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Zurn Elkay Water Solutions Corporation’s $109 Million Intellihot Bet: Can It Reach $100 Million?

Zurn Elkay Water Solutions Corporation reported solid second-quarter 2026 results, highlighted by 10% organic sales growth and a 15% increase in adjusted EBITDA, with margins expanding 120 basis points to a record 27.7%. The company generated $112 million in free cash flow for the quarter and repurchased $50 million of its stock, bringing total year-to-date share repurchases and investments to $100 million. The business saw broad-based growth, notably in water safety and control and drinking water product lines, outpacing overall portfolio performance. Approximately 5% of sales growth was attributed to price increases. The company completed the acquisition of Intellihot for $109 million, a strategic entry into the tankless commercial water heating market, a $200 million segment growing faster than the overall category. Intellihot has about $37 million annual sales with 50% gross margins and low teens EBITDA margins.