Zurn Elkay Water Solutions Corporation (NYSE:ZWS)
First Quarter Highlights
Net sales in the quarter were $389 million compared with $374 million in last year’s March quarter (+5% core sales(1), exchange rates reduced net sales by 1%).
Net income from continuing operations was $41 million (diluted EPS from continuing operations of $0.24) compared with net income from continuing operations of $34 million (diluted EPS from continuing operations of $0.19) in the year-ago quarter.
Adjusted EPS(1) was $0.31 compared with $0.29 in the year-ago quarter.
Adjusted EBITDA(1) was $98 million (25.2% of net sales) compared with $90 million (24.1% of net sales) in last year's first quarter.
Net debt leverage(1) of 0.9x as of March 31, 2025.
Deployed $77 million to repurchase 2.3 million shares of common stock in the quarter.
Todd A. Adams, Chairman and Chief Executive Officer, commented, “We had a solid start to 2025, delivering first quarter core sales(1) growth of 5% along with 25.2% adjusted EBITDA margins(1), an increase of 110 basis points year over year. We also returned significant capital to shareholders in the form of $77 million in share repurchases and $15 million in dividends while maintaining leverage(1) at 0.9x.”
“Despite the unprecedented and volatile nature of the current trade environment, we are well equipped to manage through this uncertainty by leveraging the Zurn Elkay Business System, with a relentless focus towards optimizing our supply chain while capturing increases in selling price to stay price-cost positive. It’s notable that amidst everything unfolding with tariffs and uncertainty, we are celebrating Zurn Elkay’s 125th anniversary, a testament to our durable competitive advantages, adaptability and winning culture we continue to build-on each year. We plan to honor our rich history and celebrate the dedication of our associates throughout 2025.”
Adams concluded, “In February we issued our 2024 Sustainability Report. Through the advancement of our sustainability strategy, we envision a more sustainable future as we deliver customer-focused solutions that make clean water more accessible and sustainable, minimize our environmental footprint and foster a workplace environment that empowers our associates. The report highlights Zurn Elkay’s progress in addressing critical water challenges and improving sustainability, including advancements toward our timebound goals. We remain committed as ever not only to our sustainability efforts but also supporting the sustainability efforts of our customers.”
Second Quarter Outlook
“Our outlook for the second quarter is based on the assumption that the current tariff structure in place as of today (April 22, 2025) remains in place throughout the second quarter. For the second quarter, we expect core sales(1) growth to be in the low to mid-single digit range and adjusted EBITDA margin(1) in the range of 25.5% to 26.0%. We are affirming our full year guidance as our first quarter actual results and second quarter outlook put the first half of 2025 well on-track to the original full year guidance we provided in February.”
First Quarter 2025 Overview
Net sales were $388.8 million and $373.8 million during the three months ended March 31, 2025 and March 31, 2024, respectively, an increase of 4% year over year. Core sales(1) improved 5% year over year, including growth in all product categories. Year-over-year growth was volume driven as the first quarter has no impact from tariff related price increases. The impact from foreign currency exchange rates reduced net sales by 1% in the quarter compared to the prior year quarter.
During the three months ended March 31, 2025, income from operations was $63.4 million compared to $53.2 million during the three months ended March 31, 2024. Income from operations as a percentage of net sales increased by 210 basis points year over year due to the benefits from our productivity initiatives and continuous improvement activities across the organization, as well as lower restructuring charges and carryover benefits of synergy actions taken in the prior year.
Adjusted EBITDA(1) was $98.0 million, or 25.2% of net sales, during the three months ended March 31, 2025 compared to $90.0 million, or 24.1% of net sales, during the three months ended March 31, 2024.
(1) Refer to "Non-GAAP Financial Measures" for a definition of this non-GAAP metric, as well as the accompanying reconciliations to GAAP.
