Zurn Elkay Water Solutions (ZWS) Q1 2026 earnings summary

Executive summary

• Net sales reached $433 million in Q1 2026, up 11% year-over-year, with core sales growth across nearly all product categories and adjusted EBITDA up 18% to $116 million, expanding margins by 160 basis points to 26.8%.

• Net income rose to $58.9 million from $43.6 million in Q1 2025, with adjusted EPS up to $0.41 from $0.31 and diluted EPS from continuing operations at $0.35.

• $50 million was used to repurchase approximately 1 million shares during the quarter.

• Strategic actions included increasing the revolving credit facility from $200 million to $550 million and publishing the 2025 sustainability report.

• Continued focus on higher-margin products, business mix shift toward retrofit/replace, and ongoing productivity and restructuring initiatives.

Financial highlights

• Income from operations was $82.1 million, up 29.5% year-over-year, with gross profit rising to $205.8 million.

• Adjusted EBITDA margin improved to 26.8% from 25.2% year-over-year, with trailing 12-month adjusted EBITDA margin up 630 basis points since Q1 2023.

• Free cash flow for Q1 was $43 million, and net cash provided by operating activities was $46.1 million.

• Net debt leverage ended the quarter at 0.5x, with total indebtedness at $499 million.

• Cash and cash equivalents stood at $273.5 million as of March 31, 2026.

Outlook and guidance

• Q2 2026 guidance projects 8–9% core sales growth and adjusted EBITDA margin of 27.0%–27.5%.

• Full-year free cash flow outlook is approximately $335 million, with a plan to revisit after Q2.

• Guidance assumes current tariff structure remains unchanged through 2026; no tariff refunds included.

• No change to end market guidance: institutional and waterworks low single-digit growth, commercial flat, residential down low single digits.

• Management expects to continue restructuring initiatives to optimize margins and manufacturing footprint.