilities and stockholders' equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Current maturities of debt |
|
$ |
5.7 |
|
|
$ |
5.6 |
|
Trade payables |
|
|
116.9 |
|
|
|
105.1 |
|
Compensation and benefits |
|
|
19.2 |
|
|
|
22.0 |
|
Current portion of pension and postretirement benefit obligations |
|
|
1.6 |
|
|
|
1.3 |
|
Other current liabilities |
|
|
145.9 |
|
|
|
106.4 |
|
Total current liabilities |
|
|
289.3 |
|
|
|
240.4 |
|
|
|
|
|
|
||||
Long-term debt |
|
|
530.2 |
|
|
|
533.9 |
|
Pension and postretirement benefit obligations |
|
|
50.5 |
|
|
|
57.3 |
|
Deferred income taxes |
|
|
221.4 |
|
|
|
3.1 |
|
Operating lease liability |
|
|
34.2 |
|
|
|
8.9 |
|
Reserve for asbestos claims |
|
|
79.0 |
|
|
|
66.0 |
|
Other liabilities |
|
|
44.4 |
|
|
|
41.7 |
|
Total liabilities |
|
|
1,249.0 |
|
|
|
951.3 |
|
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Common stock, |
|
|
1.8 |
|
|
|
1.3 |
|
Additional paid-in capital |
|
|
2,853.1 |
|
|
|
1,436.9 |
|
Retained deficit |
|
|
(1,164.9 |
) |
|
|
(1,236.9 |
) |
Accumulated other comprehensive loss |
|
|
(75.0 |
) |
|
|
(74.9 |
) |
Total stockholders' equity |
|
|
1,615.0 |
|
|
|
126.4 |
|
Total liabilities and stockholders' equity |
|
$ |
2,864.0 |
|
|
$ |
1,077.7 |
|
|
||||||||
|
||||||||
|
|
Year Ended |
||||||
|
|
2022 |
|
2021 |
||||
Operating activities |
|
|
|
|
||||
Net income |
|
$ |
61.7 |
|
|
$ |
120.9 |
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
||||
Depreciation |
|
|
20.5 |
|
|
|
44.1 |
|
Amortization of intangible assets |
|
|
34.0 |
|
|
|
33.4 |
|
(Loss) gain on dispositions of long-lived assets |
|
|
0.3 |
|
|
|
(10.1 |
) |
Deferred income taxes |
|
|
0.5 |
|
|
|
(12.1 |
) |
Other non-cash expense (income) |
|
|
4.8 |
|
|
|
(3.6 |
) |
Actuarial (gain) loss on pension and postretirement benefit obligations |
|
|
(1.9 |
) |
|
|
3.6 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
20.4 |
|
Stock-based compensation expense |
|
|
25.0 |
|
|
|
51.4 |
|
Changes in operating assets and liabilities: |
|
|
|
|
||||
Receivables |
|
|
15.5 |
|
|
|
(66.6 |
) |
Inventories |
|
|
(17.6 |
) |
|
|
(79.5 |
) |
Other assets |
|
|
36.5 |
|
|
|
(7.7 |
) |
Accounts payable |
|
|
(18.3 |
) |
|
|
99.1 |
|
Accruals and other |
|
|
(64.0 |
) |
|
|
30.3 |
|
Cash provided by operating activities |
|
|
97.0 |
|
|
|
223.6 |
|
|
|
|
|
|
||||
Investing activities |
|
|
|
|
||||
Expenditures for property, plant and equipment |
|
|
(7.6 |
) |
|
|
(23.3 |
) |
Acquisitions, net of cash acquired |
|
|
(44.8 |
) |
|
|
(17.1 |
) |
Proceeds from dispositions of long-lived assets |
|
|
1.3 |
|
|
|
14.3 |
|
Proceeds from insurance claims |
|
|
9.5 |
|
|
|
— |
|
Payment associated with divestiture of discontinued operations |
|
|
35.0 |
|
|
|
4.2 |
|
Cash used for investing activities |
|
|
(6.6 |
) |
|
|
(21.9 |
) |
|
|
|
|
|
||||
Financing activities |
|
|
|
|
||||
Proceeds from borrowings of debt |
|
|
102.0 |
|
|
|
550.0 |
|
Repayments of debt |
|
|
(107.7 |
) |
|
|
(1,126.7 |
) |
Dividend received from Spin-Off of PMC |
|
|
— |
|
|
|
486.8 |
|
Cash transferred to PMC related to Spin-Off |
|
|
— |
|
|
|
(192.8 |
) |
Payment of debt issuance costs |
|
|
— |
|
|
|
(28.8 |
) |
Proceeds from exercise of stock options |
|
|
2.5 |
|
|
|
24.9 |
|
Taxes withheld and paid on employees' share-based payment awards |
|
|
(0.7 |
) |
|
|
(32.3 |
) |
Repurchase of common stock |
|
|
(24.7 |
) |
|
|
(0.9 |
) |
Payment of common stock dividends |
|
|
(32.5 |
) |
|
|
(36.4 |
) |
Cash used for financing activities |
|
|
(61.1 |
) |
|
|
(356.2 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
(1.1 |
) |
|
|
(4.5 |
) |
Increase (decrease) in cash, cash equivalents and restricted cash |
|
|
28.2 |
|
|
|
(159.0 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
|
96.6 |
|
|
|
255.6 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
124.8 |
|
|
$ |
96.6 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230207006070/en/
Vice President - Investor Relations
414.223.7770
Source:
FAQ
What were ZWS's Q4 2022 earnings results?
What is the 2023 sales outlook for Zurn Elkay?
What is ZWS's adjusted EBITDA for Q4 2022?
How much has ZWS allocated for share repurchase?
What factors are affecting ZWS's margins in Q4 2022?
