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# Zurn Elkay's Intellihot Deal Came With $13.4 Million In Warranty Obligations
- URL: https://www.bullished.co/zurn-elkays-intellihot-deal-came-with-13-4-million-in-warranty-obligations-9d3e51e7/
- Published: 2026-10-27T20:23:42.000Z
- Updated: 2026-10-27T20:23:42.000Z
- Description: The acquired claims lifted the water-products maker's warranty reserve to $23.0 million from $9.4 million a quarter earlier.
- Author: Matteo Parrino
- Tags: Deals, ZWS, Industry: Industrials

Zurn Elkay Water Solutions, which makes drinking water stations, valves, drains and flush systems for commercial and institutional buildings, took on [$13.4 million of acquired warranty obligations](https://www.sec.gov/Archives/edgar/data/0001439288/000162828026067577/zws-20260930.htm?ref=bullished.co) with its purchase of tankless water heater maker Intellihot, its quarterly report filed Tuesday shows. The product warranty reserve stood at $23.0 million at September 30, against $9.4 million in the prior quarter's report.

## A reserve that more than doubled

The warranty liability table shows the nine-month balance starting at $6.6 million, then adding the $13.4 million of acquired obligations, $5.0 million charged to operations and subtracting $2.0 million of claims settled, for the $23.0 million total. Of that, $7.2 million is current and $15.8 million is long-term. The long-term piece was $4.5 million in the [prior quarter's filing](https://www.sec.gov/Archives/edgar/data/0001439288/000162828026050162/zws-20260630.htm?ref=bullished.co).

In the preliminary price allocation, the warranties offset $55.0 million of goodwill, $44.5 million of other intangibles, an $8.5 million deferred tax asset and $12.7 million of other net assets. The company says the allocation can be adjusted for up to a year after the acquisition date, so the warranty figure may still move.

## Price, wording and the target

Zurn Elkay closed the purchase of Intellihot, based in Vernon Hills, Illinois, on July 21\. It paid total consideration of $107.3 million, excluding transaction costs and net of $2.1 million of cash acquired. Intellihot serves healthcare, education, hospitality and commercial buyers.

The prior quarterly report put the price at about $108.5 million and said the deal was not expected to have a material impact. The new filing drops that sentence and says pro-forma results were not presented because they are not material.

Intellihot added 2% to third-quarter net sales of $495.1 million, up 9% from a year earlier, with core sales up 7%, according to the [earnings release](https://www.sec.gov/Archives/edgar/data/0001439288/000162828026067574/ex991earningsrelease93026.htm?ref=bullished.co).

## Buybacks and dividend alongside the deal

For the nine months, the company spent $107.3 million on the acquisition, $134.7 million on share repurchases and $55.0 million on dividends. It repurchased 732,793 shares for $35.0 million in the third quarter. The board declared a quarterly dividend of $0.13 a share on October 22, payable December 7 to holders of record on November 20.

Cash stood at $307.1 million, and the company reports no borrowings on its $550.0 million revolving credit facility. Its market value was $8.2 billion in Tuesday's report.

The company holds a one-year window from the July 21 closing to adjust the Intellihot allocation, warranty balance included.

### Sources

- [10-Q Filing — Zurn Elkay Water Solutions (ZWS)](https://www.sec.gov/Archives/edgar/data/0001439288/000162828026067577/zws-20260930.htm?ref=bullished.co) — SEC EDGAR
- [10-Q Filing — Zurn Elkay Water Solutions (ZWS), Q2 FY2026 filed 2026-07-28 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0001439288/000162828026050162/zws-20260630.htm?ref=bullished.co) — SEC EDGAR
- [Earnings release (8-K Item 2.02, ex991earningsrelease93026.htm) — Zurn Elkay Water Solutions, filed 2026-10-27](https://www.sec.gov/Archives/edgar/data/0001439288/000162828026067574/ex991earningsrelease93026.htm?ref=bullished.co) — SEC EDGAR