What changed in this filing

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Item 1. Financial Statements

2022-02-04 compared with 2021-08-05 · 205 added, 242 removed, 412 unchanged (52% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, September 30,

December 31, September 30,

(in millions, except share amounts)

5 unchanged sentences

Property, plant and equipment, net 286.9 283.4

Intangible assets 402.0 408.9

Intangible assets, net 386.9 392.5

Goodwill 117.7 115.1

1 unchanged sentence

Total assets $ 1,493.5 $ 1,518.0

Liabilities and equity:

Liabilities and stockholders’ equity:

Current portion of long-term debt $ 1.0 $ 1.0

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600,000,000 shares authorized;

158,527,319 and 158,064,750 shares outstanding at June 30, 2021 and September 30, 2020, respectively

156,834,758 and 157,955,433 shares outstanding at December 31, 2021 and September 30, 2021, respectively

Additional paid-in capital 1,313.8 1,342.2

Accumulated deficit ( 624.5 ) ( 643.9 )

Accumulated other comprehensive loss ( 14.8 ) ( 24.7 )

Accumulated other comprehensive income (loss) 1.0 ( 5.0 )

Total stockholders’ equity 691.9 694.9

Total liabilities and equity $ 1,484.6 $ 1,395.0

Total liabilities and stockholders’ equity $ 1,493.5 $ 1,518.0

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended Nine months ended

June 30, June 30,

2021 2020 2021 2020

Three months ended

(in millions, except per share amounts)

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Interest expense, net 4.3 6.1

Loss on early extinguishment of debt 16.7 — 16.7 —

Walter Energy Accrual — — — 0.2

Net other expenses 3.3 5.3

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended Nine months ended

June 30, June 30,

2021 2020 2021 2020

Three months ended

(in millions)

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Foreign currency translation 5.7 4.5

Total other comprehensive income (loss), net 4.9 ( 1.2 ) 9.9 1.7

Total comprehensive income 6.0 5.0

Comprehensive income $ 25.4 $ 21.7

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three months ended Nine months ended

June 30, June 30,

2021 2020 2021 2020

Three months ended

(in millions)

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Dividends declared ( 9.2 ) ( 8.7 )

Shares repurchased under buyback program — — — ( 5.0 )

Buyout of noncontrolling interest — — — ( 3.2 )

Shares retained for employee taxes ( 1.9 ) ( 0.9 )

Shares repurchased under buyback program ( 20.0 ) —

Stock-based compensation 2.0 1.9

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Balance, end of period ( 624.5 ) ( 697.6 )

Accumulated other comprehensive (loss) income

Balance, beginning of period ( 19.7 ) ( 33.1 ) ( 24.7 ) ( 36.0 )

Other comprehensive (loss) income 4.9 ( 1.2 ) 9.9 1.7

Balance, end of period ( 14.8 ) ( 34.3 ) ( 14.8 ) ( 34.3 )

Noncontrolling interest

Accumulated other comprehensive income (loss)

Balance, beginning of period ( 5.0 ) ( 24.7 )

Acquisition of joint venture partner’s interest — — — ( 2.2 )

Other comprehensive income 6.0 5.0

Balance, end of period 1.0 ( 19.7 )

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

Three months ended

(in millions)

1 unchanged sentence

Net income $ 19.4 $ 16.7

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition:

Depreciation 8.0 7.7

Amortization 7.2 7.0

Loss on early debt extinguishment 16.7 —

Stock-based compensation 2.0 1.9

Pension (benefits) costs ( 1.4 ) 2.2

Pension benefit ( 0.7 ) ( 0.5 )

Deferred income taxes 3.6 1.6

6 unchanged sentences

Accounts payable ( 8.4 ) ( 9.4 )

Walter Energy accrual — ( 22.0 )

Other current liabilities ( 12.8 ) ( 9.9 )

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Capital expenditures ( 11.0 ) ( 15.6 )

Acquisition, net of cash acquired ( 19.7 ) —

Proceeds from sale of assets 0.4 0.3

Acquisition purchase price adjustment 0.2 —

Proceeds from sales of assets — 0.1

Net cash used in investing activities

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Financing activities:

Issuance of debt 450.0 —

Repayment of debt ( 462.4 ) —

Dividends paid ( 9.2 ) ( 8.7 )

Deferred financing costs paid ( 6.0 ) —

Proceeds from financing transaction 3.9 —

Acquisition of joint venture partner's interest — ( 5.2 )

Employee taxes related to stock-based compensation ( 1.9 ) ( 0.9 )

Common stock issued 0.7 0.6

Proceeds from financing transaction — 3.9

Deferred financing costs paid — ( 0.5 )

Common stock repurchased under buyback program ( 20.0 ) —

Other ( 0.5 ) 0.6

Capital leases ( 0.1 ) ( 0.2 )

Net cash used in financing activities

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Cash and cash equivalents at end of period $ 207.3 $ 223.0

The accompanying notes are an integral part of the condensed consolidated financial statements.

Three months ended

(in millions)

Supplemental cash flow information

Cash paid for interest $ 25.2 $ 24.3

Cash paid for interest, net $ 10.0 $ 12.4

Cash paid for income taxes 0.4 0.7

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021

FOR THE THREE MONTHS ENDED DECEMBER 31, 2021

1 Organization and Basis of Presentation

Mueller Water Products, Inc., a Delaware corporation, together with its consolidated subsidiaries, operates in two business segments:

Infrastructure and Technologies.

Infrastructure manufactures valves for water and gas systems, including butterfly, iron gate, tapping, check, knife, plug and ball valves, as well as dry-barrel and wet-barrel fire hydrants and a broad line of pipe connection and repair products, such as clamps and couplings used to repair leaks.

Technologies offers metering systems, leak detection, pipe condition assessment and other related smart-enabled products and services.

Water Flow Solutions and Water Management Solutions.

These segments are based on a management reorganization that became effective October 1, 2021;

prior period information has been recast to conform to the current presentation.

Water Flow Solutions’ product portfolio includes iron gate valves, specialty valves and service brass products.

Water Management Solutions’ product and service portfolio includes fire hydrants, repair and installation, natural gas, metering, leak detection, pressure control and software products.

The “Company,” “we,” “us” or “our” refer to Mueller Water Products, Inc.

and its subsidiaries.

With regard to the Company’s segments, “we,” “us” or “our” may also refer to the segment being discussed.

In July 2014, Infrastructure acquired a 49 % ownership interest in an industrial valve joint venture for $ 1.7 million.

As a result of substantive control features in the operating agreement, all of the joint venture’s assets, liabilities and results of operations were included in our consolidated financial statements.

Infrastructure acquired the remaining 51% ownership interest in the business in October 2019.

On June 14, 2021, we acquired all the outstanding capital stock of i2O Water Ltd, a provider of pressure management solutions to more than 100 water companies in 45 countries.

i2O Water Ltd is organized under the laws of the United Kingdom.

The condensed consolidated balance sheet at June 30, 2021 includes the preliminary acquisition accounting for i20 Water Ltd.

The results of i20 Water Ltd’s operations and cash flows for the period subsequent to the acquisition are included in the condensed consolidated statement of operations and condensed consolidated statement of cash flows, respectively, since the acquisition date.

Refer to Note 2 for additional disclosures related to the acquisition.

During the three months ended March 31, 2021, we aligned the consolidation of the financial statements of Krausz Industries Development Ltd.

and subsidiaries (“Krausz”) in the Company’s consolidated financial statements, eliminating the previous inclusion of Krausz financial statements with a one-month reporting lag.

and its subsidiaries, and may also refer to the segment being discussed.

On December 3, 2018, we completed our acquisition of Krausz Industries Development Ltd.

and subsidiaries (“Krausz”).

During the year ended September 30, 2021, we aligned the consolidation of the financial statements of Krausz in the Company’s consolidated financial statements, eliminating the previous inclusion of Krausz financial statements with a one-month reporting lag.

In accordance with applicable accounting literature, the elimination of the one-month reporting lag is considered to be a change in accounting principle.

We believe this change in accounting principle is preferable as the financial statements of all of our subsidiaries are now reported on the same basis, providing the most current information available.

The effect of the elimination of the reporting lag during the nine months ended June 30, 2021 resulted in an increase of $6.0 million to net sales and an increase of $1.4 million to operating income.

The effect of the elimination of the reporting lag during the year ended September 30, 2021 resulted in an increase of $6.0 million to net sales and an increase of $1.4 million to operating income.

We concluded that the effect of this change is not material to the balance sheets, statements of operations, statements of cash flows, net income and earnings per share and therefore have not retrospectively applied this change.

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which require us to make certain estimates and assumptions in recording assets, liabilities, sales and expenses and the disclosure of contingent assets and liabilities.

On June 14, 2021, we acquired all the outstanding capital stock of i2O Water Ltd (“i2O”), a provider of pressure management solutions to more than 100 water companies in 45 countries.

The consolidated balance sheet at September 30, 2021 included the preliminary estimated fair values of the net assets of i2O.

The Company is still reviewing the impact of taxes and certain other items.

The results of i2O’s operations and cash flows subsequent to the acquisition are included in the Company’s consolidated statement of operations and consolidated statement of cash flows, respectively.

Refer to Note 2.

for additional disclosures related to the acquisition.

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which require us to make certain estimates and assumptions in recording assets, liabilities, sales and expenses as well as in the disclosure of contingent assets and liabilities.

Actual results could differ from those estimates.

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Our business is seasonal as a result of cold weather conditions.

Net sales and operating income have historically been lowest in the three month periods ending December 31 and March 31 when the northern United States and all of Canada generally face weather conditions that restrict significant construction activity.

Net sales and operating income historically have been lowest in the three month periods ending December 31 and March 31 when the northern United States and all of Canada generally face weather conditions that restrict significant construction activity.

In preparing these financial statements in conformity with GAAP, we have considered and, where appropriate, included the effects of the COVID-19 pandemic on our operations.

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Recently Adopted Accounting Guidance

During 2016, the Financial Accounting Standards Board (“FASB”) issued standard Accounting Standard Codification (“ASC”) 326 - Current Expected Credit Losses to replace the “incurred loss” impairment approach with an “expected loss”

approach, which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

During 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 326 - Current Expected Credit Losses to replace the “incurred loss” impairment approach with an “expected loss” approach, which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

We have completed historical and forward-looking analyses for receivables and adopted this guidance effective October 1, 2020.

Upon adoption, there was no material impact to our financial statements.

Recent Accounting Guidance Not Yet Adopted

In December 2019, the FASB issued Accounting Standards Update (“ASU”) No.

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ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted.

We plan to adopt this standard on October 1, 2021 and do not expect it to have a material impact on our financial statements.

We adopted this standard on October 1, 2021 and there was no material impact to our financial statements.

In March 2020, the FASB issued ASU No.

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Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (“ASU 2020-04”).

The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

This guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging relationships that reference the London Inter Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

ASU 2020-04 is effective from March 12, 2020, but can be adopted prospectively from a date within an interim period subsequent to March 12, 2020.

We are currently evaluating our contracts and the optional expedients provided by ASU 2020-04.

We plan to adopt this standard on October 1, 2021 and do not expect it to have a material impact on our financial statements.

We evaluated our contracts and the optional expedients provided by ASU 2020-04.

We adopted this standard on October 1, 2021 and there was no material impact to our financial statements.

Restructuring

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

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

Expenses incurred for these closures were primarily related to personnel and inventory and are included in Strategic reorganization and other charges.

In March 2021, we 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, including termination benefit costs of approximately $ 4.8 million and other associated costs of $ 9.2 million.

Of the total $ 14.0 million estimated costs, approximately $ 3.6 million are expected to be non-cash charges.

Expenses incurred during the nine months ended June 30, 2021 were approximately $ 4.2 million, including approximately $ 1.8 million of termination benefit costs which are included in Strategic reorganization and other charges and approximately $ 2.4 million in inventory write-downs which are included in Cost of sales.

Since November 2019, we have 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 and closed our facilities in Hammond, Indiana, Woodland, Washington and Surrey, British Columbia, Canada.

We also announced the closure of our facility in Aurora, Illinois which we expect to complete by the third quarter of fiscal year 2022.

The majority of the activities from these facilities have been, or will be, transferred to our Kimball, Tennessee facility.

Activity in accrued restructuring, reported as part of Other current liabilities, is presented below.

Nine months ended

Three months ended

(in millions)

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Under the NMTC, Wells Fargo contributed capital of $ 4.8 million to an investment fund and we loaned $ 12.2 million to the fund.

Wells Fargo is entitled to the associated tax credits, which are subject to 100% recapture if we do not comply with

various regulations and contractual provisions surrounding the foundry project.

We have indemnified Wells Fargo for any loss or recapture of tax credits related to the transaction until the seven-year period lapses.

Wells Fargo is entitled to the associated tax credits, which are subject to 100% recapture if we do not comply with various regulations and contractual provisions surrounding the foundry project.

We have indemnified Wells Fargo for any loss or recapture of tax credits related to the transaction until the seven-year period elapses.

We do not anticipate any credit recaptures will be required in connection with this arrangement.

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We believe that Wells Fargo will exercise its put option in December 2027 for nominal consideration, resulting in our becoming the sole owner of the investment fund, cancelling the related loans, and recognizing an estimated gain of $ 3.9 million.

We have determined that the investment fund and the Sub-CDE are variable interest entities (“VIEs”) and that we are the primary beneficiary of the VIEs.

The ongoing activities of the VIEs, namely collecting and remitting interest and fees and administering NMTC compliance, were contemplated in the initial design of the transaction and are not expected to significantly affect economic performance throughout the life of the VIEs.

We determined that the investment fund and the Sub-CDE are variable interest entities (“VIEs”) and that we are the primary beneficiary of the VIEs.

significantly affect economic performance throughout the life of the VIEs.

Additionally, we are obligated to deliver tax benefits and provide various other guarantees to Wells Fargo and to absorb the losses of the VIEs.

Wells Fargo does not have a material interest in the underling economics of the project.

Wells Fargo does not have a material interest in the underlying economics of the project.

Consequently, we have included the financial statements of the VIEs in our consolidated financial statements.

Intercompany transactions between us and the VIEs have been eliminated in consolidation.

Wells Fargo’s contribution to the investment fund is included in our financial statements within Other noncurrent liabilities as a result of its redemption features.

Direct costs associated with Wells Fargo’s capital contribution have been netted against the recorded proceeds, resulting in a net cash contribution to us of $ 3.9 million.

Other direct costs incurred associated with executing the transaction were capitalized and will be recognized as interest expense over the seven-year tax credit period.

Incremental costs to maintain the structure during the compliance period will be expensed as incurred.

Business Combination

Acquisition of i20 Water Ltd

On June 14, 2021, we acquired all the outstanding capital stock of i20 Water Ltd for $ 19.7 million, net of cash acquired.

The purchase agreement provides for customary final adjustments, including a net working capital adjustment, which we expect to occur in calendar 2021.

We have recognized the assets acquired and liabilities assumed at their estimated acquisition date fair values, with the excess of the consideration paid over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

The accounting for the business combination is based on currently available information and is considered preliminary.

We have retained a third-party valuation specialist to assist in our estimate of the fair value of acquired intangible assets.

We have not yet received a final valuation report for acquired intangible assets and we are also still gathering information about income taxes, deferred taxes and current assets and liabilities.

The final accounting for the business combination may differ materially from that presented in these unaudited consolidated statements.

The following is a summary of the estimated fair values of the net assets acquired (in millions):

Wells Fargo’s contribution to the investment fund is consolidated in our financial statements as an Other noncurrent liability as a result of its redemption features.

Direct costs associated with Wells Fargo’s capital contribution have been netted against the recorded proceeds, resulting in a net cash contribution of $ 3.9 million.

Other direct costs associated with the transaction were capitalized and are being recognized as interest expense over the seven-year tax credit period.

Incremental costs to maintain the structure during the compliance period are expensed as incurred.

Acquisition of i2O Water Ltd

On June 14, 2021, we acquired all the outstanding capital stock of i2O for $ 19.7 million, net of cash acquired.

The purchase agreement provided for customary final adjustments, including a net working capital adjustment that was completed during the three months ended December 31, 2021, resulting in a purchase price of $ 19.5 million.

We have recognized the assets acquired and liabilities assumed at their estimated acquisition date fair values, with the excess of the purchase price over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

The accounting for the business combination is considered to be preliminary.

We are still gathering information related to income taxes and certain other items.

The results of i2O are included in our Water Management Solutions segment.

The goodwill below is attributable to the strategic opportunities and synergies that we expect to arise from the acquisition of i2O and the value of its workforce.

The goodwill is nondeductible for income tax purposes.

Identified intangible assets consist of customer relationships, non-compete agreements and developed technology with an estimated weighted-average useful life of approximately 12 years and trade names with an indefinite life.

Values of intangible assets were determined using a discounted cash flow method.

The following is a summary of the preliminary estimated fair values of the net assets acquired (in millions):

Assets, net of cash:

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Other current assets 0.9

Identified intangible assets:

Tradename 1.8

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Other current liabilities ( 1.1 )

Deferred income taxes ( 2.6 )

Fair value of net assets acquired, net of cash $ 19.5

The preliminary estimated goodwill above is attributable to the strategic opportunities and synergies that we expect to arise from the acquisition of i20 Water Ltd and the workforce of the acquired business.

The goodwill is nondeductible for income tax purposes.

Revenue from Contracts with Customers

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Contract Asset and Liability Balances

The timing of revenue recognition, billings and cash collections results in customer receivables, customer advance payments and billings in excess of revenue recognized.

Customer receivables include amounts billed and currently due from customers as well as unbilled amounts.

Differences in the timing of revenue recognition, billing and cash collection result in customer receivables, advance payments and billings in excess of revenue recognized.

Customer receivables include amounts billed and currently due from customers as well as unbilled amounts (i.e., contract assets).

Amounts are billed in accordance with contractual terms and unbilled amounts arise when the timing of billing differs from the timing of revenue recognized.

Customer advance payments and billings in excess of revenue are recognized and recorded as deferred revenue, the majority of which is classified as current, based on the timing of when we expect to recognize revenue.

We reverse these contract liabilities and recognize revenue when we satisfy the related performance obligations.

We include current deferred revenue within Other current liabilities.

The table below represents the balances of our customer receivables and deferred revenues.

June 30, September 30,

Advance payments and billings in excess of revenue are recognized and recorded as deferred revenue, the majority of which we expect to receive within one year and therefore is included within Other current liabilities in the accompanying consolidated balance sheets.

Deferred revenues represent contract liabilities and are recorded when customers remit cash payments in advance of our satisfaction of performance obligations under contractual arrangements.

Contract liabilities are relieved and revenue is recognized when the performance obligation is satisfied.

Th e table below represents the balances of our customer receivables and deferred revenues.

December 31, September 30,

(in millions)

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Unbilled receivables 2.7 2.3

Total customer receivables $ 207.1 $ 185.6

Gross customer receivables 184.5 215.7

Allowance for credit losses ( 4.1 ) ( 3.5 )

Receivables, net $ 180.4 $ 212.2

Deferred revenues $ 7.4 $ 5.4

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A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.

Our performance obligations are satisfied at a point in time for sales of equipment or over time for our software hosting and leak detection monitoring services.

Performance obligations are supported by customer contracts, which provide frameworks for the nature of the distinct products or services.

We allocate the transaction price of each contract to the performance obligations on the basis of standalone selling price and recognize revenue when, or as, control of the performance obligation transfers to the customer.

Most of our performance obligations are satisfied at a “point in time” for sales of equipment and for provision of one-time services, and we generally recognize such revenue when goods are shipped or when the services are provided.

The remainder of our performance obligations are satisfied “over time” for our software hosting and leak detection monitoring services, and we generally recognize such revenue ratably as services are provided over the expected term of the contract.

We offer warranties to our customers in the form of assurance-type warranties, which provide assurance that the products provided will function as intended and comply with any agreed-upon specifications.

Such warranties generally cannot be purchased separately.

We accrue our expected warranty obligations at the time of sale.

We allocate the transaction price of each contract to the performance obligations on the basis of standalone selling price and recognize revenue when control of the performance obligation transfers to the customer.

The transaction price is adjusted for our estimate of variable consideration which may include discounts, and rebates.

To estimate variable consideration, we apply the expected value or the most likely amount method, based on whichever method most appropriately predicts the amount of consideration we expect to receive.

The method applied is based typically on historical experience and known trends.

We do not recognize variable consideration in the event there are uncertainties in the amount of variable consideration to be paid nor when it is probable there will be a significant reversal in the related revenue.

We exclude from the measurement of the transaction price all taxes assessed by a governmental authority.

We classify shipping and handling costs, such as freight to our customers’ destinations, as a component of Cost of sales.

We have elected to use the practical expedient to not adjust the transaction price of a contract for the effects of a significant financing component if, at the inception of the contract, we expect that the period between when we transfer a product or service to a customer and when a customer remits payment will be one year or less.

The revenues recognized at a point in time related to the sale of our products are recognized when the obligations of the terms of our contract are satisfied, which generally occurs upon shipment when control of the product transfers to the customer.

We offer warranties to our customers in the form of assurance-type warranties that provide assurance that the products provided will function as intended and comply with any agreed-upon specifications.

These cannot be purchased separately.

Costs to Obtain or Fulfill a Contract

We incur certain incremental costs to obtain a contract, which primarily relate to sales commissions.

Our commissions are paid based on either orders or shipments, and we reserve the right to claw back any commission in the event of product returns or lost collections.

Since the expected benefit associated with these incremental costs is one year or less based on the nature of the products sold and services provided, we expense such costs as incurred.

We incur certain incremental costs to obtain a contract, which primarily relate to incremental sales commissions.

Our commissions are paid based on a combination of orders and shipments, and we reserve the right to claw back any commissions in case of product returns or lost collections.

As the expected benefit associated with these incremental costs is generally one year or less based on the nature of the product sold and benefits received, we have applied a practical expedient and therefore do not capitalize the related costs and expense them as incurred.

The reconciliation between the U.S.

federal statutory income tax rate and the effective income tax rate is presented below.

Three months ended Nine months ended

June 30, June 30,

2021 2020 2021 2020

Three months ended

federal statutory income tax rate 21.0 % 21.0 %

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Foreign income tax rate differential ( 0.7 ) ( 0.9 )

Nondeductible compensation 0.6 1.0 0.6 0.6

Basis difference in foreign investment 1.2 0.3 1.2 —

Valuation allowances 1.4 1.5

Reversal of uncertain tax positions — ( 2.1 ) — ( 0.5 )

Other 0.5 1.1

Effective income tax rate 24.2 % 25.8 %

At June 30, 2021 and September 30, 2020, the gross liabilities for uncertain tax positions were $ 5.0 million and $ 4.5 million, respectively, and are included within Other noncurrent liabilities.

At December 31, 2021 and September 30, 2021, the gross liabilities for unrecognized income tax benefits were $ 4.6 million and $ 4.8 million, respectively, and are included in Other noncurrent liabilities.

Borrowing Arrangements

The components of our long-term debt are presented below.

June 30, September 30,

The components of our long-term debt are as follows:

December 31, September 30,

(in millions)

4.0% Senior Notes $ 450.0 $ 450.0

5.5% Senior Notes — 450.0

Finance leases 2.0 2.2

Total borrowings 452.0 452.2

Less deferred financing costs ( 5.1 ) ( 5.3 )

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Long-term debt $ 445.9 $ 445.9

ABL Agreement.

Our ABL Agreement consists of a revolving credit facility for up to $ 175.0 million which includes up to $ 25.0 million through swing line loans and may have up to $ 60.0 million of letters of credit.

The ABL Agreement permits us to increase the size of the credit facility by an additional $ 150.0 million in certain circumstances subject to adequate borrowing base availability.

Borrowings under the ABL Agreement bear interest at a floating rate equal to LIBOR plus an applicable margin range of 200 to 225 basis points, or a base rate, as defined in the ABL Agreement, plus an applicable margin range of from 100 to 125 basis points.

At December 31, 2021 the applicable margin was LIBOR plus 200 basis points.

The ABL Agreement is subject to mandatory prepayments if total outstanding borrowings under the ABL Agreement are greater than the aggregate commitments under the revolving credit facility or if we dispose of overdue accounts receivable in

certain circumstances.

The borrowing base under the ABL Agreement is equal to the sum of (a) 85% of the value of eligible accounts receivable and (b) the lesser of (i) 70% of the value of eligible inventory or (ii) 85% of the net orderly liquidation value of eligible inventory, less certain reserves.

Prepayments can be made at any time without penalty.

Substantially all of our United States subsidiaries are borrowers under the ABL Agreement and are jointly and severally liable for any outstanding borrowings.

Our obligations under the ABL Agreement are secured by a first-priority perfected lien on all of our United States inventories, accounts receivable, certain cash and other related items.

The ABL Agreement terminates on July 29, 2025 and includes a commitment fee for any unused borrowing capacity of 37.5 basis points per annum.

Borrowings are not subject to any financial maintenance covenants unless excess availability is less than the greater of $17.5 million or 10% of the Loan Cap as defined in the ABL Agreement.

Excess availability based on December 31, 2021 data was $ 133.8 million, as reduced by $ 15.0 million of outstanding letters of credit and $ 1.4 million of accrued fees and expenses.

4.0% Senior Unsecured Notes.

On May 28, 2021, we privately issued $ 450.0 million of 4.0% Senior Unsecured Notes (“Notes”), which mature on June 15, 2029 and bear interest at 4.0 %, paid semi-annually on June 15th and December 15th.

We capitalized $ 5.5 million of debt issuance costs, which are being amortized over the term of the Notes using the effective interest method.

Proceeds from the Notes, along with cash on hand were used to redeem our previously existing 5.5% Senior Unsecured Notes (“5.5% Notes”).

On May 28, 2021, we privately issued $ 450.0 million of 4.0% Senior Unsecured Notes (“4.0% Senior Notes”), which mature on June 15, 2029 and bear interest at 4.0 %, paid semi-annually in June and December.

We capitalized $ 5.5 million of financing costs that are being amortized over the term of the 4.0% Senior Notes using the effective interest method.

Substantially all of our U.S.

subsidiaries guarantee the Notes, which are subordinate to borrowings under our asset-based lending agreement (“ABL Agreement”).

Based on quoted market prices, which is a Level 1 measurement, the outstanding Notes had a fair value of $ 461.3 million as of June 30, 2021.

An indenture securing the Notes (“Indenture”) contains customary covenants and events of default, including covenants that limit our ability to incur certain debt and liens.

subsidiaries guarantee the 4.0% Senior Notes that are subordinate to borrowings under our ABL Agreement.

Based on quoted market prices that are a Level 1 measurement, the outstanding 4.0% Senior Notes had a fair value of $ 456.9 million at December 31, 2021.

An indenture governing the 4.0% Senior Notes (“Indenture”) contains customary covenants and events of default, including covenants that limit our ability to incur certain debt and liens.

There are no financial maintenance covenants associated with the Indenture.

We believe we were in compliance with these covenants at June 30, 2021.

We may redeem some or all of the Notes at any time or from time to time prior to June 15, 2024 at certain “make-whole” redemption prices (as set forth in the Indenture) and on or after June 15, 2024 at specified redemption prices (as set forth in the Indenture).

Additionally, we may redeem up to 40% of the aggregate principal amount of the Notes at any time or from time to time prior to June 15, 2024 with the net proceeds of specified equity offerings at specified redemption prices (as set forth in the Indenture).

Upon a change in control (as defined in the Indenture), we would be required to offer to purchase the Notes at a price equal to 101% of the outstanding principal amount of the Notes.

5.5% Senior Unsecured Notes.

On June 12, 2018, we privately issued $ 450.0 million of 5.5% Notes which were set to mature in 2026 and bore interest at 5.5 %, paid semi-annually.

We called the 5.5% Notes effective June 17, 2021 and redeemed the 5.5% Notes with proceeds from the issuance of the Notes and cash on hand.

As a result, we incurred $ 16.7 million in loss on extinguishment of debt, comprised of a $ 12.4 million call premium and a $ 4.3 million write-off of the remaining deferred debt issuance costs.

ABL Agreement .

The ABL Agreement consists of a $ 175.0 million revolving credit facility that includes up to $ 25.0 million in swing line loans and up to $ 60.0 million of letters of credit and permits us to increase the size of the credit facility by an additional $ 150.0 million in certain circumstances subject to adequate borrowing base availability.

Borrowings under the ABL Agreement bear interest at a floating rate equal to the LIBOR, plus an applicable margin ranging from 200 to 225 basis points, or a base rate, as defined in the ABL Agreement, plus an applicable margin ranging from 100 to 125 basis points.

At June 30, 2021, the applicable rate was LIBOR plus 200 basis points.

The borrowing base under the ABL Agreement is equal to the sum of (a) 85% of the value of eligible accounts receivable and (b) the lesser of (i) 70% of the value of eligible inventories or (ii) 85% of the net orderly liquidation value of eligible inventories, less certain reserves.

Prepayments may be made at any time with no penalty.

The ABL Agreement terminates on July 29, 2025 and includes a commitment fee for any unused borrowing capacity of 37.5 basis points per annum.

Our obligations under the ABL Agreement are secured by a first-priority perfected lien on all of our U.S.

receivables and inventories, certain cash and other supporting obligations.

Borrowings are not subject to any financial maintenance covenants unless excess availability is less than the greater of $ 17.5 million and 10 % of the Loan Cap as defined in the ABL Agreement.

Excess availability based on June 30, 2021 data was $ 145.1 million as reduced by outstanding letters of credit of $ 15.0 million and accrued fees and expenses of $ 1.7 million .

We believe we were in compliance with these covenants at December 31, 2021.

As set forth in the Indenture, we may redeem some or all of the 4.0% Senior Notes at any time or from time to time prior to June 15, 2024 at certain “make-whole” redemption prices and on or after June 15, 2024 at specified redemption prices.

Additionally, we may redeem up to 40% of the aggregate principal amount of the 4.0% Senior Notes at any time or from time to time prior to June 15, 2024 with the net proceeds of specified equity offerings at specified redemption prices.

Upon a change of control, we would be required to offer to purchase the 4.0% Senior Notes at a price equal to 101% of the outstanding principal amount of the 4.0% Senior Notes.

Derivative Financial Instruments

In connection with the acquisition of Singer Valve in 2017, we loaned U.S.

dollar-denominated funds to one of our Canadian subsidiaries.

In connection with the acquisition of Singer Valve in 2017, we loaned funds to one of our Canadian subsidiaries.

Although this intercompany loan has no direct effect on our consolidated financial statements, it creates exposure to currency risk for the Canadian subsidiary.

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dollar swap with a domestic bank.

We have not designated these swaps as hedges and the changes in their fair value are included in earnings, offsetting the currency gains and losses associated with the intercompany loan.

The values of our currency swap contracts were liabilities of $ 1.2 million and $ 1.1 million at December 31, 2021 and September 30, 2021, respectively, and are included in Other current liabilities.

The currency swap contracts expire in February 2022.

We have not designated these swaps as hedges and thus we include the changes in their fair values in earnings to offset the currency gains and losses associated with the intercompany loan.

The values of our currency swap contracts were liabilities of $ 1.6 million and $ 0.2 million at June 30, 2021 and September 30, 2020, respectively, and are included in Other current liabilities and Other noncurrent liabilities, respectively.

Retirement Plans

The components of net periodic benefit cost for our pension plans are presented below.

Three months ended Nine months ended

June 30, June 30,

2021 2020 2021 2020

Three months ended

(in millions)

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Net periodic benefit $ ( 0.7 ) $ ( 0.4 )

The amortization of actuarial losses, net of tax, is recorded as a component of other comprehensive loss.

The amortization of actuarial losses, net of tax, is recorded as a component of other comprehensive income (loss).

Stock-based Compensation Plans

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2012 Phantom Plan, and Employee stock purchase plan instruments under our 2006 Employee Stock Purchase Plan.

Grants during the nine months ended June 30, 2021 are as follows:

Units granted Weighted average grant date fair value per instrument Total grant date fair value

Grants issued during the three months ended December 31, 2021 are as follows:

Number granted Weighted average grant date fair value per instrument Total grant date fair value

(in millions)

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2020 award 57,627 $ 13.81 $ 0.8

2019 award 84,483 11.86 1.0

Employee stock purchase plan instruments 38,069 $ 3.01 $ 0.1

Quarter ended March 31, 2021

MRSUs 4,187 $ 14.26 $ 0.1

Phantom Plan instruments 1,254 11.94 —

Restricted stock units 82,565 12.81 1.1

Non-qualified stock options 8,115 3.08 —

Employee stock purchase plan instruments 35,325 2.24 0.1

Quarter ended June 30, 2021

Phantom Plan instruments 3,567 $ 14.29 $ 0.1

Restricted stock units 7,127 13.32 0.1

Employee stock purchase plan instruments 32,916 2.52 0.1

An MRSU award represents a target number of units that may be paid out at the end of a three-year award cycle based on a calculation of our relative total shareholder return (“TSR”) performance as compared with a selected peer group's TSR.

Settlements, in our common shares, will range from zero to two times the number of MRSUs granted, depending on our TSR performance relative to that of the peer group.

Compensation expense attributable to MRSUs is based on the fair value of the awards on their respective grant dates, as determined using a Monte Carlo model.

Compensation expense attributed to MRSUs is based on the fair value of the awards on their respective grant dates, as determined using a Monte Carlo model.

The assumptions used to determine the grant-date fair value are indicated below.

January 27, 2021 December 2, 2020

November 30, 2021

Variables used in determining grant date fair value:

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The expected term represents the average period of time the units are expected to be outstanding.

At June 30, 2021, the outstanding Phantom Plan instruments had a fair value of $ 14.42 per instrument and our liability for Phantom Plan instruments was $ 2.7 million and is included within Other current liabilities and Other noncurrent liabilities.

Stock options generally vest on each anniversary date of the original grant ratably over three years.

Compensation expense attributed to stock options is based on the fair value of the awards on their respective grant dates, as determined using a Black-Scholes model.

At December 31, 2021, the outstanding Phantom Plan instruments had a fair value of $ 14.40 per instrument and our liability for Phantom Plan instruments was $ 1.9 million and is included within current and noncurrent liabilities.

Stock options generally vest ratably over three years on each anniversary date.

Compensation expense attributed to stock options is based on the fair value of the awards on their respective grant dates, using a Black-Scholes model.

The assumptions used to determine the grant-date fair value are indicated below.

January 27, 2021 December 2, 2020

Variables used in determining grant date fair value:

November 30, 2021

Dividend yield 1.62 %

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Settlements, in our common shares, will range from zero to two times the number of PRSUs granted, depending on our financial performance relative to the targets.

We did not issue any shares of common stock during the three months ended June 30, 2021.

We issued 103,058 shares of common stock during the nine months ended June 30, 2021 to settle PRSUs during the period.

Additionally, we issued 2,324 and 221,873 shares of common stock to settle restricted stock units vested and issued zero and 108,950 shares of common stock to settle stock options exercised during the three and nine months ended June 30, 2021, respectively.

Operating income included stock-based compensation expense of $ 3.4 million and $ 1.8 million during the three months ended June 30, 2021 and 2020, respectively, and $ 8.4 million and $ 5.0 million during the nine months ended June 30, 2021 and 2020, respectively.

At June 30, 2021, there was approximately $ 11.5 million of unrecognized compensation expense related to stock-based compensation arrangements and there were 199,994 PRSUs that have been awarded for the 2021 and 2022 performance periods for which performance goal achievement cannot yet be determined.

We excluded 131,178 and 474,423 stock-based compensation instruments from the calculations of diluted earnings per share for the three months ended June 30, 2021 and 2020, respectively, and 566,666 and 274,009 for the nine months ended June 30, 2021 and 2020, respectively, since their inclusion would have been antidilutive.

We issued 240,412 shares of common stock during the three months ended December 31, 2021 to settle PRSUs vested during the period.

Additionally, we issued 130,018 and 141,135 shares of common stock to settle restricted stock units vested and stock options exercised, respectively, during the three months ended December 31, 2021.

Operating income included stock-based compensation expense of $ 2.6 million and $ 2.5 million during the three months ended December 31, 2021 and 2020, respectively.

At December 31, 2021, there was approximately $ 14.5 million of unrecognized compensation expense related to stock-based compensation arrangements and there were 57,627 PRSUs that have been awarded for the 2022 performance period for which performance goal achievement cannot yet be determined.

We excluded 277,344 and 258,522 stock-based compensation instruments from the calculations of diluted earnings per share in the three months ended December 31, 2021 and 2020, respectively, since their inclusion would have been antidilutive.

Supplemental Balance Sheet Information

Selected supplemental asset information is presented below.

June 30, September 30,

December 31, September 30,

(in millions)

Inventories, net:

Purchased components and raw material $ 125.9 $ 100.9

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Finished goods 42.3 42.2

Total inventories, net $ 176.9 $ 162.5

Total inventories $ 209.7 $ 184.7

Other current assets:

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Non-trade receivables 10.0 10.7

Workers’ compensation reimbursement receivable 1.1 —

Maintenance and repair supplies and tooling 2.7 2.9

Income taxes 0.2 0.2

Workers’compensation reimbursement receivable 0.8 0.8

Other current assets 3.1 1.9

Total other current assets $ 30.6 $ 29.3

Property, plant and equipment, net:

Property, plant and equipment:

Land $ 5.5 $ 6.1

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Accumulated depreciation ( 330.7 ) ( 324.3 )

Total property, plant and equipment, net $ 275.3 $ 253.8

Property, plant and equipment, net $ 286.9 $ 283.4

Other noncurrent assets:

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Workers’ compensation reimbursement receivable 2.7 2.7

Pension assets 4.2 0.9

Pension asset 17.9 16.8

Note receivable 1.8 1.8

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Selected supplemental liability information is presented below.

June 30, September 30,

December 31, September 30,

(in millions)

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Income taxes payable 10.8 8.5

Other 9.2 5.0

Other current liabilities 11.2 11.2

Total other current liabilities $ 114.4 $ 127.1

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Deferred development grant 2.5 2.5

Other 3.2 3.0

Other noncurrent liabilities 2.8 3.4

Total other noncurrent liabilities $ 57.1 $ 62.0

Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis each September 1 st and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

The following table summarizes information concerning our goodwill balance for the nine months ended June 30, 2021, in millions.

The following table summarizes information concerning our goodwill balance in the three months ended December 31, 2021, in millions.

Balance at September 30, 2021 $ 115.1

Acquisition of i2O Water Ltd 13.6

Acquisition purchase price adjustment ( 0.2 )

Effects of changes in foreign currency exchange rates 2.8

Balance at June 30, 2021 $ 116.0

Balance at December 31, 2021 $ 117.7

Segment Information

Summarized financial information for our segments is presented below.

Net sales and operating income associated with certain products have been reclassified as Technologies segment items to conform to the current period presentation.

Three months ended Nine months ended

June 30, June 30,

2021 2020 2021 2020

We adopted a new management structure effective October 1, 2021;

prior period information has been recast to conform to the current presentation.

The recasting has no effect on our previously reported consolidated balance sheets, consolidated statements of operations, or consolidated statements of cash flows.

The two newly named business units and reportable segments are Water Flow Solutions and Water Management Solutions.

Water Flow Solutions’ product portfolio includes iron gate valves, specialty valves and service brass products.

Water Management Solutions’ product and service portfolio includes fire hydrants, repair and installation, natural gas, metering, leak detection, pressure control and software products.

Su mmarized financial information for our segments is presented below.

Three months ended

(in millions)

Net sales, excluding intercompany:

Infrastructure $ 287.3 $ 209.4 $ 750.1 $ 641.6

Technologies 23.2 19.1 65.3 57.2

Water Flow Solutions $ 154.9 $ 128.8

Water Management Solutions 117.4 108.6

$ 272.3 $ 237.4

Operating income (loss):

Infrastructure $ 64.0 $ 43.6 $ 158.2 $ 129.4

Technologies ( 2.7 ) ( 3.6 ) ( 8.8 ) ( 10.0 )

Water Flow Solutions $ 31.3 $ 23.1

Water Management Solutions 11.4 17.0

Corporate ( 13.8 ) ( 12.3 )

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Depreciation and amortization:

Infrastructure $ 13.0 12.2 $ 38.2 $ 36.3

Technologies 2.1 2.3 6.2 6.4

Water Flow Solutions $ 7.4 $ 7.4

Water Management Solutions 7.7 7.2

Corporate 0.1 0.1

$ 15.2 $ 14.7

Strategic reorganization and other (credits) charges:

Infrastructure $ 0.2 $ — $ ( 0.4 ) $ 0.4

Technologies — — — —

Strategic reorganization and other charges:

Water Flow Solutions $ — $ 0.1

Water Management Solutions 0.1 —

Corporate 2.3 1.3

$ 3.9 $ 8.6 $ 6.1 $ 11.9

Capital expenditures:

Infrastructure $ 13.8 $ 13.4 $ 43.3 $ 49.1

Technologies 1.2 0.5 2.7 1.8

Water Flow Solutions $ 9.4 $ 12.3

Water Management Solutions 1.6 3.2

Corporate — 0.1

$ 11.0 $ 15.6

Infrastructure disaggregated net revenues:

Water Flow Solutions disaggregated net revenues:

Central $ 40.5 $ 35.0

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$ 154.9 $ 128.8

Technologies disaggregated net revenues:

Water Management Solutions disaggregated net revenues:

Central $ 28.8 $ 26.8

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$ 117.4 $ 108.6

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is presented below.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) is as follows:

Pension, net of tax Foreign currency translation Total

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Current period other comprehensive income 0.3 5.7 $ 6.0

Balance at June 30, 2021 $ ( 31.3 ) $ 16.5 $ ( 14.8 )

Balance at December 31, 2021 $ ( 21.9 ) $ 22.9 $ 1.0

Commitments and Contingencies

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Administrative costs related to these matters are expensed as incurred.

The effect of the outcome of these matters on our financial statements cannot be predicted with certainty as any such effect depends on the amount and timing of the resolution of such matters, unless otherwise indicated below.

Other than the litigation described below, we do not believe that any of our outstanding litigation would have a material adverse effect on our business or prospects.

The effect of the outcome of these matters on our financial statements cannot be predicted with certainty as any such effect depends on the amount and timing of the resolution of such matters.

Other than the litigation described below, we do not believe that any of our outstanding litigation would have a materially adverse effect on our financial position, results of operations, cash flows or liquidity.

Environmental.

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We accrue for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and reasonably estimable.

In the acquisition agreement pursuant to which a predecessor to Tyco International plc, now Johnson Controls International plc (“JCI”), sold our businesses to a previous owner in August 1999, JCI agreed to indemnify us and our affiliates, among other things, for all “Excluded Liabilities.” Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to August 1999, including environmental liabilities.

In the acquisition agreement pursuant to which a predecessor to Tyco International plc, now Johnson Controls International plc (“Tyco”), sold our businesses to a previous owner in August 1999, Tyco agreed to indemnify us and our affiliates, among other things, for all “Excluded Liabilities.” Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to August 1999, including environmental liabilities.

The indemnity survives indefinitely.

JCI’s indemnity does not cover liabilities to the extent caused by us or the operation of our businesses after August 1999, nor does it cover liabilities arising with respect to businesses or sites acquired after August 1999.

Since 2007, JCI has engaged in multiple corporate restructurings, split-offs and divestitures.

While none of these transactions directly affects the indemnification obligations of the JCI indemnitors under the 1999 acquisition agreement, the result of such transactions is that the assets of, and control over, such JCI indemnitors has changed.

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

On July 13, 2010, Rohcan Investments Limited, the former owner of a property leased by Mueller Canada Ltd.

Tyco’s indemnity does not cover liabilities to the extent caused by us or the operation of our businesses after August 1999, nor does it cover liabilities arising with respect to businesses or sites acquired after August 1999.

Since 2007, Tyco has engaged in multiple corporate restructurings, split-offs and divestitures.

While none of these transactions directly affects the indemnification obligations of the Tyco indemnitors under the 1999 acquisition agreement, the result of such transactions is that the assets of, and control over, such Tyco indemnitors has changed.

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

On July 13, 2010, Rohcan Investments Limited, the former owner of property leased by Mueller Canada Ltd.

and located in Milton, Ontario, filed suit against Mueller Canada Ltd.

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On December 7, 2011, the Court denied the plaintiff’s motion for summary judgment.

Pipe, which was sold in 2012, has been identified as a “potentially responsible party” (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act in connection with a former manufacturing facility operated by U.S.

The purchaser of U.S.

Pipe has been identified as a “potentially responsible party” (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act in connection with a former manufacturing facility operated by U.S.

Pipe that was in the vicinity of a proposed Superfund site located in North Birmingham, Alabama.

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Ultimate liability for the site will depend on many factors that have not yet been determined, including the determination of the Environmental Protection Agency’s remediation costs, the number and financial viability of the other PRPs (there are four other PRPs currently) and the determination of the final allocation of the costs among the PRPs.

Since the amounts of such costs cannot be reasonably estimated at this time, no amounts have been accrued for this matter at June 30, 2021.

Walter Energy .

On November 18, 2019, we paid approximately $ 22.2 million to the Internal Revenue Service in final settlement of a tax dispute related to our former parent company, Walter Energy, Inc.

Since the amounts of such costs cannot be reasonably estimated at this time, no amounts have been accrued for this matter at December 31, 2021.

The COVID-19 Pandemic.

The pandemic has caused, and is likely to continue to cause, severe economic, market and other disruptions to the U.S.

and global economies.

We have taken action and continue to counter such disruption, and work to protect the safety of our employees.

We are uncertain of the potential full magnitude or duration of the business and economic impacts from the unprecedented public health effort to contain and combat the spread of COVID-19, and while the extent to which the pandemic affects our results will depend on future developments, the outbreak could result in material effects to our future financial position, results of operations, cash flows and liquidity.

Mass Shooting Event at our Mueller Co.

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facility in Albertville, Alabama, in which two employees were killed and two employees were injured.

Various workers’ compensation claims arising from the event have been made to date, and we anticipate that additional claims may be made, and that liability under such claims, if any, is not expected to have a material adverse effect on our results of operations or cash flows.

However, the possibility of other legal proceedings, and any related effects, arising from this event cannot be predicted with certainty.

The COVID-19 Pandemic.

The pandemic has caused, and is likely to continue to cause, severe economic, market and other disruptions to the U.S.

and global economies.

We have taken action and continue to counter such disruption and work to protect the safety of our production workers as essential workers at our various manufacturing plants, distribution centers and research and development centers.

We are uncertain of the potential magnitude or duration of the business and economic impacts from the unprecedented public health effort to contain and combat the spread of COVID-19, and while the extent to which the pandemic affects our results will depend on future developments, including COVID-19 variants, the outbreak could result in material effects to our future financial position, results of operations, cash flows and liquidity.

Various claims arising from the event have been filed to date and we anticipate that additional claims may be made and that liability under such claims, if any, is not expected to have a material adverse effect on our results of operations or cash flows.

However, the outcome of these claims, or legal proceedings, and related effects arising from this event cannot be predicted with certainty.

Indemnifications .

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We cannot estimate the potential amount of future payments under these indemnities until events arise that would trigger a liability under the indemnities.

Additionally, in connection with the divestitures of the subsidiaries, U.S.

Additionally, in connection with the sale of assets and the divestiture of businesses, such as the divestitures of U.S.

Pipe and Anvil, we may agree to indemnify buyers and related parties for certain losses or liabilities incurred by these parties with respect to:

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Other Matters.

We monitor and analyze our warranty experience and costs periodically and revise our accruals as necessary.

We monitor and analyze our warranty experience and costs periodically and may revise our accruals as necessary.

Critical factors in our analyses include warranty terms, specific claim situations, general incurred and projected failure rates, the nature of product failures, product and labor costs, and general business conditions.

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Subsequent Events

On July 29, 2021 , our Board of Directors declared a dividend of $ 0.0550 per share on our common stock, payable on or about August 20, 2021 to stockholders of record at the close of business on August 10, 2021 .

On January 27, 2022 , our Board of Directors declared a dividend of $ 0.058 per share on our common stock, payable on February 21, 2022 to stockholders of record at the close of business on February 10, 2022 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements