8-K: Zurn Elkay Reports Record 2025, Exceeds Q4 Guidance

Zurn Elkay Water Solutions announced record full-year 2025 financial results, surpassing its fourth-quarter guidance with strong sales and profit growth.

Summary

• Zurn Elkay Water Solutions Corporation reported net sales of $407 million for the fourth quarter ended December 31, 2025, a 10% increase in core sales compared to $371 million in the prior year quarter.
• Net income from continuing operations for Q4 2025 was $42 million, or $0.24 diluted EPS, up from $36 million, or $0.21 diluted EPS, in Q4 2024.
• Adjusted EPS for Q4 2025 reached $0.36, an increase from $0.32 in the year-ago quarter.
• Adjusted EBITDA for Q4 2025 was $104 million, representing 25.6% of net sales, compared to $91 million (24.6% of net sales) in Q4 2024.
• For the full calendar year 2025, net sales were $1,696 million, an 8% increase in core sales from $1,567 million in 2024.
• Full-year 2025 net income from continuing operations was $192 million, or $1.12 diluted EPS, compared to $159 million, or $0.91 diluted EPS, in 2024.
• Adjusted EPS for full-year 2025 was $1.52, up from $1.28 in the prior year.
• Adjusted EBITDA for full-year 2025 was $442 million, representing 26.1% of net sales, an increase from $390 million (24.9% of net sales) in 2024.
• The company generated record free cash flow of $317 million in 2025 and maintained a net debt leverage of 0.4x as of December 31, 2025.
• Zurn Elkay repurchased $160 million of common stock in 2025, including $25 million (0.5 million shares) in Q4, and paid $64 million in common stock cash dividends.

Sentiment

Score: 9

Explanation: StockSavvy.ai views this as a highly positive report, driven by record financial performance, strong operational execution, a healthy balance sheet, and a confident outlook for continued growth and shareholder returns.

Positives

• Achieved record annual sales, adjusted EBITDA, and free cash flow in 2025.
• Fourth quarter core sales grew 10% year-over-year, exceeding prior guidance.
• Adjusted EBITDA margins expanded by 100 basis points in Q4 2025 to 25.6% and by 120 basis points for the full year to 26.1%.
• Generated record free cash flow of $317 million for the full year 2025.
• Maintained a very low net debt leverage of 0.4x as of December 31, 2025, indicating strong financial health.
• Repurchased $160 million of common stock in 2025, demonstrating commitment to shareholder returns.
• Increased quarterly dividend by 22% year-over-year, signaling confidence in future performance.

Risks

• Forward-looking statements involve risks and uncertainties, and actual results could differ materially from current expectations.
• Numerous factors could cause or contribute to such differences, as detailed in the company's Form 10-K for the period ended December 31, 2024, and subsequent SEC filings.

Future Outlook

For the full year 2026, Zurn Elkay expects mid-single digit core sales growth, incremental adjusted EBITDA margins of approximately 35%, and full-year free cash flow of approximately $335 million. For the first quarter of 2026, the company anticipates positive core sales growth of 7% to 8%, incremental adjusted EBITDA margins of approximately 35%, equating to adjusted EBITDA margins of approximately 25.5% to 26.0%.

Management Comments

• "We finished 2025 with record annual sales, adjusted EBITDA and free cash flow while repurchasing $160 million of our common stock and increasing our quarterly dividend 22% year over year."
• "We leveraged the Zurn Elkay Business System to drive 8% year-over-year core sales growth and full year adjusted EBITDA of $442 million with margins expanding 120 basis points year over year to 26.1%."
• "Our record free cash flow of $317 million led to net debt leverage of 0.4x at December 31, 2025. We exit 2025 with a balance sheet, outlook and management capacity that gives us the ability to deploy capital to continue to deliver shareholder value."
• "In the fourth quarter, we delivered sales, adjusted EBITDA and free cash flow ahead of our guidance from 90 days ago, as core sales grew 10%, adjusted EBITDA grew 14% to $104 million, adjusted EBITDA margins expanded 100 basis points (36% incrementals) over last year and free cash flow was $83 million."
• "As we begin 2026, we are confident in our ability to drive superior results in a variety of end market and macro environment scenarios and further build upon the sustainable competitive advantages we’ve established in our business through relentless deployment of the Zurn Elkay Business System."

Industry Context

StockSavvy.ai notes that Zurn Elkay's strong performance, particularly in core sales growth and margin expansion, suggests robust demand within the water management solutions sector. The company's emphasis on sustainability aligns with broader industry trends towards environmentally conscious products and practices, potentially enhancing its competitive positioning.

Comparison to Industry Standards

• The filing does not provide specific comparable company data or industry benchmarks to assess Zurn Elkay's performance against global standards. However, the reported core sales growth of 10% in Q4 and 8% for the full year, coupled with significant adjusted EBITDA margin expansion, indicates strong operational execution within its market segment.
• The net debt leverage of 0.4x is exceptionally low, suggesting a very conservative and financially sound position compared to many industrial peers who often operate with higher leverage ratios.

Stakeholder Impact

• Shareholders: Positively impacted by record financial performance, increased quarterly dividend (22% YoY), and significant common stock repurchases ($160 million in 2025).
• Employees: Stock-based compensation is a component of non-GAAP adjustments, indicating ongoing equity incentives.
• Customers: Benefit from the company's focus on 'specification-driven water management solutions to improve health, hydration, human safety and the environment' and its commitment to helping customers achieve sustainability goals.
• Creditors: Positively impacted by the company's strong financial health, evidenced by a very low net debt leverage of 0.4x, enhancing creditworthiness.

Next Steps

• Release of the 2025 sustainability report in the coming weeks, highlighting progress on sustainability initiatives and new short and long-term goals.
• Host an investor conference call and webcast presentation on Wednesday, February 4, 2026, at 8:30 a.m. Eastern Time to discuss results and provide a business update.

Key Dates

Recommendation

The company delivered record financial results for 2025, significantly exceeding its own guidance for Q4. Key metrics like core sales, adjusted EBITDA, and free cash flow showed robust growth and margin expansion. The balance sheet is exceptionally strong with a low net debt leverage of 0.4x. Management's confidence in mid-single-digit core sales growth and strong free cash flow for 2026, coupled with a 22% dividend increase and substantial share repurchases, indicates a very positive outlook and commitment to shareholder value. These factors collectively suggest a strong investment opportunity.

Keywords

Zurn Elkay Water Solutions, ZWS, Earnings Release, Financial Results, Q4 2025, Full Year 2025, Net Sales, Adjusted EBITDA, EPS, Free Cash Flow, Share Repurchase, Dividend, Water Management, Sustainability