Zurn Elkay’s fourth quarter was marked by robust organic sales growth and margin expansion, driving a positive market reaction. Management credited the company’s supply chain optimization and disciplined pricing for offsetting softness in residential and some nonresidential commercial segments. CEO Todd Adams noted that productivity initiatives and continuous improvement under the Zurn Elkay Business System were key contributors to performance, while CFO David Pauli highlighted the successful execution of tariff-related pricing actions. The company’s focus on higher-growth institutional and waterworks markets also supported solid results.

Is now the time to buy ZWS? Find out in our full research report (it’s free for active Edge members).

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 From Zurn Elkay’s Q4 Earnings Call

• Bryan Blair (Oppenheimer) asked about the path from strong Q1 expectations to mid-single-digit growth for the full year. CEO Todd Adams explained that price realization is higher in the first half of the year, with volume and additional opportunities expected to support growth as the year progresses.
• Adam Farley (Stifel) inquired about the specific verticals and adjacencies targeted for expansion. Adams provided color on North American water and professional-grade plumbing markets, referencing a strategy similar to the company’s earlier expansion into fire protection.
• Michael Pesendorfer (Baird) questioned the potential impact of EPA regulations on the drinking water business. CFO David Pauli said new regulations support sustained adoption but do not necessarily accelerate growth beyond current trends.
• Jae Hyun Ko (Jefferies) sought clarification on Pro Filtration’s impact on filter attachment rates and sales. Pauli noted that early adoption is strong and that the proprietary design ensures a high filter replacement rate, supporting recurring revenue.
• Jeffrey Hammond (KeyBanc) asked about the cadence and rationale for 2026 pricing actions. Adams and Pauli indicated that price increases align with normal industry practice, with early-year pricing reflecting the roll-off of previous tariff-driven actions.

Catalysts in Upcoming Quarters

Our team will be closely watching (1) the rollout and adoption rates of new products like Pro Filtration, (2) progress on supply chain shifts away from China and the resulting impact on margins, and (3) the pace of entry into new adjacencies and verticals within North American water and plumbing markets. The ability to maintain pricing discipline and capitalize on institutional market strength will also be critical metrics.

Zurn Elkay currently trades at $52.50, up from $47.06 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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