What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-10 compared with 2024-02-06 · 179 added, 267 removed, 1123 unchanged (28% of the section changed)

35 unchanged sentences

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Accounting for acquisition of Elkay Manufacturing Company

Description of the Matter As described in Note 3 to the consolidated financial statements, during the year ended December 31, 2022, the Company completed the acquisition of Elkay Manufacturing Company (Elkay).

The Company’s accounting for this acquisition included determining the fair value of the intangible assets acquired, which primarily included customer relationships and trade names.

During 2023, the Company finalized the purchase accounting for the Elkay transaction with a final purchase price of $1,457.8 million after measurement period adjustments.

Auditing the Company's finalization of the accounting for its acquisition of Elkay was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of intangible assets of $865.5 million, which principally consisted of customer relationships and the Elkay trade name.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business.

The Company used a multi-period excess earnings method, a form of the income approach, to measure the customer relationship assets and the relief from royalty method to value the trade name.

The significant assumptions used to estimate the value of the customer relationship included margin, revenue growth, the discount rate, customer attrition rate and certain other assumptions that form the basis of the forecasted cash flows.

The significant assumptions used to estimate the value of the Elkay trade name included Elkay revenue growth, and a royalty rate.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for acquisitions, including measurement period adjustments.

For example, our tests included controls over the estimation process supporting the recognition and measurement of customer relationships, trade names, and measurement period adjustments.

We also tested management’s review of the valuation models and significant assumptions used in the valuations.

To test the fair value of the customer relationship and trade name intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by management, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates and we evaluated the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results and certain peer companies.

We also evaluated evidence used by the Company in recording measurement period adjustments, including evaluation of the completeness and accuracy of the underlying data.

Pension Benefit Obligation

Description of the Matter At December 31, 2024, the Company’s projected benefit obligation related to its pension plans was $ 210.6 million and exceeded the fair value of pension plan assets of $ 203.0 million, resulting in an unfunded defined benefit pension obligation of $ 7.6 million.

As explained in Note 15 of the consolidated financial statements, the Company remeasures the pension assets and obligations at the end of each year or more frequently upon the occurrence of certain events.

The amounts are measured using actuarial valuations, which are dependent, in part, on the selection of certain actuarial assumptions.

Auditing the pension obligations was complex and required the involvement of specialists as a result of the complex nature of the actuarial assumptions, such as discount rates and mortality rates used in the Company’s annual remeasurement process.

These assumptions had a significant effect on the projected benefit obligation.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s valuation of the projected benefit obligation.

For example, we tested the Company’s controls over management’s review of the significant assumptions utilized in the valuation, including discount and mortality rates.

To test the projected benefit obligation, we performed audit procedures that included, among others, evaluating the methodology used, the significant actuarial assumptions described above, and the underlying data used by the Company.

We evaluated the change in the projected benefit obligation from the prior year due to the change in service cost, interest cost, actuarial gains and losses, benefit payments, and other activities.

In addition, we involved our actuary to assist in evaluating management’s methodology for selecting the appropriate discount rates that reflect the maturity and duration of the expected benefit payments and applying those discount rates to the benefit payments used to measure the projected benefit obligation.

To evaluate the mortality rates, we assessed whether the information is consistent with publicly available information, and whether any adjustments for entity-specific factors were applied.

/s/ Ernst & Young LLP

41 unchanged sentences

Goodwill 794.2 796.0

Insurance for asbestos claims — 72.1

Other assets 76.6 70.5

12 unchanged sentences

Operating lease liability 43.3 37.3

Reserve for asbestos claims — 79.0

Other liabilities 65.2 65.0

64 unchanged sentences

Comprehensive

(Loss) Income Non-controlling interest (1) Total Stockholders’ Equity

(Loss) Income Total Stockholders’ Equity

Balance at December 31, 2021 $ 1.3 $ 1,436.9 $ ( 1,236.9 ) $ ( 74.9 ) $ 126.4

3 unchanged sentences

— — — 4.1 4.1

Total comprehensive income — — 120.9 14.2 — 135.1

Total comprehensive income (loss) — — 61.7 ( 0.1 ) 61.6

Stock-based compensation expense — 23.2 — — 23.2

2 unchanged sentences

Repurchase of common stock (1) — — ( 24.7 ) — ( 24.7 )

Dividend received from Spin-Off Transaction — — 486.8 — — 486.8

Distribution of the net assets of the PMC business — — ( 1,923.3 ) ( 15.3 ) ( 3.0 ) ( 1,941.6 )

Proceeds associated with divestiture of discontinued operations — — 35.0 — 35.0

Elkay Merger (2) 0.5 1,416.5 — — 1,417.0

Common stock dividends ($ 0.20 per share)

5 unchanged sentences

— — — 3.7 3.7

Total comprehensive income (loss) — — 61.7 ( 0.1 ) — 61.6

Total comprehensive income — — 112.7 7.3 120.0

Stock-based compensation expense — 41.6 — — 41.6

2 unchanged sentences

Repurchase of common stock (1) ( 0.1 ) — ( 126.0 ) — ( 126.1 )

Proceeds associated with divestiture of discontinued operations — — 35.0 — — 35.0

Elkay Merger (2) — ( 5.1 ) — — ( 5.1 )

8 unchanged sentences

Stock-based compensation expense — 37.9 — — 37.9

Proceeds from exercise of stock options $ — $ 4.3 $ — $ — $ — 4.3

Proceeds from exercise of stock options and ESPP contributions — 8.6 — — 8.6

Taxes withheld and paid on employees' share-based payment awards — ( 8.6 ) — — ( 8.6 )

Repurchase of common stock (1) — — ( 150.7 ) — ( 150.7 )

Elkay Merger (3) $ — $ ( 5.1 ) $ — $ — $ — ( 5.1 )

Common stock dividends ($ 0.33 per share)

2 unchanged sentences

____________________

(1) During the transition period ended December 31, 2020, the Company acquired the remaining 30 % non-controlling interest in a PMC controlled subsidiary for a cash purchase price of $ 0.3 million.

From the time of this transaction through the Spin-Off Transaction, non-controlling interest represents a 5 % non-controlling interest in another PMC joint venture relationship.

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

(2) During the years ended December 31, 2023, 2022, and 2021, the Company repurchased and canceled 5.3 million shares, 1.1 million shares and 22.3 thousand shares of common stock at a total cost of $ 125.0 million, $ 24.7 million and $ 0.9 million at a weighted average price of $ 23.66 , $ 23.00 and $ 39.27 per share, respectively.

For the year ended December 31, 2023, the Company recognized $ 1.0 million in excise tax on the repurchases.

(1) During the years ended December 31, 2024, 2023, and 2022, the Company repurchased and canceled 4.7 million shares, 5.3 million shares and 1.1 million shares of common stock at a total cost of $ 150.2 million, $ 125.0 million and $ 24.7 million at an average price of $ 31.81 , $ 23.66 and $ 23.00 per share, respectively.

For the years ended December 31, 2024 and 2023, the Company recognized $ 0.5 million and $ 1.0 million of excise tax on the repurchases, respectively.

See Note 18, Common Stock Repurchases for additional information.

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Amortization of intangible assets 59.1 58.7 34.0

Non-cash asset impairment 2.5 — —

Non-cash restructuring charges 8.0 2.5 —

Loss on divestiture of asbestos liabilities and certain assets — 9.3 —

2 unchanged sentences

Deferred income taxes ( 14.8 ) ( 4.2 ) 0.5

Other non-cash expenses (income) 1.9 4.8 ( 3.6 )

Actuarial (gain) loss on pension and other postretirement benefit obligations ( 2.0 ) ( 1.9 ) 3.6

Other non-cash expenses 5.1 1.9 4.8

Actuarial gain on pension and other postretirement benefit obligations ( 1.4 ) ( 2.0 ) ( 1.9 )

Loss on the extinguishment of debt — 0.9 —

17 unchanged sentences

Repayments of debt ( 0.8 ) ( 77.9 ) ( 107.7 )

Dividend received from Spin-Off Transaction of PMC — — 486.8

Cash transferred to PMC related to Spin-Off Transaction — — ( 192.8 )

Payment of debt issuance costs — — ( 28.8 )

Proceeds from exercise of stock options 4.3 2.5 24.9

Proceeds from exercise of stock options and ESPP contributions 8.7 4.3 2.5

Taxes withheld and paid on employees' share-based payment awards ( 8.6 ) ( 3.1 ) ( 0.7 )

3 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 4.5 ) 1.8 ( 1.1 )

Increase (decrease) in cash, cash equivalents and restricted cash 11.9 28.2 ( 159.0 )

Increase in cash, cash equivalents and restricted cash 61.3 11.9 28.2

Cash, cash equivalents and restricted cash at beginning of period (1) 136.7 124.8 96.6

30 unchanged sentences

See Note 14, Stock-Based Compensation and Note 15, Retirement Benefits, respectively, for additional information.

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

The Company's product portfolio includes professional grade water safety and control products, flow system products, hygienic and environmental products, and filtered 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.

The Company's heritage of innovation and specification has allowed it to

provide highly-engineered, mission-critical solutions to customers for decades and affords it the privilege of having long-term, valued relationships with market leaders.

The Company's product portfolio includes professional grade water safety and control products, flow systems products, hygienic and environmental products, and filtered 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.

The Company's heritage of innovation and specification

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

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

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Allowances for doubtful accounts established are recorded within selling, general and administrative expenses within the consolidated statements of operations.

Significant Customers

The Company’s largest customer accounted for 20 %, 22 % and 23 % of consolidated net sales for the years ended December 31, 2023, 2022, and 2021, respectively.

No other customers account for more than 10% of consolidated net sales for the years ended December 31, 2023, the 2022, or 2021.

Inventories are comprised of material, direct labor and manufacturing overhead, and are stated at the lower of cost or market.

23 unchanged sentences

If the carrying amount exceeds the fair value of the reporting unit, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value up to the amount of the recorded goodwill.

During the fourth quarter of the year ended December 31, 2023, the Company completed its annual goodwill impairment tests and performed a quantitative assessment.

During the fourth quarter of the year ended December 31, 2024, the Company completed its annual goodwill and intangible asset impairment tests and elected to perform a qualitative assessment.

No goodwill impairment charges were recorded during the years ended December 31, 2024, 2023, or 2022.

During the year ended December 31, 2024, we recorded a $ 0.6 million impairment charge related to an indefinite-lived tradename no longer used.

No intangible asset impairment charges were recorded during the years ended December 31, 2023 or 2022.

Impairment of Long-Lived Assets

2 unchanged sentences

If impairment is identified, a loss is recorded equal to the excess of the asset's net book value over its fair value, and the cost basis is adjusted accordingly.

During the year ended December 31, 2023, the Company recognized $ 2.5 million of fixed asset impairment charges.

The Company recognized no impairment charges of tangible fixed assets during the during the years ended December 31, 2022 or 2021.

During the years ended December 31, 2024 and December 31, 2023, the Company recognized $ 7.4 million and $ 2.5 million of fixed asset impairment charges, respectively.

The Company recognized no impairment charges during the during the year ended December 31, 2022.

Impairments are determined utilizing Level 3 inputs within the Fair Value hierarchy, and the Company reviews and considers input from outside specialists, when appropriate.

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Such positive and negative evidence would include review of historical earnings and losses, anticipated future earnings, the time period over which the temporary differences and carryforwards are anticipated to reverse and implementation of feasible, prudent tax planning strategies.

The Company is subject to income taxes in the United States and numerous foreign jurisdictions.

The Company is subject to income taxes in the United States and multiple foreign jurisdictions.

Significant judgment is required in determining the Company’s worldwide provision for income taxes and recording the related deferred tax assets and liabilities.

In the ordinary course of the Company’s business, there is inherent uncertainty in quantifying the ultimate tax outcome of all the numerous transactions and required calculations relating to the Company’s tax positions.

Accruals for unrecognized tax benefits are provided for in accordance with the requirements of ASC 740, Income Taxes .

Accruals for unrecognized tax benefits are provided for in accordance with the requirements of ASC 740.

An unrecognized tax benefit represents the difference between the recognition of benefits related to uncertain tax positions for income tax reporting purposes and financial reporting purposes.

13 unchanged sentences

Other comprehensive (loss) income before reclassifications $ ( 4.2 ) $ 4.1 $ ( 0.1 )

Amounts reclassified from accumulated other comprehensive loss — 3.5 3.5

PMC Spin-Off Transaction ( 20.7 ) 5.4 ( 15.3 )

Balance at December 31, 2022 $ ( 75.1 ) $ 0.1 $ ( 75.0 )

Other comprehensive (loss) income before reclassifications $ ( 4.2 ) $ 4.1 $ ( 0.1 )

Balance at December 31, 2022 $ ( 75.1 ) $ 0.1 $ ( 75.0 )

Other comprehensive income before reclassifications $ 3.6 $ 3.7 $ 7.3

Balance at December 31, 2023 $ ( 71.5 ) $ 3.8 $ ( 67.7 )

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the year ended December 31, 2021 (in millions):

Pension and other postretirement plans Year Ended December 31, 2021 Income Statement Line Item

Amortization of prior service credit $ ( 0.2 ) Other income (expense), net

PMC Spin-Off Transaction settlement 4.8 Discontinued operations, net of tax

Benefit (provision) for income taxes ( 1.1 )

Total, net of income taxes $ 3.5

Other comprehensive (loss) income before reclassifications $ ( 10.0 ) $ 3.3 $ ( 6.7 )

Balance at December 31, 2024 $ ( 81.5 ) $ 7.1 $ ( 74.4 )

There were no amounts reclassified from accumulated other comprehensive loss to net income during the years ended December 31, 2024, 2023, and 2022.

Foreign Currency Translation

4 unchanged sentences

Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss.

Currency transaction losses are included in other expense, net in the consolidated statements of operations and totaled $ 0.9 million, $ 1.0 million and $ 0.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Currency transaction (gains) losses are included in other income (expense), net in the consolidated statements of operations and totaled $ 0.8 million, $( 0.9 ) million and $( 1.0 ) million for the years ended December 31, 2024, 2023, and 2022, respectively.

Advertising Costs

2 unchanged sentences

Research, development and engineering costs are charged to selling, general and administrative expenses on the consolidated statements of operations as incurred and amounted to $ 25.9 million, $ 23.7 million and $ 18.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Business Segment and Geographic Areas

The Company is a pure-play water management business that designs, procures, manufactures, and markets specification-driven water management solutions to improve health, human safety and the environment, which comprises one reportable segment.

The Company manages and evaluates its operations as one segment primarily due to similarities in the nature of its products, production process, customers and methods of distribution.

Net sales to third parties and long-lived assets by geographic region are as follows (in millions):

Net Sales Long-lived Assets

Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 December 31, 2023 December 31, 2022 December 31, 2021

United States $ 1,368.8 $ 1,135.3 $ 792.8 $ 160.6 $ 165.9 $ 51.6

Canada 133.8 131.1 113.3 11.7 12.0 12.7

Rest of World 27.9 15.4 4.8 8.0 5.9 0.1

$ 1,530.5 $ 1,281.8 $ 910.9 $ 180.3 $ 183.8 $ 64.4

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates.

Amounts attributed to the geographic regions for long-lived assets are based on the location of the entity that holds such assets.

In accordance with ASC 280, Segment Reporting , long-lived assets include property, plant, and equipment, net, which includes finance lease ROU assets, and excludes net intangible assets and goodwill.

Concentrations of Credit Risk

1 unchanged sentence

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting.

The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows when implemented.

In December 2023, the FASB issued Accounting Standards Update 2023-09 “Income Taxes (Topic 470):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which establishes new income tax disclosures to consistently categorize and provide greater disaggregation of information in the rate reconciliation, including dollar value and percentage impacts of each component of the reconciliation, as well as further disaggregates income taxes paid.

This guidance is effective for fiscal years beginning after December 15, 2024.

The Company is evaluating the impact of the adoption of ASU 2023-09 on the consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses.

The ASU’s amendments are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

The Company is evaluating the impact of the adoption of ASU 2024-03 on the consolidated financial statements.

Year Ended December 31, 2022

1 unchanged sentence

Elkay, a market leader of drinking water solutions and commercial sinks, complements the Company's 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.

The purchase price includes $ 1,411.9 million of Zurn's common stock based on Zurn's closing stock price of $ 27.48 per share 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, the Company issued 51,564,524 shares of its common stock, which represented approximately 29 % of outstanding shares immediately following the Merger.

3 unchanged sentences

These costs were associated with legal and professional services and were recognized as selling, general and administrative expenses in the consolidated statements of operations.

In accordance with the merger agreement, at closing the Company increased the size of its Board of Directors to eleven members and appointed two directors designated by Elkay.

As of December 31, 2024, the Board consisted of ten members, including one director designated by Elkay.

6 unchanged sentences

Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the Merger date.

See Note 12, Fair Value Measurements, for additional information.

As of June 30, 2023, the valuation process to determine the fair values of the net assets acquired during the measurement period was complete.

22 unchanged sentences

Unaudited Pro Forma Information

The following unaudited supplemental pro forma financial information presents the financial results from continuing operations for the years ended December 31, 2022 and 2021 as if the Elkay Merger had occurred on January 1, 2021.

The following unaudited supplemental pro forma financial information presents the financial results from continuing operations for the year ended December 31, 2022 as if the Elkay Merger had occurred on January 1, 2022.

The pro forma financial information includes, where applicable, adjustments for:

(i) additional amortization expense that would have been recognized related to the acquired intangible assets, (ii) additional depreciation expense that would have been recognized related to the acquired property, plant, and equipment, (iii) transaction costs and other one-time non-recurring costs which reduced expenses by $ 33.7 million for the year ended December 31, 2022 and increased expenses by $ 33.7 million for the year ended December 31, 2021, (v) additional cost of sales related to the inventory valuation adjustment which reduced expenses by $ 18.3 million for the year ended December 31, 2022 and increased expenses by $ 18.3 million for the year ended December 31, 2021, and (vi) the estimated income tax effect on the pro forma adjustments.

Expenses in the year ended December 31, 2022 include $ 33.7 million of transaction costs and other one-time non-recurring costs and $ 18.3 million of cost of sales related to the inventory valuation adjustment.

The pro forma financial information excludes adjustments for estimated cost synergies or other effects of the integration of the Elkay Merger.

The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the Elkay Merger been completed as of the date indicated or the results that may be obtained in the future.

December 31, 2022 December 31, 2021

December 31, 2022

Net sales $ 1,580.5

Net income (loss) from continuing operations $ 91.1 $ ( 4.2 )

Net income from continuing operations $ 37.6

Earnings per share from continuing operations

Basic $ 0.60 $ ( 0.03 )

Assuming dilution $ 0.24

For the period from July 1, 2022 through December 31, 2022, Elkay had net sales and a net loss of $ 264.4 million and $ 11.5 million, respectively, which include the impact of purchase accounting adjustments, and are included in the consolidated statements of operations for the period from July 1, 2022 through December 31, 2022.

Year Ended December 31, 2021

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

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

During the twelve months ended December 31, 2022, the Company 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.

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

On April 16, 2021, the Company 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, excluding transaction costs and net of cash acquired.

The Company paid $ 3.8 million to the sellers at closing and the remaining $ 0.7 million was paid out in 2022 and 2023 upon settlement of certain indemnities.

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.

The acquisitions have been accounted for as business combinations and were recorded by allocating the purchase prices to the fair value of assets acquired and liabilities assumed at the acquisition dates.

The excess of the purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The purchase price allocations associated with these acquisitions resulted in tax deductible goodwill of $ 7.5 million, customer relationship intangibles assets of $ 1.6 million, trade working capital of $ 9.0 million and $( 1.1 ) million of other net liabilities.

During the twelve months ended December 31, 2022, the purchase price allocations for Wade were adjusted, resulting in $ 1.3 million decrease to goodwill, primarily related to the aforementioned cash payment received from the sellers of Wade.

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

Pro-forma results of operations and certain other U.S.

GAAP disclosures related to these acquisitions have not been presented because the acquisitions did not significantly impact the Company's consolidated statements of operations or financial position.

Discontinued Operations

3 unchanged sentences

During the year ended December 31, 2022, the Company received $ 35.0 million from Regal Rexnord Corporation as a result of the final working capital and cash balances at closing exceeding the targets stipulated in the Spin-Off Transaction agreement.

In connection with the Spin-Off Transaction, the Company incurred approximately $ 60 million in separation costs during the year ended December 31, 2021, which are included within earnings from discontinued operations, net of income taxes in the accompanying consolidated statements of operations.

These costs primarily related to professional fees associated with planning the Spin-Off Transaction, as well as Spin-Off Transaction activities within finance, tax, legal and information system functions and certain investment banking fees incurred upon completion of the Spin-Off Transaction.

The major components of the Income from discontinued operations, net of tax presented in the consolidated statements of operations during the years ended December 31, 2024, 2023, and 2022 are included in the table below (in millions):

1 unchanged sentence

December 31, 2022

Net sales $ — $ — $ 973.0

Cost of sales — — 598.6

Selling, general and administrative expenses/(income) ( 8.4 ) ( 2.9 ) 260.2

Restructuring and other similar charges — — 1.9

Amortization of intangible assets — — 9.9

Interest expense, net — — 4.1

Actuarial loss on pension and other postretirement benefit obligations — — 4.8

Other non-operating income, net — — ( 5.6 )

Selling, general and administrative income ( 0.7 ) ( 8.4 ) ( 2.9 )

Income from discontinued operations before income tax 0.7 8.4 2.9

Income tax benefit (provision) 0.1 1.8 ( 28.0 )

Equity method investment income — — 0.3

Non-controlling interest income — — ( 0.2 )

Income tax benefit 0.6 0.1 1.8

Income from discontinued operations, net of tax $ 1.3 $ 8.5 $ 4.7

____________________

(1) Selling, general and administrative expenses for the year ended December 31, 2023 include the reversal of certain accruals as a result of costs the Company will no longer incur related to the Spin-Off Transaction.

(2) Results of operations for the year ended December 31, 2022 includes the reversal of certain accruals as a result of costs the Company is obligated to indemnify Regal Rexnord Corporation for being lower than original estimates.

(3) Results of operations during the year ended December 31, 2021 reflect the period from January 1, 2021 through October 4, 2021, the date on which the Spin-Off Transaction of PMC was completed.

(1) Selling, general and administrative income for the years ended December 31, 2024 and 2023 include the release of certain accruals as a result of costs the Company will no longer incur related to the Spin-Off Transaction.

(2) Results of operations for the year ended December 31, 2022 include the release of certain accruals as a result of costs the Company is obligated to under indemnification being lower than original estimates.

The consolidated statements of cash flows for the periods presented have not been adjusted to separately disclose cash flows related to discontinued operations.

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

December 31, 2022

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

December 31, 2022

Depreciation $ — $ 34.9

Amortization of intangible assets — 9.9

Gain on disposition of assets — ( 10.1 )

Deferred income taxes — 0.5

Actuarial loss on pension and other postretirement benefit obligations — 4.8

Other non-cash (income) expenses — ( 0.3 )

Stock-based compensation — 13.9

Expenditures for property, plant and equipment — ( 17.5 )

Acquisitions, net of cash acquired — —

Proceeds from dispositions of long-lived assets — 14.3

Net payments from divestiture of discontinued operations $ 35.0

Repayments of debt — ( 1.6 )

Proceeds from exercise of stock options — 12.8

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

___________________

(1) Results of operations during the year ended December 31, 2021 reflect the period from January 1, 2021 through October 4, 2021, the date on which the Spin-Off Transaction of PMC was completed.

During the year ended March 31, 2019, the Company completed the sale of the VAG business, which was previously included within the Water Management platform.

The terms of the sale agreement provided the Company to receive contingent consideration, based on, and subject to, the VAG business attainment of Earn-out EBITDA, as defined in the sale agreement.

During the year ended December 31, 2021, the Company received a $ 4.2 million cash payment as a result of the VAG businesses performance in its fiscal year ending March 31, 2021, which represented the final period of the earn-out, and was recorded within income from discontinued operations, net of tax in its consolidated statements of operations.

Restructuring and Other Similar Charges

21 unchanged sentences

$ 7.8 $ — $ 1.2 $ 9.0

Elkay opening balance sheet accrual 4.7 — — 4.7

Charges 3.4 2.5 9.4 15.3

Cash payments ( 10.5 ) — ( 10.0 ) ( 20.5 )

Non-cash charges — ( 2.5 ) — ( 2.5 )

Accrued restructuring costs, December 31, 2023 (1)

6 unchanged sentences

____________________

(1) As of December 31, 2023, the restructuring accrual is included in other current liabilities in the consolidated balance sheets.

As of December 31, 2022, $ 8.4 million of the restructuring accrual is included in other current liabilities and $ 0.6 million is included in other liabilities in the consolidated balance sheets.

(1) As of December 31, 2024 and December 31, 2023, the accrual for restructuring and other similar charges is included in other current liabilities in the consolidated balance sheets.

Revenue Recognition

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

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

The Company classifies shipping and handling fees

billed to customers as net sales and the corresponding costs are classified as cost of sales in the consolidated statements of operations.

Revenue by Category

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Net carrying amount as of December 31, 2022

Elkay Merger (1) 527.2

Purchase accounting adjustments (1) 19.0

Currency translation adjustments ( 3.0 )

Net carrying amount as of December 31, 2023

Purchase accounting adjustments (1) 19.0

Currency translation adjustments ( 1.8 )

Net carrying amount as of December 31, 2024

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Intangible asset amortization expense totaled $ 59.1 million, $ 58.7 million and $ 34.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

There were no acquired intangibles in 2023.

There were no acquired intangibles in 2024 or 2023.

Customer relationships and tradenames acquired during the year ended December 31, 2022 were assigned a weighted-average useful life of 16 years and 20 years, respectively.

During the year ended December 31, 2024, the Company recorded a $ 0.6 million impairment charge related to an indefinite-lived tradename no longer used.

The Company expects to recognize amortization expense on intangible assets subject to amortization of $ 58.6 million in 2025, $ 58.4 million in 2026, $ 58.4 million in 2027, $ 58.4 million in 2028, and $ 58.4 million in 2029.

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(3) See more information related to the restructuring obligations balance within Note 5, Restructuring and Other Similar Charges.

(4) Includes projected liabilities related to losses arising from automobile, general, environmental, and product liability claims.

(4) Includes projected liabilities related to losses arising from automobile, general, environmental, worker's compensation, and product liability claims.

Long-Term Debt

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As of December 31, 2024, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.

The Credit Agreement amended and restated in its entirety the Company’s Third Amended and Restated First Lien Credit Agreement, as amended (the “Prior Credit Agreement”).

At December 31, 2020, the Prior Credit Agreement was funded by a syndicate of banks and other financial institutions and provided for (i) a $ 625.0 million term loan facility (the “Prior Term Loan”) and (ii) a $ 264.0 million revolving credit facility (the “Prior Revolving Credit Facility”).

In connection with the 2021 amendment of the Credit Agreement, the Company recognized a $ 20.4 million loss in the prior year on the extinguishment of debt, comprised of refinancing-related costs incurred and a non-cash write-off of debt issuance costs associated with the previous debt outstanding.

The Credit Agreement provides for the issuance of a term loan facility in an aggregate principal amount of $ 550.0 million.

The proceeds of the Term Loan were, together with the dividend received by the Company in connection with the Spin-Off Transaction and cash on hand, used to (i) repay in full the aggregate principal amount outstanding of the Prior Term Loan, together with accrued interest thereon, (ii) redeem the $ 500 million of outstanding principal amount of the Notes, as described below, and (iii) pay related fees and expenses.

The proceeds of the Term Loan were, together with the dividend received by the Company in connection with the Spin-Off Transaction and cash on hand, used to (i) repay in full the aggregate principal amount outstanding of the Prior Term Loan, together with accrued interest thereon, (ii) redeem the $ 500 million of outstanding principal amount of the 4.875 % Senior Notes due 2025, and (iii) pay related fees and expenses.

On October 11, 2023, the Company made a voluntary prepayment on its Term Loan of $ 60.0 million.

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If the Net First Lien Leverage Ratio is greater than 1.80 to 1.00, the applicable margin shall equal 1.25 % in the case of base rate borrowings and 2.25 % in the case of SOFR borrowings.

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

In the event the Borrowers’ Net First Lien Leverage Ratio is less than or equal to 1.80 to 1.00, the applicable margin on both base rate and

SOFR borrowings would decrease by 0.25 %.

The Borrowers’ Net First Lien Leverage Ratio was 0.86 to 1.00 as of December 31, 2024 and therefore the applicable rate is 2.00 %.

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As of December 31, 2024 and December 31, 2023, $ 11.3 million and $ 11.0 million of the Revolving Credit Facility was considered utilized in connection with outstanding letters of credit, respectively.

4.875 % Senior Notes due 2025

On December 7, 2017, the Company issued $ 500.0 million aggregate principal amount of 4.875 % senior notes due December 15, 2025 (the “Notes”).

The Notes were issued by ZBS Global, Inc.

(f/k/a RBS Global, Inc.) and Zurn LLC (f/k/a Rexnord LLC) (Company subsidiaries;

collectively, the “Issuers”) pursuant to an Indenture, dated as of December 7, 2017 (the “Indenture”), by and among the Issuers, the domestic subsidiaries of the Company (with certain exceptions) as guarantors named therein (the “Subsidiary Guarantors”) and Wells Fargo Bank, National Association (the “Trustee”).

The Notes were general senior unsecured obligations of the Issuers.

The Company separately entered into a Parent Guarantee with the Trustee whereby it guaranteed certain obligations of the Issuers under the Indenture.

The Notes paid interest semi-annually on June 15 and December 15.

Debt issuance costs associated with the Notes were being amortized over the life of the Notes as interest expense using the effective interest method.

The Issuers redeemed the Notes on October 4, 2021, at a redemption price equal to 102.438 % of the principal amount thereof plus accrued and unpaid interest.

Accounts Receivable Securitization Program

On September 25, 2020, certain subsidiaries of the Company entered into a $ 100 million accounts receivable securitization facility (the “Securitization”) with Mizuho Bank, Ltd.

(“Mizuho”) to replace the Company’s previous $ 100.0 million accounts receivable securitization facility with Wells Fargo & Company, which was scheduled to expire in December 2020.

On May 17, 2021, the Company terminated the Securitization.

Finance Leases

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ASC 820 also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques.

Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed assumptions about the assumptions a market participant would use.

Observable inputs (highest level) reflect market data obtained from independent sources,

while unobservable inputs (lowest level) reflect internally developed assumptions about the assumptions a market participant would use.

In accordance with ASC 820, fair value measurements are classified under the following hierarchy:

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The fair value of long-term debt recorded on the consolidated balance sheets as of December 31, 2024 and December 31, 2023 was approximately $ 503.4 million and $ 503.9 million, respectively.

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

Acquisition Method of Accounting

The methods used to determine the fair value of significant identifiable assets and liabilities included in the allocation of the Elkay purchase price are discussed below.

Inventories - Acquired inventory was comprised of finished goods, work in process and raw materials.

The fair value of finished goods was calculated as the estimated selling price, adjusted for costs of the selling effort and a reasonable profit allowance relating to the selling effort.

The fair value of work in process inventory was primarily calculated as the estimated selling price, adjusted for estimated costs to complete the manufacturing, estimated costs of the selling effort, as well as a reasonable profit margin on the remaining manufacturing and selling effort.

The fair value of raw materials and supplies was determined based on replacement cost which approximates historical carrying value.

Property, Plant and Equipment - The fair value of property, plant, and equipment was determined based on assumptions that market participants would use in pricing an asset.

Leases, including Right-Of-Use ("ROU") Assets and Lease Liabilities - Lease liabilities were measured as of the acquisition date at the present value of future minimum lease payments over the remaining lease term and the incremental borrowing rate of the Company as if the acquired leases were new leases as of the acquisition date.

ROU assets recorded are equal to the amount of the lease liability at the acquisition date adjusted for any off-market terms of the lease.

The remaining lease term was based on the remaining term at the acquisition date plus any renewal or extension options that the Company is reasonably certain will be exercised.

Identifiable Intangible Assets - The fair value estimates of the identifiable intangible assets were based upon assumptions that market participants would use in pricing an asset.

The fair value and weighted average useful life of the identifiable intangible assets are as follows (in millions):

Fair Value Weighted Average Useful Life

Trade name (1) $ 145.3 20

Customer relationships (2) 720.2 16

Fair value of intangible assets acquired $ 865.5

____________________

(1) The Elkay trade name was valued using the relief from royalty method, which considers both the market approach and the income approach.

(2) The fair value of customer relationships was valued using a multi-period excess earnings method, a form of the income approach, which incorporates the estimated future cash flows to be generated from Elkay's existing customer base.

Deferred Income Tax Assets and Liabilities - The acquisition was structured as a merger and therefore, the Company assumed the historical tax basis of the Elkay business’s assets and liabilities.

The deferred income tax assets and liabilities include the expected future federal, state, and foreign tax consequences associated with temporary differences between the fair values of the assets acquired and liabilities assumed and the respective tax bases.

Tax rates utilized in calculating deferred income taxes generally represent the enacted statutory tax rates at the effective date of the acquisition in the jurisdictions in which legal title of the underlying asset or liability resides.

Other Assets Acquired and Liabilities Assumed (excluding Goodwill) - The Company utilized the carrying values, net of allowances, to value accounts receivable and accounts payable as well as other current assets and liabilities as it was determined that carrying values represented the fair value of those items at the acquisition date.

Goodwill - The excess of the consideration for the acquisition over the fair value of net assets acquired was recorded as goodwill.

The goodwill is attributable to expected synergies and expanded market opportunities from combining the Company’s operations with those of Elkay.

The goodwill created in the acquisition is not deductible for tax purposes.

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

The Company determines if a contract is (or contains) a lease at inception by evaluating whether the contract conveys the right to control the use of an identified asset.

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Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and are instead recognized on a straight-line basis over the lease term.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company rents or subleases certain real estate to third parties, primarily related to exited facilities, with income offsetting restructuring expense.

The sublease income related to these arrangements is not material to the consolidated financial statements.

Right-of-use (“ROU”) assets and liabilities are recognized in the consolidated balance sheets based on the present value of remaining lease payments over the lease term.

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Lease payments included in the measurement of the lease liabilities are comprised of fixed payments, variable payments that depend on an index or rate, and amounts probable to be paid if an option is reasonably certain to be exercised.

Variable lease payments, typically based on usage of the asset or changes in

an index or rate, are excluded from the lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

Variable lease payments, typically based on usage of the asset or changes in an index or rate, are excluded from the lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

ROU assets and lease liability balances recorded on the consolidated balance sheets are summarized as follows (in millions):

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Future minimum lease payments under operating and finance leases as of December 31, 2024 are as follows (in millions):

Years ending December 31, Operating Leases (1)

Finance Leases (1)

Years ending December 31, Operating Leases Finance Leases

2025 $ 15.8 $ 2.2

2026 14.7 2.2

2027 13.8 2.3

Thereafter 9.8 20.6

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Total lease liabilities $ 56.0 $ 20.6

____________________

(1) Excludes legally binding minimum lease payments for leases signed but not yet commenced.

The weighted-average remaining lease terms and discount rates for leases are as follows:

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Financing cash flows from finance leases 0.8 0.8 0.2

ROU assets obtained in exchange for lease liabilities are as follows (in millions):

ROU assets obtained (disposed) in exchange for lease liabilities are as follows (in millions):

December 31, 2024 December 31, 2023 December 31, 2022

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Options and RSUs granted since fiscal 2016 generally vest ratably over 3 years.

During the years ended December 31, 2022 and 2021, RSUs were granted to certain employees that cliff vest after 2 years.

During the year ended December 31, 2022, RSUs were granted to certain employees that cliff vest after 2 years.

RSUs granted to nonemployee directors vest immediately, but shares are not issued until six months after the director's cessation of service.

PSUs generally cliff vest after 3 years based on performance over that three-year period.

A portion of PSUs granted to certain executives during the year ended December 31, 2024 include a total shareholder return ("TSR") multiplier to determine the final number of PSUs earned.

In May 2024, the Company’s stockholders approved the adoption of the Zurn Elkay Water Solutions Corporation Employee Stock Purchase Plan (“ESPP").

The number of shares of Company common stock available for purchase under the ESPP is 2,000,000 shares, subject to adjustment in the event of a change in capitalization.

During the year ended December 31, 2024, the Company issued 44,436 shares of common stock related to the ESPP.

As of December 31, 2024, 1,955,564 shares remained available for future issuance.

During the year ended December 31, 2024, the Company recognized $ 0.3 million of stock-based compensation expense related to the ESPP.

In connection with the Spin-Off Transaction, the Company made adjustments to the number of unvested stock options, RSUs and PSUs with the intention of preserving the intrinsic value of the recipient's awards prior to the Spin-Off.

Accordingly, the number of stock options, RSUs and PSUs outstanding as of the date of the Spin-Off Transaction was multiplied by a factor of 2.03446 , and the related grant date fair value was divided by a factor of 2.03446 , which resulted in no increase in the intrinsic value of awards outstanding.

Stock options and RSU's continue to vest in accordance with their original vesting period.

The vesting of PSU's granted prior to the beginning of 2021 was accelerated and all outstanding awards became fully vested and were released at the time of the Spin-Off Transaction based on performance achieved through, and as of the Spin-Off Transaction date.

PSUs granted in October 2021 continue to vest in accordance with their original vesting period.

These adjustments to the Company’s share-based compensation awards were deemed to be a modification of the awards and resulted in approximately $ 4.9 million of incremental expense, of which $ 0.2 million, $ 0.2 million, and $ 4.5 million was recognized during the years ended December 31, 2023, 2022, and 2021, respectively.

Stock options and RSUs continue to vest in accordance with their original vesting period.

The vesting of PSUs granted prior to the beginning of 2021 was accelerated and all outstanding awards became fully vested and were released at the time of the Spin-Off Transaction based on performance achieved through, and as of the Spin-Off Transaction date.

These adjustments to the Company’s share-based compensation awards were deemed to be a modification of

the awards and resulted in approximately $ 4.9 million of incremental expense, of which $ 0.2 million and $ 0.2 million was recognized during the years ended December 31, 2023 and 2022, respectively.

On the date of the Spin-Off Transaction, the modification affected 124 grantees.

Stock options and RSUs outstanding that were held by employees who transferred to Regal Rexnord Corporation in connection with the Spin-Off Transaction were canceled and replaced by awards issued by Regal Rexnord Corporation.

Employees remaining with the Company did not receive share-based compensation awards of Regal Rexnord Corporation as a

result of the Spin-Off Transaction.

Except for the conversion of awards, the material terms of the awards held by employees who transferred to Regal Rexnord Corporation remained unchanged.

During the years ended December 31, 2024, 2023, and 2022, the Company recorded $ 37.9 million, $ 40.0 million and $ 25.0 million, respectively, of stock-based compensation expense from continuing operations (the related tax benefit on these amounts subject to the 162(m) compensation limitations during the years ended December 31, 2024, 2023, and 2022 was $ 9.2 million, $ 9.8 million, and $ 5.9 million, respectively).

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Exercised (1) ( 1,241,512 ) 12.62 ( 655,644 ) 11.66 ( 221,506 ) 11.89

Spin-Off Transaction conversion — — — — 2,413,727 10.98

Canceled/Forfeited ( 26,808 ) 28.49 ( 48,736 ) 27.77 ( 78,432 ) 27.65

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Granted 125,565 31.23 242,385 23.40 370,244 28.80

Spin-Off Transaction conversion — — — — 227,058 16.54

Vested ( 318,274 ) 27.06 ( 218,153 ) 30.70 ( 166,318 ) 18.37

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During the years ended December 31, 2024, 2023, and 2022, the Company granted PSUs to certain of its officers and employees.

The PSUs granted during the years ended December 31, 2023, 2022, and 2021 have a three-year performance period, and are earned and vest, subject to continued employment, based on performance relative to metrics determined by the Compensation Committee.

The PSUs granted during the years ended December 31, 2024 and 2023 had a three-year performance period, while the PSUs granted during the year ended December 31, 2022 had a two-and-a-half-year performance period, and are earned and vest, subject to continued employment, based on performance relative to metrics determined by the Compensation Committee.

The number of performance share awards earned, which can range between 0 % and 200 % of the target awards granted depending on the Company's actual performance during the respective performance period, will be satisfied with Zurn Elkay common stock.

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Granted 553,548 34.33 425,246 23.25 177,724 30.92

Spin-Off conversion Transaction — — — — 1,986,910 14.12

Vested (1) ( 431,702 ) 32.25 ( 468,722 ) 22.17 — —

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Nonvested PSUs at end of period 945,741 $ 29.53 866,810 $ 27.88 939,459 $ 27.07

______________________

(1) For the years ended December 31, 2024 and 2023, represents the target level of PSUs vested.

During the year ended December 31, 2024, PSUs were granted with vesting based on goals related to free cash flow conversion, return on invested capital, and sales growth, and certain awards contained a TSR multiplier.

During the years ended December 31, 2023 and 2022, PSUs were granted with vesting based on goals related to free cash flow conversion and return on invested capital.

The fair value of the portion of PSUs with vesting based on free cash flow conversion and return on invested capital is determined based on the Company's closing stock price on the date of grant.

The fair value of the portion of PSUs with vesting based on free cash flow conversion, return on invested capital, and sales growth is determined based on the Company's closing stock price on the date of grant.

The fair value of the portion of PSUs granted in 2024 that include a TSR multiplier is determined using a Monte Carlo valuation model.

For these awards, the number of PSUs earned based on the achievement of goals related to free cash flow conversion, return on invested capital, and sales growth may be increased by 0-75% if the Company's TSR over the performance period falls within a predefined range.

Retirement Benefits

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Most of the Company’s employees are accumulating retirement income benefits through defined contribution plans.

However, the Company sponsors frozen pension plans for certain salaried participants and ongoing pension benefits for certain employees represented by

collective bargaining.

However, the Company sponsors frozen pension plans for certain salaried participants and ongoing pension benefits for certain employees represented by collective bargaining.

These plans provide for monthly pension payments to eligible employees upon retirement.

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Other postretirement benefits consist of retiree medical plans that cover a portion of employees in the United States that meet certain age and service requirements.

Net periodic benefit costs are primarily comprised of service and interest cost, amortization of unrecognized prior service cost and the expected return on plan assets.

Net periodic benefit costs are primarily comprised of service and interest cost and the expected return on plan assets.

The service cost component of net periodic benefit cost is presented within Cost of sales and Selling, general and administrative expenses in the statements of operations while the other components of net periodic benefit cost are presented within Other income (expense), net.

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

Refer to Note 4, Discontinued Operations for further detail.

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

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These amounts are recorded within Actuarial gain on pension and other postretirement benefit obligations in the consolidated statements of operations.

On October 4, 2021, the Company completed the Spin-Off Transaction of the PMC business.

In accordance with the terms of the Spin-Off Transaction agreements, the net assets associated with the PMC business included in the Spin-Off Transaction included unfunded pension and other postretirement benefit obligations of $ 80.4 million.

The transfer of these obligations affiliated with certain defined benefit plans was accounted for as a settlement in accordance with the authoritative guidance, which required the Company to perform an interim remeasurement of certain plans.

In connection with the remeasurement, the Company recognized pre-tax non-cash actuarial losses of $ 4.8 million during the year ended December 31, 2021, which is recognized within income from discontinued operations, net of tax.

The components of net periodic benefit cost reported in the consolidated statements of operations are as follows (in millions):

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Expected return on plan assets ( 7.5 ) ( 7.5 ) ( 9.6 )

Benefit cost associated with special events:

PMC Spin-Off — — 5.7

Recognition of actuarial gains ( 0.1 ) — —

Net periodic benefit (income) expense $ 3.7 $ 4.7 $ ( 0.9 )

1 unchanged sentence

Interest cost $ 0.4 $ 0.6 $ 0.4

Amortization of prior service credit — — ( 0.2 )

Benefit cost associated with special events:

PMC Spin-Off — — ( 0.9 )

Recognition of actuarial gains ( 1.3 ) ( 2.0 ) ( 1.9 )

Net periodic benefit (income) expense $ ( 0.9 ) $ ( 1.4 ) $ ( 1.5 )

During the year ended December 31, 2024, the recognition of $ 1.4 million of net non-cash actuarial gains was primarily due to a combination of discount rate increases coupled with demographic and claims gains experienced during 2024 that were reflected in the other post-retirement benefit plans.

These gains were partially offset by an increase in the medical cost growth assumption from the prior measurement.

During the year ended December 31, 2023, the recognition of $ 2.0 million of net non-cash actuarial gains was primarily due to demographic gains experienced during 2023 that were reflected in the other post-retirement benefit plans.

1 unchanged sentence

These gains were partially offset by a decrease in discount rate from the prior measurement.

During the year ended December 31, 2022, the recognition of $ 1.9 million of net non-cash actuarial gains was primarily due to an increase in the discount rates utilized within remeasurement of the Company's defined benefit plans partially offset by unfavorable asset returns.

During the year ended December 31, 2021, the recognition of $ 3.6 million of net non-cash actuarial losses was primarily due to an increase in the discount rates utilized within remeasurement of the Company's defined benefit plans.

During the year ended December 31, 2022, the recognition of $ 1.9 million of net non-cash actuarial gains was primarily due to an increase in the discount rate utilized within remeasurement of the Company's defined benefit plans partially offset by unfavorable asset returns.

The Company made contributions to its U.S.

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Benefit obligation at beginning of period $ ( 224.0 ) $ ( 226.3 ) $ ( 8.7 ) $ ( 11.7 )

Elkay Merger (1) — ( 0.9 ) — ( 20.4 )

Service cost ( 0.1 ) ( 0.1 ) — —

3 unchanged sentences

Plan participant contributions — — ( 0.2 ) ( 0.2 )

Settlements 0.2 — — —

Benefit obligation at end of period $ ( 210.6 ) $ ( 224.0 ) $ ( 7.2 ) $ ( 8.7 )

Plan assets at the beginning of the period $ 195.2 $ 186.2 $ — $ —

Elkay Merger (1) — 0.5 — —

Actual return on plan assets 6.6 17.2 — —

1 unchanged sentence

Benefits paid ( 19.1 ) ( 19.6 ) ( 1.0 ) ( 1.4 )

Settlements ( 0.1 ) — — —

Plan assets at end of period $ 203.0 $ 195.2 $ — $ —

5 unchanged sentences

Total net funded status $ ( 7.6 ) $ ( 28.8 ) $ ( 7.2 ) $ ( 8.7 )

(1) In accordance with the terms of the Elkay Merger, the Company paid $ 17.3 million following the completion of the Elkay Merger to liquidate all remaining obligations associated with one of Elkay's defined benefit plans assumed in the Elkay Merger.

As of December 31, 2024, the Company had pension plans with a combined projected benefit obligation of $ 210.6 million compared to plan assets of $ 203.0 million, resulting in an under-funded status of $ 7.6 million compared to an under-funded status of $ 28.8 million at December 31, 2023.

12 unchanged sentences

Benefits Total

Unrecognized actuarial loss (gain) 0.4 ( 0.5 ) ( 0.1 )

Accumulated other comprehensive loss (income), gross 0.4 ( 0.5 ) ( 0.1 )

Deferred income tax (benefit) provision ( 0.1 ) 0.1 —

Accumulated other comprehensive loss (income), net $ 0.3 $ ( 0.4 ) $ ( 0.1 )

Unrecognized actuarial gain ( 4.1 ) ( 0.9 ) ( 5.0 )

Accumulated other comprehensive income, gross ( 4.1 ) ( 0.9 ) ( 5.0 )

Deferred income tax provision 1.0 0.2 1.2

Accumulated other comprehensive income, net $ ( 3.1 ) $ ( 0.7 ) $ ( 3.8 )

The following table presents significant assumptions used to determine benefit obligations and net periodic benefit cost (income) in weighted-average percentages:

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Expected return on plan assets 4.0 % 4.3 % 4.0 % n/a n/a n/a

In evaluating the expected return on plan assets, consideration was given to historical long-term rates of return on plan assets and input from the Company’s pension fund consultant on asset class return expectations, long-term inflation and current market conditions.

The following table presents the Company’s target investment allocations for the year ended December 31, 2024 and actual investment allocations at December 31, 2024 and December 31, 2023.

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Debt securities (including cash and cash equivalents) 70 % - 100 % 90 % 90 % 70 %

Other 0 % - 10 % — % — % — %

______________________

(1) The investment policy allocation represents the guidelines of the Company's pension plans based on the changes in the plans funded status.

(2) The target allocations represent the weighted average target allocations for the Company's pension plans.

(2) The target allocations represent the weighted average target allocations for the Company's U.S.

pension plan.

The Company's defined benefit pension utilizes a dynamic liability driven investment ("LDI") strategy.

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The other postretirement benefit obligation was determined using an assumed health care cost trend rate of 7.0 % in 2024 grading down to 5.0 % in 2033 and thereafter.

The discount rate, compensation rate increase and health care cost trend rate assumptions are determined as of the measurement date.

The discount rate and health care cost trend rate assumptions are determined as of the measurement date.

Defined Contribution Savings Plans

The Company sponsors certain defined-contribution savings plans for eligible employees.

Expense recognized related to these plans was $ 4.5 million, $ 5.9 million and $ 5.5 million during the years ended December 31, 2023, 2022, and 2021 , respectively.

During the year ended December 31, 2023, the Company utilized 201,053 shares of its common stock with a weighted average fair value of $ 25.06 per share in funding the cost.

During the year ended December 31, 2022, the Company utilized 67,025 shares of its common stock with a weighted average fair value of $ 26.53 per share in funding the cost.

Expense recognized related to these plans was $ 5.6 million, $ 4.5 million and $ 5.9 million during the years ended December 31, 2024, 2023, and 2022 , respectively, primarily related to the Company matching contributions.

During the year ended December 31, 2024, the Company utilized 137,031 shares of its common stock with a weighted average fair value of $ 33.71 per share in funding the cost associated with the Company matching contributions.

During the year ended December 31, 2023, the Company utilized 201,053 shares of its common stock with a weighted average fair value of $ 25.06 per share in funding the cost associated with the Company matching contributions.

Deferred Compensation Plan

1 unchanged sentence

Assets are invested primarily in mutual funds and corporate-owned life insurance contracts held in a Rabbi trust and restricted for payments to participants of the plan.

The assets and liabilities are classified in Other assets and Other liabilities, respectively, on the consolidated balance sheets.

Changes in the values of the assets held by the rabbi trust and changes in the value of the deferred compensation liability are recorded in Other income (expense), net in the consolidated statements of operations.

The assets are classified in Other assets on the consolidated balance sheets.

The short-term liabilities and long-term liabilities are classified in Compensation and benefits and Other liabilities, respectively, on the consolidated balance sheets.

Changes in the values of the assets held by the rabbi trust and changes in the value of the deferred compensation liabilities are recorded in Other income (expense), net in the consolidated statements of operations.

The fair values of the Company’s deferred compensation plan assets and liability are included in the table below (in millions).

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In October 2021, more than 130 countries agreed to implement Pillar 2, a plan introduced by the Organization for Economic Co-operation and Development (“OECD”) providing for a global minimum tax rate of 15% (calculated on a country-by-country basis) for those companies having consolidated revenue of at least €750 million.

The implementation of the Pillar 2 global minimum tax rules is intended to apply for tax years beginning in 2024.

The implementation of the Pillar 2 global minimum tax rules has begun to apply for tax years beginning in 2024.

The main purpose of such rules is to minimize tax base erosion and profit shifting from higher tax jurisdictions to lower tax jurisdictions by multi-national companies.

On February 1, 2023, the Financial Accounting Standards Board indicated that they view the minimum tax (“Top-Up Tax”) imposed under Pillar 2 as an alternative minimum tax, and as such, it should be recognized in the period incurred versus recognizing or adjusting deferred tax assets and liabilities.

On February 1, 2023, the Financial Accounting Standards Board (“FASB”) indicated that they view the minimum tax (“Top-Up Tax”) imposed under Pillar 2 as an alternative minimum tax, and as such, it should be recognized in the period incurred versus recognizing or adjusting deferred tax assets and liabilities.

On February 2, 2023, the OECD issued various administrative guidance including transitional safe harbor rules available in conjunction with the implementation of the Pillar 2 global minimum tax.

Based upon the current OECD rules and administrative guidance, the Company does not anticipate being subject to material Top-Up Taxes as various tax jurisdictions begin enacting such legislation.

The Company is continuing to monitor

the potential impact of the Pillar 2 proposals and developments on our consolidated financial statements and related disclosures, including eligibility for any transitional safe harbor rules.

Based upon the current OECD rules and administrative guidance, as well as the related legislation of those countries which has been enacted to date, the Company does not anticipate being subject to material Top-Up Taxes.

Company is continuing to monitor the potential impact of the Pillar 2 proposals and developments on our consolidated financial statements and related disclosures, including eligibility for any transitional safe harbor rules.

Income Tax Provision

69 unchanged sentences

In addition, at December 31, 2024, the Company had approximately $ 3.4 million of foreign NOL carryforwards, of which there is a recorded tax effected valuation allowance of $ 0.9 million.

The significant decrease in the deferred tax asset relating to federal and state capital loss carryforwards is the result of such credits expiring unutilized.

These expiring credits were effectively written off against the full valuation allowance previously recorded by the Company.

As such, the majority of the significant decrease in the valuation allowance was the result of this write-off.

The majority of the decrease in the deferred tax asset relating to state net operating loss and credit carryforwards is the result of certain state net operating losses expiring unutilized.

These expiring state net operating losses were effectively written off against the full valuation allowance previously recorded by the Company.

As such, the majority of the decrease in the valuation allowance was the result of this write-off.

No provision has been made for U.S.

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This net amount is presented in the consolidated balance sheets as income taxes payable (separately disclosed in other current liabilities) of $ 2.3 million and $ 3.5 million as of December 31, 2024 and 2023, respectively;

and as income taxes receivable in the consolidated balance sheets of $ 17.0 million and $ 18.3 million as of December 31, 2023 and 2022, respectively.

and as income taxes receivable in the consolidated balance sheets of $ 19.6 million and $ 17.0 million as of

December 31, 2024 and 2023, respectively.

Net cash paid for income taxes to governmental tax authorities for the years ended December 31, 2024, 2023, and 2022 was $ 68.1 million, $ 45.7 million and $ 3.1 million, respectively.

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Additions for tax positions of prior years — 0.1

Reductions for tax positions of prior years ( 0.1 ) —

Reductions due to lapse of applicable statute of limitations ( 3.4 ) ( 0.5 )

2 unchanged sentences

As of December 31, 2024 and 2023, the total amount of unrecognized tax benefits includes $ 0.5 million and $ 1.1 million of gross accrued interest and penalties, respectively.

The amount of net interest and penalties recorded as income tax expense during the years ended December 31, 2023, 2022, and 2021 was $ 0.4 million, $ 0.2 million, and $ 0.2 million, respectively.

The amount of net interest and penalties recorded as income tax (benefit) expense during the years ended December 31, 2024, 2023, and 2022 was $( 0.4 ) million, $ 0.4 million, and $ 0.2 million, respectively.

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

Consequently, the Company is subject to periodic income tax examinations by domestic and foreign income tax authorities.

In accordance with the terms of the sale agreement relating to a group of certain previously owned legal entities (the parent of which was VAG Holding GbmH, “VAG”), the Company is required to indemnify the purchaser for any future income tax liabilities associated with all open tax years ending prior to, and including, the short period ended on the date of the Company's sale of VAG.

VAG was notified by the German tax authorities of its intention to conduct an income tax examination of the VAG German entities’ corporate income and trade tax returns for the tax years ended March 31, 2014 through 2020.

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

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

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

Regal Rexnord Corporation was recently notified by the Netherlands tax authorities of their intention to conduct an income tax examination of certain PMC Netherland entities’ corporate income tax returns for the tax year ended December 31, 2021.

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

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With certain exceptions, the Company is no longer subject to U.S.

federal income tax examinations for tax years ending prior to March 31, 2020, state and local income tax examinations for years ending prior to March 31, 2019 or significant foreign income tax examinations for years ending prior to March 31, 2018.

federal income tax examinations for tax years ending prior to December 31, 2020, state and local income tax examinations for years ending prior to March 31, 2020 or significant foreign income tax examinations for years ending prior to March 31, 2019.

Commitments and Contingencies

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In addition, the buyer will indemnify the Company and its affiliates for breaches of representations or warranties, breaches of covenants, liabilities related to the operation of Zurn Industries’ and buyer’s operations post-closing and all claims arising out of asbestos liabilities and related insurance coverage.

December 15, 2023 and the Company no longer has any obligation with respect to pending and future asbestos claims related to the divested entities.

As a result of the transaction, all asbestos obligations and liabilities, related insurance assets and associated deferred taxes, and other assets sold to the buyer, have been removed from the Company’s consolidated balance sheet effective December 15, 2023 and the Company no longer has any obligation with respect to pending and future asbestos claims related to

the divested entities.

As such, the divested entities have been deconsolidated from our 2023 financial results as the Company no longer owns or controls such entities.

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This expense was recorded in other income (expense), net within the consolidated statements of operations.

During the year ended December 31, 2021, no amounts were recorded in the consolidated statements of operations.

Common Stock Repurchases

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

During the year ended December 31, 2023, the Company repurchased 5.3 million shares of common stock at a total cost of $ 125.0 million at a weighted average price of $ 23.66 per share.

During the year ended December 31, 2022, the Company repurchased 1.1 million shares of common stock at a total cost of $ 24.7 million at a weighted average price of $ 23.00 per share.

During the year ended December 31, 2021, the Company repurchased 22.3 thousand shares of common stock at a total cost of $ 0.9 million at a weighted average price of $ 39.27 per share.

During the year ended December 31, 2024, the Company repurchased 4.7 million shares of common stock at a total cost of $ 150.2 million at an average price of $ 31.81 per share.

During the year ended December 31, 2023, the Company repurchased 5.3 million shares of common stock at a total cost of $ 125.0 million at an average price of $ 23.66 per share.

During the year ended December 31, 2022, the Company repurchased 1.1 million shares of common stock at a total cost of $ 24.7 million at an average price of $ 23.00 per share.

The repurchased shares were canceled by the Company upon receipt.

At December 31, 2024, a total of approximately $ 240.2 million of repurchase authority remained under the Repurchase Program.

Subsequent Event

On February 1, 2024, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $ 0.08 per share to be paid on March 7, 2024, to stockholders of record as of February 20, 2024.

Business Segment, Geographic and Customer Information

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

The Company’s product portfolio includes professional grade water safety and control products, flow systems products, hygienic and environmental products and filtered drinking water products.

Revenue is primarily generated in the United States and the Company manages and evaluates its operations on a consolidated basis as one operating and reporting segment due to similarities of its products, processes, customer base and methods of distribution.

The Company’s accounting policies are described in Note 2, Significant Accounting Policies.

The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer.

The CODM assesses the Company’s performance and makes capital allocation decisions based on Net income from continuing operations as reported in the consolidated statement of operations.

This metric is used to monitor forecasted to actual and budgeted results and

benchmarking to our peers.

The following table includes segment revenue, significant expense items and segment profit as viewed by the CODM for the years ended December 31, 2024, 2023 and 2022:

December 31, 2024 December 31, 2023 December 31, 2022

Net sales $ 1,566.5 $ 1,530.5 $ 1,281.8

Cost of sales 859.5 882.4 816.3

Selling, general and administrative expenses 389.8 371.3 309.0

Other segment items (1) 158.3 172.6 99.5

Segment profit (Net income from continuing operations) $ 158.9 $ 104.2 $ 57.0

______________________

(1) Other segment items include restructuring and other similar charges, amortization of intangible assets, interest expense, net, actuarial gain on pension and other postretirement benefit obligations, other expense, net, provision for income taxes, and other non-recurring charges.

Segment net sales, amortization, interest expense, net, income before income taxes and income tax expense are included on the consolidated statement of operations.

Segment assets are included on the consolidated balance sheet and segment depreciation, stock-based compensation expense, non-cash restructuring charges, and expenditures for plant, property and equipment are included on the consolidated statement of cash flows.

Interest income for the years ended December 31, 2024, 2023, and 2022 was $ 7.8 million, $ 4.9 million, and $ 0.5 million, respectively.

Net sales to third parties and long-lived assets by geographic region are as follows (in millions):

Net Sales Long-lived Assets

Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 December 31, 2024 December 31, 2023 December 31, 2022

United States $ 1,394.8 $ 1,368.8 $ 1,135.3 $ 148.0 $ 160.6 $ 165.9

Canada 145.8 133.8 131.1 10.2 11.7 12.0

Rest of World 25.9 27.9 15.4 5.8 8.0 5.9

$ 1,566.5 $ 1,530.5 $ 1,281.8 $ 164.0 $ 180.3 $ 183.8

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates.

Amounts attributed to the geographic regions for long-lived assets are based on the location of the entity that holds such assets.

Long-lived assets include property, plant and equipment, net which includes finance lease ROU assets and excludes net intangible assets and goodwill.

The Company’s largest customer accounted for 19 %, 20 % and 22 % of consolidated net sales for the years ended December 31, 2024, 2023, and 2022, respectively.

No other customers account for more than 10% of consolidated net sales for the years ended December 31, 2024, 2023, or 2022.

Subsequent Events

On January 30, 2025, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $ 0.09 per share to be paid on March 7, 2025, to stockholders of record as of February 20, 2025.

Pension Plan Termination

On January 30, 2025, subsequent to the end of the fiscal year, the Company's Board of Directors approved a resolution to terminate the Company's defined benefit pension plan.

During the first quarter of fiscal year 2025, the Company commenced the plan termination process and expects to complete the termination during 2025.

The termination of the plan will follow an amendment to freeze the plan, pursuant to which all future benefit accruals, including compensation increases, will be frozen effective March 31, 2025.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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 8. Financial Statements and Supplementary Data