Zurn Elkay Water Solutions (ZWS) risk factors, FY2025 10-K

Zurn Elkay Water Solutions's FY2025 10-K, filed Feb 09, 2026, lists 27 risk factors in 4 groups. Against the prior year's 33: 3 new, 9 dropped, 6 substantially reworded.

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Risk factors listed
274 groups
New this year
3vs 33 last year
Dropped
9since the prior 10-K
Substantially reworded
6of those kept
Section length
7k wordsItem 1A

What the changes say

  • Zurn Elkay streamlined risks by removing post-merger integration and spin-off tax items, while updating figures for goodwill, customer concentration, and tax rules.

What changed since the prior 10-K

New

  • NewFinancial Risks

    Also, in spite of the limitations in our credit agreement, we may still incur significantly more debt, which could intensify the risks described above on our business, results and financial condition. For more information about our indebtedness, see Item 8, Note 10, Long-Term Debt

    The company may incur significantly more debt despite credit agreement limits, increasing financial risks.

  • NewFinancial Risks

    these agreements could result in a default. For more information, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources

    Credit agreement restrictions could limit capital allocation, share repurchases, and business operations, risking lender enforcement on collateral upon default.

  • NewLegal and Compliance Risks

    well as our own pre-existing policies; they may be customer-driven, established by the industry sectors in which we operate or imposed by third-party organizations or other constituencies

    Complying with customer-driven, industry, or third-party certification standards could increase costs and disrupt customer relationships if failed.

Dropped

  • DroppedStrategic Risks

    We depend on 1,100 independent sales representatives and approximately 65 third-party warehouses to distribute our products. In fiscal 2024, our three largest independent distributors generated approximately 33% of our consolidated net sales with the largest accounting for 19% of consolidated net sales

  • DroppedFinancial Risks

    implement our capital allocation strategy and prevent us from making debt service payments. In addition, changing or increasing interest rates, including the rates under our debt agreements, could adversely affect our business or financial condition

  • DroppedFinancial Risks

    Our required cash contributions to our pension plans may increase further and we could experience a material change in the funded status of our defined benefit pension plans and the amount recorded in our consolidated balance sheets related to those plans. Additionally, our pension costs could increase in future years

  • DroppedLegal and Compliance Risks

    imposed by third-party organizations or other constituencies

  • DroppedRisks Related to the Spin-Off Transaction

    If the Spin-Off Transaction does not qualify as a tax-free reorganization and distribution for purposes of U.S. federal income taxes, we may be subject to substantial additional taxes

  • DroppedRisks Related to the Merger with Elkay

    We recorded substantial goodwill and other intangible assets as a result of the Merger that could become impaired and result in material non-cash charges to our results of operations in the future

  • DroppedRisks Related to the Merger with Elkay

    Our results may suffer if we do not effectively manage our expanded operations following the Merger

  • DroppedRisks Related to the Merger with Elkay

    Sales of substantial amounts of the Zurn Elkay Common Stock in the open market by the former Elkay stockholders could depress the trading price of our common stock

    Dependence on 1,100 independent sales representatives and distributors generating 33% of sales.

  • DroppedRisks Related to the Merger with Elkay

    Certain former stockholders of Elkay have registration rights, the exercise of which could adversely affect the market price of our Common Stock

Reworded

  • 73% rewrittenLegal and Compliance Risks

    We are subject to changes in legislative, regulatory and legal developments involving taxes

    Added specific reference to the OECD Pillar 2 15% global minimum tax taking effect in 2024.

  • 68% rewrittenFinancial Risks

    Our goodwill and intangible assets are valued at an amount that is high relative to our total assets and in excess of our stockholders' equity

    Updated 2024 goodwill and intangible asset figures of $794.2M and $891.6M to 2025 figures of $795.0M and $835.0M.

  • 62% rewrittenFinancial Risks

    The agreements governing our financing arrangements impose certain operating and financial restrictions, which could have a material adverse effect on our business, financial condition, results of operations or cash flows

    Retitled and restructured financing agreement restrictions risk.

  • 48% rewrittenStrategic Risks

    If we are unable to effectively manage risks associated with changing technology, including artificial intelligence, product innovation and new product development, manufacturing techniques, distribution channels and business continuity, we may be at a competitive disadvantage

    Added artificial intelligence to the scope of changing technology risks.

    Was: If we are unable to effectively manage risks associated with changing technology, product innovation and new product development, manufacturing techniques, distribution channels and business continuity, we may be at a competitive disadvantage

  • 42% rewrittenStrategic Risks

    The loss or financial instability of any significant customer or customers accounting for our backlog could adversely affect our business, financial condition, results of operations or cash flows

    Updated top five customer sales concentration from 39% in 2024 to 38% in 2025, and top customer from 19% to 18%.

  • 26% rewrittenLegal and Compliance Risks

    Our failure to comply with government regulations and requirements, third-party certification requirements and policies and standards driven by our customers or other constituencies, including those related to social responsibility, could adversely affect our reputation, business and results of operations

    Condensed government regulations and third-party standards compliance risk heading and text.

All 27 risk factors

Headings as the filing states them, in filing order.

Strategic Risks

  1. 01Economic and financial market weakness, as well as overall challenging market cycles, may particularly impact the markets we serve, and, as a result may adversely affect our financial condition or results of operations
  2. 02The markets we serve are highly competitive; an inability to effectively compete would adversely affect our business, financial condition and results of operations
  3. 03If we are unable to effectively manage risks associated with changing technology, including artificial intelligence, product innovation and new product development, manufacturing techniques, distribution channels and business continuity, we may be at a competitive disadvantage48% rewritten
  4. 04We may be unable to realize intended benefits from our ongoing Supply Chain Optimization and Footprint Repositioning initiatives, restructuring and divestiture efforts, and as a result our profitability or our business otherwise might be adversely affected
  5. 05An inability to effectively integrate acquisitions, mergers or other business combinations could adversely affect our business, financial condition, results of operations or cash flows. Additionally, dispositions or liabilities retained in connection with dispositions could negatively affect us
  6. 06If dispositions are not completed in a timely manner, there may be a negative effect on our cash flows and/or our ability to execute our strategy. In addition, we may not realize some or all of the anticipated benefits of our dispositions
  7. 07The loss or financial instability of any significant customer or customers accounting for our backlog could adversely affect our business, financial condition, results of operations or cash flows42% rewritten
  8. 08The inability to adequately protect intellectual property, or defend against infringement claims brought against us, could adversely affect our business

Operational Risks

  1. 09Increases in the cost, and/or the availability, of raw materials, including as a result of tariffs or other trade protection measures, could adversely affect our business, financial condition, results of operations or cash flows
  2. 10The ongoing updates to our Enterprise Resource Planning ("ERP") systems, as well as failures of our data security and information technology infrastructure, cybersecurity breaches or misuse of artificial intelligence tools, could cause substantial business interruptions and adversely affect our business
  3. 11Our inability to attract and retain key personnel, as well as challenges with respect to the management of human capital resources, in a highly competitive industry may adversely affect our business
  4. 12Increased frequency of weather events could disrupt construction activity and adversely affect the demand for our products
  5. 13The long-term effect of climate change could decrease demand for certain of our products
  6. 14The physical impacts of climate change may materially adversely affect our business and financial condition
  7. 15Our business and operations, and the operations of our suppliers, business partners and customers, may be adversely affected by future outbreaks of infectious diseases
  8. 16Artificial intelligence presents challenges that can impact our business by posing security risks to confidential or proprietary information and personal data

Financial Risks

  1. 17Also, in spite of the limitations in our credit agreement, we may still incur significantly more debt, which could intensify the risks described above on our business, results and financial condition. For more information about our indebtedness, see Item 8, Note 10, Long-Term DebtNew
  2. 18The agreements governing our financing arrangements impose certain operating and financial restrictions, which could have a material adverse effect on our business, financial condition, results of operations or cash flows62% rewritten
  3. 19these agreements could result in a default. For more information, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital ResourcesNew
  4. 20Our goodwill and intangible assets are valued at an amount that is high relative to our total assets and in excess of our stockholders' equity68% rewritten

Legal and Compliance Risks

  1. 21Our failure to comply with government regulations and requirements, third-party certification requirements and policies and standards driven by our customers or other constituencies, including those related to social responsibility, could adversely affect our reputation, business and results of operations26% rewritten
  2. 22well as our own pre-existing policies; they may be customer-driven, established by the industry sectors in which we operate or imposed by third-party organizations or other constituenciesNew
  3. 23Regulatory and legislative developments related to climate change, may materially adversely affect our business and financial condition
  4. 24We are subject to changes in legislative, regulatory and legal developments involving taxes73% rewritten
  5. 25We may incur significant costs for environmental compliance and/or to address liabilities under environmental laws and regulations, and our reputation may be adversely affected
  6. 26Certain subsidiaries are subject to litigation, including product liability and other claims, which could adversely affect our business, reputation, financial condition, results of operations or cash flows
  7. 27Our inability to achieve our sustainability strategy goals and targets could adversely impact our business, financial condition, results of operations or cash flows

Other Zurn Elkay Water Solutions 10-Ks

  • FY2024 10-K risk factors
    33 risks

    Customer concentration is high, with the top five customers generating 39% and one customer representing 19% of consolidated net sales. The business relies heavily on 1,100 independent sales representatives and 65 third-party warehouses. Goodwill and intangible assets total $794.2 million and $891.6 million, representing a substantial portion of total assets.

    Filed Feb 10, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.