Zurn Elkay Water Solutions Reports Third Quarter 2026 Financial Results
Zurn Elkay Water Solutions Corp (ZWS) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Press Release October 27, 2026 Contact Information: For Immediate Release Bobbi Belstner Vice President, Corporate Controller 414.361.0122 Zurn Elkay Water Solutions Reports Third Quarter 2026 Financial Results Investor call scheduled for Wednesday, October 28, 2026
How this was made
The 30-second read
Why it matters
The Q3 earnings beat and dividend increase reinforce the company's growth narrative, likely supporting the stock.
Market read
First report of ZWS Q3 2026 earnings with positive surprises; actionable for traders.
What to watch
Potential headwinds from broader economic uncertainty could temper growth.
Zurn Elkay Water Solutions Reports Third Quarter 2026 Financial Results
Third-quarter net sales increased 9% year over year, core sales improved 7%, income from operations increased to $108.2 million from $77.5 million, adjusted EBITDA margin reached 28.3%, and free cash flow was $109.6 million. The company also completed the Intellihot acquisition, repurchased shares, increased its annual dividend and issued fourth-quarter sales and adjusted EBITDA guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three months ended September 30GAAP | $495.1M | – | 9% |
| Core sales, three months ended September 30non-GAAP | 7% | – | 7% |
| Acquisition contribution to net sales, three months ended September 30other | 2% | – | 2% |
| Cost of sales, three months ended September 30GAAP | $249.3M | – | – |
| Gross profit, three months ended September 30GAAP | $245.8M | – | – |
| Selling, general and administrative expenses, three months ended September 30GAAP | $121M | – | – |
| Restructuring and other similar charges, three months ended September 30GAAP | $1.4M | – | – |
| Amortization of intangible assets, three months ended September 30GAAP | $15.2M | – | – |
| Income from operations, three months ended September 30GAAP | $108.2M | – | – |
| Income from operations as a percentage of net sales, three months ended September 30GAAP | 490 basis points year over year increase | – | 490 basis points |
| Interest expense, net, three months ended September 30GAAP | −$6.3M | – | – |
| Other income, net, three months ended September 30GAAP | $700K | – | – |
| Income before income taxes, three months ended September 30GAAP | $102.6M | – | – |
| Provision for income taxes, three months ended September 30GAAP | −$26.5M | – | – |
| Net income from continuing operations, three months ended September 30GAAP | $76.1M | – | – |
| Net income from discontinued operations, net of tax, three months ended September 30GAAP | $200K | – | – |
| Net income, three months ended September 30GAAP | $76.3M | – | – |
| Diluted net income per share from continuing operations, three months ended September 30GAAP | $0.45 | – | – |
| Diluted net income per share, three months ended September 30GAAP | $0.45 | – | – |
| Adjusted EBITDA, three months ended September 30non-GAAP | $140.1M | – | – |
| Adjusted EBITDA margin, three months ended September 30non-GAAP | 28.3% of net sales | – | – |
| Adjusted net income, three months ended September 30non-GAAP | $86.8M | – | – |
| Adjusted earnings per share - diluted, three months ended September 30non-GAAP | $0.52 | – | – |
| Cash provided by operating activities, three months ended September 30GAAP | $112.2M | – | – |
| Expenditures for property, plant and equipment, three months ended September 30GAAP | −$9.8M | – | – |
| Free cash flow, three months ended September 30non-GAAP | $109.6M | – | – |
| Net sales, nine months ended September 30GAAP | $1.42B | – | – |
| Gross profit, nine months ended September 30GAAP | $739.9M | – | – |
| Income from operations, nine months ended September 30GAAP | $342.6M | – | – |
| Net income from continuing operations, nine months ended September 30GAAP | $247.5M | – | – |
| Net income, nine months ended September 30GAAP | $248.5M | – | – |
| GAAP diluted net income per share from continuing operations, nine months ended September 30GAAP | $1.47 | – | – |
| Adjusted EBITDA, nine months ended September 30non-GAAP | $392.1M | – | – |
| Adjusted net income, nine months ended September 30non-GAAP | $241.3M | – | – |
| Adjusted earnings per share - diluted, nine months ended September 30non-GAAP | $1.43 | – | – |
| Cash provided by operating activities, nine months ended September 30GAAP | $320.6M | – | – |
| Expenditures for property, plant and equipment, nine months ended September 30GAAP | −$16.1M | – | – |
| Free cash flow, nine months ended September 30non-GAAP | $264.1M | – | – |
| Net debt leverage as of September 30, 2026non-GAAP | 0.4x | – | – |
Fourth Quarter and Full Year Outlook outlook
- Revenue$430 million to $437 million
- NoteFourth quarter adjusted EBITDA between $120 million to $123 million
- NoteFull year free cash flow greater than $350 million, excluding the net impact of tariff related refunds received
Capital returns
- Deployed $35 million to repurchase 0.7 million shares of common stock in the quarter.
- Increased annual dividend 18% to $0.52 per share.
- Repurchase of common stock was $(134.7) million during the nine months ended September 30, 2026.
- Payment of common stock dividends was $(55.0) million during the nine months ended September 30, 2026.
What drove it
- Core sales improved 7% year over year, including growth in nearly all product categories.
- The acquisition of Intellihot contributed an additional 2% increase to net sales.
- Income from operations as a percentage of net sales increased by 490 basis points year over year as a result of product mix, Zurn Elkay Business System led productivity initiatives and supply chain repositioning.
- The company completed the acquisition of Intellihot during the third quarter.
- The company entered the digital master mixing valve market with internally developed new products.
Concerns
- Management cited general uncertainty within its served markets and the broader economy.
- The company said it must continue to find pockets of growth to offset that uncertainty.
- Full-year free cash flow guidance excludes the net impact of tariff related refunds received.
What to watch
- Fourth-quarter net sales guidance of $430 million to $437 million.
- Fourth-quarter adjusted EBITDA guidance of $120 million to $123 million.
- Full-year free cash flow expected to be greater than $350 million, excluding the net impact of tariff related refunds received.
- Integration and sales contribution from the completed Intellihot acquisition.
- Progress in the digital master mixing valve market and other hot water loop initiatives.
Balance sheet and cash flow
- Cash and cash equivalents were $307.1 million at September 30, 2026, compared with $300.5 million at December 31, 2025.
- Current maturities of debt were $1.7 million at September 30, 2026, compared with $0.9 million at December 31, 2025.
- Long-term debt was $498.6 million at September 30, 2026, compared with $495.6 million at December 31, 2025.
- Receivables, net were $264.9 million at September 30, 2026, compared with $184.8 million at December 31, 2025.
- Inventories, net were $280.8 million at September 30, 2026, compared with $274.4 million at December 31, 2025.
- Acquisitions, net of cash acquired were $(107.3) million during the nine months ended September 30, 2026.
- Cash used for investing activities was $(123.4) million during the nine months ended September 30, 2026.
- Cash used for financing activities was $(189.3) million during the nine months ended September 30, 2026.
Analysis
Zurn Elkay reported a strong third quarter, with net sales of $495.1 million compared with $455.4 million in the prior-year quarter. The company stated that sales increased 9% year over year, comprising 7% core-sales growth and an additional 2% from the Intellihot acquisition. Management attributed core growth to gains in nearly all product categories, while also emphasizing its expansion into hot water loop adjacencies.
Profitability improved materially. Income from operations was $108.2 million versus $77.5 million, and the company said income from operations as a percentage of sales increased by 490 basis points year over year. Management attributed that expansion to product mix, Zurn Elkay Business System led productivity initiatives and supply chain repositioning. Adjusted EBITDA was $140.1 million, or 28.3% of net sales, compared with $122.2 million, or 26.8% of net sales. GAAP diluted EPS from continuing operations was $0.45, while adjusted diluted EPS was $0.52.
Cash generation remained substantial. Cash provided by operating activities was $112.2 million in the quarter and free cash flow was $109.6 million, excluding International Emergency Economic Powers Act reciprocal tariff refunds received, net of related taxes paid. For the nine-month period, operating cash flow was $320.6 million and free cash flow was $264.1 million. The company reported $307.1 million of cash and cash equivalents, $1.7 million of current debt maturities, $498.6 million of long-term debt and net debt leverage of 0.4x as of September 30, 2026.
Capital allocation included the completion of the Intellihot acquisition, $35 million deployed to repurchase 0.7 million shares during the quarter, and an 18% increase in the annual dividend to $0.52 per share. Over the nine-month period, acquisitions, net of cash acquired, were $(107.3) million, common-stock repurchases were $(134.7) million and dividends paid were $(55.0) million. The company also highlighted internally developed digital master mixing valve products as part of its effort to build out the hot water loop opportunity.
For the fourth quarter, Zurn Elkay expects net sales of $430 million to $437 million and adjusted EBITDA of $120 million to $123 million. It expects full-year free cash flow to be greater than $350 million, excluding the net impact of tariff related refunds received. Management framed its outlook conservatively given uncertainty in served markets and the broader economy, while maintaining that it will pursue growth opportunities and profitable share gains in adjacent categories.
Management, verbatim
We delivered 7% core sales (1) growth, 28.3% adjusted EBITDA margins (1) and free cash flow (1) of $110 million in the third quarter. We were able to leverage our exceptional free cash flow (1) to invest $35 million in share repurchases in the quarter as well as fund the Intellihot acquisition, which closed during the third quarter. Finally, we are increasing our annual dividend by 18% to $0.52 per share, reflecting the confidence we have in the long-term fundamentals of our business and business model driven by the Zurn Elkay Business System.
Todd A. Adams, Chairman and Chief Executive Officer
Last quarter we announced the acquisition of Intellihot, which along with our Wilkins backflow are key components of the hot water loop. Earlier this month, we continued to build out our presence in the hot water loop with the entrance into the digital master mixing valve market with internally developed new products that we believe will allow us to take meaningful, profitable share in the category over the next several years. These breakthrough initiatives are part of our continued focus to leverage our significant competitive advantages into adjacencies. In 2026 alone, we believe we’ve expanded our served markets by roughly $400 million. While we’re encouraged with our progress, we are also aware that we must continue to be nimble in finding pockets of growth to offset the general uncertainty that exists within our served markets and the broader economy.
Todd A. Adams, Chairman and Chief Executive Officer
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported operating metrics
- Segment revenue and segment profitability disclosures
- Reported GAAP gross margin
- Fourth-quarter EPS guidance
- Fourth-quarter tax-rate guidance
- Previous-release outlook for comparison with reported results
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Zurn Elkay Water Solutions (NYSE:ZWS) provides water infrastructure products and services.
Ticker impact
Zurn Elkay Water Solutions reported Q3 2026 results with 7% core sales growth, EPS beat and raised dividend.
likely upward pressure as market prices in stronger sales and higher dividend
Revenue and EPS both exceeded prior-year levels; guidance remains solid, and share repurchase adds support.
Market effects
Water infrastructure sector may see modest uplift from ZWS's strong performance.
North American industrials could benefit from the earnings beat.
Limited to sector; no broad market impact.
Counterpoint
If the market has already priced in the dividend hike, the stock may face limited upside.
Key entities
- ExecutiveTodd A. Adams
Chairman and CEO of ZWS, provided commentary on results.
