Zurn Elkay Reports Q1 2025 Growth with Increased Sales and Operating Income Amid Mixed Cash Flow Trends

**Zurn Elkay Water Solutions Corporation (NYSE: ZWS)** has released its financial results for the first quarter ended March 31, 2025. Below are some key highlights from the income statement and important developments within the company.

Key Financial Highlights:

• Net Sales: Increased to $388.8 million in Q1 2025 from $373.8 million in Q1 2024, showing a growth of 4% year-over-year.
• Gross Profit: Rose to $181.0 million from $170.1 million, indicating effective cost management with a gross profit margin improvement.
• Income from Operations: Grew to $63.4 million from $53.2 million, marking a 19.2% increase.
• Net Income: Increased to $43.6 million; diluted net income per share rose to $0.26 from $0.19 in the prior year.
• Operating Cash Flow: Cash provided was $42.9 million, a decrease from $53.9 million in Q1 2024, reflecting higher cash usage for trade working capital.
• Interest Expense: Reduced to $7.3 million from $8.8 million, thanks to lower interest rates in the current year.
• Total Assets: Declined slightly from $2,648.5 million at the end of 2024 to $2,608.3 million as of March 31, 2025.
• Long-term Debt: Remained stable at approximately $495 million.
• Pension Plan Restructuring: A curtailment gain of $0.7 million was recognized due to the freezing of accruals in the defined benefit pension plan.

Positive Aspects:

• Strong year-over-year growth in net sales and operating income indicates a positive trend in demand for water management products.
• Reduction in interest expense suggests effective debt management.
• Improving margins driven by productivity initiatives and reduced restructuring charges.
• Successful stock repurchase program with $77.4 million spent to repurchase shares, enhancing shareholder value.

Negative Aspects:

• Operating cash flows decreased compared to the prior year due to increased working capital needs.
• Net income growth was partly offset by a higher effective tax rate at 26.9%, up from 20.9% due to additional state and foreign taxes.
• Current assets decreased, predominantly in cash and cash equivalents, which fell to $144.7 million from $198.0 million.

Outlook:

Zurn Elkay continues to focus on optimizing its operating margins and executing initiatives that enhance efficiency. The company anticipates recognizing significantly improved performance metrics in the upcoming quarters as it benefits from structural changes, operational efficiencies, and rebounding market dynamics in water management solutions.