Zurn Water Solutions Stock Earnings Reports

Zurn Elkay reported a strong start to fiscal 2026: Q1 core sales rose 11% to $433M, adjusted EBITDA was $116M with margin expansion of 160 basis points to 26.8%, and the company generated $43M of free cash flow while repurchasing $50M of shares. Management reiterated confidence in its full-year free cash flow target (~$335M) and said it will revisit the second-half outlook after Q2, taking a deliberate and conservative approach given ongoing tariff uncertainty. Key operational drivers include continued adoption and double-digit growth in Drinking Water (notably Pro Filtration), strong growth in Water Safety & Control and Drains, realization of productivity initiatives via the Zurn Elkay Business System and continuous improvement (#CI) efforts, and supply-chain/footprint actions that have reduced tariff exposure. Net leverage was low at 0.5x (inclusive of the buyback), and the revolver was upsized to $550M, extending 5 years, leaving abundant liquidity and optionality for M&A while continuing share repurchases and dividends. Q2 guidance: core sales +8% to +9% and adjusted EBITDA margin 27.0%–27.5%; the full-year outlook presently excludes any potential tariff refunds and assumes current tariff structure. Management emphasized they are managing tariffs proactively (product substitution, sourcing shift to the U.S.) and that first-half outperformance is expected to flow to the full year, but they will update the back half after Q2 for greater clarity.