On July 30, 2024, Zurn Elkay Water Solutions Corp (ZWS, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Zurn Elkay Water Solutions Corp designs, procures, manufactures, and markets a range of clean water solutions for drinking water, hygiene, and sustainable water management. The company's product portfolio includes professional-grade water control and safety, water distribution and drainage, drinking water, finish plumbing, hygienic, environmental, and site works products for public and private spaces.
Performance Overview
Zurn Elkay Water Solutions Corp (ZWS, Financial) reported net sales of $412 million for the quarter, surpassing the analyst estimate of $408.52 million and reflecting a 2% increase from the $403 million reported in the same quarter last year. The company's net income from continuing operations was $45 million, translating to a diluted EPS of $0.26, which exceeded the analyst estimate of $0.24. Adjusted EPS was $0.33, up from $0.24 in the year-ago quarter.
Key Financial Achievements
The company achieved an adjusted EBITDA of $104 million, representing 25.3% of net sales, compared to $87 million or 21.6% of net sales in the previous year's second quarter. This significant improvement in margins highlights the company's effective cost management and productivity synergies from the Elkay merger.
Todd A. Adams, Chairman and Chief Executive Officer, commented, “Both sales and margins exceeded our guidance for the second quarter, as we leveraged 3% pro forma core sales growth into adjusted EBITDA growth of 20% over the prior year, as margins improved 370 basis points to 25.3%.”
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $412.0 million | $403.2 million |
| Gross Profit | $186.3 million | $173.5 million |
| Income from Operations | $71.9 million | $54.8 million |
| Net Income from Continuing Operations | $45.3 million | $32.9 million |
| Adjusted EBITDA | $104.3 million | $87.0 million |
Balance Sheet and Cash Flow
As of June 30, 2024, Zurn Elkay Water Solutions Corp (ZWS, Financial) reported a net debt leverage of 0.9x, indicating a strong balance sheet position. The company deployed $61 million to repurchase 1.9 million shares of common stock during the quarter, reflecting confidence in its financial health and future prospects.
Analysis and Outlook
The company's performance in Q2 2024 underscores its robust operational execution and strategic focus on core sales growth and margin expansion. The successful integration of Elkay and the resulting synergies have significantly contributed to the improved financial metrics. The company's ability to generate strong free cash flow and maintain low net debt leverage positions it well for future growth and shareholder value creation.
For the third quarter, Zurn Elkay Water Solutions Corp (ZWS, Financial) expects pro forma core sales growth in the low single-digit range and an adjusted EBITDA margin of approximately 25%. The company has also raised its full-year adjusted EBITDA margin expansion guidance to 200 to 250 basis points over the prior year, with expected full-year free cash flow exceeding $250 million.
Adams added, “Our team’s belief in and relentless deployment of the Zurn Elkay Business System is what is driving our above market growth and superior financial performance around margins and free cash flow.”
Overall, Zurn Elkay Water Solutions Corp (ZWS, Financial) has demonstrated strong financial performance in Q2 2024, exceeding analyst estimates and showcasing its strategic focus on growth and operational efficiency. Investors and stakeholders will be keenly watching the company's continued execution and performance in the upcoming quarters.
Explore the complete 8-K earnings release (here) from Zurn Elkay Water Solutions Corp for further details.
