Zurn Elkay Water Solutions (ZWS) Q2 FY26 earnings call: guidance and Q&A

Could you rank order the growth of water safety and control, drinking water, and flow systems, and comment on the growth of hygienic and environmental?

Water safety and control and drinking water are growing slightly above flow systems. Hygienic and environmental is still positive but lower, and is a more competitive category.

“I don't know that it's discernible between water safety and control and drinking water are sort of above -- a little bit above flow control flow systems. And then hygienic and environmental is still positive and much more so on a unit volume basis because that's a more competitive category.”

asked by Bryan Blair · answered by Todd Adams

What makes Intellihot unique and the right fit? Can you provide a shorter-term outlook for 2027?

Intellihot was a long-coveted target due to its best-in-class technology in a complicated category with regulatory tailwinds. The acquisition was for long-term growth (5-6 years to $100M sales, 30% EBITDA margin), not specifically for 2027, but it is expected to grow nicely with margin focus.

“It's one of those sort of like the last remaining business around in that category with the best technology. And so it was a founder inventor sort of led company for a long time, and we stayed close to it. And eventually, it became an opportunity for us to acquire. And so, it's one of those things where if you would have asked us 7 or 8 years ago, what would have been the best target, we would have told you this.”

asked by Bryan Blair · answered by Todd Adams

Is the company trending towards the high end of 3-4% price for the full year? Have additional price increases been implemented mid-year, or are they more surgical?

Price realization is in the 3-4% range for the full year, with Q2 at 5%. No additional price increases were needed mid-year, and future pricing is expected to be a normal year, not elevated.

“I think it is sort of in that 3% to 4% range, and it obviously varies by category and competitive set. I mean you can sort of back check that by thinking about $50 million of refunds against the prior year of about $1.7 billion, and you get to right around 3 points of price for the year. So, we haven't really had to put in any additional price throughout '26.”

asked by Andrew Krill · answered by Daniel Klun

What will be the primary focus areas for the 2027 strategic plan, given the company's approach of a few key breakthroughs each year?

The focus will continue to be on adjacencies, targeting $100-$200 million markets where Zurn Elkay can generate $20-$30 million in revenue over three years by leveraging existing channels and sourcing. Several such announcements are expected in late 2026 and into 2027.

“I think it will be a continued progress on adjacencies, categories that are in and around what we do today in the $100 million to $200 million range where we think over a 3-year period, we can generate $20 million to $30 million of revenue by launching the product, leveraging the channels and relationships we have, pulling it through and then obviously leveraging our sourcing platform.”

asked by Nathan Jones · answered by Todd Adams

Given Intellihot's quality, was the acquisition a competitive bidding process?

The acquisition was not a competitive process; it was the result of a long-standing relationship cultivated since around 2016. Intellihot viewed Zurn Elkay as the right home for its technology.

“Well, it really wasn't a process. So again, I think as we've highlighted in the past and with essentially all the transactions we've done over the years and even with legacy companies, we prefer to develop relationships and find the right time. And in this case, this is a -- I think the first contact was somewhere around 2016.”

asked by Edward Magi · answered by Todd Adams