Overview of Zurn Elkay Water Solutions Corporation Q4 2025 Earnings

(NYSE: ZWS) delivered a solid and confident performance in its fourth-quarter 2025 earnings call, highlighting resilient financial results, disciplined execution, and a clear long-term growth strategy. The company, a leading provider of clean water management and drinking water solutions, demonstrated its ability to navigate market challenges while continuing to invest in innovation, operational efficiency, and customer-focused solutions.

The earnings call offered investors and analysts a comprehensive look into ZWS’s revenue growth, margin expansion, cash flow strength, and strategic priorities. Management emphasized the company’s strong positioning in the non-residential construction and infrastructure markets, as well as its ability to capture share through differentiated products and trusted brands.

Key Financial Highlights from Q4 2025

During the fourth quarter of fiscal year 2025, Zurn Elkay Water Solutions reported healthy financial performance supported by balanced demand across its end markets. Management noted that disciplined pricing actions, favorable product mix, and continued operational improvements contributed positively to overall profitability.

Revenue Performance

Revenue growth in Q4 2025 reflected steady demand in institutional, commercial, and industrial construction markets. The company benefited from ongoing investments in water infrastructure, particularly in schools, healthcare facilities, and municipal projects. While certain macroeconomic uncertainties persisted, ZWS demonstrated resilience through diversified end-market exposure.

Management highlighted that organic growth remained a key driver, supported by both volume gains and effective pricing strategies. The company also continued to benefit from its expanded product portfolio following prior strategic acquisitions.

Margin Expansion and Cost Discipline

Gross margin performance was a notable highlight of the quarter. ZWS management attributed margin improvement to:

• Pricing actions taken to offset inflationary pressures
• Operational efficiencies across manufacturing facilities
• Supply chain optimization and cost control initiatives

These efforts helped the company protect profitability despite ongoing cost volatility in certain raw materials and logistics.

Operational Excellence and Business Segments

Water Safety and Control Solutions

Zurn Elkay continues to benefit from increasing awareness around water safety, conservation, and regulatory compliance. Products designed to manage water flow, prevent contamination, and enhance system efficiency remained in strong demand throughout Q4 2025.

Management emphasized that aging infrastructure across North America presents a long-term opportunity, as municipalities and institutions invest in upgrading water systems to meet modern safety and sustainability standards.

Drinking Water Solutions and Elkay Brand Strength

The Elkay brand remained a key growth engine for ZWS, particularly in the area of drinking water solutions. Bottle filling stations, filtered water systems, and touchless fixtures continued to gain traction as customers prioritize hygiene, sustainability, and user convenience.

Management noted that Elkay’s strong brand recognition and innovation pipeline allow the company to differentiate itself in competitive markets while maintaining pricing discipline.

Cash Flow, Balance Sheet, and Capital Allocation

Strong Free Cash Flow Generation

Zurn Elkay Water Solutions delivered robust free cash flow in Q4 2025, reflecting disciplined working capital management and consistent earnings growth. Management reiterated that strong cash generation provides flexibility to reinvest in the business, pursue strategic acquisitions, and return value to shareholders.

Balance Sheet Strength

The company exited fiscal 2025 with a healthy balance sheet and manageable leverage. Leadership emphasized its commitment to maintaining financial flexibility, particularly in an environment where economic conditions remain uncertain.

Debt reduction and prudent capital structure management remain priorities, ensuring that ZWS can continue to invest in long-term growth initiatives without compromising financial stability.

Strategic Priorities and Long-Term Growth Initiatives

Innovation and Product Development

Innovation remains at the core of Zurn Elkay’s growth strategy. During the earnings call, management highlighted continued investment in research and development to bring new, differentiated products to market.

Focus areas include:

• Smart water management technologies
• Touchless and sensor-based fixtures
• Sustainable and water-efficient solutions

These innovations align with long-term trends in sustainability, public health, and digital infrastructure.

Go-to-Market Strategy and Customer Engagement

ZWS continues to strengthen its go-to-market strategy by deepening relationships with contractors, engineers, architects, and facility managers. Management emphasized the importance of being a trusted partner throughout the project lifecycle, from design to installation and maintenance.

Enhanced digital tools, training programs, and customer support platforms were cited as key enablers of this strategy.

Market Environment and Industry Trends

Non-Residential Construction Outlook

Management acknowledged that non-residential construction markets remain mixed, with certain segments experiencing slower activity due to higher interest rates. However, ZWS continues to see relative strength in sectors such as healthcare, education, and public infrastructure.

Government-funded projects and long-term infrastructure investments provide a level of stability and visibility for future demand.

Water Infrastructure and Sustainability Trends

Long-term trends supporting the water solutions industry remain firmly intact. Aging water infrastructure, increasing regulatory requirements, and heightened focus on sustainability are driving demand for modern, efficient water management systems.

Zurn Elkay’s portfolio is well aligned with these trends, positioning the company for sustained growth over the coming years.

Guidance and Management Commentary for 2026

Outlook for Revenue and Earnings

Looking ahead, management expressed cautious optimism for fiscal year 2026. While acknowledging ongoing macroeconomic uncertainties, leadership highlighted confidence in the company’s ability to deliver steady growth through execution, innovation, and market share gains.

Pricing discipline, cost management, and operational efficiency are expected to remain key drivers of earnings performance.

Risk Factors and Mitigation Strategies

Management addressed potential risks, including:

• Fluctuations in construction activity
• Raw material and logistics cost volatility
• Macroeconomic and interest rate pressures

To mitigate these risks, ZWS continues to focus on diversification, flexible sourcing strategies, and proactive pricing actions.

Analyst Questions and Management Responses

During the Q&A session, analysts asked about margin sustainability, demand trends, and capital allocation priorities. Management reaffirmed confidence in margin improvement initiatives and emphasized a balanced approach to growth and shareholder returns.

Leadership also highlighted that the company remains open to strategic acquisitions that align with its core competencies and long-term objectives.

Conclusion: A Confident Finish to 2025

Zurn Elkay Water Solutions Corporation closed fiscal year 2025 on a strong note, demonstrating resilience, strategic clarity, and financial discipline. The Q4 2025 earnings call reinforced management’s confidence in the company’s ability to navigate short-term challenges while capitalizing on powerful long-term trends in water safety, sustainability, and infrastructure investment.

With a strong balance sheet, trusted brands, and a clear growth strategy, ZWS appears well positioned to continue delivering value to customers, shareholders, and communities in the years ahead.

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