Zurn Elkay Water Solutions (ZWS) Q4 2024 earnings summary

Executive summary

• Achieved 4% core sales growth in Q4 and full-year 2024, with adjusted EBITDA margin expanding to 24.6% in Q4 and 24.9% for the year, and record net sales of $1,567M in 2024.

• Free cash flow reached $55M in Q4 and $272M for the year; net debt leverage ended at 0.8x, the lowest as a public company.

• $150M deployed for share repurchases (~3% of shares) and $57M in dividends paid, with a 12.5% dividend increase.

• Net income from continuing operations rose to $159M for 2024 (EPS $0.91), up from $104M in 2023 (EPS $0.59).

• Sustainability initiatives advanced, including product donations, advocacy for filter-first legislation, and a planned sustainability report.

Financial highlights

• Q4 net sales were $371M, up 4% year-over-year; adjusted EBITDA was $91M (24.6% margin), up from $84M (23.6% margin) last year.

• Full-year adjusted EBITDA reached $390M (24.9% margin), up from $340M (22.2%) in 2023.

• Q4 net income from continuing operations was $36M (EPS $0.21), up from $14M (EPS $0.08) in Q4 2023.

• Gross profit for 2024 was $707M (gross margin 45.2%), up from $648M (42.4%) in 2023, with gross profit margin expanding by 880 bps over three years.

• Q4 income from operations increased to $49.3M from $32.8M, with operating margin up 410 bps due to productivity synergies and restructuring.

Outlook and guidance

• 2025 outlook projects core sales growth similar to 2024, adjusted EBITDA of $405M–$420M, and free cash flow of ~$290M.

• Q1 2025 core sales growth expected in low single digits; adjusted EBITDA margin projected at 24.5%–25.0%.

• End markets expected to mirror 2024: low single-digit decline in commercial, offset by growth in institutional and waterworks, and flat residential.

• Tariff impacts not included in guidance; company prepared to respond as needed.

• Diluted shares outstanding projected at ~174M for 2025, assuming no further repurchases.