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Item 5. Market for Registrant’s Common Equity

2022-02-09 compared with 2020-05-12 · 13 added, 108 removed, 11 unchanged (92% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "RXN." As of May 8, 2020, there was 1 holder of record of our common stock.

As previously disclosed, following the completion of the Spin-Off Transaction with Regal, we changed our name to “Zurn Water Solutions Corporation” and shares of our common stock began to trade on the New York Stock Exchange ("NYSE") under the ticker symbol “ZWS”.

Prior to the completion of the Spin-Off Transaction, our common stock was listed on the NYSE under the symbol "RXN".

As of February 4, 2022, there was one holder of record of our common stock.

We believe the number of beneficial owners of our common stock exceeds 1,000.

Dividend Policy

On January 27, 2020, our Board of Directors declared an initial quarterly cash dividend on our common stock of $0.08 per share that was paid on March 6, 2020, to stockholders of record as of February 21, 2020, which represented the first dividend on common stock that we have paid since our 2012 initial public offering and the only dividend on our common stock declared or paid during fiscal 2020.

The decision whether to pay future dividends will be made by our Board of Directors in light of conditions then existing, including factors such as our results of operations, financial condition and requirements, business conditions and covenants under any applicable borrowing agreements and other contractual arrangements.

Following the completion of the Spin-Off Transaction, on October 21, 2021 our Board of Directors declared a quarterly cash dividend on our common stock of $0.03 per-share that was paid on December 7, 2021.

The decision whether to continue to pay dividends in the future will be made by our Board of Directors in light of conditions then existing, including factors such as our results of operations, financial condition and requirements, business conditions and covenants under any applicable borrowing agreements and other contractual arrangements.

Issuer Purchases of Equity Securities

During fiscal 2015, our Board of Directors approved a common stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of our common stock from time to time on the open market or in privately negotiated transactions.

In fiscal 2015, our Board of Directors approved a stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of our common stock from time to time on the open market or in privately negotiated transactions.

On January 27, 2020, our Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $300.0 million.

The Repurchase Program does not require us to acquire any particular amount of common stock and does not specify the timing of purchases or the prices to be paid;

however, the program will continue until the maximum amount of dollars authorized have been expended or until it is modified or terminated by the Board.

During the fourth quarter of fiscal 2020, we repurchased 3.0 million shares of common stock at a total cost of $80.7 million at a weighted average price of $27.22 per share.

The repurchased shares were canceled upon receipt.

A total of approximately $223.0 million of repurchase authority remained under the Repurchase Program at March 31, 2020.

On April 8, 2020, we announced the temporary suspension of share repurchases as a result of the uncertainty caused by the COVID-19 pandemic.

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Approximate Dollar Value that may yet be Purchased Under the Plans or Programs (1)

January 1 - January 31, 2020 147,755 $ 32.62 147,755 $ 298,939,432

February 1 - February 29, 2020 367,500 $ 32.05 367,500 $ 287,161,238

March 1 - March 31, 2020 2,450,400 $ 26.17 2,450,400 $ 223,045,614

(1) See explanation of the Repurchase Program above.

however, the program will continue until the maximum amount of dollars authorized has been expended or until it is modified or terminated by the Board.

There were no repurchases of our common stock during the three months ended December 31, 2021 and approximately $0.9 million of repurchases of our common stock during the twelve months ended December 31, 2021.

A total of approximately $162.8 million of repurchase authority remained under the Repurchase Program at December 31, 2021.

Performance Graph

Set forth below is a line graph comparing the cumulative total shareholder return of our common stock with the Standard & Poor's (the "S&P") 500 Index and the S&P 1500 Industrials Index for the five-year period ended March 31, 2020.

The graph assumes the value of the investment in our common stock and each index was $100 on March 31, 2016, and that all dividends were reinvested.

The shareholder return shown on the graph below is not necessarily indicative of future performance and the indices included do not necessarily reflect management's opinion that such indices are an appropriate measure of the relative performance of Rexnord's stock.

3/31/2016 3/31/2017 3/31/2018 3/31/2019 3/31/2020 12/31/2020 12/31/2021

Rexnord Corporation $ 100.00 $ 75.76 $ 86.47 $ 111.20 $ 94.19 $ 84.94

Zurn Water Solutions Corporation (1) $ 100.00 $ 114.14 $ 146.79 $ 124.33 $ 112.12 $ 195.30 $ 366.24

S&P 500 Index $ 100.00 $ 114.71 $ 128.21 $ 137.61 $ 125.48 $ 182.36 $ 231.40

S&P 1500 Industrials Index $ 100.00 $ 116.86 $ 131.15 $ 132.34 $ 104.54 $ 159.15 $ 191.90

SELECTED FINANCIAL DATA.

The following table of selected historical financial information is based on our consolidated financial statements, including those included elsewhere in this Form 10-K.

This data should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8, Financial Statements and Supplementary Data.

The Statements of Operations, Other Data and Balance Sheet Data are derived from our audited financial statements.

Fiscal years prior to and including fiscal year 2020 ended on March 31 of the corresponding calendar year.

For example, our fiscal year 2020, or fiscal 2020, means the period from April 1, 2019 to March 31, 2020.

Following the end of fiscal 2020, we are transitioning to a December 31 fiscal year-end date.

The nine-month period from April 1, 2020, to December 31, 2020, will serve as a transition period, and we will provide one-time, nine-month transitional financial statements in a transition report on Form 10-K to be filed in 2021.

(in millions, except share and per share amounts) Year Ended March 31, 2020

(1) Year Ended March 31, 2019

(2) Year Ended March 31, 2018

(3) Year Ended March 31, 2017 (4) Year Ended March 31, 2016

Statements of Operations:

Net sales $ 2,068.3 $ 2,050.9 $ 1,851.6 $ 1,712.5 $ 1,672.2

Cost of sales 1,250.3 1,266.1 1,145.1 1,086.1 1,062.6

Gross profit 818.0 784.8 706.5 626.4 609.6

Selling, general and administrative expenses 432.8 433.1 393.8 356.1 329.7

Restructuring and other similar charges 15.5 12.1 14.1 26.1 14.0

Amortization of intangible assets 35.4 34.0 32.2 41.0 55.8

Income from operations 334.3 305.6 266.4 203.2 210.1

Non-operating (expense) income:

Interest expense, net (58.6) (69.9) (75.1) (88.3) (90.8)

Gain (loss) on the extinguishment of debt (5) 1.0 4.3 (11.9) (7.8) —

Actuarial (loss) gain on pension and postretirement benefit obligations (36.6) 0.4 3.3 2.6 (13.0)

Other (expense) income, net (6) (3.8) (1.6) 4.4 (2.4) 8.4

Income from continuing operations before income taxes 236.3 238.8 187.1 107.3 114.7

(Provision) benefit for income taxes (7) (54.1) (53.4) 19.5 (15.6) (27.8)

Equity method investment income — 3.6 — — —

Net income from continuing operations 182.2 189.0 206.6 91.7 86.9

Loss from discontinued operations, net of tax (8) (1.8) (154.7) (130.6) (17.6) (19.0)

Net income 180.4 34.3 76.0 74.1 67.9

Non-controlling interest income 0.3 — 0.1 — —

Net income attributable to Rexnord 180.1 34.3 75.9 74.1 67.9

Dividends on preferred stock (14.4) (23.2) (23.2) (7.3) —

Net income attributable to Rexnord common stockholders $ 165.7 $ 11.1 $ 52.7 $ 66.8 $ 67.9

Basic net income (loss) per share attributable to Rexnord common stockholders:

Continuing operations $ 1.50 $ 1.58 $ 1.76 $ 0.82 $ 0.86

Discontinued operations $ (0.02) $ (1.48) $ (1.26) $ (0.17) $ (0.19)

Net income $ 1.48 $ 0.11 $ 0.51 $ 0.65 $ 0.67

Diluted income (loss) per share attributable to Rexnord common stockholders:

Continuing operations $ 1.46 $ 1.53 $ 1.69 $ 0.81 $ 0.84

Discontinued operations $ (0.01) $ (1.25) $ (1.07) $ (0.17) $ (0.18)

Net income $ 1.45 $ 0.28 $ 0.62 $ 0.64 $ 0.66

Weighted-average number of common shares outstanding (in thousands):

Basic 111,689 104,640 103,889 102,753 100,841

Effect of dilutive equity awards 12,574 18,689 18,095 2,031 2,469

Diluted 124,263 123,329 121,984 104,784 103,310

Net cash provided by (used for):

Operating activities $ 298.6 $ 258.1 $ 228.5 $ 195.1 $ 219.0

Investing activities (123.1) (53.3) (208.8) (264.0) (45.2)

Financing activities 114.9 (116.7) (308.8) 79.9 (56.3)

Depreciation and amortization of intangible assets (9) 86.6 87.9 79.7 96.1 103.4

Capital expenditures (9) 41.4 42.5 38.0 50.8 46.7

Common stock dividend per share $ 0.08 — — — —

(in millions) 2020 2019 2018 2017 2016

Balance Sheet Data:

Cash and cash equivalents $ 573.4 $ 292.5 $ 193.2 $ 464.6 $ 443.9

Working capital (10) 808.8 585.9 543.5 777.8 771.7

Total assets 3,627.1 3,259.7 3,423.7 3,539.3 3,354.8

Total debt (11) 1,473.4 1,238.0 1,356.0 1,622.7 1,920.1

Stockholders’ equity 1,313.7 1,231.0 1,212.8 1,070.6 588.0

_______________________

(1) Consolidated financial data as of and for the year ended March 31, 2020, reflects the acquisitions of Stainlessdrains.com, subsequent to May 10, 2019, and Just Manufacturing subsequent to January 28, 2020.

As a result, the comparability of the operating results for the period presented is affected by the acquired operations as well as the revaluation of the assets acquired and the liabilities assumed on the respective dates of the acquisitions.

(2) Consolidated financial data as of and for the year ended March 31, 2019, reflects the acquisition of an additional 47.5% interest in Centa China, a joint venture in which we previously maintained a 47.5% non-controlling interest, subsequent to January 23, 2019.

Prior to this transaction, we accounted for our non-controlling interest in Centa China as an equity method investment.

(3) Consolidated financial data as of and for the year ended March 31, 2018, reflects the acquisition of World Dryer subsequent to October 4, 2017, and Centa subsequent to February 9, 2018.

(4) Consolidated financial data as of and for the year ended March 31, 2017, reflects the acquisition of Cambridge subsequent to June 1, 2016.

(5) During fiscal 2020, we recognized a $1.0 million gain on the extinguishment of debt, consisting of a $3.2 million gain in connection with the forgiveness of the remaining net debt associated with the New Market Tax Credit program, partially offset by a $2.2 million loss in connection with the fiscal 2020 refinancing of our term loan and a $100.0 million voluntary prepayment made on our term loan.

During fiscal 2019, we recognized a non-cash gain on the extinguishment of debt of $5.0 million in connection with the forgiveness of the net debt associated with the New Market Tax Credit program.

This gain was partially offset by the recognition of $0.7 million of accelerated amortization of debt issuance costs in connection with a $75.0 million voluntary prepayment on our term loan during fiscal 2019.

During fiscal 2018, we recognized a $11.9 million loss on debt extinguishment associated with the fiscal 2018 amendment to our credit agreement, which was comprised of $3.9 million of refinancing-related costs, as well as a non-cash write-off of unamortized debt issuance costs associated with a fiscal 2017 term loan of $8.0 million.

During fiscal 2017, we recognized a $7.8 million loss on debt extinguishment associated with a fiscal 2017 term loan refinancing, which was comprised of $5.4 million of refinancing-related costs, as well as a non-cash write-off of unamortized debt issuance costs associated with the prior term loan of $2.4 million.

Refer to Item 8, Note 11, Long-Term Debt for additional information on debt.

(6) Other (expense) income, net for the periods indicated, consists primarily of gains and losses from foreign currency transactions and the non-service cost components of net periodic benefit credits associated with our defined benefit plans.

See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 8, Note 16, Retirement Benefits for additional information.

(7) Fiscal 2018 included a net income tax benefit associated with the remeasurement of the Company's net U.S.

deferred tax liability as a result of U.S.

Refer to Item 8, Note 17, Income Taxes for additional information.

(8) In fiscal 2019, we completed the sale of the VAG business within our Water Management platform.

Accordingly, the results of the VAG business have been reported as discontinued operations in the consolidated statements of operations for all periods presented.

Refer to Item 8, Note 4, Discontinued Operations for additional information.

In fiscal 2015, we discontinued the Mill Products business within our PMC platform.

Accordingly, the results of its operations have been reported as discontinued operations in the consolidated statements of operations for all periods presented.

(9) Amount reflects continuing operations.

(10) Working capital represents total current assets less total current liabilities.

(11) Total debt represents long-term debt, net of an unamortized debt issuance costs, plus the current portion of long-term debt and finance lease liabilities.

(1) Zurn Water Solutions Corporation historical prices were adjusted to reflect the impact of the Spin-Off Transaction that was completed on October 4, 2021.

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-K

Item 5. Market for Registrant’s Common Equity