Table of determining the proper balances of such valuation allowances. Future changes to the balances of these valuation allowances, as a result of our continued review and analysis, could result in a material impact to the financial statements for such period of change.Contents

Net income attributable to Zurn

Net income attributable to Zurn during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, was $187.3 million compared to $109.5 million during the nine months ended September 30, 2020. Diluted net income per share attributable to Zurn for the nine months ended September 30, 2021 and September 30, 2020, was ~~$50.1 million~~$1.50 and ~~$28.6 million,~~$0.89, respectively, as a result of the factors described above. ~~Diluted net income per share was $0.40 during the three months ended March 31, 2021, as compared to diluted net income per share of $0.23 during the three months ended March 31, 2020.~~

~~Net income attributable to Rexnord~~

Net income attributable to Rexnord during the three months ended March 31, 2021, was $50.0 million compared to $28.5 million during the three months ended March 31, 2020. Diluted net income per share attributable to Rexnord for the three months ended March 31, 2021 and March 31, 2020, was $0.40 and $0.23, respectively, as a result of the factors described above.

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Non-GAAP Financial Measures

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

Core sales

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

EBITDA

EBITDA represents earnings from continuing operations 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 U.S. 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 U.S. GAAP. Because EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business.

Adjusted EBITDA

Adjusted EBITDA (as described below in “Covenant Compliance”) is an important measure because, under our credit agreement, our ability to incur certain types of acquisition debt and certain types of subordinated debt, make certain types of acquisitions or asset exchanges, operate our business and make dividends or other distributions, all of which will impact our financial performance, is impacted by our Adjusted EBITDA, as our lenders measure our performance with a net first lien leverage ratio by comparing our senior secured bank indebtedness to our Adjusted EBITDA (see “Covenant Compliance” for additional discussion of this ratio, including a reconciliation to our net income). We reported net income attributable to ~~Rexnord~~Zurn in the ~~three~~nine months ended ~~March 31,~~September 30, 2021, of ~~$50.0~~$187.3 million and Adjusted EBITDA for the same period of ~~$120.2~~$381.5 million. See “Covenant Compliance” for a reconciliation of Adjusted EBITDA to net income attributable to ~~Rexnord.~~Zurn.

Covenant Compliance

Our credit agreement, which governs our senior secured credit facilities, contains, among other provisions, restrictive covenants regarding indebtedness, payments and distributions, mergers and acquisitions, asset sales, affiliate transactions, capital expenditures and the maintenance of certain financial ratios. Payment of borrowings under the credit agreement may be accelerated if there is an event of default. Events of default include the failure to pay principal and interest when due, a material breach of a representation or warranty, certain non-payments or defaults under other indebtedness, covenant defaults, events of bankruptcy and a change of control. Certain covenants contained in the credit agreement restrict our ability to take certain actions, such as incurring additional debt or making acquisitions, if we are unable to meet a maximum total net leverage ratio of 6.75 to 1.0 as of the end of each fiscal quarter. At ~~March 31,~~September 30, 2021, our net leverage ratio was ~~2.2~~1.7 to 1.0. 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.

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

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

The calculation of Adjusted EBITDA under our credit agreement as of ~~March 31,~~September 30, 2021, is presented in the table below. However, the results of such calculation could differ in the future based on the different types of adjustments that may be included in such respective calculations at the time.

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

(in millions) Nine months ended
December 31, 2020 Three months ended March 31, 2021 Twelve months ended March 31, 2021
Net income attributable to Rexnord $ 118.2 $ 50.0 $ 168.2
Non-controlling interest income 0.4 0.1 0.5
Equity method investment income (0.2) (0.1) (0.3)
Income tax provision 36.3 17.2 53.5
Actuarial loss on pension and postretirement benefit obligations 1.6 — 1.6
Other (income) expense, net (1) (4.5) 0.4 (4.1)
Interest expense, net 36.6 11.0 47.6
Depreciation and amortization 67.0 23.5 90.5
EBITDA 255.4 102.1 357.5
Adjustments to EBITDA:
Restructuring and other similar charges (2) 14.6 0.6 15.2
Stock-based compensation expense 36.6 14.8 51.4
Last-in first-out inventory adjustments (3) — 1.9 1.9
Acquisition-related fair value adjustment 1.2 0.6 1.8
Other, net (4) (0.3) 0.2 (0.1)
Subtotal of adjustments to EBITDA 52.1 18.1 70.2
Adjusted EBITDA $ 307.5 $ 120.2 $ 427.7
Pro forma adjustment for acquisitions (5) 5.1
Pro forma Adjusted EBITDA 432.8
Consolidated indebtedness (6) $ 957.6
Total net leverage ratio (7) 2.2


(in millions)	Six months ended September 30, 2020		Nine months ended December 31, 2020		Nine months ended September 30, 2021		Twelve months ended September 30, 2021
Net income attributable to Zurn	$	81.0	$	118.2	$	187.3	$	224.5

Non-controlling interest income	0.2		0.4		0.2		0.4
Income from discontinued operations, net of tax	—		—		(3.8)		(3.8)
Equity method investment income	—		(0.2)		(0.3)		(0.5)
Income tax provision	33.3		36.3		55.6		58.6
Actuarial loss on pension and postretirement benefit obligations	—		1.6		—		1.6
Other income, net (1)	(1.0)		(4.5)		(0.6)		(4.1)

Interest expense, net	24.9		36.6		33.7		45.4
Depreciation and amortization	44.0		67.0		69.4		92.4
EBITDA	182.4		255.4		341.5		414.5
Adjustments to EBITDA:
Restructuring and other similar charges (2)	8.3		14.6		3.7		10.0

Stock-based compensation expense	20.7		36.6		38.3		54.2
Last-in first-out inventory adjustments (3)	(0.5)		—		7.5		8.0
Acquisition-related fair value adjustment	0.9		1.2		0.6		0.9
Other, net (4)	(0.2)		(0.3)		(10.1)		(10.2)
Subtotal of adjustments to EBITDA	29.2		52.1		40.0		62.9
Adjusted EBITDA	$	211.6	$	307.5	$	381.5	$	477.4
Pro forma adjustment for acquisitions (5)							1.7
Pro forma Adjusted EBITDA							479.1
Consolidated indebtedness (6)							$	795.7
Total net leverage ratio (7)							1.7

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

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

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

(4)Other, net for the periods indicated, consists ~~primarily~~ of gains and losses on the disposition of long-lived assets.

(5)Represents a pro forma adjustment to include Adjusted EBITDA related to the acquisition of Hadrian, which was permitted by our credit agreement. The pro forma adjustment includes the period from ~~April~~October 1, 2020, through the date of the Hadrian acquisition. See Item 1, Note 2, Acquisitions and Divestiture for more information.

(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 ~~$234.2~~$396.1 million (as defined by the credit agreement) at ~~March 31,~~September 30, 2021.

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

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Liquidity and Capital Resources

Our primary sources of liquidity are available cash and cash equivalents, cash flow from operations, and borrowing availability of up to $264.0 million under our revolving credit facility. As of March 31, 2021, we also had availability of up to $100.0 million under our accounts receivable securitization program; however, on April 16, 2021, we provided notice of our election to terminate this program as of May 17, 2021.

As of ~~March 31,~~September 30, 2021, we had ~~$307.3~~$477.6 million of cash and cash equivalents and ~~$355.8~~$255.8 million of additional borrowing ~~capacity ($263.3 million of available borrowings under our revolving credit facility and $92.5 million available under our accounts receivable securitization program).~~capacity. As of ~~March 31,~~September 30, 2021, the available borrowings under our credit facility ~~and accounts receivable securitization~~ were reduced by $8.2 million due to outstanding letters of credit. As of December 31, 2020, we had $255.6 million of cash and cash equivalents and approximately $339.2 million of additional borrowing capacity ($261.0 million of available borrowings under our revolving credit facility and $78.2 million available under our accounts receivable securitization program).

Our revolving credit facility is available to fund our working capital requirements, capital expenditures and for other general corporate purposes.

~~In the three months ended March 31,~~On October 4, 2021, ~~the Company and Land Newco,~~RBS Global, Inc., a ~~wholly-owned indirect subsidiary of~~Delaware corporation renamed “ZBS Global, Inc.” on October 4, 2021 (“Holdings”), Zurn Holdings, Inc., a Delaware corporation (“Zurn Holdings”), Rexnord LLC, a Delaware limited liability company renamed “Zurn LLC” on October 4, 2021 (“Zurn” and, together with Zurn Holdings, the ~~Company (“Land”~~“Borrowers”), ~~each~~the lenders from time to time party thereto (“Lenders”), and Credit Suisse AG, Cayman Islands Branch, as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders entered into a ~~debt commitment letter with various~~Fourth Amended and Restated First Lien Credit Agreement (the “Restated Credit Agreement”).

The Restated Credit Agreement amends and restates in its entirety the Third Amended and Restated First Lien Credit Agreement, dated as of August 21, 2013, by and among Chase Acquisition I, Inc., a Delaware corporation, Holdings, Zurn, the several lenders ~~in connection with~~party thereto from time to time and the ~~proposed transaction with Regal disclosed in Item 1, Note 1, Basis~~Administrative Agent, as administrative agent thereunder (the “Existing Credit Agreement”). Pursuant to the Restated Credit Agreement, the Lenders have provided to the Borrowers (i) a $550 million Term B Loan (the “Term B Loan”) and (ii) a $200 million revolving line of ~~Presentation~~credit under which the Borrowers may borrow revolving credit loans and ~~Significant Accounting Policies. The lenders committed~~multicurrency swing loans (subject to ~~provide us with up~~certain sublimits) and cause to ~~$708.0 million~~be issued letters of credit (subject to certain sublimits), in an aggregate principal amount not to exceed $200 million outstanding at any time. The maturity date for the revolving line of ~~senior term loans under a senior secured~~credit is October 4, 2026 and the maturity date of the term loan ~~facility~~is October 4, 2028. The Restated Credit Agreement also makes certain other technical changes to the Existing Credit Agreement, such as modifying provisions related to the potential future replacement of the London Interbank Offered Rate (“LIBOR”).

In addition, the DDTL Facility discussed in Item 1 Note 12, Long-Term Debt, was drawn in connection with the consummation of the Transactions in order to fund the Land Cash Payment from Land to Rexnord LLC of approximately $486.6 million pursuant the terms of the Separation Agreement entered into in connection with the Transaction.

The proceeds of the term loan were, together with the Land Cash Payment and upcash on hand, used to ~~$200.0~~(i) repay in full the $625.0 million ~~in an~~ aggregate principal amount of ~~senior revolving~~term B loans outstanding under the Existing Credit Agreement, together with accrued interest thereon, (ii) redeem the $500.0 million outstanding principal amount of 4.875% Senior Notes due 2025 issued by Holdings and Zurn pursuant to an Indenture dated as of December 7, 2017, among Holdings, Zurn, the guarantors named therein and Wells Fargo Bank, National Association, as Trustee, at a ~~senior~~redemption price equal to 102.438% of the principal amount thereof plus accrued and unpaid interest and (iii) pay related fees and expenses.

The obligations under the Restated Credit Agreement and related documents are secured ~~revolving credit facility. The lenders committed~~by liens on substantially all of the assets of Holdings, the Borrowers, and certain subsidiaries of the Borrowers pursuant to ~~provide bridge loans~~a Third Amended and Restated Guarantee and Collateral Agreement, dated as of ~~up to approximately $486.8 million under a 364-day senior bridge loan facility to Land to be used to pay~~October 4, 2021, among Holdings, the ~~dividend required in connection with~~Borrowers, the ~~transaction. If~~subsidiaries of the ~~proposed transaction with Regal is consummated,~~Borrowers party thereto, and the ~~indebtedness contemplated by the commitment letter with Land will become indebtedness of a wholly-owned subsidiary of Regal.~~Administrative Agent (the “Restated Guarantee and Collateral Agreement”), and certain other collateral documents.

Cash Flows

Cash provided by operating activities was ~~$71.3~~$245.8 million and ~~$123.9~~$237.7 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Higher trade working capital and the impact of timing of payments on accrued expenses were partially offset by higher net income generated during the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

Cash used for investing activities was ~~$8.1~~$6.5 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$74.1~~$81.6 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2020. Investing activities during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, primarily included ~~$9.2~~$21.6 million of capital expenditures and $3.4 million for the acquisition of ATS GREASEwatch, partially offset by the receipt of ~~$0.7~~$18.5 million in connection with the sale of certain long-lived assets. Investing activities during the ~~three~~nine months ended ~~March 31,~~September 30, 2020, included ~~$15.9~~$31.2 million of capital expenditures and $59.4 million for the acquisition of Just Manufacturing, partially offset by the receipt of ~~$1.2~~$9.0 million in connection with the sale of certain long-lived assets.

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Cash used for financing activities was ~~$9.4~~$13.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to ~~cash provided by financing activities of $253.4~~$108.8 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2020. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we utilized ~~$0.5~~$1.7 million of cash for payments on outstanding debt, ~~$10.8~~$32.6 million for the payment of common stock dividends and $0.9 million to repurchase shares of common stock. The ~~three~~nine months ended ~~March 31,~~September 30, 2021, also includes ~~$2.8~~$23.5 million of cash proceeds associated with stock option ~~exercises.~~exercises, partially offset by $1.4 million of cash used for the payment of withholding taxes on employees' share-based awards. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we ~~borrowed~~utilized a net ~~$324.7~~$1.1 million under our credit facilities and we utilized ~~$9.8~~$29.0 million for the payment of common stock dividends and ~~$80.7~~$95.7 million to repurchase common stock. The ~~three~~nine months ended ~~March 31,~~September 30, 2020, also includes ~~$19.2~~$26.4 million of cash proceeds associated with stock option ~~exercises.~~exercises, partially offset by $9.4 million of cash used for the payment of withholding taxes on employees' share-based awards.

Indebtedness

As of ~~March 31,~~September 30, 2021, we had $1,191.8 million of total indebtedness outstanding as follows (in millions):

Total Debt at March 31, 2021 Current Maturities of Debt Long-term
Portion
Term loan (1) $ 621.7 $ — $ 621.7
4.875% Senior Notes due 2025 (2) 496.5 — 496.5
Finance leases and other subsidiary debt 73.6 2.5 71.1
Total $ 1,191.8 $ 2.5 $ 1,189.3


	Total Debt at September 30, 2021		Current Maturities of Debt		Long-term Portion
Term loan (1)	$	622.2	$	—	$	622.2
4.875% Senior Notes due 2025 (2)	496.9		—		496.9


Finance leases and other subsidiary debt	72.7		2.5		70.2
Total	$	1,191.8	$	2.5	$	1,189.3

(1)Includes unamortized debt issuance costs of ~~$3.3~~$2.8 million at ~~March 31,~~September 30, 2021.

(2)Includes unamortized debt issuance costs of ~~$3.5~~$3.1 million at ~~March 31,~~September 30, 2021.

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ITEM 3. �� QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk during the normal course of business from changes in foreign currency exchange rates and interest rates. The exposure to these risks is managed through a combination of normal operating and financing activities and derivative financial instruments in the form of foreign currency forward contracts, interest rate swaps and interest rate caps to cover certain known foreign currency transactional risks, as well as identified risks due to interest rate fluctuations. There have been no material changes in market risk from the information provided in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our Transition Report on Form 10-K for the Transition Period ended December 31, 2020.

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ITEM 4. CONTROLS AND PROCEDURES

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

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Based on that evaluation as of ~~March 31,~~September 30, 2021, the Chief Executive Officer and Chief Financial Officer concluded that, as of such date, the Company's disclosure controls and procedures are adequate and effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, in a manner allowing timely decisions regarding required disclosure. As such, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the period covered by this report.

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

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

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See the information under the heading "Commitments and Contingencies" in Note 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 1A. RISK FACTORS

In addition to the risks and uncertainties discussed in this quarterly report on Form 10-Q, particularly those disclosed in the MD&A, see Part I, Item 1A, “Risk Factors,” in the Company’s Transition Report on Form 10-K for the Transition Period ended December 31, 2020. There have been no material changes to the Risk Factors except as set forth below:

Risks Related to the Transactions with Regal Beloit Corporation

We and Regal may be unable to satisfy the conditions or obtain the approvals required to complete the expected spin-off of the Process & Motion Control segment (the “Spin-Off”) and related transactions (collectively, the “Transactions”).

The consummation of the Transactions is subject to numerous conditions, including consummation of certain transactions contemplated by the Agreement and Plan of Merger, dated as of February 15, 2021 (the “Merger Agreement”) and the Separation and Distribution Agreement, dated as of February 15, 2021 (the “Separation Agreement”), the receipt of the approval of our stockholders and Regal’s shareholders, the receipt of regulatory approvals, and other closing conditions. Neither we nor Regal can make any assurances that the Transactions will be consummated on the terms or timeline currently contemplated, or at all. Both we and Regal have ~~and will continue to expend time and resources and incur expenses related to the Transactions.~~

Governmental agencies may not approve the Transactions or may impose conditions to the approval of the Transactions or require changes to the terms of the Transactions. Any such conditions or changes could have the effect of delaying completion of the Transactions, imposing costs on or limiting the revenues of the combined company following the completion of the Transactions or otherwise reducing the anticipated benefits of the Transactions. Certain conditions or changes might cause us and/or Regal to restructure or terminate the Transactions.

Both Regal and Land Newco, Inc., a wholly-owned indirect subsidiary of the Company (“Land”), are expected to need to obtain debt financing to complete the Transactions. Although commitment letters have been obtained from various lenders, the obligations of the lenders under the commitment letters are subject to the satisfaction or waiver of customary conditions, including, among others, the absence of any material adverse effect. Accordingly, there can be no assurance that these conditions will be satisfied or, if not satisfied, waived by the lenders. If Regal or Land is not able to obtain alternative financing on commercially reasonable terms, it could prevent the consummation of the Transactions.

~~We will incur~~incurred significant costs related to the Transactions that could have an adverse effect on our liquidity, cash flows and operating results.

We ~~expect to incur~~have incurred significant one-time costs in connection with the Transactions, including the cost of financing and other transaction costs, integration costs, and other costs that our management team believes are necessary to realize the anticipated synergies from the Transactions. ~~In connection with the termination of the Merger Agreement under certain specified circumstances, we may be required to pay Regal a termination fee of $150 million.~~ The incurrence of these costs could have a material adverse effect on our liquidity, cash flows and operating results in the periods in which they are incurred.

The market price of our common stock may decline as a result of the Transactions and the market price of our common stock after the consummation of the Transactions may be affected by factors different from those affecting the price of our common stock before the Transactions.

The market price of our common stock may decline as a result of the Transactions if we do not achieve the perceived benefits of the Transactions or if the effect of the Transactions on our financial results are not consistent with the expectations of financial or industry analysts. Our results of operations, as well as the market price of our common stock after the Transactions, may be affected by factors in addition to those currently affecting our results of operations and the market price of our common stock and other differences in assets and capitalization. Accordingly, our historical market price and financial results may not be indicative of these matters after the consummation of the Transactions.

~~The pendency of the Transactions could adversely affect our business and operations.~~

In connection with the pending Transactions, some of our current or prospective customers, borrowers, managers or vendors may delay or defer decisions related to their business dealings with us, which could negatively impact our revenues, earnings, cash flows and expenses, regardless of whether the Transactions are consummated. In addition, under the Merger Agreement, we and Regal with respect to the Process & Motion Control business are each subject to certain restrictions on the

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conduct of our respective business prior to completing the Transactions. These restrictions may prevent us from taking certain actions with respect to capital stock or equity awards, amending organizational documents, taking certain actions with respect to material contracts and benefit plans, pursuing certain strategic transactions, acquiring and disposing assets, undertaking certain capital projects, undertaking certain financing transactions or incurring certain indebtedness, changing accounting or tax filing practices, settling certain legal proceedings, failing to maintain insurance, abandoning or selling certain material intellectual property and otherwise pursuing other actions that are not in the ordinary course of business, even if such actions could prove beneficial. These restrictions may impede our growth which could negatively impact our revenue, earnings and cash flows. Additionally, the pendency of the Transactions may make it more difficult for us to effectively retain and incentivize key personnel.

If the Reorganization and the Distributions do not qualify as tax-free under Sections 355 and 368(a) of the Internal Revenue Code (the “Code”), including as a result of an error in the determination of overlap shareholders or subsequent acquisitions of our common stock, then our stockholders may be required to pay substantial U.S. federal income taxes, and Land (guaranteed by Regal) may be obligated to indemnify us for such taxes imposed on us.

The obligation of us and Land Newco, Inc., a previously wholly owned indirect subsidiary of the Company (“Land”) to complete the Transactions iswas conditioned on receipt of a tax opinion , which ~~will include~~included an opinion to the effect that our transfer to Land of substantially all of the assets, and Land’s assumption from Rexnord of substantially all of the liabilities, of the Process & Motion Control business (the “Reorganization”), together with the series of distributions of all of the issued and outstanding shares of Land common stock from an indirect subsidiary of Rexnord to our ~~stockholders.(the~~stockholders (the “Distributions”), ~~will qualify~~qualified as tax-free to us, Land and our stockholders, as applicable, for U.S. federal income tax purposes (collectively, the “Rexnord Tax Opinion”). The Rexnord Tax Opinion ~~will be~~was based on, among other things, certain representations and assumptions as to factual matters and certain covenants made by us, Regal and Land. The failure of any factual representation, assumption or covenant to be true, correct and complete in all material respects could adversely affect the validity of the opinion of counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the Internal Revenue Service (the “IRS”) or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinion ~~will be~~was based on current law, and cannot be relied upon if current law changes with retroactive effect.

The Spin-Off will be taxable to us pursuant to Section 355(e) of the Code if there is a 50% or greater change in ownership of either us or Land, directly or indirectly, as part of a plan or series of related transactions that include the Spin-Off. For this purpose, any acquisitions of our, Land’s or Regal’s stock within the period beginning two years before the Spin-Off and ending two years after the Spin-Off are presumed to be a part of such plan, although we and Regal may be able to rebut that presumption. We have requested a private letter ruling from the IRS with respect to certain tax aspects of the Transactions, including matters relating to the nature and extent of shareholders who may be counted for tax purposes as overlap shareholders (i.e., investors who are both Rexnord stockholders and Regal shareholders immediately prior to the Transactions) for purposes of determining the exchange ratio in the Agreement and Plan of Merger, ~~Agreement~~dated as of February 15, 2021 (the “Merger Agreement”) (the “IRS Ruling”). ~~Assuming the IRS Ruling is received, the~~The Merger Agreement ~~provides~~provided that the number of shares of Regal common stock that may be issued in the Transactions iswas subject to increase at closing such that the former stockholders of Land (taking into account the overlap shareholders) ~~own~~owned at least 50.8% of the outstanding Regal common stock for tax purposes immediately following the closing of the merger of Phoenix 2021, Inc., a wholly-owned subsidiary of Regal (“Merger Sub”) with and into Land, with

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Land surviving as a ~~wholly-owned~~wholly owned subsidiary of Regal (the “Merger”). This percentage is reduced to 50.1% if the IRS Ruling is not received or in certain other circumstances in which overlap shareholders are not counted for this purpose. If the IRS Ruling is received, theThe continuing validity of such ruling will be subject to the accuracy of factual representations and assumptions made in the ruling request. Moreover, the IRS Ruling ~~if received, will~~ only ~~describe~~describes the time, manner and methodology for measuring Overlap Shareholders and may be subject to varying interpretations. The actual determination and calculation of Overlap Shareholders ~~will be~~was made by us, Regal and each of our respective advisors based on the IRS Ruling, but no assurance can be given that the IRS will agree with these determinations or calculations. If the IRS were to determine that the Merger, as a result of an error in the determination of Overlap Shareholders, or other acquisitions of our, Land’s or Regal’s stock, either before or after the Spin-Off, resulted in a 50% or greater change in ownership and were part of a plan or series of related transactions that included the Spin-Off, such determination could result in significant tax to us. In certain circumstances and subject to certain limitations, under the Tax Matters Agreement, dated as of February 15, 2021 (the “Tax Matters Agreement”), Land (then a subsidiary of Regal) is required to indemnify us if the Distributions become taxable as a result of certain actions by Land or Regal or as a result of a miscalculation of the Overlap Shareholders. If this occurs and Land is required to indemnify us, this indemnification obligation could be substantial and could have a material adverse effect on Land and Regal, including with respect to financial condition and results of operations given that Regal has guaranteed the indemnification obligations of Land.

If the Merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, our stockholders may be required to pay substantial U.S. federal income taxes.

The obligations of Land and Regal to consummate the Merger ~~are~~were conditioned, respectively, on our receipt of the Rexnord Tax Opinion and Regal’s receipt of the Regal Tax Opinion, in each case to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. These opinions ~~will be~~were based upon, among other things,

~~Table of Contents~~

certain representations and assumptions as to factual matters and certain covenants made by us, Regal, Land and Merger Sub. The failure of any factual representation, assumption or covenant to be true, correct and complete in all material respects could adversely affect the validity of the opinions. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinions ~~will be~~were based on current law, and cannot be relied upon if current law changes with retroactive effect. If the Merger ~~were~~is taxable, U.S. holders ~~as defined below,~~ of Land would be considered to have made a taxable sale of their Land common stock to Regal, and such U.S. holders of Land ~~would~~will generally recognize taxable gain or loss on their receipt of Regal common stock in the Merger. Under the Tax Matters Agreement, Land is required to indemnify us if the Distributions become taxable as a result of certain actions by Land or Regal or as a result of a miscalculation of the overlap shareholders.

~~If the Merger is not completed by the outside date specified in the Merger Agreement, we or Regal may terminate the Merger Agreement.~~

Either we or Regal may terminate the Merger Agreement under certain circumstances, including if the Merger has not been consummated by November 15, 2021 (or any extensions of such date pursuant to the Merger Agreement). However, this termination right will not be available to a party if that party failed to fulfill its obligations under the Merger Agreement and that failure was the primary cause of the failure to consummate the Merger. If all other conditions to closing have been satisfied other than the receipt of the required regulatory and governmental approvals, the absence of certain pending legal proceedings with any governmental body in connection with the Merger, and the absence of certain restraints in connection with the Transactions, then either we or Regal may extend the required timing for the Transactions to February 14, 2022, and subsequently to May 14, 2022, by written notice to the other party. If either party terminates the Merger Agreement, this could result in a material adverse impact on our results of operations.

~~Following consummation of the Transaction, we,~~We, Regal and Land ~~will~~are each be required to abide by potentially significant restrictions which could limit each company’s ability to undertake certain corporate actions (such as the issuance of common stock or the undertaking of certain business combinations) that otherwise could be advantageous.

The Tax Matters Agreement ~~will impose~~imposes certain restrictions on us, Regal and Land during the two-year period following the Spin-Off, subject to certain exceptions, with respect to actions that could cause the Reorganization and the Distributions to fail to qualify for their intended tax treatment. As a result of these restrictions, our, Regal’s and Land’s ability to engage in certain transactions, such as the issuance or purchase of stock or certain business combinations, may be limited.

If we, Regal or Land take any enumerated actions or omissions, or if certain events relating to us, Land or Regal occur that would cause the Reorganization or the Distributions to become taxable, the party whose actions or omissions (or event relating to) generally will be required to bear the cost of any resulting tax liability of ours (but not our stockholders). If the Reorganization or the Distributions became taxable, we would be expected to recognize a substantial amount of gain, which would result in a material amount of taxes. Any such taxes would be expected to be material to us or Regal, as applicable, and could cause its business, financial condition and operating results to suffer. These restrictions may reduce our and Regal’s ability to engage in certain business transactions that otherwise might be advantageous to them, which could adversely affect our or Regal’s respective business, results of operations, or financial condition.

The Transactions may not achieve the intended benefits and may expose us to potential risks and liabilities.

We completed the Transactions on October 4, 2021. We undertook the Transactions because, among other things, we believed that the Transactions could provide more value to Zurn and Zurn stockholders than other potential strategic options for the company or the PMC Business, including a sale of the entire company, retaining the PMC Business, and various alternative transactions. We may not benefit as expected from the increased focus on our core business, strategic programs and objectives made possible by the Transactions. In addition, the value of the Transactions may be reduced by potential liabilities related to post-closing adjustments and indemnities, which could adversely affect our results of operations.

4452

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

In fiscal 2015, the Company's Board of Directors approved a stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. On January 27, 2020, the Company's Board of Directors increased the remaining share repurchase authority under the Repurchase Program to $300.0 million. The Repurchase Program does not require the Company to acquire any particular amount of common stock and does not specify the timing of purchases or the prices to be paid; however, the program will continue until the maximum amount of dollars authorized have been expended or until it is modified or terminated by the Board. ~~During~~The Company did not repurchase any shares during the three months ended ~~March 31, 2021, the Company repurchased 22,300 shares of common stock for a total cost of $0.9 million at a weighted average price of~~ ~~$39.27~~ ~~per share. The repurchased shares were canceled by the Company upon receipt.~~September 30, 2021. A total of approximately $162.8 million of the existing repurchase authority remained under the Repurchase Program at ~~March 31,~~September 30, 2021.

ISSUER PURCHASES OF EQUITY SECURITIES
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Approximate Dollar Value that may yet be Purchased Under the Plans or Programs (1)
Period
January 1 - January 31, 2021 22,300 $ 39.27 22,300 $ 162,792,403
February 1 - February 28, 2021 — $ — — $ 162,792,403
March 1 - March 31, 2021 — $ — — $ 162,792,403
Total/Average 22,300 22,300

~~(1) See explanation of the Repurchase Program above.~~

4553

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ITEM 6. EXHIBITS

Exhibit
No.

Description

Filed
Herewith

~~2.1~~

Agreement and Plan of Merger, dated as of February 15, 2021, by and among Rexnord, Land, Regal and Merger Sub*

~~2.2~~

Separation and Distribution Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

~~10.1~~

Tax Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

~~10.2~~

Employee Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

~~10.3~~

Real Estate Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

~~10.4~~

Intellectual Property Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

~~10.5~~

~~Commitment Letter, dated as of February 14, 2021, by and between Rexnord, Credit Suisse AG, Cayman Islands Branch and Credit Suisse Loan Funding LLC~~*

~~10.5 (a)~~

~~Amended and Restated Commitment Letter, dated as of February 18, 2021, by and between Rexnord, Credit Suisse AG, Cayman Islands Branch and Credit Suisse Loan Funding LLC~~

~~10.6~~

Bridge Facility Commitment Letter, dated as of February 15, 2021, by and between Land and Barclays Bank PLC*

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS

Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Inline XBRL data (contained in Exhibit 101)

*~~Incorporated by reference to the same exhibit number in the Company's Current Report on Form 8-K, dated February 14, 2021.~~

4654

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SIGNATURE

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

~~REXNORD~~ZURN WATER SOLUTIONS CORPORATION

Date:

~~April 27,~~October 26, 2021

By:

/S/ MARK W. PETERSON

Name:

Mark W. Peterson

Title:

Senior Vice President and Chief Financial Officer

4755


Delaware		20-5197013
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

511 W. Freshwater Way		53204
Milwaukee,	Wisconsin	(Zip Code)
(Address of Principal Executive Offices)


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


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


Class						Outstanding at ~~April 23,~~October 22, 2021
~~Rexnord~~Zurn Water Solutions Corporation Common Stock, $0.01 par value per share						~~119,721,060~~121,349,513 shares




Part I FINANCIAL INFORMATION

Item 1.	Financial Statements	4

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3237

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4049

Item 4.	Controls and Procedures	4150

Part II OTHER INFORMATION

Item 1.	Legal Proceedings	4251

Item 1A.	Risk Factors	4251

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4553

Item 6.	Exhibits	4654

Signatures		4755


(Mark one)

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


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


~~REXNORD~~ZURN WATER SOLUTIONS CORPORATION
(Exact name of registrant as specified in its charter)


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	307.3	$	255.6	Cash and cash equivalents	$	477.6	$	255.6
Receivables, net	Receivables, net	310.2		274.8		Receivables, net	333.2		274.8
Inventories	Inventories	348.4		330.1		Inventories	386.4		330.1
Income tax receivable	Income tax receivable	1.4		9.8		Income tax receivable	8.4		9.8
Other current assets	Other current assets	45.7		37.4		Other current assets	57.1		37.4

Total current assets	Total current assets	1,013.0		907.7		Total current assets	1,262.7		907.7
Property, plant and equipment, net	Property, plant and equipment, net	426.1		434.8		Property, plant and equipment, net	399.5		434.8
Intangible assets, net	Intangible assets, net	516.0		524.6		Intangible assets, net	498.7		524.6
Goodwill	Goodwill	1,371.4		1,370.1		Goodwill	1,373.0		1,370.1
Other assets	Other assets	160.8		163.9		Other assets	155.2		163.9

Total assets	Total assets	$	3,487.3	$	3,401.1	Total assets	$	3,689.1	$	3,401.1
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Current maturities of debt	Current maturities of debt	$	2.5	$	2.4	Current maturities of debt	$	2.5	$	2.4
Trade payables	Trade payables	179.0		129.4		Trade payables	210.3		129.4
Compensation and benefits	Compensation and benefits	41.9		57.0		Compensation and benefits	54.5		57.0
Current portion of pension and postretirement benefit obligations	Current portion of pension and postretirement benefit obligations	3.1		3.1		Current portion of pension and postretirement benefit obligations	3.1		3.1
Other current liabilities	Other current liabilities	129.8		125.6		Other current liabilities	150.3		125.6

Total current liabilities	Total current liabilities	356.3		317.5		Total current liabilities	420.7		317.5

Long-term debt	Long-term debt	1,189.3		1,189.2		Long-term debt	1,189.3		1,189.2
Pension and postretirement benefit obligations	Pension and postretirement benefit obligations	167.9		171.4		Pension and postretirement benefit obligations	162.1		171.4
Deferred income taxes	Deferred income taxes	118.0		119.4		Deferred income taxes	112.6		119.4
Other liabilities	Other liabilities	162.9		164.3		Other liabilities	158.7		164.3

Total liabilities	Total liabilities	1,994.4		1,961.8		Total liabilities	2,043.4		1,961.8

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; shares issued and outstanding: 119,717,064 at March 31, 2021 and 119,549,735 at December 31, 2020		1.2		1.2
Common stock, $0.01 par value; 200,000,000 shares authorized; shares issued and outstanding: 121,348,314 at September 30, 2021 and 119,549,735 at December 31, 2020						Common stock, $0.01 par value; 200,000,000 shares authorized; shares issued and outstanding: 121,348,314 at September 30, 2021 and 119,549,735 at December 31, 2020	1.2		1.2

Additional paid-in capital	Additional paid-in capital	1,409.9		1,392.9		Additional paid-in capital	1,452.1		1,392.9
Retained earnings	Retained earnings	154.3		116.0		Retained earnings	269.8		116.0
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(75.6)		(73.8)		Accumulated other comprehensive loss	(80.6)		(73.8)

Total Rexnord stockholders' equity		1,489.8		1,436.3
Total Zurn stockholders' equity						Total Zurn stockholders' equity	1,642.5		1,436.3
Non-controlling interest	Non-controlling interest	3.1		3.0		Non-controlling interest	3.2		3.0
Total stockholders' equity	Total stockholders' equity	1,492.9		1,439.3		Total stockholders' equity	1,645.7		1,439.3
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,487.3	$	3,401.1	Total liabilities and stockholders' equity	$	3,689.1	$	3,401.1


	Three Months Ended
	March 31, 2021		March 31, 2020
Net sales	$	526.1	$	547.0
Cost of sales	318.2		330.5
Gross profit	207.9		216.5
Selling, general and administrative expenses	119.3		112.8
Restructuring and other similar charges	0.6		6.6
Amortization of intangible assets	9.4		9.1
Income from operations	78.6		88.0
Non-operating expense:
Interest expense, net	(11.0)		(13.4)

Actuarial loss on pension and postretirement benefit obligations	0		(35.8)
Other expense, net	(0.4)		(3.6)
Income before income taxes	67.2		35.2
Provision for income taxes	(17.2)		(6.4)
Equity method investment income (loss)	0.1		(0.2)


Net income	50.1		28.6
Non-controlling interest income	0.1		0.1
Net income attributable to Rexnord	$	50.0	$	28.5



Net income per share attributable to Rexnord:


Basic	$	0.42	$	0.23



Diluted	$	0.40	$	0.23

Weighted-average number of shares outstanding (in thousands):
Basic	119,808		121,783
Effect of dilutive equity awards	3,829		2,562
Diluted	123,637		124,345


	Three Months Ended				Nine Months Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net sales	$	557.2	$	493.6	1,651.6		1,489.7
Cost of sales	338.4		300.5		989.1		903.2
Gross profit	218.8		193.1		662.5		586.5
Selling, general and administrative expenses	117.8		105.1		359.1		318.1
Restructuring and other similar charges	2.0		6.6		3.7		14.9
Amortization of intangible assets	9.1		9.0		27.6		27.1
Income from operations	89.9		72.4		272.1		226.4
Non-operating expense:
Interest expense, net	(11.0)		(11.5)		(33.7)		(38.3)

Actuarial loss on pension and postretirement benefit obligations	—		—		—		(35.8)
Other (expense) income, net	(0.7)		0.6		0.6		(2.6)
Income before income taxes	78.2		61.5		239.0		149.7
Provision for income taxes	(17.9)		(16.1)		(55.6)		(39.7)
Equity method investment income (loss)	—		—		0.3		(0.2)
Net income from continuing operations	60.3		45.4		183.7		109.8
Income from discontinued operations, net of tax	3.8		—		3.8		—
Net income	64.1		45.4		187.5		109.8
Non-controlling interest income	—		—		0.2		0.3
Net income attributable to Zurn	$	64.1	$	45.4	187.3		109.5



Basic net income per share attributable to Zurn common stockholders:
Continuing operations	$	0.50	$	0.38	$	1.52	$	0.91
Discontinued operations	$	0.03	$	—	$	0.03	$	—
Net income	$	0.53	$	0.38	$	1.55	$	0.91
Diluted net income per share attributable to Zurn common stockholders:
Continuing operations	$	0.48	$	0.37	$	1.47	$	0.89
Discontinued operations	$	0.03	$	—	$	0.03	$	—
Net income	$	0.51	$	0.37	$	1.50	$	0.89

Weighted-average number of shares outstanding (in thousands):
Basic	121,385		120,704		120,558		120,909
Effect of dilutive equity awards	3,703		1,803		3,968		2,153
Diluted	125,088		122,507		124,526		123,062


		Restructuring and Other Similar Charges Three Months Ended March 31, 2021									Restructuring and Other Similar Charges Three Months Ended September 30, 2021
		Process & Motion Control		Water Management		Corporate		Consolidated			Process & Motion Control		Water Management		Corporate		Consolidated
Employee termination benefits	Employee termination benefits	$	(0.1)	$	0.6	$	0	$	0.5	Employee termination benefits	$	1.1	$	0.1	$	0.6	$	1.8

Contract termination and other associated costs	Contract termination and other associated costs	0.1		0		0		0.1		Contract termination and other associated costs	0.2		—		—		0.2
Total restructuring and other similar costs	Total restructuring and other similar costs	$	0	$	0.6	$	0	$	0.6	Total restructuring and other similar costs	$	1.3	$	0.1	$	0.6	$	2.0


	Three Months Ended September 30, 2021				Nine Months Ended September 30, 2021
	Process & Motion Control		Water Management		Process & Motion Control		Water Management
United States and Canada	$	201.1	$	228.4	$	590.7	$	675.0
Europe	74.7		—		229.0		—
Rest of world	51.7		1.3		153.3		3.6
Total	$	327.5	$	229.7	$	973.0	$	678.6


	Three Months Ended March 31, 2021
	Process & Motion Control		Water Management
United States and Canada	$	190.9	$	203.8
Europe	79.6		0
Rest of world	50.4		1.4
Total	$	320.9	$	205.2


		Three Months Ended March 31, 2020				Three Months Ended September 30, 2020				Nine Months Ended September 30, 2020
		Process & Motion Control		Water Management				Process & Motion Control		Water Management		Process & Motion Control		Water Management
United States and Canada	United States and Canada	$	232.3	$	179.4		United States and Canada	$	168.6	$	194.7	$	569.1	$	546.0
Europe	Europe	82.3		0			Europe	75.7		—		223.6		—
Rest of world	Rest of world	49.1		4.0			Rest of world	49.6		5.0		139.2		11.8
Total	Total	$	363.6	$	183.4		Total	$	293.9	$	199.7	$	931.9	$	557.8


Commission File Number:			001-35475


	March 31, 2021		December 31, 2020
Finished goods	$	173.7	$	164.6
Work in progress	39.7		38.6
Purchased components	73.4		70.6
Raw materials	60.6		53.4
Inventories at First-in, First-Out ("FIFO") cost	347.4		327.2
Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	1.0		2.9
	$	348.4	$	330.1


	September 30, 2021		December 31, 2020
Finished goods	$	182.5	$	164.6
Work in progress	42.4		38.6
Purchased components	89.9		70.6
Raw materials	76.2		53.4
Inventories at First-in, First-Out ("FIFO") cost	391.0		327.2
Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	(4.6)		2.9
	$	386.4	$	330.1


		Balance Sheet Classification	December 31, 2020		Additions		Deductions		March 31, 2021			Balance Sheet Classification	December 31, 2020		Additions		Deductions		September 30, 2021
Contract assets	Contract assets	Receivables, net	$	0.1	$	0	$	(0.1)	$	0	Contract assets	Receivables, net	$	0.1	$	—	$	(0.1)	$	—
Contract liabilities (1)	Contract liabilities (1)	Other current liabilities	$	4.0	$	0.3	$	(0.9)	$	3.4	Contract liabilities (1)	Other current liabilities	$	4.0	$	2.1	$	(1.5)	$	4.6


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2019	$	1.2	$	1,320.9	$	147.9	$	(104.4)	$	2.6	$	1,368.2
Total comprehensive income (loss)	—		—		28.5		(20.0)		0.1		8.6
Stock-based compensation expense	—		8.2		—		—		—		8.2
Proceeds from exercise of stock options	—		19.2		—		—		—		19.2


Repurchase of common stock	—		—		(80.7)		—		—		(80.7)
Common stock dividends ($0.08 per share)	—		—		(9.8)		—		—		(9.8)

Balance at March 31, 2020	$	1.2	$	1,348.3	$	85.9	$	(124.4)	$	2.7	$	1,313.7


	Common stock (1)		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2020	$	1.2	$	1,392.9	$	116.0	$	(73.8)	$	3.0	$	1,439.3
Total comprehensive income (loss)	—		—		50.0		(1.8)		0.1		48.3
Stock-based compensation expense	—		14.2		—		—		—		14.2
Proceeds from exercise of stock options	—		2.8		—		—		—		2.8

Repurchase of common stock (3)	—		—		(0.9)		—		—		(0.9)

Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)

Balance at March 31, 2021	$	1.2	$	1,409.9	$	154.3	$	(75.6)	$	3.1	$	1,492.9


		Foreign Currency Translation		Pension and Postretirement Plans		Total			Foreign Currency Translation		Pension and Postretirement Plans		Total
Balance at December 31, 2020	Balance at December 31, 2020	$	(46.0)	$	(27.8)	$	(73.8)	Balance at December 31, 2020	$	(46.0)	$	(27.8)	$	(73.8)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	(1.7)		0		(1.7)		Other comprehensive loss before reclassifications	(6.6)		—		(6.6)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	0		(0.1)		(0.1)		Amounts reclassified from accumulated other comprehensive loss	—		(0.2)		(0.2)
Net current period other comprehensive loss	Net current period other comprehensive loss	(1.7)		(0.1)		(1.8)		Net current period other comprehensive loss	(6.6)		(0.2)		(6.8)
Balance at March 31, 2021		$	(47.7)	$	(27.9)	$	(75.6)
Balance at September 30, 2021								Balance at September 30, 2021	$	(52.6)	$	(28.0)	$	(80.6)


			March 31, 2021								September 30, 2021
		Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:	Intangible assets subject to amortization:								Intangible assets subject to amortization:
Patents	Patents	10 years	$	52.0	$	(42.4)	$	9.6	Patents	10 years	$	52.1	$	(42.8)	$	9.3
Customer relationships (including distribution network)	Customer relationships (including distribution network)	14 years	785.8		(586.5)		199.3		Customer relationships (including distribution network)	14 years	781.7		(597.7)		184.0
Tradenames	Tradenames	13 years	44.1		(17.9)		26.2		Tradenames	13 years	43.9		(19.4)		24.5
Intangible assets not subject to amortization - tradenames	Intangible assets not subject to amortization - tradenames		280.9		—		280.9		Intangible assets not subject to amortization - tradenames		280.9		—		280.9
Total intangible assets, net	Total intangible assets, net	13 years	$	1,162.8	$	(646.8)	$	516.0	Total intangible assets, net	13 years	$	1,158.6	$	(659.9)	$	498.7

			December 31, 2020								December 31, 2020
		Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:	Intangible assets subject to amortization:								Intangible assets subject to amortization:
Patents	Patents	10 years	$	52.0	$	(42.2)	$	9.8	Patents	10 years	$	52.0	$	(42.2)	$	9.8
Customer relationships (including distribution network)	Customer relationships (including distribution network)	14 years	784.9		(578.0)		206.9		Customer relationships (including distribution network)	14 years	784.9		(578.0)		206.9
Tradenames	Tradenames	13 years	44.1		(17.1)		27.0		Tradenames	13 years	44.1		(17.1)		27.0
Intangible assets not subject to amortization - tradenames	Intangible assets not subject to amortization - tradenames		280.9		—		280.9		Intangible assets not subject to amortization - tradenames		280.9		—		280.9
Total intangible assets, net	Total intangible assets, net	13 years	$	1,161.9	$	(637.3)	$	524.6	Total intangible assets, net	13 years	$	1,161.9	$	(637.3)	$	524.6


	March 31, 2021		December 31, 2020
Contract liabilities	$	3.4	$	4.0
Sales rebates	27.3		35.7
Commissions	7.6		5.9
Restructuring and other similar charges (1)	4.0		6.8
Product warranty (2)	8.5		8.9
Risk management (3)	10.1		10.5
Legal and environmental	3.8		2.4
Taxes, other than income taxes	9.6		7.7
Income tax payable	20.3		14.5
Interest payable	7.4		1.4
Current portion of operating lease liability	13.4		13.3
Other	14.4		14.5
	$	129.8	$	125.6


		Fair Value as of March 31, 2021									Fair Value as of September 30, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Deferred compensation assets	Deferred compensation assets	$	2.5	$	10.8	$	0	$	13.3	Deferred compensation assets	$	3.0	$	11.4	$	—	$	14.4
Deferred compensation liabilities	Deferred compensation liabilities	13.7		0		0		13.7		Deferred compensation liabilities	15.0		—		—		15.0


	Fair Value as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Deferred compensation assets	$	1.0	$	10.7	$	0	$	11.7
Deferred compensation liabilities	11.9		0		0		11.9


Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Stock options	241,547	$	15.39
Restricted stock units	258,054	$	45.09
Performance stock units	258,206	$	45.10
Common stock	42,227	$	47.76


	Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	0	$	0.2	$	96.4	$	210.7	$	0	$	307.3
Receivables, net	0		0		185.1		125.1		0		310.2
Inventories	0		0		232.6		115.8		0		348.4
Income tax receivable	0		0		0.5		0.9		0		1.4
Other current assets	0		0		21.2		24.5		0		45.7
Total current assets	0		0.2		535.8		477.0		0		1,013.0
Property, plant and equipment, net	0		0		285.3		140.8		0		426.1
Intangible assets, net	0		0		396.0		120.0		0		516.0
Goodwill	0		0		1,050.1		321.3		0		1,371.4
Investment in:
Issuer subsidiaries	1,602.8		—		—		—		(1,602.8)		—
Guarantor subsidiaries	—		3,579.1		—		—		(3,579.1)		—
Non-guarantor subsidiaries	—		—		697.9		—		(697.9)		—
Other assets	0		0.5		100.0		60.3		—		160.8
Total assets	$	1,602.8	$	3,579.8	$	3,065.1	$	1,119.4	$	(5,879.8)	$	3,487.3
Liabilities and stockholders' equity
Current liabilities:
Current maturities of debt	$	0	$	0	$	2.4	$	0.1	$	0	$	2.5
Trade payables	0		0		109.2		69.8		0		179.0
Compensation and benefits	0		0		22.7		19.2		0		41.9
Current portion of pension and postretirement benefit obligations	0		0		1.7		1.4		0		3.1
Other current liabilities	0		7.2		73.1		49.5		0		129.8
Total current liabilities	0		7.2		209.1		140.0		0		356.3

Long-term debt	0		1,118.2		70.4		0.7		0		1,189.3
Note payable to (receivable from) affiliates, net	109.4		851.6		(1,109.4)		148.4		0		0
Pension and postretirement benefit obligations	0		0		117.7		50.2		0		167.9
Deferred income taxes	0		0		96.4		21.6		0		118.0
Other liabilities	0.5		0		101.8		60.6		0		162.9
Total liabilities	109.9		1,977.0		(514.0)		421.5		0		1,994.4

Total stockholders' equity	1,492.9		1,602.8		3,579.1		697.9		(5,879.8)		1,492.9
Total liabilities and stockholders' equity	$	1,602.8	$	3,579.8	$	3,065.1	$	1,119.4	$	(5,879.8)	$	3,487.3


	Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Operating activities
Cash provided by operating activities	$	8.4	$	0	$	54.4	$	8.5	$	0	$	71.3
Investing activities
Expenditures for property, plant and equipment	0		0		(5.3)		(3.9)		0		(9.2)
Acquisitions, net of cash acquired	0		0		0.4		0		0		0.4
Proceeds from dispositions of long-lived assets	0		0		0.7		0		0		0.7

Cash used for investing activities	0		0		(4.2)		(3.9)		0		(8.1)
Financing activities

Repayments of debt	0		0		(0.5)		0		0		(0.5)



Proceeds from exercise of stock options	2.8		0		0		0		0		2.8

Repurchase of common stock	(0.9)		0		0		0		0		(0.9)
Payment of common stock dividend	(10.8)		0		0		0		0		(10.8)



Cash used for financing activities	(8.9)		0		(0.5)		0		0		(9.4)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	0		0		0		(2.1)		0		(2.1)
(Decrease) increase in cash, cash equivalents and restricted cash	(0.5)		0		49.7		2.5		0		51.7
Cash, cash equivalents and restricted cash at beginning of period	0.5		0.2		46.7		208.2		0		255.6
Cash, cash equivalents and restricted cash at end of period	$	0	$	0.2	$	96.4	$	210.7	$	0	$	307.3


(in millions)	Nine months ended December 31, 2020		Three months ended March 31, 2021		Twelve months ended March 31, 2021
Net income attributable to Rexnord	$	118.2	$	50.0	$	168.2

Non-controlling interest income	0.4		0.1		0.5

Equity method investment income	(0.2)		(0.1)		(0.3)
Income tax provision	36.3		17.2		53.5
Actuarial loss on pension and postretirement benefit obligations	1.6		—		1.6
Other (income) expense, net (1)	(4.5)		0.4		(4.1)

Interest expense, net	36.6		11.0		47.6
Depreciation and amortization	67.0		23.5		90.5
EBITDA	255.4		102.1		357.5
Adjustments to EBITDA:
Restructuring and other similar charges (2)	14.6		0.6		15.2

Stock-based compensation expense	36.6		14.8		51.4
Last-in first-out inventory adjustments (3)	—		1.9		1.9
Acquisition-related fair value adjustment	1.2		0.6		1.8
Other, net (4)	(0.3)		0.2		(0.1)
Subtotal of adjustments to EBITDA	52.1		18.1		70.2
Adjusted EBITDA	$	307.5	$	120.2	$	427.7
Pro forma adjustment for acquisitions (5)					5.1
Pro forma Adjusted EBITDA					432.8
Consolidated indebtedness (6)					$	957.6
Total net leverage ratio (7)					2.2


	Total Debt at March 31, 2021		Current Maturities of Debt		Long-term Portion
Term loan (1)	$	621.7	$	—	$	621.7
4.875% Senior Notes due 2025 (2)	496.5		—		496.5


Finance leases and other subsidiary debt	73.6		2.5		71.1
Total	$	1,191.8	$	2.5	$	1,189.3


ISSUER PURCHASES OF EQUITY SECURITIES
	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Approximate Dollar Value that may yet be Purchased Under the Plans or Programs (1)
Period
January 1 - January 31, 2021	22,300	$	39.27	22,300	$	162,792,403
February 1 - February 28, 2021	—	$	—	—	$	162,792,403
March 1 - March 31, 2021	—	$	—	—	$	162,792,403
Total/Average	22,300			22,300