Q1 2025 Zurn Elkay Water Solutions Corp Earnings Call Transcript
Key Points
- Zurn Elkay Water Solutions Corp (ZWS) reported a solid Q1 with 5% organic growth and a 110 basis point improvement in EBITDA margins year over year.
- The company achieved cash flow ahead of expectations, indicating strong financial management.
- ZWS has a strategic plan to reduce its supply chain exposure to China, aiming for only 2% to 3% of COGS from China by the end of 2026.
- The company has been recognized for its sustainability efforts, including delivering 600 million gallons of filtered water in Q1, a 33% increase over the prior year.
- ZWS ended the quarter with a strong balance sheet, maintaining a net debt leverage below 1 at 0.9 times, even after deploying $77 million for share repurchases.
- The company faces potential cost increases due to tariffs, with an expected impact of $45 million to $55 million in 2025.
- There is uncertainty regarding the impact of tariffs on future pricing and demand, which could affect financial performance.
- ZWS's residential and certain commercial segments within non-residential markets showed softness, partially offsetting growth.
- The company is operating in an environment with potential new tariffs or added costs for the foreseeable future, which could impact profitability.
- There is a risk of demand destruction due to price increases, although the extent is currently unknown.
Good morning and welcome to the Zurn Elkay Water Solutions Corporation first quarter 2025 earnings results conference call with Todd Adams, Chairman and Chief Executive Officer; Dave Pauli, Chief Financial Officer; and Brian Wendland, director of FPNA; for Zurn Elkay Water Solutions. A replay of the conference call will be available as a webcast on the company's investor relations website. At this time for opening remarks and introduction, I'll turn the call over to Bryan Wendlandt. Please go ahead.
Good morning, everyone and thanks for joining the call today. Before we begin, I'd like to remind everyone that this call contains certain forward-looking statements that are subject to the safe harbour language contained in the press release that we issued yesterday afternoon, as well as in our filings with the SEC.
In addition, some comparisons refer to non-GAAP measures. Release and SEC filings contain additional information about these non-gap measures, why we use them, and why we
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