Zurn Elkay Water Solutions Corp (ZWS, Financial) released its 8-K filing on April 22, 2025, reporting robust financial results for the first quarter of 2025. The company, known for its comprehensive range of clean water solutions, achieved net sales of $389 million, surpassing the analyst estimate of $383.80 million. The diluted earnings per share (EPS) from continuing operations stood at $0.24, exceeding the estimated EPS of $0.23.
Company Overview
Zurn Elkay Water Solutions Corp designs, procures, manufactures, and markets a diverse portfolio of clean water solutions. Their offerings include professional-grade water control and safety products, water distribution and drainage systems, and hygienic and environmental products, catering to both public and private spaces.
Performance Highlights and Challenges
The company's net sales increased by 4% year-over-year, driven by a 5% growth in core sales, despite a 1% reduction due to unfavorable exchange rates. This performance is significant as it reflects the company's ability to maintain growth amidst a challenging trade environment. However, the volatile nature of trade conditions poses potential risks that could impact future performance.
Financial Achievements and Industry Significance
Zurn Elkay Water Solutions Corp reported an adjusted EBITDA of $98 million, representing 25.2% of net sales, an improvement from 24.1% in the previous year. This achievement underscores the company's operational efficiency and its strategic focus on optimizing supply chains and maintaining price-cost balance, crucial for sustaining profitability in the industrial products sector.
Key Financial Metrics
Income from operations increased to $63.4 million from $53.2 million in the prior year, with a 210 basis point improvement in operating margin. The company also deployed $77 million to repurchase 2.3 million shares, reflecting a commitment to returning capital to shareholders. The net debt leverage ratio stood at a healthy 0.9x, indicating strong financial stability.
Todd A. Adams, Chairman and CEO, stated, “We had a solid start to 2025, delivering first quarter core sales growth of 5% along with 25.2% adjusted EBITDA margins, an increase of 110 basis points year over year. We also returned significant capital to shareholders in the form of $77 million in share repurchases and $15 million in dividends while maintaining leverage at 0.9x.”
Income Statement Summary
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Net Sales | $388.8 million | $373.8 million |
| Gross Profit | $181.0 million | $170.1 million |
| Income from Operations | $63.4 million | $53.2 million |
| Net Income from Continuing Operations | $41.0 million | $34.0 million |
Analysis and Outlook
Zurn Elkay Water Solutions Corp's performance in Q1 2025 demonstrates its resilience and strategic agility in navigating a complex market landscape. The company's focus on sustainability and operational excellence positions it well for future growth. As it celebrates its 125th anniversary, ZWS continues to leverage its competitive advantages and adaptability to drive long-term success.
For the second quarter, the company anticipates core sales growth in the low to mid-single-digit range and adjusted EBITDA margins between 25.5% and 26.0%, maintaining its full-year guidance. This outlook reflects confidence in its strategic initiatives and market positioning.
Explore the complete 8-K earnings release (here) from Zurn Elkay Water Solutions Corp for further details.
