Zurn Water Solutions Reports Strong Q2 Growth

Zurn Water Solutions Corporation ((ZWS)) has held its Q2 earnings call. Read on for the main highlights of the call.

The latest earnings call from Zurn Water Solutions Corporation painted a picture of robust performance, marked by significant organic growth and enhanced guidance. The company has made notable strides in its sustainability initiatives, yet challenges persist, particularly in the residential market and due to ongoing tariff impacts.

Strong Organic Growth

Zurn Water Solutions Corporation reported an impressive 8% organic growth in the second quarter, with EBITDA surging by 13% year-over-year. The company’s margins expanded by 120 basis points, showcasing a strong financial footing and operational efficiency.

Increased Guidance

In light of its strong core business trajectory and an improved tariff situation, Zurn Elkay has raised its full-year outlook. The company now anticipates higher top-line growth, EBITDA, and free cash flow, reflecting its confidence in sustaining this positive momentum.

Record Free Cash Flow

For the first time, Zurn Water Solutions Corporation’s free cash flow exceeded $100 million, reaching a record $102 million in the quarter. This milestone underscores the company’s ability to generate substantial cash flow, supporting its growth initiatives.

Sustainability Initiatives

Zurn Elkay continues to lead in sustainability, delivering 1.2 billion gallons of safer, cleaner filtered drinking water, a 21% increase year-over-year. Additionally, the company prevented 9.6 billion single-use plastic water bottles from entering water streams, highlighting its commitment to environmental stewardship.

New Product Launch

The introduction of Elkay Pro Filtration marks a significant step in expanding Zurn Elkay’s market share. The new product offers enhanced features, including faster filter changes and longer filter life, catering to evolving customer needs.

Residential Market Softness

Despite the overall strong performance, Zurn Water Solutions Corporation faces challenges in the residential market, which is experiencing some softness. This has impacted the company’s overall growth potential, necessitating strategic adjustments.

Tariff Challenges

While the tariff environment has improved, it remains a significant challenge for Zurn Elkay, with expected impacts ranging from $35 million to $45 million for 2025. The company continues to navigate these challenges strategically.

Forward-Looking Guidance

Looking ahead, Zurn Elkay projects at least 5% core sales growth, with adjusted EBITDA between $420 million and $430 million, and free cash flow of approximately $300 million. These projections reflect the company’s robust performance and strategic initiatives to leverage its business system for sustainable growth.

In summary, Zurn Water Solutions Corporation’s earnings call highlighted a strong quarter with significant organic growth and enhanced guidance. The company remains committed to sustainability and innovation, despite facing challenges in the residential market and tariff impacts. Investors and stakeholders can look forward to continued growth and strategic advancements from Zurn Elkay.