Zurn Elkay Water Solutions (ZWS) Earnings Date & Reports

Key Takeaways

• Net sales rose 9% year over year to $495.1 million in the third quarter of 2026, roughly in line with consensus estimates of about $492.8 million.
• Adjusted (non-GAAP) earnings per share came in at $0.52, topping the $0.50 consensus estimate by about 4%.
• Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) reached $140.1 million, a 28.3% margin, while operating margin climbed to 21.9% from 17% a year earlier.
• Fourth-quarter revenue guidance of $430 million to $437 million came in below analysts' expectations, pressuring the stock after the release.
• Zurn Elkay completed its Intellihot acquisition during the quarter, repurchased 0.7 million shares for $35 million, and raised its annual dividend by 18% to $0.52 per share.
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Earnings Context and Why It Matters

Zurn Elkay Water Solutions is a pure-play water management business, and its quarterly results offer investors a useful read on demand across commercial construction, retrofit, and replacement markets. The company has posted a long streak of earnings beats, and its third-quarter 2026 report extended that momentum with an adjusted profit above consensus and meaningful margin expansion. Because management pairs each release with forward guidance, this event matters as much for the next quarter's signal as for the reported numbers. The softer fourth-quarter revenue outlook contrasted with otherwise solid execution, giving investors a mixed picture heading into the final stretch of the fiscal year.

Reported Results

For the third quarter ended September 30, 2026, Zurn Elkay reported net sales of $495.1 million, up 9% from $455.4 million a year earlier, with organic revenue up 7%. Net income was $76.3 million, compared with $61.8 million in the prior-year period, and diluted earnings per share were $0.45 on a GAAP (Generally Accepted Accounting Principles) basis.

On an adjusted (non-GAAP) basis, earnings per share were $0.52, exceeding the $0.50 consensus estimate. Adjusted EBITDA was $140.1 million, or 28.3% of net sales, and operating margin expanded to 21.9% from 17% in the year-ago quarter. Management guided fourth-quarter net sales to a range of $430 million to $437 million, below the roughly $438 million analysts had expected, while fourth-quarter adjusted EBITDA guidance of about $121.5 million at the midpoint came in above consensus.

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Market Reaction and Investor Sentiment

Zurn Elkay's stock came under pressure following the release, as an earnings beat and stronger margins were offset by revenue guidance that landed below consensus. Investors focused on the implied deceleration in the fourth quarter, interpreting the softer top-line outlook as a sign of moderating demand or a conservative posture from management heading into year-end. The completed Intellihot acquisition and the dividend increase were viewed as positive signals on capital allocation, but the guidance shortfall dominated near-term sentiment. Overall, the market reaction reflected a familiar pattern: solid execution on profitability was not enough to overcome concerns about the growth trajectory implied by management's outlook.

Forward Outlook and Key Factors to Monitor

Looking ahead, investors will closely track whether Zurn Elkay's fourth-quarter revenue lands within its guided range of $430 million to $437 million and whether the company can sustain the margin gains that have defined recent quarters. The integration of Intellihot and the company's expansion into the hot water loop and digital master mixing valve markets are notable catalysts, with management indicating it has expanded its served markets by roughly $400 million in 2026.

Margin trends remain a key watch item. Adjusted EBITDA margin reached 28.3% in the third quarter, and any commentary on cost management, pricing, or supply chain dynamics will shape expectations for continued operating leverage. Demand signals across commercial construction and retrofit markets, along with organic revenue growth, will also be central to the outlook.

Finally, capital allocation deserves attention, given the quarter's share repurchases and an 18% dividend increase. How management balances acquisitions, buybacks, and shareholder returns against the softer near-term revenue outlook will be an important theme for investors evaluating the stock's next move.

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