Zurn Elkay Water Solutions (ZWS) Q3 2026 Earnings Call: EBITDA Guidance Raised
Source Tradingkey
Key Takeaways
- Third-quarter sales rose 9% year over year to $495 million, including 7% core growth. IntelliHot contributed 2 percentage points, or $6 million, while pricing added another 2 points.
- Adjusted EBITDA increased 15% to $140 million. Adjusted EBITDA margin expanded 150 basis points to 28.3%, supported by favorable product mix, productivity gains and supply-chain repositioning.
- Free cash flow totaled $110 million for the quarter and approximately $264 million year to date. The company maintained its full-year free cash flow target of more than $350 million.
- Zurn Elkay repurchased $35 million of stock during the quarter, and its board approved an 18% increase in the annual dividend. Quarter-end leverage was 0.4x.
- Management raised its full-year 2026 adjusted EBITDA outlook to $512 million-$515 million. Fourth-quarter sales are expected to be $430 million-$437 million.
- Management expects Zurn Elkay to grow in 2027 despite a market that currently appears likely to decline by a couple of percentage points. The company sees incremental margins of at least 40%, plus $5 million or more of additional EBITDA benefits from cost actions.
Key Financial Data
| Metric | Q3 2026 | Year-over-year change / context |
|---|---|---|
| Net sales | $495 million | Up 9% reported; up 7% on a core basis |
| Adjusted EBITDA | $140 million | Up 15% |
| Adjusted EBITDA margin | 28.3% | Up 150 basis points |
| Free cash flow | $110 million | Approximately $264 million year to date |
| Net leverage | 0.4x | Remained near historically low levels |
| Share repurchases | $35 million | Completed during Q3 |
| Year-to-date net sales | $1.419 billion | Up 10% reported; up 9% core |
| Year-to-date adjusted EBITDA | $392 million | Up 16% |
| Year-to-date adjusted EBITDA margin | 27.6% | Up 140 basis points; 41% incremental margin |
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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