10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________________________________________

FORM 10-Q

(Mark one)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the quarter ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission File Number: 001-35475

_________________________________________________

ZURN ELKAY WATER SOLUTIONS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		20-5197013
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
511 W. Freshwater Way		53204
Milwaukee,	Wisconsin	(Zip Code)
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (855) 480-5050

ZURN WATER SOLUTIONS CORPORATION

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	ZWS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes  ☐    No   ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at July 22, 2022
Zurn Elkay Water Solutions Corporation Common Stock, $0.01 par value per share	177,746,970 shares

TABLE OF CONTENTS

 

Part I FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
Part II OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6.	Exhibits	36
Signatures		37

2

EXPLANATORY NOTE

As previously disclosed, on February 12, 2022, Zurn Elkay Water Solutions Corporation (formerly known as Zurn Water Solutions Corporation) (“Zurn Elkay” or the “Company”) entered into a definitive agreement to combine with Elkay Manufacturing Company (“Elkay”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among Zurn, Elkay, Zebra Merger Sub, Inc., a wholly owned subsidiary of Zurn (“Merger Sub”), and Elkay Interior Systems International, Inc., as representative of the stockholders of Elkay, providing for the merger of Elkay with and into Merger Sub, with Elkay surviving as a wholly owned subsidiary of Zurn (the “Merger”). On July 1, 2022, the Company and Elkay completed the Merger following which the Company changed its name to “Zurn Elkay Water Solutions Corporation”. Shares of the Company's common stock continue to trade on the New York Stock Exchange under the ticker symbol “ZWS”.

Private Securities Litigation Reform Act Safe Harbor Statement

    Our disclosure and analysis in this report concerning our operations, cash flows and financial position, including, in particular, the likelihood of our success in developing and expanding our business and the realization of sales from our backlog, include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar expressions are forward-looking statements. Although these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flows, research and development costs, working capital and capital expenditures, are subject to risks and uncertainties that are described more fully herein and in our Annual Report on Form 10-K for the year ended December 31, 2021, in Part I, Item 1A, “Risk Factors” and in Part I under the heading "Cautionary Notice Regarding Forward-Looking Statements", as well as in our other filings with the Securities and Exchange Commission. In addition, our Merger with Elkay Manufacturing Company involves various risks, uncertainties, and factors including those described in Part II, Item 1A, "Risk Factors" in this report. Accordingly, we can give no assurance that we will achieve the results anticipated or implied by our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

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PART I - FINANCIAL INFORMATION

ITEM  1.    FINANCIAL STATEMENTS

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in Millions, except share amounts)

	(Unaudited)
	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	110.4	$	96.6
Receivables, net	188.9		144.1
Inventories	243.4		184.5
Income taxes receivable	20.1		33.1
Other current assets	25.6		16.5
Total current assets	588.4		474.8
Property, plant and equipment, net	61.6		64.4
Intangible assets, net	174.8		179.1
Goodwill	252.6		254.1
Insurance for asbestos claims	66.0		66.0
Other assets	32.9		39.3
Total assets	$	1,176.3	$	1,077.7
Liabilities and stockholders' equity
Current liabilities:
Current maturities of debt	$	5.6	$	5.6
Trade payables	126.1		105.1
Compensation and benefits	9.2		22.0
Current portion of pension and postretirement benefit obligations	1.3		1.3
Other current liabilities	99.0		106.4
Total current liabilities	241.2		240.4
Long-term debt	531.9		533.9
Pension and postretirement benefit obligations	55.9		57.3
Deferred income taxes	9.9		3.1
Operating lease liability	5.9		8.9
Reserve for asbestos claims	66.0		66.0
Other liabilities	36.1		41.7
Total liabilities	946.9		951.3
Stockholders' equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; shares issued and outstanding: 126,182,246 at June 30, 2022 and 125,720,068 at December 31, 2021	1.3		1.3
Additional paid-in capital	1,438.3		1,436.9
Retained deficit	(1,135.3)		(1,236.9)
Accumulated other comprehensive loss	(74.9)		(74.9)
Total stockholders' equity	229.4		126.4
Total liabilities and stockholders' equity	$	1,176.3	$	1,077.7

See notes to the condensed consolidated financial statements.

4

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(in Millions, except share and per share amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net sales	$	284.2	$	243.7	$	523.8	$	448.9
Cost of sales	170.4		139.9		308.1		256.7
Gross profit	113.8		103.8		215.7		192.2
Selling, general and administrative expenses	58.4		60.4		112.3		118.1
Restructuring and other similar charges	0.3		0.3		1.4		0.9
Amortization of intangible assets	1.6		5.8		4.6		11.9
Income from operations	53.5		37.3		97.4		61.3
Non-operating expense:
Interest expense, net	(5.2)		(10.1)		(10.0)		(19.7)
Other expense, net	(0.6)		(0.4)		(0.3)		(0.1)
Income before income taxes	47.7		26.8		87.1		41.5
Provision for income taxes	(11.3)		(6.2)		(21.3)		(10.9)
Net income from continuing operations	36.4		20.6		65.8		30.6
Income from discontinued operations, net of tax	—		52.6		0.8		92.6
Net income attributable to Zurn Elkay common stockholders	$	36.4	$	73.2	$	66.6	$	123.2
Basic net income per share:
Continuing operations	$	0.29	$	0.17	$	0.52	$	0.25
Discontinued operations	$	—	$	0.44	$	0.01	$	0.77
Net income	$	0.29	$	0.61	$	0.53	$	1.03
Diluted net income per share:
Continuing operations	$	0.28	$	0.17	$	0.51	$	0.25
Discontinued operations	$	—	$	0.42	$	0.01	$	0.75
Net income	$	0.28	$	0.59	$	0.52	$	0.99
Weighted-average number of shares outstanding (in thousands):
Basic	126,419		120,465		126,350		120,138
Effect of dilutive equity awards	1,972		3,832		2,063		3,953
Diluted	128,391		124,297		128,413		124,091

See notes to the condensed consolidated financial statements.

5

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in Millions)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net income	$	36.4	$	73.2	$	66.6	$	123.2
Other comprehensive income (loss):
Foreign currency translation adjustments	(2.0)		5.4		—		3.7
Change in pension and postretirement defined benefit plans, net of tax	—		(0.1)		—		(0.2)
Other comprehensive (loss) income, net of tax	(2.0)		5.3		—		3.5
Total comprehensive income	$	34.4	$	78.5	$	66.6	$	126.7

See notes to the condensed consolidated financial statements.

6

Zurn Elkay Water Solutions Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in Millions)

(Unaudited)

	Six Months Ended
	June 30, 2022		June 30, 2021
Operating activities
Net income	$	66.6	$	123.2
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	4.7		28.1
Amortization of intangible assets	4.6		18.5
Loss (gain) on dispositions of long-lived assets	0.3		(9.2)
Deferred income taxes	6.8		(4.0)
Other non-cash expenses (income)	1.7		(1.1)
Stock-based compensation expense	7.7		27.0
Changes in operating assets and liabilities:
Receivables	(45.0)		(61.7)
Inventories	(58.9)		(30.7)
Other assets	7.8		(8.9)
Accounts payable	21.1		62.1
Accruals and other	(29.4)		1.7
Cash (used for) provided by operating activities	(12.0)		145.0
Investing activities
Expenditures for property, plant and equipment	(2.0)		(14.0)
Acquisitions, net of cash acquired	1.1		(3.4)
Proceeds from dispositions of long-lived assets	1.3		13.0
Proceeds associated with divestiture of discontinued operations	35.0		—
Cash provided by (used for) investing activities	35.4		(4.4)
Financing activities
Proceeds from borrowings of debt	10.0		—
Repayments of debt	(13.0)		(1.1)
Proceeds from exercise of stock options	1.8		19.4
Taxes withheld and paid on employees' share-based payment awards	(0.5)		(1.4)
Repurchase of common stock	—		(0.9)
Payment of common stock dividends	(7.6)		(21.6)
Cash used for financing activities	(9.3)		(5.6)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(0.3)		0.1
Increase in cash, cash equivalents and restricted cash	13.8		135.1
Cash, cash equivalents and restricted cash at beginning of period	96.6		255.6
Cash, cash equivalents and restricted cash at end of period	$	110.4	$	390.7

See notes to the condensed consolidated financial statements.

7

Zurn Elkay Water Solutions Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2022

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

    The unaudited condensed consolidated financial statements included herein have been prepared by Zurn Elkay Water Solutions Corporation (formerly known as Zurn Water Solutions Corporation) (“Zurn Elkay” or the “Company”) in accordance with accounting principles generally accepted in the United States ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

    In the opinion of management, the condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results of operations for the interim periods. Results for the interim periods are not necessarily indicative of results that may be expected for the year ending December 31, 2022. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

The Company

    As previously disclosed, on July 1, 2022, the Company completed its combination with Elkay Manufacturing Company (“Elkay”) through the merger of Elkay with and into a newly created subsidiary of the Company, with Elkay surviving as a wholly owned subsidiary of Zurn Elkay (the “Merger” or "Elkay Transaction"). The Company's results of operations will include the acquired operations subsequent to July 1, 2022. See Note 18, Subsequent Events for additional information on the Elkay Transaction.

Following the Merger, 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 control and safety, water distribution and drainage, drinking water, finish plumbing, hygienic, environmental and site works products for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time. The Company's heritage of innovation and specification has allowed it to provide highly-engineered, mission-critical solutions to customers for decades and affords the Company 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”), described below, is its operating philosophy. Grounded in the spirit of continuous improvement, ZEBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of the Company's business.

Spin-Off of Process & Motion Control Segment

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 Process & Motion Control ("PMC") business were transferred to a newly created subsidiary, Land Newco, Inc. (“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.

As a result of the Spin-Off Transaction, in accordance with authoritative guidance, the operating results of PMC are reported as discontinued operations in the condensed consolidated statements of operations for all prior periods presented. The condensed consolidated statements of cash flows has not been adjusted to separately disclose cash flows related to the discontinued operations. See Note 4, Discontinued Operations for additional information.

8

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate that is expected to be discontinued because of reference rate reform. The amendments in this update provide optional expedients and exceptions for applying GAAP to instruments affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this ASU are effective for all entities as of March 12, 2020, through December 31, 2022. The Company did not modify any material contracts due to reference rate reform during the six months ended June 30, 2022. The Company will continue to evaluate the impact this guidance will have on its consolidated financial statements for all future transactions affected by reference rate reform during the time period referenced above.

2. Acquisitions

Six Months Ended June 30, 2022

On July 1, 2022, in accordance with the terms and conditions of the Merger Agreement dated February 12, 2022, the Company completed its combination with Elkay. See Note 18 Subsequent Events for further information.

Fiscal Year 2021

On November 17, 2021, the Company completed the acquisition of the Wade Drains business ("Wade Drains") from McWane, Inc. for a cash purchase price of $12.6 million, excluding transaction costs and net of cash acquired. During the six months ended June 30, 2022, the Company received a $1.1 million cash payment from the sellers of Wade Drains in connection with finalizing the acquisition date trade working capital, which is included in the total cash purchase price above. Wade Drains manufactures a wide range of specified commercial plumbing products for customers across North America and complements 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, with the remaining $0.7 million payable to the sellers upon settlement of certain indemnities within two years of closing, 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 preliminary 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 $(1.0) million of other net liabilities. During the six months ended June 30, 2022, the preliminary purchase price allocations for Wade Drains were adjusted, resulting in a $1.3 million decrease to goodwill, primarily related to the aforementioned cash payment received from the sellers of Wade Drains. The preliminary purchase price allocations for Wade Drains will be completed within the one-year period following the acquisition dates.

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 condensed consolidated statements of operations or financial position.

3. Restructuring and Other Similar Charges

During the three and six months ended June 30, 2022, the Company continued to execute various restructuring actions. These initiatives were implemented to drive efficiencies and reduce operating costs while also modifying the Company's footprint to reflect changes in the markets it serves, the impact of acquisitions 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. Following the Merger with Elkay, Management expects to continue executing initiatives and select product-line rationalizations to optimize its operating margin and manufacturing footprint. As such, the Company expects further expenses related to workforce reductions, lease termination costs, and other facility

9

rationalization costs. Since the Company’s evaluation of other potential restructuring actions are in process, related restructuring expenses, if any, are not yet estimable.

    The following table summarizes the Company's restructuring and other similar charges during the three and six months ended June 30, 2022 and June 30, 2021, (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Employee termination benefits	$	0.2	$	0.3	$	1.3	$	0.9
Contract termination and other associated costs	0.1		—		0.1		—
Total restructuring and other similar costs	$	0.3	$	0.3	$	1.4	$	0.9

The following table summarizes the activity in the Company's restructuring accrual for the six months ended June 30, 2022 (in millions):

	Employee termination benefits		Contract termination and other associated costs		Total
Accrued Restructuring Costs, December 31, 2021 (1)	$	2.4	$	—	$	2.4
Charges	1.3		0.1		1.4
Cash payments	(2.6)		(0.1)		(2.7)
Accrued Restructuring Costs, June 30, 2022 (1)	$	1.1	$	—	$	1.1

____________________

(1)The restructuring accrual is included in other current liabilities in the condensed consolidated balance sheets.

4. Discontinued Operations

During the year ended December 31, 2021, the Company completed the Spin-Off Transaction of PMC. The operating results of PMC are reported as discontinued operations in the consolidated statements of operations for all prior periods presented, as the Spin-Off Transaction of PMC represented a strategic shift that had a major impact on operations and financial results. The condensed consolidated statements of cash flows for the six months ended June 30, 2022 and June 30, 2021 have not been adjusted to separately disclose cash flows related to the discontinued operations. During the six months ended June 30, 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.

10

The major components of the Income from discontinued operations, net of tax presented in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021, are as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net sales	$	—	$	324.6	$	—	$	645.5
Cost of sales	—		(192.6)		—		(394.0)
Selling, general and administrative expenses	—		(61.6)		—		(123.2)
Restructuring and other similar charges	—		(0.8)		—		(0.8)
Amortization of intangible assets	—		(3.3)		—		(6.6)
Interest expense, net	—		(1.6)		—		(3.0)
Other non-operating income, net	—		2.1		—		1.4
Income from discontinued operations before income tax	—		66.8		—		119.3
Income tax (provision) benefit	—		(14.3)		0.8		(26.8)
Equity method investment income	—		0.2		—		0.3
Non-controlling interest income	—		0.1		—		0.2
Income from discontinued operations, net of tax	$	—	$	52.6	$	0.8	$	92.6

The condensed consolidated statements of cash flows for the six months ended June 30, 2022 and June 30, 2021 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):

	Six Months Ended
	June 30, 2022		June 30, 2021
Depreciation	$	—	$	23.5
Amortization of intangible assets	—		6.6
Gain on disposition of assets	—		(9.2)
Deferred income taxes	—		0.1
Other non-cash charges	—		(0.9)
Stock-based compensation	—		10.8
Expenditures for property, plant and equipment	—		(12.3)
Proceeds from dispositions of long-lived assets	—		13.0
Proceeds associated with divestiture of discontinued operations	35.0		—
Repayments of debt	—		(1.1)
Proceeds from exercise of stock options	—		10.1
Taxes withheld and paid on employees' shared-based payment awards	—		(0.5)

5. Revenue Recognition

    A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when obligations under the terms of a contract with the customer are satisfied. For the majority of the Company's product sales, revenue is recognized at a point-in-time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company's manufacturing facility to the customer. When contracts include multiple products to be delivered to the customer, generally each product is separately priced and is determined to be distinct within the context of the contract. Other than a standard assurance-type warranty that the product will conform to agreed-upon specifications, there are generally no other significant post-shipment obligations. The expected costs associated with standard warranties continues to be recognized as an expense when the products are sold.

When the contract provides the customer the right to return eligible products or when the customer is part of a sales rebate program, the Company reduces revenue at the point of sale using current facts and historical experience by using an estimate for expected product returns and rebates associated with the transaction. The Company adjusts these estimates at the earlier of when the most likely amount of consideration that is expected to be received changes or when the consideration becomes fixed. Accordingly, an increase or decrease to revenue is recognized at that time.

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Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. 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.

Revenue by Category

The following tables present the Company's revenue disaggregated by customer type and customer geography (in millions):

	Three Months Ended				Six Months Ended
Customer Type	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Institutional	$	108.8	$	92.8	$	196.4	$	169.1
Commercial	84.3		73.0		159.8		137.8
All other	91.1		77.9		167.6		142.0
Total	$	284.2	$	243.7	$	523.8	$	448.9

	Three Months Ended				Six Months Ended
Geography	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
United States	$	257.5	$	219.5	$	477.1	$	405.2
Canada	20.5		18.2		35.6		32.8
Rest of world	6.2		6.0		11.1		10.9
Total	$	284.2	$	243.7	$	523.8	$	448.9

Contract Balances

For substantially all of the Company's product sales, the customer is billed 100% of the contract value when the product ships and payment is generally due 30 days from shipment. Certain contracts include longer payment periods; however, the Company has elected to utilize the practical expedient in which the Company will only recognize a financing component to the sale if payment is due more than one year from the date of shipment.

Billings are recorded as accounts receivable when an unconditional right to the contractual consideration exists. Contract assets arise when the Company performs by transferring goods or services to a customer before the customer pays consideration, or before the customer’s payment is due. A contract liability exists when the Company has received consideration or the amount is due from the customer in advance of revenue recognition. Contract liabilities and contract assets as of June 30, 2022 and June 30, 2021 were not material.

Backlog

    The Company had backlog of $84.0 million as of June 30, 2022, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts. The Company has elected to use 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. The Company expects to recognize approximately 98% of the backlog in the remaining six months of the year ending December 31, 2022, and the remaining approximately 2% in 2023 and beyond.

Timing of Performance Obligations Satisfied at a Point in Time

The Company determined that the customer is able to control the product when it is delivered to them; thus, depending on the shipping terms, control will transfer at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset and the customer has significant risks and rewards of ownership of the asset.

Variable Consideration

The Company provides volume-based rebates and the right to return product to certain customers, which are accrued for based on current facts and historical experience. Rebates are paid either on an annual or quarterly basis. There are no other significant variable consideration elements included in the Company's contracts with customers.

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Contract Costs

The Company has elected to expense contract costs as incurred if the amortization period is expected to be one year or less. If the amortization period of these costs is expected to be greater than one year, the costs would be subject to capitalization. As of June 30, 2022 and June 30, 2021, the contract assets capitalized, as well as amortization recognized in the three months ended June 30, 2022 and June 30, 2021, are not significant and no impairment losses were recognized.

Allowance for Doubtful Accounts

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. In determining the allowance for doubtful accounts, the Company also considers various factors including the aging of customer accounts and historical write-offs. 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.

6. Income Taxes

The provision for income taxes for all periods presented is based on an estimated effective income tax rate for the respective fiscal years. The estimated annual effective income tax rate is determined excluding the effect of significant discrete items or items that are reported net of their related tax effects. The tax effect of significant discrete items is reflected in the period in which they occur. The Company's income tax expense is impacted by a number of factors, including the amount of taxable earnings derived in foreign jurisdictions with tax rates that are generally higher than the U.S. federal statutory rate, state tax rates in the jurisdictions where the Company does business and the Company's ability to utilize various tax credits, capital loss and net operating loss (“NOL”) carryforwards.

The Company regularly reviews its deferred tax assets for recoverability and valuation allowances are established based on historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences, as deemed appropriate. In addition, all other available positive and negative evidence is taken into consideration for purposes of determining the proper balances of such valuation allowances. As a result of this review, the Company continues to maintain a full valuation allowance against U.S. federal and state capital loss carryforwards and a partial valuation allowance against certain foreign NOL carryforwards and other related foreign deferred tax assets, as well as certain U.S. state NOL carryforwards. Future changes to the balances of these valuation allowances, as a result of this continued review and analysis by the Company, could result in a material impact to the financial statements for such period of change.

The income tax provision was $11.3 million for the three months ended June 30, 2022, compared to $6.2 million for the three months ended June 30, 2021. The effective income tax rate for the three months ended June 30, 2022 was 23.7% versus 23.1% for the three months ended June 30, 2021. The effective income tax rate for the three months ended June 30, 2022 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments. The effective income tax rate for the three months ended June 30, 2021 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

The income tax provision was $21.3 million for the six months ended June 30, 2022, compared to $10.9 million for the six months ended June 30, 2021. The effective income tax rate for the six months ended June 30, 2022 was 24.5% versus 26.3% for the six months ended June 30, 2021. The effective income tax rate for the six months ended June 30, 2022 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments. The effective income tax rate for the six months ended June 30, 2021 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

The Company’s total liability for net unrecognized tax benefits as of June 30, 2022 and December 31, 2021 was $5.0 million and $5.9 million, respectively. The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in income tax expense. As of June 30, 2022 and December 31, 2021, the total amount of gross,

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unrecognized income tax benefits included accrued interest and penalties of $0.4 million and $0.5 million, respectively. The Company recognized $0.0 million and $0.1 million of net interest and penalties as income tax expense during the six months ended June 30, 2022 and June 30, 2021, 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. Currently, the Company is undergoing routine, periodic income tax examinations in foreign jurisdictions. During the nine month Transition Period ended December 31, 2020, the Internal Revenue Service (the “IRS”) completed an income tax examination of the Company’s U.S. consolidated federal income tax returns for the tax years ended March 31, 2016 and 2017. The Company paid approximately $1.5 million upon the conclusion of such examination, all of which was previously accrued in the Company’s financial statements. In accordance with the terms of the VAG sale agreement, 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 2019. 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 income tax examinations being conducted by the applicable tax authorities in various foreign tax jurisdictions with respect to certain PMC entities. 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; 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. federal income tax examinations for tax years ending prior to March 31, 2019, state and local income tax examinations for years ending prior to March 31, 2018 or significant foreign income tax examinations for years ending prior to March 31, 2017.

7. Earnings per Share

    Basic net income per share from continuing and discontinued operations attributable to Zurn Elkay common stockholders is computed by dividing net income from continuing operations and income from discontinued operations attributable to Zurn Elkay common stockholders, respectively, by the corresponding weighted average number of common shares outstanding for the period. Diluted net income per share from continuing and discontinued operations attributable to Zurn Elkay common stockholders 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.

The computation for diluted net income per share for the three and six months ended June 30, 2022 excludes 0.2 million and 0.2 million common shares due to their anti-dilutive effects, respectively. The computation for diluted net income per share for the three and six months ended June 30, 2021 excludes 0.2 million and 0.2 million common shares due to their anti-dilutive effects, respectively.

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8. Stockholders' Equity

Stockholders' equity consists of the following (in millions):

	Common stock (1)		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2020	$	1.2	$	1,392.9	$	116.0	$	(73.8)	$	3.0	$	1,439.3
Total comprehensive income (loss)	—		—		50.0		(1.8)		0.1		48.3
Stock-based compensation expense	—		14.2		—		—		—		14.2
Proceeds from exercise of stock options	—		2.8		—		—		—		2.8
Repurchase of common stock	—		—		(0.9)		—		—		(0.9)
Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)
Balance at March 31, 2021	$	1.2	$	1,409.9	$	154.3	$	(75.6)	$	3.1	$	1,492.9
Total comprehensive income	—		—		73.2		5.3		0.1		78.6
Stock-based compensation expense	—		11.6		—		—		—		11.6
Proceeds from exercise of stock options	—		16.6		—		—		—		16.6
Taxes withheld and paid on employees' share-based payment awards	—		(1.4)		—		—		—		(1.4)
Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)
Balance at June 30, 2021	$	1.2	$	1,436.7	$	216.7	$	(70.3)	$	3.2	$	1,587.5

	Common stock (1)		Additional paid-in capital		Retained deficit		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2021	$	1.3	$	1,436.9	$	(1,236.9)	$	(74.9)	$	—	$	126.4
Total comprehensive income	—		—		30.2		2.0		—		32.2
Stock-based compensation expense	—		3.9		—		—		—		3.9
Proceeds from exercise of stock options	—		0.5		—		—		—		0.5
Taxes withheld and paid on employees' share-based payment awards	—		(0.5)		—		—		—		(0.5)
Proceeds associated with divestiture of discontinued operations	—		—		35.0		—		—		35.0
Common stock dividends ($0.03 per share)	—		(3.8)		—		—		—		(3.8)
Balance at March 31, 2022	$	1.3	$	1,437.0	$	(1,171.7)	$	(72.9)	$	—	$	193.7
Total comprehensive income (loss)	—		—		36.4		(2.0)		—		34.4
Stock-based compensation expense	—		3.8		—		—		—		3.8
Proceeds from exercise of stock options	—		1.3		—		—		—		1.3
Common stock dividends ($0.03 per share)	—		(3.8)		—		—		—		(3.8)
Balance at June 30, 2022	$	1.3	$	1,438.3	$	(1,135.3)	$	(74.9)	$	—	$	229.4

____________________

(1)During the three and six months ended June 30, 2022, the Company issued 335,177 and 462,178 shares of common stock upon the exercise of stock options, vesting of restricted stock units, and for other common stock awards, respectively.

(2)Non-controlling interest through the Spin-Off Transaction represented a 5% non-controlling interest in a PMC joint venture relationship. The Company has no remaining non-controlling interest subsequent to the Spin-Off Transaction.

Prior year 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.

Share Repurchase Program

    During fiscal 2015, the Company's Board of Directors approved a common stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. On January 27, 2020, the Company's Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $300.0 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; 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. The Company did not repurchase any shares during the three and six months ended June 30, 2022. During the six months ended June 30, 2021, the Company repurchased 22,300 shares of

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common stock at a total cost of $0.9 million at a weighted average price of $39.27 per share. The repurchased shares were canceled by the Company upon receipt. A total of approximately $162.8 million of the existing authority remained under the Repurchase Program at June 30, 2022.

9. Accumulated Other Comprehensive Loss

    The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2022, are as follows (in millions):

	Foreign Currency Translation and Other		Pension and Postretirement Plans		Total
Balance at December 31, 2021	$	(70.9)	$	(4.0)	$	(74.9)
Other comprehensive loss before reclassifications	—		—		—
Amounts reclassified from accumulated other comprehensive loss	—		—		—
Net current period other comprehensive loss	—		—		—
Balance at June 30, 2022	$	(70.9)	$	(4.0)	$	(74.9)

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the three and six months ended June 30, 2022 and June 30, 2021 (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		Income Statement Line
Pension and other postretirement plans
Amortization of prior service credit	$	—	$	(0.1)	$	—	$	(0.2)	Other income, net
Provision for income taxes	—		—		—		—
Total net of tax	$	—	$	(0.1)	$	—	$	(0.2)

10. Inventories

The major classes of inventories are summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Finished goods	$	217.2	$	169.1
Work in progress	4.7		5.1
Raw materials	25.4		14.6
Inventories at First-in, First-Out ("FIFO") cost	247.3		188.8
Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	(3.9)		(4.3)
	$	243.4	$	184.5

11. Goodwill and Intangible Assets

    The changes in the net carrying value of goodwill for the six months ended June 30, 2022, are presented below (in millions):

Net carrying amount as of December 31, 2021	$	254.1
Currency translation adjustments	(0.2)
Purchase accounting adjustments (1)	(1.3)
Net carrying amount as of June 30, 2022	$	252.6

(1)Refer to Note 2, Acquisitions for additional information regarding the purchase accounting adjustments.

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    The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of June 30, 2022 and December 31, 2021 are as follows (in millions):

		June 30, 2022
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	25.5	$	(22.5)	$	3.0
Customer relationships (including distribution network)	15 years	351.1		(273.3)		77.8
Tradenames	13 years	11.5		(4.5)		7.0
Intangible assets not subject to amortization - trademarks and tradenames		87.0		—		87.0
Total intangible assets, net	15 years	$	475.1	$	(300.3)	$	174.8
		December 31, 2021
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	24.9	$	(22.4)	$	2.5
Customer relationships (including distribution network)	15 years	351.1		(269.1)		82.0
Tradenames	13 years	11.5		(4.0)		7.5
Intangible assets not subject to amortization - trademarks and tradenames		87.1		—		87.1
Total intangible assets, net	15 years	$	474.6	$	(295.5)	$	179.1

    Intangible asset amortization expense totaled $1.6 million and $5.8 million for the three months ended June 30, 2022 and June 30, 2021, respectively. Intangible asset amortization expense totaled $4.6 million and $11.9 million for the six months ended June 30, 2022 and June 30, 2021, respectively. Customer relationships acquired during the year ended December 31, 2021 were assigned a weighted-average useful life of 10 years. There were no intangible assets acquired during the six months ended June 30, 2022.

    The Company expects to recognize amortization expense on the intangible assets subject to amortization of $7.9 million in the year ending December 31, 2022 (inclusive of the $4.6 million of amortization expense recognized in the six months ended June 30, 2022), $6.5 million in 2023, $6.5 million in 2024, $6.4 million in 2025, $6.3 million in 2026 and $6.3 million in 2027.

12. Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Commissions	$	9.3	$	8.1
Current portion of operating lease liability	6.0		6.1
Income taxes payable	1.3		2.1
Legal and environmental	2.7		3.0
Product warranty (1)	1.2		1.3
Restructuring and other similar charges (2)	1.1		2.4
Risk management (3)	11.4		11.3
Sales rebates	35.5		38.6
Tax indemnities	21.9		21.9
Taxes, other than income taxes	1.6		1.8
Other	7.0		9.8
	$	99.0	$	106.4

____________________

(1)See more information related to the product warranty obligations within Note 15, Commitments and Contingencies.

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

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

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13. Long-Term Debt

Long-term debt is summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Term loan (1)	$	537.3	$	539.2
Finance leases (2)	0.2		0.3
Total	537.5		539.5
Less current maturities	5.6		5.6
Long-term debt	$	531.9	533.9

____________________

(1)Includes unamortized debt issuance costs of $10.0 million and $10.8 million at June 30, 2022 and December 31, 2021, respectively.

(2)Refer to Note 14, Leases, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding leases.

Senior Secured Credit Facility

    On October 4, 2021, ZBS Global, Inc. (“Holdings”), Zurn Holdings, Inc., Zurn LLC (together, the “Borrowers”), the lenders from time to time party thereto, and Credit Suisse AG, Cayman Islands Branch, as administrative agent for the lenders (in such capacity, the “Administrative Agent”) entered into a Fourth Amended and Restated First Lien Credit Agreement (the “Credit Agreement”). The Credit Agreement is funded by a syndicate of banks and other financial institutions and provides for (i) a $550.0 million term loan facility (the “Term Loan”) and (ii) a $200.0 million revolving credit facility (the “Revolving Credit Facility”).

The obligations under the Credit Agreement and related documents are secured by liens on substantially all of the assets of Holdings, the Borrowers, and certain subsidiaries of the Borrowers pursuant to a Third Amended and Restated Guarantee and Collateral Agreement, dated as of October 4, 2021 (the "Collateral Agreement"), among Holdings, the Borrowers, the subsidiaries of the Borrowers party thereto, and the Administrative Agent, and certain other collateral documents.

The Credit Agreement contains representations, warranties, covenants and events of default, including, without limitation, a financial covenant under which the Borrowers are, if certain conditions are met, obligated to maintain on a consolidated basis, as of the end of each fiscal quarter, a certain maximum Net First Lien Leverage Ratio (as defined in the Credit Agreement). As of June 30, 2022, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.

See Note 18, Subsequent Events for additional information on an amendment to the Credit Agreement entered into in connection with the Merger.

Term Debt

The Term Loan has a maturity date of October 4, 2028. The Borrowers are required to make quarterly payments of principal in an amount equal to $1.4 million on each quarter until the maturity date.

The Term Loan bears 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. 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 LIBOR 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 LIBOR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 2.08 to 1.00 as of June 30, 2022.

At June 30, 2022 and for the six months ended, the borrowings under the Term Loan had weighted-average effective interest rates of 4.04% and 2.90%, respectively.

Revolving Credit Facility

The Credit Agreement includes a $200.0 million revolving credit facility that has a maturity date of October 2, 2026. Borrowings under the Revolving Credit Facility bear 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. If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the applicable margin shall equal 1.00% in the case of base rate borrowings and 2.00% in the case of LIBOR borrowings. In the event the Borrowers' Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the applicable margin on both base rate

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and LIBOR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 2.08 to 1.00 as of June 30, 2022. The Borrowers are also required to pay a quarterly commitment fee on the average daily unused portion of the Revolving Credit Facility for each fiscal quarter and fees in connection with the issuance of letters of credit. If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the commitment fee shall equal 0.50%, and if the Company's Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the commitment fee shall equal 0.375%.

At June 30, 2022 and December 31, 2021, there were no amounts borrowed under the Revolving Credit Facility. As of June 30, 2022 and December 31, 2021, $6.1 million and $6.1 million of the Revolving Credit Facility were considered utilized in connection with outstanding letters of credit, respectively.

Finance leases and other subsidiary debt

At June 30, 2022 and December 31, 2021, the Company had finance lease obligations of $0.2 million and $0.3 million, respectively. See Note 14, Leases in the audited consolidated financial statements of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding leases.

14. Fair Value Measurements

    ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. 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.

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

•Level 1 - Quoted prices for identical instruments in active markets.

•Level 2 - Quoted prices for similar instruments; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable.

•Level 3 - Model-derived valuations in which one or more inputs or value-drivers are both significant to the fair value measurement and unobservable.

    If applicable, the Company uses quoted market prices in active markets to determine fair value, and therefore classifies such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters. These measurements are classified within Level 3 if they use significant unobservable inputs.

Fair Value of Financial Instruments

    The Company has a nonqualified deferred compensation plan where assets are invested in mutual funds and corporate-owned life insurance contracts held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for the mutual funds, which are measured using quoted prices of identical instruments in active markets categorized as Level 1. Corporate-owned life insurance contracts are recorded at cash surrender value, which is provided by a third party and reflects the net asset value of the underlying publicly traded mutual funds categorized as Level 2. The deferred compensation plan assets are classified within other assets on the condensed consolidated balance sheets. Deferred compensation plan liabilities are measured at fair value based on quoted prices of identical instruments to the investment vehicles selected by the participants categorized as Level 1. Deferred compensation plan liabilities are classified within other liabilities on the condensed consolidated balance sheets.

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    The following table provides a summary of the Company's assets and liabilities that were recognized at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in millions):

	Fair Value as of June 30, 2022
	Level 1		Level 2		Level 3		Total
Deferred compensation plan assets	$	1.1	$	11.4	$	—	$	12.5
Deferred compensation plan liabilities	12.9		—		—		12.9
	Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Deferred compensation plan assets	$	0.9	$	14.4	$	—	$	15.3
Deferred compensation plan liabilities	16.3		—		—		16.3

There were no transfers of assets between levels at June 30, 2022 and December 31, 2021, respectively.

Fair Value of Non-Derivative Financial Instruments

    The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at June 30, 2022 and December 31, 2021, due to the short-term nature of those instruments. The fair value of long-term debt as of June 30, 2022 and December 31, 2021, was approximately $534.5 million and $552.4 million, respectively. The fair value is based on quoted market prices for the same instruments.

Long-lived Assets and Intangible Assets

    Long-lived assets (which include property, plant and equipment and real estate) may be measured at fair value if such assets are held-for-sale or when there is a determination that the asset is impaired. Intangible assets (which include patents, tradenames, customer relationships, and non-compete agreements) also may be measured at fair value when there is a determination that the asset is impaired. The determination of fair value for these assets is based on the best information available that resides within Level 3 of the fair value hierarchy, including internal cash flow estimates discounted at an appropriate interest rate, quoted market prices when available, market prices for similar assets and independent appraisals, as appropriate. For real estate, cash flow estimates are based on current market estimates that reflect current and projected lease profiles and available industry information about expected trends in rental, occupancy and capitalization rates.

15. Commitments and Contingencies

Warranties:

The Company offers warranties on the sales of certain of its products and records an accrual for estimated future claims. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The following table presents changes in the Company’s product warranty liability (in millions):

	Six Months Ended
	June 30, 2022		June 30, 2021
Balance at beginning of period	$	1.3	$	1.2
Charged to operations	0.6		1.0
Claims settled	(0.7)		(0.6)
Balance at end of period	$	1.2	$	1.6

Contingencies:

    The Company's subsidiaries are involved in various unresolved legal actions, administrative proceedings and claims in the ordinary course of business involving, among other things, product liability, commercial, employment, workers' compensation, intellectual property claims and environmental matters. The Company establishes accruals in a manner that is consistent with accounting principles generally accepted in the United States for costs associated with such matters when liability is probable and those costs are capable of being reasonably estimated. 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.

    Certain Company subsidiaries are subject to asbestos litigation. As of June 30, 2022, Zurn and numerous other unrelated companies were defendants in approximately 6,000 asbestos related lawsuits representing approximately 7,000

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claims. Plaintiffs' claims allege personal injuries caused by exposure to asbestos used primarily in industrial boilers formerly manufactured by a segment of Zurn. Zurn did not manufacture asbestos or asbestos components. Instead, Zurn purchased them from suppliers. These claims are being handled pursuant to a defense strategy funded by insurers.

    As of June 30, 2022, the Company estimates the potential liability for the asbestos-related claims described above, as well as the claims expected to be filed in the next ten years, to be approximately $66.0 million, of which Zurn expects its insurance carriers to pay approximately $49.0 million in the next ten years on such claims, with the balance of the estimated liability being paid in subsequent years. The $66.0 million was developed based on actuarial studies and represents the projected indemnity payout for current and future claims. There are inherent uncertainties involved in estimating the number of future asbestos claims, future settlement costs, and the effectiveness of defense strategies and settlement initiatives. As a result, actual liability could differ from the estimate described herein and could be substantial. The liability for the asbestos-related claims is recorded in reserve for asbestos claims within the condensed consolidated balance sheets.

    Management estimates that its available insurance to cover this potential asbestos liability as of June 30, 2022 is in excess of the ten year estimated exposure, and accordingly, believes that all current claims are covered by insurance.

    As of June 30, 2022, the Company had a recorded receivable from its insurance carriers of $66.0 million, which corresponds to the amount of this potential asbestos liability that is covered by available insurance and is currently determined to be probable of recovery. However, there is no assurance the Company's current insurance coverage will ultimately be available or that this asbestos liability will not ultimately exceed the Company's coverage limits. Factors that could cause a decrease in the amount of available coverage or create gaps in coverage include: 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. The receivable for probable asbestos-related recoveries is recorded in insurance for asbestos claims within the condensed consolidated balance sheets.

16. Retirement Benefits

The components of net periodic benefit cost are as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Pension Benefits:
Service cost	$	—	$	0.1	$	—	$	0.2
Interest cost	2.2		4.6		4.3		7.5
Expected return on plan assets	(2.4)		(4.6)		(4.8)		(9.8)
Net periodic benefit cost	$	(0.2)	$	0.1	$	(0.5)	$	(2.1)
Other Postretirement Benefits:
Interest cost	$	—	$	0.1	$	0.1	$	0.2
Amortization:
Prior service credit	—		(0.1)		—		(0.2)
Net periodic benefit cost	$	—	$	—	$	0.1	$	—

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

    During the six months ended June 30, 2022 and June 30, 2021, the Company made contributions of $0.7 million and $1.8 million, respectively, to its qualified pension plan trusts.

    Prior year 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.

See Note 16, Retirement Benefits, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding retirement benefits.

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17. Stock-Based Compensation

    The Zurn Elkay Water Solutions Corporation Performance Incentive Plan (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 the Company's performance and create value for the Company's stockholders. For the three months ended June 30, 2022 and June 30, 2021, the Company recognized $3.8 million and $7.1 million of stock-based compensation expense, respectively. For the six months ended June 30, 2022 and June 30, 2021, the Company recognized $7.7 million and $16.2 million of stock-based compensation expense, respectively.

During the six months ended June 30, 2022, the Company granted the following restricted stock units, performance stock units and common stock to directors, executive officers, and certain other employees:

Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Stock options	2,650	$	12.27
Restricted stock units	13,132	$	33.51
Performance stock units	5,244	$	33.37
Common stock	28,347	$	31.11

    See Note 15, Stock-Based Compensation, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, for further information regarding stock-based compensation.

18. Subsequent Events

Elkay Transaction; Credit Agreement Amendment

On July 1, 2022, in accordance with the terms and conditions of the Merger Agreement, dated February 12, 2022, the Company announced it had closed the Merger with Elkay. Under the terms of the transaction agreements, subject to certain holdbacks and post-closing adjustments, the merger consideration to Elkay shareholders consisted of approximately 51.6 million shares of Zurn common stock, which results in former Elkay shareholders owning approximately 29% of the combined company. Elkay, a market leader of commercial drinking water solutions, complements the Company's existing product portfolio. Following the closing of the Elkay Transaction, Zurn changed its legal name from Zurn Water Solutions Corporation to Zurn Elkay Water Solutions Corporation. Zurn Elkay common stock will continue to trade on the New York Stock Exchange under the ticker symbol “ZWS.”

In connection with the consummation of the Merger, on July 1, 2022, Holdings, the Borrowers, Elkay and the other loan parties party thereto entered into that certain Amendment No. 1 (the “Amendment”) to the Fourth Amended and Restated First Lien Credit Agreement (the “Credit Agreement”) pursuant to which Elkay joined the Credit Agreement as a Borrower. Elkay and its domestic subsidiaries also granted security interests in substantially all of their personal property assets to secure the obligations under the Credit Agreement pursuant to that certain Supplement No. 1 dated as of July 1, 2022 to the Collateral Agreement and certain other collateral documents.

The Company has estimated the total consideration transferred for the acquisition of Elkay to be approximately $1.4 billion, subject to finalization of purchase accounting and working capital adjustments. Pro forma revenues and earnings have not been presented as the initial accounting for the Elkay Transaction is incomplete as of the date the consolidated financial statements are issued. The Company is in the process of assessing the fair value of the acquired tangible assets, liabilities assumed and any applicable intangible assets and liabilities for this business combination.

Dividends

On July 21, 2022, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.07 per-share to be paid on September 7, 2022, to stockholders of record as of August 19, 2022.

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ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

As previously disclosed, on July 1, 2022, we completed our combination with Elkay Manufacturing Company (“Elkay”) through the merger of Elkay with and into a newly created subsidiary of the Company, with Elkay surviving as a wholly owned subsidiary of Zurn Elkay (the “Merger” or "Elkay Transaction"). In conjunction with the Merger, we changed our name from Zurn Water Solutions Corporation to Zurn Elkay Water Solutions Corporation. Our results of operations will include the acquired operations subsequent to July 1, 2022. See Item 1, Note 18, Subsequent Events for additional information on the Elkay Transaction.

Following the merger with Elkay, Zurn Elkay is a growth-oriented, pure-play water management business that designs, procures, manufactures, and markets what we believe to be the broadest sustainable product portfolio of specification-driven water management solutions to improve health, human safety and the environment. Our product portfolio includes professional grade water control and safety, water distribution and drainage, drinking water, finish plumbing, hygienic, environmental and site works products for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time. Our heritage of innovation and specification has allowed us to provide highly-engineered, mission-critical solutions to customers for decades and affords us the privilege of having long-term, valued relationships with market leaders. We operate in a disciplined way and the Zurn Elkay Business System (“ZEBS”), described below, is our operating philosophy. Grounded in the spirit of continuous improvement, ZEBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of our business.

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

Critical Accounting Policies and Estimates

    The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Refer to Item 7, MD&A, of our Annual Report on Form 10-K for the year ended December 31, 2021 for information with respect to our critical accounting policies which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management. Except for the items reported below, management believes that as of June 30, 2022, and during the period from January 1, 2022 through June 30, 2022, there has been no material change to this information.

Recent Accounting Pronouncements

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

Acquisitions

On November 17, 2021, we completed the acquisition of the Wade Drains business ("Wade Drains") from McWane, Inc. for a cash purchase price of $12.6 million, excluding transaction costs and net of cash acquired. During the six months ended June 30, 2022, we received a $1.1 million cash payment from the sellers of Wade Drains in connection with finalizing the acquisition date trade working capital, which is included in the total cash purchase price above. Wade Drains manufactures a wide range of specified commercial plumbing products for customers across North America and complements our existing flow systems product portfolio.

On April 16, 2021, we acquired substantially all of the assets of Advance Technology Solutions, LLC (d/b/a ATS GREASEwatch) ("ATS GREASEwatch") for a total cash purchase price of $4.5 million. ATS GREASEwatch, headquartered in Saginaw, Michigan, develops, manufactures and markets remote tank monitoring devices, alarms, software and services for various applications and provides technology to enhance and expand our current product offerings within our existing product portfolio.

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Spin-Off of Process & Motion Control Segment

On October 4, 2021, we completed a Reverse Morris Trust tax-free spin-off transaction (the “Spin-off Transaction”) in which (i) substantially all the assets and liabilities of our Process & Motion Control ("PMC") business were transferred to a newly created subsidiary, Land Newco, Inc. (“Land”), (ii) the shares of Land were distributed to our stockholders pro rata, and (iii) Land was merged with a subsidiary of Regal Rexnord Corporation (formerly known as Regal Beloit Corporation), in which the stock of Land was converted into a specified number of shares of Regal Rexnord Corporation. During the six months ended June 30, 2022, we received $35.0 million from Regal Rexnord Corporation as a result of the final working capital and cash balances at closing exceeding the targets stipulated in the Spin-Off Transaction agreement.

The operating results of PMC are reported as discontinued operations in our condensed consolidated statements of operations for all periods presented. The condensed consolidated statements of cash flows for the period ended June 30, 2021 has not been adjusted to separately disclose cash flows related to the discontinued operations. See Item 1, Note 4, Discontinued Operations for additional information on cash flows associated with the discontinued operations.

The major components of the Income from discontinued operations, net of tax presented in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021, are as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net sales	$	—	$	324.6	$	—	$	645.5
Cost of sales	—		(192.6)		—		(394.0)
Selling, general and administrative expenses	—		(61.6)		—		(123.2)
Restructuring and other similar charges	—		(0.8)		—		(0.8)
Amortization of intangible assets	—		(3.3)		—		(6.6)
Interest expense, net	—		(1.6)		—		(3.0)
Other non-operating income, net	—		2.1		—		1.4
Income from discontinued operations before income tax	—		66.8		—		119.3
Income tax (provision) benefit	—		(14.3)		0.8		(26.8)
Equity method investment income	—		0.2		—		0.3
Non-controlling interest income	—		0.1		—		0.2
Income from discontinued operations, net of tax	$	—	$	52.6	$	0.8	$	92.6

Results of Operations

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

Net sales

(Dollars in Millions)

	Three Months Ended
	June 30, 2022		June 30, 2021		Change		% Change
Net Sales	$	284.2	$	243.7	$	40.5	16.6	%

Net sales were $284.2 million during the three months ended June 30, 2022, an increase of 17% year over year. Excluding a 2% increase to net sales resulting from our prior-year acquisition, core sales increased 15% year over year as nearly all of our product categories contributed to the sales growth.

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Income from operations

(Dollars in Millions)

	Three Months Ended
	June 30, 2022			June 30, 2021			Change			% Change
Income from operations	$	53.5		$	37.3		$	16.2		43.4	%
% of net sales	18.8		%	15.3		%	3.5		%

Income from operations was $53.5 million during the three months ended June 30, 2022, or 18.8% of net sales. Income from operations as a percentage of net sales increased by 350 basis points primarily as a result of the favorable impact of year-over-year sales growth (inclusive of price realization), productivity savings and the lower intangible asset amortization and non-cash stock-based compensation expense, all of which was partially offset by the year-over-year increases in material and transportation costs, as well as incremental growth and productivity investments.

Interest expense, net

    Interest expense, net was $5.2 million during the three months ended June 30, 2022, compared to $10.1 million during the three months ended June 30, 2021. The decrease in interest expense as compared to the prior year period is primarily a result of the lower outstanding borrowings following the Spin-Off Transaction refinancing, partially offset by a higher year over year interest rate. See Item 1, Note 13 Long-Term Debt for more information.

Other expense, net

    Other expense, net during the three months ended June 30, 2022 and 2021, was $0.6 million and $0.4 million, respectively. Other expense, net consists primarily of foreign currency transaction gains and losses and the non-service cost components associated with our defined benefit plans.

Provision for income taxes

The income tax provision was $11.3 million for the three months ended June 30, 2022, compared to $6.2 million for the three months ended June 30, 2021. The effective income tax rate for the three months ended June 30, 2022 was 23.7% versus 23.1% for the three months ended June 30, 2021. The effective income tax rate for the three months ended June 30, 2022 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments. The effective income tax rate for the three months ended June 30, 2021 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

On a quarterly basis, we review and analyze our valuation allowances associated with deferred tax assets relating to certain foreign and state net operating loss carryforwards as well as U.S. federal and state capital loss carryforwards. In conjunction with this analysis, we weigh both positive and negative evidence for purposes of determining the proper balances of such valuation allowances. Future changes to the balances of these valuation allowances, as a result of our continued review and analysis, could result in a material impact to the financial statements for such period of change.

Net income attributable to Zurn Elkay common stockholders

    Net income attributable to Zurn Elkay common stockholders during the three months ended June 30, 2022, was $36.4 million compared to $73.2 million during the three months ended June 30, 2021. Diluted net income per share attributable to Zurn Elkay common stockholders for the three months ended June 30, 2022 and June 30, 2021, was $0.28 and $0.59, respectively. The year over year change is the result of the PMC operations classified as discontinued operations in the prior year and the other factors described above. Net income from discontinued operations, net of tax, was $0.0 million for the three months ended June 30, 2022 compared to $52.6 million for the three months ended June 30, 2021. Diluted net income per share from discontinued operations for the three months ended June 30, 2022 and June 30, 2021, was $0.00 and $0.42, respectively.

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

Net sales

(Dollars in Millions)

	Six Months Ended
	June 30, 2022		June 30, 2021		Change		% Change
Net Sales	$	523.8	$	448.9	$	74.9	16.7	%

Net sales were $523.8 million during the six months ended June 30, 2022, an increase of 17% year over year. Excluding a 2% increase in net sales resulting from our prior-year acquisition, core sales increased 15% as nearly all of our product categories contributed to the sales growth.

Income from operations

(Dollars in Millions)

	Six Months Ended
	June 30, 2022		June 30, 2021		Change		% Change
Income from operations	97.4		61.3		36.1		58.9	%
% of net sales	18.6	%	13.7	%	4.9	%

Income from operations was $97.4 million during the six months ended June 30, 2022, or 18.6% of net sales. Income from operations as a percentage of net sales increased by 490 basis points primarily as a result of the favorable impact of year-over-year sales growth (inclusive of price realization), productivity savings, lower non-cash stock-based compensation expense, lower intangible asset amortization and the year-over-year change in the adjustment to state inventories at last-in-first-out cost, all of which was partially offset by the year-over-year increases in material and transportation costs, as well as incremental growth and productivity investments.

Interest expense, net

    Interest expense, net was $10.0 million during the six months ended June 30, 2022, compared to $19.7 million during the six months ended June 30, 2021. The decrease in interest expense as compared to the prior year period is primarily a result of the lower outstanding borrowings following the Spin-Off Transaction refinancing, partially offset by a higher year over year interest rate. See Item 1, Note 13 Long-Term Debt for more information.

Other expense, net

    Other expense, net during the six months ended June 30, 2022 and 2021 was $0.3 million and $0.1 million, respectively. Other expense, net consists primarily of foreign currency transaction gains and losses and the non-service cost components associated with our defined benefit plans.

Provision for income taxes

The income tax provision was $21.3 million during the six months ended June 30, 2022, compared to $10.9 million in the six months ended June 30, 2021. The effective income tax rate for the six months ended June 30, 2022 was 24.5% versus 26.3% in the six months ended June 30, 2021. The effective income tax rate for the six months ended June 30, 2022 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments. The effective income tax rate for the six months ended June 30, 2021 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

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Net income attributable to Zurn Elkay common stockholders

    Net income attributable to Zurn Elkay common stockholders during the six months ended June 30, 2022, was $66.6 million compared to $123.2 million during the six months ended June 30, 2021. Diluted net income per share attributable to Zurn Elkay common stockholders for the six months ended June 30, 2022 and June 30, 2021, was $0.52 and $0.99, respectively. The year over year change is the result of the PMC operations classified as discontinued operations in the prior year and the other factors described above. Net income from discontinued operations, net of tax, was $0.8 million for the six months ended June 30, 2022 compared to $92.6 million for the six months ended June 30, 2021. Diluted net income per share from discontinued operations for the six months ended June 30, 2022 and June 30, 2021, was $0.01 and $0.75, respectively.

Non-GAAP Financial Measures

    Non-GAAP financial measures are intended to supplement and not replace financial measures prepared in accordance with GAAP. The following non-GAAP financial measures are utilized by management in comparing our operating performance on a consistent basis. We believe that these financial measures are appropriate to enhance an overall understanding of our underlying operating performance trends compared to historical and prospective periods and our peers. Management also believes that these measures are useful to investors in their analysis of our results of operations and provide improved comparability between fiscal periods as well as insight into the compliance with our debt covenants. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.

Core sales

    Core sales excludes the impact of acquisitions (such as the Wade Drains acquisition), divestitures and foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparisons of our net sales performance with prior and future periods and to our peers. We exclude the effect of acquisitions and divestitures because the nature, size and number of acquisitions and divestitures can vary dramatically from period to period and between us and our peers, and can also obscure underlying business trends and make comparisons of long-term performance difficult. We exclude the effect of foreign currency translation from this measure because the volatility of currency translation is not under management's control.

EBITDA

    EBITDA represents earnings before interest and other debt related activities, taxes, depreciation and amortization. EBITDA is presented because it is an important supplemental measure of performance and it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA is also presented and compared by analysts and investors in evaluating our ability to meet debt service obligations. Other companies in our industry may calculate EBITDA differently. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of operating performance or any other measures of performance derived in accordance with GAAP. Because EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business.

Adjusted EBITDA

    Adjusted EBITDA (as described below in “Covenant Compliance”) is an important measure because, under our credit agreement, our ability to incur certain types of acquisition debt and certain types of subordinated debt, make certain types of acquisitions or asset exchanges, operate our business and make dividends or other distributions, all of which will impact our financial performance, is impacted by our Adjusted EBITDA, as our lenders measure our performance with a net first lien leverage ratio by comparing our senior secured bank indebtedness to our Adjusted EBITDA (see “Covenant Compliance” for additional discussion of this ratio, including a reconciliation to our net income). We reported net income attributable to Zurn Elkay common stockholders in the six months ended June 30, 2022, of $66.6 million and Adjusted EBITDA for the same period of $116.3 million. See “Covenant Compliance” for a reconciliation of Adjusted EBITDA to GAAP net income.

Covenant Compliance

    Our credit agreement, which governs our senior secured credit facilities, contains, among other provisions, restrictive covenants regarding indebtedness, payments and distributions, mergers and acquisitions, asset sales, affiliate transactions, capital expenditures and the maintenance of certain financial ratios. Payment of borrowings under the credit agreement may be accelerated if there is an event of default. Events of default include the failure to pay principal and interest when due, a material breach of a representation or warranty, certain non-payments or defaults under other indebtedness, covenant defaults, events of

27

bankruptcy and a change of control. Certain covenants contained in the credit agreement restrict our ability to take certain actions, such as incurring additional debt or making acquisitions, if we are unable to meet a maximum total net leverage ratio of 5.00 to 1.00 as of the end of each fiscal quarter. At June 30, 2022, our net leverage ratio was 2.08 to 1.00. Failure to comply with these covenants could limit our long-term growth prospects by hindering our ability to borrow under the revolver, to obtain future debt and/or to make acquisitions.

    “Adjusted EBITDA” is the term we use to describe EBITDA as defined and adjusted in our credit agreement, which is net income, adjusted for the items summarized in the table below. Adjusted EBITDA is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, non-cash or non-recurring losses or gains. In view of our debt level, it is also provided to aid investors in understanding our compliance with our debt covenants. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA varies from others in our industry. This measure should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; or (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-cash, non-operating or non-recurring charges that are deducted in calculating net income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results.

    In addition, certain of these expenses can represent the reduction of cash that could be used for other corporate purposes. Further, although not included in the calculation of Adjusted EBITDA below, the measure may at times allow us to add estimated cost savings and operating synergies related to operational changes ranging from acquisitions or dispositions to restructuring, and/or exclude one-time transition expenditures that we anticipate we will need to incur to realize cost savings before such savings have occurred.

    The calculation of Adjusted EBITDA under our credit agreement as of June 30, 2022, is presented in the table below. However, the results of such calculation could differ in the future based on the different types of adjustments that may be included in such respective calculations at the time.

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

(in millions)	Six months ended June 30, 2021		Twelve months ended December 31, 2021		Six months ended June 30, 2022		Twelve months ended June 30, 2022
Net income attributable to Zurn Elkay common stockholders	$	123.2	$	120.9	$	66.6	$	64.3
Income from discontinued operations, net of tax (1)	(92.6)		(71.2)		(0.8)		20.6
Provision for income taxes	10.9		2.7		21.3		13.1
Actuarial gain on pension and postretirement benefit obligations	—		(1.2)		—		(1.2)
Other expense, net (2)	0.1		0.7		0.3		0.9
Loss on the extinguishment of debt	—		20.4		—		20.4
Interest expense	19.7		34.7		10.0		25.0
Depreciation and amortization	16.5		32.7		9.3		25.5
EBITDA	77.8		139.7		106.7		168.6
Adjustments to EBITDA
Restructuring and other similar charges (3)	0.9		3.7		1.4		4.2
Stock-based compensation expense	16.2		37.5		7.7		29.0
LIFO expense (income) (4)	4.3		14.1		(0.4)		9.4
Acquisition-related fair value adjustment	0.6		0.8		0.6		0.8
Other, net (5)	—		—		0.3		0.3
Subtotal of adjustments to EBITDA	22.0		56.1		9.6		43.7
Adjusted EBITDA	$	99.8	$	195.8	$	116.3	$	212.3
Pro forma adjustment for acquisitions (6)							0.5
Pro forma Adjusted EBITDA							212.8
Consolidated indebtedness (7)							$	442.0
Total net leverage ratio (8)							2.08

__________________________________

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

(2)Other expense, net for the periods indicated, consists primarily of gains and losses from foreign currency transactions and the non-service cost components of net periodic benefit costs associated with our defined benefit plans.

(3)Restructuring and other similar charges is comprised of costs associated with workforce reductions, lease termination costs, and other facility rationalization costs.  See Item 1, Note 3, Restructuring and Other Similar Charges for more information.

(4)Last-in first-out (LIFO) inventory adjustments are excluded in calculating Adjusted EBITDA as defined in our credit agreement.

(5)Other, net consists of gains and losses on the disposition of long-lived assets.

(6)Represents a pro forma adjustment to include Adjusted EBITDA related to the acquisition of Wade Drains, which was permitted by our credit agreement. The pro forma adjustment includes the period from July 1, 2021, through the date of the Wade Drains acquisition. See Item 1, Note 2, Acquisitions for more information.

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

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

29

Liquidity and Capital Resources    

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

    As of June 30, 2022, we had $110.4 million of cash and cash equivalents and $193.9 million of additional borrowing capacity. As of June 30, 2022, the available borrowings under our credit facility were reduced by $6.1 million due to outstanding letters of credit. As of December 31, 2021, we had $96.6 million of cash and cash equivalents and approximately $193.9 million of additional borrowing capacity under our revolving credit facility.

Our revolving credit facility is available to fund our working capital requirements, capital expenditures and for other general corporate purposes. We believe this resource is adequate for our expected needs.

Cash Flows

    Cash flows for the period ended June 30, 2021 include our continuing operations and discontinued operations for the entire period, while the period ended June 30, 2022 only includes the cash flows associated with continuing operations. Refer to Item 1, Note 4, Discontinued Operations for further information.

Cash (used for) provided by operating activities was $(12.0) million and $145.0 million during the six months ended June 30, 2022 and 2021, respectively. The change in year over year operating cash flows was primarily the result of higher trade working capital and the impact of timing of payments on accounts payable and accrued expenses during the six months ended June 30, 2022.

    Cash provided by investing activities was $35.4 million during the six months ended June 30, 2022 compared cash used for investing activities of $4.4 million during the six months ended June 30, 2021. Investing activities during the six months ended June 30, 2022, included $2.0 million of capital expenditures which was offset by the receipt of $35.0 million from Regal Rexnord Corporation in connection with the final net assets transferred in the PMC Spin-Off Translation, the receipt of $1.3 million in connection with the sale of certain long-lived assets and the receipt of $1.1 million in connection with finalizing the acquisition date trade working capital associated with our 2021 acquisition of Wade Drains. Investing activities during the six months ended June 30, 2021, primarily included $14.0 million of capital expenditures and a cash payment of $3.8 million in connection with our acquisition of ATS GREASEwatch, partially offset by the receipt of $13.0 million in connection with the sale of certain long-lived assets associated with our discontinued operations and the receipt of $0.4 million in connection with finalizing the acquisition date trade working capital associated with our 2020 acquisition of Hadrian.

    Cash used for financing activities was $9.3 million during the six months ended June 30, 2022, compared to $5.6 million during the six months ended June 30, 2021. During the six months ended June 30, 2022, we utilized a net $3.0 million of cash for payments on outstanding debt and $7.6 million for the payment of common stock dividends, which was partially offset by $1.3 million of proceeds from the exercise of stock options, net of taxes withheld and paid on employees' share-based awards. During the six months ended June 30, 2021, we utilized $1.1 million of cash for payments on outstanding debt, $21.6 million for the payment of common stock dividends and $0.9 million to repurchase common stock, which was partially offset by $18.0 million of cash proceeds from the exercise of stock options, net of taxes withheld and paid on employees' share-based awards.

Indebtedness

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

	Total Debt at June 30, 2022		Current Maturities of Debt		Long-term Portion
Term loan (1)	$	537.3	$	5.5	$	531.8
Finance leases	0.2		0.1		0.1
Total	$	537.5	$	5.6	$	531.9

___________________________________________

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

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

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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We are exposed to market risk during the normal course of business from changes in foreign currency exchange rates and interest rates. The exposure to these risks is managed through a combination of normal operating and financing activities and at times derivative financial instruments in the form of foreign currency forward contracts to cover certain known foreign currency transactional risks. We also have historically entered into interest rate derivatives to manage interest rate fluctuations.

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ITEM 4.    CONTROLS AND PROCEDURES

    We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

    We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Based on that evaluation as of June 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that, as of such date, the Company's disclosure controls and procedures are adequate and effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, in a manner allowing timely decisions regarding required disclosure. As such, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the period covered by this report.

    Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

    There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM  1.    LEGAL PROCEEDINGS

    See the information under the heading "Commitments and Contingencies" in Note 15 to the condensed consolidated financial statements contained in Part I, Item 1 of this report, which is incorporated in this Part II, Item 1 by reference.

ITEM 1A. RISK FACTORS

In addition to the risks and uncertainties discussed in this quarterly report on Form 10-Q, particularly those disclosed in the MD&A, see Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the Risk Factors except as set forth below:

Risks Related to the Merger with Elkay

We will record goodwill and other intangible assets as a result of the Merger that could become impaired and result in material non-cash charges to our results of operations in the future.

We will account for the Merger as an acquisition of a business in accordance with GAAP. Under the acquisition method of accounting, the assets and liabilities of Elkay and its subsidiaries will be recorded, as of the completion of the Merger, at their respective fair values and added to Zurn Elkay’s. Our reported financial condition and results of operations for periods after completion of the Merger will reflect Elkay’s balances and results after completion of the Merger but will not be restated retroactively to reflect the historical financial position or results of operations of Elkay and its subsidiaries for periods prior to the Merger.

Under the acquisition method of accounting, the total purchase price will be allocated to Elkay’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the Merger. The excess of the purchase price over those fair values, if any, will be recorded as goodwill. To the extent the value of goodwill or intangibles, if any, becomes impaired in the future, we may be required to incur material non-cash charges relating to such impairment. Our operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.

We may be unable to successfully integrate Elkay’s business into our business or achieve the anticipated benefits of the Merger.

The success of the Merger will depend, in part, on our ability to realize the anticipated benefits and cost savings from adding Elkay’s businesses, and there can be no assurance that we will be able to successfully integrate or otherwise realize the anticipated benefits of the Merger. Difficulties in integration may result in Zurn Elkay performing differently than expected, in operational challenges, or in the failure to realize anticipated expense-related efficiencies or other synergies. Potential difficulties that may be encountered in the integration process include, among others:

• the inability to successfully integrate Elkay in a manner that permits the achievement of full revenue, expected cash flows and cost savings anticipated from the Merger;

• not realizing anticipated synergies;

• integrating personnel from Elkay and the loss of key employees;

• potential unknown liabilities and unforeseen expenses;

• integrating relationships with customers, vendors and business partners;

• performance shortfalls as a result of the diversion of management’s attention caused by completing the Merger and integrating Elkay’s operations; and

• the disruption of, or the loss of momentum in, our ongoing business or inconsistencies in standards, controls, procedures and policies.

    We may not be able to accomplish this integration process successfully.

Our results may suffer if we do not effectively manage our expanded operations following the Merger.

Following completion of the Merger, the size of our business will increase significantly beyond its current size. Our future success will depend, in part, on our ability to manage this expanded business, which poses numerous risks and uncertainties, including the need to integrate the operations and business of Elkay into our existing business in an efficient and

33

timely manner, to combine systems and management controls and to integrate relationships with customers, vendors and business partners.

The market price for Zurn Elkay Common Stock following the completion of the Merger may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of Zurn Elkay Common Stock.

Zurn’s businesses differ in some regards from those of Elkay and, accordingly, the results of operations of Zurn following completion of the Merger will be affected by some factors that are different from those currently or historically affecting the results of operations of Zurn. In addition, following the closing of the Merger, we may seek to raise additional equity financing through one or more underwritten offerings and/or private placements and/or rights offerings, or issue stock in connection with acquisitions, which may result in downward pressure on the share price of the Zurn Elkay Common Stock.

Sales of substantial amounts of the Zurn Elkay Common Stock in the open market by the former Elkay stockholders could depress the trading price of our common stock

The former Elkay stockholders may wish to dispose of some or all of the Zurn Elkay Common Stock that they received in the Merger. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of shares of our Common Stock, may adversely affect the trading price of our Common Stock.

Certain former stockholders of Elkay have registration rights, the exercise of which could adversely affect the trading price of our Common Stock.

In connection with the Merger, the Company and certain stockholders of Elkay entered into a Registration Rights Agreement, pursuant to which such stockholders have a right to demand registration of one public offering within the first three years after the closing of the Merger, subject to certain minimum and maximum thresholds and other customary conditions. The existence and potential or actual exercise of such rights, and the perception that a large number of shares will be publicly sold in the market, could adversely impact the trading price of our Common Stock.

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ITEM  2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In fiscal 2015, the Company's Board of Directors approved a stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. On January 27, 2020, the Company's Board of Directors increased the remaining share repurchase authority under the Repurchase Program to $300.0 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; 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. The Company did not repurchase any shares during the three months ended June 30, 2022. A total of approximately $162.8 million of the existing repurchase authority remained under the Repurchase Program at June 30, 2022.

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ITEM  6.    EXHIBITS

Exhibit No.	Description	Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of Zurn Elkay Water Solutions Corporation, as amended through July 1, 2022.	X
3.2	Amended and Restated Bylaws of Zurn Elkay Water Solutions Corporation, effective July 1, 2022.*
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.	X
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350	X
101.INS	Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.)	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	Cover Page Inline XBRL data (contained in Exhibit 101)	X

*Incorporated by reference to the same exhibit number in the Company's Current Report on Form 8-K, dated July 1, 2022.

36

SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, Zurn Elkay Water Solutions Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		ZURN ELKAY WATER SOLUTIONS CORPORATION
Date:	July 26, 2022	By:	/S/     MARK W. PETERSON
		Name:	Mark W. Peterson
		Title:	Senior Vice President and Chief Financial Officer

37

EX-3.1

Exhibit 3.1

CERTIFICATE OF AMENDMENT

TO THE

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

ZURN WATER SOLUTIONS CORPORATION

Pursuant to the provisions of Section 242 of the Delaware General Corporation Law (the “DGCL”), Zurn Water Solutions Corporation, a Delaware corporation duly organized and existing under the DGCL (the “Corporation”), hereby certifies as follows:

1.The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended solely to reflect a change in the name of the Corporation and ARTICLE I is hereby deleted in its entirety and replaced with the following:

“ARTICLE I

NAME

The name of the corporation is Zurn Elkay Water Solutions Corporation.”

2.That the amendment to the Corporation’s Amended and Restated Certificate of Incorporation herein certified was duly adopted and declared advisable by the Corporation’s Board of Directors in accordance with the applicable provisions of Section 242 of the DGCL.

[Remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed as of the date first above written.

ZURN WATER SOLUTIONS CORPORATION

By: /s/ Todd A. Adams

Name: Todd A. Adams

Title: President and Chief Executive Officer

[Signature Page to Certificate of Amendment]

CERTIFICATE OF AMENDMENT

TO THE

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

REXNORD CORPORATION

Pursuant to the provisions of Section 242 of the Delaware General Corporation Law (the “DGCL”), Rexnord Corporation, a Delaware corporation duly organized and existing under the DGCL (the “Corporation”), hereby certifies as follows:

3.The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended solely to reflect a change in the name of the Corporation and ARTICLE I is hereby deleted in its entirety and replaced with the following:

“ARTICLE I

NAME

The name of the corporation is Zurn Water Solutions Corporation.”

4.That the amendment to the Corporation’s Amended and Restated Certificate of Incorporation herein certified was duly adopted and declared advisable by this Corporation’s Board of Directors in accordance with the applicable provisions of Section 242 of the DGCL.

[Remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed as of the date first above written.

REXNORD CORPORATION

By: /s/ Patricia M. Whaley

Name: Patricia M. Whaley

Title: Vice President, General Counsel and Secretary

[Signature Page to Certificate of Amendment to Certificate of Incorporation]

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF REXNORD CORPORATION

Rexnord Corporation is a corporation organized and existing under the laws of the State of Delaware (the “Corporation”). The original Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) was filed with the Secretary of State of the State of Delaware on July 13, 2006, under the name of Rexnord Holdings, Inc. A Certificate of Amendment to the Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on May 24, 2011 to change the name of the Corporation from Rexnord Holdings, Inc. to Rexnord Corporation. This Amended and Restated Certificate of Incorporation of the Corporation (this “Restated Certificate”), which restates, integrates and further amends the Certificate of Incorporation (as the same was amended from time to time) in its entirety, was duly adopted by the board of directors of the Corporation (the “Board of Directors”) and the stockholders of the Corporation in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”) to read as follows:

ARTICLE I

NAME

The name of the corporation is Rexnord Corporation.

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the registered office of the Corporation in the State of Delaware is The Corporation Trust Company, 1209 Orange Street, County of New Castle, Wilmington, DE 19801. The name of the registered agent of the Corporation at such address is The Corporation Trust Company.

ARTICLE III

PURPOSE

The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized and incorporated under the DGCL.

ARTICLE IV

CAPITAL STOCK

A.The total number of shares of stock which the Corporation shall have authority to issue is 210,000,000, divided into two classes: 10,000,000 shares of Preferred Stock, par value $.01 per share (hereinafter referred to as “Preferred Stock”); and 200,000,000 shares of Common Stock, par value $.01 per share (hereinafter referred to as “Common Stock”).

B.The shares of Preferred Stock may be issued from time to time in one or more series. The board of directors of the Corporation (the “Board of Directors”) is hereby expressly authorized to provide for the issuance of shares of Preferred Stock in one or more series and, by filing a certificate pursuant to the applicable law of the State of Delaware (hereinafter referred to as “Preferred Stock Designation”), to

establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and relative, participating, optional or other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:

(i)the designation of the series, which may be by distinguishing number, letter or title;

(ii)the number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding);

(iii)the amounts payable on, and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative;

(iv)dates on which dividends, if any, shall be payable in respect of shares of the series;

(v)the redemption rights and price or prices, if any, for shares of the series;

(vi)the terms and amount of any sinking fund provided for the purchase or redemption of shares of the series;

(vii)whether the shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series of such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made;

(viii)the rights of the holders of the shares of such series upon the dissolution of, or upon the subsequent distribution of assets of, the Corporation;

(ix)restrictions on the issuance of shares of the same series or of any other class or series;

(x)the voting powers, full or limited, or no voting powers, of the holders of shares of the series; and

(xi)the manner in which any facts ascertainable outside of this Restated Certificate or the resolution or resolutions providing for the issuance of such series shall operate upon the voting powers, designations, preferences, rights, and qualifications, limitations, or restrictions of such series.

C.The shares of Common Stock shall be subject to the express terms of the shares of Preferred Stock and any series thereof. Except as may otherwise be provided in this Restated Certificate or in a Preferred Stock Designation, the holders of shares of Common Stock shall be entitled to one vote for each such share upon all questions presented to the stockholders.

D.Except as may otherwise be provided by law, in this Restated Certificate or in a Preferred Stock Designation, the holders of shares of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, and holders of shares of Preferred Stock and any series thereof shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote.

E.The Corporation shall be entitled to treat the person in whose name any share of its stock is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law.

ARTICLE V

RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS

A.In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, subject to any rights, powers and preferences of any outstanding shares of Preferred Stock and any series thereof, the holders of shares of Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares held by them.

B.Subject to applicable law, and any rights, powers and preferences of any outstanding shares of Preferred Stock and any series thereof, the holders of shares of Common Stock shall be entitled to receive dividends, when, as and if declared by the Board of Directors out of funds lawfully available therefor.

ARTICLE VI

DIRECTORS

A.The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the Amended and Restated By-laws of the Corporation, as they may be amended and/or restated from time to time (the “By-laws”). Election of directors need not be by written ballot unless the By-laws so provide.

B.The Board of Directors (other than those directors elected by the holders of shares of any series of Preferred Stock provided for or fixed pursuant to the provisions of Article IV hereof (the “Preferred Stock Directors”)) shall be divided into three classes, Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the number of directors constituting the entire Board of Directors. At each annual meeting of the stockholders, successors to the class of directors whose term expires at that annual meeting shall be elected for a term expiring at the third succeeding annual meeting of stockholders; provided, however, that each director initially appointed to Class I shall serve for an initial term expiring at the Corporation’s annual meeting of stockholders held in fiscal 2013, each director initially appointed to Class II shall serve for an initial term expiring at the Corporation’s annual meeting of stockholders held in fiscal 2014, and each director initially appointed to Class III shall serve for an initial term expiring at the Corporation’s annual meeting of stockholders held in fiscal 2015. If the number of directors (other than Preferred Stock Directors) is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office.

C.In furtherance of, and not in limitation of, the powers conferred by law, the Board of Directors is expressly authorized and empowered:

(i)to adopt, amend or repeal the By-laws of the Corporation; and

(ii)from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined or as expressly provided in this Restated Certificate or in any Preferred Stock Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by applicable law.

ARTICLE VII

STOCKHOLDER MEETINGS

A.Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any consent in writing of stockholders. Notwithstanding the foregoing, until such time as Apollo Management, L.P., Apollo Management VI, L.P. and any of their Affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) (it being acknowledged that the term “Affiliates” does not include George M. Sherman, any director employed by George M. Sherman or any of his Affiliates or any director employed by the Corporation) (collectively, “Apollo”) beneficially own less than 50.1% of the total number of shares of Common Stock outstanding at any time, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding Common Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Common Stock were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.

B.Special meetings of stockholders of the Corporation may be called only by the Board of Directors or the Chairperson of the Board, and not by the holders of a majority of the voting power of the then outstanding Common Stock. Notwithstanding the foregoing, until such time as Apollo beneficially owns less than 50.1% of the total number of shares of Common Stock outstanding at any time, special meetings of stockholders of the Corporation for any purpose or purposes may be called by the Board of Directors or the Chairperson of the Board, and shall be called by the Chief Executive Officer, the President or the Secretary of the Corporation at the written request of the holders of a majority of the voting power of the then outstanding Common Stock.

C.Advance notice of stockholder nominations for the election of directors and of the proposal by stockholders of any other action to be taken by the stockholders at a meeting shall be given in such manner as shall be provided in the By-laws of the Corporation.

ARTICLE VIII

LIMITED LIABILITY; INDEMNIFICATION

A.A director of the corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended.

B.To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) agents of the Corporation (and any other persons to which the DGCL permits the Corporation to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the DGCL, subject only to the limits created by the DGCL and applicable case law, with respect to actions for breach of duty to the Corporation, its stockholders, and others.

C.Any amendment, repeal or modification of any of the foregoing provisions of this Article VIII shall not adversely affect any right or protection of a director, officer, agent, or other person existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.

ARTICLE IX

CORPORATE OPPORTUNITY

The Corporation hereby renounces any interest or expectancy in any business opportunity, transaction or other matter in which Apollo or any of its members, directors, employees or other Affiliates (it being acknowledged that the term “Affiliates” does not include George M. Sherman, any director employed by George Sherman or any of his affiliates (other than the Corporation), or any director employed by the Corporation) (the “Apollo Group”) participates or desires or seeks to participate in (each, a “Business Opportunity”) other than a Business Opportunity that (a) is presented to an Apollo Group member solely in such person’s capacity as a director of the Corporation and with respect to which no other member of the Apollo Group independently receives notice or otherwise identifies such Business Opportunity prior to the Corporation becoming aware of such Business Opportunity or (b) is initially identified by the Apollo Group solely through the disclosure of information by or on behalf of the Corporation (each Business Opportunity other than those referred to in clause (a) or (b) is referred to as a “Renounced Business Opportunity”). No member of the Apollo Group shall have any obligation to communicate or offer any Renounced Business Opportunity to the Corporation, and any Member of the Apollo Group may pursue any Renounced Business Opportunity.

ARTICLE X

SECTION 203 OF THE DGCL

The Corporation elects not to be governed by Section 203 of the DGCL.

ARTICLE XI

AMENDMENT

Except as may be expressly provided in this Restated Certificate, the Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Restated Certificate or a Preferred Stock Designation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Restated Certificate in its present form or as hereafter amended are granted subject to the right reserved in this Article XI.

ARTICLE XII

FORUM SELECTION

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL, or (d) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or other acquiring any interest in any share of capital stock of the Corporation shall be deemed to have notice of and consent to the provisions of this Article XII.

ARTICLE XIII

EFFECTIVENESS

This Restated Certificate will become effective on April 3, 2012.

* * * * * * *

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by its duly authorized officer this 2nd day of April, 2012 and hereby affirms that the facts stated herein and true.

REXNORD CORPORATION

By: /s/ Patricia M. Whaley

Patricia M. Whaley

Vice President

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Todd A. Adams, Chair of the Board, President and Chief Executive Officer of Zurn Elkay Water Solutions Corporation,certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Zurn Elkay Water Solutions Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 26, 2022

By:	/s/ TODD A. ADAMS
Name:	Todd A. Adams
Title:	Chair of the Board, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Mark W. Peterson, Senior Vice President and Chief Financial Officer of Zurn Elkay Water Solutions Corporation, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Zurn Elkay Water Solutions Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 26, 2022

By:	/s/ MARK W. PETERSON
Name:	Mark W. Peterson
Title:	Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION

Pursuant to 18 United States Code § 1350

Each of the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 of Zurn Elkay Water Solutions Corporation (the "Company") filed with the Securities and Exchange Commission on or about the date hereof fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 26, 2022

By:	/s/ TODD A. ADAMS
Name:	Todd A. Adams
Title:	Chair of the Board, President and Chief Executive Officer

Date: July 26, 2022

By:	/s/ MARK W. PETERSON
Name:	Mark W. Peterson
Title:	Senior Vice President and Chief Financial Officer

This certification accompanies the Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Jul. 22, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-35475
Entity Registrant Name	ZURN ELKAY WATER SOLUTIONS CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-5197013
Entity Address, Address Line One	511 W. Freshwater Way
Entity Address, Postal Zip Code	53204
Entity Address, City or Town	Milwaukee,
Entity Address, State or Province	WI
City Area Code	855
Local Phone Number	480-5050
Entity Information, Former Legal or Registered Name	ZURN WATER SOLUTIONS CORPORATION
Title of Each Class	Common Stock, $.01 par value
Trading Symbol(s)	ZWS
Name of Each Exchange on Which Registered	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		177,746,970
Entity Central Index Key	0001439288
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 110.4	$ 96.6
Receivables, net	188.9	144.1
Inventories	243.4	184.5
Income taxes receivable	20.1	33.1
Other current assets	25.6	16.5
Total current assets	588.4	474.8
Property, plant and equipment, net	61.6	64.4
Intangible assets, net	174.8	179.1
Goodwill	252.6	254.1
Insurance for asbestos claims	66.0	66.0
Other assets	32.9	39.3
Total assets	1,176.3	1,077.7
Current liabilities:
Current maturities of debt	5.6	5.6
Trade payables	126.1	105.1
Compensation and benefits	9.2	22.0
Current portion of pension and postretirement benefit obligations	1.3	1.3
Other current liabilities	99.0	106.4
Total current liabilities	241.2	240.4
Long-term debt	531.9	533.9
Pension and postretirement benefit obligations	55.9	57.3
Deferred income taxes	9.9	3.1
Operating lease liability	5.9	8.9
Reserve for asbestos claims	66.0	66.0
Other liabilities	36.1	41.7
Total liabilities	946.9	951.3
Stockholders' equity:
Common stock, value	1.3	1.3
Additional paid-in capital	1,438.3	1,436.9
Retained deficit	(1,135.3)	(1,236.9)
Accumulated other comprehensive loss	(74.9)	(74.9)
Total Zurn stockholders' equity	229.4	126.4
Total liabilities and stockholders' equity	$ 1,176.3	$ 1,077.7

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Stockholders' equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	126,182,246	125,720,068
Common stock, shares outstanding (in shares)	126,182,246	125,720,068

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Net sales	$ 284.2	$ 243.7	$ 523.8	$ 448.9
Cost of sales	170.4	139.9	308.1	256.7
Gross profit	113.8	103.8	215.7	192.2
Selling, general and administrative expenses	58.4	60.4	112.3	118.1
Restructuring and other similar charges	0.3	0.3	1.4	0.9
Amortization of intangible assets	1.6	5.8	4.6	11.9
Income from operations	53.5	37.3	97.4	61.3
Non-operating expense:
Interest expense, net	(5.2)	(10.1)	(10.0)	(19.7)
Other expense, net	(0.6)	(0.4)	(0.3)	(0.1)
Income before income taxes	47.7	26.8	87.1	41.5
Provision for income taxes	(11.3)	(6.2)	(21.3)	(10.9)
Net income from continuing operations	36.4	20.6	65.8	30.6
Income from discontinued operations, net of tax	0.0	52.6	0.8	92.6
Net income attributable to Zurn Elkay common stockholders	$ 36.4	$ 73.2	$ 66.6	$ 123.2
Basic net income per share:
Continuing operations (in dollars per share)	$ 0.29	$ 0.17	$ 0.52	$ 0.25
Discontinued operations (in dollars per share)	0	0.44	0.01	0.77
Net income (in dollars per share)	0.29	0.61	0.53	1.03
Diluted net income per share:
Continuing operations (in dollars per share)	0.28	0.17	0.51	0.25
Discontinued operations (in dollars per share)	0	0.42	0.01	0.75
Net income (in dollars per share)	$ 0.28	$ 0.59	$ 0.52	$ 0.99
Weighted-average number of shares outstanding (in thousands):
Basic (in shares)	126,419	120,465	126,350	120,138
Effect of dilutive equity awards (in shares)	1,972	3,832	2,063	3,953
Diluted (in shares)	128,391	124,297	128,413	124,091

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 36.4	$ 73.2	$ 66.6	$ 123.2
Other comprehensive income (loss):
Foreign currency translation adjustments	(2.0)	5.4	0.0	3.7
Change in pension and postretirement defined benefit plans, net of tax	0.0	(0.1)	0.0	(0.2)
Other comprehensive (loss) income, net of tax	(2.0)	5.3	0.0	3.5
Total comprehensive income	$ 34.4	$ 78.5	$ 66.6	$ 126.7

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating activities
Net income	$ 66.6	$ 123.2
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	4.7	28.1
Amortization of intangible assets	4.6	18.5
Loss (gain) on dispositions of long-lived assets	0.3	(9.2)
Deferred income taxes	6.8	(4.0)
Other non-cash expenses (income)	1.7	(1.1)
Stock-based compensation expense	7.7	27.0
Changes in operating assets and liabilities:
Receivables	(45.0)	(61.7)
Inventories	(58.9)	(30.7)
Other assets	7.8	(8.9)
Accounts payable	21.1	62.1
Accruals and other	(29.4)	1.7
Cash (used for) provided by operating activities	(12.0)	145.0
Investing activities
Expenditures for property, plant and equipment	(2.0)	(14.0)
Acquisitions, net of cash acquired	1.1
Acquisitions, net of cash acquired		(3.4)
Proceeds from dispositions of long-lived assets	1.3	13.0
Proceeds associated with divestiture of discontinued operations	35.0	0.0
Cash provided by (used for) investing activities	35.4	(4.4)
Financing activities
Proceeds from borrowings of debt	10.0	0.0
Repayments of debt	(13.0)	(1.1)
Proceeds from exercise of stock options	1.8	19.4
Taxes withheld and paid on employees' share-based payment awards	(0.5)	(1.4)
Repurchase of common stock	0.0	(0.9)
Payment of common stock dividends	(7.6)	(21.6)
Cash used for financing activities	(9.3)	(5.6)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(0.3)	0.1
Increase in cash, cash equivalents and restricted cash	13.8	135.1
Cash, cash equivalents and restricted cash at beginning of period	96.6	255.6
Cash, cash equivalents and restricted cash at end of period	$ 110.4	$ 390.7

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Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

    The unaudited condensed consolidated financial statements included herein have been prepared by Zurn Elkay Water Solutions Corporation (formerly known as Zurn Water Solutions Corporation) (“Zurn Elkay” or the “Company”) in accordance with accounting principles generally accepted in the United States ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

    In the opinion of management, the condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results of operations for the interim periods. Results for the interim periods are not necessarily indicative of results that may be expected for the year ending December 31, 2022. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

The Company

    As previously disclosed, on July 1, 2022, the Company completed its combination with Elkay Manufacturing Company (“Elkay”) through the merger of Elkay with and into a newly created subsidiary of the Company, with Elkay surviving as a wholly owned subsidiary of Zurn Elkay (the “Merger” or "Elkay Transaction"). The Company's results of operations will include the acquired operations subsequent to July 1, 2022. See Note 18, Subsequent Events for additional information on the Elkay Transaction.

Following the Merger, 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 control and safety, water distribution and drainage, drinking water, finish plumbing, hygienic, environmental and site works products for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time. The Company's heritage of innovation and specification has allowed it to provide highly-engineered, mission-critical solutions to customers for decades and affords the Company 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”), described below, is its operating philosophy. Grounded in the spirit of continuous improvement, ZEBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of the Company's business.

Spin-Off of Process & Motion Control Segment

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 Process & Motion Control ("PMC") business were transferred to a newly created subsidiary, Land Newco, Inc. (“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.

As a result of the Spin-Off Transaction, in accordance with authoritative guidance, the operating results of PMC are reported as discontinued operations in the condensed consolidated statements of operations for all prior periods presented. The condensed consolidated statements of cash flows has not been adjusted to separately disclose cash flows related to the discontinued operations. See Note 4, Discontinued Operations for additional information.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate that is expected to be discontinued because of reference rate reform. The amendments in this update provide optional expedients and exceptions for applying GAAP to instruments affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this ASU are effective for all entities as of March 12, 2020, through December 31, 2022. The Company did not modify any material contracts due to reference rate reform during the six months ended June 30, 2022. The Company will continue to evaluate the impact this guidance will have on its consolidated financial statements for all future transactions affected by reference rate reform during the time period referenced above.

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Acquisitions

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisitions

Six Months Ended June 30, 2022

On July 1, 2022, in accordance with the terms and conditions of the Merger Agreement dated February 12, 2022, the Company completed its combination with Elkay. See Note 18 Subsequent Events for further information.

Fiscal Year 2021

On November 17, 2021, the Company completed the acquisition of the Wade Drains business ("Wade Drains") from McWane, Inc. for a cash purchase price of $12.6 million, excluding transaction costs and net of cash acquired. During the six months ended June 30, 2022, the Company received a $1.1 million cash payment from the sellers of Wade Drains in connection with finalizing the acquisition date trade working capital, which is included in the total cash purchase price above. Wade Drains manufactures a wide range of specified commercial plumbing products for customers across North America and complements 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, with the remaining $0.7 million payable to the sellers upon settlement of certain indemnities within two years of closing, 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 preliminary 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 $(1.0) million of other net liabilities. During the six months ended June 30, 2022, the preliminary purchase price allocations for Wade Drains were adjusted, resulting in a $1.3 million decrease to goodwill, primarily related to the aforementioned cash payment received from the sellers of Wade Drains. The preliminary purchase price allocations for Wade Drains will be completed within the one-year period following the acquisition dates.

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 condensed consolidated statements of operations or financial position.

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Restructuring and Other Similar Charges

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring and Other Similar Charges

Restructuring and Other Similar ChargesDuring the three and six months ended June 30, 2022, the Company continued to execute various restructuring actions. These initiatives were implemented to drive efficiencies and reduce operating costs while also modifying the Company's footprint to reflect changes in the markets it serves, the impact of acquisitions 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. Following the Merger with Elkay, Management expects to continue executing initiatives and select product-line rationalizations to optimize its operating margin and manufacturing footprint. As such, the Company expects further expenses related to workforce reductions, lease termination costs, and other facility

rationalization costs. Since the Company’s evaluation of other potential restructuring actions are in process, related restructuring expenses, if any, are not yet estimable.

    The following table summarizes the Company's restructuring and other similar charges during the three and six months ended June 30, 2022 and June 30, 2021, (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Employee termination benefits	$	0.2	$	0.3	$	1.3	$	0.9
Contract termination and other associated costs	0.1		—		0.1		—
Total restructuring and other similar costs	$	0.3	$	0.3	$	1.4	$	0.9

The following table summarizes the activity in the Company's restructuring accrual for the six months ended June 30, 2022 (in millions):

	Employee termination benefits		Contract termination and other associated costs		Total
Accrued Restructuring Costs, December 31, 2021 (1)	$	2.4	$	—	$	2.4
Charges	1.3		0.1		1.4
Cash payments	(2.6)		(0.1)		(2.7)
Accrued Restructuring Costs, June 30, 2022 (1)	$	1.1	$	—	$	1.1

____________________

(1)The restructuring accrual is included in other current liabilities in the condensed consolidated balance sheets.

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Discontinued Operations

6 Months Ended

Jun. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued OperationsDuring the year ended December 31, 2021, the Company completed the Spin-Off Transaction of PMC. The operating results of PMC are reported as discontinued operations in the consolidated statements of operations for all prior periods presented, as the Spin-Off Transaction of PMC represented a strategic shift that had a major impact on operations and financial results. The condensed consolidated statements of cash flows for the six months ended June 30, 2022 and June 30, 2021 have not been adjusted to separately disclose cash flows related to the discontinued operations. During the six months ended June 30, 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 condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021, are as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net sales	$	—	$	324.6	$	—	$	645.5
Cost of sales	—		(192.6)		—		(394.0)
Selling, general and administrative expenses	—		(61.6)		—		(123.2)
Restructuring and other similar charges	—		(0.8)		—		(0.8)
Amortization of intangible assets	—		(3.3)		—		(6.6)
Interest expense, net	—		(1.6)		—		(3.0)
Other non-operating income, net	—		2.1		—		1.4
Income from discontinued operations before income tax	—		66.8		—		119.3
Income tax (provision) benefit	—		(14.3)		0.8		(26.8)
Equity method investment income	—		0.2		—		0.3
Non-controlling interest income	—		0.1		—		0.2
Income from discontinued operations, net of tax	$	—	$	52.6	$	0.8	$	92.6

The condensed consolidated statements of cash flows for the six months ended June 30, 2022 and June 30, 2021 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):

	Six Months Ended
	June 30, 2022		June 30, 2021
Depreciation	$	—	$	23.5
Amortization of intangible assets	—		6.6
Gain on disposition of assets	—		(9.2)
Deferred income taxes	—		0.1
Other non-cash charges	—		(0.9)
Stock-based compensation	—		10.8
Expenditures for property, plant and equipment	—		(12.3)
Proceeds from dispositions of long-lived assets	—		13.0
Proceeds associated with divestiture of discontinued operations	35.0		—
Repayments of debt	—		(1.1)
Proceeds from exercise of stock options	—		10.1
Taxes withheld and paid on employees' shared-based payment awards	—		(0.5)

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Revenue Recognition

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

    A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when obligations under the terms of a contract with the customer are satisfied. For the majority of the Company's product sales, revenue is recognized at a point-in-time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company's manufacturing facility to the customer. When contracts include multiple products to be delivered to the customer, generally each product is separately priced and is determined to be distinct within the context of the contract. Other than a standard assurance-type warranty that the product will conform to agreed-upon specifications, there are generally no other significant post-shipment obligations. The expected costs associated with standard warranties continues to be recognized as an expense when the products are sold.

When the contract provides the customer the right to return eligible products or when the customer is part of a sales rebate program, the Company reduces revenue at the point of sale using current facts and historical experience by using an estimate for expected product returns and rebates associated with the transaction. The Company adjusts these estimates at the earlier of when the most likely amount of consideration that is expected to be received changes or when the consideration becomes fixed. Accordingly, an increase or decrease to revenue is recognized at that time.

Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. 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.

Revenue by Category

The following tables present the Company's revenue disaggregated by customer type and customer geography (in millions):

	Three Months Ended				Six Months Ended
Customer Type	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Institutional	$	108.8	$	92.8	$	196.4	$	169.1
Commercial	84.3		73.0		159.8		137.8
All other	91.1		77.9		167.6		142.0
Total	$	284.2	$	243.7	$	523.8	$	448.9

	Three Months Ended				Six Months Ended
Geography	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
United States	$	257.5	$	219.5	$	477.1	$	405.2
Canada	20.5		18.2		35.6		32.8
Rest of world	6.2		6.0		11.1		10.9
Total	$	284.2	$	243.7	$	523.8	$	448.9

Contract Balances

For substantially all of the Company's product sales, the customer is billed 100% of the contract value when the product ships and payment is generally due 30 days from shipment. Certain contracts include longer payment periods; however, the Company has elected to utilize the practical expedient in which the Company will only recognize a financing component to the sale if payment is due more than one year from the date of shipment.

Billings are recorded as accounts receivable when an unconditional right to the contractual consideration exists. Contract assets arise when the Company performs by transferring goods or services to a customer before the customer pays consideration, or before the customer’s payment is due. A contract liability exists when the Company has received consideration or the amount is due from the customer in advance of revenue recognition. Contract liabilities and contract assets as of June 30, 2022 and June 30, 2021 were not material.

Backlog

    The Company had backlog of $84.0 million as of June 30, 2022, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts. The Company has elected to use 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. The Company expects to recognize approximately 98% of the backlog in the remaining six months of the year ending December 31, 2022, and the remaining approximately 2% in 2023 and beyond.

Timing of Performance Obligations Satisfied at a Point in Time

The Company determined that the customer is able to control the product when it is delivered to them; thus, depending on the shipping terms, control will transfer at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset and the customer has significant risks and rewards of ownership of the asset.

Variable Consideration

The Company provides volume-based rebates and the right to return product to certain customers, which are accrued for based on current facts and historical experience. Rebates are paid either on an annual or quarterly basis. There are no other significant variable consideration elements included in the Company's contracts with customers.

Contract Costs

The Company has elected to expense contract costs as incurred if the amortization period is expected to be one year or less. If the amortization period of these costs is expected to be greater than one year, the costs would be subject to capitalization. As of June 30, 2022 and June 30, 2021, the contract assets capitalized, as well as amortization recognized in the three months ended June 30, 2022 and June 30, 2021, are not significant and no impairment losses were recognized.

Allowance for Doubtful Accounts

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. In determining the allowance for doubtful accounts, the Company also considers various factors including the aging of customer accounts and historical write-offs. 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.

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Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes for all periods presented is based on an estimated effective income tax rate for the respective fiscal years. The estimated annual effective income tax rate is determined excluding the effect of significant discrete items or items that are reported net of their related tax effects. The tax effect of significant discrete items is reflected in the period in which they occur. The Company's income tax expense is impacted by a number of factors, including the amount of taxable earnings derived in foreign jurisdictions with tax rates that are generally higher than the U.S. federal statutory rate, state tax rates in the jurisdictions where the Company does business and the Company's ability to utilize various tax credits, capital loss and net operating loss (“NOL”) carryforwards.

The Company regularly reviews its deferred tax assets for recoverability and valuation allowances are established based on historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences, as deemed appropriate. In addition, all other available positive and negative evidence is taken into consideration for purposes of determining the proper balances of such valuation allowances. As a result of this review, the Company continues to maintain a full valuation allowance against U.S. federal and state capital loss carryforwards and a partial valuation allowance against certain foreign NOL carryforwards and other related foreign deferred tax assets, as well as certain U.S. state NOL carryforwards. Future changes to the balances of these valuation allowances, as a result of this continued review and analysis by the Company, could result in a material impact to the financial statements for such period of change.

The income tax provision was $11.3 million for the three months ended June 30, 2022, compared to $6.2 million for the three months ended June 30, 2021. The effective income tax rate for the three months ended June 30, 2022 was 23.7% versus 23.1% for the three months ended June 30, 2021. The effective income tax rate for the three months ended June 30, 2022 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments. The effective income tax rate for the three months ended June 30, 2021 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

The income tax provision was $21.3 million for the six months ended June 30, 2022, compared to $10.9 million for the six months ended June 30, 2021. The effective income tax rate for the six months ended June 30, 2022 was 24.5% versus 26.3% for the six months ended June 30, 2021. The effective income tax rate for the six months ended June 30, 2022 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments. The effective income tax rate for the six months ended June 30, 2021 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, and the accrual of various state income taxes, partially offset by the recognition of income tax benefits associated with share-based payments.

The Company’s total liability for net unrecognized tax benefits as of June 30, 2022 and December 31, 2021 was $5.0 million and $5.9 million, respectively. The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in income tax expense. As of June 30, 2022 and December 31, 2021, the total amount of gross,

unrecognized income tax benefits included accrued interest and penalties of $0.4 million and $0.5 million, respectively. The Company recognized $0.0 million and $0.1 million of net interest and penalties as income tax expense during the six months ended June 30, 2022 and June 30, 2021, 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. Currently, the Company is undergoing routine, periodic income tax examinations in foreign jurisdictions. During the nine month Transition Period ended December 31, 2020, the Internal Revenue Service (the “IRS”) completed an income tax examination of the Company’s U.S. consolidated federal income tax returns for the tax years ended March 31, 2016 and 2017. The Company paid approximately $1.5 million upon the conclusion of such examination, all of which was previously accrued in the Company’s financial statements. In accordance with the terms of the VAG sale agreement, 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 2019. 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 income tax examinations being conducted by the applicable tax authorities in various foreign tax jurisdictions with respect to certain PMC entities. 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; 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. federal income tax examinations for tax years ending prior to March 31, 2019, state and local income tax examinations for years ending prior to March 31, 2018 or significant foreign income tax examinations for years ending prior to March 31, 2017.

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Earnings per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

    Basic net income per share from continuing and discontinued operations attributable to Zurn Elkay common stockholders is computed by dividing net income from continuing operations and income from discontinued operations attributable to Zurn Elkay common stockholders, respectively, by the corresponding weighted average number of common shares outstanding for the period. Diluted net income per share from continuing and discontinued operations attributable to Zurn Elkay common stockholders 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.

The computation for diluted net income per share for the three and six months ended June 30, 2022 excludes 0.2 million and 0.2 million common shares due to their anti-dilutive effects, respectively. The computation for diluted net income per share for the three and six months ended June 30, 2021 excludes 0.2 million and 0.2 million common shares due to their anti-dilutive effects, respectively.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders' Equity

Stockholders' equity consists of the following (in millions):

	Common stock (1)		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2020	$	1.2	$	1,392.9	$	116.0	$	(73.8)	$	3.0	$	1,439.3
Total comprehensive income (loss)	—		—		50.0		(1.8)		0.1		48.3
Stock-based compensation expense	—		14.2		—		—		—		14.2
Proceeds from exercise of stock options	—		2.8		—		—		—		2.8
Repurchase of common stock	—		—		(0.9)		—		—		(0.9)
Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)
Balance at March 31, 2021	$	1.2	$	1,409.9	$	154.3	$	(75.6)	$	3.1	$	1,492.9
Total comprehensive income	—		—		73.2		5.3		0.1		78.6
Stock-based compensation expense	—		11.6		—		—		—		11.6
Proceeds from exercise of stock options	—		16.6		—		—		—		16.6
Taxes withheld and paid on employees' share-based payment awards	—		(1.4)		—		—		—		(1.4)
Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)
Balance at June 30, 2021	$	1.2	$	1,436.7	$	216.7	$	(70.3)	$	3.2	$	1,587.5

	Common stock (1)		Additional paid-in capital		Retained deficit		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2021	$	1.3	$	1,436.9	$	(1,236.9)	$	(74.9)	$	—	$	126.4
Total comprehensive income	—		—		30.2		2.0		—		32.2
Stock-based compensation expense	—		3.9		—		—		—		3.9
Proceeds from exercise of stock options	—		0.5		—		—		—		0.5
Taxes withheld and paid on employees' share-based payment awards	—		(0.5)		—		—		—		(0.5)
Proceeds associated with divestiture of discontinued operations	—		—		35.0		—		—		35.0
Common stock dividends ($0.03 per share)	—		(3.8)		—		—		—		(3.8)
Balance at March 31, 2022	$	1.3	$	1,437.0	$	(1,171.7)	$	(72.9)	$	—	$	193.7
Total comprehensive income (loss)	—		—		36.4		(2.0)		—		34.4
Stock-based compensation expense	—		3.8		—		—		—		3.8
Proceeds from exercise of stock options	—		1.3		—		—		—		1.3
Common stock dividends ($0.03 per share)	—		(3.8)		—		—		—		(3.8)
Balance at June 30, 2022	$	1.3	$	1,438.3	$	(1,135.3)	$	(74.9)	$	—	$	229.4

____________________

(1)During the three and six months ended June 30, 2022, the Company issued 335,177 and 462,178 shares of common stock upon the exercise of stock options, vesting of restricted stock units, and for other common stock awards, respectively.

(2)Non-controlling interest through the Spin-Off Transaction represented a 5% non-controlling interest in a PMC joint venture relationship. The Company has no remaining non-controlling interest subsequent to the Spin-Off Transaction.

Prior year 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.

Share Repurchase Program

    During fiscal 2015, the Company's Board of Directors approved a common stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. On January 27, 2020, the Company's Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $300.0 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; 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. The Company did not repurchase any shares during the three and six months ended June 30, 2022. During the six months ended June 30, 2021, the Company repurchased 22,300 shares of

common stock at a total cost of $0.9 million at a weighted average price of $39.27 per share. The repurchased shares were canceled by the Company upon receipt. A total of approximately $162.8 million of the existing authority remained under the Repurchase Program at June 30, 2022.

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

    The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2022, are as follows (in millions):

	Foreign Currency Translation and Other		Pension and Postretirement Plans		Total
Balance at December 31, 2021	$	(70.9)	$	(4.0)	$	(74.9)
Other comprehensive loss before reclassifications	—		—		—
Amounts reclassified from accumulated other comprehensive loss	—		—		—
Net current period other comprehensive loss	—		—		—
Balance at June 30, 2022	$	(70.9)	$	(4.0)	$	(74.9)

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the three and six months ended June 30, 2022 and June 30, 2021 (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		Income Statement Line
Pension and other postretirement plans
Amortization of prior service credit	$	—	$	(0.1)	$	—	$	(0.2)	Other income, net
Provision for income taxes	—		—		—		—
Total net of tax	$	—	$	(0.1)	$	—	$	(0.2)

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Inventories

6 Months Ended

Jun. 30, 2022

Inventory, Net [Abstract]

Inventories

Inventories The major classes of inventories are summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Finished goods	$	217.2	$	169.1
Work in progress	4.7		5.1
Raw materials	25.4		14.6
Inventories at First-in, First-Out ("FIFO") cost	247.3		188.8
Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	(3.9)		(4.3)
	$	243.4	$	184.5

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

    The changes in the net carrying value of goodwill for the six months ended June 30, 2022, are presented below (in millions):

Net carrying amount as of December 31, 2021	$	254.1
Currency translation adjustments	(0.2)
Purchase accounting adjustments (1)	(1.3)
Net carrying amount as of June 30, 2022	$	252.6

(1)Refer to Note 2, Acquisitions for additional information regarding the purchase accounting adjustments.

    The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of June 30, 2022 and December 31, 2021 are as follows (in millions):

		June 30, 2022
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	25.5	$	(22.5)	$	3.0
Customer relationships (including distribution network)	15 years	351.1		(273.3)		77.8
Tradenames	13 years	11.5		(4.5)		7.0
Intangible assets not subject to amortization - trademarks and tradenames		87.0		—		87.0
Total intangible assets, net	15 years	$	475.1	$	(300.3)	$	174.8
		December 31, 2021
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	24.9	$	(22.4)	$	2.5
Customer relationships (including distribution network)	15 years	351.1		(269.1)		82.0
Tradenames	13 years	11.5		(4.0)		7.5
Intangible assets not subject to amortization - trademarks and tradenames		87.1		—		87.1
Total intangible assets, net	15 years	$	474.6	$	(295.5)	$	179.1

    Intangible asset amortization expense totaled $1.6 million and $5.8 million for the three months ended June 30, 2022 and June 30, 2021, respectively. Intangible asset amortization expense totaled $4.6 million and $11.9 million for the six months ended June 30, 2022 and June 30, 2021, respectively. Customer relationships acquired during the year ended December 31, 2021 were assigned a weighted-average useful life of 10 years. There were no intangible assets acquired during the six months ended June 30, 2022.

    The Company expects to recognize amortization expense on the intangible assets subject to amortization of $7.9 million in the year ending December 31, 2022 (inclusive of the $4.6 million of amortization expense recognized in the six months ended June 30, 2022), $6.5 million in 2023, $6.5 million in 2024, $6.4 million in 2025, $6.3 million in 2026 and $6.3 million in 2027.

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Other Current Liabilities

6 Months Ended

Jun. 30, 2022

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Commissions	$	9.3	$	8.1
Current portion of operating lease liability	6.0		6.1
Income taxes payable	1.3		2.1
Legal and environmental	2.7		3.0
Product warranty (1)	1.2		1.3
Restructuring and other similar charges (2)	1.1		2.4
Risk management (3)	11.4		11.3
Sales rebates	35.5		38.6
Tax indemnities	21.9		21.9
Taxes, other than income taxes	1.6		1.8
Other	7.0		9.8
	$	99.0	$	106.4

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(1)See more information related to the product warranty obligations within Note 15, Commitments and Contingencies.

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

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

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Long-Term Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt is summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Term loan (1)	$	537.3	$	539.2
Finance leases (2)	0.2		0.3
Total	537.5		539.5
Less current maturities	5.6		5.6
Long-term debt	$	531.9	533.9

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(1)Includes unamortized debt issuance costs of $10.0 million and $10.8 million at June 30, 2022 and December 31, 2021, respectively.

(2)Refer to Note 14, Leases, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding leases.

Senior Secured Credit Facility

    On October 4, 2021, ZBS Global, Inc. (“Holdings”), Zurn Holdings, Inc., Zurn LLC (together, the “Borrowers”), the lenders from time to time party thereto, and Credit Suisse AG, Cayman Islands Branch, as administrative agent for the lenders (in such capacity, the “Administrative Agent”) entered into a Fourth Amended and Restated First Lien Credit Agreement (the “Credit Agreement”). The Credit Agreement is funded by a syndicate of banks and other financial institutions and provides for (i) a $550.0 million term loan facility (the “Term Loan”) and (ii) a $200.0 million revolving credit facility (the “Revolving Credit Facility”).

The obligations under the Credit Agreement and related documents are secured by liens on substantially all of the assets of Holdings, the Borrowers, and certain subsidiaries of the Borrowers pursuant to a Third Amended and Restated Guarantee and Collateral Agreement, dated as of October 4, 2021 (the "Collateral Agreement"), among Holdings, the Borrowers, the subsidiaries of the Borrowers party thereto, and the Administrative Agent, and certain other collateral documents.

The Credit Agreement contains representations, warranties, covenants and events of default, including, without limitation, a financial covenant under which the Borrowers are, if certain conditions are met, obligated to maintain on a consolidated basis, as of the end of each fiscal quarter, a certain maximum Net First Lien Leverage Ratio (as defined in the Credit Agreement). As of June 30, 2022, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.

See Note 18, Subsequent Events for additional information on an amendment to the Credit Agreement entered into in connection with the Merger.

Term Debt

The Term Loan has a maturity date of October 4, 2028. The Borrowers are required to make quarterly payments of principal in an amount equal to $1.4 million on each quarter until the maturity date.

The Term Loan bears 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. 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 LIBOR 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 LIBOR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 2.08 to 1.00 as of June 30, 2022.

At June 30, 2022 and for the six months ended, the borrowings under the Term Loan had weighted-average effective interest rates of 4.04% and 2.90%, respectively.

Revolving Credit Facility

The Credit Agreement includes a $200.0 million revolving credit facility that has a maturity date of October 2, 2026. Borrowings under the Revolving Credit Facility bear 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. If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the applicable margin shall equal 1.00% in the case of base rate borrowings and 2.00% in the case of LIBOR borrowings. In the event the Borrowers' Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the applicable margin on both base rate

and LIBOR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 2.08 to 1.00 as of June 30, 2022. The Borrowers are also required to pay a quarterly commitment fee on the average daily unused portion of the Revolving Credit Facility for each fiscal quarter and fees in connection with the issuance of letters of credit. If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the commitment fee shall equal 0.50%, and if the Company's Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the commitment fee shall equal 0.375%.

At June 30, 2022 and December 31, 2021, there were no amounts borrowed under the Revolving Credit Facility. As of June 30, 2022 and December 31, 2021, $6.1 million and $6.1 million of the Revolving Credit Facility were considered utilized in connection with outstanding letters of credit, respectively.

Finance leases and other subsidiary debt

At June 30, 2022 and December 31, 2021, the Company had finance lease obligations of $0.2 million and $0.3 million, respectively. See Note 14, Leases in the audited consolidated financial statements of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding leases.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

    ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. 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.

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

•Level 1 - Quoted prices for identical instruments in active markets.

•Level 2 - Quoted prices for similar instruments; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable.

•Level 3 - Model-derived valuations in which one or more inputs or value-drivers are both significant to the fair value measurement and unobservable.

    If applicable, the Company uses quoted market prices in active markets to determine fair value, and therefore classifies such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters. These measurements are classified within Level 3 if they use significant unobservable inputs.

Fair Value of Financial Instruments

    The Company has a nonqualified deferred compensation plan where assets are invested in mutual funds and corporate-owned life insurance contracts held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for the mutual funds, which are measured using quoted prices of identical instruments in active markets categorized as Level 1. Corporate-owned life insurance contracts are recorded at cash surrender value, which is provided by a third party and reflects the net asset value of the underlying publicly traded mutual funds categorized as Level 2. The deferred compensation plan assets are classified within other assets on the condensed consolidated balance sheets. Deferred compensation plan liabilities are measured at fair value based on quoted prices of identical instruments to the investment vehicles selected by the participants categorized as Level 1. Deferred compensation plan liabilities are classified within other liabilities on the condensed consolidated balance sheets.

    The following table provides a summary of the Company's assets and liabilities that were recognized at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in millions):

	Fair Value as of June 30, 2022
	Level 1		Level 2		Level 3		Total
Deferred compensation plan assets	$	1.1	$	11.4	$	—	$	12.5
Deferred compensation plan liabilities	12.9		—		—		12.9
	Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Deferred compensation plan assets	$	0.9	$	14.4	$	—	$	15.3
Deferred compensation plan liabilities	16.3		—		—		16.3

There were no transfers of assets between levels at June 30, 2022 and December 31, 2021, respectively.

Fair Value of Non-Derivative Financial Instruments

    The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at June 30, 2022 and December 31, 2021, due to the short-term nature of those instruments. The fair value of long-term debt as of June 30, 2022 and December 31, 2021, was approximately $534.5 million and $552.4 million, respectively. The fair value is based on quoted market prices for the same instruments.

Long-lived Assets and Intangible Assets

    Long-lived assets (which include property, plant and equipment and real estate) may be measured at fair value if such assets are held-for-sale or when there is a determination that the asset is impaired. Intangible assets (which include patents, tradenames, customer relationships, and non-compete agreements) also may be measured at fair value when there is a determination that the asset is impaired. The determination of fair value for these assets is based on the best information available that resides within Level 3 of the fair value hierarchy, including internal cash flow estimates discounted at an appropriate interest rate, quoted market prices when available, market prices for similar assets and independent appraisals, as appropriate. For real estate, cash flow estimates are based on current market estimates that reflect current and projected lease profiles and available industry information about expected trends in rental, occupancy and capitalization rates.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Warranties:

The Company offers warranties on the sales of certain of its products and records an accrual for estimated future claims. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The following table presents changes in the Company’s product warranty liability (in millions):

	Six Months Ended
	June 30, 2022		June 30, 2021
Balance at beginning of period	$	1.3	$	1.2
Charged to operations	0.6		1.0
Claims settled	(0.7)		(0.6)
Balance at end of period	$	1.2	$	1.6

Contingencies:

    The Company's subsidiaries are involved in various unresolved legal actions, administrative proceedings and claims in the ordinary course of business involving, among other things, product liability, commercial, employment, workers' compensation, intellectual property claims and environmental matters. The Company establishes accruals in a manner that is consistent with accounting principles generally accepted in the United States for costs associated with such matters when liability is probable and those costs are capable of being reasonably estimated. 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.

    Certain Company subsidiaries are subject to asbestos litigation. As of June 30, 2022, Zurn and numerous other unrelated companies were defendants in approximately 6,000 asbestos related lawsuits representing approximately 7,000

claims. Plaintiffs' claims allege personal injuries caused by exposure to asbestos used primarily in industrial boilers formerly manufactured by a segment of Zurn. Zurn did not manufacture asbestos or asbestos components. Instead, Zurn purchased them from suppliers. These claims are being handled pursuant to a defense strategy funded by insurers.

    As of June 30, 2022, the Company estimates the potential liability for the asbestos-related claims described above, as well as the claims expected to be filed in the next ten years, to be approximately $66.0 million, of which Zurn expects its insurance carriers to pay approximately $49.0 million in the next ten years on such claims, with the balance of the estimated liability being paid in subsequent years. The $66.0 million was developed based on actuarial studies and represents the projected indemnity payout for current and future claims. There are inherent uncertainties involved in estimating the number of future asbestos claims, future settlement costs, and the effectiveness of defense strategies and settlement initiatives. As a result, actual liability could differ from the estimate described herein and could be substantial. The liability for the asbestos-related claims is recorded in reserve for asbestos claims within the condensed consolidated balance sheets.

    Management estimates that its available insurance to cover this potential asbestos liability as of June 30, 2022 is in excess of the ten year estimated exposure, and accordingly, believes that all current claims are covered by insurance.

    As of June 30, 2022, the Company had a recorded receivable from its insurance carriers of $66.0 million, which corresponds to the amount of this potential asbestos liability that is covered by available insurance and is currently determined to be probable of recovery. However, there is no assurance the Company's current insurance coverage will ultimately be available or that this asbestos liability will not ultimately exceed the Company's coverage limits. Factors that could cause a decrease in the amount of available coverage or create gaps in coverage include: 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. The receivable for probable asbestos-related recoveries is recorded in insurance for asbestos claims within the condensed consolidated balance sheets.

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Retirement Benefits

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Retirement Benefits

Retirement Benefits

The components of net periodic benefit cost are as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Pension Benefits:
Service cost	$	—	$	0.1	$	—	$	0.2
Interest cost	2.2		4.6		4.3		7.5
Expected return on plan assets	(2.4)		(4.6)		(4.8)		(9.8)
Net periodic benefit cost	$	(0.2)	$	0.1	$	(0.5)	$	(2.1)
Other Postretirement Benefits:
Interest cost	$	—	$	0.1	$	0.1	$	0.2
Amortization:
Prior service credit	—		(0.1)		—		(0.2)
Net periodic benefit cost	$	—	$	—	$	0.1	$	—

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

    During the six months ended June 30, 2022 and June 30, 2021, the Company made contributions of $0.7 million and $1.8 million, respectively, to its qualified pension plan trusts.

    Prior year 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.

See Note 16, Retirement Benefits, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding retirement benefits.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Stock-Based Compensation

Stock-Based Compensation

    The Zurn Elkay Water Solutions Corporation Performance Incentive Plan (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 the Company's performance and create value for the Company's stockholders. For the three months ended June 30, 2022 and June 30, 2021, the Company recognized $3.8 million and $7.1 million of stock-based compensation expense, respectively. For the six months ended June 30, 2022 and June 30, 2021, the Company recognized $7.7 million and $16.2 million of stock-based compensation expense, respectively.

During the six months ended June 30, 2022, the Company granted the following restricted stock units, performance stock units and common stock to directors, executive officers, and certain other employees:

Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Stock options	2,650	$	12.27
Restricted stock units	13,132	$	33.51
Performance stock units	5,244	$	33.37
Common stock	28,347	$	31.11

    See Note 15, Stock-Based Compensation, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, for further information regarding stock-based compensation.

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Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Elkay Transaction; Credit Agreement Amendment

On July 1, 2022, in accordance with the terms and conditions of the Merger Agreement, dated February 12, 2022, the Company announced it had closed the Merger with Elkay. Under the terms of the transaction agreements, subject to certain holdbacks and post-closing adjustments, the merger consideration to Elkay shareholders consisted of approximately 51.6 million shares of Zurn common stock, which results in former Elkay shareholders owning approximately 29% of the combined company. Elkay, a market leader of commercial drinking water solutions, complements the Company's existing product portfolio. Following the closing of the Elkay Transaction, Zurn changed its legal name from Zurn Water Solutions Corporation to Zurn Elkay Water Solutions Corporation. Zurn Elkay common stock will continue to trade on the New York Stock Exchange under the ticker symbol “ZWS.”

In connection with the consummation of the Merger, on July 1, 2022, Holdings, the Borrowers, Elkay and the other loan parties party thereto entered into that certain Amendment No. 1 (the “Amendment”) to the Fourth Amended and Restated First Lien Credit Agreement (the “Credit Agreement”) pursuant to which Elkay joined the Credit Agreement as a Borrower. Elkay and its domestic subsidiaries also granted security interests in substantially all of their personal property assets to secure the obligations under the Credit Agreement pursuant to that certain Supplement No. 1 dated as of July 1, 2022 to the Collateral Agreement and certain other collateral documents.

The Company has estimated the total consideration transferred for the acquisition of Elkay to be approximately $1.4 billion, subject to finalization of purchase accounting and working capital adjustments. Pro forma revenues and earnings have not been presented as the initial accounting for the Elkay Transaction is incomplete as of the date the consolidated financial statements are issued. The Company is in the process of assessing the fair value of the acquired tangible assets, liabilities assumed and any applicable intangible assets and liabilities for this business combination.

Dividends

On July 21, 2022, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.07 per-share to be paid on September 7, 2022, to stockholders of record as of August 19, 2022.

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate that is expected to be discontinued because of reference rate reform. The amendments in this update provide optional expedients and exceptions for applying GAAP to instruments affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this ASU are effective for all entities as of March 12, 2020, through December 31, 2022. The Company did not modify any material contracts due to reference rate reform during the six months ended June 30, 2022. The Company will continue to evaluate the impact this guidance will have on its consolidated financial statements for all future transactions affected by reference rate reform during the time period referenced above.

Revenue Recognition

Revenue Recognition

    A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when obligations under the terms of a contract with the customer are satisfied. For the majority of the Company's product sales, revenue is recognized at a point-in-time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company's manufacturing facility to the customer. When contracts include multiple products to be delivered to the customer, generally each product is separately priced and is determined to be distinct within the context of the contract. Other than a standard assurance-type warranty that the product will conform to agreed-upon specifications, there are generally no other significant post-shipment obligations. The expected costs associated with standard warranties continues to be recognized as an expense when the products are sold.

When the contract provides the customer the right to return eligible products or when the customer is part of a sales rebate program, the Company reduces revenue at the point of sale using current facts and historical experience by using an estimate for expected product returns and rebates associated with the transaction. The Company adjusts these estimates at the earlier of when the most likely amount of consideration that is expected to be received changes or when the consideration becomes fixed. Accordingly, an increase or decrease to revenue is recognized at that time.

Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. 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.For substantially all of the Company's product sales, the customer is billed 100% of the contract value when the product ships and payment is generally due 30 days from shipment. Certain contracts include longer payment periods; however, the Company has elected to utilize the practical expedient in which the Company will only recognize a financing component to the sale if payment is due more than one year from the date of shipment.Billings are recorded as accounts receivable when an unconditional right to the contractual consideration exists. Contract assets arise when the Company performs by transferring goods or services to a customer before the customer pays consideration, or before the customer’s payment is due. A contract liability exists when the Company has received consideration or the amount is due from the customer in advance of revenue recognition.The Company has elected to use 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.

Timing of Performance Obligations Satisfied at a Point in Time

The Company determined that the customer is able to control the product when it is delivered to them; thus, depending on the shipping terms, control will transfer at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset and the customer has significant risks and rewards of ownership of the asset.

Variable Consideration

The Company provides volume-based rebates and the right to return product to certain customers, which are accrued for based on current facts and historical experience. Rebates are paid either on an annual or quarterly basis. There are no other significant variable consideration elements included in the Company's contracts with customers.

Contract CostsThe Company has elected to expense contract costs as incurred if the amortization period is expected to be one year or less. If the amortization period of these costs is expected to be greater than one year, the costs would be subject to capitalization.

Fair Value of Financial Instruments

The Company has a nonqualified deferred compensation plan where assets are invested in mutual funds and corporate-owned life insurance contracts held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for the mutual funds, which are measured using quoted prices of identical instruments in active markets categorized as Level 1. Corporate-owned life insurance contracts are recorded at cash surrender value, which is provided by a third party and reflects the net asset value of the underlying publicly traded mutual funds categorized as Level 2. The deferred compensation plan assets are classified within other assets on the condensed consolidated balance sheets. Deferred compensation plan liabilities are measured at fair value based on quoted prices of identical instruments to the investment vehicles selected by the participants categorized as Level 1. Deferred compensation plan liabilities are classified within other liabilities on the condensed consolidated balance sheets.Long-lived assets (which include property, plant and equipment and real estate) may be measured at fair value if such assets are held-for-sale or when there is a determination that the asset is impaired. Intangible assets (which include patents, tradenames, customer relationships, and non-compete agreements) also may be measured at fair value when there is a determination that the asset is impaired. The determination of fair value for these assets is based on the best information available that resides within Level 3 of the fair value hierarchy, including internal cash flow estimates discounted at an appropriate interest rate, quoted market prices when available, market prices for similar assets and independent appraisals, as appropriate. For real estate, cash flow estimates are based on current market estimates that reflect current and projected lease profiles and available industry information about expected trends in rental, occupancy and capitalization rates.

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Restructuring and Other Similar Charges (Tables)

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

The following table summarizes the Company's restructuring and other similar charges during the three and six months ended June 30, 2022 and June 30, 2021, (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Employee termination benefits	$	0.2	$	0.3	$	1.3	$	0.9
Contract termination and other associated costs	0.1		—		0.1		—
Total restructuring and other similar costs	$	0.3	$	0.3	$	1.4	$	0.9

Schedule of Activity in Restructuring Accrual

The following table summarizes the activity in the Company's restructuring accrual for the six months ended June 30, 2022 (in millions):

	Employee termination benefits		Contract termination and other associated costs		Total
Accrued Restructuring Costs, December 31, 2021 (1)	$	2.4	$	—	$	2.4
Charges	1.3		0.1		1.4
Cash payments	(2.6)		(0.1)		(2.7)
Accrued Restructuring Costs, June 30, 2022 (1)	$	1.1	$	—	$	1.1

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(1)The restructuring accrual is included in other current liabilities in the condensed consolidated balance sheets.

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Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations

The major components of the Income from discontinued operations, net of tax presented in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021, are as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net sales	$	—	$	324.6	$	—	$	645.5
Cost of sales	—		(192.6)		—		(394.0)
Selling, general and administrative expenses	—		(61.6)		—		(123.2)
Restructuring and other similar charges	—		(0.8)		—		(0.8)
Amortization of intangible assets	—		(3.3)		—		(6.6)
Interest expense, net	—		(1.6)		—		(3.0)
Other non-operating income, net	—		2.1		—		1.4
Income from discontinued operations before income tax	—		66.8		—		119.3
Income tax (provision) benefit	—		(14.3)		0.8		(26.8)
Equity method investment income	—		0.2		—		0.3
Non-controlling interest income	—		0.1		—		0.2
Income from discontinued operations, net of tax	$	—	$	52.6	$	0.8	$	92.6

The condensed consolidated statements of cash flows for the six months ended June 30, 2022 and June 30, 2021 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):

	Six Months Ended
	June 30, 2022		June 30, 2021
Depreciation	$	—	$	23.5
Amortization of intangible assets	—		6.6
Gain on disposition of assets	—		(9.2)
Deferred income taxes	—		0.1
Other non-cash charges	—		(0.9)
Stock-based compensation	—		10.8
Expenditures for property, plant and equipment	—		(12.3)
Proceeds from dispositions of long-lived assets	—		13.0
Proceeds associated with divestiture of discontinued operations	35.0		—
Repayments of debt	—		(1.1)
Proceeds from exercise of stock options	—		10.1
Taxes withheld and paid on employees' shared-based payment awards	—		(0.5)

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following tables present the Company's revenue disaggregated by customer type and customer geography (in millions):

	Three Months Ended				Six Months Ended
Customer Type	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Institutional	$	108.8	$	92.8	$	196.4	$	169.1
Commercial	84.3		73.0		159.8		137.8
All other	91.1		77.9		167.6		142.0
Total	$	284.2	$	243.7	$	523.8	$	448.9

	Three Months Ended				Six Months Ended
Geography	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
United States	$	257.5	$	219.5	$	477.1	$	405.2
Canada	20.5		18.2		35.6		32.8
Rest of world	6.2		6.0		11.1		10.9
Total	$	284.2	$	243.7	$	523.8	$	448.9

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2022

Stockholders' Equity Note [Abstract]

Schedule of Stockholders' Equity

Stockholders' equity consists of the following (in millions):

	Common stock (1)		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2020	$	1.2	$	1,392.9	$	116.0	$	(73.8)	$	3.0	$	1,439.3
Total comprehensive income (loss)	—		—		50.0		(1.8)		0.1		48.3
Stock-based compensation expense	—		14.2		—		—		—		14.2
Proceeds from exercise of stock options	—		2.8		—		—		—		2.8
Repurchase of common stock	—		—		(0.9)		—		—		(0.9)
Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)
Balance at March 31, 2021	$	1.2	$	1,409.9	$	154.3	$	(75.6)	$	3.1	$	1,492.9
Total comprehensive income	—		—		73.2		5.3		0.1		78.6
Stock-based compensation expense	—		11.6		—		—		—		11.6
Proceeds from exercise of stock options	—		16.6		—		—		—		16.6
Taxes withheld and paid on employees' share-based payment awards	—		(1.4)		—		—		—		(1.4)
Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)
Balance at June 30, 2021	$	1.2	$	1,436.7	$	216.7	$	(70.3)	$	3.2	$	1,587.5

	Common stock (1)		Additional paid-in capital		Retained deficit		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2021	$	1.3	$	1,436.9	$	(1,236.9)	$	(74.9)	$	—	$	126.4
Total comprehensive income	—		—		30.2		2.0		—		32.2
Stock-based compensation expense	—		3.9		—		—		—		3.9
Proceeds from exercise of stock options	—		0.5		—		—		—		0.5
Taxes withheld and paid on employees' share-based payment awards	—		(0.5)		—		—		—		(0.5)
Proceeds associated with divestiture of discontinued operations	—		—		35.0		—		—		35.0
Common stock dividends ($0.03 per share)	—		(3.8)		—		—		—		(3.8)
Balance at March 31, 2022	$	1.3	$	1,437.0	$	(1,171.7)	$	(72.9)	$	—	$	193.7
Total comprehensive income (loss)	—		—		36.4		(2.0)		—		34.4
Stock-based compensation expense	—		3.8		—		—		—		3.8
Proceeds from exercise of stock options	—		1.3		—		—		—		1.3
Common stock dividends ($0.03 per share)	—		(3.8)		—		—		—		(3.8)
Balance at June 30, 2022	$	1.3	$	1,438.3	$	(1,135.3)	$	(74.9)	$	—	$	229.4

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(1)During the three and six months ended June 30, 2022, the Company issued 335,177 and 462,178 shares of common stock upon the exercise of stock options, vesting of restricted stock units, and for other common stock awards, respectively.

(2)Non-controlling interest through the Spin-Off Transaction represented a 5% non-controlling interest in a PMC joint venture relationship. The Company has no remaining non-controlling interest subsequent to the Spin-Off Transaction.

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2022, are as follows (in millions):

	Foreign Currency Translation and Other		Pension and Postretirement Plans		Total
Balance at December 31, 2021	$	(70.9)	$	(4.0)	$	(74.9)
Other comprehensive loss before reclassifications	—		—		—
Amounts reclassified from accumulated other comprehensive loss	—		—		—
Net current period other comprehensive loss	—		—		—
Balance at June 30, 2022	$	(70.9)	$	(4.0)	$	(74.9)

Reclassification out of Accumulated Other Comprehensive Loss

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the three and six months ended June 30, 2022 and June 30, 2021 (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		Income Statement Line
Pension and other postretirement plans
Amortization of prior service credit	$	—	$	(0.1)	$	—	$	(0.2)	Other income, net
Provision for income taxes	—		—		—		—
Total net of tax	$	—	$	(0.1)	$	—	$	(0.2)

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Inventories (Tables)

6 Months Ended

Jun. 30, 2022

Inventory, Net [Abstract]

Summary of Major Classes of Inventories

The major classes of inventories are summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Finished goods	$	217.2	$	169.1
Work in progress	4.7		5.1
Raw materials	25.4		14.6
Inventories at First-in, First-Out ("FIFO") cost	247.3		188.8
Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	(3.9)		(4.3)
	$	243.4	$	184.5

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill

The changes in the net carrying value of goodwill for the six months ended June 30, 2022, are presented below (in millions):

Net carrying amount as of December 31, 2021	$	254.1
Currency translation adjustments	(0.2)
Purchase accounting adjustments (1)	(1.3)
Net carrying amount as of June 30, 2022	$	252.6

(1)Refer to Note 2, Acquisitions for additional information regarding the purchase accounting adjustments.

Schedule of Gross Carrying Amount and Accumulated Amortization for Finite-Lived Intangible Assets

The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of June 30, 2022 and December 31, 2021 are as follows (in millions):

		June 30, 2022
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	25.5	$	(22.5)	$	3.0
Customer relationships (including distribution network)	15 years	351.1		(273.3)		77.8
Tradenames	13 years	11.5		(4.5)		7.0
Intangible assets not subject to amortization - trademarks and tradenames		87.0		—		87.0
Total intangible assets, net	15 years	$	475.1	$	(300.3)	$	174.8
		December 31, 2021
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	24.9	$	(22.4)	$	2.5
Customer relationships (including distribution network)	15 years	351.1		(269.1)		82.0
Tradenames	13 years	11.5		(4.0)		7.5
Intangible assets not subject to amortization - trademarks and tradenames		87.1		—		87.1
Total intangible assets, net	15 years	$	474.6	$	(295.5)	$	179.1

Schedule of Gross Carrying Amount and Accumulated Amortization for Infinite-Lived Intangible Assets

The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of June 30, 2022 and December 31, 2021 are as follows (in millions):

		June 30, 2022
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	25.5	$	(22.5)	$	3.0
Customer relationships (including distribution network)	15 years	351.1		(273.3)		77.8
Tradenames	13 years	11.5		(4.5)		7.0
Intangible assets not subject to amortization - trademarks and tradenames		87.0		—		87.0
Total intangible assets, net	15 years	$	475.1	$	(300.3)	$	174.8
		December 31, 2021
	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Patents	9 years	$	24.9	$	(22.4)	$	2.5
Customer relationships (including distribution network)	15 years	351.1		(269.1)		82.0
Tradenames	13 years	11.5		(4.0)		7.5
Intangible assets not subject to amortization - trademarks and tradenames		87.1		—		87.1
Total intangible assets, net	15 years	$	474.6	$	(295.5)	$	179.1

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Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Other Liabilities Disclosure [Abstract]

Schedule of Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Commissions	$	9.3	$	8.1
Current portion of operating lease liability	6.0		6.1
Income taxes payable	1.3		2.1
Legal and environmental	2.7		3.0
Product warranty (1)	1.2		1.3
Restructuring and other similar charges (2)	1.1		2.4
Risk management (3)	11.4		11.3
Sales rebates	35.5		38.6
Tax indemnities	21.9		21.9
Taxes, other than income taxes	1.6		1.8
Other	7.0		9.8
	$	99.0	$	106.4

____________________

(1)See more information related to the product warranty obligations within Note 15, Commitments and Contingencies.

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

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

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt

Long-term debt is summarized as follows (in millions):

	June 30, 2022		December 31, 2021
Term loan (1)	$	537.3	$	539.2
Finance leases (2)	0.2		0.3
Total	537.5		539.5
Less current maturities	5.6		5.6
Long-term debt	$	531.9	533.9

____________________

(1)Includes unamortized debt issuance costs of $10.0 million and $10.8 million at June 30, 2022 and December 31, 2021, respectively.

(2)Refer to Note 14, Leases, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding leases.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Recognized at Fair Value on a Recurring Basis

The following table provides a summary of the Company's assets and liabilities that were recognized at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in millions):

	Fair Value as of June 30, 2022
	Level 1		Level 2		Level 3		Total
Deferred compensation plan assets	$	1.1	$	11.4	$	—	$	12.5
Deferred compensation plan liabilities	12.9		—		—		12.9
	Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Deferred compensation plan assets	$	0.9	$	14.4	$	—	$	15.3
Deferred compensation plan liabilities	16.3		—		—		16.3

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of Product Warranty Liability

The following table presents changes in the Company’s product warranty liability (in millions):

	Six Months Ended
	June 30, 2022		June 30, 2021
Balance at beginning of period	$	1.3	$	1.2
Charged to operations	0.6		1.0
Claims settled	(0.7)		(0.6)
Balance at end of period	$	1.2	$	1.6

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Retirement Benefits (Tables)

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Schedule of Net Benefit Costs

The components of net periodic benefit cost are as follows (in millions):

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Pension Benefits:
Service cost	$	—	$	0.1	$	—	$	0.2
Interest cost	2.2		4.6		4.3		7.5
Expected return on plan assets	(2.4)		(4.6)		(4.8)		(9.8)
Net periodic benefit cost	$	(0.2)	$	0.1	$	(0.5)	$	(2.1)
Other Postretirement Benefits:
Interest cost	$	—	$	0.1	$	0.1	$	0.2
Amortization:
Prior service credit	—		(0.1)		—		(0.2)
Net periodic benefit cost	$	—	$	—	$	0.1	$	—

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Schedule of Share-Based Payments

During the six months ended June 30, 2022, the Company granted the following restricted stock units, performance stock units and common stock to directors, executive officers, and certain other employees:

Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Stock options	2,650	$	12.27
Restricted stock units	13,132	$	33.51
Performance stock units	5,244	$	33.37
Common stock	28,347	$	31.11

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Acquisitions (Details) - USD ($) $ in Millions			6 Months Ended
	Nov. 17, 2021	Apr. 16, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Business Acquisition [Line Items]
Acquisitions, net of cash acquired				$ 3.4
Goodwill			$ 252.6		$ 254.1
McWane Assets Acquisition
Business Acquisition [Line Items]
Acquisitions, net of cash acquired	$ 12.6
Preliminary cash purchase price			1.1
Advance Technology Solutions, LLC
Business Acquisition [Line Items]
Preliminary cash purchase price		$ 3.8
Payments to acquire business		4.5
Consideration transferred payable		$ 0.7
Cash purchase price payable period		2 years
Goodwill		$ 7.5
Other intangible assets		1.6
Trade working capital		9.0
Other liabilities		$ (1.0)
Decrease in goodwill			$ 1.3

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Restructuring and Other Similar Charges - By Operating Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Restructuring Cost and Reserve [Line Items]
Total restructuring and other similar costs	$ 0.3	$ 0.3	$ 1.4	$ 0.9
Employee termination benefits
Restructuring Cost and Reserve [Line Items]
Total restructuring and other similar costs	0.2	0.3	1.3	0.9
Contract termination and other associated costs
Restructuring Cost and Reserve [Line Items]
Total restructuring and other similar costs	$ 0.1	$ 0.0	$ 0.1	$ 0.0

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Restructuring and Other Similar Charges - Restructuring Reserve (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Restructuring Reserve [Roll Forward]
Accrued restructuring costs, beginning of period			$ 2.4
Charges	$ 0.3	$ 0.3	1.4	$ 0.9
Cash payments			(2.7)
Accrued restructuring costs, end of period	1.1		1.1
Employee termination benefits
Restructuring Reserve [Roll Forward]
Accrued restructuring costs, beginning of period			2.4
Charges	0.2	0.3	1.3	0.9
Cash payments			(2.6)
Accrued restructuring costs, end of period	1.1		1.1
Contract termination and other associated costs
Restructuring Reserve [Roll Forward]
Accrued restructuring costs, beginning of period			0.0
Charges	0.1	$ 0.0	0.1	$ 0.0
Cash payments			(0.1)
Accrued restructuring costs, end of period	$ 0.0		$ 0.0

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Discontinued Operations - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($)
Discontinued Operations, Disposed of by Sale | Process & Motion Control
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Working capital	$ 35.0

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Discontinued Operations - Loss From Discontinued Operations (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income from discontinued operations, net of tax	$ 0.0	$ 52.6	$ 0.8	$ 92.6
Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	0.0		0.0
Cost of sales	0.0		0.0
Selling, general and administrative expenses	0.0		0.0
Restructuring and other similar charges	0.0		0.0
Amortization of intangible assets	0.0		0.0
Interest expense, net	0.0		0.0
Other non-operating income, net	0.0		0.0
Income from discontinued operations before income tax	0.0		0.0
Income tax (provision) benefit	0.0		0.8
Equity method investment income	0.0		0.0
Non-controlling interest income	0.0		0.0
Income from discontinued operations, net of tax	$ 0.0		$ 0.8
Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales		324.6		645.5
Cost of sales		(192.6)		(394.0)
Selling, general and administrative expenses		(61.6)		(123.2)
Restructuring and other similar charges		(0.8)		(0.8)
Amortization of intangible assets		(3.3)		(6.6)
Interest expense, net		(1.6)		(3.0)
Other non-operating income, net		2.1		1.4
Income from discontinued operations before income tax		66.8		119.3
Income tax (provision) benefit		(14.3)		(26.8)
Equity method investment income		0.2		0.3
Non-controlling interest income		0.1		0.2
Income from discontinued operations, net of tax		$ 52.6		$ 92.6

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Discontinued Operations - Other Significant Operating Non-Cash Items (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Depreciation	$ 4.7	$ 28.1
Amortization of intangible assets	4.6	18.5
Gain on disposition of assets	(0.3)	9.2
Deferred income taxes	6.8	(4.0)
Other non-cash charges	1.7	(1.1)
Stock-based compensation	7.7	27.0
Repayments of debt	(13.0)	(1.1)
Proceeds from exercise of stock options	1.8	19.4
Taxes withheld and paid on employees' shared-based payment awards	(0.5)	(1.4)
Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Depreciation	0.0
Amortization of intangible assets	0.0
Gain on disposition of assets	0.0
Deferred income taxes	0.0
Other non-cash charges	0.0
Stock-based compensation	0.0
Expenditures for property, plant and equipment	0.0
Proceeds from dispositions of long-lived assets	0.0
Proceeds associated with divestiture of discontinued operations	35.0
Repayments of debt	0.0
Proceeds from exercise of stock options	0.0
Taxes withheld and paid on employees' shared-based payment awards	$ 0.0
Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Depreciation		23.5
Amortization of intangible assets		6.6
Gain on disposition of assets		9.2
Deferred income taxes		0.1
Other non-cash charges		(0.9)
Stock-based compensation		10.8
Expenditures for property, plant and equipment		(12.3)
Proceeds from dispositions of long-lived assets		13.0
Proceeds associated with divestiture of discontinued operations		0.0
Repayments of debt		(1.1)
Proceeds from exercise of stock options		10.1
Taxes withheld and paid on employees' shared-based payment awards		$ (0.5)

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Revenue Recognition - Revenue Disaggregated by Customer Type and Geography (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue [Line Items]
Total	$ 284.2	$ 243.7	$ 523.8	$ 448.9
United States
Disaggregation of Revenue [Line Items]
Total	257.5	219.5	477.1	405.2
Canada
Disaggregation of Revenue [Line Items]
Total	20.5	18.2	35.6	32.8
Rest of world
Disaggregation of Revenue [Line Items]
Total	6.2	6.0	11.1	10.9
Institutional
Disaggregation of Revenue [Line Items]
Total	108.8	92.8	196.4	169.1
Commercial
Disaggregation of Revenue [Line Items]
Total	84.3	73.0	159.8	137.8
All other
Disaggregation of Revenue [Line Items]
Total	$ 91.1	$ 77.9	$ 167.6	$ 142.0

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Revenue Recognition - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percent of contract billed	100.00%		100.00%
Past due period			30 days
Performance obligations expected to be satisfied	$ 84,000,000		$ 84,000,000
Impairment loss recognized	$ 0	$ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percentage of remaining performance obligation	98.00%		98.00%
Percentage of remaining performance obligation, expected timing	6 months		6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percentage of remaining performance obligation	2.00%		2.00%
Percentage of remaining performance obligation, expected timing

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Income tax provision	$ 11.3	$ 6.2	$ 21.3	$ 10.9
Effective income tax rate	23.70%	23.10%	24.50%	26.30%
Unrecognized tax benefits	$ 5.0		$ 5.0		$ 5.9
Accrued interest and penalties	0.4		0.4		$ 0.5
Net interest and penalties recognized as income tax expense			0.0	$ 0.1
Additional tax liabilities at conclusion of tax examination	$ 1.5		$ 1.5

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Earnings per Share (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	0.2	0.2	0.2	0.2

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Stockholders' Equity - Roll Forward (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Nov. 24, 2020
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			$ 1,492.9	$ 1,439.3		$ 1,439.3
Beginning balance, parent	$ 193.7	$ 126.4			$ 126.4
Total comprehensive income (loss)			78.6	48.3
Total comprehensive income	34.4	32.2	78.5		66.6	126.7
Stock-based compensation expense	3.8	3.9	11.6	14.2
Proceeds from exercise of stock options	1.3	0.5	16.6	2.8
Taxes withheld and paid on employees' share-based payment awards		(0.5)	(1.4)
Repurchase of common stock				(0.9)
Proceeds associated with divestiture of discontinued operations		35.0
Common stock dividends	(3.8)	(3.8)	(10.8)	(10.8)
Ending balance			$ 1,587.5	$ 1,492.9		1,587.5
Ending balance, parent	$ 229.4	$ 193.7			$ 229.4
Common stock dividends (in dollars per share)	$ 0.03	$ 0.03	$ 0.09	$ 0.09
Common stock issued (in shares)	335,177				462,178
Centa China | Centa China | Process & Motion Control
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Non-controlling interest							5.00%
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			$ 1.2	$ 1.2		1.2
Beginning balance, parent	$ 1.3	$ 1.3			$ 1.3
Ending balance			1.2	1.2		1.2
Ending balance, parent	1.3	1.3			1.3
Additional paid-in capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			1,409.9	1,392.9		1,392.9
Beginning balance, parent	1,437.0	1,436.9			1,436.9
Stock-based compensation expense	3.8	3.9	11.6	14.2
Proceeds from exercise of stock options	1.3	0.5	16.6	2.8
Taxes withheld and paid on employees' share-based payment awards		(0.5)	(1.4)
Common stock dividends	(3.8)	3.8
Ending balance			1,436.7	1,409.9		1,436.7
Ending balance, parent	1,438.3	1,437.0			1,438.3
Retained deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			154.3	116.0		116.0
Beginning balance, parent	(1,171.7)	(1,236.9)			(1,236.9)
Total comprehensive income (loss)			73.2	50.0
Total comprehensive income	36.4	30.2
Repurchase of common stock				(0.9)
Proceeds associated with divestiture of discontinued operations		35.0
Common stock dividends			(10.8)	(10.8)
Ending balance			216.7	154.3		216.7
Ending balance, parent	(1,135.3)	(1,171.7)			(1,135.3)
Accumulated other comprehensive loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			(75.6)	(73.8)		(73.8)
Beginning balance, parent	(72.9)	(74.9)			(74.9)
Total comprehensive income (loss)			5.3	(1.8)
Total comprehensive income	(2.0)	2.0
Ending balance			(70.3)	(75.6)		(70.3)
Ending balance, parent	(74.9)	(72.9)			(74.9)
Non-controlling interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			3.1	3.0		3.0
Beginning balance, parent	0.0	0.0			0.0
Total comprehensive income (loss)			0.1	0.1
Ending balance			$ 3.2	$ 3.1		$ 3.2
Ending balance, parent	$ 0.0	$ 0.0			$ 0.0

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Stockholders' Equity - Narrative (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2021	Jan. 27, 2020	Mar. 31, 2015
Class of Stock [Line Items]
Repurchased and canceled shares (in shares)	0	0	22,300
Cost of repurchased and canceled shares of common stock			$ 900,000
Average price of repurchased and canceled shares of common stock (in dollars per share)			$ 39.27
Common Stock
Class of Stock [Line Items]
Common stock repurchase program amount				$ 300,000,000	$ 200,000,000
Remaining amount of repurchase authority	$ 162,800,000	$ 162,800,000

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Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, parent	$ 193.7		$ 126.4
Other comprehensive loss before reclassifications			0.0
Amounts reclassified from accumulated other comprehensive loss			0.0
Other comprehensive (loss) income, net of tax	(2.0)	$ 5.3	0.0	$ 3.5
Ending balance, parent	229.4		229.4
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, parent	(72.9)		(74.9)
Ending balance, parent	(74.9)		(74.9)
Foreign Currency Translation and Other
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, parent			(70.9)
Other comprehensive loss before reclassifications			0.0
Amounts reclassified from accumulated other comprehensive loss			0.0
Other comprehensive (loss) income, net of tax			0.0
Ending balance, parent	(70.9)		(70.9)
Pension and Postretirement Plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, parent			(4.0)
Other comprehensive loss before reclassifications			0.0
Amounts reclassified from accumulated other comprehensive loss			0.0
Other comprehensive (loss) income, net of tax			0.0
Ending balance, parent	$ (4.0)		$ (4.0)

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Accumulated Other Comprehensive Loss - Reclassifications out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Pension and other postretirement plans
Other expense, net	$ (0.6)	$ (0.4)	$ (0.3)	$ (0.1)
Provision for income taxes	11.3	6.2	21.3	10.9
Net income from continuing operations	36.4	20.6	65.8	30.6
Reclassification out of Accumulated Other Comprehensive Income
Pension and other postretirement plans
Net income from continuing operations	0.0	(0.1)	0.0	(0.2)
Reclassification out of Accumulated Other Comprehensive Income | Pension and other postretirement plans
Pension and other postretirement plans
Provision for income taxes	0.0	0.0	0.0	0.0
Reclassification out of Accumulated Other Comprehensive Income | Amortization of prior service credit
Pension and other postretirement plans
Other expense, net	$ 0.0	$ (0.1)	$ 0.0	$ (0.2)

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Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Inventory, Net [Abstract]
Finished goods	$ 217.2	$ 169.1
Work in progress	4.7	5.1
Raw materials	25.4	14.6
Inventories at First-in, First-Out ("FIFO") cost	247.3	188.8
Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	(3.9)	(4.3)
Inventories	$ 243.4	$ 184.5

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Goodwill and Intangible Assets - Changes in Net Carrying Value (Details) $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($)
Goodwill [Roll Forward]
Net carrying amount, beginning of period	$ 254.1
Currency translation adjustments	(0.2)
Purchase accounting adjustments	(1.3)
Net carrying amount, end of period	$ 252.6

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Goodwill and Intangible Assets - Gross Carrying Amount and Accumulated Amortization (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Intangible assets subject to amortization:
Weighted Average Useful Life	15 years	15 years
Accumulated Amortization	$ (300.3)	$ (295.5)
Intangible assets not subject to amortization - trademarks and tradenames
Gross Carrying Amount	475.1	474.6
Net Carrying Amount	174.8	179.1
Trademarks and tradenames
Intangible assets not subject to amortization - trademarks and tradenames
Carrying amount	$ 87.0	$ 87.1
Patents
Intangible assets subject to amortization:
Weighted Average Useful Life	9 years	9 years
Gross Carrying Amount	$ 25.5	$ 24.9
Accumulated Amortization	(22.5)	(22.4)
Net Carrying Amount	$ 3.0	$ 2.5
Customer relationships (including distribution network)
Intangible assets subject to amortization:
Weighted Average Useful Life	15 years	15 years
Gross Carrying Amount	$ 351.1	$ 351.1
Accumulated Amortization	(273.3)	(269.1)
Net Carrying Amount	$ 77.8	$ 82.0
Tradenames
Intangible assets subject to amortization:
Weighted Average Useful Life	13 years	13 years
Gross Carrying Amount	$ 11.5	$ 11.5
Accumulated Amortization	(4.5)	(4.0)
Net Carrying Amount	$ 7.0	$ 7.5

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Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization expense	$ 1.6	$ 5.8	$ 4.6	$ 11.9
Amortization expense in year ending 2022	7.9		7.9
Amortization expense in fiscal year 2023	6.5		6.5
Amortization expense in fiscal year 2024	6.5		6.5
Amortization expense in fiscal year 2025	6.4		6.4
Amortization expense in fiscal year 2026	6.3		6.3
Amortization expense in fiscal year 2027	$ 6.3		$ 6.3
Customer Relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Weighted average useful life of intangible assets acquired					10 years

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Other Current Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Other Liabilities Disclosure [Abstract]
Commissions	$ 9.3	$ 8.1
Current portion of operating lease liability	6.0	6.1
Income taxes payable	1.3	2.1
Legal and environmental	2.7	3.0
Product warranty	1.2	1.3
Restructuring and other similar charges	1.1	2.4
Risk management	11.4	11.3
Sales rebates	35.5	38.6
Tax indemnities	21.9	21.9
Taxes, other than income taxes	1.6	1.8
Other	7.0	9.8
Other current liabilities	$ 99.0	$ 106.4
Operating lease, liability, current, statement of financial position	Other current liabilities	Other current liabilities

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Long-Term Debt - Summary of Debt (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total	$ 537.5	$ 539.5
Less current maturities	5.6	5.6
Long-term debt	531.9	533.9
Term loan | Medium-term Notes
Debt Instrument [Line Items]
Total	537.3	539.2
Unamortized debt issuance costs	10.0	10.8
Finance Leases | Other Debt
Debt Instrument [Line Items]
Total	$ 0.2	$ 0.3

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Long-Term Debt - Narrative (Details) - USD ($)		6 Months Ended
	Oct. 04, 2021	Jun. 30, 2022	Dec. 31, 2021
Other Subsidiary Debt
Debt Instrument [Line Items]
Amounts borrowed		$ 200,000	$ 300,000
Medium-term Notes | Senior Secured Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 550,000,000
Period payment	$ 1,400,000
Lien leverage ratio		208.00%
Weighted-average effective interest rate		4.04%
Weighted-average interest rate, over time		2.90%
Medium-term Notes | Senior Secured Credit Facility | Leverage Ratio Scenario One
Debt Instrument [Line Items]
Lien leverage ratio	180000000.00%
Medium-term Notes | Senior Secured Credit Facility | Leverage Ratio Scenario One | Base Rate
Debt Instrument [Line Items]
Applicable margin	1.25%
Medium-term Notes | Senior Secured Credit Facility | Leverage Ratio Scenario One | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Applicable margin	2.25%
Medium-term Notes | Senior Secured Credit Facility | Leverage Ratio Scenario Two
Debt Instrument [Line Items]
Interest rate decrease	0.25%
Revolving credit facility | Senior Secured Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 200,000,000
Lien leverage ratio	208.00%
Amounts borrowed		$ 0	0
Letters of credit outstanding, amount		$ 6,100,000	$ 6,100,000
Revolving credit facility | Senior Secured Credit Facility | Leverage Ratio Scenario One
Debt Instrument [Line Items]
Lien leverage ratio	200000000.00%
Commitment fee	0.50%
Revolving credit facility | Senior Secured Credit Facility | Leverage Ratio Scenario One | Base Rate
Debt Instrument [Line Items]
Applicable margin	1.00%
Revolving credit facility | Senior Secured Credit Facility | Leverage Ratio Scenario One | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Applicable margin	2.00%
Revolving credit facility | Senior Secured Credit Facility | Leverage Ratio Scenario Two
Debt Instrument [Line Items]
Lien leverage ratio	200000000.00%
Interest rate decrease	0.25%
Commitment fee	0.375%

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Fair Value Measurements - Schedule of Assets and Liabilities Measured on Recurring and Nonrecurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation plan assets	$ 12.5	$ 15.3
Deferred compensation plan liabilities	12.9	16.3
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation plan assets	1.1	0.9
Deferred compensation plan liabilities	12.9	16.3
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation plan assets	11.4	14.4
Deferred compensation plan liabilities	0.0	0.0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation plan assets	0.0	0.0
Deferred compensation plan liabilities	$ 0.0	$ 0.0

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Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Fair value of long-term debt	$ 534.5	$ 552.4

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Commitments and Contingencies - Warranty Liability (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Movement in Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 1.3	$ 1.2
Charged to operations	0.6	1.0
Claims settled	(0.7)	(0.6)
Balance at end of period	$ 1.2	$ 1.6

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Commitments and Contingencies - Narrative (Details) lawsuit in Thousands, claimant in Thousands, $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($) carrier lawsuit claimant
Loss Contingencies [Line Items]
Number of carriers, if insolvent, could impact coverage | carrier	1
Asbestos Issue | Zurn
Loss Contingencies [Line Items]
Number of lawsuits | lawsuit	6
Number of claimants | claimant	7
Time frame of claims expected to be filed	10 years
Insurance for asbestos claims	$ 66.0
Estimated claim payments made over specified period	$ 49.0
Time frame of estimated claims disbursements	10 years

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Retirement Benefits - Schedule of Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 0.0	$ 0.1	$ 0.0	$ 0.2
Interest cost	2.2	4.6	4.3	7.5
Expected return on plan assets	(2.4)	(4.6)	(4.8)	(9.8)
Amortization:
Net periodic benefit cost	(0.2)	0.1	(0.5)	(2.1)
Other Postretirement Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Interest cost	0.0	0.1	0.1	0.2
Amortization:
Prior service cost	0.0	(0.1)	0.0	(0.2)
Net periodic benefit cost	$ 0.0	$ 0.0	$ 0.1	$ 0.0

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Retirement Benefits - Narrative (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Retirement Benefits [Abstract]
Contributions by employer	$ 0.7	$ 1.8

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Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement, Noncash Expense [Abstract]
Stock-based compensation expense	$ 3.8	$ 7.1	$ 7.7	$ 16.2

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Stock-Based Compensation - Stock Options, Restricted Stock Units, and Performance Stock Units (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Stock options
Number of Awards
Number of awards (in shares) | shares	2,650
Weighted Average Grant-Date Fair Value
Weighted average grant-date fair value (in dollars per share) | $ / shares	$ 12.27
Restricted stock units
Number of Awards
Number of awards (in shares) | shares	13,132
Weighted Average Grant-Date Fair Value
Weighted average grant-date fair value (in dollars per share) | $ / shares	$ 33.51
Performance stock units
Number of Awards
Number of awards (in shares) | shares	5,244
Weighted Average Grant-Date Fair Value
Weighted average grant-date fair value (in dollars per share) | $ / shares	$ 33.37
Common stock
Number of Awards
Number of awards (in shares) | shares	28,347
Weighted Average Grant-Date Fair Value
Weighted average grant-date fair value (in dollars per share) | $ / shares	$ 31.11

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Subsequent Events (Details) - Subsequent Event - USD ($) $ / shares in Units, shares in Millions, $ in Billions	Jul. 21, 2022	Jul. 01, 2022
Subsequent Event [Line Items]
Quarterly dividend declared (in dollars per share)	$ 0.07
Elkay Manufacturing Company
Subsequent Event [Line Items]
Issued shares (in shares)		51.6
Percent interest of the stock		29.00%
Business combination, consideration transferred		$ 1.4