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Item 1. Financial Statements

2022-07-26 compared with 2022-04-27 · 186 added, 149 removed, 441 unchanged (43% of the section changed)

FINANCIAL STATEMENTS

Zurn Water Solutions Corporation and Subsidiaries

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in Millions, except share amounts)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

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shares issued and outstanding:

125,847,069 at March 31, 2022 and 125,720,068 at December 31, 2021

126,182,246 at June 30, 2022 and 125,720,068 at December 31, 2021

Additional paid-in capital 1,438.3 1,436.9

4 unchanged sentences

See notes to the condensed consolidated financial statements.

Zurn Water Solutions Corporation and Subsidiaries

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(in Millions, except share and per share amounts)

Three Months Ended

March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net sales $ 284.2 $ 243.7 $ 523.8 $ 448.9

7 unchanged sentences

Interest expense, net ( 5.2 ) ( 10.1 ) ( 10.0 ) ( 19.7 )

Other income, net 0.3 0.3

Other expense, net ( 0.6 ) ( 0.4 ) ( 0.3 ) ( 0.1 )

Income before income taxes 47.7 26.8 87.1 41.5

2 unchanged sentences

Income from discontinued operations, net of tax — 52.6 0.8 92.6

Net income attributable to Zurn common stockholders $ 30.2 $ 50.0

Net income attributable to Zurn Elkay common stockholders $ 36.4 $ 73.2 $ 66.6 $ 123.2

Basic net income per share:

11 unchanged sentences

See notes to the condensed consolidated financial statements.

Zurn Water Solutions Corporation and Subsidiaries

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in Millions)

Three Months Ended

March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net income $ 36.4 $ 73.2 $ 66.6 $ 123.2

2 unchanged sentences

Change in pension and postretirement defined benefit plans, net of tax — ( 0.1 ) — ( 0.2 )

Other comprehensive (loss) income, net of tax ( 2.0 ) 5.3 — 3.5

Total comprehensive income $ 34.4 $ 78.5 $ 66.6 $ 126.7

See notes to the condensed consolidated financial statements.

Zurn Water Solutions Corporation and Subsidiaries

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in Millions)

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

Operating activities

3 unchanged sentences

Amortization of intangible assets 4.6 18.5

Loss (gain) on dispositions of long-lived assets 0.3 ( 9.2 )

Deferred income taxes 6.8 ( 4.0 )

Other non-cash expenses 0.5 0.7

Other non-cash expenses (income) 1.7 ( 1.1 )

Stock-based compensation expense 7.7 27.0

21 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 0.3 ) 0.1

(Decrease) increase in cash, cash equivalents and restricted cash ( 23.4 ) 51.7

Increase in cash, cash equivalents and restricted cash 13.8 135.1

Cash, cash equivalents and restricted cash at beginning of period 96.6 255.6

1 unchanged sentence

See notes to the condensed consolidated financial statements.

Zurn Water Solutions Corporation and Subsidiaries

Zurn Elkay Water Solutions Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2022

June 30, 2022

Basis of Presentation and Significant Accounting Policies

The unaudited condensed consolidated financial statements included herein have been prepared by Zurn Water Solutions Corporation (“Zurn” or the “Company”) in accordance with accounting principles generally accepted in the United States ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission.

The unaudited condensed consolidated financial statements included herein have been prepared by Zurn Elkay Water Solutions Corporation (formerly known as Zurn Water Solutions Corporation) (“Zurn Elkay” or the “Company”) in accordance with accounting principles generally accepted in the United States ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

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These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

As previously disclosed, on July 1, 2022, the Company completed its combination with Elkay Manufacturing Company (“Elkay”) through the merger of Elkay with and into a newly created subsidiary of the Company, with Elkay surviving as a wholly owned subsidiary of Zurn Elkay (the “Merger” or "Elkay Transaction").

The Company's results of operations will include the acquired operations subsequent to July 1, 2022.

See Note 18, Subsequent Events for additional information on the Elkay Transaction.

Following the Merger, Zurn Elkay is a growth-oriented, pure-play water management business that designs, procures, manufactures, and markets what the Company believes to be the broadest sustainable product portfolio of specification-driven water management solutions to improve health, human safety and the environment.

The Company's product portfolio includes professional grade water control and safety, water distribution and drainage, drinking water, finish plumbing, hygienic, environmental and site works products for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time.

The Company's heritage of innovation and specification has allowed it to provide highly-engineered, mission-critical solutions to customers for decades and affords the Company the privilege of having long-term, valued relationships with market leaders.

The Company operates in a disciplined way and the Zurn Elkay Business System (“ZEBS”), described below, is its operating philosophy.

Grounded in the spirit of continuous improvement, ZEBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of the Company's business.

Spin-Off of Process & Motion Control Segment

On October 4, 2021, the Company completed a Reverse Morris Trust tax-free spin-off transaction (the “Spin-off Transaction”) in which (i) substantially all the assets and liabilities of the Company's PMC business were transferred to a newly created subsidiary, Land Newco, Inc.

(“Land”), (ii) the shares of Land were distributed to the Company's stockholders pro rata, and (iii) Land was merged with a subsidiary of Regal Rexnord Corporation (formerly known as Regal Beloit Corporation), in which the stock of Land was converted into a specified number of shares of Regal Rexnord Corporation in accordance with the exchange ratio.

Following completion of the Spin-Off Transaction, the Company's name was changed to “Zurn Water Solutions Corporation” and the ticker symbol for its shares of common stock trading on the New York Stock Exchange was changed to “ZWS”.

As a result of the Spin-Off Transaction, in accordance with the authoritative guidance, the operating results of PMC are reported as discontinued operations in the condensed consolidated statements of operations for all prior periods presented.

On October 4, 2021, the Company completed a Reverse Morris Trust tax-free spin-off transaction (the “Spin-off Transaction”) in which (i) substantially all the assets and liabilities of the Company's Process & Motion Control ("PMC") business were transferred to a newly created subsidiary, Land Newco, Inc.

As a result of the Spin-Off Transaction, in accordance with authoritative guidance, the operating results of PMC are reported as discontinued operations in the condensed consolidated statements of operations for all prior periods presented.

The condensed consolidated statements of cash flows has not been adjusted to separately disclose cash flows related to the discontinued operations.

See Note 4, Discontinued Operations for additional information.

Zurn Water Solutions Corporation is a growth-oriented, pure-play water management business that designs, procures, manufactures, and markets what the Company believes to be the broadest sustainable product portfolio of specification-driven water management solutions to improve health, human safety and the environment.

The Company's product portfolio includes professional grade water safety and control, flow systems and hygienic and environmental products for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time.

The Company's heritage of innovation and specification has allowed Zurn to provide highly-engineered, mission-critical solutions to customers for decades and affords Zurn the privilege of having long-term, valued relationships with market leaders.

The Company operates in a disciplined way and the Zurn Business System (“ZBS”), described below, is its operating philosophy.

Grounded in the spirit of continuous improvement, ZBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of the Company's business.

Recent Accounting Pronouncements

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The amendments in this ASU are effective for all entities as of March 12, 2020, through December 31, 2022.

The Company did not modify any material contracts due to reference rate reform during the three

months ended March 31, 2022.

The Company did not modify any material contracts due to reference rate reform during the six months ended June 30, 2022.

The Company will continue to evaluate the impact this guidance will have on its consolidated financial statements for all future transactions affected by reference rate reform during the time period referenced above.

Three Months Ended March 31, 2022

On February 12, 2022, the Company entered into a definitive agreement to combine with Elkay Manufacturing Company (“Elkay”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Elkay, Zebra Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), and Elkay Interior Systems International, Inc., as representative of the stockholders of Elkay.

The Merger Agreement provides that among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Elkay would merge with Merger Sub, with Elkay surviving as a wholly-owned subsidiary of the Company (the “Merger”).

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), the Company will exchange, for 100 % of the outstanding equity of Elkay, up to 52.5 million newly issued shares of the Company's common stock, which on a pro forma basis, assuming closing of the Merger on December 31, 2021 (and assuming no adjustments pursuant to the Merger Agreement), would have represented approximately 29 % of the outstanding shares of the Company's common stock on a fully diluted basis as of such date (the “Merger Consideration”).

The Company anticipates the Merger will close will close early in the third quarter of 2022.

The closing of the Merger is subject to customary conditions, including, among others, the absence of laws or orders by a governmental authority enjoining or prohibiting the consummation of the transactions contemplated by the Merger Agreement;

the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”) (which waiting period expired on March 30, 2022);

the required approvals by the respective stockholders of the Company and Elkay;

a registration statement having become effective in accordance with the provisions of the Securities Act of 1933, as amended, and not being subject to any stop order suspending the registration statement (registration statement became effective on April 26, 2022);

the shares of the Company's common stock to be issued in the Merger being approved for listing on the New York Stock Exchange as of the closing;

the accuracy of the parties’ representations and warranties contained in the Merger Agreement (subject to certain materiality qualifications);

the parties’ compliance with the covenants and agreements in the Merger Agreement in all material respects;

and the absence of any material adverse effect on the Company or Elkay.

Six Months Ended June 30, 2022

On July 1, 2022, in accordance with the terms and conditions of the Merger Agreement dated February 12, 2022, the Company completed its combination with Elkay.

See Note 18 Subsequent Events for further information.

Fiscal Year 2021

On November 17, 2021, the Company completed the acquisition of the Wade Drains business ("Wade Drains") from McWane, Inc.

for a preliminary cash purchase price of $ 13.7 million, excluding transaction costs and net of cash acquired.

The preliminary purchase price is subject to customary post-closing adjustments.

for a cash purchase price of $ 12.6 million, excluding transaction costs and net of cash acquired.

During the six months ended June 30, 2022, the Company received a $ 1.1 million cash payment from the sellers of Wade Drains in connection with finalizing the acquisition date trade working capital, which is included in the total cash purchase price above.

Wade Drains manufactures a wide range of specified commercial plumbing products for customers across North America and complements the Company's existing flow systems product portfolio.

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The preliminary purchase price allocations associated with these acquisitions resulted in tax deductible goodwill of $ 7.5 million, customer relationship intangibles assets of $ 1.6 million, trade working capital of $ 9.0 million and $( 1.0 ) million of other net liabilities.

The preliminary purchase price allocations will be completed within the one-year period following the acquisition dates.

During the six months ended June 30, 2022, the preliminary purchase price allocations for Wade Drains were adjusted, resulting in a $ 1.3 million decrease to goodwill, primarily related to the aforementioned cash payment received from the sellers of Wade Drains.

The preliminary purchase price allocations for Wade Drains will be completed within the one-year period following the acquisition dates.

The Company's results of operations include the acquired operations subsequent to the acquisition dates.

2 unchanged sentences

Restructuring and Other Similar Charges

During the three months ended March 31, 2022, the Company continued to execute various restructuring actions.

These initiatives were implemented to drive efficiencies and reduce operating costs while also modifying the Company's

footprint to reflect changes in the markets it serves, the impact of acquisitions on the Company's overall manufacturing capacity and the refinement of its overall product portfolio.

During the three and six months ended June 30, 2022, the Company continued to execute various restructuring actions.

These initiatives were implemented to drive efficiencies and reduce operating costs while also modifying the Company's footprint to reflect changes in the markets it serves, the impact of acquisitions on the Company's overall manufacturing capacity and the refinement of its overall product portfolio.

These restructuring actions primarily resulted in workforce reductions, lease termination costs, and other facility rationalization costs.

Management expects to continue executing initiatives and select product-line rationalizations to optimize its operating margin and manufacturing footprint.

As such, the Company expects further expenses related to workforce reductions, lease termination costs, and other facility rationalization costs.

Following the Merger with Elkay, Management expects to continue executing initiatives and select product-line rationalizations to optimize its operating margin and manufacturing footprint.

As such, the Company expects further expenses related to workforce reductions, lease termination costs, and other facility

rationalization costs.

Since the Company’s evaluation of other potential restructuring actions are in process, related restructuring expenses, if any, are not yet estimable.

The following table summarizes the Company's restructuring and other similar charges during the three months ended March 31, 2022 and March 31, 2021, (in millions):

Three Months Ended

March 31, 2022 March 31, 2021

The following table summarizes the Company's restructuring and other similar charges during the three and six months ended June 30, 2022 and June 30, 2021, (in millions):

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Employee termination benefits $ 0.2 $ 0.3 $ 1.3 $ 0.9

1 unchanged sentence

Total restructuring and other similar costs $ 0.3 $ 0.3 $ 1.4 $ 0.9

The following table summarizes the activity in the Company's restructuring accrual for the three months ended March 31, 2022 (in millions):

The following table summarizes the activity in the Company's restructuring accrual for the six months ended June 30, 2022 (in millions):

Employee termination benefits Contract termination and other associated costs Total

2 unchanged sentences

Cash payments ( 2.6 ) ( 0.1 ) ( 2.7 )

Accrued Restructuring Costs, March 31, 2022 (1) $ 1.3 $ — $ 1.3

Accrued Restructuring Costs, June 30, 2022 (1) $ 1.1 $ — $ 1.1

____________________

3 unchanged sentences

The operating results of PMC are reported as discontinued operations in the consolidated statements of operations for all prior periods presented, as the Spin-Off Transaction of PMC represented a strategic shift that had a major impact on operations and financial results.

The condensed consolidated statements of cash flows for the three months ended March 31, 2021 has not been adjusted to separately disclose cash flows related to the discontinued operations.

During the three months ended March 31, 2022, the Company received $ 35.0 million from Regal Rexnord Corporation as a result of the final working capital and cash balances at closing exceeded the targets stipulated within the Spin-Off Transaction agreement.

The major components of the Income from discontinued operations, net of tax presented in the condensed consolidated statements of operations for the three months ended March 31, 2022 and March 31, 2021, are as follows (in millions):

Three Months Ended

March 31, 2022 March 31, 2021

The condensed consolidated statements of cash flows for the six months ended June 30, 2022 and June 30, 2021 have not been adjusted to separately disclose cash flows related to the discontinued operations.

During the six months ended June 30, 2022, the Company received $ 35.0 million from Regal Rexnord Corporation as a result of the final working capital and cash balances at closing exceeding the targets stipulated in the Spin-Off Transaction agreement.

The major components of the Income from discontinued operations, net of tax presented in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021, are as follows (in millions):

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net sales $ — $ 324.6 $ — $ 645.5

1 unchanged sentence

Selling, general and administrative expenses — ( 61.6 ) — ( 123.2 )

Restructuring and other similar charges — ( 0.8 ) — ( 0.8 )

Amortization of intangible assets — ( 3.3 ) — ( 6.6 )

Interest expense, net — ( 1.6 ) — ( 3.0 )

Other expense, net — ( 0.7 )

Other non-operating income, net — 2.1 — 1.4

Income from discontinued operations before income tax — 66.8 — 119.3

Income tax benefit (provision) 0.8 ( 12.5 )

Income tax (provision) benefit — ( 14.3 ) 0.8 ( 26.8 )

Equity method investment income — 0.2 — 0.3

1 unchanged sentence

Income from discontinued operations, net of tax $ — $ 52.6 $ 0.8 $ 92.6

The condensed consolidated statements of cash flows for the three months ended March 31, 2022 and March 31, 2021 have not been adjusted to separately disclose cash flows related to discontinued operations.

The condensed consolidated statements of cash flows for the six months ended June 30, 2022 and June 30, 2021 have not been adjusted to separately disclose cash flows related to discontinued operations.

However, the significant investing and financing cash flows and other significant non-cash operating items associated with the discontinued operations were as follows (in millions):

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

Depreciation $ — $ 23.5

Amortization of intangible assets — 6.6

Loss on disposition of assets — 0.2

Gain on disposition of assets — ( 9.2 )

Deferred income taxes — 0.1

6 unchanged sentences

Proceeds from exercise of stock options — 10.1

Taxes withheld and paid on employees' shared-based payment awards — ( 0.5 )

Revenue Recognition

9 unchanged sentences

Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue.

The Company has elected to recognize the cost for freight and shipping when control of products has transferred to the customer as a

component of cost of sales in the consolidated statements of operations.

The Company has elected to recognize the cost for freight and shipping when control of products has transferred to the customer as a component of cost of sales in the consolidated statements of operations.

The Company classifies shipping and handling fees billed to customers as net sales and the corresponding costs are classified as cost of sales in the consolidated statements of operations.

1 unchanged sentence

The following tables present the Company's revenue disaggregated by customer type and customer geography (in millions):

Three Months Ended

Customer Type March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

Customer Type June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Institutional $ 108.8 $ 92.8 $ 196.4 $ 169.1

2 unchanged sentences

Total $ 284.2 $ 243.7 $ 523.8 $ 448.9

Three Months Ended

Geography March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

Geography June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

United States $ 257.5 $ 219.5 $ 477.1 $ 405.2

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A contract liability exists when the Company has received consideration or the amount is due from the customer in advance of revenue recognition.

Contract liabilities and contract assets as of March 31, 2022 and March 31, 2021 were not material.

The Company had backlog of $ 100.8 million as of March 31, 2022, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts.

Contract liabilities and contract assets as of June 30, 2022 and June 30, 2021 were not material.

The Company had backlog of $ 84.0 million as of June 30, 2022, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts.

The Company has elected to use the optional exemption provided by ASC 606-10-50-14A for variable consideration, and has not included estimated rebates in the amount of unsatisfied performance obligations.

The Company expects to recognize approximately 99 % of the backlog in the remaining nine months of the year ending December 31, 2022, and the remaining approximately 1 % in 2023 and beyond.

The Company expects to recognize approximately 98 % of the backlog in the remaining six months of the year ending December 31, 2022, and the remaining approximately 2 % in 2023 and beyond.

Timing of Performance Obligations Satisfied at a Point in Time

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The Company has elected to expense contract costs as incurred if the amortization period is expected to be one year or less.

If the amortization period of these costs is expected to be greater than one year, the costs would be subject to

capitalization.

As of March 31, 2022 and March 31, 2021, the contract assets capitalized, as well as amortization recognized in the three months ended March 31, 2022 and March 31, 2021, are not significant and no impairment losses were recognized.

If the amortization period of these costs is expected to be greater than one year, the costs would be subject to capitalization.

As of June 30, 2022 and June 30, 2021, the contract assets capitalized, as well as amortization recognized in the three months ended June 30, 2022 and June 30, 2021, are not significant and no impairment losses were recognized.

Allowance for Doubtful Accounts

13 unchanged sentences

Future changes to the balances of these valuation allowances, as a result of this continued review and analysis by the Company, could result in a material impact to the financial statements for such period of change.

The income tax provision was $ 10.0 million for the three months ended March 31, 2022, compared to $ 4.7 million for the three months ended March 31, 2021.

The effective income tax rate for the three months ended March 31, 2022, was 25.4 % versus 32.0 % for the three months ended March 31, 2021.

The effective income tax rate for the three months ended March 31, 2022 was above the U.S.

The income tax provision was $ 11.3 million for the three months ended June 30, 2022, compared to $ 6.2 million for the three months ended June 30, 2021.

The effective income tax rate for the three months ended June 30, 2022 was 23.7 % versus 23.1 % for the three months ended June 30, 2021.

The effective income tax rate for the three months ended June 30, 2022 was above the U.S.

federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S.

federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code and the accrual of various state income taxes, partially offset by the recognition of certain previously unrecognized tax benefits due to the lapse of the applicable statutes of limitations and income tax benefits associated with share-based payments.

The effective income tax rate for the three months ended March 31, 2021 was above the U.S.

federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

The effective income tax rate for the three months ended June 30, 2021 was above the U.S.

federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S.

The Company’s total liability for net unrecognized tax benefits as of March 31, 2022 and December 31, 2021 was $ 4.9 million and $ 5.9 million, respectively.

The income tax provision was $ 21.3 million for the six months ended June 30, 2022, compared to $ 10.9 million for the six months ended June 30, 2021.

The effective income tax rate for the six months ended June 30, 2022 was 24.5 % versus 26.3 % for the six months ended June 30, 2021.

The effective income tax rate for the six months ended June 30, 2022 was above the U.S.

federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S.

federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

The effective income tax rate for the six months ended June 30, 2021 was above the U.S.

federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S.

The Company’s total liability for net unrecognized tax benefits as of June 30, 2022 and December 31, 2021 was $ 5.0 million and $ 5.9 million, respectively.

The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in income tax expense.

As of March 31, 2022 and December 31, 2021, the total amount of gross, unrecognized income tax benefits included accrued interest and penalties of $ 0.3 million and $ 0.5 million, respectively.

The Company recognized $( 0.1 ) million and $ 0.0 million of net interest and penalties as income tax expense (benefit) during the three months ended March 31, 2022 and March 31, 2021, respectively.

As of June 30, 2022 and December 31, 2021, the total amount of gross,

unrecognized income tax benefits included accrued interest and penalties of $ 0.4 million and $ 0.5 million, respectively.

The Company recognized $ 0.0 million and $ 0.1 million of net interest and penalties as income tax expense during the six months ended June 30, 2022 and June 30, 2021, respectively.

The Company conducts business in multiple locations within and outside the U.S.

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VAG was notified by the German tax authorities of its intention to conduct an income tax examination of the VAG German entities’ corporate income and trade tax returns for the tax years ended March 31, 2014 through 2019.

Similarly, in accordance with the Spin-Off Transaction, the Company is required to indemnify Regal Rexnord

Corporation for any future income tax liabilities associated with PMC entities relating to all open tax years ending prior to, and including, the short period ended on the date of the Spin-Off.

During the fiscal year ended March 31, 2020, the Italian tax authorities began conducting an income tax examination of the income tax return of one of PMC’s Italian subsidiaries for the tax year ended March 31, 2018.

In addition, certain of the PMC German subsidiaries are currently undergoing a corporate income and trade tax examination by the German tax authorities for the tax years or periods ended March 31, 2015 through March 31, 2018.

Similarly, in accordance with the Spin-Off Transaction, the Company is required to indemnify Regal Rexnord Corporation for any future income tax liabilities associated with PMC entities relating to all open tax years ending prior to, and including, the short period ended on the date of the Spin-Off.

There are currently a number of ongoing income tax examinations being conducted by the applicable tax authorities in various foreign tax jurisdictions with respect to certain PMC entities.

It appears reasonably possible that the amounts of unrecognized income tax benefits and indemnification liabilities could change in the next twelve months upon conclusion of the current ongoing examinations;

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Earnings per Share

Basic net income per share from continuing and discontinued operations attributable to Zurn common stockholders is computed by dividing net income from continuing operations and income from discontinued operations attributable to Zurn common stockholders, respectively, by the corresponding weighted average number of common shares outstanding for the period.

Diluted net income per share from continuing and discontinued operations attributable to Zurn common stockholders is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares, except when the effect would be anti-dilutive.

The computation for diluted net income per share for the three months ended March 31, 2022 and March 31, 2021, excludes 0.2 million and 0.2 million common shares due to their anti-dilutive effects, respectively.

Basic net income per share from continuing and discontinued operations attributable to Zurn Elkay common stockholders is computed by dividing net income from continuing operations and income from discontinued operations attributable to Zurn Elkay common stockholders, respectively, by the corresponding weighted average number of common shares outstanding for the period.

Diluted net income per share from continuing and discontinued operations attributable to Zurn Elkay common stockholders is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares, except when the effect would be anti-dilutive.

The computation for diluted net income per share for the three and six months ended June 30, 2022 excludes 0.2 million and 0.2 million common shares due to their anti-dilutive effects, respectively.

The computation for diluted net income per share for the three and six months ended June 30, 2021 excludes 0.2 million and 0.2 million common shares due to their anti-dilutive effects, respectively.

Stockholders' Equity

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Balance at March 31, 2021 $ 1.2 $ 1,409.9 $ 154.3 $ ( 75.6 ) $ 3.1 $ 1,492.9

Total comprehensive income — — 73.2 5.3 0.1 78.6

Stock-based compensation expense — 11.6 — — — 11.6

Proceeds from exercise of stock options — 16.6 — — — 16.6

Taxes withheld and paid on employees' share-based payment awards — ( 1.4 ) — — — ( 1.4 )

Common stock dividends ($ 0.09 per share)

— — ( 10.8 ) — — ( 10.8 )

Balance at June 30, 2021 $ 1.2 $ 1,436.7 $ 216.7 $ ( 70.3 ) $ 3.2 $ 1,587.5

Common stock (1) Additional

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Balance at March 31, 2022 $ 1.3 $ 1,437.0 $ ( 1,171.7 ) $ ( 72.9 ) $ — $ 193.7

Total comprehensive income (loss) — — 36.4 ( 2.0 ) — 34.4

Stock-based compensation expense — 3.8 — — — 3.8

Proceeds from exercise of stock options — 1.3 — — — 1.3

Common stock dividends ($ 0.03 per share)

— ( 3.8 ) — — — ( 3.8 )

(1) During the three months ended March 31, 2022 and March 31, 2021, the Company issued 127,001 and 189,629 shares of common stock upon the exercise of stock options, vesting of restricted stock units, and for other common stock awards, respectively.

(2) Non-controlling interest through the Spin-Off Transaction represents a 5 % non-controlling interest in a PMC joint venture relationship.

Balance at June 30, 2022 $ 1.3 $ 1,438.3 $ ( 1,135.3 ) $ ( 74.9 ) $ — $ 229.4

____________________

(1) During the three and six months ended June 30, 2022, the Company issued 335,177 and 462,178 shares of common stock upon the exercise of stock options, vesting of restricted stock units, and for other common stock awards, respectively.

(2) Non-controlling interest through the Spin-Off Transaction represented a 5 % non-controlling interest in a PMC joint venture relationship.

The Company has no remaining non-controlling interest subsequent to the Spin-Off Transaction.

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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.

The Company did no t repurchase any shares during the three months ended March 31, 2022.

During the three months ended March 31, 2021, the Company repurchased 22,300 shares of common stock at a total cost of $ 0.9 million at a weighted average price of $ 39.27 per share.

The Company did no t repurchase any shares during the three and six months ended June 30, 2022.

During the six months ended June 30, 2021, the Company repurchased 22,300 shares of

common stock at a total cost of $ 0.9 million at a weighted average price of $ 39.27 per share.

The repurchased shares were canceled by the Company upon receipt.

A total of approximately $ 162.8 million of the existing authority remained under the Repurchase Program at March 31, 2022 .

A total of approximately $ 162.8 million of the existing authority remained under the Repurchase Program at June 30, 2022.

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2022, are as follows (in millions):

The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2022, are as follows (in millions):

Foreign Currency Translation and Other Pension and Postretirement Plans Total

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Amounts reclassified from accumulated other comprehensive loss — — —

Net current period other comprehensive income 2.0 — 2.0

Balance at March 31, 2022 $ ( 68.9 ) $ ( 4.0 ) $ ( 72.9 )

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the three months ended March 31, 2022 and March 31, 2021 (in millions):

Three Months Ended

March 31, 2022 March 31, 2021 Income Statement Line

Net current period other comprehensive loss — — —

Balance at June 30, 2022 $ ( 70.9 ) $ ( 4.0 ) $ ( 74.9 )

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the three and six months ended June 30, 2022 and June 30, 2021 (in millions):

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 Income Statement Line

Pension and other postretirement plans

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The major classes of inventories are summarized as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Finished goods $ 217.2 $ 169.1

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Goodwill and Intangible Assets

The changes in the net carrying value of goodwill for the three months ended March 31, 2022, are presented below (in millions):

The changes in the net carrying value of goodwill for the six months ended June 30, 2022, are presented below (in millions):

Net carrying amount as of December 31, 2021 $ 254.1

Currency translation adjustments ( 0.2 )

Net carrying amount as of March 31, 2022 $ 255.0

The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of March 31, 2022 and December 31, 2021 are as follows (in millions):

March 31, 2022

Purchase accounting adjustments (1) ( 1.3 )

Net carrying amount as of June 30, 2022 $ 252.6

(1) Refer to Note 2, Acquisitions for additional information regarding the purchase accounting adjustments.

The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of June 30, 2022 and December 31, 2021 are as follows (in millions):

June 30, 2022

Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount

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Total intangible assets, net 15 years $ 474.6 $ ( 295.5 ) $ 179.1

Intangible asset amortization expense totaled $ 3.0 million and $ 6.1 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

Intangible asset amortization expense totaled $ 1.6 million and $ 5.8 million for the three months ended June 30, 2022 and June 30, 2021, respectively.

Intangible asset amortization expense totaled $ 4.6 million and $ 11.9 million for the six months ended June 30, 2022 and June 30, 2021, respectively.

Customer relationships acquired during the year ended December 31, 2021 were assigned a weighted-average useful life of 10 years.

There were no intangible assets acquired during the three months ended March 31, 2022.

The Company expects to recognize amortization expense on the intangible assets subject to amortization of $ 7.9 million in the year ending December 31, 2022 (inclusive of the $ 3.0 million of amortization expense recognized in the three months ended March 31, 2022), $ 6.5 million in 2023, $ 6.5 million in 2024, $ 6.5 million in 2025, $ 6.3 million in 2026 and $ 6.3 million in 2027.

There were no intangible assets acquired during the six months ended June 30, 2022.

The Company expects to recognize amortization expense on the intangible assets subject to amortization of $ 7.9 million in the year ending December 31, 2022 (inclusive of the $ 4.6 million of amortization expense recognized in the six months ended June 30, 2022), $ 6.5 million in 2023, $ 6.5 million in 2024, $ 6.4 million in 2025, $ 6.3 million in 2026 and $ 6.3 million in 2027.

Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Commissions $ 9.3 $ 8.1

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Sales rebates 35.5 38.6

Taxes payable on behalf of PMC 21.9 21.9

Tax indemnities 21.9 21.9

Taxes, other than income taxes 1.6 1.8

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Long-term debt is summarized as follows (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Term loan (1) $ 537.3 $ 539.2

Finance leases and other subsidiary debt (2) 0.3 0.3

Finance leases (2) 0.2 0.3

Total 537.5 539.5

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____________________

(1) Includes unamortized debt issuance costs of $ 10.4 million and $ 10.8 million at March 31, 2022 and December 31, 2021, respectively.

(1) Includes unamortized debt issuance costs of $ 10.0 million and $ 10.8 million at June 30, 2022 and December 31, 2021, respectively.

(2) Refer to Note 14, Leases, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding leases.

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The Credit Agreement is funded by a syndicate of banks and other financial institutions and provides for (i) a $ 550.0 million term loan facility (the “Term Loan”) and (ii) a $ 200.0 million revolving credit facility (the “Revolving Credit Facility”).

The obligations under the Credit Agreement and related documents are secured by liens on substantially all of the assets of Holdings, the Borrowers, and certain subsidiaries of the Borrowers pursuant to a Third Amended and Restated Guarantee and Collateral Agreement, dated as of October 4, 2021, among Holdings, the Borrowers, the subsidiaries of the Borrowers party thereto, and the Administrative Agent, and certain other collateral documents.

The obligations under the Credit Agreement and related documents are secured by liens on substantially all of the assets of Holdings, the Borrowers, and certain subsidiaries of the Borrowers pursuant to a Third Amended and Restated Guarantee and Collateral Agreement, dated as of October 4, 2021 (the "Collateral Agreement"), among Holdings, the Borrowers, the subsidiaries of the Borrowers party thereto, and the Administrative Agent, and certain other collateral documents.

The Credit Agreement contains representations, warranties, covenants and events of default, including, without limitation, a financial covenant under which the Borrowers are, if certain conditions are met, obligated to maintain on a consolidated basis, as of the end of each fiscal quarter, a certain maximum Net First Lien Leverage Ratio (as defined in the Credit Agreement).

As of March 31, 2022, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.

As of June 30, 2022, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.

See Note 18, Subsequent Events for additional information on an amendment to the Credit Agreement entered into in connection with the Merger.

The Term Loan has a maturity date of October 4, 2028.

Commencing on March 31, 2022, the Borrowers are required to make quarterly payments of principal in an amount equal to $ 1.4 million on each quarter until the maturity date.

The Borrowers are required to make quarterly payments of principal in an amount equal to $ 1.4 million on each quarter until the maturity date.

The Term Loan bears interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case, plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter.

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In the event the Borrowers’ Net First Lien Leverage Ratio is less than or equal to 1.80 to 1.00, the applicable margin on both base rate and LIBOR borrowings would decrease by 0.25 %.

The Borrowers’ Net First Lien Leverage Ratio was 2.36 to 1.0 as of March 31, 2022.

Certain prepayments of the Term Loan occurring on or prior to April 4, 2022 are subject to a 1.00 % prepayment penalty.

At March 31, 2022 and for the three months ended, the borrowings under the Term Loan had weighted-average effective interest rates of 2.75 % and 2.75 %, respectively.

The Borrowers’ Net First Lien Leverage Ratio was 2.08 to 1.00 as of June 30, 2022.

At June 30, 2022 and for the six months ended, the borrowings under the Term Loan had weighted-average effective interest rates of 4.04 % and 2.90 %, respectively.

Revolving Credit Facility

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If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the applicable margin shall equal 1.00 % in the case of base rate borrowings and 2.00 % in the case of LIBOR borrowings.

In the event the Borrowers' Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the applicable margin on both base rate and LIBOR borrowings would decrease by 0.25 %.

The Borrowers’ Net First Lien Leverage Ratio was 2.36 to 1.0 as of March 31, 2022.

The Borrowers are also required to pay a quarterly commitment fee on the average daily unused portion of the

Revolving Credit Facility for each fiscal quarter and fees in connection with the issuance of letters of credit.

In the event the Borrowers' Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the applicable margin on both base rate

and LIBOR borrowings would decrease by 0.25 %.

The Borrowers’ Net First Lien Leverage Ratio was 2.08 to 1.00 as of June 30, 2022.

The Borrowers are also required to pay a quarterly commitment fee on the average daily unused portion of the Revolving Credit Facility for each fiscal quarter and fees in connection with the issuance of letters of credit.

If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the commitment fee shall equal 0.50 %, and if the Company's Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the commitment fee shall equal 0.375 %.

At March 31, 2022 and December 31, 2021, there were no amounts borrowed under the Revolving Credit Facility.

As of March 31, 2022 and December 31, 2021, $ 6.1 million and $ 6.1 million of the Revolving Credit Facility were considered utilized in connection with outstanding letters of credit, respectively.

At June 30, 2022 and December 31, 2021, there were no amounts borrowed under the Revolving Credit Facility.

As of June 30, 2022 and December 31, 2021, $ 6.1 million and $ 6.1 million of the Revolving Credit Facility were considered utilized in connection with outstanding letters of credit, respectively.

Finance leases and other subsidiary debt

At March 31, 2022 and December 31, 2021, various wholly owned subsidiaries had additional debt of $ 0.3 million and $ 0.3 million, respectively, comprised primarily of finance lease obligations.

At June 30, 2022 and December 31, 2021, the Company had finance lease obligations of $ 0.2 million and $ 0.3 million, respectively.

See Note 14, Leases in the audited consolidated financial statements of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding leases.

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Deferred compensation plan liabilities are classified within other liabilities on the condensed consolidated balance sheets.

The following table provides a summary of the Company's assets and liabilities that were recognized at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 (in millions):

Fair Value as of March 31, 2022

The following table provides a summary of the Company's assets and liabilities that were recognized at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in millions):

Fair Value as of June 30, 2022

Level 1 Level 2 Level 3 Total

5 unchanged sentences

Deferred compensation plan liabilities 16.3 — — 16.3

There were no transfers of assets between levels at March 31, 2022 and December 31, 2021, respectively.

There were no transfers of assets between levels at June 30, 2022 and December 31, 2021, respectively.

Fair Value of Non-Derivative Financial Instruments

The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at March 31, 2022 and December 31, 2021, due to the short-term nature of those instruments.

The fair value of long-term debt as of March 31, 2022 and December 31, 2021, was approximately $ 545.5 million and $ 552.4 million, respectively.

The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at June 30, 2022 and December 31, 2021, due to the short-term nature of those instruments.

The fair value of long-term debt as of June 30, 2022 and December 31, 2021, was approximately $ 534.5 million and $ 552.4 million, respectively.

The fair value is based on quoted market prices for the same instruments.

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The following table presents changes in the Company’s product warranty liability (in millions):

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

Balance at beginning of period $ 1.3 $ 1.2

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Certain Company subsidiaries are subject to asbestos litigation.

As of March 31, 2022, Zurn and numerous other unrelated companies were defendants in approximately 6,000 asbestos related lawsuits representing approximately 7,000 claims.

As of June 30, 2022, Zurn and numerous other unrelated companies were defendants in approximately 6,000 asbestos related lawsuits representing approximately 7,000

Plaintiffs' claims allege personal injuries caused by exposure to asbestos used primarily in industrial boilers formerly manufactured by a segment of Zurn.

2 unchanged sentences

These claims are being handled pursuant to a defense strategy funded by insurers.

As of March 31, 2022, the Company estimates the potential liability for the asbestos-related claims described above, as well as the claims expected to be filed in the next ten years , to be approximately $ 66.0 million, of which Zurn expects its insurance carriers to pay approximately $ 49.0 million in the next ten years on such claims, with the balance of the estimated liability being paid in subsequent years.

As of June 30, 2022, the Company estimates the potential liability for the asbestos-related claims described above, as well as the claims expected to be filed in the next ten years , to be approximately $ 66.0 million, of which Zurn expects its insurance carriers to pay approximately $ 49.0 million in the next ten years on such claims, with the balance of the estimated liability being paid in subsequent years.

The $ 66.0 million was developed based on actuarial studies and represents the projected indemnity payout for current and future claims.

2 unchanged sentences

The liability for the asbestos-related claims is recorded in reserve for asbestos claims within the condensed consolidated balance sheets.

Management estimates that its available insurance to cover this potential asbestos liability as of March 31, 2022 is in excess of the ten year estimated exposure, and accordingly, believes that all current claims are covered by insurance.

As of March 31, 2022, the Company had a recorded receivable from its insurance carriers of $ 66.0 million, which corresponds to the amount of this potential asbestos liability that is covered by available insurance and is currently determined to be probable of recovery.

Management estimates that its available insurance to cover this potential asbestos liability as of June 30, 2022 is in excess of the ten year estimated exposure, and accordingly, believes that all current claims are covered by insurance.

As of June 30, 2022, the Company had a recorded receivable from its insurance carriers of $ 66.0 million, which corresponds to the amount of this potential asbestos liability that is covered by available insurance and is currently determined to be probable of recovery.

However, there is no assurance the Company's current insurance coverage will ultimately be available or that this asbestos liability will not ultimately exceed the Company's coverage limits.

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The components of net periodic benefit cost are as follows (in millions):

Three Months Ended

March 31, 2022 March 31, 2021

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Pension Benefits:

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The Company recognizes the net actuarial gains or losses in excess of the corridor in operating results during the final quarter of each fiscal year (or upon any required re-measurement event).

During the three months ended March 31, 2022 and March 31, 2021, the Company made contributions of $ 0.2 million and $ 0.1 million, respectively, to its qualified pension plan trusts.

During the six months ended June 30, 2022 and June 30, 2021, the Company made contributions of $ 0.7 million and $ 1.8 million, respectively, to its qualified pension plan trusts.

Prior year amounts disclosed within this note include amounts attributable to the Company's discontinued operations, unless otherwise noted.

2 unchanged sentences

Stock-Based Compensation

The Zurn Water Solutions Corporation Performance Incentive Plan (the "Plan") is utilized to provide performance incentives to the Company's officers, employees, directors and certain others by permitting grants of equity awards (for common stock), as well as performance-based cash awards, to such persons to encourage them to maximize Zurn's performance and create value for Zurn's stockholders.

For the three months ended March 31, 2022 and March 31, 2021, the Company recognized $ 3.9 million and $ 9.1 million of stock-based compensation expense, respectively.

During the three months ended March 31, 2022, the Company granted the following restricted stock units, performance stock units and common stock to directors, executive officers, and certain other employees:

The Zurn Elkay Water Solutions Corporation Performance Incentive Plan (the "Plan") is utilized to provide performance incentives to the Company's officers, employees, directors and certain others by permitting grants of equity awards (for common stock), as well as performance-based cash awards, to such persons to encourage them to maximize the Company's performance and create value for the Company's stockholders.

For the three months ended June 30, 2022 and June 30, 2021, the Company recognized $ 3.8 million and $ 7.1 million of stock-based compensation expense, respectively.

For the six months ended June 30, 2022 and June 30, 2021, the Company recognized $ 7.7 million and $ 16.2 million of stock-based compensation expense, respectively.

During the six months ended June 30, 2022, the Company granted the following restricted stock units, performance stock units and common stock to directors, executive officers, and certain other employees:

Award Type Number of Awards Weighted Average Grant-Date Fair Value

Stock options 2,650 $ 12.27

Restricted stock units 13,132 $ 33.51

2 unchanged sentences

See Note 15, Stock-Based Compensation, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, for further information regarding stock-based compensation.

Subsequent Events

Elkay Transaction;

Credit Agreement Amendment

On July 1, 2022, in accordance with the terms and conditions of the Merger Agreement, dated February 12, 2022, the Company announced it had closed the Merger with Elkay.

Under the terms of the transaction agreements, subject to certain holdbacks and post-closing adjustments, the merger consideration to Elkay shareholders consisted of approximately 51.6 million shares of Zurn common stock, which results in former Elkay shareholders owning approximately 29 % of the combined company.

Elkay, a market leader of commercial drinking water solutions, complements the Company's existing product portfolio.

Following the closing of the Elkay Transaction, Zurn changed its legal name from Zurn Water Solutions Corporation to Zurn Elkay Water Solutions Corporation.

Zurn Elkay common stock will continue to trade on the New York Stock Exchange under the ticker symbol “ZWS.”

In connection with the consummation of the Merger, on July 1, 2022, Holdings, the Borrowers, Elkay and the other loan parties party thereto entered into that certain Amendment No.

1 (the “Amendment”) to the Fourth Amended and Restated First Lien Credit Agreement (the “Credit Agreement”) pursuant to which Elkay joined the Credit Agreement as a Borrower.

Elkay and its domestic subsidiaries also granted security interests in substantially all of their personal property assets to secure the obligations under the Credit Agreement pursuant to that certain Supplement No.

1 dated as of July 1, 2022 to the Collateral Agreement and certain other collateral documents.

The Company has estimated the total consideration transferred for the acquisition of Elkay to be approximately $ 1.4 billion, subject to finalization of purchase accounting and working capital adjustments.

Pro forma revenues and earnings have not been presented as the initial accounting for the Elkay Transaction is incomplete as of the date the consolidated financial statements are issued.

The Company is in the process of assessing the fair value of the acquired tangible assets, liabilities assumed and any applicable intangible assets and liabilities for this business combination.

On July 21, 2022, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $ 0.07 per-share to be paid on September 7, 2022, to stockholders of record as of August 19, 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