Q4 2023 Earnings Summary
Reported on Jan 8, 2025 (After Market Close)
Pre-Earnings Price$33.20Last close (Feb 7, 2024)
Post-Earnings Price$33.48Open (Feb 8, 2024)
Price Change
$0.28(+0.84%)
- Strong Growth in the Drinking Water Platform: ZWS's drinking water platform experienced high teens growth in sales and low 20s growth in orders in the fourth quarter. Management expects this double-digit growth to continue into 2024, contributing positively to both revenue and margins due to the favorable mix.
- Resilient Commercial Market Exposure: Despite concerns about the commercial market, ZWS benefits from a diverse exposure across various commercial sub-verticals and geographies, providing sufficient opportunities for growth. The CEO emphasized that even if the commercial market is down mid-single digits, there is enough activity for ZWS to deliver its growth targets.
- Potential for Accretive Bolt-on Acquisitions: With a strong balance sheet and significant capital deployment optionality, ZWS is ready to pursue bolt-on acquisitions again. Management indicated they are prepared to execute on opportunities that arise, which could drive additional growth and enhance shareholder value.
- The company anticipates a mid-single-digit decline in commercial end markets for 2024, which could negatively impact sales and profitability given their significant exposure to this segment. , ,
- Growth appears heavily reliant on the double-digit growth of the drinking water segment, while the rest of the portfolio is expected to grow only flat to up modestly, indicating potential vulnerability if the drinking water segment underperforms. ,
- Despite federal infrastructure funding, the company expects the Waterworks market to grow only low single digits, suggesting that infrastructure spending may not significantly benefit results in the near term.
Research analysts covering Zurn Elkay Water Solutions.