# DOVER Corp (DOV) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from DOVER Corp's 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/29905/000002990525000006/dov-20241231.htm Accession: 0000029905-25-000006 Filing date: 2025-02-14 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/DOV/ All MD&A years: /company/DOV/mda/ Previous year: /company/DOV/mda/fy2023/ (FY 2023) Next year: /company/DOV/mda/fy2025/ (FY 2025) ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand our results of operations and financial condition for the year ended December 31, 2024, 2023 and 2022. The MD&A should be read in conjunction with our consolidated financial statements and Notes included in Item 8 of this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed elsewhere in this Form 10-K, particularly in Item 1A. "Risk Factors" and in the "Special Note Regarding Forward-Looking Statements" preceding Part I of this Form 10-K. Throughout this MD&A, we refer to measures used by management to evaluate performance, including a number of financial measures that are not defined under accounting principles generally accepted in the United States of America ("GAAP"). Please see "Non-GAAP Disclosures" at the end of this Item 7 for further detail on these financial measures. We believe these measures provide investors with important information that is useful in understanding our business results and trends. Reconciliations within this MD&A provide more details on the use and derivation of these measures. OVERVIEW Dover Corporation is a diversified global manufacturer and solutions provider delivering innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions and support services. For the year ended December 31, 2024, consolidated revenue was $7.7 billion, an increase of $61.4 million or 0.8%, as compared to the prior year. The increase is driven by acquisition-related growth of 3.0%, partially offset by a disposition-related decline of 2.0% and an unfavorable impact from foreign currency translation of 0.2%. The results were driven by acquisitions, solid demand across most end markets and strategic pricing initiatives. Organic revenue remained flat due to increases of 8.2%, 2.6%, 2.4%, and 1.4% in our Engineered Products, Clean Energy & Fueling, Imaging & Identification, and Pumps & Process Solutions segments, respectively, offset by the Climate & Sustainability Technologies segment which declined 11.2%. For further information, see "Segment Results of Operations" within this Item 7. From a geographic perspective, organic revenue for the U.S., our largest market, grew 3.8% as compared to the prior year, driven by broad-based growth primarily in our Engineered Products and Clean Energy & Fueling segments. Revenue in Asia and Europe declined 7.1% and 3.1%, respectively, while revenue in Other Americas grew 5.6%. All other geographic markets declined 17.4% organically year over year. Bookings increased 7.3% over the prior year to $7.7 billion for the year ended December 31, 2024. This included organic bookings growth of 6.5% and acquisition-related growth of 3.2%, partially offset by a disposition-related decline of 2.1% and an unfavorable impact from foreign currency translation of 0.3%. Restructuring and other costs of $85.0 million included restructuring charges of $69.8 million and other costs of $15.2 million. Restructuring and other costs were primarily related to headcount reductions and product line and other exit costs in the Clean Energy & Fueling and Climate & Sustainability Technologies segments. Other costs (benefits) were primarily due to non-cash asset impairment charges and reorganization costs in the Climate & Sustainability Technologies and Imaging & Identification segments, respectively. For further discussion related to our restructuring and other costs, see "Restructuring and Other Costs (Benefits)," within this Item 7. During the year ended December 31, 2024, the Company completed eight business acquisitions for approximately $674.0 million, net of cash acquired and inclusive of measurement period adjustments and contingent consideration. See Note 3 — Acquisitions in the consolidated financial statements in Item 8 of this Form 10-K for further details regarding the businesses acquired during the year. 29     Table of Contents On March 31, 2024, the Company completed the sale of the De-Sta-Co business, an operating company within the Engineered Products segment, for total consideration, net of cash transferred of $675.9 million. This sale resulted in a pre-tax gain on disposition of $530.3 million, included within the consolidated statements of earnings for the year ended December 31, 2024. See Note 4 — Discontinued and Disposed Operations in the consolidated financial statements in Item 8 of this Form 10-K for further details. On September 30, 2024, a minority owned equity method investment held within the Climate & Sustainability Technologies segment was sold and the Company received its proportionate share of the proceeds amounting to $93.0 million. The sale resulted in a preliminary pre-tax gain of $67.4 million, included within the consolidated statements of earnings for the year ended December 31, 2024. See Note 4 — Discontinued and Disposed Operations in the consolidated financial statements in Item 8 of this Form 10-K for further details. On October 8, 2024, the Company completed the sale of the Environmental Solutions Group ("ESG") business, an operating company within the Engineered Products segment, for total consideration, net of cash transferred, of $2.0 billion. This sale resulted in a preliminary pre-tax gain on disposition of $1.6 billion, included within earnings from discontinued operations, net in the consolidated statements of earnings for the year ended December 31, 2024. For all periods presented, the results of ESG prior to the sale are classified as discontinued operations as the disposal represented a strategic shift with a major impact on our operations and financial results. See Note 4 — Discontinued and Disposed Operations in the consolidated financial statements in Item 8 of this Form 10-K for further details. The discussion within this MD&A, unless otherwise noted, relates solely to our continuing operations. During the year ended December 31, 2024, the Company received a total of 2,869,282 shares upon completion of a $500 million accelerated repurchase program (the "ASR Program"). The total number of shares ultimately repurchased under the ASR Program was based on the volume-weighted average share price of Dover's common stock during the calculation period of the accelerated share repurchase program, less a discount, which was $174.26 over the term of the ASR Program. During the year ended December 31, 2024, exclusive of the ASR Program, there were no share repurchases. CONSOLIDATED RESULTS OF OPERATIONS [[GREPCENT_TABLE]] [["","","Years Ended December 31,","","% / Point Change"],["(dollars in thousands, except per share figures)","","2024","","2023","","2022","","2024 vs. 2023","","","","","2023 vs. 2022"],["Revenue","","$","7,745,909","","$","7,684,476","","$","7,844,174","","0.8","%","","","","","(2.0)","%"],["Cost of goods and services","","4,787,288","","4,816,932","","4,939,221","","(0.6)","%","","","","","(2.5)","%"],["Gross profit","","2,958,621","","2,867,544","","2,904,953","","3.2","%","","","","","(1.3)","%"],["Gross profit margin","","38.2","%","","37.3","%","","37.0","%","","0.90","","","","","","0.30"],["Selling, general and administrative expenses","","1,752,266","","1,648,204","","1,625,312","","6.3","%","","","","","1.4","%"],["Selling, general and administrative expenses as a percent of revenue","","22.6","%","","21.4","%","","20.7","%","","1.20","","","","","","0.70"],["Operating earnings","","1,206,355","","1,219,340","","1,279,641","","(1.1)","%","","","","","(4.7)","%"],["Interest expense","","131,171","","131,304","","116,456","","(0.1)","%","","","","","12.7","%"],["Interest income","","(37,158)","","(13,496)","","(4,429)","","175.3","%","","","","","204.7","%"],["Gain on dispositions","","(597,798)","","\u2014","","\u2014","","nm*","","","","","nm*"],["Other income, net","","(46,876)","","(21,468)","","(22,589)","","118.4","%","","","","","(5.0)","%"],["Earnings before provision for income taxes","","1,757,016","","1,123,000","","1,190,203","","56.5","%","","","","","(5.6)","%"],["Provision for income taxes","","357,048","","179,136","","200,291","","99.3","%","","","","","(10.6)","%"],["Effective tax rate","","20.3","%","","16.0","%","","16.8","%","","4.30","","","","","","(0.8)"],["Earnings from continuing operations","","1,399,968","","943,864","","989,912","","48.3","%","","","","","(4.7)","%"],["Earnings from discontinued operations, net","","1,297,158","","112,964","","75,464","","nm*","","","","","nm*"],["Net earnings","","$","2,697,126","","$","1,056,828","","$","1,065,376","","155.2","%","","","","","(0.8)","%"],["Earnings per common share from continuing operations - diluted","","$","10.09","","","$","6.71","","","$","6.89","","","50.4","%","","","","","(2.6)","%"]] [[/GREPCENT_TABLE]]  *nm: not meaningful 30     Table of Contents Revenue Revenue for the year ended December 31, 2024 increased $61.4 million, or 0.8% to $7.7 billion compared with 2023. Organic revenue remained flat as pricing actions and broad-based demand across most of the portfolio were offset by lower shipments of beverage can-making equipment, polymer processing equipment, and European heat exchangers. The increase in revenue was driven by acquisition-related growth of 3.0% primarily in our Clean Energy & Fueling and Pumps & Process Solutions segments, partially offset by a disposition-related decline of 2.0% in our Engineered Products segment and an unfavorable impact from foreign currency translation of 0.2%. Customer pricing favorably impacted revenue in 2024 by approximately 1.6% and by 3.8% in the prior year. Revenue for the year ended December 31, 2023 decreased $159.7 million, or 2.0% to $7.7 billion compared with 2022. Organic revenue decline of 2.8% was primarily due to general reduction in our customers' and distribution channels' inventory levels that resulted from lead time normalization and higher inventory carrying costs driven by interest rate increases. Acquisition-related growth increased by 1.0% primarily driven by our Pumps & Process Solutions segment, offset by an unfavorable impact from foreign currency translation of 0.2%. Customer pricing favorably impacted revenue in 2023 by approximately 3.8% and by 6.7% in the prior year. Gross Profit Gross profit for the year ended December 31, 2024, increased $91.1 million, or 3.2%, to $3.0 billion compared with 2023, primarily driven by positive product mix, pricing and productivity actions. Gross profit margin increased 90 basis points to 38.2% as compared to the prior year driven by benefits from mix, pricing, price versus cost dynamics and productivity initiatives, partially offset by inflationary headwinds, acquisition integration costs and lower volumes across some of the Company's businesses. Gross profit for the year ended December 31, 2023, decreased $37.4 million, or 1.3%, to $2.9 billion compared with 2022, primarily due to lower volumes across some end markets, partially offset by positive market conditions in certain secular growth-exposed businesses, as well as pricing, productivity initiatives and restructuring actions. Gross profit margin increased 30 basis points to 37.3% as compared to the prior year driven by benefits from pricing, productivity and restructuring actions, partially offset by lower volumes across some of the Company's businesses. Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2024 increased $104.1 million, or 6.3% to $1.8 billion compared with 2023, primarily driven by increased employee compensation and benefits and acquisition-related amortization. As a percentage of revenue, selling, general and administrative expenses increased 120 basis points to 22.6%, reflecting an increase in expense which exceeded the increase in the revenue base. Selling, general and administrative expenses for the year ended December 31, 2023 increased $22.9 million, or 1.4% to $1.6 billion compared with 2022, primarily driven by increased restructuring, employee compensation and benefits and acquisition-related transaction and integration costs, partially offset by lower contract labor costs. As a percentage of revenue, selling, general and administrative expenses increased 70 basis points to 21.4%, reflecting a decrease in the revenue base. Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $149.6 million, $139.1 million and $151.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. These costs as a percent of revenue were 1.9%, 1.8% and 1.9% for the years December 31, 2024, 2023 and 2022, respectively. Non-Operating Items Interest Expense, net For the year ended December 31, 2024, interest expense, net of interest income, decreased $23.8 million, or 20.2%, to $94.0 million compared with 2023 primarily due to interest income generated by the proceeds from the sale of ESG held in highly liquid short-term investments. 31     Table of Contents For the year ended December 31, 2023, interest expense, net of interest income, increased $5.8 million, or 5.2%, to $117.8 million compared with 2022 primarily driven by increased higher average interest rates since the prior year, partially offset by decreased commercial paper borrowings. Gain on Dispositions Gain on dispositions of $597.8 million for the year ended December 31, 2024 was driven by the sale of the De-Sta-Co business on March 31, 2024, and the sale of a minority owned equity method investment on September 30, 2024. See Note 4 — Discontinued and Disposed Operations in the consolidated financial statements in Item 8 of this Form 10-K for further details. There were no significant dispositions in the years ended 2023 and 2022. Other Income, net Other income, net includes non-service pension benefit, deferred compensation plan investments gain or loss, earnings or charges from equity method investments, foreign exchange gain or loss, and various other items. Other income, net for the years ended December 31, 2024, 2023 and 2022 was $46.9 million, $21.5 million and $22.6 million, respectively. For the year ended December 31, 2024, other income increased compared to 2023 primarily driven by increased non-service pension benefit and increased deferred compensation plan investment gain. For the year ended December 31, 2023, other income decreased compared to 2022 due to the decrease in non-service pension benefit, partially offset by increased non-operational income and increased earnings from our equity method investments. Income Taxes Our businesses have a global presence with 35.8%, 45.8% 46.7% of our pre-tax earnings in 2024, 2023 and 2022, respectively, generated in foreign jurisdictions. Foreign earnings are generally subject to local country tax rates that differ from the 21.0% U.S. statutory tax rate.  Our effective tax rate was 20.3% for the year ended December 31, 2024, compared to 16.0% and 16.8% for the years ended December 31, 2023 and December 31, 2022, respectively. The 2024 tax rate was primarily driven by gains on dispositions. The 2023 rate was primarily driven by the release of a valuation allowance against non-U.S. tax loss carryforwards mainly related to an internal reorganization, partially offset by accrual of withholding taxes on current and future repatriation of certain foreign earnings.The 2022 rate was primarily driven by favorable audit resolutions, including a reduction to income taxes previously recorded related to the Tax Cut and Jobs Act. The Company is continuing to monitor the changes in tax laws resulting from the Organization for Economic Cooperation and Development’s multi-jurisdictional plan of action to address base erosion and profit shifting. We do not expect this to have a material impact on our effective tax rate. See Note 14 — Income Taxes in the consolidated financial statements in Item 8 of this Form 10-K for additional details. Earnings from Continuing Operations For the year ended December 31, 2024, earnings from continuing operations increased $456.1 million, or 48.3%, to $1.4 billion, or $10.09 per diluted share, compared with earnings from continuing operations of $943.9 million, or $6.71 per diluted share, for the year ended December 31, 2023. Earnings from continuing operations increased primarily from gain on dispositions, pricing actions and benefits from productivity initiatives, partially offset by lower volumes across some of the Company's businesses, and increased selling, general and administrative expenses. 32     Table of Contents For the year ended December 31, 2023, earnings from continuing operations decreased $46.0 million, or 4.7% to $943.9 million or $6.71 per diluted share compared with earnings from continuing operations of $989.9 million or $6.89 per diluted share, for the year ended December 31, 2022. Earnings from continuing operations decreased primarily due to lower volumes across some of the Company's businesses and increased selling, general and administrative expenses, partially offset by customer pricing actions and benefits from productivity initiatives. Discontinued Operations For the years ended December 31, 2024, 2023, and 2022, the historical results of ESG were presented as discontinued operations as the sale represented a strategic shift that will have a major impact on our operations and financials results. For the years ended December 31, 2024, 2023, and 2022 earnings from discontinued operations, net were $1.3 billion, $113.0 million and $75.5 million respectively. Refer to Note 4 — Discontinued and Disposed Operations in Item 8 of this form 10-K for additional information on discontinued and disposed operations. SEGMENT RESULTS OF OPERATIONS The summary that follows provides a discussion of the results of operations of each of our five reportable operating segments (Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions and Climate & Sustainability Technologies). Each of these segments is comprised of various product and service offerings that serve multiple markets. We evaluate our operating segment performance based on segment earnings as defined in Note 19 — Segment Information in the consolidated financial statements in Item 8 of this Form 10-K. Additionally, we use the following operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments: •Bookings represent total orders received from customers in the current reporting period and exclude de-bookings related to orders received in prior periods, if any. This metric is an important measure of performance and an indicator of revenue order trends. •Organic bookings represent bookings excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. This metric is an important measure of performance and an indicator of revenue order trends. •Book-to-bill is a ratio of the amount of bookings received from customers during a period divided by the amount of revenue recorded during that same period. This metric is a useful indicator of demand. 33     Table of Contents Engineered Products Our Engineered Products segment provides a wide range of equipment, components, software, solutions and services to the vehicle aftermarket, aerospace and defense, industrial winch and hoist, and fluid dispensing end-markets. [[GREPCENT_TABLE]] [["","","Years Ended December 31,","","% Change"],["(dollars in thousands)","","2024","","2023","","2022","","2024 vs. 2023","","2023 vs. 2022"],["Revenue","","$","1,202,457","","","$","1,250,925","","","$","1,379,512","","","(3.9)","%","","(9.3)","%"],["Segment earnings","","$","231,237","","","$","224,051","","","$","240,496","","","3.2","%","","(6.8)","%"],["Segment margin","","19.2","%","","17.9","%","","17.4","%"],["Operational metric:"],["Bookings","","$","1,171,777","","","$","1,269,649","","","$","1,320,288","","","(7.7)","%","","(3.8)","%"],["Components of revenue growth (decline):"],["Organic growth (decline)","","","","","","","","8.2","%","","(9.3)","%"],["Acquisitions","","","","","","","","0.2","%","","\u2014","%"],["Dispositions","","","","","","","","(12.2)","%","","\u2014","%"],["Foreign currency translation","","","","","","","","(0.1)","%","","\u2014","%"],["Total revenue decline","","","","","","","","(3.9)","%","","(9.3)","%"]] [[/GREPCENT_TABLE]] 2024 Versus 2023 Engineered Products revenue for the year ended December 31, 2024 decreased $48.5 million, or 3.9%, compared to the prior year due to a disposition-related decline of 12.2% and an unfavorable impact from foreign currency translation of 0.1%, partially offset by organic revenue growth of 8.2% and acquisition-related growth of 0.2%. The disposition-related decline was due to the divestiture of De-Sta-Co in the first quarter of 2024. Customer pricing favorably impacted revenue in 2024 by approximately 0.7%. The organic revenue growth was primarily driven by improved production performance and increased demand in our vehicle service business, along with favorable demand trends in our aerospace & defense business. We expect positive organic growth in 2025, driven by favorable demand trends in several of our key end markets, most notably in our aerospace and defense businesses. Engineered Products segment earnings for the year ended December 31, 2024 increased $7.2 million, or 3.2%, compared to the prior year. The increase was primarily driven by organic volume increases and favorable price versus cost dynamics, partially offset by disposition impacts. Segment margin increased to 19.2% from 17.9% in the prior year. Overall, bookings for the year ended December 31, 2024 declined 7.7% compared to the prior year primarily due to a disposition-related decline of 11.7%, partially offset by broad-based organic growth of 3.5% and a favorable impact from acquisitions of 0.5%. Segment book-to-bill was 0.97. 2023 Versus 2022 Engineered Products revenue for the year ended December 31, 2023 decreased $128.6 million, or a 9.3% organic revenue decline. Customer pricing favorably impacted revenue in 2023 by approximately 1.7%. The organic revenue decline was primarily due to lower volumes in our vehicle service business in Europe and Asia, as well as transient disruptions in our vehicle service business in North America from an ERP upgrade that reduced volumes in the second and third quarter. Our other businesses in the segment saw robust demand increases, including from key customers in both our aerospace and defense business, and our industrial winch and hoist business. 34     Table of Contents Engineered Products segment earnings for the year ended December 31, 2023 decreased $16.4 million, or 6.8%, compared to the prior year. The decrease was due to lower volumes and increased material and labor costs, partially offset by customer pricing actions, productivity and cost reduction initiatives. Segment margin increased to 17.9% from 17.4% in the prior year. Clean Energy & Fueling Our Clean Energy & Fueling segment provides components, equipment, software solutions and services enabling safe and reliable storage, transport and dispensing of traditional and clean fuels (including liquefied natural gas, hydrogen, and electric vehicle charging), cryogenic gases, and other hazardous substances along the supply chain, and safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments. [[GREPCENT_TABLE]] [["","","Years Ended December 31,","","% Change"],["(dollars in thousands)","","2024","","2023","","2022","","2024 vs. 2023","","2023 vs. 2022"],["Revenue","","$","1,936,784","","","$","1,788,277","","","$","1,878,507","","","8.3","%","","(4.8)","%"],["Segment earnings","","$","359,993","","","$","328,604","","","$","352,993","","","9.6","%","","(6.9)","%"],["Segment margin","","18.6","%","","18.4","%","","18.8","%"],["Operational metric:"],["Bookings","","$","1,938,495","","","$","1,745,521","","","$","1,821,025","","","11.1","%","","(4.1)","%"],["Components of revenue growth (decline):"],["Organic growth (decline)","","","","","","","","2.6","%","","(4.0)","%"],["Acquisitions","","","","","","","","6.0","%","","\u2014","%"],["Foreign currency translation","","","","","","","","(0.3)","%","","(0.8)","%"],["Total revenue growth (decline)","","","","","","","","8.3","%","","(4.8)","%"]] [[/GREPCENT_TABLE]] 2024 Versus 2023 Clean Energy & Fueling revenue for the year ended December 31, 2024 increased $148.5 million, or 8.3%, compared to the prior year, attributable to acquisition-related growth of 6.0% and organic growth of 2.6%, partially offset by an unfavorable impact from foreign currency translation of 0.3%. Customer pricing favorably impacted revenue in 2024 by approximately 2.5%. The organic revenue growth was primarily driven by pricing actions and growth in clean energy solutions and North American above-ground retail fueling equipment, partially offset by lower volumes in fluid transfer solutions and vehicle wash solutions due to temporary macro-driven market headwinds impacting customer demand. We expect positive organic growth in 2025 driven by a favorable outlook across each major end market. Clean Energy & Fueling segment earnings for the year ended December 31, 2024 increased $31.4 million, or 9.6%, compared to the prior year. The increase was primarily driven by strategic pricing and the favorable impact of acquisitions, partially offset by inflationary headwinds and integration costs in clean energy solutions. Segment margin increased to 18.6% from 18.4% in the prior year. Overall bookings for the year ended December 31, 2024 increased 11.1% compared to the prior year, driven by organic growth of 5.8% and acquisition-related growth of 5.6%, partially offset by an unfavorable impact from foreign currency translation of 0.3%. The organic bookings growth was primarily driven by increased demand for North America above-ground retail fueling equipment and favorable demand trends across our clean energy platform. Segment book-to-bill was 1.00. 35     Table of Contents 2023 Versus 2022 Clean Energy & Fueling revenue for the year ended December 31, 2023 decreased $90.2 million, or 4.8%, compared to the prior year, attributable to an organic decline of 4.0% and an unfavorable impact from foreign currency translation of 0.8%. Customer pricing favorably impacted revenue in 2023 by approximately 4.3%. The organic revenue decline was primarily due to reduced year-over-year demand in above ground retail fueling equipment, due to the expected roll-off of EMV-related demand in the first half of the year, as well as general reduction in our customers' inventory across our distribution channels, as higher interest rates increased its carrying costs. This was partially offset by pricing actions aimed at mitigating material cost inflation and strong demand in our fluid transfer solutions and hydrogen and liquefied natural gas clean energy businesses. Clean Energy & Fueling segment earnings for the year ended December 31, 2023 decreased $24.4 million, or 6.9%, compared to the prior year. The decrease was primarily due to reduced organic volumes, unfavorable foreign currency translation, and increased material, logistics and labor costs, partially offset by pricing, productivity initiatives, and the benefits from restructuring actions. Segment margin decreased to 18.4% from 18.8% in the prior year. Imaging & Identification Our Imaging & Identification segment supplies precision marking and coding, product traceability, brand protection and digital textile printing equipment, as well as related consumables, software and services to the global packaged and consumer goods, pharmaceutical, industrial manufacturing, textile and other end-markets. [[GREPCENT_TABLE]] [["","","Years Ended December 31,","","% Change"],["(dollars in thousands)","","2024","","2023","","2022","","2024 vs. 2023","","2023 vs. 2022"],["Revenue","","$","1,137,165","","","$","1,116,732","","","$","1,123,815","","","1.8","%","","(0.6)","%"],["Segment earnings","","$","301,707","","","$","272,512","","","$","268,084","","","10.7","%","","1.7","%"],["Segment margin","","26.5","%","","24.4","%","","23.9","%"],["Operational metric:"],["Bookings","","$","1,144,147","","","$","1,121,229","","","$","1,154,199","","","2.0","%","","(2.9)","%"],["Components of revenue growth (decline):"],["Organic growth","","","","","","","","2.4","%","","0.2","%"],["Acquisitions","","","","","","","","0.7","%","","\u2014","%"],["Foreign currency translation","","","","","","","","(1.3)","%","","(0.8)","%"],["Total revenue growth (decline)","","","","","","","","1.8","%","","(0.6)","%"]] [[/GREPCENT_TABLE]] 2024 Versus 2023 Imaging & Identification revenue for the year ended December 31, 2024 increased $20.4 million, or 1.8% compared to the prior year, comprised of organic growth of 2.4% and acquisition-related growth of 0.7%, partially offset by an unfavorable impact from foreign currency translation of 1.3%. Customer pricing favorably impacted revenue in 2024 by approximately 2.8%. The organic revenue growth was primarily driven by pricing initiatives and increased demand for marking and coding consumables, partially offset by softer demand in our digital textile printing business. We expect positive organic growth in 2025 primarily driven by favorable demand trends in our marking and coding business across regions, particularly in North America. Imaging & Identification segment earnings for the year ended December 31, 2024 increased $29.2 million, or 10.7%, compared to the prior year. This increase was primarily driven by favorable product mix, pricing and productivity initiatives, 36     Table of Contents partially offset by an unfavorable impact from foreign currency translation. Segment margin increased to 26.5% from 24.4% in the prior year. Overall bookings for the year ended December 31, 2024 increased 2.0%, comprised of an organic growth of 2.6% and acquisition-related growth of 0.8%, partially offset by an unfavorable impact from foreign currency translation of 1.4%. The organic bookings growth was primarily driven by favorable demand trends in our marking and coding businesses. Segment book-to-bill was 1.01. 2023 Versus 2022 Imaging & Identification revenue for the year ended December 31, 2023 decreased $7.1 million, or 0.6% compared to the prior year, comprised of an unfavorable impact from foreign currency translation of 0.8%, partially offset by organic growth of 0.2%. Customer pricing favorably impacted revenue in 2023 by approximately 5.0%. The organic revenue growth was primarily driven by customer pricing and growth in serialization software, partially offset by reduced customer investments in new marking and coding equipment, along with lower textile printer shipments caused by high energy prices and macro uncertainty in textile producing regions. Imaging & Identification segment earnings for the year ended December 31, 2023 increased $4.4 million, or 1.7%, compared to the prior year. This increase was primarily driven by pricing initiatives and productivity actions, partially offset by an unfavorable impact from foreign currency translation, organic volume reductions, and material and labor cost inflation. Segment margin increased to 24.4% from 23.9% in the prior year. Pumps & Process Solutions Our Pumps & Process Solutions segment manufactures specialty pumps and flow meters, fluid transfer connectors, highly engineered precision components, instruments and digital controls for rotating and reciprocating machines, and polymer processing equipment, serving single-use biopharmaceutical production, diversified industrial manufacturing applications, chemical production, plastics and polymer processing, midstream and downstream oil and gas, clean energy markets, thermal management, food and beverage, semiconductor production and medical applications and other end-markets. [[GREPCENT_TABLE]] [["","","Years Ended December 31,","","% Change"],["(dollars in thousands)","","2024","","2023","","2022","","2024 vs. 2023","","2023 vs. 2022"],["Revenue","","$","1,894,566","","","$","1,755,691","","","$","1,728,235","","","7.9","%","","1.6","%"],["Segment earnings","","$","536,606","","","$","484,405","","","$","533,018","","","10.8","%","","(9.1)","%"],["Segment margin","","28.3","%","","27.6","%","","30.8","%"],["Operational metric:"],["Bookings","","$","1,856,680","","","$","1,677,115","","","$","1,709,204","","","10.7","%","","(1.9)","%"],["Components of revenue growth (decline):"],["Organic growth (decline)","","","","","","","","1.4","%","","(3.3)","%"],["Acquisitions","","","","","","","","6.3","%","","4.4","%"],["Foreign currency translation","","","","","","","","0.2","%","","0.5","%"],["Total revenue growth","","","","","","","","7.9","%","","1.6","%"]] [[/GREPCENT_TABLE]] 2024 Versus 2023 Pumps & Process Solutions revenue for the year ended December 31, 2024 increased $138.9 million, or 7.9%, compared to the prior year, attributable to acquisition-related growth of 6.3%, organic growth of 1.4% and a favorable impact from foreign currency translation of 0.2%. Acquisition-related growth was driven by the acquisition of the FW Murphy Production Controls business in the fourth quarter of 2023. Customer pricing favorably impacted revenue by approximately 1.7% in 2024. 37     Table of Contents The organic revenue growth was driven by robust shipment rates of single-use biopharma components and connectors used in liquid cooling of high performance computers and in data centers, as well as solid growth in precision components, partially offset by expected revenue declines in our plastics and polymer processing solutions business due to customers shifting focus to optimizing the significant capacity investments made over the last several years. We expect continued organic growth in 2025 primarily due to continued positive demand trends across most businesses and stable volumes in polymer processing. Pumps & Process Solutions segment earnings for the year ended December 31, 2024 increased $52.2 million, or 10.8%, compared to the prior year. The increase was primarily driven by the favorable impact from the FW Murphy acquisition, the positive impact from pricing initiatives and productivity actions, and a favorable shift in product mix. Segment margin increased to 28.3% from 27.6% in the prior year. Overall bookings for the year ended December 31, 2024 increased 10.7% as compared to the prior year, driven by acquisition-related growth of 6.8%, organic growth of 3.7% and a favorable impact from foreign currency translation of 0.2%. The organic bookings growth was driven by positive demand trends in connectors, supported by improving customer sentiment in bioprocessing and growth in high performance computing and data center applications. Segment book-to-bill was 0.98. 2023 Versus 2022 Pumps & Process Solutions revenue for the year ended December 31, 2023 increased $27.5 million, or 1.6%, compared to the prior year, attributable to acquisition-related growth of 4.4% and a favorable impact from foreign currency translation of 0.5%, partially offset by an organic decline of 3.3%. Acquisition-related growth was driven by the acquisitions of Witte Pumps & Technology GmbH, Malema Engineering Corporation, and AMN DPI in 2022. Customer pricing favorably impacted revenue by approximately 4.1% in 2023. The organic revenue decline was due to reduced shipments for single-use components used in biopharmaceutical manufacturing, as well as a decline in connector demand in core medical and industrial end markets, due to channel and end customer focus on inventory reductions. This was partially offset by customer pricing, along with continued demand strength in thermal connectors, hygienic dosing systems, plastics and polymer processing solutions equipment, and bearings and compression components. Pumps & Process Solutions segment earnings for the year ended December 31, 2023 decreased $48.6 million, or 9.1%, compared to the prior year. The decrease was primarily due to the unfavorable volume and product mix impact of reduced revenues relating to biopharmaceutical components along with labor and material cost increases, partially offset by pricing initiatives and productivity and cost reduction actions. Segment margin decreased to 27.6% from 30.8% in the prior year. 38     Table of Contents Climate & Sustainability Technologies Our Climate & Sustainability Technologies segment is a provider of innovative and energy-efficient equipment, components, solutions, services and parts for the commercial refrigeration, heating and cooling and beverage can-making equipment end-markets. [[GREPCENT_TABLE]] [["","","Years Ended December 31,","","% Change"],["(dollars in thousands)","","2024","","2023","","2022","","2024 vs. 2023","","2023 vs. 2022"],["Revenue","","$","1,579,649","","","$","1,778,582","","","$","1,737,724","","","(11.2)","%","","2.4","%"],["Segment earnings","","$","250,875","","","$","305,380","","","$","254,484","","","(17.8)","%","","20.0","%"],["Segment margin","","15.9","%","","17.2","%","","14.6","%"],["Operational metric:"],["Bookings","","$","1,570,632","","","$","1,348,653","","","$","1,669,916","","","16.5","%","","(19.2)","%"],["Components of revenue (decline) growth:"],["Organic (decline) growth","","","","","","","","(11.2)","%","","2.4","%"],["Acquisitions","","","","","","","","0.3","%","","0.2","%"],["Foreign currency translation","","","","","","","","(0.3)","%","","(0.2)","%"],["Total revenue (decline) growth","","","","","","","","(11.2)","%","","2.4","%"]] [[/GREPCENT_TABLE]] 2024 Versus 2023 Climate & Sustainability Technologies revenue for the year ended December 31, 2024 decreased $198.9 million, or 11.2%, compared to the prior year, reflecting an organic revenue decline of 11.2% and an unfavorable impact from foreign currency translation of 0.3%, partially offset by acquisition-related growth of 0.3%. Customer pricing favorably impacted revenue in 2024 by approximately 0.4%. The organic revenue decline was primarily due to reduced shipments of heat exchangers in Europe due to HVAC OEM's efforts to reduce component inventories, as well as continued headwinds in new beverage can-making equipment sales as customers pivot from new equipment investment to scaling production and expanding utilization of recent capacity additions. This was partially offset by increased demand for retail refrigeration equipment and services, including the growing demand for low-global warming potential ("GWP") CO2 refrigerant systems. We expect a return to positive organic growth in 2025 as solid equipment demand in retail refrigeration continues, demand for heat exchangers in data center cooling applications accelerate, and demand headwinds in both beverage can-making equipment and European heat exchangers abate. Climate & Sustainability Technologies segment earnings for the year ended December 31, 2024 decreased $54.5 million, or 17.8%, compared to the prior year. The segment earnings decrease was primarily due to the negative impact from lower volumes in heat exchangers and beverage can-making equipment, partially offset by increased retail refrigeration volumes, productivity initiatives and cost reduction actions. Segment margin decreased to 15.9% from 17.2% in the prior year. Overall, bookings for the year ended December 31, 2024 increased 16.5% compared to the prior year, reflecting organic growth of 16.7% and an unfavorable impact from foreign currency translation of 0.2%. The organic bookings growth was primarily driven by favorable demand trends across retail refrigeration, including continued strong demand for low-GWP CO2 refrigerant system, along with a recovery in order intake for beverage can-making equipment. Segment book-to-bill was 0.99. 39     Table of Contents 2023 Versus 2022 Climate & Sustainability Technologies revenue for the year ended December 31, 2023 increased $40.9 million, or 2.4%, compared to the prior year, reflecting an organic revenue growth of 2.4% and acquisition-related growth of 0.2%, partially offset by an unfavorable impact from foreign currency translation of 0.2%. Customer pricing favorably impacted revenue in 2023 by approximately 3.7%. The organic revenue growth was principally driven by strong demand and pricing initiatives in most markets. Our heat exchanger business grew in U.S. commercial HVAC and industrial markets, and growth in European shipments for heat pumps. Retail refrigeration revenue also increased from the prior year, driven by customer pricing actions, large system refurbishment programs and growing demand for low-GWP CO2 refrigerant systems, partially offset by lower shipments in the interest rate sensitive convenience store market. Beverage can-making business revenues modestly decreased from the prior year due to expected year over year revenue reductions beginning in the fourth quarter driven by reduced orders for new beverage can-making equipment as large can-maker customers focused on scaling production and growing utilization of recent capacity additions. Climate & Sustainability Technologies segment earnings for the year ended December 31, 2023 increased $50.9 million, or 20.0%, compared to the prior year. The segment earnings increase was driven by customer pricing actions, product mix and significant benefits from productivity initiatives, partially offset by higher labor costs. Segment margin increased to 17.2% from 14.6% in the prior year. Reconciliation of Segment Earnings to Earnings from Continuing Operations [[GREPCENT_TABLE]] [["","","","Years Ended December 31,"],["(dollars in thousands)","","","","","2024","","2023","","2022"],["Earnings from Continuing Operations:"],["Segment earnings:"],["Engineered Products","","","","","$","231,237","","","$","224,051","","","$","240,496"],["Clean Energy & Fueling","","","","","359,993","","","328,604","","","352,993"],["Imaging & Identification","","","","","301,707","","","272,512","","","268,084"],["Pumps & Process Solutions","","","","","536,606","","","484,405","","","533,018"],["Climate & Sustainability Technologies","","","","","250,875","","","305,380","","","254,484"],["Total segment earnings","","","","","1,680,418","","","1,614,952","","","1,649,075"],["Purchase accounting expenses (1)","","","","","186,241","","","158,582","","","174,397"],["Restructuring and other costs (2)","","","","","84,983","","","62,927","","","36,209"],["Disposition costs (3)","","","","","\u2014","","","1,302","","","\u2014"],["(Gain) loss on dispositions (4)","","","","","(597,798)","","","\u2014","","","194"],["Corporate expense / other (5)","","","","","155,963","","","151,333","","","136,045"],["Interest expense","","","","","131,171","","","131,304","","","116,456"],["Interest income","","","","","(37,158)","","","(13,496)","","","(4,429)"],["Earnings before provision for income taxes","","","","","1,757,016","","","1,123,000","","","1,190,203"],["Provision for income taxes","","","","","357,048","","","179,136","","","200,291"],["Earnings from continuing operations","","","","","$","1,399,968","","","$","943,864","","","$","989,912"]] [[/GREPCENT_TABLE]] (1) Purchase accounting expenses are primarily comprised of amortization of intangible assets. (2) Restructuring and other costs relate to actions taken for headcount reductions, facility consolidations and site closures, product line exits, and other asset charges. (3) Disposition costs related to the sale of De-Sta-Co in our Engineered Products segment. (4)(Gain) loss on dispositions includes post-closing adjustments; see Note 4 — Discontinued and Disposed Operations in the consolidated financial statements in Item 8 of this Form 10-K for further details. (5) Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, shared business services and digital and IT overhead costs, deal-related expenses and various administrative expenses relating to the corporate headquarters. 40     Table of Contents Restructuring and Other Costs (Benefits) Restructuring and other costs are not presented in our segment earnings because these costs are excluded from the segment operating performance measure reviewed by management. During the year ended December 31, 2024, restructuring charges of $69.8 million were primarily related to headcount reductions and product line and other exit costs in the Clean Energy & Fueling and Climate & Sustainability Technologies segments. These restructuring programs were initiated in 2023 and 2024 and were undertaken in light of current market conditions. The Company will continue to make proactive adjustments to its cost structure to align with current demand trends. Other costs, net of $15.2 million, were primarily due to non-cash asset impairment charges and reorganization costs in the Climate & Sustainability Technologies and Imaging & Identification segments, respectively. These restructuring and other charges were primarily recorded in cost of goods and services and selling, general and administrative expenses in the consolidated statement of earnings. Additional programs beyond the scope of the announced programs may be implemented during 2025 with related restructuring charges. We recorded the following restructuring and other costs for the year ended December 31, 2024: [[GREPCENT_TABLE]] [["","Year Ended December 31, 2024"],["(dollars in thousands)","Engineered Products","","Clean Energy & Fueling","","Imaging & Identification","","Pumps & Process Solutions","","Climate & Sustainability Technologies","","Corporate","","Total"],["Restructuring","$","7,847","","","$","30,858","","","$","9,960","","","$","4,956","","","$","15,197","","","$","992","","","$","69,810"],["Other costs, net","9","","","2,714","","","4,900","","","61","","","4,916","","","2,573","","","15,173"],["Restructuring and other costs","$","7,856","","","$","33,572","","","$","14,860","","","$","5,017","","","$","20,113","","","$","3,565","","","$","84,983"]] [[/GREPCENT_TABLE]] During the year ended December 31, 2023, restructuring charges of $49.9 million were primarily related to headcount reductions and exit costs in the Clean Energy & Fueling, Engineered Products and Pumps & Process Solutions segments. These restructuring programs were initiated in 2022 and 2023 and were undertaken in light of market conditions. Other costs, net of $13.0 million were primarily due to an asset impairment in our Climate & Sustainability Technologies segment and product line rationalization and footprint reduction in our Clean Energy & Fueling segment. These restructuring and other charges were recorded in cost of goods and services and selling, general and administrative expenses in the consolidated statement of earnings. We recorded the following restructuring and other costs for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["","Year Ended December 31, 2023"],["(dollars in thousands)","Engineered Products","","Clean Energy & Fueling","","Imaging & Identification","","Pumps & Process Solutions","","Climate & Sustainability Technologies","","Corporate","","Total"],["Restructuring","$","8,976","","","$","20,336","","","$","5,918","","","$","7,686","","","$","4,541","","","$","2,444","","","$","49,901"],["Other costs, net","55","","","4,330","","","1,183","","","233","","","4,758","","","2,467","","","13,026"],["Restructuring and other costs","$","9,031","","","$","24,666","","","$","7,101","","","$","7,919","","","$","9,299","","","$","4,911","","","$","62,927"]] [[/GREPCENT_TABLE]] 41     Table of Contents During the year ended December 31, 2022, restructuring charges of $30.5 million were primarily due to headcount reductions and facility consolidations resulting from restructuring programs initiated in 2021 and 2022, including non-cash foreign currency translation losses due to substantial liquidation of businesses. Other costs (benefits), net of $5.7 million, were primarily due to write-off of assets in connection with an exit from certain Latin America countries in our Climate & Sustainability Technologies segment. These restructuring and other charges were recorded in cost of goods and services and selling, general and administrative expenses in the consolidated statement of earnings. We recorded the following restructuring and other costs for the year ended December 31, 2022: [[GREPCENT_TABLE]] [["","Year Ended December 31, 2022"],["(dollars in thousands)","Engineered Products","","Clean Energy & Fueling","","Imaging & Identification","","Pumps & Process Solutions","","Climate & Sustainability Technologies","","Corporate","","Total"],["Restructuring","$","3,194","","","$","9,571","","","$","4,702","","","$","4,685","","","$","6,007","","","$","2,321","","","$","30,480"],["Other costs (benefits), net","479","","","(13)","","","1,740","","","(2)","","","3,263","","","262","","","5,729"],["Restructuring and other costs","$","3,673","","","$","9,558","","","$","6,442","","","$","4,683","","","$","9,270","","","$","2,583","","","$","36,209"]] [[/GREPCENT_TABLE]] See Note 11 — Restructuring Activities in the consolidated financial statements in Item 8 of this Form 10-K for additional details regarding our recent restructuring activities. Purchase Accounting Expenses Purchase accounting expenses primarily relate to amortization of acquired assets and charges related to fair value step-ups for acquired inventory sold during the period. These expenses are not presented in our segment earnings because they are excluded from the segment operating performance measure reviewed by management. These expenses reconcile to segment earnings as follows: [[GREPCENT_TABLE]] [["","","","Years Ended December 31,"],["(dollars in thousands)","","","","","2024","","2023","","2022"],["Purchase accounting expenses"],["Engineered Products","","","","","$","10,727","","","$","13,359","","","$","13,911"],["Clean Energy & Fueling (1)","","","","","93,719","","","78,261","","","96,655"],["Imaging & Identification","","","","","23,015","","","23,089","","","22,179"],["Pumps & Process Solutions","","","","","38,803","","","24,278","","","22,332"],["Climate & Sustainability Technologies","","","","","19,977","","","19,595","","","19,320"],["Total","","","","","$","186,241","","","$","158,582","","","$","174,397"],["(1) Purchase accounting expenses in our Clean Energy & Fueling segment decreased by $18,394 for the year ended December 31, 2023 from the prior year comparable period, which included $18,995 of charges related to fair value step-ups for inventory from the Q4 2021 acquisition of RegO and Acme Cryogenics."]] [[/GREPCENT_TABLE]] 42     Table of Contents FINANCIAL CONDITION We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Significant factors affecting liquidity are cash flows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, repurchase of outstanding shares, adequacy of available commercial paper and bank lines of credit and the ability to attract long-term capital with satisfactory terms. We generate substantial cash from the operations of our businesses and remain in a strong financial position, with sufficient liquidity available for upcoming debt maturities and for reinvestment in existing businesses and strategic acquisitions. Cash Flow Summary The following table is derived from our consolidated statements of cash flows: [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["Cash Flows from Operations (in thousands)","2024","","2023","","2022"],["Net cash flows provided by (used in):"],["Operating activities","$","1,087,833","","","$","1,219,546","","","$","746,754"],["Investing activities","(26,983)","","","(717,715)","","","(520,844)"],["Financing activities","(1,271,673)","","","(568,056)","","","(260,265)"]] [[/GREPCENT_TABLE]] Operating Activities Cash flow from operating activities for the year ended December 31, 2024 decreased by $131.7 million compared to 2023. This decrease was primarily due to tax payments of $103.4 million and $20.4 million related to gains from the sales of De-Sta-Co and a minority owned equity method investment, respectively, during the year ended December 31, 2024. Cash flow from operating activities for the year ended December 31, 2023 increased by $472.8 million compared to 2022. This increase was primarily driven by improvements in the management of working capital. Adjusted Working Capital: We believe adjusted working capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) provides a meaningful measure of liquidity by showing changes caused by operational results. The following table provides a calculation of adjusted working capital: [[GREPCENT_TABLE]] [["Adjusted Working Capital (in thousands)","","December 31, 2024","","December 31, 2023"],["Receivables, net","","$","1,354,225","","","$","1,321,107"],["Inventories, net","","1,144,838","","","1,144,089"],["Less: Accounts payable","","848,006","","","854,465"],["Adjusted working capital","","$","1,651,057","","","$","1,610,731"]] [[/GREPCENT_TABLE]] Adjusted working capital increased by $40.3 million, or 2.5%, to $1.7 billion at December 31, 2024, which reflected an increase in accounts receivable of $33.1 million, an increase in inventory of $0.7 million and a decrease in accounts payable of $6.5 million. These amounts include the effects of acquisitions, dispositions and foreign currency translation. The increase in adjusted working capital versus year-end 2023 is primarily a result of collections timing driving higher year-end accounts receivable balances. Investing Activities Cash flow from investing activities is derived from cash inflows from proceeds from dispositions, offset by cash outflows for acquisitions and capital expenditures. The majority of the activity in investing activities was comprised of the following: •Proceeds from dispositions: In 2024, we received net proceeds of $768.8 million from the sales of De-Sta-Co, an operating company within the Engineered Products segment, and a minority owned equity method investment within Climate & Sustainability Technologies segment. See Note 4 — Discontinued and Disposed Operations in the consolidated financial statements in Item 8 of this Form 10-K for additional information. 43     Table of Contents •Acquisitions: In 2024, we deployed $635.3 million, net of cash acquired to acquire eight businesses. In comparison, we acquired two businesses in 2023 for total consideration of $533.6 million, net of cash acquired. Total acquisition spend in 2022 was $312.9 million, net of cash acquired and was comprised of three businesses. See Note 3 — Acquisitions in the consolidated financial statements in Item 8 of this Form 10-K for additional information. •Capital spending: Capital expenditures, primarily to support growth initiatives, productivity and new product launches, were $167.5 million in 2024, $183.4 million in 2023, and $211.1 million in 2022. Our capital expenditures decreased $15.9 million and $27.7 million in 2024 and 2023, respectively, in line with our planned expenditures for the years. We anticipate that capital expenditures and any additional acquisitions we make in 2025 will be funded from available cash and internally generated funds and, if necessary, through the issuance of commercial paper, or by accessing the public debt or equity markets. We estimate capital expenditures in 2025 to range from $170.0 million to $190.0 million. Financing Activities Cash flow from financing activities generally relates to the use of cash for purchases of our common stock and payment of dividends, offset by net borrowing activity. The majority of financing activity was attributed to the following: •Repurchase of common stock, including accelerated share repurchase program: During 2024, the Company received a total of 2,869,282 shares upon completion of the 2024 ASR Program for $500.0 million. During the year ended December 31, 2023, the Company repurchased no shares. During the year ended December 31, 2022, the Company received a total of 3,892,295 shares upon completion of the 2022 ASR Program for $500.0 million, and exclusive of the 2022 ASR Program, repurchased 641,428 shares of common stock at a total cost of $85.0 million. •Commercial paper and other short-term borrowings, net: During 2024 and 2023, we used $467.6 million and $267.5 million, respectively, to pay off primarily commercial paper borrowings. During 2022, we received net proceeds of $629.9 million from commercial paper and other short-term borrowings used to partially fund our accelerated share repurchase transaction and the acquisition of Malema. •Dividend payments: Total dividend payments to common shareholders were $283.1 million in 2024, $284.3 million in 2023 and $287.6 million 2022. Our dividends paid per common share increased 1% to $2.05 per share in 2024 compared to $2.03 per share in 2023. The number of common shares outstanding decreased from 2023 to 2024, as share repurchases exceeded share issuances. Cash Flows from Discontinued Operations Cash flows from discontinued operations generated $1.6 billion, $107.9 million and $38.9 million for the years ended December 31, 2024, 2023 and 2022, respectively, and represents the results of ESG during the periods presented. The cash flows from discontinued operations generated for 2024 primarily relate to cash provided by investing activities of $2.0 billion, which is comprised primarily of proceeds from the sale of ESG and partially offset by cash used by operating activities of $339.5 million, comprised of $439.9 million in tax payments made related to the gain on disposition, partially offset by cash flows from ESG's operating results. Cash flows generated for 2023 primarily relate to cash provided by operating activities of $116.8 million, partially offset by capital expenditures of $8.9 million. Cash flows generated for 2022 primarily relate to cash provided by operations of $59.0 million, partially offset by cash paid for an asset acquisition of $10.2 million and capital expenditures of $9.9 million. Liquidity and Capital Resources Free Cash Flow In addition to measuring our cash flow generation and usage based upon the operating, investing and financing classifications included in the consolidated statements of cash flows, we also measure free cash flow (a non-GAAP measure) which represents net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of earnings from continuing operations equals free 44     Table of Contents cash flow divided by earnings from continuing operations. We believe that free cash flow is an important measure of liquidity because it provides management and investors a measurement of cash generated from operations that may be available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock. The following table reconciles our free cash flow to cash flow provided by operating activities: [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["Free Cash Flow (dollars in thousands)","2024","","2023","","2022"],["Cash flow provided by operating activities","$","1,087,833","","","$","1,219,546","","","$","746,754"],["Less: Capital expenditures","(167,533)","","","(183,406)","","","(211,082)"],["Free cash flow","$","920,300","","","$","1,036,140","","","$","535,672"],["Cash flow from operating activities as a percentage of revenue","14.0 %","","15.9 %","","9.5 %"],["Cash flow from operating activities as a percentage of earnings from continuing operations","77.7 %","","129.2 %","","75.4 %"],["Free cash flow as a percentage of revenue","11.9 %","","13.5 %","","6.8 %"],["Free cash flow as a percentage of earnings from continuing operations","65.7 %","","109.8 %","","54.1 %"]] [[/GREPCENT_TABLE]] Free cash flow for the year ended December 31, 2024 decreased by $115.8 million compared to 2023 primarily due to tax payments made for the gain on sale of De-Sta-Co and a minority owned equity method investment totaling $123.8 million, partially offset by lower capital expenditures. The decreases in cash flow from operating activities and free cash flow as percentages of earnings from continuing operations are primarily due to the gain on sale of De-Sta-Co and a minority owned equity method investment. Free cash flow for the year ended December 31, 2023 increased by $500.5 million compared to 2022 driven by higher operating cash flow, primarily as a result of improvements in cash flows related to working capital and a decrease in capital expenditures compared to the prior year. Additionally, the year ended December 31, 2022 includes a $43.5 million income tax payment related to the gain on sale of Unified Brands in the fourth quarter of 2021 and a $13.4 million tax payment in 2022 related to an internal reorganization. Capitalization We use commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase of our common stock. As of December 31, 2024, we maintained $1.0 billion five-year and $500.0 million 364-day unsecured revolving credit facilities (together, the "Credit Agreements") with a syndicate of banks which expire April 6, 2028 and April 3, 2025, respectively. We may elect to extend the maturity date of any loans under the 364-day credit facility until April 3, 2026, subject to conditions specified therein. The Credit Agreements are designated as a liquidity back-stop for the Company's commercial paper program. At the Company's election, loans under the Credit Agreements will bear interest at a base rate plus an applicable margin. The Credit Agreements require the Company to pay facility fees and impose various restrictions on the Company such as, among other things, a requirement to maintain an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of not less than 3.0 to 1. The Company was in compliance with all covenants in the Credit Agreements and other long-term debt covenants at December 31, 2024 and had an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of 42.5 to 1. We are not aware of any potential impairment to our liquidity and expect to remain in compliance with all of our debt covenants. We also have a current shelf registration statement filed with the SEC that allows for the issuance of additional debt securities that may be utilized in one or more offerings on terms to be determined at the time of the offering. Net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, capital expenditures and acquisitions. 45     Table of Contents At December 31, 2024, our cash and cash equivalents totaled $1.8 billion, of which approximately $300.5 million was held outside the United States. At December 31, 2023, our cash and cash equivalents, including cash held for sale, totaled $415.9 million, of which $286.9 million was held outside the United States. Cash and cash equivalents are held primarily in bank deposits with highly rated banks. We regularly hold cash in excess of near-term requirements in bank deposits or invest the funds in government money market instruments or short-term investments, which consist of investment grade time deposits with original maturity dates at the time of purchase of no greater than three months. We utilize the net debt to net capitalization calculation (a non-GAAP measure) to assess our overall financial leverage and capacity and believe the calculation is useful to investors for the same reason. Net debt represents total debt minus cash and cash equivalents, including cash held for sale. Net capitalization represents net debt plus stockholders' equity. The following table provides a calculation of net debt to net capitalization from the most directly comparable GAAP measures: [[GREPCENT_TABLE]] [["Net Debt to Net Capitalization Ratio (dollars in thousands)","","December 31, 2024","","December 31, 2023","","","December 31, 2022"],["Commercial paper","","$","\u2014","","","$","467,600","","","","$","734,936"],["Current portion of long-term debt and other","","400,056","","","682","","","","836"],["Total short-term borrowings and current portion of long-term debt","","400,056","","","468,282","","","","735,772"],["Long-term debt","","2,529,346","","","2,991,759","","","","2,942,513"],["Total debt","","2,929,402","","","3,460,041","","","","3,678,285"],["Less: Cash and cash equivalents, including cash held for sale","","(1,844,877)","","","(415,861)","","","","(380,868)"],["Net debt","","1,084,525","","","3,044,180","","","","3,297,417"],["Add: Stockholders' equity","","6,953,996","","","5,106,605","","","","4,286,366"],["Net capitalization","","$","8,038,521","","","$","8,150,785","","","","$","7,583,783"],["Net debt to net capitalization","","13.5","%","","37.3","%","","","43.5","%"]] [[/GREPCENT_TABLE]] Our net debt to net capitalization ratio decreased to 13.5% at December 31, 2024 compared to 37.3% at December 31, 2023. Net debt decreased $2.0 billion during the period primarily due to increased cash and cash equivalents from the disposition of the ESG business. Stockholders' equity increased for the period as a result of current earnings of $2.7 billion, partially offset by share repurchases under the ASR Program and dividends paid during the period. Our net debt to net capitalization ratio decreased to 37.3% at December 31, 2023 compared to 43.5% at December 31, 2022. Net debt decreased $253.2 million primarily due to a decrease in commercial paper borrowings and greater cash and cash equivalents, including cash held for sale. Stockholder's equity increased for the period as a result of earnings of $1.1 billion offset by $284.3 million of dividends paid. Our ability to obtain debt financing at comparable risk-based interest rates is partly a function of our existing cash flow-to-debt and debt-to-capitalization levels as well as our current credit standing. Set forth below are our credit ratings, as of December 31, 2024, which were independently developed by the respective credit agencies. The Moody's rating and outlook were issued in December 2018, and the Standard & Poor's rating was issued in December 2017 and the outlook was most recently revised in May 2021. The ratings and outlooks from both agencies were affirmed in 2024. [[GREPCENT_TABLE]] [["","Short-Term Rating","","Long-Term Rating","","Outlook"],["Moody's","P-2","","Baa1","","Stable"],["Standard & Poor's","A-2","","BBB+","","Stable"]] [[/GREPCENT_TABLE]] As of December 31, 2024, we had approximately $160.0 million outstanding in letters of credit, surety bonds, and performance and other guarantees which primarily expire on various dates through 2035. These letters of credit and bonds are primarily issued as security for insurance, warranty and other performance obligations. In general, we would only be liable for the amount of these guarantees in the event of default in the performance of our obligations, the probability of which is believed to be remote. 46     Table of Contents Our estimate of future interest payments on long-term debt is $841.2 million based on the interest rates in effect as of December 31, 2024. Operating cash flow and access to capital markets are expected to satisfy our various cash flow requirements, including acquisitions, capital expenditures, purchase obligations, debt maturities and lease obligations. Acquisition spending and/or share repurchases could potentially increase our debt. We believe that existing sources of liquidity are adequate to meet anticipated funding needs at current risk-based interest rates for the foreseeable future. Financial Instruments and Risk Management The diverse nature of our businesses' activities necessitates the management of various financial and market risks, including those related to changes in interest rates, foreign currency exchange rates and commodity prices. We periodically use derivative financial instruments to manage some of these risks. We do not hold or issue derivative instruments for trading or speculative purposes. We are exposed to credit loss in the event of nonperformance by counterparties to our financial instrument contracts; however, nonperformance by these counterparties is considered unlikely as our policy is to contract with highly-rated, diversified counterparties. Interest Rate Exposure As of December 31, 2024, and for the years ended December 31, 2024, 2023 and 2022, we did not have any open interest rate swap contracts; however, we may in the future enter into interest rate swap agreements to manage our exposure to interest rate changes. We issue commercial paper, which exposes us to changes in variable interest rates; however, maturities are typically three months or less so a change in rates over this period would not have a material impact on our pre-tax earnings. We consider our current risk related to market fluctuations in interest rates to be minimal since our debt is largely long-term and fixed rate in nature. Generally, the fair market value of fixed-interest rate debt will increase as interest rates fall and decrease as interest rates rise. A 100 basis point increase in market interest rates would decrease the 2024 year-end fair value of our long-term debt by approximately $129.1 million. However, since we have no plans to repurchase our outstanding fixed-rate instruments before their maturities, the impact of market interest rate fluctuations on our long-term debt does not affect our results of operations or financial position. Foreign Currency Exposure We conduct business in various non-U.S. countries, including Canada, substantially all of the European countries, Mexico, Brazil, China, India and other Asian countries. Therefore, we have foreign currency risk relating to receipts from customers, payments to suppliers and intercompany transactions denominated in foreign currencies. We will occasionally use derivative financial instruments to offset such risks, when it is believed that the exposure will not be limited by our normal operating and financing activities. We have formal policies to mitigate risk in this area by using fair value and/or cash flow hedging programs. Changes in the value of the currencies of the countries in which we operate affect our results of operations, financial position and cash flows when translated into U.S. dollars, our reporting currency. The strengthening of the U.S. dollar could result in unfavorable translation effects as the results of foreign operations are translated into U.S. dollars. We have generally accepted the exposure to exchange rate movements relative to our investment in non-U.S. operations. We may, from time to time, for a specific exposure, enter into fair value hedges. Additionally, we have designated the €600 million and €500 million of euro-denominated notes issued November 9, 2016 and November 4, 2019, respectively, as a hedge of our net investment in euro-denominated operations. Due to the high degree of effectiveness between the hedging instruments and the exposure being hedged, fluctuations in the value of the euro-denominated debt due to exchange rate changes are offset by changes in the net investment. Accordingly, changes in the value of the euro-denominated debt are recognized in the cumulative translation adjustment section of other comprehensive income to offset changes in the value of the net investment in euro-denominated operations. Due to the fluctuations of the euro relative to the U.S. dollar, the U.S. dollar equivalent of this debt increases or decreases, resulting in the recognition of a 47     Table of Contents pre-tax gain of $66.8 million, and $80.3 million in other comprehensive (loss) earnings for the years ended December 31, 2024, and 2022, respectively and a pre-tax loss of $45.8 million for the year ended December 31, 2023. Commodity Price Exposure Some of our businesses are exposed to volatility in the prices of certain commodities, such as aluminum, steel, copper and various precious metals, among others. Our primary exposure to commodity pricing volatility relates to the use of these materials in purchased component parts or the purchase of raw materials. In some cases, we maintain longer-term index-based contracts on raw materials and component parts and centrally drive an ongoing effort to minimize risk proactively. However, we are prone to exposure as these contracts expire. Critical Accounting Estimates Revenue Recognition Description The majority of our revenue is generated through the manufacture and sale of a broad range of specialized products and components, with revenue recognized upon transfer of title and risk of loss, which is generally upon shipment. In limited cases, our revenue arrangements with customers require delivery, installation, testing, certification, or other promises to deliver goods or services that may impact the timing or pattern of revenue recognized. The remainder of our revenue is recognized over time, which is primarily related to services performed and specialized goods manufactured. Judgments and uncertainties involved in the estimate A significant level of judgment is involved in the identification of performance obligations for contracts with multiple-element arrangements and the allocation of the transaction price based on the relative stand-alone selling price. The identification requires judgment to identify all distinct goods or services and also the appropriate timing of revenue recognition for each distinct good or service based on the transfer of control to the customer. We estimate the relative stand-alone selling price for performance obligations if not directly observable. A significant level of judgment is also involved in the selection of the appropriate method to recognize revenue over time. Effect if actual results differ from assumptions To the extent the judgments and estimates used or the method selected to recognize revenue over time differ or change in a future period, a change to revenue and the related assets and liabilities could impact our financial position or results of operations. The judgments, estimates, and methods used have been applied consistently over the last three fiscal years. Valuation of Acquired Intangible Assets Description Intangible assets represent a significant portion of our consolidated balance sheet as a result of current and past acquisitions. Intangible assets primarily include customer intangibles, trademarks, unpatented technologies, and patents. The fair value of acquired intangible assets is determined using widely accepted valuation techniques, and the Company may engage third-party appraisal firms to assist with the determination of fair values of significant intangible assets. The valuation of intangible assets is performed at the time of acquisition and may change during the acquisition measurement period until the valuation is finalized. The fair value of finite-lived intangible assets is subsequently amortized over the estimated useful life. Judgments and uncertainties involved in the estimate The significant assumptions used in the valuation of customer intangibles include future cash flows, customer attrition rate, and discount rate. The significant assumptions for the valuation of trademarks include future revenues, royalty rate, and discount rate. The significant assumptions for the valuation of unpatented technologies and patents include future revenues, obsolescence rate, royalty rate, and discount rate. The assumptions and estimates used in the valuation of these intangible assets are based on several factors, including historical experience with similar businesses and industries and information obtained from operating company management. 48     Table of Contents Effect if actual results differ from assumptions While we believe the assumptions used in our valuation of intangible assets are reasonable and representative of expected results, actual results may differ from these assumptions. While the assumptions used for each acquisition are dependent on the acquired company, the assumptions have been applied using a consistent methodology over the last three fiscal years. Goodwill Impairment Description Goodwill is the difference between the consideration transferred and the fair value of net assets acquired. Goodwill is tested for impairment on an annual basis during the fourth quarter, or more frequently when indicators of impairment exist, or when a change in the composition of reporting units for goodwill occurs for other reasons, such as a disposition or a change in segments. The impairment test involves a comparison of the fair value of each reporting unit with its carrying value. Fair value reflects the price a potential market participant would be willing to pay for the reporting unit in an arms-length transaction. Judgments and uncertainties involved in the estimate The significant assumptions in the fair value analysis of goodwill are the estimated future cash flows and the discount rate. The determination of future cash flows involves significant judgment and is primarily driven by forecasted revenue growth rates and EBITDA margins for the reporting unit. These assumptions are developed based on the reporting unit’s expected future performance, which considers historical performance. We use a discount rate commensurate with the inherent risks in our internally developed forecasts of future cash flows. The discount rate may also fluctuate due to market conditions such as rising interest rates. Effect if actual results differ from assumptions While we believe the assumptions used in our annual impairment analysis are reasonable and representative of expected results and reflective of a market participant, actual results may differ from these assumptions. The methodology used for the goodwill impairment test has remained consistent over the last three fiscal years. Valuation of Pension Benefit Obligation Description The pension benefit obligation is actuarially determined in accordance with GAAP and is impacted by assumptions used to estimate the obligation, namely the discount rate. Annually, we review the actuarial assumptions used and compare the assumptions to third-party benchmarks to ensure that the selected assumptions accurately account for our future pension benefit obligations. Judgments and uncertainties involved in the estimate Our discount rate assumptions are determined by developing a yield curve based on high quality corporate bonds with maturities matching the plans’ expected benefit payment streams. The plans’ expected cash flows are then discounted by the resulting year-by-year discount rates. The 2024 weighted-average discount rate used to measure our pension benefit obligations for non-US plans decreased to 2.64% from 2.80% in 2023 due to a decrease in interest rates. The U.S. Plan discount rate increased to 5.70% from 5.20% in 2023 due to increases in corporate bond yields over this period. Effect if actual results differ from assumptions A 25-basis point decrease in the discount rates used for these plans would have increased pension benefit obligations by approximately $15.3 million from the amount recorded at December 31, 2024. The methodology used for the valuation of the pension benefit obligation has remained consistent over the last three fiscal years. Recoverability of Deferred Income Tax Assets and Unrecognized Tax Benefits Description We operate in and are subject to income taxes in various jurisdictions and are subject to ongoing audits by federal, state, and non-U.S. tax authorities. Significant judgment is required in determining the realizability of deferred tax assets and evaluating unrecognized tax benefits. 49     Table of Contents We have significant amounts of deferred tax assets that are evaluated for recoverability and valued accordingly. Management evaluates the realizability of deferred income tax assets for each jurisdiction in which the Company operates. We record valuation allowances to reduce the carrying value of deferred tax assets to amounts that we expect are more likely than not to be realized. The provision for unrecognized tax benefits provides a recognition threshold and measurement attribute for determining the financial statement tax benefits taken or expected to be taken in a tax return and disclosure requirements regarding uncertainties in income tax positions. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Judgments and uncertainties involved in the estimate In assessing the adequacy of a recorded valuation allowance, we consider all positive and negative evidence, including the scheduled reversal of deferred tax liabilities, historical and projected future taxable income, and tax planning strategies. Additionally, significant judgment is required in the identification and measurement of unrecognized tax benefits. Our liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions. Effect if actual results differ from assumptions Although we believe that our judgments and estimates are reasonable, actual results could differ and result in additional tax expense or benefit. If we determine a valuation allowance should be recognized to reduce the carrying value of a deferred tax asset or a liability for an unrecognized tax benefit needs to be recorded, the adjustment would result in a change to tax expense in the period such determination is made. We have not made any material changes in the process we use to assess valuation allowances and unrecognized tax benefits over the last three fiscal years. Contingencies Description Liabilities are established for environmental and legal contingencies at both the business and corporate levels. A significant amount of judgment and the use of estimates are required to quantify our ultimate exposure in these matters. Judgments and uncertainties involved in the estimate The valuation of liabilities for these contingencies is reviewed on a quarterly basis to ensure that we have accrued the proper level of expense. The liability balances are adjusted to account for changes in circumstances for ongoing issues and the establishment of additional liabilities for emerging issues. Estimates used in the valuations include the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and currently accrued to-date and consider the availability and extent of insurance coverage. Such liability balances contain uncertainties due to new developments regarding the facts and circumstances of each proceeding, changes in applicable laws and regulations, and other future events and decisions by third parties that may impact the ultimate resolution of a proceeding. Effect if actual results differ from assumptions Although we believe that the amount accrued to-date is adequate, future changes in circumstances could impact these determinations, and we may be exposed to a material loss. For example, to the extent we prevail in matters for which a liability has been established or are required to pay amounts in excess of our established liability, our contingent liability in a given financial statement period could be materially affected. However, the Company does not believe that it is currently involved in any legal proceedings which, individually or in the aggregate, could have a material effect on its financial position, results of operations, or cash flows. Recent Accounting Standards See Note 1 — Description of Business and Summary of Significant Accounting Policies in the consolidated financial statements in Item 8 of this Form 10-K for a discussion of recent accounting pronouncements and recently adopted accounting standards. 50     Table of Contents Non-GAAP Disclosures In an effort to provide investors with additional information regarding our results as determined by GAAP, we also disclose non-GAAP information, which we believe provides useful information to investors. Free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of earnings from continuing operations, net debt, net capitalization, net debt to net capitalization ratio, adjusted working capital, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for cash flows from operating activities, debt or equity, working capital or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. We believe the net debt to net capitalization ratio and free cash flow are important measures of liquidity. Net debt to net capitalization is helpful in evaluating our capital structure and the amount of leverage we employ. Free cash flow and free cash flow ratios provide both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase our common stock. We believe that reporting adjusted working capital provides a meaningful measure of liquidity by showing changes caused by operational results. We believe that reporting organic revenue growth provides a useful comparison of our revenue performance and trends between periods. Reconciliations and comparisons to non-GAAP measures can be found above in this Item 7, MD&A.