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Item 2. Management’s Discussion and Analysis

2022-07-26 compared with 2022-04-27 · 113 added, 85 removed, 125 unchanged (61% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Zurn is a growth-oriented, pure-play water business that designs, procures, manufactures, and markets what we believe is the broadest sustainable product portfolio of water management solutions to improve health, human safety and the environment.

Our product portfolio includes professional grade water control and safety, water distribution and drainage, finish plumbing, hygienic and environmental and site works products for public and private spaces.

As previously disclosed, on July 1, 2022, we completed our 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").

In conjunction with the Merger, we changed our name from Zurn Water Solutions Corporation to Zurn Elkay Water Solutions Corporation.

Our results of operations will include the acquired operations subsequent to July 1, 2022.

See Item 1, Note 18, Subsequent Events for additional information on the Elkay Transaction.

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

Our 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.

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

We operate in a disciplined way and the Zurn Business System (“ZBS”) is our 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 our business.

We operate in a disciplined way and the Zurn Elkay Business System (“ZEBS”), described below, is our 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 our business.

The following information should be read in conjunction with the audited consolidated financial statements and notes thereto, along with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), in our Annual Report on Form 10-K for the year ended December 31, 2021.

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Refer to Item 7, MD&A, of our Annual Report on Form 10-K for the year ended December 31, 2021 for information with respect to our critical accounting policies which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management.

Except for the items reported below, management believes that as of March 31, 2022, and during the period from January 1, 2022 through March 31, 2022, there has been no material change to this information.

Except for the items reported below, management believes that as of June 30, 2022, and during the period from January 1, 2022 through June 30, 2022, there has been no material change to this information.

Recent Accounting Pronouncements

See Item 1, Note 1, Basis of Presentation and Significant Accounting Policies regarding recent accounting pronouncements.

On February 12, 2022, we 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 Zurn, Elkay, Zebra Merger Sub, Inc., a wholly-owned subsidiary of Zurn (“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 Zurn (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”), we will exchange, for 100% of the outstanding equity of Elkay, up to 52.5 million newly issued shares of our 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”).

We anticipate the Merger 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 Zurn 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 our 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 Zurn or Elkay.

On November 17, 2021, we 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.

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.

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, we 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 our existing flow systems product portfolio.

On April 16, 2021, we acquired substantially all of the assets of Advance Technology Solutions, LLC (d/b/a ATS GREASEwatch) ("ATS GREASEwatch") for a total cash purchase price of $4.5 million.

ATS GREASEwatch, headquartered in Saginaw, Michigan, develops, manufactures and markets remote tank monitoring devices, alarms, software and services for various applications and provides technology to enhance and expand our current product offerings within our existing Water Management platform.

Spin-Off of Process & Motion Control Segment

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

(“Land”), (ii) the shares of Land were distributed to our 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, our name was changed to “Zurn Water Solutions Corporation” and the ticker symbol for our shares of common stock trading on the New York Stock Exchange was changed to “ZWS”.

During the three months ended March 31, 2022, we 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.

During the six months ended June 30, 2022, we 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 operating results of PMC are reported as discontinued operations in our condensed consolidated statements of operations for all periods presented.

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

The condensed consolidated statements of cash flows for the period ended June 30, 2021 has not been adjusted to separately disclose cash flows related to the discontinued operations.

See Item 1, Note 4, Discontinued Operations for additional information on cash flows associated with the discontinued operations.

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 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

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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)

Actuarial loss on pension and postretirement benefit obligations — —

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

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Results of Operations

Three Months Ended March 31, 2022 compared with the Three Months Ended March 31, 2021:

Three Months Ended June 30, 2022 compared with the Three Months Ended June 30, 2021:

(Dollars in Millions)

Three Months Ended

March 31, 2022 March 31, 2021 Change % Change

June 30, 2022 June 30, 2021 Change % Change

Net Sales $ 284.2 $ 243.7 $ 40.5 16.6 %

Net sales were $239.6 million during the three months ended March 31, 2022, an increase of 17% year over year.

Excluding a 2% increase to net sales resulting from our prior-year acquisition, core sales increased 15% year over year as all of our product categories contributed to the sales growth.

Net sales were $284.2 million during the three months ended June 30, 2022, an increase of 17% year over year.

Excluding a 2% increase to net sales resulting from our prior-year acquisition, core sales increased 15% year over year as nearly all of our product categories contributed to the sales growth.

Income from operations

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Three Months Ended

March 31, 2022 March 31, 2021 Change % Change

June 30, 2022 June 30, 2021 Change % Change

Income from operations $ 53.5 $ 37.3 $ 16.2 43.4 %

% of net sales 18.8 % 15.3 % 3.5 %

Income from operations was $43.9 million during the three months ended March 31, 2022, or 18.3% of net sales.

Income from operations as a percentage of net sales increased by 660 basis points primarily as a result of the favorable impact of year-over-year sales growth (inclusive of price realization), productivity savings, lower non-cash stock-based compensation expense, lower intangible asset amortization and the year-over-year change in the adjustment to state inventories at last-in-first-out cost, all of which was partially offset by the year-over-year increases in material and transportation costs, as well as incremental growth and productivity investments.

Income from operations was $53.5 million during the three months ended June 30, 2022, or 18.8% of net sales.

Income from operations as a percentage of net sales increased by 350 basis points primarily as a result of the favorable impact of year-over-year sales growth (inclusive of price realization), productivity savings and the lower intangible asset amortization and non-cash stock-based compensation expense, all of which was partially offset by the year-over-year increases in material and transportation costs, as well as incremental growth and productivity investments.

Interest expense, net

Interest expense, net was $4.8 million during the three months ended March 31, 2022, compared to $9.6 million during the three months ended March 31, 2021.

The decrease in interest expense as compared to the prior year's period is primarily a result of the lower outstanding borrowings following the Spin-Off Transaction refinancing.

Interest expense, net was $5.2 million during the three months ended June 30, 2022, compared to $10.1 million during the three months ended June 30, 2021.

The decrease in interest expense as compared to the prior year period is primarily a result of the lower outstanding borrowings following the Spin-Off Transaction refinancing, partially offset by a higher year over year interest rate.

See Item 1, Note 13 Long-Term Debt for more information.

Other income, net

Other income, net during the three months ended March 31, 2022 and 2021, was $0.3 million and $0.3 million, respectively.

Other income, net consists primarily of foreign currency transaction gains and losses and the non-service cost components associated with our defined benefit plans.

Other expense, net

Other expense, net during the three months ended June 30, 2022 and 2021, was $0.6 million and $0.4 million, respectively.

Other expense, net consists primarily of foreign currency transaction gains and losses and the non-service cost components associated with our defined benefit plans.

Provision for income taxes

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.

On a quarterly basis, we review and analyze our valuation allowances associated with deferred tax assets relating to certain foreign and state net operating loss carryforwards as well as U.S.

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

Net income attributable to Zurn common stockholders

Net income attributable to Zurn common stockholders during the three months ended March 31, 2022, was $30.2 million compared to $50.0 million during the three months ended March 31, 2021.

Diluted net income per share attributable to Zurn common stockholders for the three months ended March 31, 2022 and March 31, 2021, was $0.24 and $0.40, respectively, as a result of the factors described above.

Net income from discontinued operations, net of tax, was $0.8 million for the three months ended March 31, 2022 compared to $40.0 million for the three months ended March 31, 2021.

Diluted net income per share from discontinued operations for the three months ended March 31, 2022 and March 31, 2021, was $0.01 and $0.32, respectively.

Net income attributable to Zurn Elkay common stockholders

Net income attributable to Zurn Elkay common stockholders during the three months ended June 30, 2022, was $36.4 million compared to $73.2 million during the three months ended June 30, 2021.

Diluted net income per share attributable to Zurn Elkay common stockholders for the three months ended June 30, 2022 and June 30, 2021, was $0.28 and $0.59, respectively.

The year over year change is the result of the PMC operations classified as discontinued operations in the prior year and the other factors described above.

Net income from discontinued operations, net of tax, was $0.0 million for the three months ended June 30, 2022 compared to $52.6 million for the three months ended June 30, 2021.

Diluted net income per share from discontinued operations for the three months ended June 30, 2022 and June 30, 2021, was $0.00 and $0.42, respectively.

Six Months Ended June 30, 2022 compared with the Six Months Ended June 30, 2021:

(Dollars in Millions)

Six Months Ended

June 30, 2022 June 30, 2021 Change % Change

Net Sales $ 523.8 $ 448.9 $ 74.9 16.7 %

Net sales were $523.8 million during the six months ended June 30, 2022, an increase of 17% year over year.

Excluding a 2% increase in net sales resulting from our prior-year acquisition, core sales increased 15% as nearly all of our product categories contributed to the sales growth.

Income from operations

(Dollars in Millions)

Six Months Ended

June 30, 2022 June 30, 2021 Change % Change

Income from operations 97.4 61.3 36.1 58.9 %

% of net sales 18.6 % 13.7 % 4.9 %

Income from operations was $97.4 million during the six months ended June 30, 2022, or 18.6% of net sales.

Income from operations as a percentage of net sales increased by 490 basis points primarily as a result of the favorable impact of year-over-year sales growth (inclusive of price realization), productivity savings, lower non-cash stock-based compensation expense, lower intangible asset amortization and the year-over-year change in the adjustment to state inventories at last-in-first-out cost, all of which was partially offset by the year-over-year increases in material and transportation costs, as well as incremental growth and productivity investments.

Interest expense, net

Interest expense, net was $10.0 million during the six months ended June 30, 2022, compared to $19.7 million during the six months ended June 30, 2021.

See Item 1, Note 13 Long-Term Debt for more information.

Other expense, net

Other expense, net during the six months ended June 30, 2022 and 2021 was $0.3 million and $0.1 million, respectively.

Other expense, net consists primarily of foreign currency transaction gains and losses and the non-service cost components associated with our defined benefit plans.

Provision for income taxes

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

Net income attributable to Zurn Elkay common stockholders

Net income attributable to Zurn Elkay common stockholders during the six months ended June 30, 2022, was $66.6 million compared to $123.2 million during the six months ended June 30, 2021.

Diluted net income per share attributable to Zurn Elkay common stockholders for the six months ended June 30, 2022 and June 30, 2021, was $0.52 and $0.99, respectively.

The year over year change is the result of the PMC operations classified as discontinued operations in the prior year and the other factors described above.

Net income from discontinued operations, net of tax, was $0.8 million for the six months ended June 30, 2022 compared to $92.6 million for the six months ended June 30, 2021.

Diluted net income per share from discontinued operations for the six months ended June 30, 2022 and June 30, 2021, was $0.01 and $0.75, respectively.

Non-GAAP Financial Measures

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Adjusted EBITDA (as described below in “Covenant Compliance”) is an important measure because, under our credit agreement, our ability to incur certain types of acquisition debt and certain types of subordinated debt, make certain types of acquisitions or asset exchanges, operate our business and make dividends or other distributions, all of which will impact our financial performance, is impacted by our Adjusted EBITDA, as our lenders measure our performance with a net first lien leverage ratio by comparing our senior secured bank indebtedness to our Adjusted EBITDA (see “Covenant Compliance” for additional discussion of this ratio, including a reconciliation to our net income).

We reported net income attributable to Zurn common stockholders in the three months ended March 31, 2022, of $30.2 million and Adjusted EBITDA for the same period of $52.0 million.

We reported net income attributable to Zurn Elkay common stockholders in the six months ended June 30, 2022, of $66.6 million and Adjusted EBITDA for the same period of $116.3 million.

See “Covenant Compliance” for a reconciliation of Adjusted EBITDA to GAAP net income.

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Certain covenants contained in the credit agreement restrict our ability to take certain actions, such as incurring additional debt or making acquisitions, if we are unable to meet a maximum total net leverage ratio of 5.00 to 1.00 as of the end of each fiscal quarter.

At March 31, 2022, our net leverage ratio was 2.36 to 1.0.

At June 30, 2022, our net leverage ratio was 2.08 to 1.00.

Failure to comply with these covenants could limit our long-term growth prospects by hindering our ability to borrow under the revolver, to obtain future debt and/or to make acquisitions.

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Further, although not included in the calculation of Adjusted EBITDA below, the measure may at times allow us to add estimated cost savings and operating synergies related to operational changes ranging from acquisitions or dispositions to restructuring, and/or exclude one-time transition expenditures that we anticipate we will need to incur to realize cost savings before such savings have occurred.

The calculation of Adjusted EBITDA under our credit agreement as of March 31, 2022, is presented in the table below.

The calculation of Adjusted EBITDA under our credit agreement as of June 30, 2022, is presented in the table below.

However, the results of such calculation could differ in the future based on the different types of adjustments that may be included in such respective calculations at the time.

Set forth below is a reconciliation of net income attributable to Zurn common stockholders to Adjusted EBITDA for the periods indicated below.

(in millions) Three months ended

March 31, 2021 Twelve months ended

December 31, 2021 Three months ended

March 31, 2022 Twelve months ended

March 31, 2022

Net income attributable to Zurn common stockholders $ 50.0 $ 120.9 $ 30.2 $ 101.1

(in millions) Six months ended

June 30, 2021 Twelve months ended

December 31, 2021 Six months ended

June 30, 2022 Twelve months ended

June 30, 2022

Net income attributable to Zurn Elkay common stockholders $ 123.2 $ 120.9 $ 66.6 $ 64.3

Income from discontinued operations, net of tax (1) (92.6) (71.2) (0.8) 20.6

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Actuarial gain on pension and postretirement benefit obligations — (1.2) — (1.2)

Other (income) expense, net (2) (0.3) 0.7 (0.3) 0.7

Other expense, net (2) 0.1 0.7 0.3 0.9

Loss on the extinguishment of debt — 20.4 — 20.4

16 unchanged sentences

(1) Income from discontinued operations, net of tax is not included in Adjusted EBITDA in accordance with the terms of our credit agreement.

(2) Other (income) expense, 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 costs associated with our defined benefit plans.

(2) Other expense, 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 costs associated with our defined benefit plans.

(3) Restructuring and other similar charges is comprised of costs associated with workforce reductions, lease termination costs, and other facility rationalization costs.

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(6) Represents a pro forma adjustment to include Adjusted EBITDA related to the acquisition of Wade Drains, which was permitted by our credit agreement.

The pro forma adjustment includes the period from April 1, 2021, through the date of the Wade Drains acquisition.

The pro forma adjustment includes the period from July 1, 2021, through the date of the Wade Drains acquisition.

See Item 1, Note 2 , Acquisitions for more information.

(7) Our credit agreement defines our consolidated indebtedness as the sum of all indebtedness (other than letters of credit or bank guarantees, to the extent undrawn) consisting of indebtedness for borrowed money and capitalized lease obligations, less unrestricted cash, which was $57.3 million (as defined by the credit agreement) at March 31, 2022.

(7) Our credit agreement defines our consolidated indebtedness as the sum of all indebtedness (other than letters of credit or bank guarantees, to the extent undrawn) consisting of indebtedness for borrowed money and capitalized lease obligations, less unrestricted cash, which was $95.5 million (as defined by the credit agreement) at June 30, 2022.

(8) Our credit agreement defines the total net leverage ratio as the ratio of consolidated indebtedness (as described above) to Adjusted EBITDA for the trailing four fiscal quarters.

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Our primary sources of liquidity are available cash and cash equivalents, cash flow from operations, and borrowing availability of up to $200.0 million under our revolving credit facility.

As of March 31, 2022, we had $73.2 million of cash and cash equivalents and $193.9 million of additional borrowing capacity.

As of March 31, 2022, the available borrowings under our credit facility were reduced by $6.1 million due to outstanding letters of credit.

As of June 30, 2022, we had $110.4 million of cash and cash equivalents and $193.9 million of additional borrowing capacity.

As of June 30, 2022, the available borrowings under our credit facility were reduced by $6.1 million due to outstanding letters of credit.

As of December 31, 2021, we had $96.6 million of cash and cash equivalents and approximately $193.9 million of additional borrowing capacity under our revolving credit facility.

Our revolving credit facility is available to fund our working capital requirements, capital expenditures and for other general corporate purposes.

We believe this resource is adequate for expected needs.

Cash flows for the period ended March 31, 2021 include our continuing operations and discontinued operations for the entire period, while the period ended March 31, 2022 only include the cash flows associated with continuing operations.

We believe this resource is adequate for our expected needs.

Cash flows for the period ended June 30, 2021 include our continuing operations and discontinued operations for the entire period, while the period ended June 30, 2022 only includes the cash flows associated with continuing operations.

Refer to Item 1, Note 4, Discontinued Operations for further information.

Cash (used for) provided by operating activities was $(53.9) million and $71.3 million during the three months ended March 31, 2022 and 2021, respectively.

The change in year over year operating cash flows was primarily the result of higher trade working capital and the impact of timing of payments on accounts payable and accrued expenses during the three months ended March 31, 2022.

Cash provided by investing activities was $35.5 million during the three months ended March 31, 2022 compared cash used for investing activities of $8.1 million during the three months ended March 31, 2021.

Investing activities during the three months ended March 31, 2022, included $0.8 million of capital expenditures which was offset by the receipt of $35.0 million from Regal Rexnord Corporation in connection with the final net assets transferred in the PMC Spin-Off Translation and the receipt of $1.3 million in connection with the sale of certain long-lived assets.

Investing activities during the three months ended March 31, 2021, primarily included $9.2 million of capital expenditures, partially offset by the receipt of $0.7 million in connection with the sale of certain long-lived assets and the receipt of $0.4 million in connection with finalizing the acquisition date trade working capital associated with our 2020 acquisition of Hadrian.

Cash used for financing activities was $5.2 million during the three months ended March 31, 2022, compared to $9.4 million during the three months ended March 31, 2021.

During the three months ended March 31, 2022, we utilized a net $1.4 million of cash for payments on outstanding debt, $3.8 million for the payment of common stock dividends and $0.5 million for the payment of withholding taxes on employees' share-based awards.

The three months ended March 31, 2022, also includes $0.5 million of cash proceeds associated with stock option exercises.

During the three months ended March 31, 2021, we utilized $0.5 million of cash for payments on outstanding debt, $10.8 million for the payment of common stock dividends and $0.9 million to repurchase common stock.

The three months ended March 31, 2021, also includes $2.8 million of cash proceeds associated with stock option exercises.

As of March 31, 2022, we had $538.5 million of total indebtedness outstanding as follows (in millions):

Cash (used for) provided by operating activities was $(12.0) million and $145.0 million during the six months ended June 30, 2022 and 2021, respectively.

Cash provided by investing activities was $35.4 million during the six months ended June 30, 2022 compared cash used for investing activities of $4.4 million during the six months ended June 30, 2021.

Investing activities during the six months ended June 30, 2022, included $2.0 million of capital expenditures which was offset by the receipt of $35.0 million from Regal Rexnord Corporation in connection with the final net assets transferred in the PMC Spin-Off Translation, the receipt of $1.3 million in connection with the sale of certain long-lived assets and the receipt of $1.1 million in connection with finalizing the acquisition date trade working capital associated with our 2021 acquisition of Wade Drains.

Investing activities during the six months ended June 30, 2021, primarily included $14.0 million of capital expenditures and a cash payment of $3.8 million in connection with our acquisition of ATS GREASEwatch, partially offset by the receipt of $13.0 million in connection with the sale of certain long-lived assets associated with our discontinued operations and the receipt of $0.4 million in connection with finalizing the acquisition date trade working capital associated with our 2020 acquisition of Hadrian.

Cash used for financing activities was $9.3 million during the six months ended June 30, 2022, compared to $5.6 million during the six months ended June 30, 2021.

During the six months ended June 30, 2022, we utilized a net $3.0 million of cash for payments on outstanding debt and $7.6 million for the payment of common stock dividends, which was partially offset by $1.3 million of proceeds from the exercise of stock options, net of taxes withheld and paid on employees' share-based awards.

During the six months ended June 30, 2021, we utilized $1.1 million of cash for payments on outstanding debt, $21.6 million for the payment of common stock dividends and $0.9 million to repurchase common stock, which was partially offset by $18.0 million of cash proceeds from the exercise of stock options, net of taxes withheld and paid on employees' share-based awards.

As of June 30, 2022, we had $537.5 million of total indebtedness outstanding as follows (in millions):

Total Debt at

March 31, 2022 Current Maturities of Debt Long-term

June 30, 2022

Current Maturities of Debt Long-term

Term loan (1) $ 537.3 $ 5.5 $ 531.8

Finance leases and other subsidiary debt 0.3 0.1 0.2

Finance leases 0.2 0.1 0.1

Total $ 537.5 $ 5.6 $ 531.9

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(1) Includes unamortized debt issuance costs of $10.4 million at March 31, 2022.

(1) Includes unamortized debt issuance costs of $10.0 million at June 30, 2022.

See Item 1, Note 13, Long-Term Debt for a description of our outstanding indebtedness.

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 2. Management’s Discussion and Analysis