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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2023
or
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 1-34036
John Bean Technologies Corporation
(Exact name of registrant as specified in its charter)
Delaware91-1650317
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)
Identification No.)
70 West Madison Street,Suite 4400
Chicago,Illinois60602
(Address of principal executive offices)(Zip code)
(312) 861-5900
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareJBTNew York Stock Exchange

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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      No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding at October 20, 2023
Common Stock, par value $0.01 per share31,838,746
1


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions, except per share data)2023202220232022
Revenue:
Product revenue$362.1 $365.2 $1,095.9 $1,042.3 
Service revenue41.5 33.6 123.9 106.8 
Total revenue403.6 398.8 1,219.8 1,149.1 
Operating expenses:
Cost of products237.9 242.4 726.7 701.3 
Cost of services21.8 20.9 70.9 63.8 
Selling, general and administrative expense101.5 99.2 305.6 291.3 
Restructuring expense6.4 1.5 9.7 2.9 
Operating income 36.0 34.8 106.9 89.8 
Pension expense, other than service cost0.2 0.1 0.6 0.1 
Interest expense, net0.9 3.2 14.5 7.1 
Income from continuing operations before income taxes34.9 31.5 91.8 82.6 
Income tax provision4.3 5.8 17.1 11.3 
Equity in net earnings of unconsolidated affiliate(0.1)— (0.1)— 
Income from continuing operations30.5 25.7 74.6 71.3 
Income from discontinued operations, net of taxes437.1 8.5 449.6 21.9 
Net income $467.6 $34.2 $524.2 $93.2 
Basic earnings per share from:
Continuing operations$0.95 $0.80 $2.33 $2.23 
Discontinued operations13.65 0.27 14.05 0.68 
Net income $14.60 $1.07 $16.38 $2.91 
Diluted earnings per share from:
Continuing operations$0.95 $0.80 $2.32 $2.22 
Discontinued operations13.59 0.27 14.00 0.68 
Net income$14.54 $1.07 $16.32 $2.90 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.  
2


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions)2023202220232022
Net income$467.6 $34.2 $524.2 $93.2 
Other comprehensive income, net of taxes
Foreign currency translation adjustments(14.7)(22.6)(10.7)(49.2)
Pension and other postretirement benefits adjustments0.9 1.5 2.8 4.5 
Derivatives designated as hedges(1.1)4.4 (2.4)13.5 
Other comprehensive income (14.9)(16.7)(10.3)(31.2)
Comprehensive income$452.7 $17.5 $513.9 $62.0 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.  
3


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In millions, except per share data and number of shares)September 30, 2023December 31, 2022
Assets:
Current Assets:
Cash and cash equivalents$401.7 $71.7 
Marketable securities125.0  
Trade receivables, net of allowances190.6 200.5 
Contract assets69.3 65.1 
Inventories226.7 239.8 
Other current assets78.3 75.8 
Current assets of discontinued operations 216.1 
Total current assets1,091.6 869.0 
Property, plant and equipment, net of accumulated depreciation of $318.0 and $306.0 respectively
245.1 245.4 
Goodwill770.4 770.1 
Intangible assets, net395.8 430.1 
Other assets185.9 183.1 
Non-current assets of discontinued operations 85.8 
Total Assets$2,688.8 $2,583.5 
Liabilities and Stockholders' Equity:
Current Liabilities:
Short-term debt$ $0.6 
Accounts payable, trade and other121.3 170.6 
Advance and progress payments169.8 173.7 
Income taxes payable140.3 10.5 
Other current liabilities152.9 147.3 
Current liabilities of discontinued operations 117.8 
Total current liabilities584.3 620.5 
Long-term debt645.8 977.3 
Accrued pension and other postretirement benefits, less current portion18.3 32.0 
Other liabilities67.3 79.9 
Non-current liabilities of discontinued operations 11.1 
Commitments and contingencies (Note 14)
Stockholders' Equity:
Preferred stock, $0.01 par value; 20,000,000 shares authorized; no shares issued in 2023 or 2022
  
Common stock, $0.01 par value; 120,000,000 shares authorized; September 30, 2023: 31,861,680 issued, and 31,837,947 outstanding; December 31, 2022: 31,861,680 issued, and 31,803,721 outstanding
0.3 0.3 
Common stock held in treasury, at cost September 30, 2023: 23,733 shares; December 31, 2022: 57,959 shares
(2.1)(5.3)
Additional paid-in capital223.9 220.7 
Retained earnings1,365.6 851.3 
Accumulated other comprehensive loss(214.6)(204.3)
Total stockholders' equity1,373.1 862.7 
Total Liabilities and Stockholders' Equity$2,688.8 $2,583.5 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
4


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months Ended September 30,
(In millions)20232022
Cash flows from continuing operating activities:
Income from continuing operations$74.6 $71.3 
Adjustments to reconcile income from continuing operations to cash provided by continuing operating activities:
Depreciation and amortization69.3 55.4 
Stock-based compensation7.1 6.4 
Other9.4 7.9 
Changes in operating assets and liabilities:
Trade receivables, net and contract assets2.3 (23.5)
Inventories7.9 (62.5)
Accounts payable, trade and other(43.6)19.6 
Advance and progress payments(0.2)17.1 
Accrued pension and other postretirement benefits, net(11.2)(2.9)
Other assets and liabilities, net(20.0)(1.8)
Cash provided by continuing operating activities95.6 87.0 
Cash flows from continuing investing activities:
Proceeds from sale of AeroTech, net793.2  
Acquisitions, net of cash acquired(0.1)(329.7)
Investment in unconsolidated affiliate(10.4) 
Capital expenditures(46.2)(63.3)
Proceeds from disposal of assets1.2 0.9 
Purchase of Marketable Securities(125.0) 
Cash provided by (required by) continuing investing activities612.7 (392.1)
Cash flows from continuing financing activities:
Net proceeds on short-term debt(0.6)0.6 
Net payments for domestic credit facilities(339.5)311.8 
Settlement of taxes withheld on stock-based compensation awards(1.7)(1.2)
Proceeds from settlement of cross currency swaps5.8  
Dividends(9.7)(9.8)
Common stock repurchases (2.8)
Cash (required by) provided by continuing financing activities(345.7)298.6 
Net increase (decrease) in cash from continuing operations362.6 (6.5)
Cash flows from discontinued operations:
Cash required by operating activities of discontinued operations, net(28.0)(12.4)
Cash required by investing activities of discontinued operations, net(3.4)(2.4)
Net cash required by discontinued operations(31.4)(14.8)
Effect of foreign exchange rate changes on cash and cash equivalents(2.6)(4.9)
Net increase (decrease) in cash and cash equivalents328.6 (26.2)
Cash and cash equivalents from continuing operations, beginning of period71.7 76.9 
Add: Cash and cash equivalents from discontinued operations, beginning of period1.4 1.9 
Add: Net increase (decrease) in cash and cash equivalents328.6 (26.2)
Less: Cash and cash equivalents from discontinued operations, end of period (1.8)
Cash and cash equivalents from continuing operations, end of period$401.7 $50.8 
Supplemental Cash Flow Information for Continuing Operations:
Non-cash investing in capital expenditures, accrued but not paid$3.4 $12.0 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
5


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

Three Months Ended September 30, 2023
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at June 30, 2023$0.3 $(2.2)$221.3 $901.5 $(199.7)$921.2 
Net income— — — 467.6 — 467.6 
Issuance of treasury stock— 0.1 (0.1)— —  
Common stock cash dividends, $0.10 per share
— — — (3.5)— (3.5)
Foreign currency translation adjustments, net of income taxes of $0.5
— — — — (14.7)(14.7)
Derivatives designated as hedges, net of income taxes of $0.4
— — — — (1.1)(1.1)
Pension and other postretirement liability adjustments, net of income taxes of $(0.4)
— — — — 0.9 0.9 
Stock-based compensation expense— — 2.8 — — 2.8 
Taxes withheld on issuance of stock-based awards— — (0.1)— — (0.1)
Balance at September 30, 2023$0.3 $(2.1)$223.9 $1,365.6 $(214.6)$1,373.1 

Nine Months Ended September 30, 2023
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at December 31, 2022$0.3 $(5.3)$220.7 $851.3 $(204.3)$862.7 
Net income— — — 524.2 — 524.2 
Issuance of treasury stock— 3.2 (3.2)— —  
Common stock cash dividends, $0.30 per share
— — — (9.9)— (9.9)
Foreign currency translation adjustments, net of income taxes of $1.1
— — — — (10.7)(10.7)
Derivatives designated as hedges, net of income taxes of $0.8
— — — — (2.4)(2.4)
Pension and other postretirement liability adjustments, net of income taxes of $(1.0)
— — — — 2.8 2.8 
Stock-based compensation expense— — 8.1 — — 8.1 
Taxes withheld on issuance of stock-based awards— — (1.7)— — (1.7)
Balance at September 30, 2023$0.3 $(2.1)$223.9 $1,365.6 $(214.6)$1,373.1 

6


Three Months Ended September 30, 2022
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at June 30, 2022$0.3 $ $215.4 $786.0 $(211.9)$789.8 
Net income— — — 34.2 — 34.2 
Issuance of treasury stock— 0.1 (0.1)— — — 
Share repurchases— (0.5)— — — (0.5)
Common stock cash dividends, $0.10 per share
— — — (3.2)— (3.2)
Foreign currency translation adjustments, net of income taxes of $(1.7)
— — — — (22.6)(22.6)
Derivatives designated as hedges, net of income taxes of $(1.6)
— — — — 4.4 4.4 
Pension and other postretirement liability adjustments, net of income taxes of $(0.5)
— — — — 1.5 1.5 
Stock-based compensation expense— — 2.6 — — 2.6 
Balance at September 30, 2022$0.3 $(0.4)$217.9 $817.0 $(228.6)$806.2 

Nine Months Ended September 30, 2022
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at December 31, 2021$0.3 $ $214.2 $733.4 $(197.4)$750.5 
Net income— — — 93.2 — 93.2 
Issuance of treasury stock— 2.4 (2.4)— — — 
Share repurchases— (2.8)— — — (2.8)
Common stock cash dividends, $0.30 per share
— — — (9.6)— (9.6)
Foreign currency translation adjustments, net of income taxes of $(3.4)
— — — — (49.2)(49.2)
Derivatives designated as hedges, net of income taxes of $(4.8)
— — — — 13.5 13.5 
Pension and other postretirement liability adjustments, net of income taxes of $(1.5)
— — — — 4.5 4.5 
Stock-based compensation expense— — 7.3 — — 7.3 
Taxes withheld on issuance of stock-based awards— — (1.2)— — (1.2)
Balance at September 30, 2022$0.3 $(0.4)$217.9 $817.0 $(228.6)$806.2 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
7


JOHN BEAN TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business
John Bean Technologies Corporation and its majority-owned consolidated subsidiaries (the “Company,” “JBT,” “our,” “us,” or “we”) provide global technology solutions to high-value segments of the food and beverage industries. The Company designs, produces and services sophisticated products and systems for multi-national and regional customers. The Company has manufacturing operations worldwide that are strategically located to facilitate delivery of its products and services to its customers.

Basis of Presentation
In accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, the accompanying unaudited condensed consolidated financial statements (the “interim financial statements”) do not include all of the information and notes for complete financial statements as required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). As such, the accompanying interim financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2022, which provides a more complete description of the Company’s accounting policies, financial position, operating results, business, properties, and other matters. The year-end Condensed Consolidated Balance Sheet was derived from audited financial statements, but does not include all annual disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, the interim financial statements reflect all normal recurring adjustments necessary for a fair statement of the Company's financial condition and operating results as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the interim results and trends in the interim financial statements may not be representative of those for the full year or any future period.

Discontinued Operations
On August 1, 2023, the Company completed the sale of its former AeroTech business segment ("AeroTech") to Oshkosh Corporation, a Wisconsin corporation (the "Purchaser") in exchange for cash consideration of $808.2 million, (the "Transaction"). The Transaction was made pursuant to the Stock and Asset Purchase Agreement ("Purchase Agreement"), dated May 26, 2023, by and between the Company and the Purchaser to sell AeroTech and is subject to post-closing purchase price adjustments under the Purchase Agreement. As a result, the financial results of AeroTech have been presented as discontinued operations in the Condensed Consolidated Statements of Income for all periods presented. The assets and liabilities of AeroTech are reflected as assets and liabilities of discontinued operations on the Condensed Consolidated Balance Sheets for prior periods presented. The operating results and cash flows of AeroTech have been reported through July 31, 2023, the date immediately prior to the closing date of the Transaction. Amounts pertaining to results of operations, financial condition and cash flows throughout the document are from the Company's continuing operations unless otherwise noted. Refer to Note 2, Discontinued Operations, for further discussion.

Business Segments
The Company has determined that it operates in a single reportable segment for continuing operations, with the AeroTech reporting segment considered as a discontinued operation as of June 30, 2023. The Company's Chief Executive Officer is the chief operating decision maker (CODM), who reviews the Company's financial information presented on a consolidated basis for purposes of allocating resources and evaluating the Company's financial performance. The key measures reviewed by the CODM for these purposes are most notably Adjusted EBITDA from continuing operations and Adjusted EBITDA margin from continuing operations. Adjusted EBITDA is EBITDA adjusted for items that are not reflective of ongoing operations.

Use of Estimates
Preparation of financial statements that follow U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

8


Marketable Securities
The Company invests portions of its excess cash in different marketable securities, which are classified as held-to-maturity debt securities, as we have the intent and ability to hold them to their maturity dates. The marketable securities are comprised of a certificate of deposit with a maturity date of less than 1 year. The marketable securities are recorded on the Condensed Consolidated Balance Sheets at amortized cost and interest income is recorded as it is earned within interest expense, net in the Condensed Consolidated Statements of Income.

Equity Method Investment
During the third quarter of 2023 the Company acquired an equity method investment for $10.4 million in InnospeXion ApS, a Danish company, which was recorded in other assets on the Condensed Consolidated Balance Sheet. The Company uses the equity method of accounting when it has significant influence or when it has more than a minor ownership interest or minor influence over an investee's operations, but does not have a controlling financial interest. Initial investments are recorded at cost (including certain transaction costs) and are adjusted by the Company's share of the investee's undistributed earnings and losses. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

Recently Adopted Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). ASU No. 2020-04 provides that an entity can elect not to apply certain required modification accounting in U.S. GAAP to contracts where all changes to the critical terms relate to reference rate reform (e.g., the expected discontinuance of LIBOR and the transition to an alternative reference interest rate, etc.). In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform. The rule became effective for all entities as of March 12, 2020 and is set to expire after December 31, 2024 as per ASU No. 2022-06, issued in December 2022. During 2023, the Company adopted the practical expedient provided under ASU 2020-04 related to its debt and interest rate swap arrangements and as such, any amendments are treated as a continuation of the existing agreements and no gain or loss on the modification is recorded.

NOTE 2. DISCONTINUED OPERATIONS

As disclosed in Note 1, on August 1, 2023, the Company completed the sale of AeroTech to the Purchaser in exchange for cash consideration of $808.2 million. The Transaction was completed pursuant to the Purchase Agreement, dated May 26, 2023, by and between the Company and Purchaser to sell AeroTech and is subject to post-closing purchase price adjustments under the Purchase Agreement. The Company recognized a gain on the Transaction of $444.1 million, net of $143.4 million of taxes, which is recognized in Income from discontinued operations within the Condensed Consolidated Statements of Income for both the three and nine month periods ended September 30, 2023. The sale of AeroTech supports the Company's strategy to become a pure-play food and beverage solutions provider.

In connection with the Transaction, the Company and the Purchaser entered into a Transition Services Agreement (the "TSA") for the provision of information technology related services for 12 months and of other services for up to 6 months to support the transition of the AeroTech business, subject to the terms and conditions set forth therein. In addition, the TSA provides the Purchaser options to extend the term for information technology related services for up to another 6 months. TSA income is recognized as services are performed, and the income earned is recorded in Selling, general and administrative expense within the Condensed Consolidated Statements of Income to offset the costs incurred to support the TSA.
9


Summarized Discontinued Operations Financial Information

The following table summarizes the results of operations classified as discontinued operations, net of taxes, in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2023 and 2022.

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions)2023202220232022
Revenue$38.8 $156.6 $344.1 $417.8 
Operating expenses:
Cost of sales37.4 132.4 288.4 351.3 
Selling, general and administrative expense11.5 13.1 45.3 37.6 
Operating income(10.1)11.1 10.4 28.9 
Interest expense0.4 0.4 2.0 1.1 
Gain on sale of AeroTech587.5  587.5  
Income from discontinued operations before income taxes577.0 10.7 595.9 27.8 
Income tax provision139.9 2.2 146.3 5.9 
Income from discontinued operations, net of taxes$437.1 $8.5 $449.6 $21.9 

In accordance with ASC 205-20, Allocation of Interest to Discontinued Operations, the Company elected to allocate interest expense to discontinued operations for the Company's debt that is not directly attributed to the AeroTech business. Interest expense was allocated based on a ratio of net assets of discontinued operations to the sum of consolidated net assets and consolidated debt.

10


The following table provides a reconciliation of the carrying amounts of the major classes of assets and liabilities which are included in assets and liabilities of discontinued operations in the accompanying Condensed Consolidated Balance Sheets as of December 31, 2022:

(In millions)December 31, 2022
Assets:
Cash and cash equivalents$1.4 
Trade receivables, net of allowances98.5 
Contract assets24.5 
Inventories82.7 
Other current assets9.0 
Total current assets of discontinued operations$216.1 
Property, plant and equipment, net of accumulated depreciation of $40.4
$24.5 
Goodwill37.7 
Intangible assets, net15.3 
Other assets8.3 
Total non-current assets of discontinued operations$85.8 
Liabilities:
Accounts payable$66.4 
Advance and progress payments20.9 
Other current liabilities30.5 
Total current liabilities of discontinued operations$117.8 
Total non-current liabilities of discontinued operations$11.1 

11


NOTE 3. ACQUISITIONS

During fiscal year 2022, the Company acquired 100% of the voting equity of two businesses. The Company did not make any acquisitions during the nine months ended September 30, 2023. A summary of the acquisitions made during 2022 is as follows:
DateType Company/Product LineLocation (Near)
September 1, 2022StockBevcorp, LLC ("Bevcorp")Eastlake, Ohio
A provider of beverage processing and packaging solutions in blending, handling, filling, and closing technologies. The Bevcorp acquisition expands the Company's presence in the ready-to-drink carbonated beverage production market and provides significant cross-selling opportunity in filling and seaming food and beverage applications.
July 1, 2022Stock
Alco-food-machines GmbH & Co. KG ("Alco")
Bad Iburg, Germany
A provider of further food processing equipment and production lines for a broad range of food applications. The Alco acquisition extends the Company's capabilities in further processing offerings and strengthens existing full line offerings.
Each acquisition has been accounted for as a business combination. Tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their respective estimated fair values. The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and revenue enhancement synergies coupled with the assembled workforce acquired.
(In millions)
Bevcorp(1)
Alco(2)
Total
Financial assets$20.8 $9.1 $29.9 
Inventories33.1 11.7 44.8 
Property, plant and equipment5.5 0.9 6.4 
Customer relationship(3)
127.0 9.2 136.2 
Patents and acquired technology(3)
3.8 4.7 8.5 
Trademarks(3)
10.0 3.2 13.2 
Financial liabilities(18.7)(19.9)(38.6)
Total identifiable net assets$181.5 $18.9 $200.4 
Cash consideration paid$294.9 $44.0 $338.9 
Cash acquired5.7 3.9 9.6 
Net consideration$289.2 $40.1 $329.3 
Goodwill(4)
$113.4 $25.1 $138.5 

(1)The purchase accounting for Bevcorp was final as of March 31, 2023.
(2)The purchase accounting for Alco was final as of June 30, 2023.
(3)The acquired intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from six to twenty-four years. The intangible assets acquired in 2022 have weighted average useful lives of twenty-three years for trademarks, twenty years for customer relationship, and seven years for patents and acquired technology.
(4)The Company expects goodwill of $135.4 million from these acquisitions to be deductible for income tax purposes.

12


NOTE 4. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill were as follows:
(In millions)
Balance as of December 31, 2022$770.1 
Acquisitions(1.0)
Currency translation1.3 
Balance as of September 30, 2023$770.4 

Intangible assets consisted of the following:
September 30, 2023December 31, 2022
(In millions)Carrying AmountAccumulated AmortizationCarrying AmountAccumulated Amortization
Customer relationship$421.3 $140.3 $420.8 $118.6 
Patents and acquired technology169.6 102.6 169.6 90.6 
Trademarks53.1 15.7 53.1 14.6 
Non-amortizing intangible assets10.4 — 10.4 — 
Other8.7 8.7 8.6 8.6 
Total intangible assets$663.1 $267.3 $662.5 $232.4 


NOTE 5. INVENTORIES

Inventories consisted of the following:
(In millions)September 30, 2023December 31, 2022
Raw materials $30.0 $33.6 
Work in process 54.6 54.6 
Finished goods 189.4 195.0 
Gross inventories before valuation adjustments 274.0 283.2 
LIFO reserves(26.9)(24.2)
Valuation adjustments(20.4)(19.2)
Net inventories $226.7 $239.8 


NOTE 6. PENSION

Components of net periodic benefit cost were as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions)2023202220232022
Service cost$0.2 $0.4 $0.8 $1.3 
Interest cost3.2 1.9 9.7 5.7 
Expected return on plan assets(4.3)(3.9)(12.9)(11.7)
Settlement charge 0.2  0.2 
Amortization of net actuarial losses1.3 1.9 3.8 5.9 
Net periodic cost$0.4 $0.5 $1.4 $1.4 

During the nine months ended September 30, 2023, the Company made contributions of $9.0 million to the U.S. qualified pension plan. The Company does not expect to make any additional contributions to its pension or other post-retirement benefit plans in 2023.




NOTE 7. DEBT

The components of the Company's borrowings were as follows:
(In millions)Maturity DateSeptember 30, 2023December 31, 2022
Revolving credit facility (1)
December 14, 2026$250.0 $584.6 
Less: unamortized debt issuance costs(0.8)(2.2)
Revolving credit facility, net$249.2 $582.4 
Convertible senior notes (2)
May 15, 2026$402.5 $402.5 
Less: unamortized debt issuance costs(5.9)(7.6)
Convertible senior notes, net$396.6 $394.9 
Long-term debt, net$645.8 $977.3 
(1) Weighted-average interest rate at September 30, 2023 was 6.83%
(2) Effective interest rate for the Notes (as defined below) for the quarter ended September 30, 2023 was 0.82%

Components of interest expense recognized for the 0.25% Convertible Senior Notes due 2026 (the "Notes") were as follows:

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions)2023202220232022
Contractual interest expense$0.3 $0.3 $0.8 $0.8 
Interest cost related to amortization of issuance costs0.6 0.5 1.7 1.6 
Total interest expense$0.9 $0.8 $2.5 $2.4 

Convertible Note Hedge Transactions

On May 28, 2021, the Company closed a private offering of $402.5 million aggregate principal amount of the Notes to qualified institutional buyers. The initial conversion rate of the Notes is 5.8958 shares of the Company's common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $169.61 per share. The conversion rate of the Notes is subject to adjustment upon the occurrence of certain specified events.

On May 28, 2021, the Company paid an aggregate amount of $65.6 million for the Convertible Note Hedge Transactions (the "Hedge Transactions"). The Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those in the Notes, approximately 2.4 million shares of the Company's common stock. These are the same number of shares initially underlying the Notes, at a strike price of $169.61, subject to customary adjustments. The Hedge Transactions will expire upon the maturity of the Notes, subject to earlier exercise or termination.

The Hedge Transactions are expected generally to reduce the potential dilutive effect of the conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted Notes, in the event that the market price per share of the Company's common stock, as measured under the terms of the Hedge Transactions, is greater than the Hedge Transactions strike price of $169.61. The Hedge Transactions meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore these transactions are not revalued after their issuance.

The Company made a tax election to integrate the Notes and the Hedge Transactions. The accounting impact of this tax election makes the Hedge Transactions deductible as original issue discount interest for tax purposes over the term of the note, and results in a $17.1 million deferred tax asset recorded as an adjustment to Additional paid-in capital on our Balance Sheet as of September 30, 2023.

14


Warrant Transactions

In addition, concurrently with entering into the Hedge Transactions, the Company separately entered into privately-negotiated Warrant Transactions (the "Warrant Transactions"), whereby the Company sold to the counterparties warrants to acquire, collectively, subject to anti-dilution adjustments, 2.4 million shares of its common stock at an initial strike price of $240.02 per share. The Company received aggregate proceeds of $29.5 million from the Warrant Transactions with the counterparties, with such proceeds partially offsetting the costs of entering into the Hedge Transactions. The warrants expire in August 2026. If the market value per share of the common stock, exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share, unless the Company elects, subject to certain conditions, to settle the warrants in cash. The warrants meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore the warrants are not revalued after issuance.

NOTE 8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income, net of tax, as of the Balance Sheet date. For the Company, AOCI is composed of adjustments related to pension and other postretirement benefit plans, derivatives designated as hedges, and foreign currency translation adjustments. Changes in the AOCI balances for the three months ended September 30, 2023 and 2022 by component are shown in the following tables:

(In millions)
Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation (1)
Total (1)
Beginning balance, June 30, 2023$(129.0)$13.5 $(84.2)$(199.7)
Other comprehensive income (loss) before reclassification 1.1 (14.6)(13.5)
Amounts reclassified from accumulated other comprehensive income0.9 (2.2)(0.1)(1.4)
Ending balance, September 30, 2023$(128.1)$12.4 $(98.9)$(214.6)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended September 30, 2023 were $1.3 million of charges to pension expense, other than service cost, net of $0.4 million income tax benefit. Reclassification adjustments for derivatives designated as hedges for the same period were $2.9 million of interest income, net of $0.7 million income tax provision. Reclassification adjustments for foreign currency translation related to net investment hedges for the three months ended September 30, 2023 were immaterial.

(In millions)
Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation (1)
Total (1)
Beginning balance, June 30, 2022$(142.5)$10.9 $(80.3)$(211.9)
Other comprehensive income (loss) before reclassification0.1 5.1 (22.0)(16.8)
Amounts reclassified from accumulated other comprehensive income1.4 (0.7)(0.6)0.1 
Ending balance, September 30, 2022$(141.0)$15.3 $(102.9)$(228.6)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended September 30, 2022 were $1.9 million of charges to pension expense, other than service cost, net of $0.5 million income tax benefit. Reclassification adjustments for derivatives designated as hedges for the same period were $0.9 million of interest income, net of $0.2 million income tax provision. Reclassification adjustments for foreign currency translation related to net investment hedges for the three months ended September 30, 2022 were $0.8 million of benefit in interest expense, net of $0.2 million income tax provision.


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Changes in the AOCI balances for the nine months ended September 30, 2023 and 2022 by component are shown in the following tables:

(In millions)
Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation(1)
Total (1)
Beginning balance, December 31, 2022$(130.9)$14.8 $(88.2)$(204.3)
Other comprehensive income before reclassification 3.5 (9.6)(6.1)
Amounts reclassified from accumulated other comprehensive income2.8 (5.9)(1.1)(4.2)
Ending balance, September 30, 2023$(128.1)$12.4 $(98.9)$(214.6)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the nine months ended September 30, 2023 were $3.8 million of charges to pension expense, other than service cost, net of $1.0 million in benefit for income taxes. Reclassification adjustments for derivatives designated as hedges for the same period were $7.9 million of interest income, net of $2.0 million income tax provision. Reclassification adjustments for foreign currency translation related to net investment hedges for the nine months ended September 30, 2023 were $1.5 million of benefit in interest expense, net of $0.4 million income tax provision.

(In millions)
Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation(1)
Total (1)
Beginning balance, December 31, 2021$(145.5)$1.8 $(53.7)$(197.4)
Other comprehensive income before reclassification0.1 13.9 (47.6)(33.6)
Amounts reclassified from accumulated other comprehensive income4.4 (0.4)(1.6)2.4 
Ending balance, September 30, 2022$(141.0)$15.3 $(102.9)$(228.6)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the nine months ended September 30, 2022 were $5.9 million of charges to pension expense, other than service cost, net of $1.5 million income tax benefit. Reclassification adjustments for derivatives designated as hedges for the same period were $0.5 million of interest income, net of $0.1 million income tax provision. Reclassification adjustments for foreign currency translation related to net investment hedges for the nine months ended September 30, 2022 were $2.2 million of benefit in interest expense, net of $0.6 million income tax provision.

NOTE 9. REVENUE RECOGNITION

Transaction price allocated to remaining performance obligations

The Company has estimated that $689.2 million in revenue is expected to be recognized in the future periods related to remaining performance obligations from the Company's contracts with customers outstanding as of September 30, 2023. The Company expects to complete these obligations and recognize 40% as revenue in 2023, 51% in 2024, and the remainder after 2024.

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Disaggregation of Revenue

In the following table, revenue is disaggregated by type of good or service, primary geographical market, and timing of recognition. The table also includes a reconciliation of the disaggregated revenue to total revenue.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions)2023202220232022
Type of Good or Service
Recurring (1)
$202.7 $185.8 $639.1 $541.3 
Non-recurring (1)
200.9 213.0 580.7 607.8 
Total403.6 398.8 1,219.8 1,149.1 
Geographical Region (2)
North America238.9 232.0 737.6 668.0 
Europe, Middle East and Africa101.6 100.4 300.0 293.2 
Asia Pacific37.0 35.4 108.0 106.8 
Latin America26.1 31.0 74.2 81.1 
Total403.6 398.8 1,219.8 1,149.1 
Timing of Recognition
Point in Time200.8 205.7 619.6 556.8 
Over Time202.8 193.1 600.2 592.3 
Total403.6 398.8 1,219.8 1,149.1 
(1) Aftermarket parts and services and revenue from lease and long-term service contracts are considered recurring revenue. Non-recurring revenue includes new equipment and installation.

(2) Geographical region represents the region in which the end customer resides.

Contract balances

The timing of revenue recognition, billings and cash collections results in trade receivables, contract assets, and advance and progress payments (contract liabilities). Contract assets exist when revenue recognition occurs prior to billings. Contract assets are transferred to trade receivables when the right to payment becomes unconditional (i.e., when receipt of the amount is dependent only on the passage of time). Conversely, the Company often receives payments from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Balance Sheet as Contract assets and within Advance and progress payments, respectively, on a contract-by-contract net basis at the end of each reporting period.

Contract asset and liability balances for the period were as follows:
Balances as of
(In millions)September 30, 2023December 31, 2022
Contract Assets$69.3 $65.1 
Contract Liabilities158.4 161.2 
Balances as of
September 30, 2022December 31, 2021
Contract Assets68.3 69.0 
Contract Liabilities187.8 156.5 

The revenue recognized during the nine months ended September 30, 2023 and 2022 that was included in contract liabilities at the beginning of the period amounted to $143.1 million and $122.6 million, respectively. The remainder of the change from December 31, 2022 and December 31, 2021 is driven by the timing of advance and milestone payments received from
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customers, customer returns and fulfillment of performance obligations. There were no significant changes in the contract balances other than those described above.

NOTE 10. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share from net income for the respective periods and basic and diluted shares outstanding:

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions, except per share data)2023202220232022
Basic earnings per share:
Numerator:
Income from continuing operations$30.5 $25.7 $74.6 $71.3 
Income from discontinued operations, net of tax437.1 8.5 449.6 21.9 
Net income$467.6 $34.2 $524.2 $93.2 
Denominator:
Weighted average number of shares outstanding32.0 32.0 32.0 32.0 
Basic earnings per share from:
Continuing operations$0.95 $0.80 $2.33 $2.23 
Discontinued operations13.65 0.27 14.05 0.68 
Net income$14.60 $1.07 $16.38 $2.91 
Diluted earnings per share:
Numerator:
Income from continuing operations$30.5 $25.7 $74.6 $71.3 
Income from discontinued operations, net of tax437.1 8.5 449.6 21.9 
Net income$467.6 $34.2 $524.2 $93.2 
Denominator:
Weighted average number of shares outstanding32.0 32.0 32.0 32.0 
Effect of dilutive securities:
Restricted stock0.2 0.1 0.1 0.1 
Total shares and dilutive securities32.2 32.1 32.1 32.1 
Diluted earnings per share from:
Continuing operations$0.95 $0.80 $2.32 $2.22 
Discontinued operations13.59 0.27 14.00 0.68 
Net income$14.54 $1.07 $16.32 $2.90 


NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities that the Company can assess at the measurement date.
Level 2: Observable inputs other than those included in Level 1 that are observable for the asset or liability, either directly or indirectly. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

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Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:
As of September 30, 2023As of December 31, 2022
(In millions)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:
Investments$12.1 $12.1 $ $ $12.1 $12.1 $ $ 
Derivatives24.9  24.9  34.3  34.3  
Total assets$37.0 $12.1 $24.9 $ $46.4 $12.1 $34.3 $ 
Liabilities:
Derivatives$4.2 $ $4.2 $ $7.2 $ $7.2 $ 
Total liabilities$4.2 $ $4.2 $ $7.2 $ $7.2 $ 

Investments represent securities held in a trust for the non-qualified deferred compensation plan. Investments are classified as trading securities and are valued based on quoted prices in active markets for identical assets that the Company has the ability to access. As of September 30, 2023, $2.8 million of investments are recorded in other current assets on the Balance Sheet related to investments that are expected to be redeemed within the next twelve months. The remaining investments are reported separately in other assets on the Balance Sheet. Investments include an unrealized gain of $1.1 million and an unrealized loss of $3.9 million as of September 30, 2023 and December 31, 2022, respectively.

The Company uses the income approach to measure the fair value of derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change between the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values, and applying an appropriate discount rate as well as a factor of credit risk.

The Notes are not registered securities nor listed on any securities exchange but may be traded by qualified institutional buyers. The fair value of the Notes estimated using Level 2 inputs was $362.3 million as of September 30, 2023.

The carrying amounts of cash and cash equivalents, trade receivables and payables, marketable securities, as well as financial instruments included in other current assets and other current liabilities, approximate fair values because of their short-term maturities.

The carrying values of the Company's revolving credit facility recorded in long-term debt on the Balance Sheet approximate their fair values due to their variable interest rates.

NOTE 12. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Derivative Financial Instruments

All derivatives are recorded as assets or liabilities in the Balance Sheet at their respective fair values. For derivatives designated as cash flow hedges, the unrealized gain or loss related to the derivatives is recorded in Other comprehensive income (loss) until the hedged transaction affects earnings. The Company assesses at inception of the hedge, whether the derivative in the hedging transaction will be highly effective in offsetting changes in cash flows of the hedged item. Changes in the fair value of derivatives that do not meet the criteria for designation as a hedge are recognized in earnings.

Foreign Exchange: The Company manufactures and sells products in a number of countries throughout the world and, as a result, the Company is exposed to movements in foreign currency exchange rates. The Company's major foreign currency exposures involve the markets in Western Europe, South America and Asia. Some sales and purchase contracts contain embedded derivatives due to the nature of doing business in certain jurisdictions, which the Company takes into consideration as part of its risk management policy. The purpose of foreign currency hedging activities is to manage the economic impact of exchange rate volatility associated with anticipated foreign currency purchases and sales made in the normal course of business. The Company primarily utilizes forward foreign exchange contracts with maturities of less than 2 years in managing this foreign exchange rate risk. The Company has not designated these forward foreign exchange contracts, which had a notional value at September 30, 2023 of $784.7 million, as hedges and therefore does not apply hedge accounting.

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The fair values of our foreign currency derivative assets are recorded within other current assets and other assets, and the fair values of foreign currency derivative liabilities are recorded within other current liabilities and other liabilities. The following table presents the fair value of foreign currency derivatives and embedded derivatives included within the Balance Sheet:

As of September 30, 2023As of December 31, 2022
(In millions)Derivative AssetsDerivative LiabilitiesDerivative AssetsDerivative Liabilities
Total$8.1 $4.2 $4.5 $7.2 

A master netting arrangement allows counterparties to net settle amounts owed to each other as a result of separate offsetting derivative transactions. The Company enters into master netting arrangements with its counterparties when possible to mitigate credit risk in derivative transactions by permitting it to net settle for transactions with the same counterparty. However, the Company does not net settle with such counterparties. As a result, derivatives are presented at their gross fair values in the Balance Sheet.  

As of September 30, 2023 and December 31, 2022, information related to these offsetting arrangements was as follows:

(In millions)As of September 30, 2023
Offsetting of AssetsGross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetsNet Presented in the Consolidated Balance SheetsAmount Subject to Master Netting AgreementNet Amount
Derivatives$24.5 $ $24.5 $(3.9)$20.6 
(In millions)As of September 30, 2023
Offsetting of LiabilitiesGross Amounts of Recognized LiabilitiesGross Amounts Offset in the Consolidated Balance SheetsNet Presented in the Consolidated Balance SheetsAmount Subject to Master Netting AgreementNet Amount
Derivatives$4.1 $ $4.1 $(3.9)$0.2 

(In millions)As of December 31, 2022
Offsetting of AssetsGross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetsNet Presented in the Consolidated Balance SheetsAmount Subject to Master Netting AgreementNet Amount
Derivatives$33.0 $ $33.0 $(3.0)$30.0 
(In millions)As of December 31, 2022
Offsetting of LiabilitiesGross Amounts of Recognized LiabilitiesGross Amounts Offset in the Consolidated Balance SheetsNet Presented in the Consolidated Balance SheetsAmount Subject to Master Netting AgreementNet Amount
Derivatives$7.3 $ $7.3 $(3.0)$4.3 

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The following table presents the location and amount of the gain (loss) on foreign currency derivatives and on the remeasurement of assets and liabilities denominated in foreign currencies, as well as the net impact recognized in the Statements of Income: 
Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on DerivativesAmount of Gain (Loss) Recognized in Income
Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2023202220232022
Foreign exchange contractsRevenue$1.8 $(2.0)$(0.1)$(6.9)
Foreig