Fourth Quarter 2024 Highlights
Zurn Elkay Water Solutions Corporation reported robust financial results for the fourth quarter of 2024, demonstrating strong growth across several key metrics:
- Net Sales: The company achieved net sales of $371 million during the quarter, representing a 4% increase compared to $357 million in the same period last year. This growth was driven by core sales expansion.
- Net Income from Continuing Operations: Net income from continuing operations rose significantly to $36 million, or $0.21 per diluted share, up from $14 million, or $0.08 per diluted share, in the year-ago quarter.
- Adjusted Earnings Per Share (EPS): Adjusted EPS improved to $0.32, up from $0.26 in the fourth quarter of 2023.
- Adjusted EBITDA: Adjusted EBITDA reached $91 million, accounting for 24.6% of net sales, compared to $84 million, or 23.6% of net sales, in the prior-year quarter.
- Net Debt Leverage: As of December 31, 2024, the company maintained a healthy net debt leverage ratio of 0.8x.
- Share Repurchases: Zurn Elkay deployed $20 million to repurchase 0.5 million shares of its common stock during the Financial Results quarter.
Calendar Year 2024 Highlights
The full-year 2024 results underscored the company’s continued momentum and strategic execution:
- Net Sales: For the calendar year 2024, net sales totaled $1,567 million, reflecting a 2% increase from $1,531 million in 2023. Core sales growth was even stronger at 3%, despite a 100 basis point impact from the planned exit of certain residential sink products.
- Net Income from Continuing Operations: The company reported net income from continuing operations of $159 million, or $0.91 per diluted share, compared to $104 million, or $0.59 per diluted share, Financial Results in 2023.
- Adjusted EPS: Adjusted EPS climbed to $1.28, an improvement from $0.97 in the prior year.
- Adjusted EBITDA: Adjusted EBITDA for the year amounted to $390 million, representing 24.9% of net sales, compared to $340 million, or 22.2% of net sales, in 2023.
- Capital Deployment: Zurn Elkay completed $150 million in common stock repurchases and paid $57 million in dividends to shareholders.
- Free Cash Flow: The company generated a record free cash flow of $272 million during the year.
Leadership Commentary
Todd A. Adams, Chairman and Chief Executive Officer, expressed his satisfaction with the company’s performance in 2024 Financial Results
2024 was another year of solid execution for us as we delivered record sales, EBITDA, and cash flow performance while repurchasing $150 million of our shares Financial Results and increasing our dividend by 12.5% year over year. Despite pockets of challenging end markets, we achieved 4% pro forma core sales growth, improved our adjusted EBITDA margins by 270 basis points, and made significant strides in deploying our strategies to deliver even better growth in the coming years. Our team’s belief in and relentless deployment of the Zurn Elkay Business System positions us to continue delivering above-market growth and superior financial performance in 2025.
Adams further elaborated on the fourth-quarter performance:
As it relates to the fourth quarter, we delivered a solid quarter as sales, margins, and cash flow exceeded the guidance we provided 90 days ago. Core sales grew by 4%, Financial Results adjusted EBITDA margins expanded by 100 basis points over last year, and free cash flow was $55 million in the quarter.
As we move into 2025, we have confidence in the trajectory of our strategic growth initiatives and will continue to amplify our culture of continuous improvement to deliver on our sustainability initiatives. Our mission remains the same—effective protection, conservation, and management of cleaner, safer water. Financial Results We feel even better positioned to capitalize on any recovery across our end markets, while our exceptional free cash flow and strong balance sheet give us the ability to deploy capital to deliver shareholder value.
Adams also highlighted the company’s commitment to sustainability
In the coming weeks, you will see us release our 2024 sustainability report that highlights the progress we continue to make with respect to sustainability inside the company as well as how we help our customers achieve their own goals. We continue to make enhancements to our sustainability program, and our pursuit of helping our customers protect the vital resource of clean water has never been stronger. We are excited to continue building on the momentum we have around sustainability as a means to drive the growth of our company.
Fourth Quarter 2024 Overview
- Net Sales Growth: Net sales increased by 4% year-over-year, rising from $356.8 million in Q4 2023 to $370.7 million in Q4 2024. This growth was driven by core sales expansion across nearly all product categories.
- Income from Operations: Income from operations surged to $49.3 million in Q4 2024, compared to $32.8 million in the same period last year. Operating margins expanded by 410 basis points due to productivity synergies and restructuring actions related to the Elkay Merger. The prior year included a $11.4 million loss from the divestiture of asbestos liabilities and certain assets.
- Adjusted EBITDA: Adjusted EBITDA for the quarter was $91.1 million, or 24.6% of net sales, compared to $84.1 million, or 23.6% of net sales, in Q4 2023.
Non-GAAP Financial Measures
The company utilizes non-GAAP financial measures to provide a clearer understanding of its operating performance. These measures include core sales, adjusted EPS, adjusted EBITDA, and free cash flow. Management believes these metrics enhance comparability across fiscal periods and offer insight into compliance with debt covenants. However, non-GAAP measures should not be viewed in isolation or as substitutes for GAAP-based financial information. Investors are encouraged to review the reconciliation of non-GAAP measures to their most directly comparable GAAP financial measures, which are provided in the accompanying financial tables.
