EL7.AI
StocksMedium•28 October 2026•
4 min read

Zurn Elkay Raises 2026 Adjusted Earnings Forecast to $515 Million

Key Facts

1Zurn Elkay raised its 2026 adjusted EBITDA forecast to $512–515 million and kept its free cash flow forecast above $350 million.
2Third-quarter sales were $495.1 million, up 9% from the same period of 2025.
3Third-quarter adjusted EBITDA reached $140.1 million, or 28.3% of sales, compared with $122.2 million and 26.8% a year earlier.
4The board increased the annual dividend by 18%.

Zurn Elkay raised its 2026 adjusted earnings before interest, taxes, depreciation and amortization forecast to a range of $512 million to $515 million, while keeping its free cash flow forecast above $350 million after excluding the net impact of fee recoveries and related taxes. The update came with the release of third-quarter results on October 28, when sales reached $495.1 million, compared with $455.4 million in the same period of 2025. Sales rose 9% year over year, while underlying growth was 7%, the company said. Adjusted EBITDA also increased to $140.1 million from $122.2 million a year earlier. Management said the annual earnings forecast reflects the strength of its operating model.

Adjusted EBITDA margin improved to 28.3% of sales, compared with 26.8% in the third quarter of 2025, alongside an increase in adjusted EBITDA to $140.1 million. Management attributed the margin expansion to a better product mix, as higher-margin products continued to lead growth, and productivity gains from the Zurn Elkay Business System. It added that supply chain repositioning continued to deliver benefits. Adjusted earnings per share were $0.52, compared with $0.43 in the year-earlier quarter. Net income from continuing operations rose to $76 million, and diluted earnings per share from those operations reached $0.45, compared with $60 million and $0.35 a year earlier.

IntelliHOT contributed two percentage points, or $6 million, to sales growth during the quarter, and the company said its performance was in line with expectations. Quarterly sales totaled $495 million, according to the CEO on the call, while the results statement reported $495.1 million. The difference reflects the rounded figure cited on the call and the detailed figure in the statement. Underlying growth was 7%, excluding IntelliHOT's contribution, according to the company's breakdown of growth rates and the business's contribution. The results follow second-quarter sales of $491 million, compared with $445 million a year earlier, with underlying growth of 10%.

July guidance projected mid-single-digit underlying growth in the fourth quarter and full-year 2026, with annual adjusted EBITDA of $503 million to $513 million. The new guidance sets the low end of the EBITDA range at $512 million and the high end at $515 million, an upward revision to the annual forecast. For the fourth quarter, the company expects sales of $430 million to $437 million and adjusted EBITDA of $120 million to $123 million. In the third quarter, actual sales of $495.1 million exceeded analysts' estimate of $493.4 million, while adjusted earnings per share of $0.52 also beat the $0.50 forecast. The estimates were reported in FactSet's analyst survey.

The board announced an 18% increase in the annual dividend, and the CEO said the decision reflects the company's confidence in its business and its desire to continue rewarding shareholders with rising dividends. The increase applies to the annual dividend, according to management, and does not refer to a specific increase in a quarterly payment. The company's latest dividend reported by EL7 was $0.11 per share, approved in July. The company also repurchased one million shares for $50 million during the second quarter. These decisions place the dividend and share buybacks among the company's previous capital-return actions, while it kept its 2026 free cash flow forecast above $350 million after excluding the net impact of fee recoveries and taxes.

On the market, the CEO said management expects the market in 2027 to be down by about two points, based on its current estimate. He added that market-share initiatives and structural growth areas support the company's growth outlook despite the expected market weakness. He cited drinking water, maintenance, repair and upgrades, pricing and adjacent markets among those areas. The company had scheduled a call to discuss third-quarter results and its business update for October 28 at 7:30 a.m. Central Time. It said it would provide 2027 guidance in February and update investors on fourth-quarter and calendar-year 2026 results in early February.