DEF: Zurn Elkay Reports Record 2025 Performance, Outlines 2026 Proxy

Sentiment:

Definitive Proxy Statement 12 March 2026 4:49 PM

📋All filings for Zurn Elkay Water Solutions CORP

Zurn Elkay Water Solutions Corporation announces record financial performance for 2025, including 8% organic growth and 13% Adjusted EBITDA increase, alongside proposals for its April 2026 Annual Meeting.

Capital raiseOn February 11, 2025, the company entered into an Underwriting Agreement for the sale of up to 8,912,500 shares of common stock by Ice Mountain LLC (the Selling Stockholder).In connection with this transaction, the company repurchased 1,636,905 of these shares (approximately $55,000,000) from the underwriters at the same price per share paid by the underwriters to the Selling Stockholder.

Better than expectedAdjusted EBITDA grew 13% to $442 million, exceeding the MICP target of $420 million.Free Cash Flow reached $317 million, surpassing the MICP target of $290 million.The company's stock price increased by 25% in 2025.The February 2023 PSUs, which vested in 2025, paid out at 200% of target value, indicating exceptional performance against long-term goals.

Summary

The company achieved record financial performance in 2025, including 8% organic growth, 13% Adjusted EBITDA growth to $442 million, and $317 million in free cash flow.
The dividend was increased by 22%, and $165 million of ZWS shares were repurchased, while financial leverage and net debt were reduced to historical lows.
The stock price increased by 25% in 2025, reflecting underlying business strength and sequential sales growth.
Key proposals for the April 30, 2026 Annual Meeting include the election of three directors, an advisory vote on executive compensation, and the ratification of Ernst & Young LLP as the independent auditor for 2026.
The company advanced its filtered drinking water solutions with Elkay Pro Filtration and expanded offerings with Liv EZ for residential use.
Sustainability efforts were recognized by Newsweek, TIME, and Barrons, with new targets set for product attributes, R&D, employee development, and supply chain governance.
Executive compensation for 2025 was heavily performance-based, with the CEO's long-term incentives being 100% performance stock units (PSUs) and other NEOs having a significant portion tied to PSUs.
The Management Incentive Compensation Plan (MICP) for 2025 resulted in a financial factor payout of 118% based on exceeding Adjusted EBITDA and Free Cash Flow targets.

Sentiment

Score: 9

Explanation: StockSavvy.ai views this filing as overwhelmingly positive, reflecting strong financial performance, strategic advancements in key growth areas, and robust corporate governance practices. The record financial metrics and external recognition for sustainability indicate a well-managed company with a clear vision.

Positives

Achieved 8% organic growth in 2025.
Adjusted EBITDA grew 13% to a record $442 million in 2025.
Delivered a record $317 million of free cash flow in 2025.
Increased dividend by 22% and repurchased $165 million of ZWS shares.
Reduced financial leverage and net debt to the lowest levels in company history.
Stock price increased by 25% in 2025.
Advanced filtered drinking water solutions with Elkay Pro Filtration, certified to reduce lead, PFAS, and microplastics.
Expanded drinking water offerings with Liv EZ, bringing commercial-grade filtered water to homes.
Received multiple third-party recognitions for sustainability, including Newsweek's America's Most Responsible Companies (No. 45) and America's Greenest Companies, TIME's Worlds Best Companies for Sustainable Growth (No. 229 globally, No. 40 U.S.), and Barrons' 100 Most Sustainable U.S. Companies (No. 63).
Products saved an estimated 31.2 billion gallons of water in 2025, and Elkay bottle fillers prevented over 124 billion single-use plastic bottles since 2012.
95% associate engagement in the 2025 annual survey, with overall scores improving 2 points year-over-year.
Increased formal training per associate by 10% to 20.5 hours on average in 2025.
The 2025 Management Incentive Compensation Plan (MICP) achieved a financial factor payout of 118%, exceeding targets for Adjusted EBITDA ($442.2 million vs. $420 million target) and Free Cash Flow ($316.6 million vs. $290 million target).
February 2023 PSUs (vested in 2025) paid out at 200% of target value, indicating strong long-term performance achievement.

Risks

The company depends heavily on information technology infrastructure, and a material security breach could impede business operations, require costly remediation beyond insurance coverage, cause loss of customers/revenue, or damage reputation.
Cybersecurity threats are becoming more complex, and a large percentage of the workforce working remotely may heighten these risks.
Measures taken to maintain and enhance cybersecurity, including security technologies, internal controls, network/data center resiliency, and insurance coverage, may be inadequate.
Technology systems could be vulnerable to disability, failures, or unauthorized access, including problems caused by natural disasters, security breaches, malicious attacks, or misuse of artificial intelligence tools.
Failure to comply with an increasing number of evolving data privacy and security laws and regulations could result in fines, penalties, and other costs.

Future Outlook

The company is optimistic about outstanding performance in 2026 and beyond, having built additional sustainable competitive advantages. It plans to continue regular stockholder outreach to solicit feedback on material corporate matters and seriously consider this feedback for continuous improvement. The board will continue to review and evaluate corporate governance, executive compensation, and sustainability programs. A new target has been set to reduce water withdrawal intensity by 3% by 2030.

Management Comments

"2025 was an exciting year for our company, having celebrated our 125th anniversary while making meaningful progress on our long-term strategic objectives and delivering a solid year of financial performance."
"We begin 2026 having built additional sustainable, competitive advantages in our business throughout the past year and are optimistic about our prospects for outstanding performance in the year ahead and beyond."
"Operating by our guiding principle – Simply Do the Right Thing – continues to earn us recognition from others."
"On behalf of our 2,600 Zurn Elkay associates, rest assured we are confident and have the strategy and culture to win far into the future."

Industry Context

StockSavvy.ai notes that Zurn Elkay's strong 2025 financial performance, particularly in organic growth, Adjusted EBITDA, and free cash flow, positions it favorably within the water solutions industry. The company's focus on sustainable water solutions, including filtered drinking water and water conservation products, aligns with increasing global demand for environmental, social, and governance (ESG) compliant products and infrastructure improvements. The legislative progress in states like Massachusetts and Wisconsin to reduce lead in drinking water, modeled after Michigan's law, indicates a growing market opportunity for Zurn Elkay's core offerings, potentially driving further growth in its filtered drinking water solutions business. The consistent external recognition for sustainability also enhances its brand reputation and competitive edge in an industry increasingly scrutinized for environmental impact.

Comparison to Industry Standards

Zurn Elkay's 8% organic growth and 13% Adjusted EBITDA growth to $442 million in 2025 demonstrate robust performance, potentially outpacing some peers in the industrial technology and water infrastructure sectors. For instance, while specific peer data is not provided in the filing, companies like Watts Water Technologies, Inc. and Pentair Plc operate in similar spaces, and Zurn Elkay's reported metrics suggest strong execution in a competitive environment.
The company's commitment to sustainability, evidenced by its inclusion in Newsweek's America's Most Responsible Companies (No. 45) and Barrons' 100 Most Sustainable U.S. Companies (No. 63), places it among leading global benchmarks for corporate responsibility. This level of recognition is comparable to or exceeds many larger industrial and manufacturing firms, highlighting a strong ESG profile.
The CEO's long-term incentive compensation being 100% performance-based PSUs is noted as higher than the peer group comparison, indicating a more aggressive alignment with shareholder value creation compared to industry averages for executive compensation structures.
The payout of February 2023 PSUs at 200% of target value, based on Free Cash Flow Conversion and ROIC, suggests superior performance against internal benchmarks, which is a positive indicator of management's ability to meet and exceed challenging financial goals.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Composition	The board has a long-standing focus on building a highly-engaged, independent board, with the CEO being the only non-independent director. Five new directors have been added since 2019 to expand perspectives, skills, and experiences.	Ongoing	Enhances board diversity, fresh perspectives, and independent oversight, aligning with best practices for corporate governance.
Director Age Limit	Directors will not be nominated for election or re-election after attaining age 75, though a director reaching 75 during a term may serve the remainder of that term.	Ongoing	Promotes board refreshment and ensures a balance of experience with new perspectives.
Gender Diversity	The board has 30% female representation.	Ongoing	Reflects a commitment to diversity, which can lead to broader perspectives and improved decision-making.
Committee Independence	All committees of the Board (Audit, Compensation, Nominating and Corporate Governance, Sustainability) are 100% independent.	Ongoing	Ensures objective oversight and decision-making in critical areas like financial reporting, executive compensation, and governance.
Director Election Standard	Directors who do not receive a majority of votes cast in uncontested elections must offer an irrevocable resignation, contingent upon board acceptance.	Ongoing	Strengthens stockholder voice and accountability for director performance.
Stockholder Outreach	Annual stockholder outreach is conducted to solicit feedback from investors on corporate governance, executive compensation, sustainability, and other matters. Feedback is presented to management and the Board for consideration and implementation.	Ongoing (extensive outreach conducted Q4 2025 and Q1 2026)	Enhances transparency and responsiveness to stockholder concerns, fostering better alignment between the company and its investors.
Cybersecurity Oversight	The Audit Committee oversees cybersecurity risk, with two members holding cybersecurity oversight certificates and one an AI oversight certificate. A cybersecurity governance council meets quarterly, and the CIO provides periodic updates to the Audit Committee and annual updates to the full Board.	Ongoing	Provides robust, expert-led oversight of critical cybersecurity and technology risks, enhancing the company's resilience against evolving threats.
Executive Compensation Clawback Policy	Adopted an Executive Compensation Clawback Policy, effective October 2023, complying with SEC and NYSE rules. It mandates recovery of incentive compensation in case of accounting restatements and allows discretionary recovery for illegal/fraudulent conduct or material Code of Conduct breaches.	October 2023	Strengthens accountability for executive officers and aligns compensation with accurate financial reporting and ethical conduct.
Insider Trading Policy	The policy prohibits directors, officers, and employees from engaging in hedging or monetization transactions, holding company securities in a margin account, pledging company securities as collateral, or taking loans against 401(k) Plan balances invested in company stock.	Ongoing	Prevents conflicts of interest and promotes long-term alignment of insiders' interests with those of stockholders.

Related Party Transactions

On February 11, 2025, the company repurchased 1,636,905 shares of its common stock (approximately $55,000,000) from underwriters in connection with a sale of up to 8,912,500 shares by Ice Mountain LLC (the Selling Stockholder). The Audit Committee reviewed and approved the terms and conditions of this share repurchase.

Stakeholder Impact

**Shareholders**: Positive impact due to record financial performance (8% organic growth, 13% Adjusted EBITDA growth, $317M free cash flow), 22% dividend increase, $165M share repurchases, and a 25% stock price increase in 2025. Enhanced corporate governance and executive compensation alignment with performance also benefit shareholders.
**Employees (Associates)**: Positive impact through expanded professional development opportunities (20.5 hours of formal training per associate, a 10% increase), high associate engagement (95% participation, 2-point score improvement), and a commitment to zero workplace injuries through an Occupational Health and Safety Management system.
**Customers**: Positive impact from advanced product offerings like Elkay Pro Filtration and Liv EZ, which address complex water challenges, enhance health and safety, and promote sustainability. The company's focus on product innovation and quality directly benefits customers.
**Communities**: Positive impact through philanthropic efforts, such as donating Elkay filtered bottle filling stations to under-resourced public school districts (e.g., Erie, Pennsylvania). The company's commitment to sustainability and environmental stewardship also benefits the communities in which it operates.
**Suppliers**: The company's sustainability strategy includes new targets pertaining to supply chain governance, indicating a focus on ethical and sustainable sourcing, which could lead to increased scrutiny and collaboration with suppliers on ESG matters.
**Creditors**: Positive impact from the reduction of financial leverage and net debt to the lowest levels in company history, indicating improved financial health and reduced credit risk.

Next Steps

Stockholders to vote on the election of three directors at the Annual Meeting on April 30, 2026.
Stockholders to hold an advisory vote to approve the compensation of named executive officers.
Stockholders to ratify the selection of Ernst & Young LLP as the independent registered public accounting firm for 2026.
The company plans to continue regular stockholder outreach to solicit feedback on material corporate matters.
The executive management team and Board will continue to seriously consider feedback from stockholder discussions for continuous improvement.
The company will continue to focus on its sustainability strategy by regularly reviewing goals and key performance indicators.
The company will continue to evaluate changing reporting frameworks and the landscape to ensure appropriate disclosure to stockholders.
The company has set a new target to reduce water withdrawal intensity by 3% by 2030.
The next annual meeting of stockholders is expected to be held on April 29, 2027.

Key Dates

Date	Description
1900	Company founded by John A. Zurn in Erie, Pennsylvania.
2002	Ernst & Young LLP began serving as the company's independent registered public accounting firm.
2009	Todd A. Adams joined the board of directors.
2012	Mark S. Bartlett joined the board of directors.
2013	Thomas D. Christopoul joined the board of directors.
2015	George C. Moore joined the board of directors.
2016	David C. Longren joined the board of directors.
2019	Rosemary Schooler and Peggy N. Troy joined the board of directors. Five new directors added since 2019.
2020	Todd A. Adams became Chairman of the Board. Mark S. Bartlett became Lead Director. Sustainability Committee established.
October 4, 2021	Spin-off of the former Process and Motion Control business.
2021	Don Butler joined the board of directors.
July 1, 2022	Acquisition of Elkay Manufacturing Company.
2022	Timothy J. Jahnke joined the board of directors.
2023	Emma M. McTague joined the board of directors. Executive Compensation Clawback Policy adopted, effective October 2023.
February 2023	Long-term equity incentive awards, including PSUs, were granted, which vested in 2025.
May 17, 2024	Company entered into a letter agreement with Mr. Adams regarding his continued employment, extending through May 17, 2028.
2024	Most recent advisory say-on-frequency vote of stockholders was held, resulting in annual say-on-pay votes.
February 11, 2025	Company entered into an Underwriting Agreement for the sale of common stock by Ice Mountain LLC, and repurchased 1,636,905 shares (approx. $55,000,000) from the underwriters.
January 1, 2025	Start of the performance period for PSUs granted in 2025, extending through December 31, 2027.
December 31, 2025	End of the fiscal year for which financial results and compensation are reported. Record date for stock ownership guidelines for directors.
December 2024	Peggy N. Troy retired as President and Chief Executive Officer of Children's Wisconsin.
March 3, 2026	Record Date for stockholders entitled to vote at the Annual Meeting.
March 12, 2026	Expected date for mailing Notice of Internet Availability of Proxy Materials to stockholders.
April 20, 2026	Deadline for stockholders to request paper copies of proxy materials to assure timely delivery before the annual meeting. Deadline for 401(k) Plan voting instructions.
April 30, 2026	Date of the Annual Meeting of Stockholders.
2026	Annual cash compensation for non-employee directors revised to $100,000, and annual equity grant value to $150,000.
December 1, 2026	Start of the window for written notice to the Corporate Secretary for proposals or nominations for the 2027 annual meeting.
December 31, 2026	End of the window for written notice to the Corporate Secretary for proposals or nominations for the 2027 annual meeting.
November 12, 2026	Deadline for stockholder proposals to be considered for inclusion in proxy material for the 2027 annual meeting under Rule 14a-8.
April 29, 2027	Expected date of the 2027 annual meeting of stockholders.
2029	Expiration of three-year terms for directors elected at the April 30, 2026 annual meeting.

Recommendation

strong buy

The filing reveals exceptional financial performance in 2025, including record Adjusted EBITDA and free cash flow, significant organic growth, a substantial dividend increase, and share repurchases. The 25% stock price increase in 2025 reflects this strength, yet the company's continued strategic advancements in sustainable water solutions and strong corporate governance suggest further upside potential. The executive compensation structure is highly aligned with performance, and the company's proactive approach to sustainability and stakeholder engagement are long-term value drivers. While cybersecurity risks are noted, the company has robust oversight in place. The overall picture indicates a well-managed company with strong fundamentals and positive momentum, making it a compelling 'strong buy' for investors seeking growth and stability in the water solutions sector.

Keywords

Water Solutions, Sustainability, Corporate Governance, Executive Compensation, SEC Filing, Proxy Statement, Financial Performance, Adjusted EBITDA, Free Cash Flow, Dividend, Share Repurchase, Cybersecurity, Risk Management, Board of Directors, Elkay Pro Filtration, Liv EZ, Environmental Stewardship, Human Capital Management

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