Zurn Elkay Third-Quarter Profit Rises To $76 Million, Dividend Up 18% — Fourth-Quarter Sales Outlook Is $430 Million To $437 Million
The water-products maker raised its annual dividend to $0.52 a share and guided to fourth-quarter adjusted EBITDA of $120 million to $123 million.
Zurn Elkay Water Solutions, which makes water management products such as filtered drinking water stations, valves and drains, said third-quarter net income from continuing operations rose to $76 million, or $0.45 per diluted share, from $60 million, or $0.35, a year earlier. It also raised its annual dividend 18% to $0.52 a share, in an 8-K filed Tuesday.
Sales up 9%, margins wider
Net sales were $495 million against $455 million in the year-earlier quarter. Core sales, which exclude acquisitions and currency effects, grew 7%, and the Intellihot acquisition added another 2%.
Adjusted EBITDA, a profit measure before interest, taxes, depreciation and amortization, was $140 million, or 28.3% of sales, up from $122 million, or 26.8%. Adjusted earnings per share were $0.52 against $0.43. Income from operations as a share of sales rose 490 basis points (4.9 percentage points), which the company attributed to product mix, productivity initiatives and supply chain repositioning.
Free cash flow was $110 million, excluding tariff refunds received under the International Emergency Economic Powers Act, net of related taxes paid. Net debt leverage stood at 0.4 times adjusted EBITDA as of September 30, 2026.
Buybacks, Intellihot and a bigger dividend
The company spent $35 million to repurchase 0.7 million shares in the quarter and closed the Intellihot purchase. Chairman and CEO Todd Adams said the company used its "exceptional free cash flow" to fund both.
Adams said the dividend increase reflects confidence in the business's long-term fundamentals. He also pointed to a move this month into digital master mixing valves, which he said should help the company take "meaningful, profitable share" over the next several years. In 2026 alone, he said, the company believes it has expanded its served markets by roughly $400 million.
Zurn Elkay sells mainly to institutional and commercial building projects such as schools, hospitals and offices, through wholesalers, distributors and independent sales representatives.
A cautious fourth-quarter guide
For the fourth quarter, the company expects net sales of $430 million to $437 million and adjusted EBITDA of $120 million to $123 million. It expects full-year free cash flow above $350 million, excluding tariff-related refunds.
Adams said it feels "like a time to be conservative in our assumptions while remaining aggressive with our actions." He also cited "general uncertainty" in the company's served markets and the broader economy.
Management holds its investor call Wednesday at 8:30 a.m. Eastern.
The fourth-quarter sales range sits below the $495 million just reported, and Adams will field questions on it Wednesday morning.
Sources
- 8-K Filing — Zurn Elkay Water Solutions Corp (ZWS) — SEC EDGAR
- Exhibit ex991earningsrelease93026.htm — Zurn Elkay Water Solutions Corp 8-K exhibit — SEC EDGAR
