BARNES GROUP INC [B] Filings

10-Q 1 b-20240930.htm 10-Q b-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2024


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

For the transition period from to

Commission File Number 1-04801

BARNES GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware

06-0247840

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

123 Main Street

Bristol

Connecticut

06010

(Address of Principal Executive Offices)

(Zip Code)

(860) 583-7070

Registrant's telephone number, including area code

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

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


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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

The registrant had outstanding 50,940,019 shares of common stock as of October 23, 2024.

Barnes Group Inc.

Index to Form 10-Q

For the Quarterly Period Ended September 30, 2024


		Page
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Statements of (Loss) Income for the three and nine months ended Se ptember 30, 2024 and 2023	3
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2024 and 2023	4
	Condensed Consolidated Balance Sheets as of Se ptember 30, 2024 and December 31, 2023	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	45

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	48

	Signatures	50

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. See “FORWARD-LOOKING STATEMENTS” under Part I - Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BARNES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net sales	$	387,794	$	360,988	$	1,200,664	$	1,035,329

Cost of sales	259,402		253,490		817,686		704,358
Selling and administrative expenses	84,920		97,508		255,314		271,688
Costs (gain) related to the sale of businesses	1,651		—		(5,420)		—
Goodwill impairment charge	—		—		53,694		—
	345,973		350,998		1,121,274		976,046
Operating income	41,821		9,990		79,390		59,283

Interest expense	19,573		22,792		65,216		34,612
Other expense (income), net	517		(874)		1,367		(2,427)
Income (loss) before income taxes	21,731		(11,928)		12,807		27,098
Income taxes	23,875		9,802		59,824		18,318


Net (loss) income	$	(2,144)	$	(21,730)	$	(47,017)	$	8,780

Per common share:
Basic	$	(0.04)	$	(0.43)	$	(0.92)	$	0.17
Diluted	(0.04)		(0.43)		(0.92)		0.17

Weighted average common shares outstanding:
Basic	51,302,818		51,057,979		51,276,280		51,033,181
Diluted	51,302,818		51,057,979		51,276,280		51,223,978

See accompanying notes.

BARNES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Dollars in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net (loss) income	$	(2,144)	$	(21,730)	$	(47,017)	$	8,780
Other comprehensive (loss) income, net of tax
Unrealized (loss) gain on hedging activities, net of tax (1)	(18,515)		814		(6,423)		663
Foreign currency translation adjustments, net of tax (2)	54,206		(14,282)		5,464		(10,146)
Defined benefit pension and other postretirement benefits, net of tax (3)	(163)		539		5,684		10,810
Total other comprehensive income (loss), net of tax	35,528		(12,929)		4,725		1,327
Total comprehensive (loss) income	$	33,384	$	(34,659)	$	(42,292)	$	10,107

(1) Net of tax of $(6,824) and $255 for the three months ended September 30, 2024 and 2023, respectively, and $(2,154) and $218 for the nine months ended September 30, 2024 and 2023, respectively.

(2) Net of tax of $0 for each of the three and nine month periods ended September 30, 2024 and 2023.

(3) Net of tax of $32 and $113 for the three months ended September 30, 2024 and 2023, respectively, and $2,733 and $3,741 for the nine months ended September 30, 2024 and 2023, respectively.

See accompanying notes.

BARNES GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

(Unaudited)


	September 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	80,675	$	89,827
Accounts receivable, less allowances (2024 - $6,732; 2023 - $7,258)	327,063		353,923
Inventories	353,230		365,221
Prepaid expenses and other current assets	105,763		97,749
Total current assets	866,731		906,720

Deferred income taxes	8,289		10,295

Property, plant and equipment	858,051		1,031,495
Less accumulated depreciation	(506,316)		(628,798)
	351,735		402,697

Goodwill	1,081,960		1,183,624
Other intangible assets, net	655,927		706,471
Other assets	110,390		98,207
Total assets	$	3,075,032	$	3,308,014

Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable	$	506	$	16
Accounts payable	142,571		164,264
Accrued liabilities	226,637		221,462
Long-term debt - current	9,765		10,868
Total current liabilities	379,479		396,610

Long-term debt	1,135,162		1,279,962
Accrued retirement benefits	36,540		45,992
Deferred income taxes	117,010		120,608
Long-term tax liability	7,400		21,714
Other liabilities	94,955		80,865

Commitments and contingencies (Note 17)
Stockholders' equity
Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2024 - 64,788,605 shares; 2023 - 64,600,635 shares)	648		646
Additional paid-in capital	548,462		537,948
Treasury stock, at cost (2024 - 13,950,200 shares; 2023 - 13,914,076 shares)	(533,806)		(532,415)
Retained earnings	1,479,586		1,551,213
Accumulated other non-owner changes to equity	(190,404)		(195,129)
Total stockholders' equity	1,304,486		1,362,263
Total liabilities and stockholders' equity	$	3,075,032	$	3,308,014

See accompanying notes.

BARNES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
Operating activities:
Net (loss) income	$	(47,017)	$	8,780
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	89,837		79,196

Gain on disposition of property, plant and equipment	(9)		(202)
Stock compensation expense	10,530		8,121
Non-cash goodwill impairment charge	53,694		—
Gain on sale of businesses	(3,894)		—
Changes in assets and liabilities, net of the effects of acquisition and divestiture:
Accounts receivable	(4,587)		(5,273)
Inventories	(21,481)		(8,699)
Prepaid expenses and other current assets	(11,629)		5,367
Accounts payable	(4,641)		(11,629)
Accrued liabilities	5,510		22,437
Deferred income taxes	683		(3,541)
Long-term retirement benefits	(12,364)		(13,096)
Long-term tax liability	(9,972)		(13,029)
Other	5,090		2,541
Net cash provided by operating activities	49,750		70,973

Investing activities:
Proceeds from disposition of property, plant and equipment	223		6,990
Proceeds from the sale of businesses, net of cash sold	160,869		—

Capital expenditures	(41,822)		(37,405)
Business acquisitions, net of cash acquired	159		(718,782)

Other	—		(921)
Net cash provided (used) by investing activities	119,429		(750,118)

Financing activities:
Net change in other borrowings	242		(167)
Payments on long-term debt	(321,318)		(268,580)
Proceeds from the issuance of long-term debt	170,000		1,006,333
Payments of debt issuance costs	—		(11,341)

Proceeds from the issuance of common stock	176		277

Dividends paid	(24,361)		(24,302)
Withholding taxes paid on stock issuances	(1,391)		(857)
Cash settlement of foreign currency hedges related to intercompany financing	(1,070)		(6,346)
Other	(232)		(2,625)
Net cash (used) provided by financing activities	(177,954)		692,392

Effect of exchange rate changes on cash flows	(2,590)		(2,190)
(Decrease) increase in cash, cash equivalents and restricted cash	(11,365)		11,057
Cash, cash equivalents and restricted cash at beginning of period	92,040		81,128
Cash, cash equivalents and restricted cash at end of period	80,675		92,185
Less: Restricted cash, included in Prepaid expenses and other current assets	—		(2,145)
Cash and cash equivalents at end of period	$	80,675	$	90,040

See accompanying notes.

BARNES GROUP INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All dollar amounts included in the notes are stated in thousands except per share data)

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Condensed Consolidated Balance Sheet and the related Condensed Consolidated Statements of (Loss) Income, Comprehensive (Loss) Income and Cash Flows have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The Condensed Consolidated Financial Statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The balance sheet as of December 31, 2023 has been derived from the 2023 financial statements of Barnes Group Inc. (the "Company"). For additional information, please refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair statement of the results, have been included. Operating results for the three and nine month periods ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

2. Recent Accounting Standards

The Financial Accounting Standards Board ("FASB") establishes changes to accounting principles under U.S. generally accepted accounting principles ("US GAAP") through the use of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification. The Company evaluates the applicability and potential impacts of recent ASUs on its Condensed Consolidated Financial Statements and related disclosures.

Recently Issued Accounting Standards

In November 2023, the FASB amended its guidance related to segment reporting requirements. The amended guidance serves to improve segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amended guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The guidance requires application on a retrospective basis to all periods presented. The adoption of this amended guidance is expected to impact the Company's segment disclosures with no material impact on the Company's Consolidated Financial Statements.

In December 2023, the FASB amended its guidance related to income tax disclosure requirements. The amended guidance establishes new income tax disclosure requirements including providing greater disaggregation in the rate reconciliation and information on taxes paid. The amended guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that the guidance may have on the disclosures within its Consolidated Financial Statements.

3. Acquisition

On August 31, 2023 (“Acquisition Date”), the Company completed its acquisition of MB Aerospace Holdings Inc., a Delaware corporation ("MB Aerospace"), along with such entity's subsidiaries by acquiring all of the issued and outstanding shares of capital stock of MB Aerospace. MB Aerospace is a leading provider of precision aero-engine component manufacture and repair services serving major aerospace and defense engine original equipment manufacturers (“OEMs”), tier 1 suppliers and maintenance, repair and overhaul ("MRO") providers. This business, which is being integrated into our Aerospace segment, provides significant growth opportunities and enhances the Company’s ability to deliver value-add solutions across the aero-engine value chain. Further, the acquisition of MB Aerospace increases customer diversification within both commercial aerospace and defense platforms and provides the Company with a well-balanced portfolio across aerospace and industrial end markets.

The Company acquired MB Aerospace for an aggregate purchase price of $728,448, which includes post-closing adjustments under the terms of the Stock Purchase Agreement. The Company paid $718,623, net of $9,825 of cash acquired, in cash, using cash on hand and borrowings under the Company’s $1,000,000 Revolving Credit Facility and its $650,000 Term Loan Facility (see Note 10).

During the three months ended September 30, 2023, the Company incurred $17,423 of acquisition-related costs related to the acquisition of MB Aerospace. These transaction costs have been recognized in the Company's Condensed Consolidated Statements of (Loss) Income, of which $7,817 was recognized as selling and administrative expenses and of which $9,606 primarily relating to the bridge loan facility financing was recognized as Interest expense (see Note 10).

During the nine months ended September 30, 2023, the Company incurred $22,711 of acquisition-related costs related to the acquisition of MB Aerospace. These costs include $1,729 of due diligence costs and $20,982 of transaction costs to complete the acquisition. These transaction costs have been recognized in the Company's Condensed Consolidated Statements of (Loss) Income, of which $13,105 was recognized as selling and administrative expenses and of which $9,606 primarily relating to the bridge loan facility financing was recognized as Interest expense (see Note 10).

The operating results of MB Aerospace have been included in the Consolidated Statements of Income since the Acquisition Date. The Company reported $26,476 in net sales and an operating loss of $7,386 from MB Aerospace, included within the Aerospace segment's operating profit, inclusive of $8,019 of short-term purchase accounting adjustments related to inventory step-up and backlog intangible amortization and $2,208 of amortization of other intangible assets acquired, for the period from the Acquisition Date through September 30, 2023.

Fair Value of Assets Acquired and Liabilities Assumed

The Company accounted for the MB Aerospace acquisition as a business combination. The identifiable assets acquired and liabilities assumed are recorded at their preliminary fair values as of the Acquisition Date, inclusive of subsequent purchase price adjustments, and are consolidated into the Company’s condensed consolidated financial statements. The assignment of fair market value requires significant judgments regarding the estimates and assumptions used to value the acquired assets and liabilities assumed. In determining the fair values of the assets acquired and liabilities assumed, the Company utilized the cost, income and market approaches from the perspective of a market participant. The Company used third party valuation professionals to aid in the determination of the estimated fair value of certain assets acquired and liabilities assumed.

The following table summarizes the fair values for each major class of assets acquired, net of cash acquired, and liabilities assumed at the Acquisition Date, inclusive of subsequent purchase price adjustments:


Accounts receivable	$	48,863
Inventories	77,914
Prepaid expenses and other current assets	18,093

Property, plant and equipment	76,363
Goodwill	328,361
Other intangible assets	320,000
Other Assets	10,627
Total Assets Acquired	880,221

Accounts payable	(21,826)
Accrued liabilities	(37,260)
Deferred income taxes	(83,480)
Other liabilities	(9,609)
Debt assumed	(9,423)
Total Liabilities Assumed	(161,598)
Net Assets Acquired	$	718,623

The Company recorded the fair values of the assets acquired and liabilities assumed of MB Aerospace as of August 31, 2023. Fair values are inclusive of purchase price adjustments that were made subsequent to the acquisition date.

Goodwill represents the excess of the purchase consideration over the fair value of the underlying acquired net tangible and intangible assets. Goodwill has been allocated to the Company’s Aerospace segment. None of the recognized goodwill from the acquisition of MB Aerospace is expected to be deductible for income tax purposes. In connection with the acquisition, the Company recorded $328,361 of goodwill and $320,000 of intangible assets. See Note 9.

The Other intangible assets in the table above consist of backlog, developed technology, and customer relationships, which are amortized over their respective estimated useful lives (see Note 9).

Supplemental Pro Forma Information

The following table reflects the unaudited pro forma operating results of the Company for the three and nine months ended September 30, 2023, which give effect to the acquisition of MB Aerospace as if it had occurred on January 1, 2022. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2022, nor are they intended to be indicative of results that may occur in the future. The underlying pro forma information includes the historical financial results of the Company and MB Aerospace adjusted for certain items including depreciation and amortization expense associated with the assets acquired and the Company’s expense related to financing arrangements, with the related tax effects.

The unaudited pro forma combined condensed financial information has been prepared using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”).

The pro forma information does not include the effects of any synergies or cost reduction initiatives related to the acquisition.


	Three months ended September 30,		Nine months ended September 30,
	2023		2023
Net sales	$	416,088	$	1,249,129
Net (loss) income	(5,013)		6,701

The unaudited pro forma combined condensed financial information during the three and nine month periods ended September 30, 2023 were adjusted to include:

a.Depreciation and Amortization - Adjustment of $(4,490) and $481 for the three and nine months ended September 30, 2023, respectively, to reflect the adjustment to property, plant, and equipment depreciation and amortization expense from the acquired backlog, developed technology and customer relationships.

b.Transaction Costs - Adjustments of $(7,817) and $(13,105) for the three and nine months ended September 30, 2023, respectively, to reflect the elimination of non-recurring transaction costs.

c.Interest Expense - Adjustment of $(9,858) and $3,209 for the three and nine months ended September 30, 2023, respectively, to reflect the adjustment to interest expense resulting from interest on the new debt to finance the acquisition of MB Aerospace and the extinguishment of MB Aerospace’s existing debt and the amortization of related debt issuance costs.

d.Inventory Step-Up - Adjustment of $(3,019) and $(3,019) for the three and nine months ended September 30, 2023, respectively, to eliminate the inventory fair value adjustment that was recognized in cost of sales during the three and nine months ended September 30, 2023.

e.Income Taxes - The estimated tax impacts of the pro forma adjustments have been reflected within the unaudited pro forma condensed combined statement of operations by using a blended foreign, federal and state statutory income tax rate.

4. Divestiture

On January 9, 2024, the Company entered into a Share and Asset Purchase Agreement (as amended, the "SPA") with One Equity Partners ("OEP") to sell its Associated Spring™ and Hänggi™ businesses (the "Businesses") for $175,000, subject to certain adjustments (the "Sale"). The Businesses operated within the Company's Force & Motion Control (formerly Motion Control Solutions) business. Pursuant to the required accounting guidance, as of March 31, 2024, the Company allocated $58,900 of goodwill from the Force & Motion Control reporting unit to the Businesses based on the estimated relative fair values of the Businesses to be disposed of and the portion of the reporting unit that will be retained.

The Company completed the Sale of the Businesses to OEP on April 4, 2024. Gross proceeds received were $173,435. The Company yielded net cash proceeds of $160,869 after consideration of cash sold and transaction costs. The Company recorded additional transaction costs associated with the sale of the Businesses of $1,651 during the three month period ended September 30, 2024, with $1,042 reflected within Accounts payable as of September 30, 2024. The final amount of proceeds from the Sale is subject to post closing adjustments. The Company recorded a gain on the sale of the Businesses of $3,894 ($5,420 through operating profit) during the nine month periods ended September 30, 2024. Resulting tax charges of $0 and $23,688, were recognized during the three and nine month periods ended September 30, 2024, respectively. The Company utilized the proceeds from the Sale to reduce outstanding debt.

5. Revenue

The Company is a global provider of highly engineered products, differentiated industrial technologies, and innovative solutions, serving a wide range of end markets and customers. Its specialized products and services are used in far-reaching applications in aerospace, healthcare, automation, packaging, mobility and manufacturing.

Revenue is recognized by the Company when control of the product or solution is transferred to the customer. Control is generally transferred when products are shipped or delivered to customers, title is transferred, the significant risks and rewards of ownership have transferred, and the Company has rights to payment and the rewards of ownership pass to the customer. Customer acceptance may also be a factor in determining whether control of the product has transferred. Although revenue is generally recognized at a point in time, a certain portion of the Company's businesses with customized products or contracts in which the Company performs work on customer-owned assets requires the use of an over-time recognition model as certain contracts meet one or more of the established criteria pursuant to the accounting guidance. Also, service revenue is recognized as control transfers, which is concurrent with the services being performed.

The following table presents the Company's revenue disaggregated by products and services, and geographic regions, by segment:


	Three Months Ended September 30, 2024						Three Months Ended September 30, 2023
	Aerospace		Industrial		Total Company		Aerospace		Industrial		Total Company
Products and Services(A)
Aerospace Original Equipment Manufacturing Products	$	137,806	$	—	$	137,806	$	97,994	$	—	97,994
Aerospace Aftermarket Products and Services	94,128		—		94,128		58,096		—		58,096
Force & Motion Control Products	—		40,284		40,284		—		91,442		91,442
Molding Solutions Products	—		101,750		101,750		—		99,428		99,428
Automation Products	—		13,826		13,826		—		14,028		14,028
	$	231,934	$	155,860	$	387,794	$	156,090	$	204,898	$	360,988

Geographic Regions (B)
Americas	$	150,950	$	54,476	$	205,426	$	106,608	$	89,574	$	196,182
Europe	47,861		64,782		112,643		29,708		74,777		104,485
Asia	29,307		35,932		65,239		17,213		38,738		55,951
Rest of World	3,816		670		4,486		2,561		1,809		4,370
	$	231,934	$	155,860	$	387,794	$	156,090	$	204,898	$	360,988


	Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023
	Aerospace		Industrial		Total Company		Aerospace		Industrial		Total Company
Products and Services(A)
Aerospace Original Equipment Manufacturing Products	$	404,818	$	—	$	404,818	$	246,094	$	—	246,094
Aerospace Aftermarket Products and Services	266,444		—		266,444		149,268		—		149,268
Force & Motion Control Products (B)	—		175,858		175,858		—		290,356		290,356
Molding Solutions Products	—		310,038		310,038		—		303,082		303,082
Automation Products	—		43,506		43,506		—		46,529		46,529
	$	671,262	$	529,402	$	1,200,664	$	395,362	$	639,967	$	1,035,329

Geographic Regions (C)
Americas	$	453,858	$	198,044	$	651,902	$	279,029	$	278,768	$	557,797
Europe	133,586		221,035		354,621		70,776		235,406		306,182
Asia	75,064		106,814		181,878		38,876		119,670		158,546
Rest of World	8,754		3,509		12,263		6,681		6,123		12,804
	$	671,262	$	529,402	$	1,200,664	$	395,362	$	639,967	$	1,035,329

(A) The results of MB Aerospace, from the acquisition on August 31, 2023, have been included within the Company's revenue disaggregated by products and services, and geographic regions within the Aerospace Segment for the three and nine month periods ended September 30, 2024 and September 30, 2023..

(B) Effective April 23, 2024, following the divestiture of the Businesses, the Company renamed the Motion Control Solutions business to Force & Motion Control. Revenue related to the divested businesses contributed $0 and $53,040 during the three and nine month periods ended September 30, 2024, respectively, and $51,804 and $162,666 during the three and nine month periods ended September 30, 2023, respectively.

Revenue from products and services transferred to customers at a point in time accounted for approximately 70 percent and 75 percent of total revenue for the three month periods ended September 30, 2024 and September 30, 2023, respectively. Revenue from products and services transferred to customers at a point in time accounted for approximately 70 percent and 80 percent of total revenue for the nine month periods ended September 30, 2024 and September 30, 2023, respectively. A majority of revenue within the Industrial segment and Aerospace Original Equipment Manufacturing Products business ("OEM"), along with a portion of revenue within the Aerospace Aftermarket Products and Services business ("Aftermarket"), is recognized at a point in time, primarily when the product or solution is shipped to the customer.

Revenue from products and services transferred to customers over-time accounted for approximately 30 percent of total revenue and 25 percent of total revenue for the three month periods ended September 30, 2024 and September 30, 2023, respectively. Revenue from products and services transferred to customers over-time accounted for approximately 30 percent and 20 percent of total revenue for the nine month periods ended September 30, 2024 and September 30, 2023, respectively. The Company recognizes revenue over-time in instances where a contract supports a continual transfer of control to the customer. Substantially all of our revenue in the Aerospace Aftermarket maintenance repair and overhaul business (within Aftermarket Products and Services) and a portion of the revenue within Force & Motion Control productions (formerly Motion Control Solutions), Molding Solutions products and Aerospace OEM products is recognized over-time. Within the Molding Solutions and Aerospace Aftermarket businesses, this continual transfer of control to the customer partially results from repair and refurbishment work performed on customer-controlled assets. With other contracts, this continual transfer of control to the customer is supported by clauses in the contract, or governing commercial law of the relevant jurisdiction, where we deliver products that do not have an alternative use and require an enforceable right to payment of costs incurred (plus a reasonable profit) or the Company has a contractual right to complete any work in process and receive full contract price.

The majority of our revenue is from contracts that are for less than one year, however certain Aerospace OEM and Molding Solutions business contracts extend beyond one year. In the Industrial segment, customers are typically OEMs or suppliers to OEMs and, in some businesses, distributors. In the Aerospace segment, customers include commercial airlines, OEMs, defense-related manufacturers, and industry parts and service providers.

A performance obligation represents a promise within a contract to provide a distinct good or service to the customer. Revenue is recognized in an over-time model based on the extent of progress towards completion of the performance obligation. The

selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company utilizes the cost-to-cost measure of progress for over-time contracts as we believe this measure best depicts the transfer of control to the customer, which occurs as we incur costs on contracts.

Adjustments to net sales, cost of sales and the related impact to operating income are recognized as necessary in the period they become known. Revenue recognized from performance obligations satisfied in previous periods was not material in both the three month period ended September 30, 2024 and 2023.

Contract Balances. The timing of revenue recognition, invoicing and cash collections affects accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets.

Unbilled Receivables (Contract Assets) - Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect revenue that is recognized when 1) the cost-to-cost method is applied and 2) such revenue exceeds the amount invoiced to the customer. Unbilled receivables are included within Prepaid Expenses and Other Current Assets on the Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023.

Customer Advances and Deposits (Contract Liabilities) - The Company may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior to revenue being recognized. Certain contracts within the Molding Solutions business, for example, may require such advances. Since the performance obligations related to such advances have not been satisfied, a contract liability is established. An offsetting asset of equal amount is recorded as an account receivable until the advance is collected. Advances and deposits are included within Accrued Liabilities on the Condensed Consolidated Balance Sheets until the respective revenue is recognized. Advance payments are not considered a significant financing component as they are generally received less than one year before the customer solution is completed. These assets and liabilities are reported on the Condensed Consolidated Balance Sheets on an individual contract basis at the end of each reporting period.

Net contract assets (liabilities) consisted of the following:


	September 30, 2024		December 31, 2023		$ Change		% Change
Unbilled receivables (contract assets)	$	67,089	$	59,652	$	7,437	12	%
Contract liabilities	(42,831)		(42,428)		(403)		1	%
Net contract assets	$	24,258	$	17,224	$	7,034	41	%

Contract liabilities balances at September 30, 2024 and December 31, 2023 include $12,516 and $10,032, respectively, of customer advances for which the Company has not yet collected payment, but has an unconditional right to collect payment. Accounts receivable, as presented on the Condensed Consolidated Balance Sheet, includes corresponding balances at September 30, 2024 and December 31, 2023, respectively.

Changes in the net contract assets during the nine month period ended September 30, 2024 included a $7,437 increase in contract assets, driven primarily by contract progress (i.e., unbilled receivable), partially offset by earlier contract progress being invoiced to the customer. Offsetting this net contract increase was a $403 increase in contract liabilities, driven primarily by new customer advances, offset by revenue recognized in the current nine-month period.

The Company recognized approximately 15% and 90% of the revenue related to the contract liabilities balance as of December 31, 2023 during the three and nine month period ended September 30, 2024, and approximately 15% and 85% of the revenue related to the contract liabilities balance as of December 31, 2022 during the three and nine month period ended September 30, 2023, respectively, primarily representing revenue from the sale of molds and hot runners within the Molding Solutions business.

Remaining Performance Obligations. The Company has elected to disclose remaining performance obligations only for contracts with an original duration of greater than one year. Such remaining performance obligations represent the transaction price of firm orders for which work has not yet been performed and, for Aerospace, excludes projections of components and assemblies that Aerospace OEM customers anticipate purchasing in the future under existing programs, which represent orders that are beyond lead time and do not represent performance obligations pursuant to accounting guidance. As of September 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $632,394. The

Company expects to recognize revenue on approximately 70% of the remaining performance obligations over the next 12 months, with the remainder to be recognized within 24 months.

6. Stockholders' Equity

A schedule of consolidated changes in equity for the nine months ended September 30, 2024 is as follows (number of shares in thousands):


	Common Stock (Number of Shares)	Common Stock (Amount)		Additional Paid-In Capital		Treasury Stock (Number of Shares)	Treasury Stock (Amount)		Retained Earnings		Accumulated Other Non-Owner Changes to Equity		Total Stockholders’ Equity
December 31, 2023	64,600	$	646	$	537,948	13,914	$	(532,415)	$	1,551,213	$	(195,129)	$	1,362,263
Comprehensive income (loss)	—	—		—		—	—		1,947		(28,070)		(26,123)
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,111)		—		(8,111)


Employee stock plans	16	—		3,443		2	(71)		(52)		—		3,320
March 31, 2024	64,616	$	646	$	541,391	13,916	$	(532,486)	$	1,544,997	$	(223,199)	$	1,331,349
Comprehensive (loss) income	—	—		—		—	—		(46,821)		(2,733)		(49,554)
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,118)		—		(8,118)

Employee stock plans	63	1		3,027		2	(70)		(137)		—		2,821
June 30, 2024	64,679	$	647	$	544,418	13,918	$	(532,556)	$	1,489,921	$	(225,932)	$	1,276,498
Comprehensive loss (income)	—	—		—		—	—		(2,144)		35,528		33,384
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,132)		—		(8,132)


Employee stock plans	110	1		4,044		32	(1,250)		(59)		—		2,736
September 30, 2024	64,789	$	648	$	548,462	13,950	$	(533,806)	$	1,479,586	$	(190,404)	$	1,304,486

A schedule of consolidated changes in equity for the nine months ended September 30, 2023 is as follows (number of shares in thousands):


	Common Stock (Number of Shares)	Common Stock (Amount)		Additional Paid-In Capital		Treasury Stock (Number of Shares)	Treasury Stock (Amount)		Retained Earnings		Accumulated Other Non-Owner Changes to Equity		Total Stockholders’ Equity
December 31, 2022	64,481	$	645	$	529,791	13,891	$	(531,507)	$	1,567,898	$	(220,500)	$	1,346,327
Comprehensive income	—	—		—		—	—		13,159		29,209		42,368
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,096)		—		(8,096)

Residual interest in subsidiary	—	—		(2,381)		—	—		—		—		(2,381)
Employee stock plans	23	—		2,665		6	(252)		(83)		—		2,330
March 31, 2023	64,504	$	645	$	530,075	13,897	$	(531,759)	$	1,572,878	$	(191,291)	$	1,380,548
Comprehensive income (loss)	—	—		—		—	—		17,352		(14,953)		2,399
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,099)		—		(8,099)

Employee stock plans	22	—		2,339		3	(124)		(76)		—		2,139
June 30, 2023	64,526	$	645	$	532,414	13,900	$	(531,883)	$	1,582,055	$	(206,244)	$	1,376,987
Comprehensive income (loss)	—	—		—		—	—		(21,730)		(12,929)		(34,659)
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,107)		—		(8,107)


Employee stock plans	59	1		3,363		12	(481)		(53)		—		2,830
September 30, 2023	64,585	$	646	$	535,777	13,912	$	(532,364)	$	1,552,165	$	(219,173)	$	1,337,051

7. Net (Loss) Income Per Common Share

For the purpose of computing diluted net income per common share, the weighted-average number of common shares outstanding is increased for the potential dilutive effects of stock-based incentive plans. No potentially dilutive shares have been included in the diluted earnings per share calculations for the three and nine month periods ended September 30, 2024 due to the Company's reported net losses for the periods. No potentially dilutive shares have been included in the diluted earnings per share calculation for the three month period ended September 30, 2023 due to the Company's reported net loss for the

period. For the purpose of computing diluted net income per common share for the nine month period ended September 30, 2023, the weighted-average number of common shares outstanding was increased by 190,797.

The calculation of weighted-average diluted shares outstanding excludes all shares that would have been anti-dilutive. During the three month periods ended September 30, 2024 and 2023, the Company excluded 792,230 and 683,374 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive. During the nine month periods ended September 30, 2024 and 2023, the Company excluded 1,182,283 and 757,813 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive.

The Company granted 144,100 stock options, 196,660 restricted stock unit awards and 145,100 performance share awards ("PSAs") in February 2024 as part of its annual long-term incentive equity grant awards. All of the stock options and the restricted stock unit awards vest upon meeting certain service conditions. The restricted stock unit awards are included in basic weighted-average common shares outstanding as they contain nonforfeitable rights to dividend payments. The PSAs are part of the long-term Performance Share Award Program and are based on performance goals that are driven by a combination of independently measured metrics (depending on the grant year).

The metrics for awards granted in 2024 include the Company’s total shareholder return ("TSR"), return on invested capital ("ROIC") and operating income before depreciation and amortization growth ("EBITDA growth") with metrics weighted 50%, 25% and 25%, respectively. The TSR and EBITDA growth metrics are designed to assess the long-term Company performance relative to the performance of companies included in the Russell 2000 Index over a three-year performance period. ROIC is designed to assess the Company's performance compared to pre-established Company targets over a three-year performance period. The participants can earn from zero to 200% of the target award and the award includes a forfeitable right to dividend equivalents, which are not included in the aggregate target award numbers. The fair value of the TSR is determined using a Monte Carlo valuation method as the award contains a market condition.

8. Inventories

The components of inventories consisted of:


	September 30, 2024		December 31, 2023
Finished goods	$	92,623	$	104,801
Work-in-process	121,836		105,737
Raw material and supplies	138,771		154,683
	$	353,230	$	365,221

9. Goodwill and Other Intangible Assets

Goodwill:

The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended September 30, 2024:


	Aerospace		Industrial		Total Company
December 31, 2023 (A)	$	352,352	$	831,272	$	1,183,624
Acquisition related	7,478		—		7,478

Divestiture related (see Note 4)	—		(58,900)		(58,900)
Impairment charge	—		(53,694)		(53,694)
Foreign currency translation	1,478		1,974		3,452
September 30, 2024	$	361,308	$	720,652	$	1,081,960

(A) Industrial amounts as of December 31, 2023 are net of accumulated goodwill impairment losses of $68,194.

The acquisition-related changes recorded at Aerospace during 2024 include purchase accounting adjustments of $7,478 of goodwill resulting from the acquisition of MB Aerospace.

The Company completed the sale of the Businesses in April 2024. See Note 3. Pursuant to the required accounting guidance, the Company allocated $58,900 of goodwill within the Force & Motion Control (formerly Motion Control Solutions) reporting unit to the divested Businesses based on the estimated relative fair values of the Businesses.

During the second quarter, management completed the Company's annual impairment assessment of goodwill as of April 1, 2024. The Company utilizes the option to first assess qualitative factors to determine whether it is necessary to perform the Step 1 quantitative goodwill impairment test in accordance with the applicable accounting standards. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, overall reporting unit performance and events directly affecting a reporting unit. If the Company determines that the Step 1 quantitative impairment test is required, management estimates the fair value of the reporting unit using a discounted cash flow model (a form of the income approach), a market approach, or both. Inherent in management’s development of cash flow projections under the income approach are assumptions and estimates, including those related to future earnings and growth rates and the weighted average cost of capital. Pursuant to the market approach, management considers readily available market information, including comparable public company earnings multiples relative to the performance of the Company's businesses. The Company compares the fair value of the reporting unit with the carrying value of the reporting unit. If the fair values were to fall below the carrying values, the Company would recognize a non-cash impairment charge to income from operations for the amount by which the carrying amount of any reporting unit exceeds the reporting unit’s fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit.

Based on qualitative assessments as of April 1, 2024, management concluded that it was not more likely than not that the fair value of each of the Company’s reporting units was below its respective carrying value, except for the Automation reporting unit. Therefore, management performed a Step 1 quantitative assessment for the Automation reporting unit. In estimating the fair value of the Automation reporting unit, management evaluated readily available end market information, including earnings multiples, from comparable public companies that also operate within the automation sector. Management’s assessment resulted in a non-cash goodwill impairment charge of $53,694 related to the Automation reporting unit as the estimated fair value of the reporting unit declined below its carrying value. The reduction of fair value was primarily the result of lower projections for the reporting unit, consistent with a reduction of forecasted growth trends within the broader automation market. A decline in projections was largely due to uncertainty in the broader industrial manufacturing markets, partially restricting the significant capital expenditures required for such investments in automation. A significant level of reliance on the automotive sector and corresponding delays in model change releases, more specifically, also negatively impacted the fair value of the Automation reporting unit. The non-cash goodwill impairment charge was recorded during the three-month period ended June 30, 2024.

Other Intangible Assets:

Other intangible assets consisted of:


		September 30, 2024				December 31, 2023
	Range of Life -Years	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized intangible assets:
Revenue Sharing Programs (RSPs)	Up to 30	$	296,700	$	(186,237)	$	299,500	$	(176,143)
Component Repair Programs (CRPs)	Up to 30	111,839		(54,987)		111,839		(49,577)
Customer relationships	10-16	579,050		(199,088)		586,189		(180,679)
Patents and technology	4-18	174,280		(101,859)		178,433		(100,662)
Trademarks/trade names	10-30	7,153		(6,469)		10,949		(10,910)
Other	Up to 10	27,150		(17,487)		26,334		(14,857)
		1,196,172		(566,127)		1,213,244		(532,828)
Unamortized intangible assets:
Trade names		55,670		—		55,670		—
Foreign currency translation		(29,788)		—		(29,615)		—
Other intangible assets		$	1,222,054	$	(566,127)	$	1,239,299	$	(532,828)

In the second quarter of 2024, management completed its annual impairment assessment of its trade names, which are indefinite-lived intangible assets. Based on this assessment, there were no impairments.

Gross amounts of $7,139, $4,153 and $3,821 that were included within customer relationships, patents and technology, and trademarks, respectively, and were fully amortized as of December 31, 2023, were related to the divested Businesses.

Amortization of intangible assets for the three months period ended September 30, 2024 and September 30, 2023 was $16,735 and $18,860, respectively. Amortization of intangible assets for the nine months period ended September 30, 2024 and September 30, 2023 was $51,398 and $42,084, respectively.

Estimated amortization of intangible assets for future periods is as follows: 2024 (remainder) - $19,000; 2025 - $71,000; 2026 - $68,000; 2027 - $67,000; 2028 - $63,000 and 2029 - $62,000.

10. Debt

Long-term debt and notes and overdrafts payable at September 30, 2024 and December 31, 2023 consisted of:


	September 30, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Revolving Credit Facility	$	565,762	$	572,941	$	642,988	$	646,843
Term Loan Facility	579,078		579,802		648,375		651,215
Unamortized deferred financing costs and original issue discount - Term Loan Facility	(11,122)		—		(12,532)		—

Borrowings under lines of credit and overdrafts	506		506		16		16
Finance leases	11,209		11,029		11,999		11,732

	1,145,433		1,164,278		1,290,846		1,309,806

Less current maturities	(10,271)				(10,884)
Long-term debt	$	1,135,162			$	1,279,962

On February 10, 2021, the Company and certain of its subsidiaries entered into the sixth amended and restated senior unsecured revolving credit agreement (the "Unsecured Credit Agreement") and retained Bank of America, N.A. as the Administrative Agent for the lenders. The $1,000,000 Unsecured Credit Agreement was to mature in February 2026. Borrowings under the Unsecured Credit Agreement bore interest at either the Eurocurrency rate, as defined in the Unsecured Credit Agreement, plus a margin of 1.175% to 1.775% or the base rate, as defined in the Unsecured Credit Agreement, plus a margin of 0.175% to 0.775%, depending on the Company's leverage ratio at the time of the borrowing. Multi-currency borrowings, pursuant to the Unsecured Credit Agreement, bore interest at their respective interbank offered rate (i.e. Euribor) or 0.00% (higher of the two rates) plus a margin of between 1.175% and 1.775%. The Unsecured Credit Agreement required the Company to maintain a Senior Debt Ratio of not more than 3.25 times. In addition, the Unsecured Credit Agreement required the Company to maintain a Total Debt Ratio of not more than 3.75 times for each fiscal quarter. A ratio of Consolidated EBITDA to Consolidated Cash Interest Expense, as defined, of not less than 4.25 times, was also required at the end of each fiscal quarter. The Company subsequently amended the Unsecured Credit Agreement on October 11, 2021 (the "LIBOR Transition Amendment"), defining certain applicable multi-currency borrowing rates that could be used as replacement rates for LIBOR, which was expected to be discontinued by reference rate reform.

On April 6, 2022, the Company entered into Amendment No. 1 to the Unsecured Credit Agreement (“Amendment No. 1”), which (i) replaced the LIBOR interest rate for U.S. dollar loans to a term Secured Overnight Financing Rate including a Secured Overnight Financing Rate adjustment (or "SOFR", as defined in the Unsecured Credit Agreement), (ii) added a daily SOFR option for U.S. dollar loans and a term SOFR option for U.S. dollar loans, and (iii) added the ability to borrow foreign swing line loans based on the Euro Short Term Rate ("€STR") (as defined) with the same interest spread as the interest spread for SOFR Loans (as defined) and Alternative Currency Loans (defined as loans denominated in Euro, Sterling, Swiss Francs or Yen). In addition, Amendment No. 1 lowered the interest rate spread on (i) SOFR Loans and Alternative Currency Loans to a range from 0.975% to 1.70%, depending on the leverage ratio (the “Leverage Ratio”) of Consolidated Total Debt (as defined) to Consolidated EBITDA (as defined) as of the end of each fiscal quarter, and (ii) loans based on the Base Rate (as defined), to a range from 0.00% to 0.70%, depending on the Company’s Leverage Ratio as of the end of each fiscal quarter. Amendment No. 1 also lowered the facility fee, which was required to be paid by the Company under the Unsecured Credit Agreement and was calculated on the full amount of the revolving facility, to a range from 0.15% to 0.30%, depending on the Company’s Leverage

Ratio at the end of each fiscal quarter. In April 2022, the Company paid fees and expenses of $1,037 in conjunction with executing Amendment No. 1. Such fees have been deferred within Other Assets on the Condensed Consolidated Balance Sheets and will be amortized into interest expense on the Condensed Consolidated Statements of (Loss) Income through its maturity.

On June 5, 2023, the Company entered into the Agreement with MB Aerospace Group Holdings Limited, a Cayman Islands limited company (the "Agreement"). In connection with entry into the Agreement, on June 5, 2023, the Company entered into the Second Amendment (the “Second Amendment”) to Note Purchase Agreement and Amendment No. 2 ("Amendment No. 2") to Unsecured Credit Agreement to facilitate the acquisition of MB Aerospace Holdings Inc., a Delaware corporation (“MB Aerospace”), along with such entity’s subsidiaries (the “Transaction”), as well as a commitment letter with Bank of America, N.A. and BofA Securities, Inc. (collectively, the “Commitment Parties”), pursuant to which the Commitment Parties agreed to provide, subject to the satisfaction of customary closing conditions contained therein, a $1,000,000 backstop senior secured revolving credit facility and a $700,000 senior secured 364-day bridge loan facility ("Bridge Loan Facility"). The Bridge Loan Facility was only intended to be drawn to the extent that the Company did not obtain alternative financing prior to the closing of the Transaction. The Company recorded fees of $9,500 in conjunction with the Bridge Loan Facility and $1,000,000 backstop senior secured revolving credit facility into interest expense on the Condensed Consolidated Statements of Income (Loss) in 2023. On the Acquistion Date, pursuant to the terms of the Agreement, the Company completed the Transaction for an aggregate purchase price of $728,448, subject to customary and specified closing adjustments, as set forth in the Agreement. Concurrently, the Company entered into a new Credit Agreement (the “Credit Agreement”) among the Company and certain of its subsidiaries, the issuing banks, lenders and other parties party thereto, and Bank of America, N.A., as administrative agent, as collateral agent and as swingline lender, which provides for senior secured financing of $1,650,000, consisting of a term loan facility (the “Term Loan Facility”) in an aggregate principal amount of $650,000, at an original issue discount of $4,875, and a revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Facilities”) in an aggregate principal amount of up to $1,000,000, including a letter of credit sub-facility of up to $50,000. Proceeds of the loans borrowed under the Senior Facilities on the Acquisition Date, net of a 0.75% original issue discount on the Term Loan Facility, were used to fund, in part, the transactions contemplated by the Agreement, including the consummation of the Transaction, the repayment in full of the 3.97% Senior Notes, and to pay related fees and expenses. As of the Acquisition Date, the Revolving Credit Facility had outstanding borrowings in an aggregate principal amount of approximately $698,000. Proceeds of any loans under the Revolving Credit Facility borrowed after the Acquisition Date will be used for general corporate purposes. The Company paid fees and expenses of $3,058 in conjunction with executing the Revolving Credit Facility. Such fees have been deferred within Other Assets on the Condensed Consolidated Balance Sheets and will be amortized into interest expense on the Condensed Consolidated Statements of (Loss) Income through the maturity of the Credit Agreement with the previously recorded debt issuance costs. The Company incurred $8,283 of debt issuance costs in conjunction with executing the Term Loan Facility. Such fees have been recorded as a direct deduction from the carrying amount of the Term Loan Facility and will be amortized into interest expense on the Condensed Consolidated Statements of (Loss) Income through the maturity of the Term Loan Facility. Cash used to pay these fees was recorded through financing activities on the Condensed Consolidated Statements of Cash Flows. On August 31, 2023, in connection with the Credit Agreement and the closing of the Transaction, the Bridge Loan Facility was terminated.

On March 19, 2024, the Company entered into a Refinancing Amendment (“Amendment No. 2”) to the Credit Agreement which replaced the outstanding principal amount of term loans under the Term Loan Facility (the “Existing Term Loans”) with an equal amount of new term loans (the “New Term Loans”) having substantially similar terms as the Existing Term Loans, except with respect to the interest rate applicable to the New Term Loans and certain other provisions. The interest rate margin applicable to the New Term Loans was reduced to 1.50%, in the case of ABR loans, and 2.50%, in the case of Term SOFR loans (with the Term SOFR floor remaining at 0.0%). The interest rate margin applicable to the Existing Term Loans was 2.00%, in the case of ABR loans, and 3.00%, in the case of Term SOFR loans. In addition, the Term SOFR adjustment applicable to the New Term Loans was reduced to 0.00%, from 0.10% for the Existing Term Loans. The Company recorded fees of $1,579 in conjunction with Amendment No. 2 within interest expense on the Condensed Consolidated Statements of (Loss) Income in the three months ended March 31, 2024.

The Senior Facilities are guaranteed by each of the Company’s wholly owned domestic subsidiaries and are secured by substantially all assets of the Company and of each subsidiary guarantor, in each case subject to certain exceptions.

Borrowings under the Senior Facilities bear interest at a rate per annum equal to, at the Company’s option, either Term SOFR (subject to a 0.00% floor) or an alternate base rate ("ABR"), in each case plus an applicable margin of (i) in the case of borrowings under the Term Loan Facility, 2.50% for Term SOFR loans and 1.50% for ABR loans and (ii) in the case of borrowings under the Revolving Credit Facility, initially, 2.375% for Term SOFR loans and 1.375% for ABR loans. The applicable margin for borrowings under the Revolving Credit Facility varies depending on the Company’s total net leverage ratio. At September 30, 2024, the applicable margin for borrowings under the Revolving Credit Facility was 2.00%. The Company is also required to pay a commitment fee initially equal to 0.35% per annum to the lenders under the Revolving

Credit Facility in respect of the unutilized commitments thereunder. The commitment fee under the Revolving Credit Facility varies depending on the Company’s total net leverage ratio. At September 30, 2024, the commitment fee under the Revolving Credit Facility was 0.275%.

The Term Loan Facility matures on the seven-year anniversary of the Acquisition Date and amortizes in equal quarterly installments ($6,500 annually), starting with the first full fiscal quarter after the Acquisition Date, of 0.25% of the initial principal amount. The Revolving Credit Facility matures on the five-year anniversary of the Acquisition Date (August 31, 2028). In addition, the Company is required to prepay outstanding loans under the Term Loan Facility, subject to certain exceptions, with up to 50% of the Company’s annual excess cash flow (as defined under the Credit Agreement) in excess of the greater of $50,000 and 15.0% of Last Twelve Months ("LTM") Adjusted Consolidated EBITDA (as defined in the Credit Agreement) as of the applicable time, and with up to 100% of the net cash proceeds of certain recovery events and non-ordinary course asset sales (which percentages vary depending on the Company’s first lien secured net leverage ratio).

The Company may generally prepay outstanding loans under the Senior Facilities at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to Term SOFR loans.

The Revolving Credit Facility requires that the Company maintain a maximum Total Net Leverage Ratio, as defined in the Credit Agreement, initially of 5.50 to 1.00 as of the last day of each fiscal quarter for which financials have been (or were required to be) delivered, commencing with the first full fiscal quarter after the Acquisition Date, stepping down to 4.00 to 1.00 over time. The maximum Total Net Leverage Ratio is 5.00 to 1.00 for the quarter ended September 30, 2024 thus limiting the available credit to $459,113. For material acquisitions in certain circumstances, such ratio may be increased by up to 0.50 to 1.00. The actual ratio, as defined, was 3.35 to 1.00 as of September 30, 2024. The Revolving Credit Facility also requires that the Company not permit the Interest Coverage Ratio as of the last day of any test period to be less than 3.00 to 1.00. The actual ratio, as defined, was 3.95 to 1.00 as of September 30, 2024. At September 30, 2024, the Company was in compliance with all applicable covenants.

The Senior Facilities contain certain affirmative and negative covenants that limit the ability of the Company, among other things and subject to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, asset sales and acquisitions, pay dividends and make other restricted payments and enter into transactions with affiliates. The Senior Facilities also contain certain events of default, including relating to a change of control. If an event of default occurs, the lenders under the Senior Facilities will be entitled to take various actions, including the acceleration of amounts due under the Senior Facilities.

Borrowings and availability under the Revolving Credit Facility were $565,762 and $434,238, respectively, at September 30, 2024 and $642,988 and $357,012, respectively, at December 31, 2023, subject to covenants discussed above. The average interest rate on these borrowings was 6.11% and 6.76% on September 30, 2024 and December 31, 2023, respectively. The average interest rate excludes the impact of the Company’s interest swap agreements. See Note 11. Borrowings included Euro-denominated borrowings of 269,500 Euros ($300,762) at September 30, 2024 and 296,500 Euros ($327,988) at December 31, 2023. The fair value of the borrowings is based on observable Level 2 inputs. The borrowings were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

Borrowings under the Term Loan Facility were $579,078 and $648,375 at September 30, 2024 and December 31, 2023, respectively. The average interest rate on these borrowings was 7.35% and 8.46% on September 30, 2024 and December 31, 2023, respectively. The average interest rate excludes the impact of the Company’s interest swap agreements. See Note 11. The fair value of the borrowings is based on the quoted market price of the borrowings on September 30, 2024, which represents Level 1 observable inputs.

In addition, the Company has approximately $78,000 in uncommitted short-term bank credit lines ("Credit Lines") and overdraft facilities. The Credit Lines are accessed locally and are available primarily within the U.S., Europe and Asia. The Credit Lines are subject to the applicable borrowing rates within each respective country and vary between jurisdictions (i.e. LIBOR, Euribor, etc.). The Company had no borrowings under the Credit Lines at September 30, 2024 and December 31, 2023. The Company had borrowed $506 and $16 under the overdraft facilities at September 30, 2024 and December 31, 2023, respectively. Repayments under the Credit Lines are due within one month after being borrowed. Repayments of the overdrafts are generally due within two days after being borrowed. The carrying amounts of the Credit Lines and overdrafts approximate fair value due to the short maturities of these financial instruments.

The Company also has finance leases under which $11,209 and $11,999 was outstanding at September 30, 2024 and December 31, 2023, respectively. The fair value of the finance leases is based on observable Level 2 inputs. These instruments were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

11. Derivatives

The Company has manufacturing, service and sales facilities around the world and thus makes investments and conducts business transactions denominated in various currencies. The Company is also exposed to fluctuations in interest rates and commodity price changes. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Derivative financial instruments have been used by the Company to hedge its exposure to fluctuations in interest rates. On March 24, 2021, the Company entered into an interest rate swap agreement (the "2021 Swap") with one bank that commenced on January 31, 2022 and that converted the interest on $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.17% plus the borrowing spread. Effective, April 30, 2022, the Company amended the 2021 Swap (the "Amended 2021 Swap"), such that the one-month SOFR-based borrowing rate replaced the one-month LIBOR-based borrowing rate. The Amended 2021 Swap, which will expire on January 30, 2026, converts the interest on $100,000 of the Company's one-month SOFR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.075% plus the borrowing spread. On July 19, 2023, the Company entered into an interest rate swap agreement (the "Euribor Swap") with one bank that commenced on July 31, 2023, which converts the interest on €150,000 of the Company's Euribor-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 3.257% plus the borrowing spread. Under the Euribor Swap, €50,000 will expire on July 31, 2026, with the remaining balance of €100,000 expiring on July 31, 2028. On September 12, 2023, the Company entered into six additional interest rate swap agreements (the "2023 Swaps") with six different banks that commenced on September 29, 2023, which convert the interest on $600,000 of the Company's one-month SOFR-based borrowings from a variable rate plus the borrowing spread to a blended fixed rate of 4.321% plus the borrowing spread. Under the 2023 Swaps, $50,000 will expire on August 31, 2026, $100,000 will expire on August 31, 2027, $200,000 will expire on August 31, 2028, $50,000 will expire on August 31, 2029 and the remaining balance of $200,000 will expire on August 31, 2030. The execution of the interest rate swap agreements in 2023 did not have a material impact on our business, financial condition, results of operations or cash flow. These interest rate swap agreements (the "Swaps") are accounted for as cash flow hedges.

The Company also uses derivative financial instruments to hedge its exposures to fluctuations in foreign currency exchange rates. The Company has various contracts outstanding which primarily hedge recognized assets or liabilities and anticipated transactions in various currencies including the Euro, British pound sterling, U.S. dollar, Japanese yen, Singapore dollar, Korean won, Swedish krona, Chinese renminbi, Mexican peso, Hong Kong dollar and Swiss franc. Certain foreign currency derivative instruments are treated as cash flow hedges of forecasted transactions. All foreign exchange contracts are due within two years.

The Company does not use derivatives for speculative or trading purposes or to manage commodity exposures.

The Company records the derivatives at fair value on the Condensed Consolidated Balance Sheets within Prepaid Expenses and Other Current Assets, Other Assets, Accrued Liabilities or Other Liabilities depending on their fair value and remaining contractual period. Changes in the fair market value of derivatives accounted for as cash flow hedges are recorded to accumulated other comprehensive income (loss) and reclassified to earnings in a manner that matches the earnings impact of the hedged transaction. Reclassifications to earnings for the Swaps are recorded through interest expense and reclassifications to earnings for foreign exchange contracts are recorded through net sales. Changes in the fair market value of the foreign exchange contracts that are not designated hedging instruments are recorded directly to earnings through Other expense (income), net.

The fair values of the Amended 2021 Swap were $3,378 and $5,976 as of September 30, 2024 and December 31, 2023, respectively, and were recorded in Other Assets in the Condensed Consolidated Balance Sheets for the periods. The fair values of the Euribor Swap were $(6,004) and $(5,485) as of September 30, 2024 and December 31, 2023, respectively, and were recorded in Other Liabilities in the Condensed Consolidated Balance Sheets for the periods. The fair values of the 2023 Swaps were $(25,326) and $(19,984) as of September 30, 2024 and December 31, 2023, respectively, and were recorded in Other Liabilities in the Condensed Consolidated Balance Sheets for the periods. The fair values of the Company's other derivatives were not material to the Company's Condensed Consolidated Balance Sheets as of September 30, 2024 or December 31, 2023. See Note 12. The activity related to the derivatives that have been designated hedging instruments was not material to the Company's Condensed Consolidated Financial Statements for the periods ended September 30, 2024 or 2023. The Company recognized gains of $11,772 and losses of $2,517 related to the foreign exchange contracts that are not accounted for as hedging instruments within Other expense (income), net, in the Condensed Consolidated Statements of (Loss) Income for the three-month periods ended September 30, 2024 and 2023, respectively. The Company recognized gains of $75 and losses of $5,466 related to the foreign exchange contracts that are not accounted for as hedging instruments within Other Expense (income), net, in the Consolidated Statements of (Loss) Income for the nine month periods ended September 30, 2024 and 2023, respectively.

Such losses (gains) were substantially offset by net gains (losses) recorded on the underlying hedged asset or liability (the "underlying"). Offsetting net gains (losses) on the underlying are also recorded within Other expense (income), net.

The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. Financing cash flows during the nine month periods ended September 30, 2024 and 2023, as presented on the Condensed Consolidated Statements of Cash Flows, include $1,070 and $6,346, respectively, of net cash payments related to the settlement of foreign currency hedges related to intercompany financing.

12. Fair Value Measurements

The provisions of the accounting standard for fair value define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard classifies the inputs used to measure fair value into the following hierarchy:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 Unobservable inputs for the asset or liability.

The following table provides the assets and liabilities reported at fair value and measured on a recurring basis as of September 30, 2024 and December 31, 2023:


			Fair Value Measurements Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2024
Asset derivatives	$	5,026	$	—	$	5,026	$	—
Liability derivatives	(31,841)		—		(31,841)		—
Bank acceptances	13,957		—		13,957		—
Rabbi trust assets	1,729		1,729		—