Zurn Elkay Water Solutions (US:ZWS)2026-02-03 21:15Financial Performance - Zurn Elkay Water Solutions reported fourth quarter net sales of $407 million, a 10% increase from $371 million in the same quarter last year[6]. - Adjusted EBITDA for the fourth quarter was $104 million, representing 25.6% of net sales, up from $91 million or 24.6% of net sales in the prior year[10]. - Full year 2025 net sales reached $1,696 million, an 8% increase from $1,567 million in 2024, with adjusted EBITDA of $442 million and a margin of 26.1%[6]. - Income from continuing operations for the fourth quarter was $42 million, with diluted EPS of $0.24, compared to $36 million and $0.21 in the prior year[6]. - Net income for the three months ended December 31, 2025, was $42.1 million, an increase of 15.7% compared to $36.4 million for the same period in 2024[39]. - Adjusted EBITDA for the twelve months ended December 31, 2025, reached $442.2 million, up 13.3% from $390.4 million in 2024[39]. - Adjusted net income for the twelve months ended December 31, 2025, was $260.8 million, representing a 16.5% increase from $223.9 million in 2024[41]. - Net income for the twelve months ended December 31, 2025, was $198.0 million, up 23.5% from $160.2 million in 2024[25]. - Basic net income per share for continuing operations increased to $1.14 for the twelve months ended December 31, 2025, compared to $0.92 in 2024[25]. - The diluted earnings per share for the twelve months ended December 31, 2025, was $1.52, up from $1.28 in 2024, marking an 18.8% increase[41]. Cash Flow and Debt - The company generated record free cash flow of $317 million in 2025, with a net debt leverage ratio of 0.4x as of December 31, 2025[6]. - Free cash flow for the twelve months ended December 31, 2025, was $316.6 million, an increase from $271.7 million in 2024[43]. - Cash provided by operating activities for the twelve months ended December 31, 2025, was $346.5 million, compared to $293.5 million in 2024, reflecting an 18.1% increase[50]. - The company’s long-term debt as of December 31, 2025, was $495.6 million, slightly up from $494.8 million in 2024[48]. Stockholder Returns - The company repurchased $160 million of common stock and increased its quarterly dividend by 22% year over year[5]. Future Outlook - Zurn Elkay plans to achieve mid-single digit core sales growth and approximately $335 million in free cash flow for the full year 2026[8]. - For the first quarter of 2026, Zurn Elkay expects core sales growth of 7% to 8% and adjusted EBITDA margins of approximately 25.5% to 26.0%[8]. Tax and Adjustments - The provision for income taxes for the twelve months ended December 31, 2025, was $63.9 million, with an effective tax rate of 24.9%[30]. - Total adjustments for non-GAAP results for the twelve months ended December 31, 2025, amounted to $89.7 million[30]. - The company reported a restructuring charge of $9.6 million for the twelve months ended December 31, 2025[30]. Assets and Equity - Total assets as of December 31, 2025, were $2,679.4 million, a slight increase from $2,648.5 million in 2024[48]. - The company reported a total stockholders' equity of $1,603.3 million as of December 31, 2025, compared to $1,586.8 million in 2024[48]. Profitability Metrics - Gross profit for the twelve months ended December 31, 2025, reached $764.8 million, representing an 8.1% increase from $707.0 million in 2024[25]. - Income from operations for the three months ended December 31, 2025, was $60.4 million, a 22.6% increase compared to $49.3 million in the same period of 2024[25]. - Non-GAAP net income for the three months ended December 31, 2025, was $61.6 million, reflecting an adjustment of $19.5 million[27]. - The weighted-average number of diluted shares outstanding for the three months ended December 31, 2025, was 170,296 thousand[25]. - The company incurred $40.6 million in stock-based compensation expense for the twelve months ended December 31, 2025, compared to $37.9 million in 2024[50].