Zurn Elkay Water Solutions (US:ZWS)2025-10-28 20:18Financial Performance - Net sales for the three months ended September 30, 2025, were $455.4 million, an increase of 11.1% compared to $410.0 million for the same period in 2024[112]. - Income from operations for the three months ended September 30, 2025, was $77.5 million, reflecting a 10.4% increase from $70.2 million in the prior year[113]. - Net income for the three months ended September 30, 2025, was $61.8 million, compared to $43.5 million for the same period in 2024, resulting in diluted net income per share of $0.36[118]. - For the nine months ended September 30, 2025, net sales were $1,288.7 million, representing a year-over-year increase of 7.8% from $1,195.8 million[119]. - Income from operations for the nine months ended September 30, 2025, was $218.5 million, an increase of 11.9% from $195.3 million in the same period of 2024[120]. - Net income for the nine months ended September 30, 2025, was $155.9 million, an increase of 26% from $123.8 million for the same period in 2024[125]. - Diluted net income per share increased to $0.91 for the nine months ended September 30, 2025, compared to $0.71 for the same period in 2024[125]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $338.1 million, up from $299.3 million for the same period in 2024, reflecting a 13% increase[131]. Tax and Other Income - The effective income tax rate for the three months ended September 30, 2025, was 24.7%, down from 28.0% in the prior year[116]. - Other income for the three months ended September 30, 2025, was $8.7 million, compared to an expense of $(1.5) million in the same period of 2024, driven by the settlement of the U.S. defined benefit pension plan[115]. - The company recognized a curtailment gain of $0.7 million from the pension plan freeze in Q1 2025 and a pre-tax settlement gain of $10.0 million from exiting the pension plan[106]. Debt and Liquidity - The Net First Lien Leverage Ratio as of September 30, 2025, was 0.63 to 1.00, indicating strong compliance with debt covenants[132]. - Total indebtedness as of September 30, 2025, was $496.4 million, with a term loan of $476.1 million and finance leases of $20.3 million[143]. - The company had $260.1 million in cash and cash equivalents as of September 30, 2025, along with $189.9 million of additional borrowing capacity under its revolving credit facility[138]. - The company believes its liquidity resources are adequate for expected short-term and long-term needs[139]. Cash Flow - Cash provided by operating activities was $254.8 million for the nine months ended September 30, 2025, compared to $229.9 million for the same period in 2024, representing an increase of 11%[140]. - Cash used for investing activities was $20.7 million during the nine months ended September 30, 2025, compared to $11.1 million for the same period in 2024[141]. - Cash used for financing activities increased to $174.1 million for the nine months ended September 30, 2025, from $165.8 million in the same period of 2024[142]. Interest and Restructuring - Interest expense, net decreased to $7.1 million for the three months ended September 30, 2025, down from $8.3 million in the prior year, primarily due to lower interest rates[114]. - Restructuring charges for the three months ended September 30, 2025, totaled $1.8 million, compared to $2.7 million in the same period of 2024[111]. Market Risk - The company is exposed to market risk from changes in foreign currency exchange rates and interest rates[145]. - Exposure to these risks is managed through normal operating and financing activities, as well as derivative financial instruments[145]. - The company utilizes foreign currency forward contracts to cover certain known foreign currency transactional risks[145]. - Historically, the company has entered into interest rate derivatives to manage interest rate fluctuations[145].