What changed in this filing

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Item 1. Financial Statements

2025-04-29 compared with 2024-10-23 · 156 added, 253 removed, 351 unchanged (54% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net sales $ 963.9 $ 978.8

2 unchanged sentences

Selling, general and administrative expenses 192.6 192.2

Impairment expense — — — 15.6

Interest expense 2.9 1.0

Other expense (income), net 2.6 2.5 0.5 ( 10.5 )

Other income, net ( 1.2 ) ( 1.2 )

Earnings before provision for income taxes 181.1 192.7

2 unchanged sentences

Basic Net Earnings Per Share of Common Stock $ 0.95 $ 1.00

$ 0.82 $ 0.90 $ 2.90 $ 2.79

Diluted Net Earnings Per Share of Common Stock $ 0.95 $ 1.00

$ 0.82 $ 0.90 $ 2.87 $ 2.77

Dividends Per Share of Common Stock $ 0.34 $ 0.32

(1) Earnings per share amounts are calculated discretely and, therefore, may not add up to the total due to rounding.

SMITH CORPORATION

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net earnings $ 136.6 $ 147.6

1 unchanged sentence

Foreign currency translation adjustments 0.7 ( 4.8 )

Unrealized losses on cash flow derivative instruments, less related income tax benefit of $ 0.3 and $ 0.5 in 2024, $ 0.3 and $ 0.8 in 2023

( 0.9 ) ( 0.8 ) ( 1.6 ) ( 2.4 )

Adjustment to pension liability, less related income tax provision of $ 0.0 and $( 0.1 ) in 2024, $ 0.0 and $( 0.1 ) in 2023

0.1 — 0.2 0.1

Unrealized gains on cash flow derivative instruments, less related income tax provision of $( 0.3 ) in 2025, and $( 0.3 ) in 2024

Adjustment to pension liability, less related income tax provision of $ 0.0 in 2025, and $ 0.0 in 2024

Comprehensive Earnings $ 138.2 $ 143.9

3 unchanged sentences

(dollars in millions)

September 30,

Current Assets

26 unchanged sentences

Stockholders’ Equity

Class A Common Stock (shares issued, 26,016,713 and 26,023,132 as of September 30, 2024 and December 31, 2023, respectively)

Common Stock (shares issued 164,690,879 and 164,684,460 as of September 30, 2024 and December 31, 2023, respectively)

Class A Common Stock (shares issued, 26,000,449 and 26,014,825 as of March 31, 2025 and December 31, 2024, respectively)

Common Stock (shares issued 164,707,143 and 164,692,769 as of March 31, 2025 and December 31, 2024, respectively)

Capital in excess of par value 605.8 601.3

8 unchanged sentences

(dollars in millions)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities

4 unchanged sentences

Deferred income taxes ( 5.0 ) 2.9

Non-cash impairment — 15.6

Pension settlement income — ( 6.0 )

Pension settlement income non-cash taxes — 1.5

Net changes in operating assets and liabilities:

9 unchanged sentences

Financing Activities

Long-term debt repaid ( 6.9 ) ( 214.9 )

Long-term debt incurred (repaid) 76.5 ( 6.8 )

Common stock repurchases ( 120.6 ) ( 74.5 )

Net proceeds from stock option activity 17.2 11.3

Net (payments) proceeds from stock option activity ( 1.8 ) 8.0

Dividends paid ( 49.2 ) ( 47.3 )

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Class A Common Stock

7 unchanged sentences

Balance at the beginning of period $ 601.3 $ 578.2

Conversion of Class A Common Stock 0.1 —

Issuance of share units ( 12.6 ) ( 14.6 )

13 unchanged sentences

Exercise of stock options ( 1.8 ) 2.7

Stock incentives and directors’ compensation — — 0.2 0.3

Shares repurchased ( 120.6 ) ( 74.5 )

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Basis of Presentation

2 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results expected for the full year.

Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results expected for the full year.

It is suggested the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 11, 2025.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 740, Income Taxes (issued under Accounting Standards Update (ASU) 2023-09, “Improvements to Income Tax Disclosures” ).

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03 “Income Statement - Reporting Comprehensive Income (Topic 220):

Disaggregation of Income Statement Expenses.” The ASU requires additional disclosures by disaggregating the costs and expense line items that are presented on the face of the income statement.

The ASU is effective for the Company beginning with its 2027 annual disclosures and subsequent interim periods.

Early adoption is permitted.

This ASU requires a public company to apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this ASU on its disclosures.

In December 2023, the FASB amended Accounting Standards Codification (ASC) 740 (issued under ASU 2023-09, “Improvements to Income Tax Disclosures”).

This ASU requires added disclosures related to the tax rate reconciliation and income taxes paid and includes other amendments intended to improve effectiveness and comparability.

1 unchanged sentence

The Company is currently evaluating the impact the adoption of ASU 2023-09 will have on its annual disclosures.

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .” The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

The update is effective for the Company beginning with its 2024 annual disclosures and interim periods beginning in 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements.

The adoption of ASU 2023-07 will not affect the Company’s financial position or its results of operations but will result in additional disclosures for the 2024 annual disclosures and for interim periods beginning in 2025.

Revenue Recognition

9 unchanged sentences

The Company’s payment terms for the majority of its customers are 30 to 90 days from shipment.

Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $ 33.2 million and $ 59.7 million at September 30, 2024 and December 31, 2023, respectively.

Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $ 43.0 million and $ 54.4 million at March 31, 2025 and December 31, 2024, respectively.

Customer deposit liabilities are short term in nature, recognized into revenue within one year of receipt.

2 unchanged sentences

In addition, the Company monitors other risk factors including forward-looking information when establishing adequate allowances for credit losses, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables.

The Company’s allowance for credit losses was $ 12.0 million and $ 10.1 million at September 30, 2024 and December 31, 2023, respectively.

Revenue Recognition (continued)

The Company’s allowance for credit losses was $ 14.6 million and $ 12.9 million at March 31, 2025 and December 31, 2024, respectively.

Rebates and incentives are based on pricing agreements and are tied to sales volume.

The amount of revenue is reduced for variable consideration related to customer rebates which are calculated using expected values and are based on program specific factors such as expected rebate percentages based on expected volumes.

In situations where the customer has the right to return eligible products, the Company reduces revenue for its estimates of expected product returns, which are primarily based on an analysis of historical experience.

In situations where the customer has the right to return

Revenue Recognition (continued)

eligible products, the Company reduces revenue for its estimates of expected product returns, which are primarily based on an analysis of historical experience.

Changes in such accruals may be required if actual sales volume differs from estimated sales volume or if future returns differ from historical experience.

13 unchanged sentences

Typical applications for water heaters include residences, restaurants, hotels, office buildings, laundries, car washes and small businesses.

The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 900 independent wholesale plumbing distributors.

The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes approximately 900 independent wholesale plumbing distributors.

The Company also sells residential water heaters and related parts through retail and maintenance, repair and operations (MRO) channels.

14 unchanged sentences

(dollars in millions) Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

North America

9 unchanged sentences

Total Net Sales $ 963.9 $ 978.8

Acquisitions and Dispositions

2024 Acquisitions

During the third quarter of 2024, the Company signed an agreement to acquire Pureit, a residential water purification business in South Asia, from Unilever for approximately $ 120 million, subject to customary adjustments.

The Company expects to complete the acquisition of Pureit by the end of 2024 and does not expect the acquisition to have a material impact on earnings in the first year.

During the fourth quarter of 2024, the Company acquired Pureit, a residential water purification business in South Asia, from Unilever for an aggregate purchase price of $ 124.6 million.

The acquired company is included in the Rest of World segment.

The purchase price consisted of an initial cash payment of $ 117.9 million upon the closing of the transaction and a separate payment of $ 6.7 million for inventory made under a transitional supply agreement with Unilever.

The Company incurred acquisition costs of approximately $ 1.4 million.

The purchase price allocation remains preliminary and subject to final valuation adjustments that will be completed within the one-year period following the acquisition date.

The following table summarizes the preliminary allocation of the fair value of the assets acquired and liabilities assumed at the date of acquisition.

Of the $ 57.4 million of acquired identifiable intangible assets, $ 48.9 million was assigned to trademarks that are not subject to amortization, $ 3.9 million was assigned to patents which are amortized over 15 years, and the remaining $ 4.6 million was assigned to customer relationships which are amortized over two to three years .

The excess of the acquisition purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The following table summarizes the estimated fair values of Pureit's assets acquired and liabilities assumed at the date of acquisition:

November 1, 2024 (dollars in millions)

Current assets $ 5.6

Property, plant and equipment 0.6

Intangible assets 57.4

Goodwill 62.9

Total assets acquired 126.5

Current liabilities ( 1.9 )

Net assets acquired $ 124.6

During the first quarter of 2024, the Company acquired a privately-held water treatment company.

3 unchanged sentences

The acquired company is included in the North America segment.

2023 Acquisition

During the third quarter of 2023, the Company acquired a privately-held water treatment company.

The Company paid an aggregate cash purchase price of $ 16.8 million, net of cash acquired, including an additional payment of $ 0.7 million made in the fourth quarter of 2023.

The addition of the acquired company expands the Company's water treatment footprint.

The acquired company is included in the North America segment.

As required under ASC 805 Business Combinations, results of operations have been included in the Company’s consolidated financial statements from the date of acquisition.

During the third quarter of 2024, the Company continued the process of exiting its operations in Vietnam.

The restructuring expense associated with the exit was recorded in the fourth quarter of 2023 and did not have a material impact on the Company's consolidated financial statements.

During 2023, the Company sold its business in Turkey (disposal group), which was included in the Company's Rest of World segment, for an amount that approximated the carrying value of the net assets.

In the first quarter of 2023, the Company determined that the disposal group met the criteria to be classified as held for sale and that the fair value of the disposal group, less cost to sell, was lower than its carrying amount.

As a result, in the first quarter of 2023, the Company recorded an impairment expense of $ 15.6 million, of which $ 12.5 million was recorded in the Rest of World segment, and $ 3.1 million was recorded in Corporate Expense.

The impairment was recorded as a net reduction of $ 4.5 million to the assets and liabilities and $ 11.1 million for the anticipated liquidation of the cumulative foreign currency translation adjustment associated with the disposal group.

The following table presents the components of the Company’s inventory balances:

(dollars in millions) September 30,

(dollars in millions) March 31,

2025 December 31, 2024

9 unchanged sentences

(dollars in millions) Three Months Ended

September 30,

Balance at July 1, $ 187.6 $ 180.7

Expense 16.0 18.6

Claims settled ( 16.4 ) ( 17.6 )

Balance at September 30, $ 187.2 $ 181.7

(dollars in millions) Nine Months Ended

September 30,

Balance at January 1, $ 190.4 $ 188.1

Expense 19.4 19.7

Acquired obligations (1)

Claims settled ( 16.6 ) ( 22.8 )

Balance at September 30, $ 187.2 $ 181.7

During the third quarter of 2024, the Company renewed and amended its $ 500 million multi-year, multi-currency revolving credit agreement with a new expiration date of August 23, 2029.

Balance at March 31, $ 194.3 $ 185.0

(1) Refer to Note 3 for additional information regarding the acquisition of Pureit

In 2024, the Company renewed and amended its $ 500 million multi-year, multi-currency revolving credit agreement with a new expiration date of August 23, 2029.

The facility has an accordion provision that allows it to be increased up to $ 1 billion if certain conditions (including lender approval) are satisfied.

Borrowings under the Company's bank credit lines and commercial paper borrowings are supported by a $ 500 million revolving credit agreement.

As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at September 30, 2024.

As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at March 31, 2025.

At its option, the Company either maintains cash balances or pays fees for bank credit and services.

The facility requires the Company to maintain two financial covenants, a leverage ratio test and an interest coverage test.

The Company was in compliance with the covenants as of September 30, 2024.

The Company was in compliance with the covenants as of March 31, 2025.

Earnings per Share of Common Stock

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Denominator for basic earnings per share - weighted average shares 143,579,588 147,178,955

3 unchanged sentences

The Company adopted the A.

Smith Combined Incentive Compensation Plan (the Incentive Plan) effective January 1, 2007, and the Incentive Plan was reapproved by stockholders on April 15, 2020.

Smith Combined Incentive Compensation Plan (the Incentive Plan) effective January 1, 2007, and the Incentive Plan was most recently reapproved by stockholders on April 15, 2020.

The Incentive Plan is a continuation of the A.

Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002.

The number of shares available for granting of share units at September 30, 2024 was 2,289,392 .

Upon stock option exercise or share unit vesting, shares are issued from treasury stock.

Total stock based compensation expense recognized in the three months ended September 30, 2024 and 2023 was $ 2.3 million and $ 1.5 million, respectively.

Total stock based compensation expense recognized in the nine months ended September 30, 2024 and 2023 was $ 12.7 million and $ 10.1 million, respectively.

Stock Options

Beginning in 2023, the Company no longer grants stock options.

Stock options previously granted have a three year pro-rata vesting from the date of grant.

Stock options were issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant.

For active employees, all options granted expire ten years after the date of grant.

The Company’s stock options are expensed ratably over the three year vesting period.

Stock based compensation expense attributable to stock options in the three months ended September 30, 2024 and 2023 was $ 0.2 million and $ 0.3 million, respectively.

Stock based compensation expense attributable to stock options in the nine months ended September 30, 2024 and 2023 was $ 0.5 million and $ 0.9 million, respectively.

Changes in options, all of which relate to the Company’s Common Stock, were as follows for the nine months ended September 30, 2024:

Price Number of

Options Average

Life Aggregate

Outstanding at January 1, 2024 $ 52.93 1,872,553

Exercised 46.48 ( 455,409 )

Forfeited 74.27 ( 3,260 )

Outstanding at September 30, 2024 54.96 1,413,884 6 years $ 49.3

Exercisable at September 30, 2024 53.49 1,313,104 6 years $ 47.7

Stock Based Compensation (continued)

The number of shares available for granting of stock based compensation at March 31, 2025 was 2,079,233 .

Upon vesting or exercise of stock based compensation, shares are issued from treasury stock.

Participants in the Incentive Plan may be awarded share units.

Share units vest three years after the date of grant.

The Company granted 195,363 and 168,688 share units under the Incentive Plan in the nine months ended September 30, 2024 and 2023, respectively.

The Company granted 209,366 and 189,792 share units under the Incentive Plan in the three months ended March 31, 2025 and 2024, respectively.

The share units were valued at $ 13.7 million and $ 15.6 million at the date of issuance in 2025 and 2024, respectively, based on the price of the Company’s Common Stock at the date of grant.

The share units are recognized as compensation expense ratably over the three-year vesting period;

however, included in share unit expense in the three and nine months ended September 30, 2024 and 2023 was expense associated with accelerated vesting of share unit awards for certain employees who are retirement eligible or will become retirement eligible during the vesting period.

Stock based compensation expense attributable to share units of $ 1.7 million and $ 1.1 million was recognized in the three months ended September 30, 2024 and 2023, respectively.

Stock based compensation expense attributable to share units of $ 10.9 million and $ 8.7 million was recognized in the nine months ended September 30, 2024 and 2023, respectively.

however, included in share unit expense in the three months ended March 31, 2025 and 2024 was expense associated with accelerated vesting of share unit awards for certain employees who are retirement eligible or will become retirement eligible during the vesting period.

Stock based compensation expense attributable to share units of $ 5.5 million and $ 7.8 million was recognized in the three months ended March 31, 2025 and 2024, respectively.

Certain non-U.S.-based employees receive the cash value of the share price at the vesting date in lieu of shares.

Unvested cash-settled awards are remeasured at each reporting period.

A summary of share unit activity under the Incentive Plan is as follows for the nine months ended September 30, 2024:

A summary of share unit activity under the Incentive Plan is as follows for the three months ended March 31, 2025:

Number of Units Weighted-Average

4 unchanged sentences

Forfeited ( 3,935 ) 72.66

Issued and unvested at September 30, 2024 471,204 71.29

Issued and unvested at March 31, 2025 592,523 68.83

Performance Stock Units

1 unchanged sentence

Performance stock units vest over three years following the date of the grant.

Performance stock units vest under a set of measurement criteria which are based upon achievement of certain Environmental, Social, and Governance targets.

Performance stock units vest under a set of measurement criteria which are based upon achievement of certain Sustainability targets.

Potential payouts range from zero to 150 % of the target awards and changes from target amounts are reflected as performance adjustments.

The Company granted 29,475 and 24,580 performance stock units under the Incentive Plan in the nine months ended September 30, 2024 and 2023, respectively.

The Company granted 35,365 and 28,390 performance stock units under the Incentive Plan in the three months ended March 31, 2025 and 2024, respectively.

The performance stock units were valued at $ 2.3 million and $ 2.3 million at the date of issuance in 2025 and 2024, respectively, based on the price of the Company’s Common Stock at the date of grant.

The performance stock units are recognized as compensation expense ratably over the three-year vesting period.

Stock based compensation expense attributable to performance stock units of $ 0.4 million and $ 0.2 million was recognized in the three months ended September 30, 2024 and 2023, respectively.

Stock based compensation expense attributable to performance stock units of $ 1.3 million and $ 0.5 million was recognized in the nine months ended September 30, 2024 and 2023, respectively.

Stock based compensation expense attributable to performance stock units of $ 0.5 million and $ 0.3 million was recognized in the three months ended March 31, 2025 and 2024, respectively.

Certain non-U.S.-based executives receive the cash value of the share price at the vesting date in lieu of shares.

Unvested cash-settled awards are remeasured at each reporting period.

A summary of performance stock unit activity under the Incentive Plan is as follows for the nine months ended September 30, 2024:

A summary of performance stock unit activity under the Incentive Plan is as follows for the three months ended March 31, 2025:

Number of Units Weighted-Average

2 unchanged sentences

Granted 35,365 65.51

Forfeited ( 3,426 ) 75.33

Performance adjustments 16,289 80.76

Issued and unvested at September 30, 2024 77,096 75.41

The following table presents the components of the Company’s net pension expense:

(dollars in millions) Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Service cost $ 0.3 $ 0.2 $ 0.8 $ 0.7

Interest cost 0.3 0.3 1.0 0.9

Expected return on plan assets ( 0.3 ) ( 0.3 ) ( 0.9 ) ( 0.9 )

Amortization of unrecognized loss 0.1 — 0.2 0.1

Amortization of prior service cost — — 0.1 0.1

Defined benefit plan expense before settlement income 0.4 0.2 1.2 0.9

Settlement income — — — ( 6.0 )

Total pension expense (income) $ 0.4 $ 0.2 $ 1.2 $ ( 5.1 )

The service cost component of net periodic benefit cost is presented within cost of products sold and selling, general and administrative expenses within the condensed consolidated statements of earnings while the other components of pension expense are reflected in other (income) expense, net.

The Company was not required to and did no t make a contribution to its U.S.

pension plan in 2023.

The Company is no t required to make a contribution in 2024.

Issued and unvested at March 31, 2025 109,763 72.21

Segment Results

4 unchanged sentences

Both segments primarily manufacture and market in their respective regions of the world.

The following table presents the Company’s segment results:

(dollars in millions) Three Months Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31, 2025

(dollars in millions) North America Rest of World Inter-segment Elimination Total Segments Less:

Corporate Expenses Total

Sales from external customers $ 743.4 $ 220.5 $ — $ 963.9 $ — $ 963.9

Inter-segment sales 5.3 6.2 — 11.5 — 11.5

748.7 226.7 — 975.4 — 975.4

Elimination of Inter-segment sales ( 5.3 ) ( 6.2 ) — ( 11.5 ) — ( 11.5 )

Net Sales 743.4 220.5 — 963.9 — 963.9

Cost of products sold 445.7 142.8 — 588.5 — 588.5

Gross Profit 297.7 77.7 — 375.4 — 375.4

Inter-segment Profit — — — — — —

Selling, general and administrative expenses 113.4 57.4 — 170.8 21.8 192.6

Other (income) expense, net ( 0.9 ) 0.6 — ( 0.3 ) ( 0.9 ) ( 1.2 )

Earnings $ 185.2 $ 19.7 $ — $ 204.9 $ ( 20.9 ) $ 184.0

Interest expense ( 2.9 )

Earnings before provision for income taxes $ 181.1

Three Months Ended March 31, 2024

(dollars in millions) North America Rest of World Inter-segment Elimination Total Segments Less:

Corporate Expenses Total

Sales from external customers $ 761.6 $ 217.2 $ — $ 978.8 $ — $ 978.8

Inter-segment sales 4.7 9.7 — 14.4 — 14.4

766.3 226.9 — 993.2 — 993.2

Elimination of Inter-segment sales ( 4.7 ) ( 9.7 ) — ( 14.4 ) — ( 14.4 )

Net Sales 761.6 217.2 — 978.8 — 978.8

Cost of products sold 449.1 145.0 — 594.1 — 594.1

Gross Profit 312.5 72.2 — 384.7 — 384.7

Inter-segment Profit — 0.3 ( 0.3 ) — — —

Selling, general and administrative expenses 113.3 56.5 — 169.8 22.4 192.2

Other expense (income), net 0.5 ( 1.2 ) — ( 0.7 ) ( 0.5 ) ( 1.2 )

Earnings $ 198.7 $ 17.2 $ ( 0.3 ) $ 215.6 $ ( 21.9 ) $ 193.7

Interest expense ( 1.0 )

Earnings before provision for income taxes $ 192.7

Segment Results (continued)

Assets, depreciation and capital expenditures by segment

(dollars in millions) March 31, 2025 December 31, 2024

North America $ 2,437.3 $ 2,315.2

Rest of World 557.7 592.1

Inter-segment ( 11.0 ) ( 5.8 ) ( 36.6 ) ( 16.9 )

$ 902.6 $ 937.5 $ 2,905.7 $ 2,864.7

Segment earnings

Total Segments 2,995.0 2,907.3

Corporate (1)

Total $ 3,267.7 $ 3,240.0

(1) The majority of corporate assets consist of cash, cash equivalents, marketable securities, and deferred income taxes.

Depreciation and amortization Three Months Ended

(dollars in millions) 2025 2024

North America $ 15.4 $ 14.8

$ 162.5 $ 170.0 $ 559.6 $ 557.7

Rest of World 5.0 4.4

13.6 23.2 56.7 56.8

Inter-segment earnings elimination — — ( 0.4 ) —

176.1 193.2 615.9 614.5

Corporate expense (3)

( 18.0 ) ( 14.4 ) ( 55.7 ) ( 47.0 )

Interest expense ( 1.5 ) ( 2.4 ) ( 4.3 ) ( 10.9 )

Earnings before income taxes 156.6 176.4 555.9 556.6

Provision for income taxes 36.5 41.0 132.0 137.3

Net earnings $ 120.1 $ 135.4 $ 423.9 $ 419.3

Additional Information

(1) Adjustments:

Total Segments 20.4 19.2

Corporate 0.3 0.4

Total $ 20.7 $ 19.6

Capital expenditures Three Months Ended

(dollars in millions) 2025 2024

North America $ 19.0 $ 19.8

includes pension settlement income of:

$ — $ — $ — $ ( 5.0 )

(2) Adjustments:

Rest of World 2.3 2.1

includes impairment expense of:

(3) Adjustments:

Corporate expense

includes pension settlement income of:

— — — ( 1.0 )

includes impairment expense of:

Total Segments 21.3 21.9

Corporate — 0.1

Total $ 21.3 $ 22.0

Fair Value Measurements

Accounting Standards Codification (ASC) 820, Fair Value Measurements , among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis.

ASC 820, Fair Value Measurements , among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis.

ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

6 unchanged sentences

Assets (liabilities) measured at fair value on a recurring basis are as follows (dollars in millions):

Fair Value Measurement Using Balance Sheet Location September 30,

Fair Value Measurement Using Balance Sheet Location March 31,

2025 December 31, 2024

Quoted prices in active markets for identical assets (Level 1) Marketable Securities $ 27.2 $ 36.5

Significant other observable inputs (Level 2) Other current assets / (Accrued liabilities) ( 1.2 ) ( 4.1 )

Significant other observable inputs (Level 2) Accrued Liabilities ( 0.7 ) ( 1.9 )

Items measured at fair value were comprised of the Company’s marketable securities (Level 1) and derivative instruments (Level 2).

There were no changes in the Company's valuation techniques used to measure fair values on a recurring basis during the nine months ended September 30, 2024.

There were no changes in the Company's valuation techniques used to measure fair values on a recurring basis during the three months ended March 31, 2025.

Derivative Instruments

4 unchanged sentences

Cash Flow Hedges

With the exception of its net investment hedges, the Company designates all of its hedging instruments as cash flow hedges.

With the exception of its net investment hedges, the Company designates all of its hedging instruments that qualify for hedge accounting in accordance with ASC 815 as cash flow hedges.

For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), gains or losses on the derivative instrument are reported as a component of other comprehensive loss, net of tax, and are reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.

4 unchanged sentences

Gains and losses on these instruments are recorded in accumulated other comprehensive loss, net of tax, until the underlying transaction is recorded in earnings.

When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the consolidated statement of earnings.

When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the condensed consolidated statement of earnings.

The assessment of effectiveness for forward contracts is based on changes in the forward rates.

1 unchanged sentence

The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year.

The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year .

The combined fair value of the foreign currency forward contracts was a liability balance of $ 1.2 million as of September 30, 2024 which was recorded in Accrued liabilities within the consolidated balance sheet.

The combined fair value of the foreign currency forward contracts was an asset balance of $ 0.9 million as of December 31, 2023 which was recorded in Other current assets within the consolidated balance sheet.

Derivative Instruments (continued)

The combined fair value of the foreign currency forward contracts was an asset balance of $ 0.1 million as of March 31, 2025 which was recorded in Other current assets within the condensed consolidated balance sheet.

The combined fair value of the foreign currency forward contracts was a liability balance of $ 1.4 million as of December 31, 2024 which was recorded in Accrued liabilities within the condensed consolidated balance sheet.

The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts as of the dates indicated that were designated as cash flow hedges:

(dollars in millions) September 30, 2024 December 31, 2023

(dollars in millions) March 31, 2025 December 31, 2024

Buy Sell Buy Sell

3 unchanged sentences

Total $ 29.9 $ 21.7 $ 41.2 $ 28.9

Net Investment Hedges

The Company enters into certain foreign currency forward contracts to hedge the exposure to a portion of the Company’s net investments in certain non-U.S.

subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S.

For the derivative instruments that are designated and qualify as net investment hedges, gains and losses are reported in other comprehensive loss where they offset gains and losses recorded on the Company’s net investments in its non-U.S.

subsidiaries.

These hedges are determined to be effective.

The Company recognized $ 4.0 million and $ 0.2 million of after-tax losses associated with hedges of net investments in non-U.S.

subsidiaries in currency translation adjustment in other comprehensive loss in the three months ended September 30, 2024 and September 30, 2023, respectively.

The Company recognized $ 1.4 million and $ 1.1 million of after-tax gains associated with hedges of net investments in non-U.S.

subsidiaries in currency translation adjustment in other comprehensive loss in the nine months ended September 30, 2024 and September 30, 2023, respectively.

The contractual amount of the Company's foreign currency forward contracts that are designated as net investment hedges was zero as of September 30, 2024.

The combined fair value of the net investment hedges was zero as of September 30, 2024.

The combined fair value of the net investment hedges was a liability balance of $ 4.2 million as of December 31, 2023 which was recorded in Accrued liabilities within the consolidated balance sheet.

Derivative Instruments (continued)

Interest Rate Swaps

The Company is exposed to interest rate risk as a result of the Company’s floating rate borrowings.

The Company entered into a forward interest rate swap agreement with an independent counterparty to hedge the variability in cash flows due to changes in Secured Overnight Financing Rate (SOFR) benchmark interest rate associated with variable rate borrowings.

An interest rate swap at March 31, 2025 has a maturity date of September 30, 2029 and effectively converts the Company’s variable interest rate obligation to a fixed interest rate obligation.

The interest rate swap had an aggregate notional amount of 4.2 billion rupees outstanding as of March 31, 2025 and December 31, 2024.

The aggregate effective interest rate of the swap as of March 31, 2025 was 8.25 %.

The fair value of the interest rate swap contract was a liability balance of $ 0.8 million and $ 0.5 million as of March 31, 2025 and December 31, 2024, respectively, which was recorded in Accrued liabilities within the condensed consolidated balance sheet.

The effect of cash flow hedges on the condensed consolidated statement of earnings:

Three Months Ended September 30 (dollars in millions):

Derivatives in ASC 815 cash flow hedging relationships Amount of (loss) gain recognized in other

Three Months Ended March 31 (dollars in millions):

Derivatives in ASC 815 cash flow hedging relationships Amount of gain (loss) recognized in other

comprehensive

3 unchanged sentences

comprehensive loss

into earnings Amount of gain

into earnings Amount of (loss) gain

reclassified from

4 unchanged sentences

Foreign currency contracts $ 1.3 $ 1.8 Cost of products sold $ ( 0.2 ) $ 0.6

Nine Months Ended September 30 (dollars in millions):

Derivatives in ASC 815 cash flow hedging relationships Amount of (loss) gain recognized in other

comprehensive

loss on derivatives Location of gain

reclassified from

accumulated other

comprehensive loss

into earnings Amount of gain

reclassified from

accumulated other

comprehensive

loss into earnings

Interest rate swap ( 0.3 ) — Interest expense — —

$ 1.0 $ 1.8 $ ( 0.2 ) $ 0.6

Foreign currency contracts $ ( 0.3 ) $ 3.6 Cost of products sold $ 1.9 $ 6.7

Net Investment Hedges

The Company uses foreign currency denominated intercompany debt and third-party foreign currency forward contracts to hedge the exposure to a portion of the Company’s net investments in certain non-U.S.

subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S.

subsidiaries.

These hedges are determined to be effective.

The Company recognized $( 1.2 ) million of after tax losses and $ 4.0 million of after-tax gains associated with hedges of net investments in non-U.S.

subsidiaries in currency translation adjustment in other comprehensive loss in the three months ended March 31, 2025 and March 31, 2024, respectively.

The contractual amount of the Company’s foreign currency denominated intercompany debt that is designated as a net investment hedge was ¥ 1.5 billion RMB as of March 31, 2025 and December 31, 2024.

The fair value of the net investment hedge was zero as of March 31, 2025 and December 31, 2024.

Balance Sheet Hedges

2 unchanged sentences

These foreign exchange contracts did not qualify for hedge accounting in accordance with ASC 815 and as such were marked to market through earnings.

The fair value of the foreign exchange contracts was zero as of September 30, 2024.

The fair value of the foreign exchange contracts was a liability balance of $ 0.8 million as of December 31, 2023 which was recorded in Accrued liabilities within the consolidated balance sheet.

Derivative Instruments (continued)

The fair value of the foreign exchange contracts was zero as of March 31, 2025 and December 31, 2024.

The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges:

(dollars in millions) September 30, 2024 December 31, 2023

(dollars in millions) March 31, 2025 December 31, 2024

Buy Sell Buy Sell

Canadian dollar $ — $ — $ — $ 6.4

Chinese yuan — — 206.8 —

Total $ — $ 18.7 $ 250.9 $ —

The amounts recognized within the consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below.

Three Months Ended September 30 (dollars in millions):

Derivatives not designated as hedging instruments:

Location of expense within the consolidated statements of earnings

Foreign exchange contracts Other (income) expense - net $ ( 3.6 ) $ 1.1

Nine Months Ended September 30 (dollars in millions):

Derivative Instruments (continued)

The amounts recognized within the condensed consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below.

Three Months Ended March 31 (dollars in millions):

Derivatives not designated as hedging instruments:

Location of expense within the consolidated statements of earnings

Foreign exchange contracts Other (income) expense - net $ 2.1 $ 1.1

The Company’s effective income tax rate for the three and nine months ended September 30, 2024 was 23.3 percent and 23.7 percent, respectively.

The Company estimates that its annual effective income tax rate for the full year 2024 will be approximately 24 percent.

The effective income tax rate for the three and nine months ended September 30, 2023 was 23.2 percent and 24.7 percent, respectively.

The change in the effective income tax rate for the three months ended September 30, 2024 compared to the effective income tax rate for the three months ended September 30, 2023 was primarily due to geographical earnings mix.

The change in the effective income tax rate for the nine months ended September 30, 2024 compared to the effective income tax rate for the nine months ended September 30, 2023 was primarily due to geographical earnings mix and a $ 15.6 million impairment expense recorded in the prior year period with no associated tax benefit.

Refer to Note 3 - Acquisitions and Dispositions for additional information regarding the impairment expense.

As of September 30, 2024, the Company had $ 17.2 million of unrecognized tax benefits of which $ 3.5 million would affect its effective income tax rate if recognized.

Location of expense within the condensed consolidated statements of earnings

Foreign exchange contracts Other expense, net $ — $ 4.0

The Company’s effective income tax rate for the three months ended March 31, 2025 was 24.6 percent.

The Company estimates that its annual effective income tax rate for the full year 2025 will be approximately between 24 and 24.5 percent.

The effective income tax rate for the three months ended March 31, 2024 was 23.4 percent.

The change in the effective income tax rate for the three months ended March 31, 2025 compared to the effective income tax rate for the three months ended March 31, 2024 was primarily due to the geographical earnings mix.

As of March 31, 2025, the Company had $ 16.2 million of unrecognized tax benefits of which $ 4.3 million would affect its effective income tax rate if recognized.

The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

10 unchanged sentences

Potential losses under the repurchase arrangements represent the difference between the repurchase price and net proceeds from the resale of the product plus costs incurred in the process, less related distributor rebates.

The Company’s reserves for estimated losses under these repurchase arrangements were immaterial as of September 30, 2024 and December 31, 2023.

The Company’s reserves for estimated losses under these repurchase arrangements were immaterial as of March 31, 2025 and December 31, 2024.

Changes in Accumulated Other Comprehensive Loss by Component

1 unchanged sentence

(dollars in millions) Three Months Ended

September 30,

Cumulative foreign currency translation

2 unchanged sentences

Balance at end of period ( 103.6 ) ( 85.1 )

Unrealized net gain on cash flow derivatives

Balance at beginning of period — 3.3

Other comprehensive (loss) gain before reclassifications ( 0.6 ) 1.1

Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $ 0.1 and $ 0.6 in 2024 and 2023, respectively)

( 0.3 ) ( 1.9 )

Balance at end of period ( 0.9 ) 2.5

Pension liability

Balance at beginning of period ( 4.5 ) ( 3.1 )

Amounts reclassified from accumulated other comprehensive loss:

Balance at end of period ( 4.4 ) ( 3.1 )

Accumulated other comprehensive loss, end of period $ ( 85.2 ) $ ( 90.1 )

(1) Amortization of pension items:

Actuarial losses $ 0.1 $ — (2)

Income tax benefit — —

Reclassification net of income tax benefit $ 0.1 $ —

(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost.

See Note 9 - Pensions for additional details.

Changes in Accumulated Other Comprehensive Loss by Component (continued)

Changes to accumulated other comprehensive loss by component are as follows:

(dollars in millions) Nine Months Ended

September 30,

Cumulative foreign currency translation

Balance at beginning of period $ ( 80.3 ) $ ( 84.1 )

Other comprehensive gain (loss) before reclassifications 0.4 ( 5.4 )

Balance at end of period ( 79.9 ) ( 89.5 )

Unrealized net gain on cash flow derivatives

Unrealized net (loss) gain on cash flow derivatives

Balance at beginning of period ( 1.5 ) 0.7

Other comprehensive (loss) gain before reclassifications ( 0.2 ) 2.7

Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $ 0.5 and $ 1.6 in 2024 and 2023, respectively)

( 1.4 ) ( 5.1 )

Other comprehensive gain before reclassifications 0.7 1.4

Realized losses (gains) on derivatives (net of income tax (benefit) provision of $( 0.1 ) and $ 0.1 in 2025 and 2024, respectively)

Balance at end of period ( 0.7 ) 1.7

6 unchanged sentences

Actuarial losses $ 0.1 $ 0.1

Prior year service cost 0.1 0.1 (2)

Income tax benefit — —

Reclassification net of income tax benefit $ 0.1 $ 0.1

(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost.

See Note 9 - Pensions for additional details.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements