From The Motley Fool · Motley Fool Transcribing · · 2m
Zurn Elkay Q3 2026 Earnings Results
Zurn Elkay reports 9% top-line growth and 28.3% adjusted EBITDA margin in Q3 2026 with 40% incremental margin target for 2027.
In brief
Zurn Elkay reports 9% top-line growth and 28.3% adjusted EBITDA margin in Q3 2026 with 40% incremental margin target for 2027. Zurn Elkay Water Solutions achieved 9% reported sales growth and 28.3% adjusted EBITDA margin in Q3 2.026, raising full-year 2026 adjusted EBITDA guidance to $512-$515 million with a 40%…
Q3 2026 Results
Zurn Elkay reported 9% reported sales growth and 7% core growth year over year.
Adjusted EBITDA Performance
Adjusted EBITDA grew 15% year over year to $140.1 million with a 28.3% margin, expanding 150 basis points from prior year.
Free Cash Flow
Generated $109.6 million in free cash flow excluding $7.2 million in net tariff refunds.
Share Repurchases
Executed $35 million share repurchases to buy back 700,000 shares of common stock.
Dividend Increase
Increased annual dividend by 18% to $0.52 per share reflecting confidence in long-term business model.
Net Debt Leverage
Maintained 0.4x net debt leverage at end of Q3 2026, historically low levels.
Intellihot Acquisition
Acquired Intellihot for $107.3 million cash to enter commercial hot water loop market.
Hot Water Loop Strategy
Integrated Intellihot's tankless condensing heaters with Runpoint digital valve for temperature and flow control.
Market Opportunity
Hot water mixing valve market presents $200 million opportunity with potential for $50 million category capture by Zurn Elkay.
Market Outlook
Dodge Momentum Index at recent highs while Architecture Billings Index below 50 for extended period indicating diverging signals.
End Market Mix
50% new construction and 50% maintenance, repair, and operations (MRO) and retrofit projects.
Institutional Market Exposure
50% of portfolio with education and healthcare subverticals accounting for 72% of that exposure.
Commercial Market Exposure
30% of total business with growth in data centers offsetting weakness in other office subverticals.
Q4 Sales Guidance
Guided Q4 sales between $430 million and $437 million reflecting seasonal market softness.
Q4 Adjusted EBITDA Guidance
Guided Q4 adjusted EBITDA between $120 million and $123 million.
Full Year 2026 Guidance
Raised full-year 2026 adjusted EBITDA guidance to $512-$515 million and free cash flow to greater than $350 million.
The essence
Zurn Elkay Water Solutions achieved 9% reported sales growth and 28.3% adjusted EBITDA margin in Q3 2.026, raising full-year 2026 adjusted EBITDA guidance to $512-$515 million with a 40% incremental margin target for 2027.
