A Look Back at HVAC and Water Systems Stocks' Q2 Earnings: Zurn Elkay (NYSE:ZWS) Vs The Rest Of The Pack

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at hvac and water systems stocks, starting with Zurn Elkay (NYSE:ZWS).

Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 9 hvac and water systems stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 14.3% below.

Thankfully, share prices of the companies have been resilient as they are up 5.3% on average since the latest earnings results.

Zurn Elkay (NYSE:ZWS)

Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.

Zurn Elkay reported revenues of $444.5 million, up 7.9% year on year. This print exceeded analysts’ expectations by 4.5%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ adjusted operating income estimates.

Todd A. Adams, Chairman and Chief Executive Officer, commented, “We continue to navigate the global tariff dynamic extraordinarily well as the diversity and flexibility of our supply chain, selective pricing actions and the Zurn Elkay Business System drove strong results in the quarter. Second quarter core sales(1) growth was 8% year over year and includes some customer buy ahead as well as some early benefit from our pricing actions implemented in the quarter. Adjusted EBITDA margins(1) were above the high end of our guidance range at a record 26.5% and up 120 basis points over the prior year second quarter. Free cash flow(1), inclusive of the $33 million we deployed to buy back shares, exceeded $100 million in the quarter for the first time ever while our leverage declined to 0.7x.”

Interestingly, the stock is up 21.4% since reporting and currently trades at $46.55.

Is now the time to buy Zurn Elkay? Access our full analysis of the earnings results here, it’s free.

Best Q2: Northwest Pipe (NASDAQ:NWPX)

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.

Northwest Pipe reported revenues of $133.2 million, up 2.8% year on year, outperforming analysts’ expectations by 10.1%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.

Northwest Pipe pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 24.1% since reporting. It currently trades at $53.10.

Is now the time to buy Northwest Pipe? Access our full analysis of the earnings results here, it’s free.

Slowest Q2: AAON (NASDAQ:AAON)

Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.

AAON reported revenues of $311.6 million, flat year on year, falling short of analysts’ expectations by 4.1%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.

Interestingly, the stock is up 5.2% since the results and currently trades at $84.75.

Read our full analysis of AAON’s results here.

CSW (NASDAQ:CSW)

With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ:CSW) offers special chemicals, coatings, sealants, and lubricants for various industries.

CSW reported revenues of $263.6 million, up 16.6% year on year. This number missed analysts’ expectations by 5.2%. Overall, it was a disappointing quarter as it also produced a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.

CSW achieved the fastest revenue growth but had the weakest performance against analyst estimates among its peers. The stock is flat since reporting and currently trades at $270.02.

Read our full, actionable report on CSW here, it’s free.

Carrier Global (NYSE:CARR)

Founded by the inventor of air conditioning, Carrier Global (NYSE:CARR) manufactures heating, ventilation, air conditioning, and refrigeration products.

Carrier Global reported revenues of $6.11 billion, up 3% year on year. This print met analysts’ expectations. Zooming out, it was a mixed quarter as it also logged a decent beat of analysts’ EBITDA estimates but full-year EPS guidance meeting analysts’ expectations.

Carrier Global had the weakest full-year guidance update among its peers. The stock is down 15.1% since reporting and currently trades at $68.15.

Read our full, actionable report on Carrier Global here, it’s free.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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