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# Zurn Elkay Sees Its 2027 Market Down 'A Couple Points' But Still Promises Growth
- URL: https://www.bullished.co/zurn-elkay-sees-its-2027-market-down-a-couple-points-but-still-promises-growth-74f64528/
- Published: 2026-10-28T13:37:52.000Z
- Updated: 2026-10-28T13:37:52.000Z
- Description: Management leans on price, share gains and new product lines, and says 2027 looks like 40% incremental margins or better.
- Author: Matteo Parrino
- Tags: Earnings, ZWS, Industry: Industrials

[Zurn Elkay Water Solutions](https://www.bullished.co/tag/zws/), which makes drinking water stations, valves, drains and restroom fixtures, said on its [third-quarter earnings call](https://www.sec.gov/Archives/edgar/data/1439288/000162828026067574/ex991earningsrelease93026.htm?ref=bullished.co) Wednesday that its end market "looks to be likely down a couple points next year," yet it still sees growth in 2027\. Chief Operating Officer Dave Pauli added that 2027 "looks like 40% incrementals plus."

## Growth without a market lift

Chairman and CEO Todd Adams said the broader economy and parts of its end markets "don't feel like they're going to be a tailwind for our business in 2027," so the company will lean on "grit" and its business system.

Pauli said growth would come from share-gain initiatives, drinking water, repair and retrofit work at about 50% of sales, price and adjacencies. He cited positive core growth in 59 of the last 63 quarters and a 10-year core sales growth rate of 6%. Formal 2027 guidance comes in February.

On pricing, Adams told a Stifel analyst to think of price as "regular way," a couple of points in 2027\. No incremental price is assumed in the fourth quarter beyond what is already in place, and a price increase is teed up for next year.

## The 40% margin ratchet

Incremental margin is the share of each added sales dollar that becomes profit. Pauli said the expectation was 25% to 30% around the Elkay merger, then 30%, then 35% at the start of this year, and 40% in the second quarter.

He said cost-savings work adds EBITDA of around $5 million or more in 2027 on top of that. Answering an Oppenheimer analyst, Adams said the 40% comes from the core business, not the new hot water push, which he called a category that will run at or above the company's average margin.

Shares traded at $47.39, down 3.58% from the prior close of $49.15, in Wednesday trading.

## A quarter that beat the guide

Third-quarter sales were [$495 million](https://markets.ft.com/data/announce/detail?dockey=600-202610271605BIZWIRE%5FUSPRX%5F%5F%5F%5F20261027%5FBW819007-1&ref=bullished.co), up 9% reported and 7% core, at the high end of guidance, CFO Dan Klun said. Adjusted EBITDA rose 15% to $140 million, with margin up 150 basis points to 28.3%. Price added about two points of growth.

The company [bought $35 million](https://www.sec.gov/Archives/edgar/data/1439288/000162828026067574/ex991earningsrelease93026.htm?ref=bullished.co) of stock, and the board raised the annual dividend 18%. Free cash flow was $110 million for the quarter. For the fourth quarter it guided to sales of $430 million to $437 million and adjusted EBITDA of $120 million to $123 million, and it raised full-year adjusted EBITDA to $512 million to $515 million.

President Jeff Schoon introduced the Wilkins Runpoint digital mixing valve, entering a market he put at more than $200 million, and said mixing valves could become a $50 million category for the company over the long run.

Management will give formal 2027 guidance in early February, when it reports fourth-quarter results.

### Sources

- [Document](https://www.sec.gov/Archives/edgar/data/1439288/000162828026067574/ex991earningsrelease93026.htm?ref=bullished.co) — sec.gov
- [Zurn Water (ZWS) Q3 Earnings and Revenues Surpass Estimates](https://finance.yahoo.com/markets/stocks/articles/zurn-water-zws-q3-earnings-212012579.html?ref=bullished.co) — Yahoo Finance
- [Zurn Elkay Water Solutions Non-GAAP EPS of $0.52 beats by $0.02, revenue of $495.1M beats by $1.73M (NYSE:ZWS)](https://seekingalpha.com/news/4658405-zurn-elkay-water-solutions-non-gaap-eps-of-0%5F52-beats-by-0%5F02-revenue-of-495%5F1m-beats-by?ref=bullished.co) — seekingalpha.com
- [Zurn Elkay Water Solutions Reports Third Quarter 2026 Financial Results – Company Announcement - FT.com](https://markets.ft.com/data/announce/detail?dockey=600-202610271605BIZWIRE%5FUSPRX%5F%5F%5F%5F20261027%5FBW819007-1&ref=bullished.co) — Financial Times
- [Here are the major earnings after the close Tuesday | Seeking Alpha](https://seekingalpha.com/news/4657214-here-are-the-major-earnings-after-the-close-tuesday?ref=bullished.co) — seekingalpha.com

### More on Zurn Elkay Water Solutions

- [Zurn Elkay Third-Quarter Profit Rises To $76 Million, Dividend Up 18% — Fourth-Quarter Sales Outlook Is $430 Million To $437 Million](https://www.bullished.co/zurn-elkay-third-quarter-profit-rises-to-76-million-dividend-up-18-fourth-quarter-sales-07e8f81d/)
- [Zurn Elkay's Intellihot Deal Came With $13.4 Million In Warranty Obligations](https://www.bullished.co/zurn-elkays-intellihot-deal-came-with-13-4-million-in-warranty-obligations-9d3e51e7/)

[All Zurn Elkay Water Solutions (ZWS) coverage →](https://www.bullished.co/tag/zws/)