What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-14 compared with 2022-02-09 · 103 added, 87 removed, 116 unchanged (62% of the section changed)

As previously disclosed, on October 4, 2021, Zurn Water Solutions Corporation (formerly known as Rexnord Corporation) (“Zurn,” "we," "us," "our," or 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 our Process & Motion Control 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 certain number of shares of Regal Rexnord Corporation in accordance with the exchange ratio.

As previously disclosed, on February 12, 2022, Zurn Water Solutions Corporation ("Zurn") 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, providing for the merger of Elkay with and into Merger Sub, with Elkay surviving as a wholly owned subsidiary of Zurn (the “Merger”).

On July 1, 2022, the Merger was completed following which we changed our name to “Zurn Elkay Water Solutions Corporation” (“Zurn Elkay”, "we", "us", "our", or the “Company”).

Shares of our common stock continue to trade on the New York Stock Exchange under the ticker symbol “ZWS”.

Also, as previously disclosed, 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 business were transferred to a newly created subsidiary, Land Newco, Inc.

Following completion of the Spin-Off Transaction, we changed our name 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”.

1 unchanged sentence

Process & Motion Control and Water Management.

The Process & Motion Control platform designed, manufactured, marketed and serviced a comprehensive range of specified, highly-engineered mechanical components used within complex systems.

Following the Spin-Off Transaction, the operating results and financial position of the Process & Motion Control platform are reported as discontinued operations within our consolidated financial statements, as the divestiture represented a strategic shift that had a major impact on our operations and financial results.

After completion of the Spin-Off Transaction, Zurn is a growth-oriented, pure-play water management business that designs, procures, manufactures, and markets what we believe is 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 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.

Zurn's heritage of innovation and specification have 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”), described below, 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.

Zurn is a leading provider of specification-driven water management solutions to the multi-billion dollar construction market of primarily commercial and institutional buildings and to a lesser extent to the waterworks and multi-family residential construction markets.

Our strategy is to build Zurn around a strategic platform that participates in end markets with sustainable growth characteristics where we are, or have the opportunity to become, the industry leader.

Following the Spin-Off Transaction, the operating results and financial position of the Process & Motion Control platform are reported as discontinued operations within our consolidated financial statements and we operate as a single Water Management platform.

Following the completion of the Spin-Off Transaction and 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 safety and control products, flow system products, hygienic and environmental products, and drinking water 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 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.

Zurn Elkay is a leading provider of specification-driven water management solutions to the multi-billion dollar construction market of primarily commercial and institutional buildings and to a lesser extent to the waterworks and residential construction markets.

Our strategy is to build Zurn Elkay around a strategic platform that participates in end markets with sustainable growth characteristics where we are, or have the opportunity to become, the industry leader.

We have a track record of acquiring and integrating companies and expect to continue to pursue strategic acquisitions that will broaden our product lines, allow us to move into adjacent markets and expand our geographic presence.

The demand for our products is primarily driven by new commercial and institutional building construction, the retrofit of existing structures (to make them more energy and water efficient) and, to a lesser extent, new infrastructure and multi-family residential construction.

We believe we have become a market leader in the industry by developing innovative products that meet stringent third-party regulatory, building, and plumbing code requirements and by subsequently achieving specification of our products into projects and applications.

We are led by an experienced, high-caliber management team that employs ZBS as a proven operating philosophy to drive excellence and world-class performance in all aspects of our business, and which includes our "Voice of the Customer" process to promote superior customer satisfaction.

With our broad portfolio of products, we believe we have become a market leader in the industry by developing innovative products that meet stringent third-party regulatory, building, and plumbing code requirements and by subsequently achieving specification of our products into projects and applications.

We are led by an experienced, high-caliber management team that employs ZEBS as a proven operating philosophy to drive excellence and world-class performance in all aspects of our business, and which includes our "Voice of the Customer" process to promote superior customer satisfaction.

Our physical footprint encompasses 40 principal manufacturing and warehouse facilities located primarily in North America.

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.

ZBS is based on the following principles:

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.

ZEBS is based on the following principles:

(1) strategy deployment (a long-term strategic planning process that determines annual improvement priorities and the actions necessary to achieve those priorities);

(2) measuring our performance based on customer satisfaction, or the "Voice of the Customer;" (3) involvement of all our associates in the execution of our strategy;

and (4) a culture that embraces Kaizen, the Japanese philosophy of continuous improvement.

We believe applying ZBS can yield superior growth, quality, delivery and operating costs relative to our competition, resulting in enhanced profitability and ultimately the creation of stockholder value.

As we have applied ZBS over the past several years, we have experienced improvements in growth, productivity, cost reduction and asset efficiency and believe there are opportunities to continue to improve our performance as we continue to apply ZBS.

Zurn designs, procures, manufactures, and markets what we believe is the broadest sustainable product portfolio of specification-driven water management solutions to improve health, human safety and the environment.

Our products are marketed and sold under widely recognized brand names, including Zurn®, Wilkins®, Green Turtle®, World Dryer®, StainlessDrains.com™, JUST®, Hadrian® and Wade®.

Over the past century, Zurn has established itself as an innovator and leading designer, manufacturer and distributor of highly engineered products and solutions that control the flow, delivery, treatment and conservation of water as well as human hygiene to and within institutional and commercial buildings and, to a lesser extent, for waterworks and multi-family residential applications.

and (4) a culture that embraces Kaizen, the Japanese philosophy of continuous improvement and the concepts around 80/20 simplification.

We believe applying ZEBS can yield superior growth, quality, delivery and operating costs relative to our competition, resulting in enhanced profitability and ultimately the creation of stockholder value.

As we have applied ZEBS over the past several years, we have experienced improvements in growth, productivity, cost reduction and asset efficiency and believe there are opportunities to continue to improve our performance as we continue to apply ZEBS.

Zurn Elkay designs, procures, manufactures, and markets what we believe is the broadest sustainable product portfolio of specification-driven water management solutions to promote health, provide clean drinking water, conserve and protect natural resources and help keep people safe.

Our products are marketed and sold under widely recognized brand names, including Zurn®, Elkay®, Wilkins®, Green Turtle®, World Dryer®, StainlessDrains.com™, JUST®, Hadrian®, Wade®, and Halsey Taylor®.

Over the past century, Zurn Elkay has established itself as an innovator and leading designer, manufacturer and distributor of highly engineered products and solutions that control the flow, delivery, treatment and conservation of water as well as human hygiene to and within institutional and commercial buildings and, to a lesser extent, for waterworks and residential applications.

The institutional construction end users include education, healthcare, and government segments.

1 unchanged sentence

The waterworks end users include, municipal water and wastewater and transportation segments.

The demand for our products is primarily driven by new commercial and institutional building construction, the retrofit of existing structures (to make them more energy and water efficient) and, to a lesser extent, new waterworks and multi-family residential construction.

Our products are principally specification-driven as they deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time while meeting the stringent county-specific regulatory, building, and plumbing code requirements.

The majority of these stringent testing and regulatory approval processes are completed through the Foundation for Cross-Connection Control and Hydraulic Research at the University of Southern California, the International Association of Plumbing and Mechanical Officials ("IAPMO"), the National Sanitation Foundation ("NSF"), ASTM International ("ASTM") the Plumbing and Drainage Institute ("PDI"), the Underwriters Laboratories ("UL"), Factory Mutual ("FM") and the American Waterworks Association ("AWWA") prior to the commercialization of our products.

In addition, our products are project-critical and typically represent a low percentage of the overall project cost.

We believe these characteristics, coupled with our extensive distribution network, create a high level of end-user loyalty for our products and allow us to achieve specification of our products into projects and applications and maintain leading market shares in the majority of our product lines.

Our products are principally specification-driven given their technical design and ability to meet certain performance characteristics.

They deliver superior value to building owners, positively impact the environment and human health and hygiene and reduce product installation time while meeting the stringent county-specific regulatory, building, and plumbing code requirements.

These stringent testing and regulatory approval processes are completed principally through the Foundation for Cross-Connection Control and Hydraulic Research at the University of Southern California, the International Association of Plumbing and Mechanical Officials ("IAPMO"), the National Sanitation Foundation ("NSF"), ASTM International ("ASTM"), the Plumbing and Drainage Institute ("PDI"), Underwriters Laboratories ("UL"), Factory Mutual ("FM") and the American Waterworks Association ("AWWA") typically prior to the commercialization of our products.

Our products are project-critical and typically represent a low percentage of the overall project cost.

We believe these characteristics, coupled with our extensive distribution network, create a high level of end-user loyalty for our products and allow us to achieve specification of our products into projects and applications and to maintain leading market shares in the majority of our product lines.

We utilize an extensive sales and marketing network spanning approximately 30 countries, which consists of approximately 1,070 independent sales representatives across 190 sales agencies.

Specifically, it has been our experience that, once an architect, engineer, contractor, or owner has specified our product with satisfactory results, that person will generally continue to use our products in future projects.

The inclusion of our products with project specifications, combined with our ability to innovate, engineer, and deliver products and systems that save time and money for engineers, architects, contractors and builders and has resulted in growing demand for our products.

The inclusion of our products with project specifications, combined with our ability to innovate, engineer, and deliver products and systems that save time and money in both installation and over the life of the product for engineers, architects, contractors and builders, and has resulted in growing demand for our products.

Our distribution model is predicated upon maintaining high product availability near our customers.

We believe this model provides us with a competitive advantage as we can meet our customer demand with local inventory at significantly reduced lead times as compared with others in our industry.

We evaluate our competitive position in our markets based on available market data, relevant benchmarks compared to our relative group and industry trends.

We evaluate our competitive position in our markets based on available market data, relevant benchmarks compared to our relative peer group and industry trends.

We generally do not participate in segments of our served markets that have been commoditized or in applications that do not require differentiation based on product quality, reliability and innovation.

We serve a broad and diverse array of commercial and industrial end markets with solid fundamental long-term growth characteristics.

We serve a broad and diverse array of institutional, commercial and industrial end markets, and to a lesser extent waterworks and residential end markets, with solid fundamental long-term growth characteristics.

We believe there continues to be long-term growth potential in our markets.

The markets in which we participate are relatively fragmented with competitors across a broad range of industries, sectors, and product lines.

Although competition exists across all of our businesses, we do not believe that any one competitor directly competes with us across all of our product lines.

We believe our served markets are growing long term at relatively strong rates, and that the growing demand for water conservation, quality, hygienic solutions and safety can potentially support

market growth above that of overall United States industrial production.

Although competition exists across all of our businesses, we do not believe that any one competitor directly competes with us across the breadth of all of our product lines.

We believe our served markets are growing long term at relatively strong rates, and that the growing demand for water safety, conservation, hygienic solutions, availability of clean drinking water, and the elimination of plastic water bottles can potentially support market growth above that of overall United States industrial production.

We believe that we can continue to grow our platform long term at rates above the growth rate of the overall market and the growth rate of our competition, by focusing our efforts and resources towards end markets that have above-average growth characteristics.

We believe the areas in which we compete are tied to growth in commercial and institutional construction, as well as, to a lesser extent, waterworks.

We believe the areas in which we compete are primarily tied to growth in commercial and institutional construction, as well as, to a lesser extent, waterworks.

We believe these areas have significant long-term growth fundamentals.

2 unchanged sentences

In addition, we believe water management manufacturers with innovative products, like ours, are able to grow at a faster pace than the broader waterworks, commercial, and institutional construction markets, as well as mitigate cyclical downturns in market growth.

The industry's specification-driven end-markets require manufacturers to work closely with local engineers, architects, contractors and builders to design specific applications on a project-by-project basis.

As a result, building and maintaining relationships with architects, engineers, contractors and builders, who specify products for use in construction projects, and having flexibility in design and product innovation are critical to compete effectively in these markets.

The industry's specification-driven end-markets require manufacturers to work closely with building owners, local engineers, architects, contractors and builders to design specific applications on a project-by-project basis that meet specific local performance requirements as well as building owners' needs.

As a result, building and maintaining relationships with owners, architects, engineers, contractors and builders, who specify products for use in construction projects, and having flexibility in design and product innovation are critical to compete effectively in these markets.

Companies with a strong network of such relationships have a competitive advantage.

Specifically, it has been our experience that, once an engineer, contractor, builder, or architect has specified our product with satisfactory results, they often will continue to use our products in future projects.

Specifically, it has been our experience that, once an owner, engineer, contractor, builder, or architect has specified our product with satisfactory results, they often will continue to use our products in future projects.

Our products tend to be project-critical, highly-engineered and high value-add and typically are a low percentage of overall project cost.

3 unchanged sentences

In addition, many of these products must meet detailed specifications set by water management engineers, architects, contractors and builders.

Among our leading brands are Zurn® and Wilkins®.

Among our leading brands are Zurn®, Elkay®, and Wilkins®.

Water Safety and Control Products

2 unchanged sentences

These highly specified and engineered flow control devices protect and control the potable water supply and emergency water supply within a building or site.

Designed to meet the stringent requirements of independent test labs, such as the IAPMO, NSF, UL and FM, they are sold into commercial, institutional, and industrial new construction and retrofit applications as well as the fire protection, municipal water and wastewater and irrigation end markets.

Control solutions that protect human health and gravity drainage products that protect the environment are sold under the Zurn® brand and are typically required in the early stages of a construction or retrofit project, when potable water and non-potable water control and drainage systems are installed.

Designed to meet the stringent requirements of independent test labs, such as the IAPMO, NSF, UL and FM, they are sold into institutional, commercial, and residential new construction and retrofit applications as well as the fire protection, municipal water and wastewater and irrigation end markets.

Water control solutions that protect human health and gravity drainage products that protect the environment are sold under the Zurn® brand and are typically required in the early stages of a construction or retrofit project, when potable water and non-potable water control and drainage systems are installed.

Water control products include PEX piping, valves, fittings and installation tools.

3 unchanged sentences

Flow systems products are commonly installed within a building or on a site to manage storm water and wastewater.

Specification drainage products within flow systems include point drains (such as roof drains and floor drains), hydrants, fixture carrier systems, and chemical drainage systems that are used to control storm water, process water and potable water in various commercial, institutional, industrial, civil and irrigation applications.

Linear drainage systems are used to capture and direct storm water in a wide variety of commercial, institutional, industrial and transportation infrastructure applications.

Our wastewater pre-treatment products include oil and grease interceptors and separators, acid neutralization systems and remote monitoring systems and are marketed under the Zurn® and Green Turtle® brands.

Specification drainage products within flow systems include point drains (such as roof drains and floor drains), hydrants, fixture carrier systems, and chemical drainage systems that are used to control storm water, and process water and potable water in various institutional, commercial, industrial, civil and irrigation applications.

Linear drainage systems are used to capture and direct storm water in a wide variety of institutional, commercial, industrial and transportation infrastructure applications.

Our wastewater pre-treatment products include oil and grease interceptors and separators, acid neutralization systems and remote

monitoring systems and are marketed under the Zurn® and Green Turtle® brands.

Interceptors are used to separate and capture fats, oils, and greases from wastewater before it is discharged into the municipal wastewater collection system.

2 unchanged sentences

Acid neutralization systems are primarily used in schools, hospitals and laboratories.

In fiscal 2020, we acquired substantially all the assets of East Creek Corporation (d/b/a StainlessDrains.com) ("StainlessDrains.com"), a leading manufacturer of highly specialized stainless steel drains for industries focused in foodservice, food and beverage production, retail, chemical, commercial, and amusement parks.

This acquisition added complementary product lines to our existing product portfolio.

In fiscal 2021, we acquired substantially all of the assets of Advance Technology Solutions, LLC (d/b/a ATS GREASEwatch) ("ATS GREASEwatch").

1 unchanged sentence

In addition, we expanded our high-quality flow systems portfolio during fiscal 2021 with the acquisition of the Wade Drains ("Wade") product line from McWane, Inc.

The acquisition of the Wade product line leverages Zurn’s existing expertise in flow systems to expand our market coverage and offer an additional brand of drainage and environmental products.

The acquisition of the Wade product line leverages Zurn Elkay’s existing expertise in flow systems to expand our market coverage and offer an additional brand of drainage and environmental products.

Hygienic and Environmental Products

Hygienic and environmental products are typically required in the latter stages of a construction or retrofit project, when interior spaces are being outfitted with fixtures, valves and faucets.

Zurn's hygienic and environmental products include primarily sensor-operated flush valves marketed under the Aquaflush®, AquaSense® and AquaVantage® brand names and heavy-duty commercial faucets marketed under the AquaSpec® brand name.

Zurn Elkay's hygienic and environmental products include primarily sensor-operated flush valves marketed under the Aquaflush®, AquaSense® and AquaVantage® brand names and heavy-duty commercial faucets marketed under the AquaSpec® brand name.

Innovative water conserving fixtures are marketed under the EcoVantage® and Zurn One® brand names.

These products are commonly used in office buildings, schools, hospitals, airports, sports facilities, convention centers, shopping malls, restaurants, and industrial production buildings.

The Zurn One Systems® integrate valve and/or faucet products with fixtures into complete, easily customizable plumbing systems, and thus provide a valuable time and cost-saving means of delivering commercial and institutional bathroom fixtures.

The EcoVantage® fixture systems promote water-efficiency, assists in achieving compliance with certain water conservation requirements, and generates savings for building owners in new construction and retrofit bathroom fixture installations.

In fiscal 2020, we acquired Just Manufacturing Company ("Just Manufacturing") a leading manufacturer of stainless steel sinks and plumbing fixtures primarily used in institutional and commercial end markets.

In addition, during the Transition Period, we acquired substantially all of the assets of Hadrian Manufacturing Inc.

These products are commonly used in schools, hospitals, office buildings, airports, sports facilities, convention centers, shopping malls, restaurants, and industrial production buildings.

The EcoVantage® fixture systems promote water-efficiency, health and hygiene and assist in achieving compliance with certain water conservation requirements, and generate savings for building owners in new construction and retrofit bathroom fixture installations.

In 2020, we acquired Just Manufacturing Company ("Just Manufacturing") a leading manufacturer of stainless steel sinks and plumbing fixtures primarily used in institutional and commercial end markets.

In addition, we acquired substantially all of the assets of Hadrian Manufacturing Inc.

and 100% of the stock of Hadrian, Inc.

(collectively “Hadrian”) a leading manufacturer of restroom partition systems and lockers primarily used in institutional and commercial end markets.

The combination of World Dryer’s eco-friendly hand dryers, Just Manufacturing's stainless steel product portfolio, Hadrian’s partition systems and Zurn's water-efficient hygienic and environmental products allows us to deliver what we believe is the most comprehensive hygienic and environmental content to new and existing buildings.

Mergers and acquisitions are a critical part of the Zurn growth strategy.

Our strategy is to grow strategically by acquiring leading companies in attractive markets with businesses that we believe will benefit from ZBS to increase customer satisfaction, revenue growth and operating margins.

The combination of World Dryer’s eco-friendly hand dryers, Just Manufacturing's stainless steel product portfolio, Hadrian’s partition systems and Zurn Elkay's water-efficient hygienic and environmental products allows us to deliver a bundle of products known as "BrightShield by Zurn" to our customers, what we believe is the most comprehensive hygienic and environmental content to new and existing buildings.

In fiscal 2022, we completed the merger with Elkay, a leading manufacturer and distributor of drinking water solutions and commercial and residential sinks.

Elkay offers a wide array of sinks recognized for their design, durability and aesthetics.

These products are commonly used in residential, hotel and lodging, office, retail, education, healthcare, transportation, recreation and leisure, public and industrial applications.

Elkay's sinks are sold in various forms, with stainless steel representing the most popular, followed by quartz, fireclay-ceramic, cast iron, and other materials.

Drinking Water Products

With the Elkay Merger, we added a leading drinking water product line that includes an extensive collection of drinking water delivery products oriented around providing the cleanest, superior tasting water while improving overall water hygiene, accessibility and sustainability.

Elkay’s water dispensing and filtration products, predominantly comprised of bottle filling stations, water fountains and water dispensers, are often plumbed directly into building water systems and required to comply with strict applicable codes and standards.

Elkay's drinking water solutions are designed to meet or exceed facility needs and specifications of education, healthcare, hospitality, multifamily, municipal, office, retail and commercial facilities.

Mergers and acquisitions are a critical part of the Zurn Elkay growth strategy.

Our strategy is to grow strategically by acquiring leading companies in attractive markets with businesses that we believe will benefit from ZEBS to increase customer satisfaction, revenue growth and operating margins.

In our last three fiscal years, we have completed several acquisitions focused on expanding our product portfolio and presence in the end markets we serve;

1 unchanged sentence

The respective purchase prices for these transactions are stated net of cash acquired and exclude transaction costs.

• July 1, 2022 - We completed the merger with Elkay for a preliminary purchase price of $1,462.9 million.

The preliminary purchase price includes $1,417.0 million of Zurn's common stock based on Zurn's closing stock price of $27.48 on July 1, 2022, and $45.9 million of net cash payments for the repayment of Elkay's existing term loan and Elkay's transaction related costs outstanding that were in excess of Elkay's cash and cash equivalents balance at the time of closing.

The total number of shares of our common stock issued at closing was preliminary and subject to change upon finalization of customary post-closing adjustments with respect to cash, indebtedness and working capital.

We expect that approximately 186,000 of these shares will be returned to us in the first half of calendar year 2023 as a result of lower working capital and cash balances at closing compared to targets stipulated in the Merger Agreement.

Elkay is a market leader of drinking water solutions and commercial sinks which complements the offerings of our existing product portfolio.

• November 17, 2021 - We expanded our high-quality flow systems portfolio with the acquisition of the Wade product line from McWane, Inc.

for a cash purchase price of $12.6 million.

During the twelve months ended December 31, 2022, we received a $1.1 million cash payment from the sellers of Wade in connection with finalizing the acquisition date trade working capital, which is included in the total cash purchase price above.

Founded in 1865, Wade manufactures a wide range of specified commercial flow systems products for customers across North America.

The acquisition leverages Zurn’s existing expertise in flow systems to expand its market coverage and offer an additional brand of drainage and environmental products.

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

The acquisition leverages our existing expertise in flow systems to expand our market coverage and offer an additional brand of drainage and environmental products.

• April 16, 2021 - We acquired substantially all of the assets of ATS GREASEwatch for a cash purchase price of $4.5 million.

ATS GREASEwatch 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 and complements our existing product portfolio.

3 unchanged sentences

Just Manufacturing manufactures stainless steel sinks and plumbing fixtures primarily used in institutional and commercial end markets and complements the offerings of our existing product portfolio.

• May 10, 2019 - We acquired substantially all of the assets of StainlessDrains.com, a manufacturer of stainless steel drains, grates and accessories for industrial and commercial end markets, for a cash purchase price of $24.8 million.

StainlessDrains.com added complementary product lines to our existing product portfolio.

Our water safety and control, flow systems and hygienic and environmental products are sold for new construction, remodeling and retrofit applications to customers in commercial, institutional, waterworks and multi-family residential end markets and are distributed through independent sales representatives, plumbing wholesalers and industry-specific distributors in the waterworks, foodservice, industrial, janitorial, sanitation and siteworks industries.

Our independent sales representatives work with engineers, architects, building owners and operators, contractors, and builders, to specify our water safety, quality, flow control and conservation products for their use and with wholesalers to assess and meet the needs of building contractors in construction projects.

Our water safety and control, flow systems products, hygienic and environmental, and drinking water products are sold for new construction, remodeling and retrofit applications to customers in commercial, institutional, waterworks and residential end markets and are distributed through independent sales representatives, plumbing wholesalers and industry-specific distributors in the waterworks, foodservice, industrial, janitorial, sanitation and siteworks industries.

Our independent sales representatives work with building owners, engineers, architects, and operators, contractors, and builders, to specify our water safety, quality, flow control and conservation products for their use and with wholesalers to assess and meet the needs of building contractors in construction projects.

They also combine knowledge of our products’ installation methods and delivery availability with local market expertise to provide contractors with value-added service.

We use approximately 1,070 independent sales representatives, along with a network of regional distribution centers and third-party warehouses, to provide our customers with same-day service and quick response times.

Zurn® and Wilkins® benefit from strong brand recognition, which is enhanced by a strong propensity to replace "like-for-like" products.

In addition to our domestic manufacturing facilities, we maintain a global network of independent sources that manufacture high quality, lower-cost component parts for our products.

These sources fabricate parts to our specifications using our proprietary designs, which enables us to focus on product engineering, assembly, testing and quality control.

By closely monitoring these sources and through extensive product testing, we are able to maintain product quality and be a cost-competitive producer of commercial and institutional products.

Zurn®, Elkay® and Wilkins® benefit from strong brand recognition, which is enhanced by a strong propensity to replace "like-for-like" products.

Product Development

2 unchanged sentences

Each of our product lines has technical staff responsible for product development and application support.

Zurn has approximately 150 active patents in the United States and approximately 70 foreign active patents as of December 31, 2021.

Product innovation is crucial in the commercial and institutional plumbing products markets because new products must continually be developed to meet specifications and regulatory demands.

Zurn's products are known in the industry for such innovation.

In fiscal 2018, we launched our digital strategy for a customer productivity platform based on the integration of innovative Industrial Internet of Things (IIoT) and e-commerce technologies with Zurn's leading portfolio of products.

Our secure online portal, plumbSMART™, allows for real-time insights from Zurn Connected Products including wireless monitoring of usage trends, water consumption, possible issues and alerts through digitally-connected product solutions that can be retrofitted to the installed base of our products.

This information is used by our customers’ operations and maintenance staff through their facility and automation control systems and cloud-based portals to minimize unplanned system downtime and improve the productivity and safety of their operations.

Zurn Elkay has approximately 160 active patents in the United States and approximately 70 foreign active patents as of December 31, 2022.

Product innovation is crucial in the commercial and institutional plumbing products markets because new products must continually be developed to meet specifications and regulatory demands as well as customer needs.

Zurn Elkay's products are known in the industry for such innovation.

Our innovation is focused on introducing products that provide incremental value to our end customer and help enable our customers achieve their sustainability goals by focusing innovation on products that save water, use less energy, and other sustainable attributes.

Our secure online portal, plumbSMART™, allows for real-time insights from our Connected Products including wireless monitoring of usage trends, water consumption, possible issues and alerts through digitally-connected product solutions that can be retrofitted to the installed base of our products.

This information is used by our customers’ operations and maintenance staff

through their facility and automation control systems and cloud-based portals to minimize unplanned system downtime and improve the productivity and safety of their operations.

Suppliers and Raw Materials

1 unchanged sentence

The key materials used in our manufacturing activities include:

brass, castings, copper, zinc, forgings, plate steel, high-performance engineered plastic and resin.

brass, castings, copper, zinc, stainless steel, forgings, plate steel, high-performance engineered plastic and resin.

Our global sourcing strategy is to maintain alternate sources of supply for our important materials and components wherever possible.

3 unchanged sentences

We generally purchase our materials on the open market.

In addition to our domestic manufacturing facilities, we maintain a global network of independent sources that manufacture high quality, lower-cost component parts for our products.

These sources fabricate parts to our specifications using our proprietary designs, which enables us to focus on product engineering, assembly, testing and quality control.

By closely monitoring these sources and through extensive product testing, we are able to maintain product quality and be a cost-competitive producer of commercial and institutional products.

Our backlog of unshipped orders was approximately $42 million and $70 million as of December 31, 2022 and December 31, 2021, respectively.

1 unchanged sentence

See Item 1A Risk Factors of this report for more information on the risks associated with backlog.

Demand for our products is primarily driven by commercial and institutional building activity, remodeling and retrofit opportunities, and to a lesser extent, new home starts as well as waterworks expansion.

Accordingly, weather has an impact on

the seasonality of certain end markets.

Demand for our products is primarily driven by institutional and commercial building activity, remodeling and retrofit opportunities, and to a lesser extent, new home starts as well as waterworks expansion.

Accordingly, weather has an impact on the seasonality of certain end markets.

With the exception of our remodeling and retrofit opportunities, weather is an important variable as it significantly impacts construction.

Spring and summer months in the United States and Canada represent the main construction season for increased construction in the commercial, institutional and waterworks markets, as well as new housing starts.

As a result, sales generally decrease slightly in the third and fourth quarters as compared to the first two quarters of the calendar year.

Spring and summer months in the United States and Canada represent the main construction season with increased construction in the institutional, commercial, and waterworks markets, as well as new housing starts.

As a result, sales generally decrease slightly in the first and fourth quarters as compared to the second and third quarters of the calendar year.

Our business also depends upon general economic conditions and other market factors beyond our control, and we serve customers in cyclical industries.

4 unchanged sentences

Approximately 190 of our United States employees are represented by labor unions.

We are currently party to two collective bargaining agreements in the United States with expiration dates in June 2022 and October 2024.

We are currently party to four collective bargaining agreements in the United States with expiration dates in November 2023, October 2024, and June 2026.

We believe we have a strong relationship with our employees, including those represented by labor unions.

Zurn strives to attract, retain and develop the talent necessary to meet goals.

Our Human Resources programs are designed to, among other aims, foster diversity and inclusion, develop talent for critical roles and leadership positions, reward and support associates through competitive pay and benefits, and promote the health and safety of our associates.

Zurn Elkay strives to attract, retain and develop the talent necessary to meet our goals.

Our Human Resources programs are designed to, among other aims, foster diversity and inclusion, develop talent for critical roles and leadership positions, reward and support associates through competitive compensation and benefits, and promote the health and safety of our associates.

Diversity and Inclusion:

We are committed to fostering, cultivating and preserving a culture of diversity and inclusion where our associates are engaged and fulfilled.

We recognize and value our associates for the unique perspectives they bring to Zurn – from different ages, ethnic and cultural backgrounds, sexual orientation, gender identity and expression, veteran status and abilities, including individuals who bring diverse opinions, experience and leadership styles to their work at Zurn.

We recognize and value our associates for the unique perspectives they bring to Zurn Elkay – from different ages, ethnic and cultural backgrounds, sexual orientation, gender identity and expression, veteran status and abilities, including individuals who bring diverse opinions, experience and leadership styles to their work at Zurn Elkay.

Inclusion is built into our key human resources programs and processes.

3 unchanged sentences

Our leadership team conducts a robust program of employee engagement and we have invested in the personal and professional development of our employees.

We monitor a variety of metrics to ensure the health of our company culture and alignment with our values and strategic business priorities.

Each year all employees are trained on various policies and procedures along with matters specific to their respective roles within the organization.

We monitor metrics to ensure the health of our company

culture and alignment with our values and strategic business priorities.

Each year, we survey our employees to better understand what matters most to them.

3 unchanged sentences

To be our best and maintain integrity in everything we do, we strive to provide associates with the right tools and resources.

Through continual training and engaging associates and visitors in addressing safety issues, we have reduced our Total Recordable Incident Rate ("TRIR") by more than 60% from calendar year 2017 t hrough calendar year 2021 an d also reduced our Lost Time Incident Rate ("LTIR") over the same period.

At 0.96 TRIR per 100 full-time workers, we are better than best-in-class benchmarks.

Through continual training and engaging associates and visitors in addressing safety issues, we have reduced our Total Recordable Incident Rate ("TRIR") by 24% when compared to the combined Zurn Elkay rate for calendar year 2021 an d also reduced our Lost Time Incident Rate ("LTIR") by 38% over the same period.

At 1.21 TRIR and 0.37 LTIR per 100 full-time workers, we are better than best-in-class benchmarks.

We are also committed to improving the holistic health and well-being of our associates and have various programs in place to provide information, activities and support for assisting healthy choices.

5 unchanged sentences

Liability may also include damages to natural resources.

On occasion we are involved in such investigations and/or cleanup, and also have been or could be named as a PRP in environmental matters.

On occasion we are involved in such investigations and/or cleanup, and we have been named as a PRP in environmental matters and could be named in future matters.

We do not currently anticipate any significant additional expenditures related to maintaining compliance;

3 unchanged sentences

Our phone number is (855) 480-5050.

Our website address is www.zurnwatersolutions.com.

Our website address is www.zurn-elkay.com.

We make available free of charge, on or through our website, as soon as reasonably practicable after they are electronically filed or furnished to the Securities and Exchange Commission (the "SEC"), our annual and transition reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements on Schedule 14A, as well as amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

6 unchanged sentences

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

What changed 10-K

Item 1. Business