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Commission File Number:			001-35475

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.

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.

 

Part I FINANCIAL INFORMATION
Item 1.			Financial Statements			4
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			30
Item 4.			Controls and Procedures			31
Part II OTHER INFORMATION
Item 1.			Legal Proceedings			32
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 5.			Other Information			32
Item 6.			Exhibits			33
Signatures						34

 

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, they 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, 2024, 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. 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.

ITEM  1.    FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements included herein have been prepared by Zurn Elkay 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, 2025. 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, 2024.

Zurn Elkay is a growth-oriented, pure-play water management business that designs, procures, manufactures, and markets what the Company believes to be the broadest sustainable product portfolio of specification-driven water management solutions to improve health, hydration, human safety and the environment. The Company's product portfolio includes professional grade water safety and control products, flow systems products, hygienic and environmental products, and filtered drinking water products for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time. The Company's heritage of innovation and specification has allowed it to provide highly-engineered, mission-critical solutions to customers for decades and affords it the privilege of having long-term, valued relationships with market leaders. The Company operates in a disciplined way and the Zurn Elkay Business System (“ZEBS”) is its operating philosophy. 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 its business.

In December 2023, the FASB issued Accounting Standards Update 2023-09 “Income Taxes (Topic 470): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which establishes new income tax disclosures to consistently categorize and provide greater disaggregation of information in the rate reconciliation, including dollar value and percentage impacts of each component of the reconciliation, as well as further disaggregates income taxes paid. This guidance is effective for fiscal years beginning after December 15, 2024. The Company is evaluating the impact of the adoption of ASU 2023-09 on the consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses. The ASU’s amendments are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact of the adoption of ASU 2024-03 on the consolidated financial statements.

During the three and six months ended June 30, 2025, 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 mergers and 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. Management expects to continue executing similar initiatives to optimize the Company's operating margin and manufacturing footprint. As such, the Company expects further expenses related to workforce reductions, potential impairment or accelerated depreciation of assets, lease termination costs and other facility rationalization costs.

The Company's restructuring plans are preliminary and the full extent of related expenses 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, 2025 and June 30, 2024, (in millions):

The following table summarizes the activity in the Company's restructuring accrual for the six months ended June 30, 2025 (in millions):

(1)As of June 30, 2025 and December 31, 2024, the restructuring accrual is included in other current liabilities in the condensed consolidated balance sheets.

(2)Non-cash charges consist primarily of asset impairments based on Level 3 inputs.

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 in accordance with the exchange ratio. The operating results of PMC are reported as discontinued operations in the consolidated statements of operations for all 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, 2025 and June 30, 2024 have not been adjusted to separately disclose cash flows related to the discontinued operations.

(1)Selling, general and administrative expense includes the release of certain accruals as a result of costs the Company will no longer incur related to the Spin-Off Transaction.

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 continue 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 condensed consolidated statements of operations. Unsatisfied performance obligations as of June 30, 2025 have an expected duration of one year or less.

The Company designs, procures, manufactures, and markets a comprehensive portfolio of water management solutions. The Company disaggregates its sales by customer type and geographic location, which the Company believes best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows may be impacted differently by certain economic factors. The following tables present revenue disaggregated by customer type and the geographic region of the end customer (in millions):

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, 2025 and December 31, 2024 were not material.

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.

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.

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 credit losses, 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 allowances for credit losses, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables.

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.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. There are multiple business tax provisions for which further guidance from the U.S. Treasury and the Internal Revenue Service is needed. The Company is currently reviewing and evaluating the impact of the guidance provided to date that could affect our income tax payable and deferred tax liability, including changes related to bonus depreciation and the expensing of research and development expenditures, among other topics.

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 the purpose 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, as well as certain foreign NOL carryforwards and related deferred tax assets and continues to maintain a partial valuation allowance against certain U.S. state NOL and tax credit carryforwards. Future changes to the balances of these valuation allowances, as a result of this continued review and analysis by the Company, could impact the financial statements for such period of change.

The income tax provision was $32.9 million for the six months ended June 30, 2025, compared to $25.5 million for the six months ended June 30, 2024. The effective income tax rate for the six months ended June 30, 2025 was 26.5% versus 24.3% for the six months ended June 30, 2024. The effective income tax rate for the six months ended June 30, 2025 and for the six months ended June 30, 2024 was above the U.S. federal statutory rate of 21% primarily due to the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, the accrual of various state income taxes and the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, partially offset by the recognition of income tax benefits associated with share-based payments.

The Company’s total liability for net unrecognized tax benefits as of June 30, 2025 and December 31, 2024 was $2.0 million and $1.8 million, respectively. The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in income tax expense. As of June 30, 2025 and December 31, 2024, the total amount of unrecognized tax benefits includes gross accrued interest and penalties of $0.5 million. The Company recognized $0.1 million and $(0.2) million of net interest and penalties as income tax expense (benefit) during the six months ended June 30, 2025 and June 30, 2024, 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. It is reasonably possible that the amounts of unrecognized income tax benefits could change in the next twelve months based upon future income tax examinations; however, any potential payments of income tax, interest and penalties would not be 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 December 31, 2021, state and local income tax examinations for years ending prior to December 31, 2020 or significant foreign income tax examinations for years ending prior to March 31, 2020.

Basic net income per share from continuing and discontinued operations is computed by dividing net income from continuing operations and income from discontinued operations, respectively, by the corresponding weighted average number of common shares outstanding for the period. Diluted net income per share from continuing and discontinued operations is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares and the vesting of restricted stock units and performance stock units using the treasury stock method, except when the effect would be anti-dilutive.

The computation for diluted net income per share for the three and six months ended June 30, 2025 excludes 0.1 million shares due to their anti-dilutive effects. The computation for diluted net income per share for the three and six months ended June 30, 2024 excludes 0.5 million shares and 0.3 million shares due to their anti-dilutive effects, respectively.

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

			Common stock (1)												Additional paid-in capital						Retained deficit						Accumulated other comprehensive loss																		Total stockholders’ equity
Balance at December 31, 2023			$	1.7											$	2,847.0					$	(1,178.2)					$	(67.7)																	$	1,602.8
Total comprehensive income			—												—						34.3						(2.5)																		31.8
Stock-based compensation expense			—												10.0						—						—																		10.0
Proceeds from exercise of stock options			—												2.1						—						—																		2.1
Repurchase of common stock			—												—						(18.9)						—																		(18.9)
Common stock dividends ($0.08 per share)			—												(13.9)						—						—																		(13.9)
Balance at March 31, 2024			$	1.7											$	2,845.2					$	(1,162.8)					$	(70.2)																	$	1,613.9
Total comprehensive income			—												—						46.0						(1.5)																		44.5
Stock-based compensation expense			—												9.4						—						—																		9.4
Proceeds from exercise of stock options			—												1.7						—						—																		1.7
Repurchase of common stock			—												—						(61.3)						—																		(61.3)
Common stock dividends ($0.08 per share)			—												(13.8)						—						—																		(13.8)
Balance at June 30, 2024			$	1.7											$	2,842.5					$	(1,178.1)					$	(71.7)																	$	1,594.4

			Common stock (1)												Additional paid-in capital						Retained deficit						Accumulated other comprehensive loss																		Total stockholders’ equity
Balance at December 31, 2024			$	1.7											$	2,828.2					$	(1,168.7)					$	(74.4)																	$	1,586.8
Total comprehensive income			—												—						43.6						(0.2)																		43.4
Stock-based compensation expense			—												10.5						—						—																		10.5
Proceeds from exercise of stock options and ESPP contributions			—												1.1						—						—																		1.1
Taxes withheld and paid on employees' share-based payment awards			—												(0.5)						—						—																		(0.5)
Repurchase of common stock			—												—						(78.0)						—																		(78.0)
Common stock dividends ($0.09 per share)			—												(15.3)						—						—																		(15.3)
Balance at March 31, 2025			$	1.7											$	2,824.0					$	(1,203.1)					$	(74.6)																	$	1,548.0
Total comprehensive income			—												—						50.5						4.9																		55.4
Stock-based compensation expense			—												9.0						—						—																		9.0
Proceeds from exercise of stock options and ESPP contributions			—												1.3						—						—																		1.3
Repurchase of common stock			—												—						(32.9)						—																		(32.9)
Common stock dividends ($0.09 per share)			—												(16.4)						—						—																		(16.4)
Balance at June 30, 2025			$	1.7											$	2,817.9					$	(1,185.5)					$	(69.7)																	$	1,564.4

(1)During the three and six months ended June 30, 2025, the Company issued 109,796 and 597,933 shares of common stock, upon the exercise of stock options, vesting of restricted stock units and performance stock units, and for other common stock issuances, respectively. During the three and six months ended June 30, 2024, the Company issued 171,495 and 1,398,393 shares of common stock, upon the exercise of stock options, vesting of restricted stock units and performance stock units, and for other common stock issuances, respectively.

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. On February 8, 2023, the Company's Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $500.0 million. 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 of Directors. During the three months ended June 30, 2025, the Company repurchased 972,619 shares of common stock at a total cost of $32.5 million at an average price of $33.41 per share. During the six months ended June 30, 2025, the Company repurchased 3,244,641 shares of common stock at a total cost of $109.9 million at a weighted average price of $33.87 per share. During the three months ended June 30, 2024, the Company repurchased 1,942,016 shares of common stock at a total cost of $61.0 million at an average price of $31.38 per share.

During the six months ended June 30, 2024, the Company repurchased 2,562,860 shares of common stock at a total cost of $79.9 million at an average price of $31.15 per share. The repurchased shares were canceled by the Company upon receipt. Approximately $130.3 million of the existing authority remained under the Repurchase Program at June 30, 2025.

The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2025, are as follows (in millions):

There were no amounts reclassified from accumulated other comprehensive loss to net income during the six months ended June 30, 2025 and 2024.

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

						June 30, 2025						December 31, 2024
Finished goods						$	233.2					$	228.7
Work in progress						11.8						12.1
Raw materials						50.8						44.8
Inventories at First-In, First-Out ("FIFO") cost						295.8						285.6
Adjustment to state inventories at Last-In, First-Out ("LIFO") cost						(20.0)						(13.0)
						$	275.8					$	272.6

The changes in the net carrying value of goodwill for the six months ended June 30, 2025, are presented below (in millions):

The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of June 30, 2025 and December 31, 2024 are as follows (in millions):

Intangible asset amortization expense totaled $14.6 million and $14.8 million for the three months ended June 30, 2025 and June 30, 2024, respectively. Intangible asset amortization expense totaled $29.3 million and $29.5 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

The Company expects to recognize amortization expense on the intangible assets subject to amortization of $58.7 million in the year ending December 31, 2025 (inclusive of the $29.3 million of amortization expense recognized in the six months ended June 30, 2025), $58.5 million in 2026, $58.5 million in 2027, $58.5 million in 2028, $58.5 million in 2029 and $58.5 million in 2030.

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

						June 30, 2025						December 31, 2024
Commissions						$	12.4					$	9.2
Current portion of operating lease liability						14.1						12.7
Income taxes payable						7.2						2.3
Professional fees						2.1						1.6
Product warranty (1)						5.6						4.9
Restructuring and other similar charges (2)						0.9						1.2
Risk management (3)						5.8						5.5
Sales rebates						77.9						73.2
Tax indemnities						11.1						12.2
Taxes, other than income taxes						2.9						2.9
Other						13.4						10.5
						$	153.4					$	136.2

____________________

(1)See more information related to the product warranty obligations balance within Note 14, Commitments and Contingencies.

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

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

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

						June 30, 2025						December 31, 2024
Term loan (1)						$	475.7					$	475.0
Finance leases						20.2						20.6
Total						495.9						495.6
Less current maturities						0.8						0.8
Long-term debt						$	495.1					$	494.8

(1)Includes unamortized debt issuance costs of $4.7 million and $5.4 million at June 30, 2025 and December 31, 2024, respectively.

On October 4, 2021, ZBS Global, Inc. (“Holdings”), Zurn Holdings, Inc., Zurn LLC (together, the “Original 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 as amended by that certain Amendment No. 1 to Fourth Amended and Restated First Lien Credit Agreement dated as of July 1, 2022 (the "Amendment") (as so amended, the “Credit Agreement”). Pursuant to the Amendment, Elkay joined the Credit Agreement as a borrower (Elkay and the Original Borrowers, collectively, the "Borrowers"). 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, among Holdings, the Borrowers, the subsidiaries of the Borrowers party thereto, and the Administrative Agent, as supplemented pursuant to that certain Supplement No. 1 dated as of July 1, 2022, executed by Elkay and its domestic subsidiaries, 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, 2025, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.

Term Debt

The Credit Agreement provides for the issuance of a term loan facility in an aggregate principal amount of $550.0 million. The proceeds of the Term Loan were, together with the dividend received by the Company in connection with the Spin-Off Transaction and cash on hand, used to (i) repay in full a $625 million term loan, together with accrued interest thereon, (ii) redeem the $500 million of outstanding principal amount of the 4.875% Senior Notes due 2025, and (iii) pay related fees and expenses.

In October 2023, the Company made a voluntary prepayment on its Term Loan of $60.0 million. In connection with this prepayment, the Company recognized a $0.9 million loss on debt extinguishment to write off a portion of the unamortized debt issuance costs. The Term Loan has a maturity date of October 4, 2028. In connection with the voluntary prepayment of $60.0 million, quarterly principal payments are no longer required.

For purposes of the Term Loan, effective July 1, 2023, the secured overnight financing rate ("SOFR") replaced LIBOR, and accordingly, beginning July 1, 2023 the Term Loan bears interest at the Borrowers' option, by reference to a base rate or a rate based on Term SOFR, plus a Term SOFR adjustment of 0.115%, 0.262%, or 0.428% for interest periods of one month, three months, and six months, respectively, plus an applicable margin 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 SOFR borrowings. In the event the Borrowers’ Net First Lien Leverage Ratio is less than or equal to 1.80 to 1.00, the applicable margin on both base rate and SOFR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 0.79 to 1.00 as of June 30, 2025, and therefore the applicable margin is 2.00%.

Prior to July 1, 2023, the Term Loan bore interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter as illustrated above.

At June 30, 2025 and for the six months then ended, the borrowings under the Term Loan had weighted-average effective interest rates of 6.41% and 6.44%, respectively.

Revolving Credit Facility

The Credit Agreement includes a $200.0 million revolving credit facility that has a maturity date of October 2, 2026. Similar to the Term Loan, effective July 1, 2023, the SOFR replaced LIBOR, and accordingly, beginning July 1, 2023 the Revolving Credit Facility bears interest by reference to a base rate or a rate based on Term SOFR, plus a Term SOFR adjustment of 0.115%, 0.262%, or 0.428% for interest periods of one month, three months, and six months, respectively, plus an applicable margin 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 SOFR 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 SOFR borrowings would decrease by 0.25%. The Borrowers’ Net First Lien Leverage Ratio was 0.79 to 1.00 as of June 30, 2025. 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%.

Prior to July 1, 2023, borrowings under the Revolving Credit Facility bore interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case, plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter as illustrated above.

At June 30, 2025 and December 31, 2024, there were no amounts borrowed under the Revolving Credit Facility. As of June 30, 2025 and December 31, 2024, $10.1 million and $11.3 million, respectively, of the Revolving Credit Facility was considered utilized in connection with outstanding letters of credit.

At June 30, 2025 and December 31, 2024, the Company had finance lease obligations of $20.2 million and $20.6 million, respectively.

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.

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 short-term and long-term plan liabilities are classified within Compensation and benefits and Other liabilities, respectively, 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, 2025 and December 31, 2024 (in millions):

There were no transfers of assets between levels at June 30, 2025 and December 31, 2024, respectively.

The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at June 30, 2025 and December 31, 2024, due to the short-term nature of those instruments. The fair value of long-term debt as of June 30, 2025 and December 31, 2024, was approximately $503.0 million and $503.4 million, respectively. The fair value is based on quoted market prices for the same instruments.

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):

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 a 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.

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

						Three Months Ended												Six Months Ended
						June 30, 2025						June 30, 2024						June 30, 2025						June 30, 2024
Pension Benefits:
Service cost						$	—					$	0.1					$	—					$	0.1
Interest cost						2.9						2.8						5.7						5.6
Expected return on plan assets						(2.3)						(1.8)						(4.6)						(3.7)
Curtailment						—						—						(0.7)						—
Net periodic cost						$	0.6					$	1.1					$	0.4					$	2.0
Other Postretirement Benefits:
Interest cost						$	0.1					$	0.1					$	0.2					$	0.2
Net periodic cost						$	0.1					$	0.1					$	0.2					$	0.2

The service cost component of net periodic cost 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 cost are presented within Other expense, net. The Company recognizes the net actuarial gains or losses in excess of the corridor in operating results during the final quarter of each fiscal year (or upon any required re-measurement event).

On January 30, 2025, the Company's Board of Directors approved a resolution to terminate the Company's U.S. defined benefit pension plan (the "Pension Plan") with the full freeze of benefit accruals under the Plan effective March 31, 2025 and the termination of the Pension Plan effective April 1, 2025. The Pension Plan freeze resulted in a curtailment gain of $0.7 million in the first quarter of 2025. The Company expects to annuitize the remaining pension liability in fiscal year 2025.

See Note 15, 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, 2024 for further information regarding retirement benefits.

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, 2025 and June 30, 2024, the Company recognized $9.0 million and $9.4 million of stock-based compensation expense, respectively. For the six months ended June 30, 2025 and June 30, 2024, the Company recognized $19.5 million and $19.4 million of stock-based compensation expense, respectively.

During the six months ended June 30, 2025, the Company granted the following stock options, restricted stock units, performance stock units, and common stock to directors, executive officers, and certain other employees:

In May 2024, the Company’s stockholders approved the adoption of the Zurn Elkay Water Solutions Corporation Employee Stock Purchase Plan (the “ESPP"). The number of shares of Company common stock available for purchase under the ESPP is 2,000,000 shares, subject to adjustment in the event of a change in capitalization.

During the three and six months ended June 30, 2025, the Company issued 18,403 and 45,698 shares of common stock, respectively. As of June 30, 2025, 1,909,866 shares remained available for future issuance. During the three and six months ended June 30, 2025, the Company recognized $0.1 million and $0.3 million of stock-based compensation expense related to the ESPP, respectively.

See Note 14, 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, 2024, for further information regarding stock-based compensation.

The Company is a growth-oriented, pure-play water management business that designs, procures, manufactures and markets what the Company believes to be the broadest sustainable product portfolio of specification-driven water management solutions to improve health, hydration, human safety and the environment. The Company’s product portfolio includes professional grade water safety and control products, flow systems products, hygienic and environmental products and filtered drinking water products. Revenue is primarily generated in the United States and the Company manages and evaluates its operations on a consolidated basis as one reportable operating segment due to similarities of its products, processes, customer base and methods of distribution. See Note 2, Significant Accounting Policies, to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, for further information regarding the Company's accounting policies.

The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM assesses the Company’s performance and makes capital allocation decisions based on Net income from continuing operations as reported in the consolidated statement of operations. This metric is used to monitor forecasted to actual and budgeted results and benchmarking to our peers.

The following table includes segment revenue, significant expense items and segment profit as viewed by the CODM for the three and six months ended June 30, 2025 and June 30, 2024:

(1)Other segment items include restructuring and other similar charges, amortization of intangible assets, interest expense, net, other expense, net, and provision for income taxes.

Segment net sales, amortization, interest expense, net, income before income taxes and income tax expense are included on the condensed consolidated statement of operations. Segment assets are included on the condensed consolidated balance sheet and segment depreciation, stock-based compensation expense, non-cash restructuring charges, and expenditures for plant, property and equipment are included on the condensed consolidated statement of cash flows. Interest income for the three months ended June 30, 2025 and June 30, 2024 was $1.4 million and $1.9 million, respectively. Interest income for the six months ended June 30, 2025 and June 30, 2024 was $3.1 million and $3.5 million, respectively.

On July 24, 2025, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.09 per share to be paid on September 5, 2025, to stockholders of record as of August 20, 2025.

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

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

The following information should be read in conjunction with the audited consolidated financial statements and notes thereto, along with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), in our Annual Report on Form 10-K for the year ended December 31, 2024.

As disclosed in Part I, Item 1A, "Risk Factors", of our Annual Report on Form 10-K for the year ended December 31, 2024, the Company’s business is subject to risks related to, among other factors, tariffs and other trade protection measures put in place by the United States or other countries. Starting in the first quarter of 2025, the United States government announced additional tariffs on goods imported into the U.S. from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response. The U.S. government continues to negotiate with other countries regarding the tariffs. While the Company is well positioned to respond to the tariff environment, costs are impacted by trade policies.

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, 2024 for information with respect to our critical accounting estimates 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, 2025, and during the period from January 1, 2025 through June 30, 2025, there has been no material change to this information.

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

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 in accordance with the exchange ratio. 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 six months ended June 30, 2025 and June 30, 2024 have not been adjusted to separately disclose cash flows related to the discontinued operations.

(1)Selling, general and administrative expense includes the release of certain accruals as a result of costs the Company will no longer incur related to the Spin-Off Transaction.

See Item 1, Note 3, Discontinued Operations for additional information.

During the three and six months ended June 30, 2025, 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 mergers and 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. Management expects to continue executing similar initiatives to optimize the Company's operating margin and manufacturing footprint. As such, the Company expects further expenses related to workforce reductions, potential impairment or accelerated depreciation of assets, lease termination costs and other facility rationalization costs. For the three and six months ended June 30, 2025, restructuring charges totaled $1.9 million and $3.6 million, respectively. For the three and six months ended June 30, 2024, restructuring charges totaled $0.7 million and $7.0 million, respectively. Refer to Item 1, Note 2, Restructuring and Other Similar Charges for further information.

Net sales were $444.5 million and $412.0 million during the three months ended June 30, 2025 and June 30, 2024, respectively, an increase of 8% year over year. Core sales improved 8% year over year, including growth in all product categories.

During the three months ended June 30, 2025, income from operations was $77.6 million compared to $71.9 million during the three months ended June 30, 2024. Income from operations as a percentage of net sales stayed consistent year over year as a result of the favorable impact of year-over-year sales growth (inclusive of price realization) and productivity savings being offset primarily by the year-over-year change in the adjustment to state inventories at last-in, first-out cost and incremental restructuring expense.

Interest expense, net was $7.7 million for the three months ended June 30, 2025, compared to $8.5 million for the three months ended June 30, 2024. The decrease in interest expense, net as compared to the prior year period is primarily due to lower interest rates.

Other expense, net for the three months ended June 30, 2025 and 2024, was $2.0 million and $1.6 million, respectively. Other expense, net consists primarily of foreign currency transaction gains and losses, the non-service cost components associated with our defined benefit and postretirement plans and other non-operational gains and losses. The year-over-year change is primarily driven by increased other non-operational and foreign currency transaction losses, offset by lower defined benefit plan costs in the current year.

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 impact the financial statements for such period of change.

Net income for the three months ended June 30, 2025, was $50.5 million compared to net income of $46.0 million for the three months ended June 30, 2024. Diluted net income per share for the three months ended June 30, 2025 and June 30, 2024, was $0.29 and $0.27, respectively. The year-over-year change is the result of the factors described above. Net income from discontinued operations, net of tax, was $0.4 million for the three months ended June 30, 2025 compared to net income from discontinued operations, net of tax, of $0.7 million for the three months ended June 30, 2024. Diluted net income per share from discontinued operations for the three months ended June 30, 2025 and June 30, 2024, was $0.00 and $0.01, respectively.

Net sales were $833.3 million during the six months ended June 30, 2025, an increase of 6% year over year. Core sales improved 7% year over year, including growth in all product categories. The impact from foreign currency exchange rates reduced net sales by 1% in the year.

Income from operations during the six months ended June 30, 2025 was $141.0 million compared to $125.1 million during the six months ended June 30, 2024. Income from operations as a percentage of net sales increased by 100 basis points year over year as a result of the favorable impact of year-over-year sales growth (inclusive of price realization) and productivity savings being slightly offset primarily by the year-over-year change in the adjustment to state inventories at last-in, first-out cost.

    Interest expense, net was $15.0 million during the six months ended June 30, 2025, compared to $17.3 million during the six months ended June 30, 2024. The decrease in interest expense, net as compared to the prior year period is primarily due to reduced interest expense in the current year as a result of lower interest rates.

    Other expense, net during the six months ended June 30, 2025 was $2.0 million compared to $3.0 million during the six months ended June 30, 2024. Other expense, net consists primarily of foreign currency transaction gains and losses, the non-service cost components associated with our defined benefit plans and other non-operational gains and losses. The year-over-year change is primarily driven by lower defined benefit plan costs in the current year, partly offset by foreign currency transaction losses.

The income tax provision was $32.9 million for the six months ended June 30, 2025, compared to $25.5 million for the six months ended June 30, 2024. The effective income tax rate for the six months ended June 30, 2025 was 26.5% versus 24.3% for the six months ended June 30, 2024. The effective income tax rate for the six months ended June 30, 2025 and the six months ended June 30, 2024 was above the U.S. federal statutory rate of 21% primarily due to the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code, the accrual of various state income taxes and the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, partially offset by the recognition of income tax benefits associated with share-based payments.

Net income for the six months ended June 30, 2025, was $94.1 million compared to $80.3 million for the six months ended June 30, 2024. Diluted net income per share for the six months ended June 30, 2025 and June 30, 2024, was $0.55 and $0.46, respectively. The year-over-year change is the result of the factors described above. Net income from discontinued operations, net of tax, was $3.0 million for the six months ended June 30, 2025 compared to $1.0 million for the six months ended June 30, 2024. Diluted net income per share from discontinued operations for the six months ended June 30, 2025 and June 30, 2024, was $0.02 and $0.01, respectively.

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 excludes the impact of mergers and acquisitions, 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 mergers and acquisitions and divestitures because the nature, size and number can vary dramatically from period to period and between us and our peers, and can also obscure underlying business trends and make comparisons of long-term performance difficult. We exclude the effect of foreign currency translation from this measure because the volatility of currency translation is not under management's control.

EBITDA 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 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). "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 in the "Covenant Compliance" section. 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. 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 added back in calculating Adjusted EBITDA can represent the reduction of cash that could be used for other corporate purposes. Further, although not included in the calculation of Adjusted EBITDA in the "Covenant Compliance" section below, the measure may at times allow us to add estimated cost savings and operating synergies related to operational changes ranging from mergers, acquisitions or dispositions to restructuring, and/or exclude one-time transition expenditures that we anticipate incurring to realize cost savings before such savings have occurred.

The calculation of Adjusted EBITDA under our credit agreement as of June 30, 2025, is presented in the table in the "Covenant Compliance" section 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. For the six months ended June 30, 2025, we reported net income of $94.1 million and Adjusted EBITDA for the same period of $215.9 million. See "Covenant Compliance" for a reconciliation of Adjusted EBITDA to GAAP net income.

Our credit agreement, which governs our senior secured credit facilities, contains, among other provisions, restrictive covenants regarding indebtedness, payments and distributions, mergers and acquisitions, asset sales, affiliate transactions, capital expenditures and the maintenance of certain financial ratios. Payment of borrowings under the credit agreement may be accelerated if there is an event of default. Events of default include the failure to pay principal and interest when due, a material breach of a representation or warranty, certain non-payments or defaults under other indebtedness, covenant defaults, events of bankruptcy and a change of control. Certain covenants contained in the credit agreement restrict our ability to take certain actions, such as incurring additional debt or making acquisitions, if we are unable to meet a maximum total Net First Lien Leverage Ratio (consolidated indebtedness to Adjusted EBITDA) of 5.00 to 1.00 as of the end of each fiscal quarter. As of June 30, 2025, our Net First Lien Leverage Ratio was 0.79 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.

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

(in millions)			Six months ended June 30, 2024						Twelve months ended December 31, 2024						Six months ended June 30, 2025						Twelve months ended June 30, 2025
Net income			$	80.3					$	160.2					$	94.1					$	174.0
Income from discontinued operations, net of tax (1)			(1.0)						(1.3)						(3.0)						(3.3)
Provision for income taxes			25.5						48.1						32.9						55.5
Actuarial gain on pension and postretirement benefit obligations			—						(1.4)						—						(1.4)
Other expense, net (2)			3.0						5.9						2.0						4.9
Interest expense, net			17.3						33.1						15.0						30.8
Depreciation and amortization			43.3						88.3						44.8						89.8
EBITDA			168.4						332.9						185.8						350.3
Adjustments to EBITDA
Restructuring and other similar charges (3)			7.0						13.5						3.6						10.1
Stock-based compensation expense			19.4						37.9						19.5						38.0
Last-In, First-Out ("LIFO") adjustments (4)			(0.9)						5.5						7.0						13.4
Other, net (5)			0.4						0.6						—						0.2
Subtotal of adjustments to EBITDA			25.9						57.5						30.1						61.7
Adjusted EBITDA			$	194.3					$	390.4					$	215.9					$	412.0
Consolidated indebtedness (6)																					$	326.6
Net First Lien Leverage Ratio (7)																					0.79

(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 consists primarily of gains and losses from foreign currency transactions, the non-service cost components of net periodic benefit costs associated with our defined benefit plans and other non-operational gains and losses as defined in our credit agreement.

(3)In accordance with the terms in our credit agreement, restructuring and other similar charges is comprised of costs associated with workforce reductions, asset impairments, lease termination costs, and other facility rationalization costs.  See Item 1, Note 2, Restructuring and Other Similar Charges for more information.

(4)Last-In, First-Out ("LIFO") 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 per the credit agreement.

(6)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 $169.3 million (as defined by the credit agreement) at June 30, 2025.

(7)Our credit agreement defines the Net First Lien Leverage Ratio as the ratio of consolidated indebtedness (as described above) to Adjusted EBITDA for the trailing four fiscal quarters.

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, 2025, we had $201.9 million of cash and cash equivalents and $189.9 million of additional borrowing capacity under our revolving credit facility. As of June 30, 2025, the available borrowings under our credit facility were reduced by $10.1 million due to outstanding letters of credit. As of December 31, 2024, we had $198.0 million of cash and cash equivalents and $188.7 million of additional borrowing capacity under our revolving credit facility. As of December 31, 2024, the available borrowings under our credit facility were reduced by $11.3 million due to outstanding letters of credit.

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

Net cash provided by operating activities was $153.5 million and $139.0 million during the six months ended June 30, 2025 and 2024, respectively. The change in year-over-year operating cash flows was primarily the result of an increase in net income during the six months ended June 30, 2025.

Cash used for investing activities was $13.3 million during the six months ended June 30, 2025 and $7.0 million during the six months ended June 30, 2024. Investing activities during the six months ended June 30, 2025, consisted of $13.3 million of capital expenditures. Investing activities during the six months ended June 30, 2024, consisted of $8.6 million of capital expenditures, which were partially offset by $1.6 million from the sale of certain long-lived assets.

Cash used for financing activities was $138.7 million during the six months ended June 30, 2025, compared to $104.2 million during the six months ended June 30, 2024. During the six months ended June 30, 2025, we utilized $0.4 million of cash for payments on finance leases, $109.9 million to repurchase outstanding shares of our common stock, and $30.3 million for the payment of common stock dividends, which was partially offset by $1.9 million of proceeds from the exercise of stock options and ESPP contributions, net of taxes withheld and paid on employees' share-based awards. During the six months ended June 30, 2024, we utilized $0.4 million of cash for payments on finance leases, $79.9 million to repurchase outstanding shares of our common stock, and $27.7 million for the payment of common stock dividends, which was partially offset by $3.8 million of proceeds from the exercise of stock options.

As of June 30, 2025, we had $495.9 million of total indebtedness outstanding as follows (in millions):

						Total Debt at June 30, 2025						Current Maturities of Debt						Long-term Portion
Term loan (1)						$	475.7					$	—					$	475.7
Finance leases						20.2						0.8						19.4
Total						$	495.9					$	0.8					$	495.1

(1)Includes unamortized original issue discount and debt issuance costs of $4.7 million at June 30, 2025.

See Item 1, Note 12, Long-Term Debt for a description of our outstanding indebtedness.

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.

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 and 15d-15 of the Exchange Act. Based on that evaluation as of June 30, 2025, 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.

ITEM  1.    LEGAL PROCEEDINGS

See the information under the heading "Commitments and Contingencies" in Note 14 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  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 approved increasing the remaining share repurchase authority under the Repurchase Program to $300.0 million. On February 8, 2023, the Company's Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $500.0 million. 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 of Directors. During the three months ended June 30, 2025, the Company repurchased 972,619 shares of common stock at a total cost of $32.5 million at an average price of $33.41 per share. The repurchased shares were canceled by the Company upon receipt. The remaining repurchase authority under the Repurchase Program at June 30, 2025 was $130.3 million.