Zurn Elkay Water Solutions (ZWS) - 2025 Q3 - Quarterly Results

Financial Performance - Third quarter net sales were $455 million, an 11% increase from $410 million in the same quarter last year[5] - Adjusted EBITDA for the third quarter was $122 million, representing a 16% growth year-over-year and a margin of 26.8%[5][7] - Net income from continuing operations was $60 million, with diluted EPS increasing to $0.35 from $0.25 in the prior year[5] - Net income for the three months ended September 30, 2025, was $61.8 million, a 42.0% increase from $43.5 million in the same period of 2024[22] - Basic net income per share for continuing operations was $0.89 for the nine months ended September 30, 2025, compared to $0.71 in the same period of 2024, an increase of 25.4%[22] - Adjusted net income for the nine months ended September 30, 2025, was $199.2 million, compared to $167.3 million for the same period in 2024, marking a 19.0% increase[38] - The company reported a total comprehensive income of $53.1 million for the three months ended September 30, 2025, compared to $44.1 million for the same period in 2024, a 20.3% increase[42] Cash Flow and Debt - Free cash flow for the quarter was $94 million, resulting in a net debt leverage ratio of 0.6x[5] - Free cash flow for the nine months ended September 30, 2025, was $234.1 million, compared to $217.2 million for the same period in 2024, indicating a 7.9% increase[40] - Cash provided by operating activities for the nine months ended September 30, 2025, was $254.8 million, compared to $229.9 million for the same period in 2024, a 10.9% increase[46] - The company’s long-term debt as of September 30, 2025, was $495.5 million, slightly up from $494.8 million as of December 31, 2024[44] Sales and Growth Projections - For the fourth quarter, core sales growth is expected to be in the high-single digit range, with adjusted EBITDA projected between $99 million and $102 million[6] - The full year adjusted EBITDA outlook has been raised to between $437 million and $440 million, up from the previous guidance of $420 million to $430 million[6] - Core sales growth was driven by improvements across all product categories, maintaining consistent income from operations as a percentage of net sales[6] Dividend and Shareholder Returns - The company raised its annual dividend by 22% to $0.44 per share and increased share repurchase authorization to $500 million[4] Operational Changes - The company completed the termination of its US Pension Plan during the quarter[5] - The company incurred restructuring and similar charges of $1.8 million for the three months ended September 30, 2025, down from $2.7 million in the same period of 2024[24] Tax and Adjustments - The effective tax rate for the three months ended September 30, 2025, was 24.5%, compared to 26.9% for the same period in 2024[24] - Total adjustments for non-GAAP reconciliation for the nine months ended September 30, 2025, amounted to $63.7 million, compared to $58.4 million in the prior year[27]