Zurn Elkay grows Q3 sales 9% and lifts its dividend by 18%

Zurn Elkay Water Solutions reported third-quarter 2026 results on 27 October, the same day as Xylem. Where Xylem talked about cautious spending, Zurn Elkay posted solid growth, a big step up in margins and a larger dividend.

The numbers

Net sales rose 9% to $495.1 million, from $455.4 million a year earlier. Core sales, which strip out acquisitions, were up 7%, with growth in nearly all product categories, and acquisitions added another 2%.

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Income from operations climbed to $108.2 million from $77.5 million, and operating margin widened by 490 basis points. The company credited product mix, productivity work under the Zurn Elkay Business System and the repositioning of its supply chain. Adjusted EBITDA was $140.1 million, or 28.3% of sales, up from 26.8%, and adjusted EPS rose to $0.52 from $0.43.

Free cash flow for the quarter was $109.6 million. Net debt leverage stood at just 0.4 times at the end of September, which leaves plenty of room for further deals.

Cash back and bolt-ons

The board raised the annual dividend by 18% to $0.52 a share. Zurn Elkay also spent $35 million buying back 0.7 million shares in the quarter, taking repurchases for the first nine months to $134.7 million.

On the acquisition side, it completed the purchase of Intellihot during the quarter, and nine-month acquisition spending reached $107.3 million net of cash acquired. It also entered the digital master mixing valve market with a product developed in-house. Chairman and CEO Todd A. Adams told analysts the company believes it has expanded its served markets by roughly $400 million this year, according to StockStory's call coverage.

The outlook

For the fourth quarter, Zurn Elkay guided to net sales of $430 million to $437 million and adjusted EBITDA of $120 million to $123 million. It expects full-year free cash flow above $350 million, excluding the net effect of tariff refunds.

StockStory noted that the revenue guide was about 1% below analyst expectations at the midpoint, even though the EBITDA guide was ahead, and the shares fell 6.7% to $45.88 after the release. Adams struck a careful tone in the results statement, saying the business "must continue to be nimble in finding pockets of growth to offset the general uncertainty".

The bigger picture

Zurn Elkay sits further downstream than most waterworks suppliers, in building water systems rather than buried infrastructure, but it competes for the same engineers, specifiers and rep agency attention. Its quarter shows that pricing, mix and operational discipline are still delivering margin gains, and that listed water companies with strong balance sheets are using them for steady bolt-on acquisitions alongside buybacks.

What it means for hiring

Bolt-on deals and new product categories, such as Intellihot and the mixing valve launch, usually need product managers and specification sellers who can take a new line into existing rep and distributor networks. We expect that demand to continue.
In our view, a supplier that talks about finding pockets of growth will lean harder on its rep agencies and regional sales leaders for share gains, which raises the bar for commercial hires.
Margin gains from supply chain repositioning suggest operations and sourcing leaders remain a priority hire for water products manufacturers.

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