Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
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 Zurn, 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 include the acquired operations subsequent to July 1, 2022. See Item 1, Note 2, Acquisition, for additional information on the Elkay Merger.
Zurn Elkay Water Solutions Corporation 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”) 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, 2022.
Critical Accounting Policies and Estimates
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Refer to Item 7, MD&A, of our Annual Report on Form 10-K for the year ended December 31, 2022 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 September 30, 2023, and during the period from January 1, 2023 through September 30, 2023, 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.
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Acquisitions
On July 1, 2022, we completed the Elkay Merger for a purchase price of $1,457.8 million. Elkay, a market leader of drinking water solutions and commercial sinks, complements our existing product portfolio. The purchase price includes $1,411.9 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 term loan and Elkay's transaction related costs outstanding that were in excess of Elkay's cash and cash equivalents at the time of closing. Pursuant to the terms of the merger agreement, we issued 51,564,524 shares of common stock, which represented approximately 29% of outstanding shares immediately following the Merger. During the six months ended June 30, 2023, we completed the final price adjustments and the adjusted purchase price is reflected in the purchase price amounts above, following the return of 186,020 of the shares we issued at closing as a result of lower working capital and cash balances at closing compared to targets stipulated in the merger agreement. The shares returned were canceled upon receipt. As of June 30, 2023, the measurement period was complete. Our results of operations include Elkay subsequent to the Merger date. See Item 1, Note 2, Acquisition for additional information on the Elkay Merger.
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. During 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 September 30, 2023 have not been adjusted to separately disclose cash flows related to 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 and nine months ended September 30, 2023 and September 30, 2022, are as follows (in millions):
Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Selling, general and administrative expenses (1) $ 6.6 $ — $ 8.4 $ —
Income from discontinued operations before income tax 6.6 — 8.4 —
Income tax (expense) benefit (0.4) — (0.3) 0.8
Income from discontinued operations, net of tax $ 6.2 $ — $ 8.1 $ 0.8
(1) Selling, general and administrative expenses include the reversal of certain accruals as a result of costs the Company will no longer incur related to the Spin-Off Transaction.
See Item 1, Note 4, Discontinued Operations for additional information.
Restructuring and Other Similar Costs
During the three and nine months ended September 30, 2023, 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, including Elkay, 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 similar initiatives to optimize its operating margin and manufacturing footprint. As such, the Company expects further expenses related to workforce reductions, potential impairment or accelerated depreciation of assets, lease termination costs and other facility rationalization costs. For the three and nine months ended September 30, 2023, restructuring charges totaled $2.2 million and $11.9 million, respectively. For the three and nine months ended September 30, 2022, restructuring charges totaled $11.7 million and $13.1 million, respectively. Refer to Item 1, Note 3, Restructuring and Other Similar Charges for further information.
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Results of Operations
Three Months Ended September 30, 2023 compared with the Three Months Ended September 30, 2022:
Net sales
(Dollars in Millions)
Three Months Ended
September 30, 2023 September 30, 2022 Change % Change
Net Sales $ 398.4 $ 417.7 $ (19.3) (4.6) %
Net sales were $398.4 million and $417.7 million during the three months ended September 30, 2023 and September 30, 2022, respectively, a decrease of 5% year-over-year. Core sales decreased 5% year over year as a result of lower year-over-year demand associated with products sold into our residential end markets, the planned exit of certain residential sink products as well as timing of shipments in the prior year as we continued working down an elevated backlog during the three months ended September 30, 2022.
Income (loss) from operations
(Dollars in Millions)
Three Months Ended
September 30, 2023 September 30, 2022 Change % Change
Income (loss) from operations $ 60.1 $ (10.1) $ 70.2 (695.0) %
% of net sales 15.1 % (2.4) % 17.5 %
During the three months ended September 30, 2023, income from operations was $60.1 million compared to a loss of $10.1 million during the three months ended September 30, 2022. Income from operations as a percentage of net sales increased by 1750 basis points year over year due to the benefits resulting from productivity synergies and restructuring actions related to the Elkay Merger, lower material and transportation costs, and lower restructuring charges. Additionally, income from operations for the three months ended September 30, 2022 included merger costs of $33.7 million and a purchase accounting fair value adjustment of $14.6 million related to the Elkay Merger.
Interest expense, net
Interest expense, net was $9.9 million for the three months ended September 30, 2023, compared to $8.0 million for the three months ended September 30, 2022. The increase in interest expense as compared to the prior year period is primarily a result of higher year-over-year interest rates. See Item 1, Note 13 Long-Term Debt for more information.
Other income (expense), net
Other expense, net for the three months ended September 30, 2023, was $2.5 million compared to other income of $0.6 million for the three months ended September 30, 2022. Other income (expense), net consists primarily of foreign currency transaction gains and losses, the non-service cost components associated with our defined benefit plans and other non-operational gains and losses. The year-over-year change is primarily driven by higher interest cost within the non-service cost components of our defined benefit plans.
Provision for income taxes
The income tax provision was $12.5 million for the three months ended September 30, 2023, compared to $1.6 million for the three months ended September 30, 2022. The effective income tax rate for the three months ended September 30, 2023 was 26.2% versus (9.1)% for the three months ended September 30, 2022. The effective income tax rate for the three months ended September 30, 2023 was above the U.S. federal statutory rate of 21% primarily due to the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, the accrual of various state income taxes and the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, partially offset by the recognition of income tax benefits associated with share-based payments. The income tax provision recognized on the loss from operations for the three months ended September 30, 2022 was primarily due to non-deductible transactions costs associated with the Merger, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, the accrual of various state income taxes and the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, partially offset by the reduction in the valuation allowance associated with certain state NOL carryforwards.
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. federal and state capital loss carryforwards. In conjunction with this analysis, we weigh both positive and negative evidence for purposes of determining the proper balances
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of such valuation allowances. Future changes to the balances of these valuation allowances, as a result of our continued review and analysis, could impact the financial statements for such period of change.
Net income (loss)
Net income for the three months ended September 30, 2023, was $41.4 million compared to a net loss of $19.1 million for the three months ended September 30, 2022. Diluted net income (loss) per share for the three months ended September 30, 2023 and September 30, 2022, was $0.24 and $(0.11), respectively. The year-over-year change is the result of the factors described above. Net income from discontinued operations, net of tax, was $6.2 million for the three months ended September 30, 2023 compared to $0.0 million for the three months ended September 30, 2022. Diluted net income per share from discontinued operations for the three months ended September 30, 2023 and September 30, 2022, was $0.04 and $0.00, respectively.
Nine Months Ended September 30, 2023 compared with the Nine Months Ended September 30, 2022:
Net sales
(Dollars in Millions)
Nine Months Ended
September 30, 2023 September 30, 2022 Change % Change
Net Sales $ 1,173.7 $ 941.5 $ 232.2 24.7 %
Net sales were $1,173.7 million during the nine months ended September 30, 2023, an increase of 25% year-over-year. Excluding a 28% increase in sales associated with our combination with Elkay, core sales decreased 3% year over year as a result of lower year-over-year demand associated with products sold into our residential end markets, the planned exit of certain residential sink products as well as timing of shipments in the prior year as we continued working down an elevated backlog during the second and third quarter of 2022.
Income from operations
(Dollars in Millions)
Nine Months Ended
September 30, 2023 September 30, 2022 Change % Change
Income from operations 158.6 87.3 71.3 81.7 %
% of net sales 13.5 % 9.3 % 4.2 %
Income from operations during the nine months ended September 30, 2023 was $158.6 million compared to $87.3 million during the nine months ended September 30, 2022. Income from operations as a percentage of net sales increased by 420 basis points year over year due to the benefits of productivity synergies and restructuring actions, partially offset by higher non-cash stock-based compensation expense, and incremental depreciation and intangible asset amortization resulting from the Elkay Merger during the nine months ended September 30, 2023. Additionally, income from operations for the nine months ended September 30, 2022 included merger costs of $33.7 million and a purchase accounting fair value adjustment of $14.6 million related to the Elkay Merger.
Interest expense, net
Interest expense, net was $29.8 million during the nine months ended September 30, 2023, compared to $18.0 million during the nine months ended September 30, 2022. The increase in interest expense as compared to the prior year period is primarily a result of higher year-over-year interest rates. See Item 1, Note 13 Long-Term Debt for more information.
Other income (expense), net
Other expense, net during the nine months ended September 30, 2023 was $3.3 million compared to other income of $0.3 million during the nine months ended September 30, 2022. Other income (expense), net consists primarily of foreign currency transaction gains and losses, the non-service cost components associated with our defined benefit plans and other non-operational gains and losses. The year-over-year change is primarily driven by higher interest cost within the non-service cost components of our defined benefit plans and accruals for estimated environmental remediation costs, partially offset by income recognized in connection with an insurance settlement.
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Provision for income taxes
The income tax provision was $34.8 million for the nine months ended September 30, 2023, compared to $22.9 million for the nine months ended September 30, 2022. The effective income tax rate for the nine months ended September 30, 2023 was 27.7% versus 32.9% for the nine months ended September 30, 2022. The effective income tax rate for the nine months ended September 30, 2023 was above the U.S. federal statutory rate of 21% primarily due to the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, the accrual of various state income taxes and the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, partially offset by the recognition of income tax benefits associated with share-based payments. The effective income tax rate for the nine months ended September 30, 2022 was above the U.S. federal statutory rate of 21% primarily due to non-deductible transactions costs associated with the Merger, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, the accrual of various state income taxes and the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, partially offset by the recognition of income tax benefits associated with share-based payments and the reduction in the valuation allowance associated with certain state NOL carryforwards.
Net income
Net income for the nine months ended September 30, 2023, was $98.8 million compared to $47.5 million for the nine months ended September 30, 2022. Diluted net income per share for the nine months ended September 30, 2023 and September 30, 2022, was $0.56 and $0.33, respectively. Net income from discontinued operations, net of tax, was $8.1 million for the nine months ended September 30, 2023 compared to $0.8 million for the nine months ended September 30, 2022. Diluted net income per share from discontinued operations for the nine months ended September 30, 2023 and September 30, 2022, was $0.05 and $0.01, respectively.
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to supplement and not replace financial measures prepared in accordance with GAAP. The following non-GAAP financial measures are utilized by management in comparing our operating performance on a consistent basis. We believe that these financial measures are appropriate to enhance an overall understanding of our underlying operating performance trends compared to historical and prospective periods and our peers. Management also believes that these measures are useful to investors in their analysis of our results of operations and provide improved comparability between fiscal periods as well as insight into the compliance with our debt covenants. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.
Core sales
Core sales excludes the impact of acquisitions (such as the Elkay Merger), divestitures and foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparisons of our net sales performance with prior and future periods and to our peers. We exclude the effect of acquisitions and divestitures because the nature, size and number can vary dramatically from period to period and between us and our peers and can also obscure underlying business trends and make comparisons of long-term performance difficult. We exclude the effect of foreign currency translation from this measure because the volatility of currency translation is not under management's control.
EBITDA
EBITDA represents earnings before interest and other debt related activities, taxes, depreciation and amortization. EBITDA is presented because it is an important supplemental measure of performance and it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA is also presented and compared by analysts and investors in evaluating our ability to meet debt service obligations. Other companies in our industry may calculate EBITDA differently. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of operating performance or any other measures of performance derived in accordance with GAAP. Because EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business.
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Adjusted EBITDA
Adjusted EBITDA is the term we use to describe EBITDA as defined and adjusted in our credit agreement, which is net income, adjusted for the items summarized in the table below. Adjusted EBITDA 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. It also is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, non-cash or non-recurring losses or gains. It is also provided to aid investors in understanding our compliance with our debt covenants. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA varies from others in our industry. This measure should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; or (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-cash, non-operating or non-recurring charges that are deducted in calculating net income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results.
In addition, certain of these excluded expenses added back in calculating Adjusted EBITDA can represent the reduction of cash that could be used for other corporate purposes. 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.
For the nine months ended September 30, 2023, we had net income of $98.8 million and Adjusted EBITDA for the same period of $255.4 million. The calculation of Adjusted EBITDA under our credit agreement as of September 30, 2023, 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.
Covenant Compliance
Our credit agreement, which governs our senior secured credit facilities, contains, among other provisions, restrictive covenants regarding indebtedness, payments and distributions, mergers and acquisitions, asset sales, affiliate transactions, capital expenditures and the maintenance of certain financial ratios. Payment of borrowings under the credit agreement may be accelerated if there is an event of default. Events of default include the failure to pay principal and interest when due, a material breach of a representation or warranty, certain non-payments or defaults under other indebtedness, covenant defaults, events of bankruptcy and a change of control. 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 comply with a maximum total Net First Lien Leverage Ratio (consolidated indebtedness to Adjusted EBITDA) of 5.00 to 1.00 as of the end of each fiscal quarter. At September 30, 2023, our Net First Lien Leverage Ratio was 1.26 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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Set forth below is a reconciliation of net income to Adjusted EBITDA for the periods indicated below.
(in millions) Nine months ended
September 30, 2022 Twelve months ended
December 31, 2022 Nine months ended
September 30, 2023 Twelve months ended
September 30, 2023
Net income $ 47.5 $ 61.7 $ 98.8 $ 113.0
Income from discontinued operations, net of tax (1) (0.8) (4.7) (8.1) (12.0)
Provision for income taxes 22.9 26.8 34.8 38.7
Actuarial gain on pension and postretirement benefit obligations — (1.9) — (1.9)
Other expense (income), net (2) (0.3) (1.7) 3.3 1.9
Interest expense 18.0 26.9 29.8 38.7
Depreciation and amortization 30.9 54.5 66.3 89.9
EBITDA 118.2 161.6 224.9 268.3
Adjustments to EBITDA
Restructuring and other similar charges (3) 13.1 15.4 11.9 14.2
Stock-based compensation expense 15.5 25.0 30.5 40.0
Merger costs (4) 33.7 33.7 — —
Last-in first-out ("LIFO") adjustments (5) 4.0 9.7 (11.9) (6.2)
Acquisition-related fair value adjustment 15.2 18.9 — 3.7
Other, net (6) 0.3 0.3 — —
Subtotal of adjustments to EBITDA 81.8 103.0 30.5 51.7
Adjusted EBITDA $ 200.0 $ 264.6 $ 255.4 $ 320.0
Consolidated indebtedness (7) $ 401.8
Total Net First Lien Leverage Ratio (8) 1.26
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(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 expense (income), net for the periods indicated, consists primarily of gains and losses from foreign currency transactions, the non-service cost components of net periodic benefit costs associated with our defined benefit plans and other non-operational gains and losses.
(3) Restructuring and other similar charges is comprised of costs associated with workforce reductions, asset impairments, lease termination costs, and other facility rationalization costs. See Item 1, Note 3, Restructuring and Other Similar Charges for more information.
(4) Merger costs is comprised of costs associated with legal and other professional services incurred in connection with completing the Elkay Merger, which are excluded in calculating Adjusted EBITDA as defined in our credit agreement.
(5) LIFO adjustments are excluded in calculating Adjusted EBITDA as defined in our credit agreement.
(6) Other, net consists of gains and losses on the disposition of long-lived assets.
(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 $152.4 million (as defined by the credit agreement) at September 30, 2023.
(8) Our credit agreement defines the total Net First Lien Leverage Ratio as the ratio of consolidated indebtedness (as described above) to Adjusted EBITDA for the trailing four fiscal quarters.
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Liquidity and Capital Resources
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 September 30, 2023, we had $173.1 million of cash and cash equivalents and $194.2 million of additional borrowing capacity. As of September 30, 2023, the available borrowings under our credit facility were reduced by $5.8 million due to outstanding letters of credit. As of December 31, 2022, we had $124.8 million of cash and cash equivalents and approximately $192.5 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 our expected short-term and long-term needs.
Cash Flows
Cash provided by operating activities was $195.7 million and $12.6 million during the nine months ended September 30, 2023 and 2022, respectively. The change in year-over-year operating cash flows was primarily the result of a lower use of cash for trade working capital, an increase in net income, and the timing of accrued expenses during the nine months ended September 30, 2023.
Cash used for investing activities was $6.6 million during the nine months ended September 30, 2023 and $12.8 million during the nine months ended September 30, 2022. Investing activities during the nine months ended September 30, 2023, consisted of $15.9 million of capital expenditures, which were partially offset by the receipt of $9.0 million in connection with an insurance settlement and $0.3 million from the sale of certain long-lived assets. Investing activities during the nine months ended September 30, 2022, included $4.3 million of capital expenditures and net cash payments of $44.8 million in connection with acquisitions, 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 Transaction and the receipt of $1.3 million in connection with the sale of certain long-lived assets.
Cash used for financing activities was $141.5 million during the nine months ended September 30, 2023, compared to $23.1 million during the nine months ended September 30, 2022. During the nine months ended September 30, 2023, we utilized a net $4.7 million of cash for payments on outstanding debt, $100.2 million to repurchase outstanding shares of our common stock and $36.6 million for the payment of common stock dividends. During the nine months ended September 30, 2022, we utilized a net $4.4 million of cash for payments on outstanding debt and $20.1 million for the payment of common stock dividends, which was partially offset by $1.4 million of proceeds from the exercise of stock options, net of taxes withheld and paid on employees' share-based awards.
Indebtedness
As of September 30, 2023, we had $554.2 million of total indebtedness outstanding as follows (in millions):
Total Debt at
September 30, 2023
Current Maturities of Debt Long-term
Portion
Term loan (1) $ 532.4 $ 5.5 $ 526.9
Finance leases 21.8 0.8 21.0
Total $ 554.2 $ 6.3 $ 547.9
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(1) Includes unamortized debt issuance costs of $8.0 million at September 30, 2023.
See Item 1, Note 13, Long-Term Debt for a description of our outstanding indebtedness.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.