Management’s Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Belden is a leading global supplier of network infrastructure solutions that makes the digital journey simpler, smarter and secure.
+Added: Belden is a leading global supplier of network infrastructure and digitization solutions that makes the digital journey simpler, smarter and secure.
We’re moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions.
5 unchanged sentences
• Execute a disciplined capital allocation strategy while maintaining net leverage of approximately 1.5x;
−Removed: • Drive Adjusted EPS to $8.00 by 2025.
+Added: • Drive Adjusted EPS to at least $8.00 by 2025.
Significant Trends and Events in 2023
The following trends and events during 2023 had varying effects on our financial condition, results of operations, and cash flows.
−Removed: In 2020, the World Health Organization (WHO) declared the outbreak of the novel coronavirus (COVID-19) a pandemic.
−Removed: Since the beginning of the pandemic, our foremost focus has been on the health and safety of our employees and customers.
−Removed: In response to the outbreak, to protect the health and safety of our employees, we modified practices at our manufacturing locations and offices to adhere to guidance from the WHO, the U.S.
−Removed: Centers for Disease Control and Prevention and other local health and governmental authorities with respect to social distancing, physical separation, personal protective equipment and sanitization.
−Removed: In light of variant mutations of the virus, even as vaccinations become more prevalent and more employees return to our offices, many of these safeguards will continue.
−Removed: Our suppliers, distributors, and other partners have similarly had their operations disrupted, and in regions of the world where infection rates have remained high, human suffering and market disruptions have persisted.
−Removed: We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by local or foreign governmental authorities, or that we determine are in the best interests of our employees and customers.
Foreign currency
11 unchanged sentences
dollars in a foreign location.
−Removed: D uring periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline.
−Removed: Furthermore, inflation may impact labor, energy, and other costs.
−Removed: We are mindful of ongoing inflationary pressures and as a result, proactively implement selling price increases and cost control measures.
Commodity Prices
18 unchanged sentences
We generally expect that our unit sales volume will increase or decrease consistently with the market growth rate.
−Removed: Our strategic goal is to utilize our Market Delivery System to target faster growing geographies, applications, and trends within our end markets, in order to achieve growth that is higher than the general market growth rate.
+Added: Our strategic goal is to transition to a solutions provider and target faster growing geographies, applications, and trends within our end markets, in order to achieve growth that is higher than the general market growth rate.
To the extent that we exceed the market growth rates, we consider it to be the result of capturing market share.
−Removed: Tripwire Divestiture
−Removed: During 2022, we sold Tripwire for gross cash consideration of $350 million and recognized a loss on disposal of discontinued operations, net of tax of $9.2 million.
−Removed: Debt Repurchase
−Removed: During 2022, we repurchased all of the €200.0 million aggregate principal amount of 4.125% senior subordinated notes previously due 2026.
−Removed: We recognized a $6.4 million loss on debt extinguishment for the premiums paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off.
−Removed: During 2022, we completed three acquisitions.
−Removed: On January 17, 2022, we acquired Macmon for $41.9 million , net of cash acquired.
−Removed: Macmon, based in Berlin, Germany, is a leading provider of products and services that secure network infrastructure in a variety of mission critical industries.
−Removed: On March 3, 2022, we acquired NetModule for $23.5 million, net of cash acquired.
−Removed: NetModule, based in Bern, Switzerland, is a leading provider of reliable, fast and secure wireless network infrastructures through advanced capabilities in 5G and WiFi6 technologies in a variety of mission critical industries with a strong focus on mass transit and intelligent traffic systems within the transportation vertical.
−Removed: On April 15, 2022, we acquired CAI for $19.0 million , net of cash acquired.
−Removed: CAI is headquartered in Anniston, Alabama and designs, manufactures, and sells a range of plug-in radio frequency filters used in outside plant hybrid fiber-coax nodes.
−Removed: The results of operations of each acquisition have been included in our results of operations from their respective acquisition dates.
−Removed: The three acquisitions were not material to our results of operations.
−Removed: Macmon and NetModule are included in the Industrial Automation Solutions segment, and CAI is included in the Enterprise Solutions segment.
−Removed: All three acquisitions were funded with cash on hand.
+Added: D uring periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline.
+Added: Furthermore, inflation may impact labor, energy, and other costs.
+Added: We monitor inflation pressures and proactively implement selling price increases and cost control measures as appropriate.
Share Repurchase Program
−Removed: During 2022, we repurchased 2.6 million shares of our common stock under the share repurchase program for an aggregate cost of $150.0 million at an average price per share of $57.95.
−Removed: Gain on Sale of Asset
−Removed: During 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale.
−Removed: This gain on sale was excluded from Segment EBITDA of our Industrial Automation Solutions segment.
−Removed: Equity Method Investment
−Removed: During 2022, we invested $20.0 million in Litmus for a noncontrolling ownership interest.
−Removed: Litmus provides critical data connectivity needed to monitor, visualize, analyze, and integrate industrial data.
−Removed: We account for this investment using the equity method of accounting.
+Added: During 2023, we repurchased 2.3 million shares of our common stock for an aggregate cost of $192.1 million at an average price per share of $85.27.
+Added: Sichert Acquisition
+Added: During 2023, we acquired Sichert with cash on hand for $97.5 million, net of cash acquired.
+Added: Sichert, based in Berlin Germany, designs and manufactures a portfolio of polycarbonate street cabinets utilized in outside plant passive optical networks (“PON”) and 5G networks.
+Added: Sichert is reported within the Enterprise Solutions segment.
+Added: CloudRail Acquisition
+Added: During 2023, we acquired CloudRail with cash on hand for $9.2 million, net of cash acquired.
+Added: CloudRail, based in Mannheim, Germany, spec ializes in sensor to cloud data solutions allowing end users to quickly connect sensors on their machinery to cloud providers to drive business insights and improve outcomes.
+Added: CloudRail is reported within the Industrial Automation Solutions segment.
+Added: Gain on Sale of Assets
+Added: During 2023, we sold our property in Ontario, Canada as part of a sale and leaseback transaction for $13.8 million and recognized a $12.1 million pre-tax gain on sale.
+Added: This gain on sale was excluded from Segment EBITDA.
+Added: Sale and Deconsolidation of Hite
+Added: During 2023, we sold our 51% ownership interest in Shanghai Hi-Tech Control System Co, Ltd to (Hite) for $0.9 million and recognized a $0.4 million pretax gain on sale.
+Added: The sale also includes $0.6 million of potential earnout payments.
+Added: The joint venture developed and provided certain Industrial Automation Solutions products and integrated solutions to customers in China.
+Added: As Belden was the primary beneficiary of the joint venture, due to both our ownership percentage and control over the activities of the joint venture, we consolidated the joint venture in our financial statements and presented the results of the joint venture attributable to Hite’s ownership as net income attributable to noncontrolling inter est in the Consolidated Statements of Operations up to the disposal date when we sold and deconsolidated the entity.
Results of Operations
11 unchanged sentences
Asset impairments — — 9,283 n/a (100.0) %
−Removed: Gain on sale of asset 37,891 — — n/a n/a
+Added: Gain on sale of assets 12,056 37,891 — (68.2) % n/a
Operating income 317,518 363,334 263,676 (12.6) % 37.8 %
Interest expense, net 33,625 43,554 62,693 (22.8) % (30.5) %
−Removed: Non-operating pension benefit (cost) 4,005 4,476 (395) 10.5 % (1,233.2) %
+Added: Non-operating pension benefit 1,863 4,005 4,476 53.5 % (10.5) %
Gain on sale of note receivable — — 27,036 n/a (100.0) %
−Removed: Loss on debt extinguishment 6,392 5,715 — (11.8) % n/a
+Added: Loss on debt extinguishment — 6,392 5,715 100.0 % 11.8 %
Income from continuing operations before taxes 285,756 317,393 226,780 (10.0) % 40.0 %
2023 Compared to 2022
+Added: Revenues decreased $94.4 million from 2022 to 2023 due to the following factors:
+Added: • Lower sales volume resulted in a $108.4 million decrease in revenues.
+Added: • Copper prices had a $19.9 million unfavorable impact on revenues.
+Added: • Divestitures had a $1.4 million unfavorable impact on revenues.
+Added: • Currency translation had a $0.4 million unfavorable impact on revenues.
+Added: • Acquisitions contributed $35.7 million in revenues.
+Added: Gross profit increased $38.7 million from 2022 to 2023 primarily due to favorable product mix and pricing.
+Added: Gross profit margins were robust, expanding 280 basis points from 35.2% to 38.0%.
+Added: Selling, general and administrative expenses increased $44.1 million from 2022 to 2023.
+Added: Strategic investments to enhance our solution selling capabilities, acquisitions, and severance actions contributed to the increase in selling, general and administrative expenses;
+Added: partially offset by a decrease in incentive compensation.
+Added: Research and development expenses increased $12.1 million from 2022 to 2023 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives.
+Added: Amortization of intangibles increased $2.5 million from 2022 to 2023 primarily due to acquisitions.
+Added: Gain on sale of assets decreased $25.8 million from 2022 to 2023.
+Added: During 2022 and 2023, we sold certain real estate in the United States and Canada and recognized a $37.9 million and $12.1 million pre-tax gain on sale, respectively.
+Added: Operating income decreased $45.8 million from 2022 to 2023 primarily due to the increase in expenses and decrease in the gain on sale of assets discussed above.
+Added: Net interest expense decreased $9.9 million from 2022 to 2023 primarily due to the retirement of the 2026 Notes during 2022 and an increase in interest income.
+Added: Loss on debt extinguishment decreased $6.4 million from 2022 to 2023 due to the debt refinancing that took place during 2022.
+Added: The loss on debt extinguishment in 2022 represents the premium paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off.
+Added: Income from continuing operations before taxes decreased $31.6 million from 2022 to 2023 primarily due to the decrease in operating income discussed above.
+Added: 2022 Compared to 2021
Revenues increased $305.2 million from 2021 to 2022 due to the following factors:
−Removed: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G products resulted in a $365.0 million increase in revenues.
−Removed: • Acquisitions, net of disposals contributed an estimated $19.3 million in revenues.
+Added: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband products resulted in a $365.0 million increase in revenues.
+Added: • Acquisitions, net of disposals contributed $19.3 million in revenues.
• Currency translation had a $65.3 million unfavorable impact on revenues.
9 unchanged sentences
See Notes 5, 11 and 12.
−Removed: Gain on sale of asset increased $37.9 million from 2021 to 2022.
+Added: Gain on sale of assets increased $37.9 million from 2021 to 2022.
During 2022, we sold certain real estate in the United States and recognized a $37.9 million pre-tax gain on sale.
−Removed: Operating income increased $99.7 million from 2021 to 2022 primarily as a result of the increase in gross profit, the gain on sale of asset in 2022, and lack of asset impairment charges as compared to 2021, partially offset by the increase in selling, general and administrative expenses;
+Added: Operating income increased $99.7 million from 2021 to 2022 primarily as a result of the increase in gross profit, the gain on sale of assets in 2022, and lack of asset impairment charges as compared to 2021, partially offset by the increase in selling, general and administrative expenses;
research and development expenses;
6 unchanged sentences
Income from continuing operations before taxes increased $90.6 million from 2021 to 2022 primarily due to the increase in operating income discussed above.
−Removed: 2021 Compared to 2020
−Removed: Revenues increased $549.1 million from 2020 to 2021 due to the following factors:
−Removed: • Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $376.8 million increase in revenues.
−Removed: • Copper prices had a $117.2 million favorable impact on revenues.
−Removed: • Currency translation had a $26.7 million favorable impact on revenues.
−Removed: • Acquisitions contributed an estimated $37.7 million in revenues.
−Removed: • Divestitures had a $9.3 million unfavorable impact on revenues.
−Removed: Gross profit increased $196.2 million from 2020 to 2021 due to the increases in revenues discussed above while gross profit margins expanded 70 basis points.
−Removed: Excluding the impact of higher copper pass through pricing and changes in foreign currency rates, gross profit margins increased more than 200 basis points.
−Removed: Selling, general and administrative expenses increased $54.6 million from 2020 to 2021.
−Removed: Strategic investments to enhance our solution selling capabilities (e.g., customer innovation centers), higher incentive compensation, and acquisitions contributed to the increase in selling, general and administrative expenses.
−Removed: Research and development expenses increased $17.2 million from 2020 to 2021 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives.
−Removed: Amortization of intangibles increased $1.6 million from 2020 to 2021 primarily due to currency translation.
−Removed: Asset impairments increased $9.3 million from 2020 to 2021 as a result of impairment charges of $3.6 million to write down certain held and used long-lived assets in our Industrial Automation Solutions segment to fair value, impairment charges of $3.4 million for our former oil and gas business in Brazil sold during 2021, and impairment charges of $2.3 million to write down certain real estate in Neckartenzlingen, Germany sold as part of a sale and leaseback transaction during 2021 to its fair value.
−Removed: See Notes 5, 11 and 12.
−Removed: Operating income increase $113.6 million from 2020 to 2021 primarily due to the increase in gross profit discussed above, partially offset by the increase in selling, general and administrative expenses;
−Removed: research and development expenses;
−Removed: amortization of intangibles expense;
−Removed: and asset impairments.
−Removed: Net interest expense increased $3.8 million from 2020 to 2021 primarily due to currency translation.
−Removed: Gain on sale of note receivable increased $27.0 million from 2020 to 2021 as a result of the sale of the Seller’s Note in 2021 related to the 2020 divestiture of Grass Valley.
−Removed: Loss on debt extinguishment increased $5.7 million from 2020 to 2021 due to the debt refinancing that took place during 2021.
−Removed: The $5.7 million loss on debt extinguishment represents the premium paid to the bond holders to retire the 2025 Notes and for the unamortized debt issuance costs on the 2025 Notes that we were required to write-off.
−Removed: Income from continuing operations before taxes increased $136.0 million from 2020 to 2021 primarily due to the increase in operating income discussed above.
−Removed: Year Ended December 31, Percentage Change
+Added: Years Ended December 31, Percentage Change
2023 2022 2021 2023 vs.
5 unchanged sentences
We recognized income tax expense of $43.2 million in 2023, representing an effective tax rate of 15.1%.
−Removed: The effective tax rate was primarily impacted by foreign tax rate differences, and domestic permanent differences and tax credits primarily associated with our foreign income inclusions.
+Added: The effective tax rate was primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits.
We recognized income tax expense of $49.6 million in 2022, representing an effective tax rate of 15.6%.
+Added: The effective tax rate was primarily impacted by foreign tax rate differences, domestic permanent differences, and tax credits primarily associated with our foreign income inclusions.
+Added: We recognized income tax expense of $27.9 million in 2021, representing an effective tax rate of 12.3%.
The effective tax rate was primarily impacted by a change in the deferred tax asset valuation allowance due to the release of a valuation allowance against the foreign tax credits in the U.S.
and a pension deferred tax asset in a foreign jurisdiction.
−Removed: We recognized income tax expense of $20.1 million in 2020, representing an effective tax rate of 22.1%.
−Removed: The effective tax rate was impacted by foreign tax rate differences, and domestic permanent differences and tax credits primarily associated with our foreign income inclusions.
Our income tax expense and effective tax rate in future periods may be impacted by many factors, including our geographic mix of income and changes in tax laws.
5 unchanged sentences
GAAP income from continuing operations $ 242,556 $ 267,748 $ 198,841
−Removed: Income tax expense 49,645 27,939 20,098
Depreciation expense 51,379 46,669 43,073
−Removed: Interest expense, net 43,554 62,693 58,903
+Added: Income tax expense 43,200 49,645 27,939
Amortization of intangibles 40,375 37,860 30,630
−Removed: Loss on debt extinguishment 6,392 5,715 —
+Added: Interest expense, net 33,625 43,554 62,693
Severance, restructuring, and acquisition integration costs (1)
25,152 16,685 23,867
+Added: Amortization of software development intangible assets 7,692 3,875 1,579
Adjustments related to acquisitions and divestitures (2)
6,177 7,833 (5,035)
−Removed: Amortization of software development intangible assets 3,875 1,579 872
+Added: Loss on debt extinguishment — 6,392 5,715
Non-operating pension settlement loss — 1,189 —
Asset impairments (3)
−Removed: Gain on sale of asset (4)
−Removed: Gain on note receivable (5)
+Added: Gain on sale of assets (4)
+Added: (12,056) (37,891) —
+Added: Gain on sale of note receivable (5)
Adjusted EBITDA $ 438,100 $ 443,559 $ 371,549
1 unchanged sentence
Adjusted EBITDA margin 17.4 % 17.0 % 16.1 %
−Removed: (1) See Note 15, Severance, Restructuring, and Acquisiti on Integration Activities, for details .
−Removed: (2) In 2022, we incurred $10.1 million for lease guarantees associated with the Grass Valley disposal (see Note 12), $2.2 million related to fair value adjustments of acquired inventory and investments, and gains of $4.5 million on collections from previously written off receivables associated with the sale of Grass Valley.
+Added: (1) Includes costs from programs described in Note 15, Restructuring Activities as well as other immaterial programs.
+Added: (2) In 2023, we incurred $4.1 million for lease guarantees associated with the Grass Valley disposal (see Note 12), $1.5 million related to fair value adjustments of acquired inventory and other assets, and $0.6 million of net losses associated with the sales of businesses.
+Added: In 2022, we incurred $10.1 million for lease guarantees associated with the Grass Valley disposal, $2.2 million related to fair value adjustments of acquired inventory and other assets, and gains of $4.5 million on collections from previously written off receivables associated with the sale of Grass Valley.
In 2021, we collected $2.2 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, reduced the Opterna earn-out liability by $5.8 million, recognized cost of sales of $2.3 million related to adjustments of acquired inventory to fair value, and recognized a $0.6 million loss on the sale of tangible assets.
−Removed: In 2020, we recognized $0.1 million of cost of sales related to adjustments of acquired inventory to fair value.
(3) In 2021, we recognized a $3.6 million impairment on assets held and used and a $5.7 million impairment on assets held for sale .
See Note 11, Property, Plant, and Equipment , for details.
+Added: (4) In 2023, we sold certain real estate in Canada for $13.8 million, net of transaction costs and recognized a $12.1 million pre-tax gain on sale.
In 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale.
See Note 11, Property, Plant, and Equipment , for details.
−Removed: (5) In 2021, we sold the seller's note associated with the Grass Valley disposal to a third party for $62.0 million and recognized a gain on sale of $27.0 million.
+Added: (5) In 2021, we sold the seller's note associated with the Grass Valley disposal to a third party for $62.0 million and recognized a pre-tax gain on sale of $27.0 million.
See Note 5, Disposals .
29 unchanged sentences
2023 Compared to 2022
−Removed: Revenues increased $305.2 million from 2021 to 2022 due to the following factors:
−Removed: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G products resulted in a $365.0 million increase in revenues.
−Removed: • Acquisitions, net of disposals contributed an estimated $19.3 million in revenues.
−Removed: • Currency translation had a $65.3 million unfavorable impact on revenues.
+Added: Revenues decreased $94.4 million from 2022 to 2023 due to the following factors:
+Added: • Lower sales volume resulted in a $108.4 million decrease in revenues.
• Copper prices had a $19.9 million unfavorable impact on revenues.
−Removed: Adjusted EBITDA increased $72.0 million in 2022 from 2021 primarily due to the leverage on higher sales volume, as discussed above.
−Removed: Accordingly, adjusted EBITDA margins expanded to 17.0% from 16.1% in the year ago period.
+Added: • Divestitures had a $1.4 million unfavorable impact on revenues.
+Added: • Currency translation had a $0.4 million unfavorable impact on revenues.
+Added: • Acquisitions contributed $35.7 million in revenues.
+Added: Adjusted EBITDA decreased $5.5 million in 2023 from 2022 primarily due to the decrease in revenues discussed above, partially offset by favorable mix.
+Added: Adjusted EBITDA margins expanded to 17.4% from 17.0% in the year ago period.
2022 Compared to 2021
Revenues increased $305.2 million from 2021 to 2022 due to the following factors:
−Removed: • Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $376.8 million increase in revenues.
−Removed: • Copper prices had a $117.2 million favorable impact on revenues.
−Removed: • Currency translation had a $26.7 million favorable impact on revenues.
−Removed: • Acquisitions contributed an estimated $37.7 million in revenues.
−Removed: • Divestitures had a $9.3 million unfavorable impact on revenues.
+Added: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband products resulted in a $365.0 million increase in revenues.
+Added: • Acquisitions, net of disposals contributed $19.3 million in revenues.
+Added: • Currency translation had a $65.3 million unfavorable impact on revenues.
+Added: • Copper prices had a $13.8 million unfavorable impact on revenues.
Adjusted EBITDA increased $72.0 million in 2022 from 2021 primarily due to the leverage on higher sales volume, as discussed above.
3 unchanged sentences
Enterprise Solutions
−Removed: Year Ended December 31, Percentage Change
+Added: Years Ended December 31, Percentage Change
2023 2022 2021 2023 vs.
5 unchanged sentences
2023 Compared to 2022
+Added: Enterprise revenues decreased $75.6 million in 2023 as compared to 2022.
+Added: Decreases in volume, lower copper prices, and unfavorable currency translation contribu ted $92.5 m illion, $10.2 million, and $4.6 million, respectively, to the decrease in revenues, partially offset by revenues of $31.7 million from acquisitions.
+Added: Enterprise EBITDA decreased $12.4 million in 2023 as compared to 2022 primarily due to the decreases in revenues discussed above.
+Added: 2022 Compared to 2021
Enterprise revenues increased $124.1 million in 2022 as compared to 2021.
2 unchanged sentences
Accordingly, Adjusted EBITDA margins expanded to 13.5% from 13.4% in the year ago period.
−Removed: 2021 Compared to 2020
−Removed: Enterprise revenues increased $202.0 million in 2021 as compared to 2020.
−Removed: Increases in volume, higher copper prices, and favorable currency translation contributed $143.6 million, $50.4 million, and $8.0 million, respectively, to the increase in revenues year over year.
−Removed: Enterprise EBITDA increased $45.2 million in 2021 as compared to 2020 primarily due to the leverage on higher sales volume, as discussed above.
−Removed: Accordingly, Adjusted EBITDA margins expanded to 13.4% from 11.4% in the year ago period.
Industrial Automation Solutions
−Removed: Year Ended December 31, Percentage Change
+Added: Years Ended December 31, Percentage Change
2023 2022 2021 2023 vs.
5 unchanged sentences
2023 Compared to 2022
−Removed: Industrial Automation revenues increased $181.2 million in 2022 as compared to 2021 primarily due to increases in volume and favorable pricing of $230.1 million and acquisitions, net of disposals of $13.9 million, partially offset by unfavorable currency translation and lower copper pass-through pricing of $52.0 million and $10.8 million, respectively.
−Removed: Industrial Automation EBITDA increased $54.4 million in 2022 as compared to 2021 primarily as a result of the increase in revenues discussed above.
+Added: Industrial Automation revenues decreased $18.8 million in 2023 as compared to 2022 primarily due to decreases in volume and lower copper prices of $15.9 m illion and $9.7 million, respectively, partially offset by favorable currency translation and acquisitions, net of disposals of $4.2 million and $2.6 million, respectively.
+Added: Industrial Automation EBITDA increased $10.2 million in 2023 as compared to 2022 primarily as a result of favorable mix and manufacturing productivity.
Accordingly, Adjusted EBITDA margins expanded to 20.7% from 19.7% in the year ago period.
2022 Compared to 2021
−Removed: Industrial Automation revenues increased $347.1 million in 2021 as compared to 2020 primarily due to increases in volume;
−Removed: higher copper prices;
−Removed: acquisitions, net of disposals;
−Removed: and favorable currency translation of $233.2 million, $66.8 million, $28.4 million, and $18.7 million, respectively.
+Added: Industrial Automation revenues increased $181.2 million in 2022 as compared to 2021 primarily due to increases in volume and favorable pricing of $230.1 million and acquisitions, net of disposals of $13.9 million, partially offset by unfavorable currency translation and lower copper pass-through pricing of $52.0 million and $10.8 million, respectively.
Industrial Automation EBITDA increased $54.4 million in 2022 as compared to 2021 primarily as a result of the increase in revenues discussed above.
6 unchanged sentences
economic conditions worldwide, customer demand, competitive market forces, customer acceptance of our product offerings, and commodities pricing.
−Removed: The following table is derived from our Consolidated Cash Flow Statements and includes the results and cash flow activity of discontinued operations up to the February 22, 2022 disposal date consistent with the Consolidated Cash Flow Statements:
+Added: The following table is derived from our Consolidated Cash Flow S tatements and includes the results and cash flow activity of discontinued operations up to the February 22, 2022 disposal date :
Years Ended December 31,
5 unchanged sentences
Effects of currency exchange rate changes on cash and cash equivalents 2,020 (12,574)
−Removed: Increase in cash and cash equivalents 43,919 141,763
+Added: Increase (decrease) in cash and cash equivalents (90,632) 43,919
Cash and cash equivalents, beginning of year 687,676 643,757
1 unchanged sentence
Net cash provided by operating activities totaled $319.6 million for 2023 compared to $281.3 million for 2022.
−Removed: The increase is primarily due to higher net income and favorable changes in inventory.
−Removed: Inventory was a source of cash of $5.6 million compared to a use of cash of $93.0 million in the prior year.
−Removed: The use of cash for inventory in the prior year was due to investments in inventory to satisfy the increasing demand.
−Removed: Net cash provided by investing activities totaled $168.4 million for 2022 compared to a use of cash of $92.0 million for 2021.
−Removed: Investing activities for 2022 included proceeds of $334.6 million and $43.5 million from the sale of the Tripwire disposal group and tangible property, respectively, as well as $105.1 million for capital expenditures and $104.6 million for the investment in Litmus and acquisitions of Macmon, NetModule and CAI.
−Removed: Investing activities for 2021 included capital expenditures of $91.0 million, payments primarily for the acquisition of OTN Systems of $73.3 million, purchases of intangible assets of $3.6 million, cash receipts for the carrying value of the seller's note and sale of the oil and gas cable business in Brazil of $45.7 million, and cash receipts for the sale of real estate in Germany of $30.2 million.
+Added: The increase is primarily due to a $35.4 million improvement in operating assets and liabilities as we successfully managed working capital to mitigate the impact of lower revenues in 2023.
+Added: Net cash from investing activities was a use of cash of $200.4 million for 2023 compared to a source of cash of $168.4 million for 2022.
+Added: Investing activities for 2023 included $116.7 million for capital expenditures and $106.7 million primarily for the acquisitions of Sichert and Cloudrail, partially offset by $13.7 million for asset sales and $9.3 million received from the disposals of businesses.
+Added: Investing activities for 2022 included proceeds of $334.6 million and $43.5 million from the sale of the Tripwire disposal group and tangible property, respectively, partially offset by $105.1 million for capital expenditures and $104.6 million primarily for the acquisitions of Macmon, NetModule and CAI.
Net cash flows used for financing activities totaled $211.9 million for 2023 compared to $393.2 million for 2022.
+Added: Financing activities for 2023 included payments under our share repurchase program of $192.1 million, payments related to share based compensation activities of $17.4 million, cash dividend payments of $8.5 million, financing lease payments of $0.4 million, and proceeds from the issuance of common stock of $6.5 million.
Financing activities for 2022 included repayments of debt obligations of $230.6 million, payments under our share repurchase program of $150.0 million, cash dividend payments of $8.9 million, net payments related to share based compensation activities of $7.2 million, financing lease payments of $0.2 million, and proceeds from the issuance of common stock of $3.7 million.
−Removed: Financing activities for 2021 included repayments of debt obligations of $360.3 million, cash dividend payments of $9.0 million, debt issuance costs of $8.2 million, net payments related to share based compensation activities of $5.6 million, financing lease payments of $3.1 million, payments to noncontrolling interests of $2.7 million, and borrowings under credit arrangements of $356.0 million.
−Removed: During 2021, we completed an offering for €300.0 million aggregate principal amount of 3.375% senior subordinated notes due 2031, repurchased the €300.0 million 2025 Notes, and refinanced the Revolver - see Note 16.
Our cash and cash equivalents balance was $597.0 million as of December 31, 2023.
12 unchanged sentences
At December 31, 2023, the following contractual obligations and commercial commitments were outstanding:
−Removed: Principal payments on long-term debt of $1.2 billion, none of which is due in 2023 (see Note 16).
+Added: Principal payments on long-term debt totaled $1.2 billion, none of which is due in 2024 (see Note 16).
Depending on the conditions in the credit markets, we may refinance this debt, or we may use cash from operations, including temporarily accessing our Revolving Credit Agreement, to repay this debt.
Interest payments on long-term debt of $216.0 million, of which $44.2 million is due in 2024.
−Removed: Operating lease obligations of $77.2 million, of which $15.5 million is due in 2023 (see Note 12).
−Removed: Pension and other postemployment obligations of $84.3 million, of which $9.6 million is due in 2023 (see Note 19).
+Added: Opera ting lease obligations of $91.5 million, of which $18.0 million is due in 2024 (see Note 12).
+Added: Pension and other postemployment obligation s of $106.6 million, of which $12.3 million is d ue in 2024 (see Note 19).
Obligations to purchase goods or services that are enforceable and legally binding of $43.7 million.
All of these obligations are due in 2024.
−Removed: Standby financial letters of credit, bank guarantees, and surety bonds totaling $17.3 million, of which $15.3 million are scheduled to expire or mature in 2023.
+Added: Standby financial letters of credit, bank guarantees, and surety bonds totaled $19.9 million, of which $13.5 million will expire or mature in 2024.
These commitments are generally issued to secure obligations we have for a variety of commercial reasons such as workers compensation self-insurance programs in several states and the importation and exportation of product.
29 unchanged sentences
A 10% change in our sales reserve for such Changes as of December 31, 2023 would have affected net income by approximately $2.5 million in 2023 .
−Removed: At times, we enter into arrangements that involve the delivery of multiple promised goods or services.
−Removed: For these arrangements, when the promised goods or services can be separated, the revenue is allocated to each distinct good or service based on that performance obligation’s relative standalone selling price and recognized based upon transfer of control for each performance obligation.
−Removed: Generally, we determine standalone selling price using the adjusted market assessment approach.
−Removed: Revenue allocated to support services under our support contracts is typically recognized ratably over the term of the service.
−Removed: Revenue allocated to distinct professional services is recognized when (or as) the performance obligation is satisfied depending on the terms of the arrangement.
−Removed: When professional services are not distinct from goods, the professional services and goods are combined into one performance obligation, and revenue allocated to that performance obligation is recognized when (or as) the performance obligation is satisfied.
We recognize deferred tax assets resulting from tax credit carryforwards, net operating loss carryforwards, and deductible temporary differences between taxable income on our income tax returns and income before taxes under GAAP.
10 unchanged sentences
In the future, if we prevail in matters for which accruals have been established previously or pay amounts in excess of reserves, there could be a material effect on our income tax provisions in the period in which such determination is made.
−Removed: On August 16, 2022, the Inflation Reduction Act of 2022 (the Act) was signed into law.
−Removed: We are evaluating the effect that the Act will have on our consolidated financial statements and related disclosures.
−Removed: None of the tax provisions of the Act are expected to have a material impact to our consolidated financial statements and related disclosures.
+Added: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures (ASU 2023-09) enhancing the transparency and decision usefulness of income tax disclosures.
+Added: ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.
+Added: ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted.
+Added: The amendments in ASU 2023-09 are applied on a prospective basis, though retrospective application is permitted.
+Added: We did not early adopt this pronouncement and are in the process of evaluating its impact on our consolidated financial statements and related disclosures.
See Note 18, Income Taxes, to the consolidated financial statements for further information regarding income taxes.
7 unchanged sentences
We determined that each of our reportable segments (Enterprise Solutions and Industrial Automation Solutions) represents an operating segment.
−Removed: Within those operating segments, we have identified reporting units based on whether there is discrete financial information prepared that is regularly reviewed by segment management.
+Added: Within those operating segments, we have identified reporting units based on whether there is discrete fina ncial information prepared that is regularly reviewed by segment management.
As a result of this evaluation, we have identified three reporting units within Enterprise Solutions and three reporting units within Industrial Automation Solutions for purposes of goodwill impairment testing.
2 unchanged sentences
If it is more likely than not that the fair value is less than the carrying value, then a quantitative assessment is required for the reporting unit, as described in the paragraph below.
−Removed: In 2022, we performed a qualitative assessment over five of our reporting units.
+Added: In 2023, we performed a qualitative assessment over three of our re porting units.
When we evaluate goodwill for impairment using a quantitative assessment, we compare the fair value of each reporting unit to its carrying value.
6 unchanged sentences
Consideration is given to the financial conditions and operating performance of the reporting unit being valued relative to those publicly-traded companies operating in the same or similar lines of business.
−Removed: For our annual impairment test in 2022, we performed a quantitative assessment over one of our reporting units.
−Removed: The excess of the fair value over the carrying value under the income approach was 48%.
+Added: For our annual impairment test in 2023, we performed a quantitative assessment over three of our reporting units.
+Added: The excess of the fair value over the carrying value under the income approach ranged from 30% to 106%.
The assumptions used to estimate fair values were based on the past performance of the reporting unit as well as the projections incorporated in our strategic plan.
2 unchanged sentences
We also considered assumptions that market participants may use.
−Removed: In our quantitative assessment, the discount rate was 13.1%, the 2023 to 2032 compounded annual revenue growth rate was 4.9%, and the revenue growth rate beyond 2032 was 2.5%.
+Added: In our quantitative assessment, the discount rate ranged from 11.9% to 13.8%, the 2024 to 2033 compounded annual revenue growth rate ranged from 4.2% to 6.3%, and the revenue growth rate beyond 2033 ranged from 2.0% to 3.0%.
By their nature, these assumptions involve risks and uncertainties.
6 unchanged sentences
We determined that our trademark was not impaired during 2023.
−Removed: Significant assumptions to determine fair value included sales growth, royalty rates, and discount rates.
+Added: Significant assumptions to determine fair value included sales growth, a royalty rate, and a discount rate.
Pension and Other Postretirement Benefits
7 unchanged sentences
Actual results that differ from our assumptions are accumulated and, if in excess of the lesser of 10% of the projected benefit obligation or the fair market value of plan assets, amortized over the estimated future working life of the plan participants.
−Removed: As a sensitivity measure, the effect of a 50 basis point decline in the assumed discount rate would have resulted in a decrease in the 2022 net periodic benefit cost of less than $0.1 million and an increase in the projected benefit obligations of approximately $17.8 million as of December 31, 2022.
+Added: As a sensitivity measure, the effect of a 50 basis point decline in the assumed discount rate would have resulted in a decrease in the 2023 net periodic benefit cost of approximately $0.1 million and an increase in the projected benefit obligations of approximately $19.8 million as of December 31, 2023.
A 50 basis point decline in the expected return on plan assets would have resulted in an increase in the 2023 net periodic benefit cost of approximately $1.5 million.
−Removed: Conversely, the effect of a 50 basis point increase in the assumed discount rate would have resulted in an increase in the 2022 net periodic benefit cost of approximately $0.6 million and a decrease in the projected benefit obligation of approximately $16.3 million as of December 31, 2022.
+Added: Conversely, the effect of a 50 basis point increase in the assumed discount rate would have resulted in a decrease in the 2023 net periodic benefit cost of less than $0.1 million and a decrease in the projected benefit obligation of approximately $18.3 million as of December 31, 2023.
A 50 basis point increase in the expected return on plan assets would have resulted in a decrease in the 2023 net periodic benefit cost of approximately $1.5 million.
12 unchanged sentences
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.