Zurn Elkay Experiences Significant Growth and Margin Expansion

Zurn Elkay Water Solutions Corporation has demonstrated a strong performance in the second quarter, reporting a 20% increase in adjusted EBITDA alongside significant margin expansion. The company achieved core growth of 3%, resulting in a margin increase of 370 basis points. Notably, Zurn Elkay generated $80 million in free cash flow and repurchased nearly 2 million shares. For the first half of the year, EBITDA rose by $35 million, and free cash flow improved by $50 million compared to the same period last year. Looking ahead, the company expects robust cash flow for the second half of the year and projects to exceed $250 million in free cash flow for the full year. Zurn Elkay positions itself as a leading water solutions provider in North America, emphasizing its dedication to sustainability and growth across its commercial brass, flow systems, and drinking water sectors.

### Key Highlights
– Zurn Elkay recorded a 20% increase in adjusted EBITDA with core growth of 3%.
– The company experienced a margin expansion of 370 basis points, achieving $80 million in free cash flow.
– The repurchase of nearly 2 million shares contributed to shareholder returns.
– Year-to-date EBITDA increased by $35 million, and free cash flow rose by $50 million compared to last year.
– For Q3, Zurn Elkay anticipates low single-digit core sales growth and an adjusted EBITDA margin expansion of 200-250 basis points for the year.

### Company Outlook
– Low single-digit core sales growth is projected for the third quarter.
– An adjusted EBITDA margin expansion is anticipated to be between 200 and 250 basis points year-over-year.
– Free cash flow is expected to surpass $250 million for the full year.

### Areas of Concern
– Market weakness has been noted in the commercial sector.
– The impact of previously announced product line exits will reflect in the third quarter results.

### Positive Trends
– The institutional sector shows strength, contributing positively to sales.
– Strong margin performance with expectations of incremental margin growth of 30-35%.
– Supply chain initiatives are projected to yield a net benefit of $5-10 million.
– Ongoing growth initiatives in commercial brass, flow systems, and drinking water sectors.

### Investor Insights
Zurn Elkay is highlighted as a financially strong company with a perfect Piotroski Score of 9, indicative of robust financial health. The firm has a market capitalization of $5.54 billion and a P/E ratio of approximately 40, suggesting optimism among investors regarding its earnings potential. Revenue growth over the past year stands at 8.34%, further affirming the company’s competitive edge.

Zurn Elkay will provide further updates during their third-quarter results announcement later in October.

In summary, Zurn Elkay Water Solutions Corporation has proven to be a resilient player within the water solutions industry, building on its financial stability and future growth prospects while maintaining a strong commitment to sustainability.