Zurn Elkay’s first quarter results were shaped by a combination of solid organic growth, margin expansion, and operational discipline. Management cited 5% organic sales growth largely driven by non-residential end markets, as well as improved profitability through ongoing productivity initiatives. CEO Todd Adams noted that, “there is little to no impact on the Q1 results from the implementation of tariffs,” clarifying that announced price increases are expected to take effect in the second quarter. The company’s proactive supply chain restructuring and volume-driven performance contributed to the positive market response.
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Zurn Elkay (ZWS) Q1 CY2025 Highlights:
- Revenue: $388.8 million vs analyst estimates of $383.3 million (4% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.31 vs analyst estimates of $0.29 (7.1% beat)
- Adjusted EBITDA: $98 million vs analyst estimates of $95.07 million (25.2% margin, 3.1% beat)
- Revenue Guidance for Q2 CY2025 is $422.3 million at the midpoint, below analyst estimates of $424.5 million
- Operating Margin: 16.3%, up from 14.2% in the same quarter last year
- Organic Revenue rose 5% year on year (0% in the same quarter last year)
- Market Capitalization: $5.98 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Zurn Elkay’s Q1 Earnings Call
- Bryan Blair (Oppenheimer) asked how the volume versus price contribution to growth is evolving amid the tariff environment. CEO Todd Adams responded that while price increases will exceed prior assumptions, the guidance remains broad to accommodate market uncertainties over the next eight months.
- Nathan Jones (Stifel) questioned whether price increases might cause demand destruction or alter revenue mix. Adams replied that while some demand loss is possible, the company expects net pricing to benefit top-line growth and potentially EBITDA, though it is too early to quantify.
- Andrew Krill (Deutsche Bank) inquired about the company’s ability to respond if tariffs outside China rise sharply. Adams and CFO David Pauli highlighted the company’s supply chain flexibility, dual sourcing, and readiness to shift production or manage inventory to adapt to new tariff scenarios.
- Mike Halloran (Baird) asked how government and education end markets might react to capital spending uncertainty. Adams replied that government is a small segment, and he expects strength across other verticals, including education and healthcare, to offset any headwinds.
- Andrew Buscaglia (BNP Paribas) raised the issue of repeated pricing actions and potential long-term effects. Adams noted that the industry is insulated by limited competitors and specified products, so price increases are expected to be broadly adopted without major disruption, though long-term inflationary impact remains a consideration.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of supply chain transitions away from China and the resulting impact on cost structure, (2) the ability of price increases to offset higher tariff costs without significant demand erosion, and (3) ongoing margin performance as productivity initiatives are scaled. Developments in tariff policy and competitive responses to pricing actions will also be key areas of focus.
Zurn Elkay currently trades at $35.57, up from $31.13 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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