What changed in this filing

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Item 1A. Risk Factors

2021-11-19 compared with 2020-11-19 · 151 added, 132 removed, 197 unchanged (59% of the section changed)

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Governments and private water entities may have limited abilities to increase taxes, water fees or water rates, as applicable.

It is not unusual for water and wastewater projects to be delayed and rescheduled for a number of reasons, including changes in project priorities, increasing interest rates and inflation and difficulties in complying with environmental and other governmental regulations.

For example, changes in interest rates and credit markets (including municipal bonds, mortgages, home equity loans and consumer credit) can significantly increase the costs of the projects in which our products are utilized — such as new residential construction and water and wastewater infrastructure upgrade, repair and replacement projects — and lead to such projects being reduced, delayed and/or rescheduled, which could result in a decrease in our revenues and earnings and adversely affect our financial condition.

It is not unusual for water and wastewater projects to be delayed and rescheduled for a number of reasons, including changes in project priorities, increasing interest rates, inflation and difficulties in complying with environmental and other governmental regulations.

For example, changes in interest rates and credit markets, including municipal bonds, mortgages, home equity loans and consumer credit, can significantly increase the costs of the projects in which our products are utilized, such as in new residential construction and water and wastewater infrastructure upgrade, repair and replacement projects, and lead to such projects being reduced, delayed and/or rescheduled, which could result in a decrease in our revenues and earnings and adversely affect our financial condition.

In addition, higher interest rates are often accompanied by inflation.

In an inflationary environment, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation, which would reduce our profit margins.

Some state and local governments have placed or may place significant restrictions on the use of water by their constituents.

These types of water use restrictions may lead to reduced water revenues by private water entities, municipalities or other governmental agencies, which could similarly affect funding decisions for water-related projects.

In an inflationary environment, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation, which would reduce our profit margins and cash flows.

Some state and local governments may place significant restrictions on the use of water by their constituents and/or increase their water conservation efforts.

These types of water use restrictions and water conservation efforts may lead to reduced water revenues by private water entities, municipalities or other governmental agencies, which could similarly affect funding decisions for water-related projects.

Poor economic conditions may cause states, municipalities or private water entities to receive lower than anticipated revenues, which may lead to reduced or delayed funding for water infrastructure projects.

Even if favorable economic conditions exist, water infrastructure owners may choose not to address deferred infrastructure needs due to a variety of political factors or competing spending priorities.

Even if favorable economic conditions exist, water infrastructure owners may choose not to address deferred infrastructure needs as a result of a variety of political factors or competing spending priorities.

Low levels of spending for water and wastewater infrastructure construction activity could adversely affect our sales, profitability and cash flows.

Residential construction activity is important to our business and adverse conditions or sustained uncertainty regarding this market could adversely affect our financial results.

Residential construction activity is important to our business and adverse conditions or sustained uncertainty within this market could adversely affect our financial results.

New water and wastewater infrastructure spending is heavily dependent upon residential construction.

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Our business depends on a small group of key customers for a significant portion of our sales.

Infrastructure sells products primarily to distributors and our success depends on these outside parties operating their businesses profitably and effectively.

A majority of our products are sold primarily to distributors and our success depends on these outside parties operating their businesses profitably and effectively.

These distributors’ profitability and effectiveness can vary significantly from company to company and from region to region within the same company.

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Distributors in our industry have experienced consolidation in recent years.

If such consolidation continues, our distributors could be acquired by other distributors who have better relationships with our competitors and pricing and profit margin pressure may intensify.

Pricing and profit margin pressure or the loss of any one of our key distributors in any market could adversely affect our operating results.

If such consolidation continues, our distributors could be acquired by other distributors who have better relationships with our competitors, and consequently,

Index to Financial Statements

Technologies primarily sells directly to end users.

Some of these customers represent a relatively high concentration of net sales.

pricing and profit margin pressure may intensify.

Pricing and profit margin pressure or the loss of any one of our key distributors in any market could adversely affect our operating results.

Certain products and solutions, primarily technology-enabled products and solutions, are sold directly to end users.

Some of these customers represent a relatively high concentration of sales.

Over time, expected growth in sales is expected to lessen the significance of individual customers.

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Strong competition could adversely affect prices and demand for our products and services, which would adversely affect our operating results.

and Canadian markets for water infrastructure and flow control products are very competitive.

The United States and Canadian markets for water infrastructure and flow control products are very competitive.

While there are only a few competitors for most of our product and service offerings, many of our competitors are well-established companies with strong brand recognition.

We compete on the basis of a variety of factors, including the quality, price and innovation of our products, services and service levels.

Our ability to retain our customers in the face of competition depends on our ability to market our products and services to our customers and end users effectively.

markets for water metering products and systems are highly competitive.

Our ability to retain customers in the face of competition depends on our ability to market our products and services to our customers and end users effectively.

The United States markets for water metering products and systems are highly competitive.

Our primary competitors benefit from strong market positions and many end users are slow to transition to new products or new brands.

Our ability to gain customers depends on our technological advancements and ability to market our products and services to our customers and end users effectively.

Our ability to attract new customers depends on our technological advancements and ability to market our products and services to our customers and end users effectively.

In addition to competition from North American companies, we face the threat of competition from outside of North America.

The intensity of competition from these companies is affected by fluctuations in the value of the U.S.

dollar against their local currencies, the cost to ship competitive products into North America and the availability of trade remedies, if any.

Competition may also increase as a result of U.S.

competitors shifting their operations to lower-cost countries or otherwise reducing their costs.

The intensity of competition from these companies is affected by fluctuations in the value of the United States dollar against foreign local currencies, the cost to ship competitive products into North America and the availability of trade remedies, if any.

Competition may also increase as a result of competitors located in the United States shifting their operations to lower-cost countries or otherwise reducing their costs.

Our competitors may reduce the prices of their products or services, improve their quality, improve their functionality or enhance their marketing or sales activities.

Any of these potential developments could adversely affect our prices and demand for our products and services.

The long-term success of our newer systems and solutions, including the related products, software and services, such as smart metering, leak detection and pipe condition assessment, depends on market acceptance.

Technologies’ smart metering and leak detection and pipe condition assessment products and services have much less market history than many of Infrastructure’s products.

The long-term success of our newer systems and solutions, including the related products, software and services, such as smart metering, leak detection, pressure monitoring and pipe condition assessment, depends on market acceptance.

Our technology-enabled smart metering, leak detection, pressure monitoring and pipe condition assessment products and services have much less market history than many of our traditional products.

Our investments in smart metering have primarily focused on the market for AMI and have been based on our belief that water utilities will transition over time from traditional manually-read meters to automatically-read meters.

The market for AMI is relatively new and continues to evolve, and the U.S.

markets for water meter products and systems are highly competitive.

Water utilities have traditionally been slow adopters of new technology and may not adopt AMI as quickly as we expect, due, in part, to the substantial investment related to installation of AMI systems.

The market for AMI is relatively new and continues to evolve, and the United States markets for water meter products and systems are highly competitive.

Water utilities have traditionally been slow adopters of new technology and may not adopt AMI as quickly as we expect, partially as a result of the substantial investment related to installation of AMI systems.

The strong market positions of our primary competitors may also slow the adoption of our products.

Similarly, the adoption of our leak detection and pipe condition assessment products and services depends on the willingness of our customers to invest in new product and service offerings, and the pace of adoption may be slower than we expect.

If the market for AMI develops more slowly than we expect or if our new leak detection and pipe condition assessment products and services fail to gain market acceptance, our opportunity to grow these businesses will be limited.

Similarly, the adoption of our pressure monitoring, leak detection and pipe condition assessment products and services depends on the willingness of our customers to invest in new product and service offerings, and the pace of adoption may be slower than we expect.

If the market for our technology-enabled products and services develops more slowly than we expect or these products and services fail to gain market acceptance, our opportunity to grow these businesses will be limited.

Index to Financial Statements

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These challenges can be costly and technologically challenging, and we cannot determine in advance the ultimate effect they may have.

For example, during the quarters ended March 30, 2017 and June 30, 2018, we recorded discrete warranty expenses of $9.8 million and $14.1 million, respectively, associated with certain products that Technologies produced prior to 2017, as described more fully in Note 18.

to the Notes to the Consolidated Financial Statements.

Warranty liabilities and the related reserve estimation process is highly judgmental due to the complex nature of these exposures and the unique circumstances of each claim.

Warranty liabilities and the related reserve estimation process is highly judgmental as a result of the complex nature of these exposures and the unique circumstances of each claim.

Furthermore, once claims are asserted for an alleged product defect by municipalities or other customers, it can be difficult to determine the level of potential exposure or liability related to such allegation to which the assertion of these claims will expand geographically.

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Current and future claims may arise out of events or circumstances not covered by insurance and not subject to effective indemnification agreements with our subcontractors.

Failure to successfully manage these challenges could result in lost revenue, significant expenses, and harm to our reputation.

Inefficient or ineffective allocation of capital, along with increased capital expenditure levels to modernize our aging facilities and expand our capabilities, could adversely affect our operating results and/or shareholder value, including negatively impacting our available cash reserves and prevent acquisition or other cash-intensive opportunities.

Our goal is to invest capital to generate long-term value for our shareholders.

This includes spending on capital projects, such as developing or acquiring strategic businesses, technologies and product lines with the potential to strengthen our industry position, enhancing our existing set of product and service offerings, or entering new markets, as well as periodically returning value to our stockholders through share repurchases and dividends.

Failure to successfully manage these challenges could result in lost revenue, significant expense, and harm to our reputation.

Inefficient or ineffective allocation of capital, along with increased capital expenditure levels to modernize our aging facilities and expand our capabilities, could adversely affect our operating results and/or stockholder value, including negatively impacting our available cash reserves and prevent acquisition or other cash-intensive opportunities.

Our goal is to invest capital to generate long-term value for our stockholders.

This includes spending on capital projects, such as developing or acquiring strategic businesses, technologies and product lines with the potential to strengthen our industry position, enhancing our existing set of product and service offerings, or entering into new markets, as well as periodically returning value to our stockholders through share repurchases and dividends.

For example, we have completed the construction of our large valve manufacturing expansion in Chattanooga, Tennessee and made an additional investment in a facility in Kimball, Tennessee to further expand our capabilities in the area and allow us to insource more products and operations.

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The actions taken to address specific risks may affect how well we manage the more general risk of capital efficiency.

If we do not properly allocate and manage our capital, we may fail to produce optimal financial results and we may experience a reduction in stockholder value, including increased volatility in our stock price.

If we do not allocate properly and manage our capital, we may fail to produce expected financial results, and we may experience a reduction in stockholder value, including increased volatility in our stock price.

We may not realize the expected benefits from our strategic reorganization plans.

During October 2018, we announced the move of our Middleborough, Massachusetts facility to Atlanta, which will allow us to consolidate our resources and accelerate product innovation through creation of a research and development center of excellence for software and electronics in Atlanta, Georgia.

As a result of this reorganization, we expect annual cost savings of approximately $1.5 million, which takes into account the hiring and alignment of new engineering talent.

During November 2019, we announced the purchase of a new facility in Kimball, Tennessee, which will allow us to support and enhance our investment in our Chattanooga large casting foundry.

As a result of this reorganization, we announced the subsequent closures of our facilities in Hammond, Indiana and Woodland, Washington.

We have incurred $2.5 million in charges related to this reorganization in fiscal 2020.

We cannot guarantee that the activities under the restructuring and reorganization activities will result in the desired efficiencies and estimated cost savings.

In fiscal 2019, we relocated our research and development activities from our Middleborough, Massachusetts facility to Atlanta, Georgia, which consolidated our resources and should accelerate product innovation through creation of a research and development center of excellence for software and electronics in Atlanta.

Between November 2019 and March 2021, we announced the purchase and closure of several facilities.

We purchased a new facility in Kimball, Tennessee, to support and enhance our investment in our Chattanooga, Tennessee large casting foundry.

As a result of this reorganization, we closed our facilities in Hammond, Indiana and Woodland, Washington.

We also announced the planned closures of our facilities in Aurora, Illinois and Surrey, British Columbia, Canada.

Most of the activities from these plants will be transferred to our Kimball, Tennessee facility.

We expect to substantially complete these facility closures by the third quarter of our fiscal year 2022 and expect to incur total expenses related to this restructuring of approximately $14.0 million.

We cannot guarantee that the activities under the restructuring and reorganization activities will result in the desired efficiencies and estimated cost savings, if any.

Our business strategy includes developing, acquiring and investing in companies and technologies that broaden our product portfolio or complement our existing business, which could be unsuccessful or consume significant resources and adversely affect our operating results.

As part of our long-term business strategy, we will continue to evaluate the development or acquisition of strategic businesses, technologies and product lines with the potential to strengthen our industry position, enhance and expand our existing set of product and service offerings, or enter new markets.

As part of our long-term business strategy, we continue to evaluate the development or acquisition of strategic businesses, technologies and product lines with the potential to strengthen our industry position, enhance and expand our existing set of product and service offerings, or enter new markets.

We may be unable to identify or successfully complete suitable acquisitions in the future and completed acquisitions may not be successful.

Index to Financial Statements

Acquisitions and technology investments may involve significant cash expenditures, debt incurrence, operating losses and expenses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

These types of transactions involve numerous other risks, including:

Acquisitions and technology investments may involve significant cash expenditures, the incurrence of debt, operating losses and expenses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

These types of transactions involve numerous other risks, including but not limited to:

• Diversion of management time and attention from existing operations,

• Difficulties in integrating acquired businesses, technologies and personnel into our business or into our compliance and control programs, particularly those that involve international operations;

• Difficulties in integrating acquired businesses, technologies and personnel into our business or into our compliance and control programs, particularly those that include international operations,

• Working with partners or other ownership structures with shared decision-making authority (our interests and other ownership interests may be inconsistent),

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• Inability to obtain required regulatory approvals and/or required financing on favorable terms,

• Potential loss of key employees, contractual relationships or customers;

• Potential loss of key employees, contractual relationships or customers of the acquired company,

• Increased operating expenses related to the acquired businesses or technologies,

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• Entering new markets in which we have little or no experience or in which competitors may have stronger market positions,

• Dilution of interests of holders of our common shares through the issuance of equity securities or equity-linked securities;

• Inability to achieve expected synergies or the achievement of such synergies taking longer than expected to realize, including increases in revenue, enhanced efficiencies, or increased market share, or the benefits may ultimately be smaller than we expected.

• Dilution of stockholder value through the issuance of equity securities or equity-linked securities, and

Any acquisitions or investments may ultimately harm our business or financial condition, as they may not be successful and may ultimately have an adverse effect on our operating results or financial condition and/or result in impairment charges.

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A part of our growth strategy depends on us expanding internationally.

Although net sales outside of the United States and Canada account for a relatively small percentage of our total net sales, we expect to increase our level of business activity outside of the United States and Canada, as illustrated by our acquisition of Krausz Industries, which is based in Tel Aviv, Israel, in December 2018.

Although sales outside of the United States and Canada account for a relatively small percentage of our total net sales, we expect to increase our level of business activity outside of the United States and Canada, as illustrated by our December 2018 acquisition of Krausz Industries, which is based in Israel, and our acquisition in June 2021 of i2O Water Ltd, which is based in Southampton, United Kingdom.

Some countries that present potential good business opportunities also face political and economic instability and vulnerability to infrastructure and other disruptions.

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We also face the potential risks arising from staffing, monitoring and managing international operations, including the risk such activities may divert our resources and management time.

In addition, compliance with the laws and regulations of multiple international jurisdictions increases our cost of doing business.

In addition, compliance with the laws, regulations and taxes of multiple international jurisdictions increases our cost of doing business.

International operations are subject to anti-corruption laws and anti-competition regulations, among others.

For example, the U.S.

Foreign Corrupt Practices Act and similar non-U.S.

anti-corruption laws generally prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence foreign government officials and certain others for the purpose of obtaining or retaining business, or obtaining an unfair advantage.

For example, the United States Foreign Corrupt Practices Act and similar anti-corruption laws outside of the United States generally prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence foreign government officials and certain others for the purpose of obtaining or retaining business, or obtaining an unfair advantage.

Violations of these laws and regulations could result in criminal and civil sanctions, disrupt our business and adversely affect our brands, international expansion efforts, business and operating results.

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We earn revenues and incur expenses in foreign currencies as part of our operations outside of the United States.

Accordingly, fluctuations in currency exchange rates may significantly increase the amount of U.S.

dollars required for foreign currency expenses or significantly decrease the U.S.

dollars we receive from foreign currency revenues.

As a result, changes between the foreign exchange rates and the U.S.

dollar affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results.

We expect that our exposure to foreign currency exchange rate fluctuations will grow as the relative contribution of our non-U.S.

operations increases through both organic and inorganic growth.

Accordingly, fluctuations in currency exchange rates may significantly increase the amount of United States dollars required for foreign currency expenses or significantly decrease the United States dollars we receive from revenues denominated in a foreign currency.

Changes between a foreign exchange rate and the United States dollar affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results.

We expect that our exposure to foreign currency exchange rate fluctuations will grow as the relative contribution of our operations outside the United States increases through both organic and inorganic growth.

Risks related to our operations

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If the supply of a critical single- or limited-source product is delayed or curtailed, we may not be able to ship the related products in desired quantities or in a timely manner.

Even where multiple sources of supply are available, qualification of the alternative suppliers and establishment of reliable supplies could result in delays and a possible loss of sales, which could harm our operating results.

These relationships reduce our direct control over production.

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A disruption in our supply chain or other factors impacting the distribution of our products could adversely affect our business.

A disruption within our logistics or supply chain network at any of the freight companies that deliver components for our manufacturing operations in the United States or ship our fully-assembled products to our customers could adversely affect our business and result in lost sales or harm to our reputation.

Our supply chain is dependent on third party ocean-going container ships, rail, barge and trucking systems and, therefore, disruption in these logistics services because of weather-related problems, strikes, bankruptcies or other events could adversely affect our financial performance and financial condition, negatively impacting sales, profitability and cash flows.

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Many of our products are big, bulky and heavy, which tend to increase transportation costs.

We also have relatively few manufacturing sites, which tends to increase transportation distances to our customers and costs.

We also have relatively few manufacturing sites, which tends to increase transportation distances to our customers and consequently increases our transportation costs.

High transportation costs could make our products less competitive compared to similar or alternative products offered by competitors.

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A significant portion of our cost structure is fixed, including manufacturing overhead, capital equipment and research and development costs.

In a prolonged economic downturn, these fixed costs may cause our gross margins to erode and earnings to decline.

In a prolonged economic downturn, these fixed costs may cause our gross margins to erode and our earnings to decline.

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Normal operations at our key manufacturing facilities may be interrupted.

Some of our key products, including fire hydrants and iron gate valves, are manufactured at single or few manufacturing facilities that depend on critical pieces of heavy equipment that cannot be economically moved to other locations.

Some of our key products, including fire hydrants and iron gate valves, are manufactured at a single facility or few manufacturing facilities, that depend on critical pieces of heavy equipment that cannot be moved economically to other locations.

We are therefore limited in our ability to shift production among locations.

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• Releases of pollutants and hazardous substances to air, soil, surface water or ground water,

• Labor disputes;

• Labor disputes, and

• Cyberattacks and events.

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Our business depends on our technology and expertise, which were largely developed internally and are not subject to statutory protection.

We rely on a combination of patent protection, copyright and trademark laws, trade secrets protection, employee and third-party confidentiality agreements and technical measures to protect our intellectual property rights.

We rely on a combination of patent protection, copyright and trademark laws, trade secrets protection, employee and third-party confidentiality agreements as well as technical measures to protect our intellectual property rights.

The measures that we take to protect our intellectual property rights may not adequately deter infringement, misappropriation or independent development of our technology, and they may not prevent an unauthorized party from obtaining or using information or intellectual property that we regard as proprietary or keep others from using brand names similar to our own.

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In addition, our actions to enforce our rights may result in substantial costs and the diversion of management time and other resources.

We may also be subject to intellectual property infringement claims from time to time, which may result in additional expenses and diverting resources to respond to these claims.

Finally, for those products in our portfolio that rely on patent protection, once a patent has expired the product is more subject to competition.

We may also be subject to intellectual property infringement claims from time to time, which may result in additional expenses and the diversion of resources to respond to these claims.

Finally, for those products in our portfolio that rely on patent protection, once a patent has expired the product is further subjected to competition.

Products under patent protection potentially generate significantly higher revenue and earnings than those not protected by patents.

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We may fail to effectively manage confidential data, which could harm our reputation, result in substantial additional costs and subject us to litigation.

As we grow our Technologies businesses, we continue to accumulate increasing volumes of customer data.

As we grow our technology-enabled products, services and solutions, we continue to accumulate increasing volumes of customer data.

In addition, we store personal information in connection with our human resources operations.

Our efforts to protect this information may be unsuccessful due to employee errors or malfeasance, technical malfunctions, the actions of third parties (such as cyber attack) or other factors.

If our cyber defenses and other countermeasures we deploy are unable to protect personal data, it could be accessed or disclosed improperly, which could expose us to liability, harm our reputation and deter current and potential users from using our products and services.

Our efforts to protect this information may be unsuccessful as a result of employee errors or malfeasance, technical malfunctions, the actions of third parties such as a cyberattack or other factors.

If our cyber defenses and other countermeasures are unable to protect personal data, it could be accessed or disclosed improperly, which could expose us to liability, harm our reputation and deter current and potential users from using our products and services.

The regulatory environment related to cyber and information security, data collection and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result in additional costs.

Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our reputation.

Cyberthreats are constantly evolving and can take a variety of forms, increasing the difficulty of detecting and successfully defending against them.

Individual and groups of hackers and sophisticated organizations, including state-sponsored organizations or nation-states, continuously undertake attacks that pose threats to our customers and our IT.

These actors may use a wide variety of methods, which may include developing and deploying malicious software or exploiting vulnerabilities in hardware, software, or other infrastructure in order to attack our products and services or gain access to our networks and datacenters, using social engineering techniques to induce our employees, users, partners, or customers to disclose passwords or other sensitive information or take other actions to gain access to our data or our users’ or customers’ data, or acting in a coordinated manner to launch distributed denial of service or other coordinated attacks.

Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, unauthorized access to customer data, or harm to our reputation.

Cybersecurity threats are constantly evolving and can take a variety of forms, increasing the difficulty of detecting and successfully defending against them.

These actors may use a wide variety of methods, which may include developing and deploying malicious software or exploiting vulnerabilities in hardware, software, radio communication protocols, or other infrastructure in order to attack our products and services.

Additionally, these actors may reverse engineer trade secrets or other confidential intellectual property, or gain access to our networks and data centers, using social engineering techniques to induce our employees, users, partners, or customers to disclose passwords or other sensitive information or take other actions to gain access to our data or our users’ or customers’ data, or act in a coordinated manner to launch distributed denial of service attacks, deny or postpone access to critical water infrastructure telemetry through vulnerabilities in our cloud services and infrastructure, or logging, sensing, and telemetry products.

Inadequate account security practices may also result in unauthorized access to confidential data.

We may have no current capability to detect certain vulnerabilities, which may allow them to persist in the environment over long periods of time.

Cyberthreats can have cascading impacts that unfold with increasing speed across our internal networks and systems and those of our partners and customers.

Cybersecurity threats can have cascading impacts that unfold with increasing speed across our internal networks and systems and those of our partners and customers.

Breaches of our facilities, network, or data security could disrupt the security of our systems and business applications, impair our ability to provide services to our customers and protect the privacy of their data, result in product development delays, compromise confidential or technical business information harming our reputation, result in theft or misuse of our intellectual property or other assets, require us to allocate more resources to improved technologies, or otherwise adversely affect our business.

We may be affected by new governmental legislation and regulations relating to carbon dioxide emissions.

Many of our manufacturing plants use significant amounts of electricity generated by burning fossil fuels, which releases carbon dioxide.

Several state courts and administrative agencies are considering the scope and scale of carbon dioxide emission regulation under various laws pertaining to the environment, energy use and development and greenhouse gas emissions.

In addition, several states are considering various carbon dioxide registration and reduction programs.

The final details and scope of these various legislative, regulatory and policy measures are unclear and their potential impact is still uncertain, so we cannot fully predict the impact on our business.

The potential impacts of climate change on our operations are highly uncertain.

Although the financial impact of these potential changes is not reasonably estimable at this time, our operations in certain locations and those of our customers and suppliers could potentially be adversely affected, which could adversely affect our sales, profitability and cash flows.

Misuse of our technology-enabled products, services and solutions could lead to reduced revenue, increased costs, liability claims, or harm to our reputation.

As we continue to design and develop products, services and solutions that leverage our hosted or cloud-based resources, the internet-of-things and other wireless/remote technologies and include networks of distributed and interconnected devices that contain sensors, data transfers and other computing capabilities, our customers’ data and systems may be subjected to harmful or illegal content or attacks, including potential cybersecurity threats.

Additionally, we may not have adequately anticipated or precluded such cybersecurity threats through our product design or development.

These products, services and solutions inevitably contain vulnerabilities or critical security defects which may not been remedied and cannot be disclosed without compromising security.

We may also make prioritization decisions in determining which vulnerabilities or security

Index to Financial Statements

defects to fix, and the timing of these fixes, which could result in compromised security.

These vulnerabilities and security defects could expose us or our customers to a risk of loss, disclosure, or misuse of information/data;

adversely affect our operating results;

result in litigation, liability, or regulatory action (including under laws related to privacy, data protection, data security, network security, and consumer protection);

deter customers or sellers from using our products, services and solutions;

and otherwise harm our business and reputation.

We are subject to a variety of claims, investigations and litigation that could adversely affect our results of operations and harm our reputation.

In the normal course of our business, we are subject to claims and lawsuits, including from time to time claims for damages related to product liability and warranties, investigations by governmental agencies, litigation alleging the infringement of intellectual property rights and litigation related to employee matters and commercial disputes.

We may also be subject to investigations, claims, litigation and other proceedings outside the ordinary course of business, such as the February 2019 mass shooting event we experienced in our Aurora, Illinois facility.

Defending these lawsuits and becoming involved in these investigations may divert our management’s attention, and may cause us to incur significant expenses, even if there is no evidence that our systems or components were the cause of the claim.

We may also be subject to investigations, claims, litigation and other proceedings outside the ordinary course of business, such as the June 2021 mass shooting event in our Albertville, Alabama facility.

Defending these lawsuits and becoming involved in these investigations may divert management’s attention, and may cause us to incur significant expenses, even if there is no evidence that our systems or practices were the cause of the claim.

In addition, we may be required to pay damage awards, penalties or settlements, or become subject to injunctions or other equitable remedies, that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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BUSINESS - Regulatory and Environmental Matters,” “Item 7.

LEGAL PROCEEDINGS - Environmental,” “Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Contingencies” and Note 17.

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All such “potentially responsible parties” (“PRP”), or any one of them, including us, may be required to bear all of such costs regardless of fault, the legality of the original disposal or ownership of the disposal site.

As a result, we may be required to conduct investigations and perform remedial activities at current and former operating and manufacturing sites where we have been, or in the future could be, named a PRP with respect to such environmental liabilities, any of which could require us to incur material costs.

As a result, we may be required to conduct investigations and perform remedial activities at current and former operating and manufacturing sites where we have been deemed, or in the future could be, named a PRP with respect to such environmental liabilities, any of which could require us to incur material costs.

The final remediation costs of these environmental sites may exceed current estimated costs, and additional sites in the future may require material remediation expenses.

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BUSINESS - Regulatory and Environmental Matters,” “Item 7.

LEGAL PROCEEDINGS - Environmental,” “Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Contingencies” and Note 17.

of the Notes to Consolidated Financial Statements.

Climate change and legal or regulatory responses thereto may have an adverse impact on our business and results of operations.

There is growing concern that a gradual increase in global average temperatures as a result of increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.

Many of our manufacturing plants use significant amounts of electricity generated by burning fossil fuels, which releases carbon dioxide.

Such climate change may impair our production capabilities, disrupt our supply chain or impact demand for our products.

Growing concern over climate change also may result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment.

Increased energy or compliance costs and expenses as a result of increased legal or regulatory requirements may cause disruptions in, or an increase in the costs associated with, the manufacturing and distribution of our products.

The impacts of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations.

If we fail to achieve or improperly report on our progress toward achieving our goals and commitments to reduce our carbon footprint or in environmental and sustainability programs and initiatives, the results could have an adverse impact on our business and results of operations.

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We rely on successors to Tyco to indemnify us for certain liabilities and they may become financially unable or fail to comply with the terms of the indemnity.

Under the terms of the acquisition agreement relating to the August 1999 sale by Tyco of our businesses to a previous owner of these businesses, we are indemnified by certain Tyco entities (“Tyco Indemnitors”) for all liabilities arising in connection with the operation of these businesses prior to their sale by Tyco, including with respect to products manufactured or sold prior to the closing of that transaction, as well as certain environmental liabilities.

Under the terms of the acquisition agreement relating to the August 1999 sale by Tyco of businesses which make up certain of the companies within Mueller Water Products, Inc., we are indemnified by certain Tyco entities (“Tyco Indemnitors”) for all liabilities arising in connection with the operation of these businesses prior to their sale by Tyco, including with respect to products manufactured or sold prior to the closing of that transaction, as well as certain environmental liabilities.

These indemnities survive indefinitely and are not subject to any dollar limits.

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Should any Tyco Indemnitor become financially unable or fail to comply with the terms of the indemnity, we may be responsible for such obligations or liabilities.

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Risks related to our human capital

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Competition for qualified personnel is intense and we may not be successful in attracting or retaining qualified personnel, which could negatively impact our business.

If we are unable to negotiate collective bargaining agreements on satisfactory terms or we experience strikes, work stoppages, labor unrest or higher than normal absenteeism, our business could suffer.

Many of our employees at our manufacturing locations are covered by collective bargaining agreements.

While we generally have been able to renegotiate collective bargaining agreements on generally satisfactory terms, negotiations may be challenging as the Company must have a competitive cost structure in each market while meeting the compensation and benefits needs of our employees.

If we are unable to renew collective bargaining agreements on satisfactory terms, our labor costs could increase, which could impact our financial position and results of operations.

Strikes, work stoppages or other forms of labor unrest at any of our plants could impair our ability to supply products to our distributors and customers, which could reduce our revenues, increase our expenses and expose us to customer claims.

Furthermore, our ability to meet product delivery commitments and labor needs while controlling labor costs is subject to numerous external factors, including, but not limited to:

• Market pressures with respect to prevailing wage rates,

• Unemployment levels,

• Health and other insurance costs,

• The impact of legislation or regulations governing labor relations, immigration, minimum wage, and healthcare benefits,

• Changing demographics, and

• Our reputation within the labor market.

We also compete with many other industries and businesses for most of our hourly production employees.

An inability to provide wages and/or benefits that are competitive could adversely impact our ability to attract and retain employees.

Further, changes in market compensation rates may adversely affect our labor costs.

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Our expenditures for pension obligations could be materially higher than we have predicted.

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To determine our future payment obligations under the plans, certain rates of return on the plans’ assets, growth rates of certain costs and participant longevity have been estimated.

The proportion of the assets held by our U.S.

pension plan invested in fixed income securities, instead of equity securities, has increased over historical levels.

This shift in asset allocation has resulted in a decrease in the estimated rate of return on plan assets for this plan.

The proportion of the assets held by our United States pension plan invested in fixed income securities, instead of equity securities, has decreased over historical levels.

This shift in asset allocation has not resulted in a material change to our estimated rate of return on plan assets for this plan.

Assumed discount rates, expected return on plan assets and participant longevity have significant effects on the amounts reported for the pension obligations and pension expense.

The funded status of our pension plans can also be influenced by regulatory requirements, which can change unexpectedly and impose higher costs if funding levels are below certain thresholds.

The funded status of our pension plans may also be influenced by regulatory requirements, which can change unexpectedly and impose higher costs if funding levels are below certain thresholds.

We may increase contributions to our pension plans to avoid or reduce these higher costs.

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Increasing life spans for plan participants may increase the estimated benefit payments and increase the amounts reported for pension obligations, pension contributions and pension expense.

If increased funding requirements are particularly significant and sustained, our overall liquidity could be materially reduced, which could cause us, among other things, to reduce investments and capital expenditures, or restructure or refinance our debt.

If increased funding requirements are particularly significant and sustained, our overall liquidity could be materially reduced, which could cause us to reduce investments and capital expenditures, or restructure or refinance our debt, among other things.

Risks related to our international operations

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Trade laws and regulations are complex, differ by country, and are enforced by a variety of government agencies.

Because we are subject to extensive trade laws and regulations in the countries in which we operate, we are subject to the risk that laws and regulations could change in a way that would expose us to additional costs, penalties or liabilities, and our policies and procedures may not always protect us from actions that would violate international trade laws and regulations.

Because we are subject to extensive trade laws and regulations in the countries in which we operate, we are subject to the risk that laws and regulations could change in a manner that would expose us to additional costs, penalties or liabilities, and our policies and procedures may not always protect us from actions that would violate international trade laws and regulations.

For example, certain federal legislation requires the use of American iron and steel products in certain water projects receiving certain federal appropriations.

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Any improper actions could subject us to civil or criminal penalties, including material monetary fines, or other adverse actions, including denial of import or export privileges, and could harm our reputation and our business prospects.

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If significant tariffs or other restrictions continue to be placed on foreign imports by the United States and related counter-measures are taken by impacted foreign countries, our revenue and results of operations may be harmed.

The Trump Administration has signaled that it may continue to alter trade agreements and terms between China and the United States, including limiting trade with China and/or imposing additional tariffs on imports from China most recently resulting in a Phase One trade deal in January of 2020.

In March 2018, President Trump imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports and announced additional tariffs on goods imported from China specifically, as well as certain other countries.

The materials subject to these tariffs to date can impact our raw material costs as well.

However, if further tariffs are imposed on a broader range of imports, or if further retaliatory trade measures are taken by China or other countries in response to additional tariffs, we may be required to raise our prices or incur additional expenses, which may result in the loss of customers and harm our operating performance.

If significant tariffs or other restrictions continue to be placed on foreign imports by the United States and related countermeasures are taken by impacted foreign countries, our revenue and results of operations may be harmed.

For example, trade tensions between the United States and China have led to series of significant tariffs on the importation of certain product categories over recent years.

The materials subject to these tariffs could impact our raw material costs as well.

The prices of our purchased components and raw materials can be volatile.

Our operations require substantial amounts of purchased components and raw materials, such as scrap steel, sand, resin, brass ingot and steel pipe.

We generally purchase components and raw materials at current market prices.

We may not be able to pass on the entire cost of price increases for purchased components and raw materials to our customers or offset fully the effects of these higher costs through productivity improvements.

In particular, when purchased component or raw material prices increase rapidly or to significantly higher than normal levels, we may not be able to pass cost increases through to our customers on a timely basis, if at all, which would reduce our profitability and cash flows.

In addition, if purchased components or raw materials were not available or not available on commercially reasonable terms, our sales, profitability and cash flows would be reduced.

The cost and availability of these materials are subject to economic forces largely beyond our control, including North American and international demand, foreign currency exchange rates, freight costs, tariffs and commodity speculation and other external factors beyond our control, such as the COVID-19 pandemic or other supply chain challenges.

Temporary industry-wide shortages of raw materials have occurred in fiscal 2021, which have led to increased raw material price volatility which may continue into fiscal 2022.

We may not be able to pass on the entire cost of price increases, or at all, for purchased components and raw materials to our customers or offset fully the effects of these higher costs through productivity improvements.

In particular, when purchased

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component or raw material prices increase rapidly or to significantly higher than normal levels, we may not be able to pass cost increases through to our customers on a timely basis, if at all, which would reduce our profitability and cash flows.

In addition, if purchased components or raw materials are not available or not available on commercially reasonable terms, our sales, profitability and cash flows would be reduced.

Our competitors may secure more reliable sources of purchased components and raw materials or they may obtain these supplies on more favorable terms than we do, which could give them a cost advantage.

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The negative impact of the COVID-19 pandemic on our operations may increase

The outbreak of COVID-19 is impacting cities, states and countries around the world and is temporarily changing the way we live and work.

The pandemic has also caused a shift in how we manage our business, think about work and how our work gets done.

Businesses as well as federal, state and local governments have implemented significant measures to attempt to mitigate this public health crisis and may continue to take additional actions.

Although we cannot determine the ultimate severity or duration of the pandemic at this time, the pandemic is having meaningful adverse impacts on our financial condition and results of operations as discussed in PART II, “Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.”.

As the impact of the pandemic continues, we may continue to experience additional plant closures, limitations in the ways we operate within our facilities, illness or quarantine of our employees, supply chain disruptions, transportation delays, cost increases, more extensive travel restrictions, closures or disruptions of businesses and facilities, or social, economic, political or labor instability in the affected areas.

The COVID-19 pandemic continues to have meaningful adverse impacts on our financial condition and results of operations as discussed in PART II, “Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.” As the impact of the pandemic continues, we may continue to experience additional plant closures, limitations in the ways we operate within our facilities, illness or quarantine of our employees, supply chain disruptions, transportation delays, cost increases, more extensive travel restrictions, closures or disruptions of businesses and facilities, or social, economic, political or labor instability in the affected areas.

These same factors may continue to impact our suppliers, customers and distributors and the severity of such impacts could increase.

We have implemented significant changes to the way we work in an attempt to enhance and secure the health and safety of our workforce and the communities in which they operate.

However, the health implications of the pandemic are extensive and the extent, duration and severity of the pandemic are highly uncertain.

It is also uncertain whether the measures we have taken — and additional measures we may undertake in the future — and the actions taken by governmental agencies will be successful.

Accordingly, should there be unexpected health implications for our employees, communities or others, we could face litigation or other claims and we could suffer damage to our reputation, brand and operations, which could adversely affect our business.

The health implications of the pandemic are extensive and the extent, duration and severity of the pandemic remain highly uncertain.

We are unable to estimate the impact of measures we have taken thus far, additional measures we may undertake in the future and the actions taken, or that will be taken, by governmental agencies.

Should there be unexpected health implications for our employees, communities or others, we could face litigation or other claims and suffer damage to our reputation, brand and operations, which could adversely affect our business.

We have incurred additional costs to address the pandemic as discussed in PART II, “Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,”, including costs associated with unfavorable volume variances, voluntary emergency paid leave, additional cleaning, disinfectants and sanitation materials for our employees and at our facilities.

We expect to continue to incur such costs, which may be significant, as we continue to implement operational changes in response to this pandemic.

All of our facilities were operational and able to fill orders on November 17, 2020, and our teams have worked effectively to address the few temporary closures we have experienced.

The pandemic has also caused supply chain disruption that has resulted in higher costs in the manufacture of our products.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS”, including costs associated with unfavorable volume variances, voluntary emergency paid leave, incentive payments for vaccinations, additional cleaning, disinfectants and sanitation materials for our employees and at our facilities.

We expect to continue to incur such costs, which may be significant, as we continue to implement operational changes in response to the pandemic.

The pandemic is causing disruptions in our supply chain that have caused and could result in further higher costs in the manufacture and delivery of our products.

We expect these conditions to persist for the near term and may worsen until the pandemic abates.

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Further, we expect additional costs, added administrative burdens and other negative cost and operational impacts as a result of the United States’ Occupational Safety and Health Administration (“OSHA”) emergency temporary standard (the “Vaccine/Test Mandate”) related to COVID-19 vaccination and testing requirements.

Continued disruptions in our markets and the global economy may cause us to have to assess impairments of our assets and cause us to incur and record non-cash impairment charges.

Further, our management is focused on mitigating the impact of the pandemic on our operations, which has required, and will continue to require, a large investment of time and resources across our business and may delay other strategic initiatives and large capital projects that are important to the business.

Management is focused on mitigating the impact of the pandemic on our operations, which has required, and will continue to require, a large investment of time and resources across our business and may delay other strategic initiatives and large capital projects that are important to the business.

Additionally, many of our employees are working remotely.

An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business.

The extent to which the pandemic impacts us will depend on a number of factors and developments that we are not able to predict or control, including, among others:

An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and consequently impair our ability to manage our business.

The extent to which the pandemic and the evolving regulatory environment impacts us will depend on a number of factors and developments that we are not able to predict or control, including, among others:

the severity of the virus;

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and the potential effects on our internal controls including those over financial reporting and information technology as a result of changes in working environments such as shelter-in-place and similar orders that are applicable to our employees, including management.

In addition, if the pandemic continues to create disruptions or turmoil in the credit or financial markets, it could adversely affect our ability to access capital on favorable terms and continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted.

We also cannot predict the impact that the pandemic will have on third parties with which we do business, and each of their financial conditions, including their viability and ability to pay for our products and services;

however, any material effect on these parties could adversely impact us.

The extent of the impact of the pandemic on our operations and financial results depends on future developments and is highly uncertain.

The situation is changing rapidly and future impacts may materialize that are not yet known.

In addition, if the pandemic continues to create disruptions or turmoil in the credit or financial markets, it could adversely affect our ability to access capital on favorable terms, it at all, and continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted.

The Vaccine/Test Mandate, if implemented as initially enacted, will require us to ensure that all of our employees in the United States are fully vaccinated or, if not, are tested for COVID-19 on a weekly basis, which could be difficult and costly.

As ordered via a stay by the U.S.

Court of Appeals for the Fifth Circuit, OSHA suspended the implementation of the Vaccine/Test Mandate so the outcome and timing of the implementation of the Vaccine/Test Mandate is presently unclear.

We intend to implement the Vaccine/Test Mandate by the deadline set forth by the standard once the stay and suspension of the implementation of the Vaccine/Test Mandate are removed.

Further, additional vaccine and testing mandates may be announced in jurisdictions in which we operate our business, and there could be potential conflict with actions by certain states that are in

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conflict with the Vaccine/Test Mandate, the impacts of which remain uncertain.

With ongoing health, supply chain, shipping, employment and other pandemic-related shortages of materials and workers, it is possible that the Vaccine/Test Mandate could result in labor disruptions, employee attrition and difficulty securing future labor needs as well as have impacts on the broader employment market and supply chain, which could have an adverse effect on our revenues, costs, financial condition and results of operations and subject us to various employee claims as well as other related legal liability.

The pandemic may also impact third parties with which we do business, and each of their financial conditions, including their viability and ability to pay for our products and services;

which could adversely impact us.

The extent of the impact of the pandemic on our operations and financial results depends on future developments and is highly uncertain.

The situation is ever changing and future impacts may materialize that are not yet known.

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What changed 10-K

Item 1A. Risk Factors