Zurn Elkay Water Solutions Corporation

Good morning and welcome to the Zurn LK Water Solutions Corporation first quarter 2026 earnings results conference call with Ted Adams, Chairman and Chief Executive Officer, David Pauly, Chief Financial Officer, and Bobby Biltner, Vice President and Corporate Controller for Zurn LK Water Solutions. A replay of the conference call will be available as a webcast on the company's investor relations website. At this time, for opening remarks and introduction, I'll turn the call over to Bobbie Bozner.

Good morning, everyone, and thanks for joining the call today. Before we begin, I'd like to remind everyone that this call contains certain forward-looking statements which are subject to the safe harbor language outlined in our press release issued yesterday afternoon and in our filings with the SEC. In addition, some comparisons will refer to non-GAAP measures. Our earnings release and SEC filings contain additional information about these non-GAAP measures, why we use them, and why we believe they are helpful to investors and contain reconciliations to the corresponding GAAP information. Consistent with prior quarters, we will speak to certain non-GAAP metrics as we feel they provide a better understanding of our operating results. These measures are not a substitute for GAAP. We encourage you to review the GAAP information in our earnings release and our SEC filings. With that, I'll turn the call over to Todd Adams, Chairman and CEO of Zurn LK Water Solutions.

Thanks, Bobbie, and good morning, everyone. I'll start on page three. 2026 is off to a decent start as first quarter sales grew 11% organically. EBITDA grew 18% to $116 million, and our margins expanded 160 basis points to 26.8%. In the quarter, we generated $43 million of free cash flow, and we purchased $50 million of Zern LK at roughly $47 a share. We're very comfortable with our full-year outlook for free cash flow of approximately $335 million, and anticipate revisiting that along with the rest of our outlook after Q2. Just a couple thoughts from me before I turn it over to Dave. From a market perspective, we generally see the same market conditions we outlined in when we provided our outlook in February. The same is very much true for the pricing environment. Next, there's been a lot of announcements in moving parts related to tariffs over the course of the quarter. The Supreme Court ruling on the IEPA tariffs and subsequent refunds, the implementation of 122 tariffs, changes to the 232 tariff scheme, and the opening of new studies on future Section 301 tariffs. We've also continued to advance our own supply chain footprint initiatives And what I will say here is that we are very much on track to meet or beat the objectives we set out to achieve at the beginning of the year. As it relates to all these tariff changes and potential changes in our outlook, our view is that assuming some of the known changes to 232 tariffs and projecting some likely net adverse changes stemming from the potential 122 and 301 changes, we are highly confident that without receiving any refunds or implementing any future price increases, The discrete impact of tariffs within 2026, which we said was to be price-cost positive, remains unchanged. Which leads me to my final point on our full-year outlook. I think the way to describe the way we think about our outlook is to be both deliberate and conservative. As you can see with our first quarter results and second quarter outlook, we're running ahead of what was likely assumed for the first half of 2026. As I just discussed, we have high confidence that we will continue to manage through the tariff dynamics extraordinarily well. Second, as of now, there isn't anything I can point to that would make the second half worse than what we had anticipated. So I think it's safe to say our first half outperformance flows through to the year. That's where the deliberate methodology enters into our approach. The reality is that there's eight months left in a year. And depending on the day, there's simply a lot going on in the world. So rather than try to change a bunch of digital assumptions day by day, that frankly will become more clear as the year goes on, we're simply going to update the second half after Q2. So with that, I'll turn it over to Dave.