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.
−Removed: Pension Benefit Obligation
−Removed: 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.
−Removed: 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.
+Added: Accounting for the U.S.
+Added: Pension Plan Settlement Gain
+Added: Description of the Matter For the year ended December 31, 2025, the Company recorded a $ 10.0 million pre-tax pension settlement gain within other income (expense), net.
+Added: As described in Note 14 to the consolidated financial statements, the Company’s Board of Directors approved a resolution to terminate the Company’s U.S.
+Added: defined benefit pension plan (the “Pension Plan”) with the full freeze of benefit accruals under the Pension Plan effective March 31, 2025 and the termination of the Pension Plan effective April 1, 2025.
+Added: As explained in Note 14 of the consolidated financial statements, the Company remeasures the pension assets and obligations at the end of each year or more frequently upon any required remeasurement event.
The amounts are measured using actuarial valuations, which are dependent, in part, on the selection of certain actuarial assumptions.
−Removed: 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.
−Removed: These assumptions had a significant effect on the projected benefit obligation.
−Removed: 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.
+Added: 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 accounting of the U.S.
+Added: defined benefit pension plan termination and the related remeasurement process.
+Added: These assumptions had a significant effect on the projected benefit obligation used to calculate the pension settlement gain.
+Added: 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 used to calculate the pension settlement gain.
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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: To test the projected benefit obligation used to calculate the pension settlement gain, we performed audit procedures that included, among others, evaluating the methodology used, and the significant actuarial assumptions described above.
+Added: 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, lump-sum distributions, and other activities.
+Added: In addition, we involved our actuaries 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.
111 unchanged sentences
Foreign currency translation and other adjustments 4.9 ( 10.0 ) 3.6
−Removed: Change in pension and other postretirement defined benefit plans, net of tax 3.3 3.7 4.1
+Added: Change in pension and other postretirement benefit obligations, net of tax ( 7.2 ) 3.3 3.7
Other comprehensive income (loss), net of tax ( 2.3 ) ( 6.7 ) 7.3
12 unchanged sentences
Foreign currency translation and other adjustments — — — 3.6 3.6
−Removed: Change in pension and other postretirement defined benefit plans, net of $ 2.2 million of income tax
+Added: Change in pension and other postretirement benefit obligations, net of $ 1.2 million of income tax
— — — 3.7 3.7
−Removed: Total comprehensive income (loss) — — 61.7 ( 0.1 ) 61.6
+Added: 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 )
−Removed: Proceeds associated with divestiture of discontinued operations — — 35.0 — 35.0
Elkay Merger (2) — ( 5.1 ) — — ( 5.1 )
4 unchanged sentences
Foreign currency translation and other adjustments — — — ( 10.0 ) ( 10.0 )
−Removed: Change in pension and other postretirement defined benefit plans, net of $ 1.2 million of income tax
+Added: Change in pension and other postretirement benefit obligations, net of $ 1.1 million of income tax
— — — 3.3 3.3
1 unchanged sentence
Stock-based compensation expense — 37.9 — — 37.9
−Removed: Proceeds from exercise of stock options — 4.3 — — 4.3
+Added: 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 )
−Removed: Elkay Merger (2) — ( 5.1 ) — — ( 5.1 )
Common stock dividends ($ 0.33 per share)
3 unchanged sentences
Foreign currency translation and other adjustments — — — 4.9 4.9
−Removed: Change in pension and other postretirement defined benefit plans, net of $ 1.1 million of income tax
+Added: Change in pension and other postretirement benefit obligations, net of $ 2.3 million of income tax benefit
— — — ( 7.2 ) ( 7.2 )
9 unchanged sentences
(1) During the years ended December 31, 2025, 2024, and 2023, the Company repurchased and canceled 4.4 million shares, 4.7 million shares and 5.3 million shares of common stock at a total cost of $ 159.9 million, $ 150.2 million and $ 125.0 million at an average price of $ 36.74 , $ 31.81 and $ 23.66 per share, respectively.
−Removed: 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.
+Added: For the years ended December 31, 2025, 2024, and 2023 the Company recognized $ 1.1 million, $ 0.5 million, and $ 1.0 million of excise tax on the repurchases, respectively.
See Note 17, Common Stock Repurchases for additional information.
−Removed: (2) Refer to Note 3, Acquisitions for additional information regarding the Elkay Merger.
+Added: (2) Refer to "Item 8.
+Added: Financial Statements and Supplementary Data, Note 3, Acquisitions" of our 2024 Form 10-K for additional information regarding the Elkay Merger.
See notes to consolidated financial statements.
16 unchanged sentences
Loss on the extinguishment of debt — — 0.9
+Added: Pension curtailment and settlement ( 10.7 ) — —
Stock-based compensation expense 40.6 37.9 40.0
8 unchanged sentences
Expenditures for property, plant and equipment ( 29.9 ) ( 21.8 ) ( 21.3 )
−Removed: Acquisitions, net of cash acquired — — ( 44.8 )
Proceeds from dispositions of long-lived assets — 1.6 7.7
Proceeds from insurance claims — — 9.0
−Removed: Proceeds associated with divestiture of discontinued operations — — 35.0
Cash used for investing activities ( 29.9 ) ( 20.2 ) ( 4.6 )
22 unchanged sentences
In the opinion of management, the consolidated financial statements include all adjustments necessary for a fair presentation of the financial position and the results of operations for the periods presented.
+Added: Pension Plan Termination & Settlement
+Added: On January 30, 2025, the Company's Board of Directors approved a resolution to terminate the Company's U.S.
+Added: defined benefit pension plan (the "Pension Plan") with the full freeze of benefit accruals under the Pension Plan effective March 31, 2025 and the termination of the Pension Plan effective April 1, 2025.
+Added: The Pension Plan freeze resulted in a curtailment gain of $ 0.7 million in the first quarter of 2025.
+Added: Pension Plan participants were provided the opportunity to receive their full accrued benefits from the Pension Plan assets by either electing immediate lump sum distributions or annuity contracts with a qualifying third-party annuity provider.
+Added: During the quarter ended September 30, 2025, the Company entered into an agreement to purchase annuities from a third-party annuity provider and contributed $ 4.3 million to fund the liquidation of the Pension Plan.
+Added: As a result, Pension Plan liabilities were settled and the Pension Plan was exited during the quarter ended September 30, 2025, resulting in a pre-tax settlement gain of $ 10.0 million from accumulated other comprehensive loss to other income (expense), net in the consolidated statements of operations.
Divestiture of Asbestos Liabilities and Certain Assets
3 unchanged sentences
A loss on the divestiture of asbestos liabilities and certain assets of $ 11.4 million was recognized in the consolidated statements of operations for the twelve months ended December 31, 2023.
−Removed: See Note 17, Commitments and Contingencies for additional information.
−Removed: On February 12, 2022, Zurn Water Solutions Corporation (“Zurn”) entered into a definitive agreement to combine with Elkay Manufacturing Company (“Elkay”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among Zurn, Elkay, Zebra Merger Sub, Inc., a wholly owned subsidiary of Zurn (“Merger Sub”), and Elkay Interior Systems International, Inc., as representative of the stockholders of Elkay, providing for the merger of Elkay with and into Merger Sub, with Elkay surviving as a wholly owned subsidiary of Zurn (the “Merger”).
−Removed: On July 1, 2022, the Merger was completed following which the Company changed its name to “Zurn Elkay Water Solutions Corporation”.
−Removed: Shares of the Company's common stock are traded on the New York Stock Exchange under the ticker symbol “ZWS”.
−Removed: See Note 3, Acquisitions for additional information.
Spin-Off of Process & Motion Control Segment
−Removed: On October 4, 2021, the Company completed a Reverse Morris Trust tax-free spin-off transaction (the “Spin-Off Transaction”) in which (i) substantially all the assets and liabilities of the Company's PMC business were transferred to a newly created subsidiary, Land Newco, Inc.
−Removed: (“Land”), (ii) the shares of Land were distributed to the Company's stockholders pro rata, and (iii) Land was merged with a subsidiary of Regal Rexnord Corporation (formerly known as Regal Beloit Corporation), in which the stock of Land was converted into a specified number of shares of Regal Rexnord Corporation in accordance with the exchange ratio.
−Removed: Following completion of the Spin-Off Transaction, the Company's name was changed to “Zurn Water Solutions Corporation”.
+Added: On October 4, 2021, the Company completed a Reverse Morris Trust tax-free spin-off transaction (the “Spin-Off Transaction”).
+Added: Following completion of the Spin-Off Transaction, the Company's name was changed to “Zurn Water Solutions Corporation” and was subsequently changed to "Zurn Elkay Water Solutions Corporation".
As a result of the Spin-Off Transaction, in accordance with the authoritative guidance, the operating results of PMC are reported as discontinued operations in the consolidated statements of operations for all periods presented.
−Removed: The consolidated statements of cash flows for the year ended December 31, 2024, December 31, 2023, and December 31, 2022 have not been adjusted to separately disclose cash flows related to the discontinued operations.
+Added: The consolidated statements of cash flows for the years ended December 31, 2025, 2024, and 2023 have not been adjusted to separately disclose cash flows related to the discontinued operations.
See Note 3, Discontinued Operations for additional information.
−Removed: In connection with the Spin-Off Transaction, the Company separated certain defined benefit pension and other post-employment benefit plans, and adjusted its employee share-based compensation awards.
−Removed: 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, 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 for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time.
−Removed: The Company's heritage of innovation and specification
−Removed: 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.
+Added: 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.
19 unchanged sentences
The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents.
−Removed: Receivables are stated net of allowances for doubtful accounts of $ 1.8 million at December 31, 2024, and $ 3.1 million at December 31, 2023.
+Added: Cash and cash equivalents that are restricted from operating use are classified as restricted cash.
+Added: We had $ 40.1 million and $ 38.8 million classified as restricted cash as of December 31, 2025 and 2024, respectively.
+Added: Receivables are stated net of allowances for credit losses of $ 1.2 million at December 31, 2025, and $ 1.8 million at December 31, 2024.
The Company assesses the collectability of customer receivables based on the credit worthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history.
−Removed: In determining the allowance for doubtful accounts, the Company also considers various factors including the aging of customer accounts and historical write-offs.
−Removed: In addition, the Company monitors other risk factors, including forward-looking information when establishing adequate allowances for doubtful accounts, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables.
+Added: In determining the allowance for credit losses, the Company also considers various factors including the aging of customer accounts and historical write-offs.
+Added: In addition, the Company monitors other risk factors, including forward-looking information when establishing adequate allowances for credit losses, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables.
Generally, advance payment is not required.
−Removed: Allowances for doubtful accounts established are recorded within selling, general and administrative expenses within the consolidated statements of operations.
+Added: Allowances for credit losses established are recorded within selling, general and administrative expenses within the consolidated statements of operations.
Inventories are comprised of material, direct labor and manufacturing overhead, and are stated at the lower of cost or market.
31 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.
−Removed: 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.
−Removed: The Company recognized no impairment charges during the during the year ended December 31, 2022.
+Added: During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 2.0 million, $ 7.4 million, and $ 2.5 million of fixed asset impairment charges, respectively.
Impairments are determined utilizing Level 3 inputs within the Fair Value hierarchy, and the Company reviews and considers input from outside specialists, when appropriate.
7 unchanged sentences
Balance at beginning of period $ 4.9 $ 4.7 $ 4.2
−Removed: Acquired obligations — — 3.5
Charged to operations 4.1 3.0 2.4
Claims settled ( 2.4 ) ( 2.8 ) ( 1.9 )
−Removed: Balance at end of period $ 4.9 $ 4.7 $ 4.2
+Added: Total $ 6.6 $ 4.9 $ 4.7
+Added: Less current reserve $ 3.1 $ 4.9 $ 4.7
+Added: Long-term reserve $ 3.5 $ — $ —
Deferred income taxes are provided for future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating losses, tax credits and other applicable carryforwards.
6 unchanged sentences
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.
−Removed: Accruals for unrecognized tax benefits are provided for in accordance with the requirements of ASC 740.
+Added: Accruals for unrecognized tax benefits are provided for in accordance with the requirements of ASC 740, Income Taxes ("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.
6 unchanged sentences
Basic net income per share from continuing and discontinued operations is computed by dividing net income from continuing operations and income from discontinued operations, respectively, by the corresponding weighted average number of common shares outstanding for the period.
−Removed: Diluted net income per share from continuing and discontinued operations is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares, except when the effect would be anti-dilutive.
−Removed: The computation for diluted net income per share for the years ended December 31, 2024, 2023, and 2022 excludes 0.2 million, 0.3 million and 0.4 million common shares due to their anti-dilutive effects, respectively.
+Added: Diluted net income per share from continuing and discontinued operations is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares and the vesting of restricted stock units and performance stock units using the treasury stock method, except when the effect would be anti-dilutive.
+Added: There were no common shares with anti-dilutive effects for the year ended December 31, 2025.
+Added: The computation for diluted net income per share for the years ended December 31, 2024 and 2023 excludes 0.2 million and 0.3 million common shares due to their anti-dilutive effects, respectively.
Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of tax, for the years ended December 31, 2025, 2024, and 2023 are as follows (in millions):
−Removed: Foreign Currency Translation and Other Adjustments Pension and Other Postretirement Plans Total
−Removed: Balance at December 31, 2021 $ ( 70.9 ) $ ( 4.0 ) $ ( 74.9 )
−Removed: Other comprehensive (loss) income before reclassifications $ ( 4.2 ) $ 4.1 $ ( 0.1 )
+Added: Foreign Currency Translation and Other Adjustments Pension and Other Postretirement Benefit Obligations Total
Balance at December 31, 2022 $ ( 75.1 ) $ 0.1 $ ( 75.0 )
3 unchanged sentences
Balance at December 31, 2024 $ ( 81.5 ) $ 7.1 $ ( 74.4 )
+Added: Other comprehensive income before reclassifications $ 4.9 $ 0.8 $ 5.7
+Added: Amounts reclassified from accumulated other comprehensive loss — ( 8.0 ) ( 8.0 )
+Added: Net current period other comprehensive income (loss) 4.9 ( 7.2 ) ( 2.3 )
+Added: Balance at December 31, 2025 $ ( 76.6 ) $ ( 0.1 ) $ ( 76.7 )
+Added: The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income for the year ended December 31, 2025 (in millions):
+Added: December 31, 2025 Income Statement Line
+Added: Pension and other postretirement benefit obligations
+Added: Settlement gain ( 10.0 ) Other income (expense), net
+Added: Provision for income taxes 2.0
+Added: Total net of tax $ ( 8.0 )
There were no amounts reclassified from accumulated other comprehensive loss to net income during the years ended December 31, 2024 and 2023.
5 unchanged sentences
Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss.
−Removed: 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.
+Added: Currency transaction (gains) losses totaled $ 0.7 million, $( 0.8 ) million and $ 0.9 million for the years ended December 31, 2025, 2024, and 2023, respectively, and are included in other income (expense), net in the consolidated statements of operations.
Advertising Costs
7 unchanged sentences
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.
−Removed: This guidance is effective for fiscal years beginning after December 15, 2024.
−Removed: The Company is evaluating the impact of the adoption of ASU 2023-09 on the consolidated financial statements.
+Added: This update is effective for the Company for annual fiscal periods beginning after December 15, 2024.
+Added: The Company has adopted ASU 2023-09 for the
+Added: 2025 calendar year prospectively.
+Added: Because the ASU affects disclosures only, the adoption did not affect the Company’s consolidated statements of operations or consolidated balance sheets.
In November 2024, the FASB issued Accounting Standards Update 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures:
2 unchanged sentences
The Company is evaluating the impact of the adoption of ASU 2024-03 on the consolidated financial statements.
−Removed: Year Ended December 31, 2022
−Removed: On July 1, 2022, the Company completed the Elkay Merger for a purchase price (after final purchase price adjustments) of $ 1,457.8 million.
−Removed: Elkay, a market leader of drinking water solutions and commercial sinks, complements the Company's existing product portfolio.
−Removed: 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.
−Removed: 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.
−Removed: During the six months ended June 30, 2023, the Company completed the final purchase price adjustments and the adjusted purchase price is reflected in the purchase price amounts above, following the return of 186,020 of the shares issued at closing to the Company as a result of lower working capital and cash balances at closing compared to targets stipulated in the merger agreement.
−Removed: The shares returned to the Company were canceled upon receipt.
−Removed: The Company incurred transaction-related costs of approximately $ 33.7 million for the twelve months ended December 31, 2022.
−Removed: These costs were associated with legal and professional services and were recognized as selling, general and administrative expenses in the consolidated statements of operations.
−Removed: 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.
−Removed: As of December 31, 2024, the Board consisted of ten members, including one director designated by Elkay.
−Removed: Zurn senior management immediately prior to the consummation of the Elkay Merger remained as the executive officers of the Company immediately after the Elkay Merger.
−Removed: The Company's management determined that the Company is the accounting acquirer in the Elkay Merger based on the facts and circumstances noted within this section and other relevant factors.
−Removed: As such, the Company applied the acquisition method of accounting to the identifiable assets and liabilities of the Elkay business, which have been measured at estimated fair value as of the date of the business combination.
−Removed: The excess of the purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill, which is not deductible for tax purposes.
−Removed: Elkay’s assets and liabilities were measured at estimated fair value at July 1, 2022, primarily using Level 3 inputs.
−Removed: Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions including royalty rates and customer attrition rates and others.
−Removed: Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the Merger date.
−Removed: As of June 30, 2023, the valuation process to determine the fair values of the net assets acquired during the measurement period was complete.
−Removed: The final fair value of the assets acquired and liabilities assumed were as follows (in millions):
−Removed: As Reported June 30, 2023
−Removed: Assets acquired:
−Removed: Receivables, net $ 92.0
−Removed: Inventories 139.5
−Removed: Other current assets 8.5
−Removed: Property, plant and equipment, net 127.1
−Removed: Intangible assets, net 865.5
−Removed: Goodwill 546.2
−Removed: Other assets 56.9
−Removed: Total assets acquired $ 1,835.7
−Removed: Liabilities assumed:
−Removed: Trade payables $ 30.5
−Removed: Compensation and benefits 39.3
−Removed: Current portion of pension and other postretirement benefit obligations 17.3
−Removed: Other current liabilities 45.8
−Removed: Operating lease liability 24.2
−Removed: Pension and other postretirement benefit obligations 3.6
−Removed: Deferred income taxes 206.7
−Removed: Other liabilities 10.5
−Removed: Total liabilities assumed 377.9
−Removed: Total purchase price $ 1,457.8
−Removed: Unaudited Pro Forma Information
−Removed: 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.
−Removed: The pro forma financial information includes, where applicable, adjustments for:
−Removed: (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, and (iii) the estimated income tax effect on the pro forma adjustments.
−Removed: 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.
−Removed: The pro forma financial information excludes adjustments for estimated cost synergies or other effects of the integration of the Elkay Merger.
−Removed: 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.
−Removed: December 31, 2022
−Removed: Net sales $ 1,580.5
−Removed: Net income from continuing operations $ 37.6
−Removed: Earnings per share from continuing operations
−Removed: Assuming dilution $ 0.24
−Removed: 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.
+Added: In September 2025, the FASB issued Accounting Standards Update 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):
+Added: Targeted Improvements to the Accounting for Internal-Use Software” ("ASU 2025-06"), which replaces the stage-based capitalization model for the treatment of development costs of internal-use software with a principles-based framework, reflecting modern software development practices.
+Added: In addition, ASU 2025-06 requires companies to capitalize software costs once management authorizes and commits to funding with probable completion and use.
+Added: This guidance will be effective for annual reporting periods beginning after December 15, 2027, and for interim periods within annual reporting periods within those annual reporting periods, and allows multiple transition methods, including retrospective, prospective, or modified prospective application, with early adoption permitted.
+Added: The Company is evaluating the impact of the adoption of ASU 2025-06 on the consolidated financial statements.
Discontinued Operations
2 unchanged sentences
The consolidated statements of cash flows for the years ended December 31, 2025, 2024, and 2023 have not been adjusted to separately disclose cash flows related to the discontinued operations.
−Removed: 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.
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, 2025, 2024, and 2023 are included in the table below (in millions):
6 unchanged sentences
__________________
−Removed: (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.
−Removed: (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.
−Removed: The consolidated statements of cash flows for the periods presented have not been adjusted to separately disclose cash flows related to discontinued operations.
−Removed: However, the significant investing cash flows and other significant non-cash operating items associated with the discontinued operations were as follows (in millions):
−Removed: December 31, 2022
−Removed: Net payments from divestiture of discontinued operations $ 35.0
+Added: (1) Selling, general and administrative income for the years ended December 31, 2025, 2024, and 2023 includes the release of certain accruals as a result of costs the Company will no longer incur related to the Spin-Off Transaction.
Restructuring and Other Similar Charges
During the year ended December 31, 2025, the Company continued to execute various restructuring actions.
−Removed: 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.
+Added: These initiatives were implemented to drive efficiencies and reduce operating costs while also modifying the Company's footprint to reflect changes in the markets it serves, the impact of acquisitions on the Company's overall manufacturing capacity and the refinement of its overall product portfolio.
These restructuring actions primarily resulted in workforce reductions, lease termination costs and other facility rationalization costs.
41 unchanged sentences
Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue.
−Removed: 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.
−Removed: The Company classifies shipping and handling fees
−Removed: billed to customers as net sales and the corresponding costs are classified as cost of sales in the consolidated statements of operations.
+Added: The Company has elected to recognize the cost for freight and shipping when control of products has transferred to the customer as a
+Added: component of cost of sales in the consolidated statements of operations.
+Added: 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.
+Added: Unsatisfied performance obligations as of December 31, 2025 have an expected duration of one year or less.
Revenue by Category
20 unchanged sentences
Contract liabilities and contract assets as of December 31, 2025 and December 31, 2024 were not material.
−Removed: The Company had backlog of $ 48.8 million and $ 50.8 million as of December 31, 2024, and December 31, 2023, respectively, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts.
−Removed: The Company utilizes the optional exemption provided by ASC 606-10-50-14A for variable consideration, and has not included estimated rebates in the amount of unsatisfied performance obligations.
−Removed: The Company expects to recognize approximately 100 % of the backlog as revenue in the year ending December 31, 2025.
Timing of Performance Obligations Satisfied at a Point in Time
32 unchanged sentences
Net carrying amount as of December 31, 2023
−Removed: Purchase accounting adjustments (1) 19.0
+Added: Currency translation adjustments ( 1.8 )
Net carrying amount as of December 31, 2024
1 unchanged sentence
Net carrying amount as of December 31, 2025
−Removed: ______________________
−Removed: (1) Refer to Note 3, Acquisitions for additional information regarding acquisitions.
−Removed: Total cumulative goodwill impairment charges as of December 31, 2024 and 2023 were $ 337.1 million.
The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of December 31, 2025 and December 31, 2024 consisted of the following (in millions):
17 unchanged sentences
There were no acquired intangibles in 2025, 2024, or 2023.
−Removed: 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.
54 unchanged sentences
Prior to July 1, 2023, the Term Loan bore interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter as illustrated above.
−Removed: At December 31, 2024 and December 31, 2023, the borrowings under the Term Loan had weighted-average effective interest rates of 6.42 % and 7.47 %, respectively.
+Added: At December 31, 2025 and December 31, 2024, the borrowings under the Term Loan had effective interest rates of 5.80 % and 6.42 %, respectively.
During the year ended December 31, 2025 and December 31, 2024, the borrowings under the Term Loan had weighted-average effective interest rates of 6.36 % and 7.28 %, respectively.
105 unchanged sentences
Compensation cost is recognized over the requisite service period, generally as the awards vest.
+Added: The Company accounts for forfeitures of stock-based compensation as they occur.
The Zurn Elkay Water Solutions Corporation Performance Incentive Plan, which was last approved by stockholders in fiscal 2025 (the "Plan"), is utilized to provide performance incentives to the Company's officers, employees, directors and certain others by permitting grants of equity awards (for common stock), as well as performance-based cash awards, to such persons, to encourage them to maximize Zurn Elkay's performance and create value for Zurn Elkay's stockholders.
3 unchanged sentences
Options and RSUs granted since fiscal 2016 generally vest ratably over 3 years.
−Removed: 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.
3 unchanged sentences
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.
−Removed: During the year ended December 31, 2024, the Company issued 44,436 shares of common stock related to the ESPP.
+Added: During the years ended December 31, 2025 and December 31, 2024, the Company issued 70,943 and 44,436 shares of common stock related to the ESPP, respectively.
As of December 31, 2025, 1,884,621 shares remained available for future issuance.
−Removed: During the year ended December 31, 2024, the Company recognized $ 0.3 million of stock-based compensation expense related to the ESPP.
−Removed: 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.
−Removed: 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.
−Removed: Stock options and RSUs continue to vest in accordance with their original vesting period.
−Removed: 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.
−Removed: These adjustments to the Company’s share-based compensation awards were deemed to be a modification of
−Removed: 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.
−Removed: On the date of the Spin-Off Transaction, the modification affected 124 grantees.
+Added: During the years ended December 31, 2025 and December 31, 2024, the Company recognized $ 0.5 million and $ 0.3 million of stock-based compensation expense related to the ESPP, respectively.
During the years ended December 31, 2025, 2024, and 2023, the Company recorded $ 40.6 million, $ 37.9 million and $ 40.0 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, 2025, 2024, and 2023 was $ 8.5 million, $ 9.2 million, and $ 9.8 million, respectively).
During the year ended December 31, 2025, 2024, and 2023, the Company also recorded $ 2.1 million, $ 4.6 million and $ 2.0 million, respectively, of an excess tax benefit related to stock options exercised during each period.
−Removed: As of December 31, 2024, there was $ 31.7 million of total unrecognized compensation cost related to non-vested stock options, RSUs and PSUs granted under the Plan.
+Added: As of December 31, 2025, there was $ 26.3 million of total unrecognized compensation
+Added: cost related to non-vested stock options, RSUs and PSUs granted under the Plan.
That cost is expected to be recognized over a weighted-average period of 1.5 years.
56 unchanged sentences
During the years ended December 31, 2025, 2024, and 2023, the Company granted PSUs to certain of its officers and employees.
−Removed: 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.
+Added: The PSUs granted during the years ended December 31, 2025, 2024, and 2023 had 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 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.
12 unchanged sentences
(1) For the years ended December 31, 2025, 2024, and 2023, represents the target level of PSUs vested.
−Removed: 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.
−Removed: 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.
+Added: During the years ended December 31, 2025 and 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 granted in 2024 contained a TSR multiplier.
+Added: During the year ended December 31, 2023, 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, return on invested capital, and sales growth is determined based on the Company's closing stock price on the date of grant.
4 unchanged sentences
Most of the Company’s employees are accumulating retirement income benefits through defined contribution plans.
−Removed: However, the Company sponsors frozen pension plans for certain salaried participants and ongoing pension benefits for certain employees represented by collective bargaining.
−Removed: These plans provide for monthly pension payments to eligible employees upon retirement.
−Removed: Pension benefits for salaried employees generally are based on years of frozen credited service and average earnings.
−Removed: Pension benefits for hourly employees generally are based on specified benefit amounts and years of service.
−Removed: The Company’s policy is to fund its pension obligations in conformity with the funding requirements under applicable laws and governmental regulations.
+Added: The Company previously sponsored a frozen U.S.
+Added: pension plan for certain salaried participants that was terminated in 2025.
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 and the expected return on plan assets.
−Removed: 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.
+Added: The service cost component of net periodic benefit cost is presented within cost of sales and selling, general and administrative
+Added: expenses in the statements of operations while the other components of net periodic benefit cost are presented within other income (expense), net.
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).
2 unchanged sentences
These amounts are recorded within actuarial gain on pension and other postretirement benefit obligations in the consolidated statements of operations.
−Removed: The components of net periodic benefit cost reported in the consolidated statements of operations are as follows (in millions):
+Added: On January 30, 2025, the Company's Board of Directors approved a resolution to terminate the Company's U.S.
+Added: defined benefit pension plan (the "Pension Plan") with the full freeze of benefit accruals under the Pension Plan effective March 31, 2025 and the termination of the Pension Plan effective April 1, 2025.
+Added: The Pension Plan freeze resulted in a curtailment gain of $ 0.7 million in the first quarter of 2025.
+Added: Pension Plan participants were provided the opportunity to receive their full accrued benefits from the Pension Plan assets by either electing immediate lump sum distributions or annuity contracts with a qualifying third-party annuity provider.
+Added: During the year ended December 31, 2025, the Company entered into an agreement to purchase annuities from a third-party annuity provider and contributed $ 4.3 million to fund the liquidation of the Pension Plan.
+Added: As a result, Pension Plan liabilities were settled and the Pension Plan was exited during the third quarter of 2025, resulting in a pre-tax settlement gain of $ 10.0 million from accumulated other comprehensive loss to other income (expense), net in the consolidated statements of operations.
+Added: The components of net periodic benefit (income) cost reported in the consolidated statements of operations are as follows (in millions):
December 31, 2025 December 31, 2024 December 31, 2023
3 unchanged sentences
Expected return on plan assets ( 6.9 ) ( 7.5 ) ( 7.5 )
+Added: Amortization of prior service cost 0.3 — —
+Added: Settlement ( 10.0 ) — —
+Added: Curtailment ( 0.7 ) — —
Recognition of actuarial gains ( 0.1 ) ( 0.1 ) —
−Removed: Net periodic benefit (income) expense $ 3.7 $ 4.7 $ ( 0.9 )
+Added: Net periodic benefit (income) cost $ ( 8.7 ) $ 3.7 $ 4.7
Other Postretirement Benefits:
1 unchanged sentence
Recognition of actuarial gains ( 0.4 ) ( 1.3 ) ( 2.0 )
−Removed: Net periodic benefit (income) expense $ ( 0.9 ) $ ( 1.4 ) $ ( 1.5 )
+Added: Net periodic benefit (income) cost $ — $ ( 0.9 ) $ ( 1.4 )
+Added: During the year ended December 31, 2025, the recognition of $ 0.5 million of net non-cash actuarial gains was primarily due to demographic and claims gains experienced during 2025 that were reflected in certain other post-retirement benefit plans.
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.
−Removed: These gains were partially offset by an increase in the medical cost growth assumption from the prior measurement.
+Added: These gains were partially offset by a 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.
−Removed: In addition, the post 65 medical provider options changed resulting in lower premiums for the plans.
−Removed: These gains were partially offset by a decrease in discount rate from the prior measurement.
−Removed: 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.
−Removed: The Company made contributions to its U.S.
+Added: The Company made contributions to the now terminated U.S.
qualified pension plan trusts of $ 4.3 million, $ 20.0 million and $ 11.0 million during the years ended December 31, 2025, 2024, and 2023, respectively.
+Added: The Company does not expect to make any further contributions to the U.S.
+Added: qualified pension plan trusts given it was terminated in 2025.
The status of the plans is summarized as follows (in millions):
5 unchanged sentences
Actuarial (losses) gains ( 3.8 ) 5.4 ( 0.7 ) 1.1
+Added: Plan amendments ( 0.3 ) — — —
Benefits paid 15.9 19.1 1.0 1.0
Plan participant contributions — — ( 0.1 ) ( 0.2 )
+Added: Curtailments 0.7 — — —
Settlements 201.1 0.2 — —
13 unchanged sentences
As of December 31, 2025, the Company had pension plans with a combined projected benefit obligation of $ 5.7 million compared to plan assets of $ 3.1 million, resulting in an under-funded status of $ 2.6 million compared to an under-funded status of $ 7.6 million at December 31, 2024.
−Removed: The Company’s funded status improved during the year ended December 31, 2024 primarily due to the $ 20.0 million pension plan contribution.
+Added: The Company’s funded status improved during the year ended December 31, 2025 primarily due to the termination and settlement of the Company's U.S.
+Added: defined benefit pension plan.
Any further changes in the assumptions underlying the Company’s pension values, including those that arise as a result of declines in equity markets and changes in interest rates, could result in increased pension obligation and pension cost which could negatively affect the Company’s consolidated financial position and results of operations in future periods.
3 unchanged sentences
Benefits Total
−Removed: Unrecognized actuarial gain ( 8.7 ) ( 0.7 ) ( 9.4 )
−Removed: Accumulated other comprehensive income, gross ( 8.7 ) ( 0.7 ) ( 9.4 )
+Added: Unrecognized actuarial (gain) loss ( 0.3 ) 0.4 0.1
+Added: Accumulated other comprehensive (income) loss, gross ( 0.3 ) 0.4 0.1
Deferred income tax provision 0.1 ( 0.1 ) —
−Removed: Accumulated other comprehensive income, net $ ( 6.6 ) $ ( 0.5 ) $ ( 7.1 )
+Added: Accumulated other comprehensive (income) loss, net $ ( 0.2 ) $ 0.3 $ 0.1
As of December 31, 2024
5 unchanged sentences
Accumulated other comprehensive income, net $ ( 6.6 ) $ ( 0.5 ) $ ( 7.1 )
−Removed: The following table presents significant assumptions used to determine benefit obligations and net periodic benefit cost (income) in weighted-average percentages:
+Added: The following table presents significant assumptions used to determine benefit obligations and net periodic benefit (income) cost in weighted-average percentages:
Pension Benefits Other Postretirement Benefits
3 unchanged sentences
Rate of compensation increase 3.4 % 3.0 % 3.0 % n/a n/a n/a
−Removed: Net Periodic Benefit Cost:
+Added: Net Periodic Benefit (Income) Cost:
Discount rate 6.3 % 5.2 % 5.6 % 5.6 % 5.2 % 5.6 %
1 unchanged sentence
Expected return on plan assets 4.3 % 4.0 % 4.3 % n/a n/a n/a
−Removed: 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, fair value of plan assets, long-term inflation and current market conditions.
−Removed: 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.
−Removed: December 31, 2024 December 31, 2023
−Removed: Policy (1) Target
−Removed: Allocation (2) Actual
−Removed: Allocation Actual
−Removed: Equity securities 0 % - 30 % 10 % 10 % 30 %
−Removed: Debt securities (including cash and cash equivalents) 70 % - 100 % 90 % 90 % 70 %
−Removed: ______________________
−Removed: (1) The investment policy allocation represents the guidelines of the Company's pension plans based on the changes in the plans funded status.
−Removed: (2) The target allocations represent the weighted average target allocations for the Company's U.S.
−Removed: pension plan.
−Removed: The Company's defined benefit pension utilizes a dynamic liability driven investment ("LDI") strategy.
−Removed: The objective is to more closely align the pension plan assets with its liabilities in terms of how both respond to interest rate changes.
−Removed: The plan assets are allocated into two investment categories:
−Removed: (i) LDI, comprised of high quality, investment grade fixed income securities and (ii) return seeking, comprised of traditional securities and alternative asset classes.
−Removed: All assets are managed externally according to guidelines established individually with investment managers and the Company's investment consultant.
−Removed: The Company periodically undertakes asset and liability modeling studies to determine the appropriateness of the investments.
−Removed: The Company intends to continuously reduce the assets allocated to the return seeking category, thereby increasing the assets allocated to the LDI category based on the overall improvement in the plan funded status.
−Removed: No equity securities of the Company are held in the portfolio.
The fair values of the Company’s pension plan assets for both the U.S and non-U.S.
8 unchanged sentences
Inputs (Level 3) Assets Measured at Net Asset Value
−Removed: Cash and cash equivalents $ 4.2 $ — $ — $ — $ 4.2
Investment funds
−Removed: Fixed income funds (2) — — — 178.3 178.3
−Removed: equity funds (3) 3.0 — — 9.4 12.4
International equity funds (3) — — — 0.5 0.5
32 unchanged sentences
2031 - 2035 3.0 2.8
−Removed: 2027 19.0 0.8
−Removed: 2028 18.7 0.8
−Removed: 2029 18.4 0.8
−Removed: 2030 - 2034 83.8 2.9
Pension Plans That Are Not Fully Funded
54 unchanged sentences
state NOL and tax credit carryforwards.
−Removed: 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.
−Removed: The implementation of the Pillar 2 global minimum tax rules has begun to apply for tax years beginning in 2024.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: In October 2021, the Organization for Economic Co-operation and Development (“OECD”) issued rules for a new global minimum tax ("Pillar 2") which included the introduction of a 15% global minimum tax ("Top-Up Tax") that applies to tax years beginning in 2024.
+Added: Based upon the current OECD rules and administrative guidance, as well as the related legislation of those countries in which we do business, the Company does not anticipate being subject to material Top-Up Taxes.
+Added: The Company is continuing to monitor the potential impact of the Pillar 2 proposals and development on our consolidated financial statements and related disclosures, including eligibility for any transitional safe harbor rules.
+Added: On July 4, 2025, the U.S.
+Added: enacted the One Big Beautiful Bill Act (“OBBBA”).
+Added: OBBBA incorporates changes that extend several provisions of the Tax Cuts and Jobs Act ("TCJA") of 2017 that were set to expire on December 31, 2025, including immediate expensing of domestic research and development expenses, 100% bonus depreciation, 100% depreciation of qualified production property, and reinstatement of utilizing EBITDA for the interest deduction limitation.
+Added: These changes are effective for the Company’s fiscal year ending December 31, 2025.
+Added: However, OBBBA incorporates additional changes to the
+Added: U.S tax code that will be effective after January 1, 2026, including charitable contribution limitations, deductible meal limitations, and changes to the U.S.
+Added: system for taxing international corporate income.
+Added: The Company is continuing to monitor these business tax provision for further guidance from the U.S.
+Added: Treasury and the Internal Revenue Service.
Income Tax Provision
10 unchanged sentences
Provision for income taxes $ 63.9 $ 48.1 $ 42.6
−Removed: The provision for income taxes differs from the United States statutory income tax rate due to the following items (in millions):
−Removed: December 31, 2024 December 31, 2023 December 31, 2022
+Added: The following illustrates the specific categories and the reconciling items disclosed by a public business entity in its tabular rate reconciliation in accordance with paragraphs ASC 740-10-50-12A through 50-12B (in millions).
+Added: The entity is domiciled in the United States and presents comparative financial statements.
+Added: For the disclosure of foreign tax effects in accordance with paragraph ASC 740-10-50-12A(b)(2), it is assumed that the 5 percent threshold, computed by multiplying the income (or loss) from continuing operations before income taxes by applicable statutory federal (national) income tax rate of the United States, is met for Canada, at the jurisdictional level, but not for any individual reconciling items of the same nature within Canada.
+Added: December 31, 2025
+Added: Amount Percent
+Added: federal statutory tax rate $ 53.8 21.0 %
+Added: State and local income taxes, net of federal income tax effect (1) 8.6 3.4 %
+Added: Changes in valuation allowances ( 1.3 ) ( 0.5 ) %
+Added: Foreign tax effects
+Added: Statutory tax rate difference between Canada and United States 0.7 0.2 %
+Added: Effect of changes in tax laws or rates enacted in the current period — — %
+Added: Effect on cross-border tax laws ( 0.3 ) ( 0.2 ) %
+Added: Tax credits ( 0.5 ) ( 0.2 ) %
+Added: Nontaxable or nondeductible items
+Added: Share-based compensation ( 2.1 ) ( 0.8 ) %
+Added: §162(m) limitation 5.8 2.3 %
+Added: Other 0.5 0.2 %
+Added: Changes in unrecognized tax benefits ( 1.0 ) ( 0.4 ) %
+Added: Other adjustments ( 0.3 ) ( 0.1 ) %
+Added: Effective tax rate $ 63.9 24.9 %
+Added: ____________________
+Added: (1) During the year ended December 31, 2025, state taxes in California, Illinois, New York, and Texas made up the majority of the tax effect in this category.
+Added: The following illustrates how the provision for income taxes differs from the United States statutory income tax rate related to the retrospective years ending December 31, 2024 and December 31, 2023 (in millions):
+Added: December 31, 2024 December 31, 2023
Provision for income taxes at U.S.
16 unchanged sentences
Income before income taxes $ 256.3 $ 207.0 $ 146.8
+Added: The components of income taxes paid are as follows (in millions):
+Added: Jurisdiction December 31, 2025
+Added: federal $ 49.3
+Added: California 2.5
+Added: State subtotal 9.8
+Added: Foreign subtotal 3.9
+Added: Total cash paid for income taxes (net of refunds) 63.0
+Added: The total cash paid for income taxes prior to ASU 2023-09 for the tax years ending December 31, 2024 and December 31, 2023 were $ 68.1 million and $ 45.7 million, respectively.
Deferred Income Tax Assets and Liabilities
45 unchanged sentences
This net amount is presented in the consolidated balance sheets as income taxes payable (separately disclosed in other current liabilities) of $ 3.1 million and $ 2.3 million as of December 31, 2025 and 2024, respectively;
−Removed: and as income taxes receivable in the consolidated balance sheets of $ 19.6 million and $ 17.0 million as of
−Removed: December 31, 2024 and 2023, respectively.
−Removed: 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.
+Added: and as income taxes receivable in the consolidated balance sheets of $ 13.3 million and $ 19.6 million as of December 31, 2025 and 2024, respectively.
Liability for Unrecognized Tax Benefits
13 unchanged sentences
Consequently, the Company is subject to periodic income tax examinations by domestic and foreign income tax authorities.
−Removed: 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.
−Removed: 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.
−Removed: 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;
−Removed: however, any potential payments of income tax, interest and penalties are not expected to be significant to the Company's consolidated financial statements.
With certain exceptions, the Company is no longer subject to U.S.
−Removed: 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.
+Added: federal income tax examinations for tax years ending prior to December 31, 2021, state and local income tax examinations for years ending prior to December 31, 2020 or significant foreign income tax examinations for years ending prior to March 31, 2020.
Commitments and Contingencies
3 unchanged sentences
Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss or recovery, based upon current information, management believes the eventual outcome of these unresolved legal actions, either individually or in the aggregate, will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.
−Removed: On December 15, 2023, Zurn Holdings, Inc.
−Removed: sold all of the equity interests of its direct subsidiary Zurn Industries, together with Zurn Industries’ direct and indirect subsidiaries that primarily held asbestos liabilities, certain assets and cash, in a stock sale transaction to an unaffiliated buyer.
−Removed: In accordance with the terms of the stock sale agreement, a subsidiary of the Company will indemnify the buyer for breaches of representations or warranties, breaches of covenants, and certain other liabilities as long as such liabilities are entirely unrelated to asbestos liabilities or assets.
−Removed: 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.
−Removed: 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
−Removed: the divested entities.
−Removed: As such, the divested entities have been deconsolidated from our 2023 financial results as the Company no longer owns or controls such entities.
−Removed: Therefore, for the period ending December 31, 2023, all asbestos obligations and liabilities, related insurance assets and associated deferred taxes, and other assets of the divested subsidiaries are no longer reported on the consolidated balance sheet.
−Removed: The Company recorded a loss on the divestiture of asbestos liabilities and certain assets of $ 11.4 million in the fourth quarter of 2023, including transaction expenses of $ 2.1 million.
−Removed: Prior to the stock sale transaction, certain Company subsidiaries were subject to asbestos litigation.
−Removed: As of December 31, 2022, certain Company subsidiaries and numerous other unrelated companies were defendants in approximately 6,000 asbestos related lawsuits representing approximately 7,000 claims.
−Removed: Plaintiffs' claims alleged personal injuries caused by exposure to asbestos used primarily in industrial boilers formerly manufactured by a segment of Zurn Elkay's subsidiaries.
−Removed: Those subsidiaries did not manufacture asbestos or asbestos components.
−Removed: Instead, they were purchased from suppliers.
−Removed: These claims were handled pursuant to a defense strategy funded by insurers.
−Removed: In prior years, the asbestos liability was developed based on actuarial studies and represented the projected indemnity payout for current and future claims.
−Removed: There were inherent uncertainties involved in estimating the number of future asbestos claims, future settlement costs, and the effectiveness of defense strategies and settlement initiatives.
−Removed: As of December 31, 2022, the estimated potential liability for the asbestos-related claims described above, as well as the claims expected to be filed in the next ten years , was approximately $ 79.0 million which was recorded in the reserve for asbestos claims within the consolidated balance sheets.
−Removed: In prior years, the Company also recorded a receivable from its insurance carriers, which corresponded to the amount of this potential asbestos liability that was covered by available insurance and was determined to be probable of recovery.
−Removed: However, there was no assurance the Company's insurance coverage would ultimately be available or that this asbestos liability would not ultimately exceed the coverage limits.
−Removed: Factors that could cause a decrease in the amount of available coverage or create gaps in coverage include:
−Removed: changes in law governing the policies, potential disputes and settlements with the carriers regarding the scope of coverage, and insolvencies of one or more of the Company's carriers.
−Removed: As of December 31, 2022, management estimated that the available insurance to cover the ten-year estimated potential asbestos-related liabilities was $ 72.1 million.
−Removed: During the year ended December 31, 2022, the Company recorded $ 6.9 million for the amount that the estimated potential liability exceeded a gap in the Company's estimated available insurance coverage.
−Removed: This expense was recorded in other income (expense), net within the consolidated statements of operations.
Common Stock Repurchases
2 unchanged sentences
On February 8, 2023, the Company's Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $ 500.0 million.
+Added: On October 28, 2025, the Company's Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $ 500.0 million.
The Repurchase Program does not require the Company to acquire any particular amount of common stock and does not specify the timing of purchases or the prices to be paid;
12 unchanged sentences
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.
−Removed: This metric is used to monitor forecasted to actual and budgeted results and
−Removed: benchmarking to our peers.
+Added: 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, 2025, 2024 and 2023:
6 unchanged sentences
______________________
−Removed: (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.
+Added: (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 income (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.
−Removed: 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.
+Added: Segment assets are included on the consolidated balance sheets 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, 2025, 2024, and 2023 was $ 7.6 million, $ 7.8 million, and $ 4.9 million, respectively.
13 unchanged sentences
On January 29, 2026, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $ 0.11 per share to be paid on March 6, 2026, to stockholders of record as of February 20, 2026.
−Removed: Pension Plan Termination
−Removed: 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.
−Removed: During the first quarter of fiscal year 2025, the Company commenced the plan termination process and expects to complete the termination during 2025.
−Removed: 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.