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Zurn Elkay Water Solutions Corp. – ‘10-Q’ for 9/30/22 – ‘R19’

On:  Tuesday, 10/25/22, at 4:55pm ET   ·   For:  9/30/22   ·   Accession #:  1439288-22-135   ·   File #:  1-35475

Previous ‘10-Q’:  ‘10-Q’ on 7/26/22 for 6/30/22   ·   Next:  ‘10-Q’ on 4/25/23 for 3/31/23   ·   Latest:  ‘10-Q’ on 4/23/24 for 3/31/24   ·   1 Reference:  To:  Zurn Elkay Water Solutions Corp. – ‘8-K’ on / for 7/1/22

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  As Of               Filer                 Filing    For·On·As Docs:Size

10/25/22  Zurn Elkay Water Solutions Corp.  10-Q        9/30/22   97:9.3M

Quarterly Report   —   Form 10-Q

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML   1.66M 
 2: EX-10.4     Material Contract                                   HTML     30K 
 3: EX-10.5     Material Contract                                   HTML     41K 
 4: EX-10.6     Material Contract                                   HTML     40K 
 5: EX-31.1     Certification -- §302 - SOA'02                      HTML     29K 
 6: EX-31.2     Certification -- §302 - SOA'02                      HTML     29K 
 7: EX-32.1     Certification -- §906 - SOA'02                      HTML     27K 
13: R1          Cover Page                                          HTML     77K 
14: R2          Condensed Consolidated Balance Sheets               HTML    134K 
15: R3          Condensed Consolidated Balance Sheets               HTML     34K 
                (Parenthetical)                                                  
16: R4          Condensed Consolidated Statements of Operations     HTML    136K 
17: R5          Condensed Consolidated Statements of Comprehensive  HTML     53K 
                Income                                                           
18: R6          Condensed Consolidated Statements of Cash Flows     HTML    104K 
19: R7          Basis of Presentation and Significant Accounting    HTML     36K 
                Policies                                                         
20: R8          Acquisitions                                        HTML     58K 
21: R9          Restructuring and Other Similar Charges             HTML     54K 
22: R10         Discontinued Operations                             HTML     73K 
23: R11         Revenue Recognition                                 HTML     66K 
24: R12         Income Taxes                                        HTML     38K 
25: R13         Earnings per Share                                  HTML     29K 
26: R14         Stockholders' Equity                                HTML    166K 
27: R15         Accumulated Other Comprehensive Loss                HTML     51K 
28: R16         Inventories                                         HTML     35K 
29: R17         Goodwill and Intangible Assets                      HTML     59K 
30: R18         Other Current Liabilities                           HTML     43K 
31: R19         Long-Term Debt                                      HTML     43K 
32: R20         Fair Value Measurements                             HTML     59K 
33: R21         Commitments and Contingencies                       HTML     41K 
34: R22         Retirement Benefits                                 HTML     58K 
35: R23         Stock-Based Compensation                            HTML     36K 
36: R24         Leases                                              HTML    185K 
37: R25         Subsequent Events                                   HTML     27K 
38: R26         Basis of Presentation and Significant Accounting    HTML     51K 
                Policies (Policies)                                              
39: R27         Acquisitions (Tables)                               HTML     50K 
40: R28         Restructuring and Other Similar Charges (Tables)    HTML     55K 
41: R29         Discontinued Operations (Tables)                    HTML     74K 
42: R30         Revenue Recognition (Tables)                        HTML     54K 
43: R31         Stockholders' Equity (Tables)                       HTML    160K 
44: R32         Accumulated Other Comprehensive Loss (Tables)       HTML     52K 
45: R33         Inventories (Tables)                                HTML     36K 
46: R34         Goodwill and Intangible Assets (Tables)             HTML     93K 
47: R35         Other Current Liabilities (Tables)                  HTML     43K 
48: R36         Long-Term Debt (Tables)                             HTML     36K 
49: R37         Fair Value Measurements (Tables)                    HTML     75K 
50: R38         Commitments and Contingencies (Tables)              HTML     35K 
51: R39         Retirement Benefits (Tables)                        HTML     53K 
52: R40         Stock-Based Compensation (Tables)                   HTML     34K 
53: R41         Leases (Tables)                                     HTML    120K 
54: R42         Basis of Presentation and Significant Accounting    HTML     29K 
                Policies (Details)                                               
55: R43         Acquisitions - Narrative (Details)                  HTML     98K 
56: R44         Acquisitions - Assets Acquired and Liabilities      HTML     73K 
                Assumed (Details)                                                
57: R45         Acquisitions - Pro Forma Financial Information      HTML     38K 
                (Details)                                                        
58: R46         Restructuring and Other Similar Charges - By        HTML     33K 
                Operating Segment (Details)                                      
59: R47         Restructuring and Other Similar Charges -           HTML     52K 
                Restructuring Reserve (Details)                                  
60: R48         Discontinued Operations - Narrative (Details)       HTML     33K 
61: R49         Discontinued Operations - Loss From Discontinued    HTML     70K 
                Operations (Details)                                             
62: R50         Discontinued Operations - Other Significant         HTML     62K 
                Operating Non-Cash Items (Details)                               
63: R51         Revenue Recognition - Revenue Disaggregated by      HTML     44K 
                Customer Type and Geography (Details)                            
64: R52         Revenue Recognition - Narrative (Details)           HTML     44K 
65: R53         Income Taxes (Details)                              HTML     40K 
66: R54         Earnings per Share (Details)                        HTML     28K 
67: R55         Stockholders' Equity - Roll Forward (Details)       HTML    113K 
68: R56         Stockholders' Equity - Narrative (Details)          HTML     39K 
69: R57         Accumulated Other Comprehensive Loss - Changes in   HTML     50K 
                Accumulated Other Comprehensive Income (Loss)                    
                (Details)                                                        
70: R58         Accumulated Other Comprehensive Loss -              HTML     44K 
                Reclassifications Out of Accumulated Other                       
                Comprehensive Loss (Details)                                     
71: R59         Inventories (Details)                               HTML     38K 
72: R60         Goodwill and Intangible Assets - Changes in Net     HTML     36K 
                Carrying Value (Details)                                         
73: R61         Goodwill and Intangible Assets - Gross Carrying     HTML     53K 
                Amount and Accumulated Amortization (Details)                    
74: R62         Goodwill and Intangible Assets - Narrative          HTML     50K 
                (Details)                                                        
75: R63         Other Current Liabilities (Details)                 HTML     54K 
76: R64         Long-Term Debt - Summary of Debt (Details)          HTML     42K 
77: R65         Long-Term Debt - Narrative (Details)                HTML     67K 
78: R66         Fair Value Measurements - Schedule of Assets and    HTML     38K 
                Liabilities Measured on Recurring and Nonrecurring               
                Basis (Details)                                                  
79: R67         Fair Value Measurements - Identifiable Intangible   HTML     35K 
                Assets (Details)                                                 
80: R68         Fair Value Measurements - Narrative (Details)       HTML     27K 
81: R69         Commitments and Contingencies - Warranty Liability  HTML     34K 
                (Details)                                                        
82: R70         Commitments and Contingencies - Narrative           HTML     42K 
                (Details)                                                        
83: R71         Retirement Benefits - Schedule of Components of     HTML     48K 
                Net Periodic Benefit Cost (Details)                              
84: R72         Retirement Benefits - Narrative (Details)           HTML     31K 
85: R73         Stock-Based Compensation - Narrative (Details)      HTML     27K 
86: R74         Stock-Based Compensation - Stock Options,           HTML     42K 
                Restricted Stock Units, and Performance Stock                    
                Units (Details)                                                  
87: R75         Leases - ROU Assets and Lease Liability Balances    HTML     57K 
                (Details)                                                        
88: R76         Leases - Components of Lease Expense (Details)      HTML     40K 
89: R77         Leases - Future Minimum Lease Payments (Details)    HTML     64K 
90: R78         Leases - Weighted-Average Remaining Lease Terms     HTML     36K 
                (Details)                                                        
91: R79         Leases - Supplemental Cash Flow Information         HTML     39K 
                (Details)                                                        
92: R80         Subsequent Events (Details)                         HTML     28K 
95: XML         IDEA XML File -- Filing Summary                      XML    173K 
93: XML         XBRL Instance -- zws-20220930_htm                    XML   2.46M 
94: EXCEL       IDEA Workbook of Financial Reports                  XLSX    163K 
 9: EX-101.CAL  XBRL Calculations -- zws-20220930_cal                XML    266K 
10: EX-101.DEF  XBRL Definitions -- zws-20220930_def                 XML    534K 
11: EX-101.LAB  XBRL Labels -- zws-20220930_lab                      XML   1.71M 
12: EX-101.PRE  XBRL Presentations -- zws-20220930_pre               XML    969K 
 8: EX-101.SCH  XBRL Schema -- zws-20220930                          XSD    172K 
96: JSON        XBRL Instance as JSON Data -- MetaLinks              457±   678K 
97: ZIP         XBRL Zipped Folder -- 0001439288-22-000135-xbrl      Zip    416K

‘R19’   —   Long-Term Debt

This is an IDEA Financial Report.  [ Alternative Formats ]

 
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Long-Term Debt
 9 Months Ended
Debt Disclosure [Abstract]  
Long-Term Debt Long-Term Debt
Long-term debt is summarized as follows (in millions):
September 30, 2022December 31, 2021
Term loan (1)$536.3 $539.2 
Finance leases (2)0.7 0.3 
Total537.0 539.5 
Less current maturities5.7 5.6 
Long-term debt$531.3 533.9 
____________________
(1)Includes unamortized debt issuance costs of $9.6 million and $10.8 million at September 30, 2022 and December 31, 2021, respectively.
(2)Refer to Note 18, Leases, 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 September 30, 2022, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.
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.
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 1.61 to 1.00 as of September 30, 2022, as such, the Company expects the applicable margin for LIBOR borrowings to decrease by 0.25% to 2.00% on a go forward basis.
At September 30, 2022 and for the nine months then ended, the borrowings under the Term Loan had weighted-average effective interest rates of 5.39% and 4.41%, 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 1.61 to 1.00 as of September 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 September 30, 2022 and December 31, 2021, there were no amounts borrowed under the Revolving Credit Facility. As of September 30, 2022 and December 31, 2021, $7.6 million and $6.1 million of the Revolving Credit Facility was considered utilized in connection with outstanding letters of credit, respectively.
Finance Leases and Other Subsidiary Debt
At September 30, 2022 and December 31, 2021, the Company had finance lease obligations of $0.7 million and $0.3 million, respectively. See Note 18, Leases for further information regarding leases.

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
10/4/28
10/2/26
Filed on:10/25/228-K
For Period end:9/30/22
7/1/223,  4,  8-K,  8-K/A
12/31/2110-K,  11-K,  8-K,  SD
10/4/214,  8-K
 List all Filings 

1 Previous Filing that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 7/01/22  Zurn Elkay Water Solutions Corp.  8-K:1,2,5,8 7/01/22   16:2.3M                                   Toppan Merrill/FA
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Filing Submission 0001439288-22-000135   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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