What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-05 compared with 2021-08-05 · 102 added, 98 removed, 320 unchanged (38% of the section changed)

41 unchanged sentences

the BSI Life Science segment (comprised of the Bruker BioSpin Group and the Bruker CALID Group), the BSI NANO segment and the Bruker Energy & Supercon Technologies (BEST) segment.

Revenue for the three months ended June 30, 2021 increased by $146.2 million, or 34.4%, to $570.8 million, compared to $424.6 million for the comparable period in 2020.

Revenue for the three months ended September 30, 2021 increased by $97.5 million, or 19.1%, to $608.9 million, compared to $511.4 million for the comparable period in 2020.

Included in revenue was an increase of approximately $5.2 million from foreign currency translation and an increase of $1.3 million from acquisitions.

1 unchanged sentence

measure, increased $91.0 million.

Revenue increases were driven by strong demand for our products and solutions, as well as a strong business and end market recovery compared to the same period in 2020.

Revenue for the six months ended June 30, 2021 increased by $276.9 million, or 32.6%, to $1,125.5 million, compared to $848.6 million for the comparable period in 2020.

Revenue increases were driven by strong demand for our products and solutions, as well as a robust recovery compared to the same period in 2020.

Revenue for the nine months ended September 30, 2021 increased by $374.4 million, or 27.5%, to $1,734.4 million, compared to $1,360.0 million for the comparable period in 2020.

Included in revenue was an increase of approximately $60.7 million from foreign currency translation and an increase of $6.3 million from acquisitions.

1 unchanged sentence

measure, increased $307.4 million.

Revenue increases were driven by strong demand for our products and solutions, and the business and end market recovery compared to the six months ended June 30, 2020.

Our gross profit margin increased to 49.2% during the three months ended June 30, 2021, as compared to 43.9% in the same period in 2020, the result of higher revenue and volume leverage.

Our gross profit margin increased to 49.7% during the six months ended June 30, 2021, as compared to 44.6% in the same period in 2020, the result of higher revenue, volume leverage and favorable mix.

Our income tax provision in the three months ended June 30, 2021 and 2020 was $21.3 million and $7.1 million, respectively, representing effective tax rates of 26.6% and 22.7%, respectively.

The increase in our effective tax rate was primarily due to the overall increase in profit before income tax and the jurisdictional profit mix.

Our income tax provision in the six months ended June 30, 2021 and 2020 was $48.8 million and $10.0 million, respectively, representing effective tax rates of 29.5% and 22.3%, respectively.

The increase in our effective tax rate was primarily due to the overall increase in profit before income tax and the jurisdictional profit mix, as well as the impact of unfavorable discrete items in the period.

Diluted earnings per share for the three months ended June 30, 2021 was $0.38, an increase of $0.22 compared to $0.16 per share in the same period in 2020.

Diluted earnings per share for the six months ended June 30, 2021 was $0.75, an increase of $0.53 compared to $0.22 per share in the same period in 2020.

The increase in net income and earnings per diluted share in both the three months and six months ended June 30, 2021 was primarily driven by higher revenue, gross profit and operating profit.

Revenue increases were driven by strong demand for our products and solutions, as well as a robust recovery compared to the same period in 2020.

Our gross profit margin increased to 50.7% during the three months ended September 30, 2021, as compared to 48.6% in the same period in 2020, the result of volume leverage.

Our gross profit margin increased to 50.0% during the nine months ended September 30, 2021, as compared to 46.1% in the same period in 2020, the result of volume leverage and favorable mix.

Our income tax provision in the three months ended September 30, 2021 and 2020 was $20.7 million and $20.0 million, respectively, representing effective tax rates of 19.0% and 26.6%, respectively.

The decrease in our effective tax rate was primarily due to the jurisdictional profit mix, partially offset by the impact of favorable discrete items.

Our income tax provision in the nine months ended September 30, 2021 and 2020 was $69.5 million and $30.0 million, respectively, representing effective tax rates of 25.4% and 25.0%, respectively.

The increase in our effective tax rate was primarily due to the increase in profit before income tax and the jurisdictional profit mix, partially offset by the impact of discrete items in the period.

Diluted earnings per share for the three months ended September 30, 2021 was $0.57, an increase of $0.22 compared to $0.35 per share in the same period in 2020.

Diluted earnings per share for the nine months ended September 30, 2021 was $1.32, an increase of $0.75 compared to $0.57 per share in the same period in 2020.

The increase in net income and earnings per diluted share in both the three months and nine months ended September 30, 2021 was primarily driven by higher revenue, favorable volume and operating leverage compared to the same period in 2020.

The following table presents a reconciliation from net cash provided by operating activities, which is the most directly comparable GAAP operating financial measure, to free cash flow as used by management (in millions):

Six Months Ended June 30,

Nine Months Ended

September 30,

Net cash provided by operating activities

2 unchanged sentences

The following table presents reconciliations from gross profit and gross profit margin, which are the most directly comparable GAAP operating performance measures, to non-GAAP

gross profit and non-GAAP gross profit margin as used by management (dollars in millions):

Three Months Ended June 30,

Six Months Ended June 30,

gross profit and non-GAAP

gross profit margin as used by management (dollars in millions):

Three Months Ended September 30,

Nine Months Ended September 30,

Restructuring costs

Acquisition-related costs

Purchased intangible amortization

gross profit margin was 50.0% and 45.1% in the three months ended June 30, 2021 and 2020, respectively.

gross profit margin was 50.6% and 45.9% in the six months ended June 30, 2021 and 2020, respectively.

gross profit margin was 51.7% and 49.6% in the three months ended September 30, 2021 and 2020, respectively.

gross profit margin was 51.0% and 47.3% in the nine months ended September 30, 2021 and 2020, respectively.

The increases in our non-GAAP

gross profit margins in both the three and six months ended June 30, 2021 were driven by higher revenue and volume leverage, compared to 2020 which was negatively impacted by the COVID-19

Contributions from higher margin products also favorably impacted our gross profit margin in the six months ended June 30, 2021.

gross profit margins in both the three and nine months ended September 30, 2021 were driven by higher revenue and volume leverage, compared to 2020 which was negatively impacted by the COVID-19

Contributions from higher margin products also favorably impacted our gross profit margin in the nine months ended September 30, 2021.

The following table presents reconciliations from operating income and operating margin, which are the most directly comparable GAAP operating performance measures, to non-GAAP

operating income and non-GAAP operating margin as used by management (dollars in millions):

Three Months Ended June 30,

Six Months Ended June 30,

operating income and non-GAAP

operating margin as used by management (dollars in millions):

Three Months Ended September 30,

Nine Months Ended September 30,

Operating income

3 unchanged sentences

operating income

operating margin was 17.3% and 11.5% in the three months ended June 30, 2021 and 2020, respectively.

operating margin was 17.9% and 9.6% in the six months ended June 30, 2021 and 2020, respectively.

operating margin was 20.6% and 18.6% in the three months ended September 30, 2021 and 2020, respectively.

operating margin was 18.8% and 12.9% in the nine months ended September 30, 2021 and 2020, respectively.

operating margin increased in 2021 due to higher revenue, volume and operating leverage in 2021, as compared to 2020.

36 unchanged sentences

Executing prudent temporary cost reductions

During a period of reduced demand due to COVID-19 in 2020, we implemented temporary cost reduction measures in an effort to mitigate the negative impacts on our business of COVID-19

During a period of reduced demand due to COVID-19

in 2020, we implemented temporary cost reduction measures in an effort to mitigate the negative impacts on our business of COVID-19

and the related slowdown in the global economy.

5 unchanged sentences

These cost reduction measures have since been relaxed, as our revenue has recovered.

We could in fact experience increased compensation expenses associated with employee recruiting and employee retention to the extent employment opportunities start multiplying post-pandemic, causing the search for and retention of talent to become more competitive.

We could in fact experience increased compensation expenses associated with employee recruiting and employee retention to the extent employment opportunities continue multiplying post-pandemic, causing the search for and retention of talent to remain and become more competitive.

Delivering enabling research and diagnostic products to help fight the pandemic and to support other essential priorities of our society

Bruker is providing critical technologies and solutions to help combat the COVID-19

crisis, most notably our Microbiology and infectious disease diagnostics portfolio, to which we have added SARS-COV-2

PCR tests, and our nuclear magnetic resonance and mass spectrometry systems which are used in critical disease, therapeutic and vaccine research.

crisis, most notably our Microbiology and infectious disease diagnostics portfolio and our nuclear magnetic resonance and mass spectrometry systems which are used in critical disease, therapeutic and vaccine research.

global pandemic has driven volatility and uncertainty in global markets and has in the past affected our operations significantly.

3 unchanged sentences

vaccines will impact our business, directly or indirectly, cannot accurately be predicted at this time.

As we begin to emerge from the pandemic, we continue to monitor the impact of COVID-19

We continue to monitor the impact of COVID-19

on our business and our supply chain and respond accordingly.

28 unchanged sentences

RESULTS OF OPERATIONS

Three Months Ended June 30, 2021 compared to the Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 compared to the Three Months Ended September 30, 2020

Consolidated Results

The following table presents our results (dollars in millions, except per share data):

Three Months Ended June 30,

Three Months Ended

September 30,

Product revenue

18 unchanged sentences

Net income attributable to Bruker Corporation

Net income per common share attributable to Bruker Corporation shareholders:

Basic and diluted

Weighted average common shares outstanding:

NM not meaningful

Revenue increases were driven by strong demand for our products and solutions, as well as a strong business and end market recovery as compared to the same period in 2020.

The increase in gross profit in the three months ended June 30, 2021, as compared to the same period in 2020, was a result of higher revenue and volume leverage.

Revenue increases were driven by strong demand for our products and solutions, as well as a robust recovery as compared to the same period in 2020.

The increase in gross profit in the three months ended September 30, 2021, as compared to the same period in 2020, was a result of higher revenue and volume leverage.

Selling, General and Administrative

Our selling, general and administrative expenses for the three months ended June 30, 2021 decreased to 23.6% of total revenue, from 24.1% of total revenue for the comparable period in 2020.

The decrease as a percentage of revenue was a result of the increase in revenue period over period.

Our selling, general and administrative expenses for the three months ended September 30, 2021 increased to 23.2% of total revenue, from 22.4% of total revenue for the comparable period in 2020.

The increase as a percentage of revenue was a result of the temporary cost reduction measures implemented in the prior period in an effort to mitigate the negative impacts on our business of COVID-19

and the related slowdown in the global economy.

Research and Development

Our research and development expenses for the three months ended June 30, 2021 decreased to 9.8% of total revenue from 10.4% of total revenue for the comparable period in 2020.

Our research and development expenses for the three months ended September 30, 2021 decreased to 8.6% of total revenue from 9.4% of total revenue for the comparable period in 2020.

The decrease as a percentage of revenue was a result of the increase in revenue period over period.

Other Charges, Net

Other charges, net recorded for the three months ended June 30, 2021 consisted of $2.3 million of acquisition-related charges related to acquisitions completed in 2021 and 2020, $1.4 million of restructuring costs, $0.8 million of costs associated with our global information technology (IT) transformation activities offset by a $0.1 million adjustment regarding professional fees incurred in connection with investigation matters.

Other charges, net for the three months ended June 30, 2020 consisted primarily of $1.2 million of restructuring costs related to closing facilities and implementing outsourcing and other restructuring initiatives, $1.1 million of professional fees incurred in connection with investigation matters and $0.4 million of costs associated with our global IT transformation initiative offset by a benefit of $0.8 million related to previous acquisitions.

Other charges, net recorded for the three months ended September 30, 2021 consisted of $1.1 million of costs associated with our global information technology (IT) transformation activities, $0.9 million of restructuring costs and $0.6 million of acquisition-related charges related to acquisitions completed in 2021 and 2020.

Other charges, net for the three months ended September 30, 2020 consisted primarily of $1.7 million of restructuring costs related to closing of facilities and implementing outsourcing and other restructuring initiatives, $0.9 million of acquisition-related charges, $0.7 million related to long-lived asset impairments, $0.5 million of costs associated with our global IT transformation activities and $0.3 million of professional fees incurred in connection with investigation matters.

Operating Income

The increase in operating income was due to higher revenue, gross profit and favorable operating leverage in the three months ended June 30, 2021 as our business and end markets rebounded, as compared to the same period in 2020 which was negatively impacted by the COVID-19

The increase in operating income was due to higher revenue, gross profit and favorable operating leverage in the three months ended September 30, 2021 as our business and end markets rebounded, as compared to the same period in 2020 which was negatively impacted by the COVID-19

pandemic and related economic slowdown.

Interest and Other Income (Expense), Net

The decline in net interest and other expense in the three months ended June 30, 2021, as compared to the same period in 2020 was mainly due to a smaller loss on foreign currency denominated transactions, partially offset by an increase in interest expense on our debt obligations.

The decline in net interest and other expense in the three months ended September 30, 2021, as compared to the same period in 2020 was mainly due to the impact of foreign currency exchange rates.

Income Tax Provision

2 unchanged sentences

Expected tax benefits, including tax credits and incentives, the impact of changes to valuation allowances and the effect of jurisdictional differences in statutory tax rates were also considered in the calculation.

The effective tax rates for the three months ended June 30, 2021 and 2020 were 26.6% and 22.7%, respectively.

The increase in our effective tax rate was primarily due to the overall increase in profit before income tax and the jurisdictional profit mix.

The effective tax rates for the three months ended September 30, 2021 and 2020 were 19.0% and 26.6%, respectively.

The decrease in our effective tax rate was primarily due to the jurisdictional profit mix and the impact of favorable discrete items.

Net Income (Loss) Attributable to Noncontrolling Interests

1 unchanged sentence

Net Income Attributable to Bruker Corporation

The increase in net income and earnings per diluted share in the three months ended June 30, 2021, as compared to the same period in 2020, was primarily driven by higher revenue, gross profit and operating profit as a result of the strengthened demand and recovery in our business and end markets.

The increase in net income and earnings per diluted share in the three months ended September 30, 2021, as compared to the same period in 2020, was primarily driven by higher revenue, gross profit and operating profit as a result of the strengthened demand and recovery in our business and end markets.

Reportable Segment Revenue

1 unchanged sentence

Three Months Ended

September 30,

Dollar Change

4 unchanged sentences

This aggregation reflects the similar economic characteristics, production processes, customer services provided, types and classes of customers, methods of distribution and regulatory environments.

The increase in revenue for the BSI Life Science Segment in the three months ended June 30, 2021 was due to strong demand, business and end market recovery, and was led by growth in mass spectrometry, infrared and Raman, microbiology and preclinical imaging products.

The increase in revenue for the BSI Life Science segment in the three months ended September 30, 2021 was due to strong demand, business and end market recovery, and was led by growth in infrared and Raman, Nuclear Magnetic Resonance (NMR), and Preclinical Imaging (PCI) solutions.

The increase in revenue for the BSI NANO segment was driven by a rebound in industrial research and academic market demand and continued strong demand from semiconductor and microelectronics customers.

The increase in revenue for the BEST segment resulted from higher “big science” project revenue in the three months ended June 30, 2021.

The increase in revenue for the BEST segment resulted from higher “big science” project revenue and a recovery in superconductors for healthcare MRI in the three months ended September 30, 2021.

Operating Income

The following table presents operating income and operating margins on revenue by reportable segment (dollars in millions):

Three Months Ended June 30,

Three Months Ended September 30,

Income (Loss)

9 unchanged sentences

Consolidated Results

Six Months Ended June 30, 2021 compared to the Six Months Ended June 30, 2020

Nine Months Ended September 30, 2021 compared to the Nine Months Ended September 30, 2020

The following table presents our results (dollars in millions, except per share data):

Six Months Ended June 30,

Nine Months Ended

September 30,

Product revenue

18 unchanged sentences

Net income attributable to Bruker Corporation

Net income per common share attributable to Bruker Corporation shareholders:

Basic and diluted

Weighted average common shares outstanding:

NM not meaningful

Revenue increases were driven by strong demand for our products and solutions, and the business and end market recovery as compared to the same period in 2020.

The increase in gross profit in the six months ended June 30, 2021, as compared to the same period in 2020, was a result of higher revenue, volume leverage and favorable mix.

Revenue increases were driven by strong broad demand for our products and solutions, and the business and end market recovery as compared to the same period in 2020.

The increase in gross profit in the nine months ended September 30, 2021, as compared to the same period in 2020, was a result of higher revenue, volume leverage and favorable mix.

Selling, General and Administrative

Our selling, general and administrative expenses for the six months ended June 30, 2021 decreased to 23.7% of total revenue, from 26.3% of total revenue for the comparable period in 2020.

Our selling, general and administrative expenses for the nine months ended September 30, 2021 decreased to 23.5% of total revenue, from 24.9% of total revenue for the comparable period in 2020.

The decrease as a percentage of revenue was a result of the increase in revenue period over period.

Research and Development

Our research and development expenses for the six months ended June 30, 2021 decreased to 9.8% of total revenue from 10.9% of total revenue for the comparable period in 2020.

Our research and development expenses for the nine months ended September 30, 2021 decreased to 9.4% of total revenue from 10.4% of total revenue for the comparable period in 2020.

The decrease as a percentage of revenue was a result of the increase in revenue period over period.

Other Charges, Net

Other charges, net recorded for the six months ended June 30, 2021 consisted of $3.2 million of acquisition-related charges related to acquisitions completed in 2021 and 2020, $2.7 million of restructuring costs and $1.5 million of costs associated with our global IT transformation activities.

Other charges, net recorded for the six months ended June 30, 2020 consisted primarily of $4.5 million of professional fees incurred in connection with investigation matters, $2.7 million of restructuring costs related to closing facilities and implementing outsourcing and other restructuring initiatives, $1.2 million related to long-lived asset impairments, and $1.3 million of costs associated with our global IT transformation initiative offset by a benefit of $1.9 million related to previous acquisitions.

Other charges, net recorded for the nine months ended September 30, 2021 consisted of $3.8 million of acquisition-related charges related to acquisitions completed in 2021 and 2020, $3.6 million of restructuring costs and $2.6 million of costs associated with our global IT transformation activities.

Other charges (gain), net recorded for the nine months ended September 30, 2020 consisted primarily of $4.8 million of professional fees incurred in connection with investigation matters, $4.4 million of restructuring costs related to closing of facilities and implementing outsourcing and other restructuring initiatives, $1.9 million related to long-lived asset impairments and $1.8 million of costs associated with our global IT transformation activities offset by $(1.0) million of acquisition-related charges related to previous acquisitions.

Operating Income

The increase in operating income was due to higher revenue, volume and operating leverage in the six months ended June 30, 2021 as our business and end markets rebounded, as compared to the same period in 2020 which was negatively impacted by the COVID-19

The increase in operating income was due to higher revenue, gross profit and favorable operating leverage in the nine months ended September 30, 2021 as our business and end markets rebounded, as compared to the same period in 2020 which was negatively impacted by the COVID-19

pandemic and related economic slowdown.

Interest and Other Income (Expense), Net

Net interest expense was consistent in the six months ended June 30, 2021, as compared to the same period in 2020 and primarily includes interest expense on our debt obligations.

The decline in net interest and other expense in the nine months ended September 30, 2021, as compared to the same period in 2020 was mainly due to the impact of foreign currency exchange rates.

Income Tax Provision

2 unchanged sentences

The effective tax rates for the six months ended June 30, 2021 and 2020 were 29.5% and 22.3%, respectively.

The effective tax rates for the nine months ended September 30, 2021 and 2020 were 25.4% and 25.0%, respectively.

The increase in our effective tax rate was primarily due to the increase in profit before income tax and the jurisdictional profit mix, partially offset by the impact of discrete items in the period.

Net Income (Loss) Attributable to Noncontrolling Interests

1 unchanged sentence

Net Income Attributable to Bruker Corporation

The increase in net income and earnings per diluted share in the six months ended June 30, 2021, as compared to the same period in 2020, was primarily driven by the increase in revenue, gross profit and operating profit as a result of strengthened demand and recovery in our business and end markets.

The increase in net income and earnings per diluted share in the nine months ended September 30, 2021, as compared to the same period in 2020, was primarily driven by the increase in revenue, gross profit and operating profit as a result of strengthened demand and recovery in our business and end markets.

Reportable Segment Revenue

The following table presents revenue, change in revenue and revenue growth by reportable segment (dollars in millions):

Six Months Ended

Nine Months Ended

September 30,

Dollar Change

2 unchanged sentences

Represents product and service revenue between reportable segments.

The increase in revenue for the BSI Life Science Segment in the six months ended June 30, 2021 was due to strong demand and business and end market recovery across the segment’s major product lines, including mass spectrometry, infrared, Raman, miobiology and Nuclear Magnetic Resonance (NMR) products, and included customer acceptance of two GHz-class NMR systems.

The increase in revenue for the BSI Life Science segment in the nine months ended September 30, 2021 was due to strong demand and business and end market recovery across the segment’s major product lines, including mass spectrometry, infrared, Raman, microbiology, Nuclear Magnetic Resonance (NMR) and Preclinical Imaging (PCI) solutions.

In addition, system installation activities recovered compared to the same period in 2020.

The increase in BEST segment resulted from higher “big science” project revenue in the six months ended June 30, 2021.

The increase in revenue for the BEST segment resulted from higher “big science” project revenue and a recovery in superconductors for healthcare MRI in the three months ended September 30, 2021.

Operating Income

The following table presents operating income and operating margins on revenue by reportable segment (dollars in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

Income (Loss)

13 unchanged sentences

In the future, there are no assurances that we will continue to generate cash flow from operations or that additional financing alternatives will be available to us, if required, or if available, will be obtained on terms favorable to us.

Cash, cash equivalents and short-term investments at June 30, 2021 and December 31, 2020 totaled $706.0 million and $731.8 million, respectively, of which $583.2 million and $514.9 million, respectively, related to cash, cash equivalents and short-term investments held outside of the U.S.

Cash, cash equivalents and short-term investments at September 30, 2021 and December 31, 2020 totaled $669.8 million and $731.8 million, respectively, of which $560.1 million and $514.9 million, respectively, related to cash, cash equivalents and short-term investments held outside of the U.S.

in our foreign subsidiaries, most significantly in the Netherlands, Switzerland and Hong Kong.

The following table presents our cash flows from operating activities, investing activities and financing activities for the periods presented (in millions):

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of exchange rates on cash and cash equivalents

Total (decrease) increase in cash and cash equivalents

Cash provided by operating activities during the six months ended June 30, 2021 resulted from consolidated net income adjusted for non-cash

Total decrease in cash and cash equivalents

Cash provided by operating activities during the nine months ended September 30, 2021 resulted from consolidated net income adjusted for non-cash

items of $300.9 million, partially offset by a change in operating assets and liabilities, net of acquisitions and divestitures of $157.1 million.

The primary increase is a result of increased net income driven by the increase in revenue, gross profit and operating profit as a result of the rebounding in our business and end markets.

The decrease in operating assets and liabilities, net of acquisitions and divestitures for the six months ended June 30, 2021 was primarily due to improved inventory management, higher payables and accrued liabilities partially offset by a decrease in cash received from customers due to timing of payments as compared to the same period in the prior year.

During the six months ended June 30, 2020, net cash provided by operating activities resulted from consolidated net income adjusted for non-cash

items of $97.5 million, partially offset by a change in operating assets and liabilities, net of acquisitions and divestitures of $50.7 million.

The increase in operating assets and liabilities, net of acquisitions and divestitures for the six months ended June 30, 2020 was primarily caused by an increase in cash received from customers offset by purchases of inventory for orders in 2020.

Cash used in investing activities during the six months ended June 30, 2021 resulted mainly purchases of property, plant and equipment of $47.3 million, purchases of short-term investments of $48.0 million and acquisitions of $4.0 million.

Cash used in investing activities during the six months ended June 30, 2020 was primarily attributed to cash paid for purchases of property, of plant and equipment of $50.8 million, purchases of short-term investments of $50.0 million and acquisitions of $24.6 million offset by $6.1 million of maturities in short-term investments.

Net cash used in financing activities during the six months ended June 30, 2021 was primarily from cash paid for purchases of common stock under our repurchase program of $71.1 million and $12.1 million for the payment of dividends.

Net cash provided by financing activities during the six months ended June 30, 2020 was primarily attributable to $200.9 million in net proceeds from borrowings under the 2019 Revolving Credit Agreement offset in part by $12.3 million for the payment of dividends and $50.0 million of repurchases of common stock under our repurchase program.

The decrease in operating assets and liabilities, net of acquisitions and divestitures for the nine months ended September 30, 2021 was primarily due to strategic inventory management to handle supply chain challenges, timing of tax payment payables and increased revenues at the end of the period.

These decreases were partially offset by a decrease in timing of payments as compared to the same period in the prior year.

During the nine months ended September 30, 2020, net cash provided by operating activities was $129.2 million, resulting from consolidated net income adjusted for non-cash

items of $185.7 million, offset by a change in operating assets and liabilities, net of acquisitions and divestitures of $56.5 million.

The increase in operating assets and liabilities, net of acquisitions and divestitures for the nine months ended September 30, 2020 was primarily caused by an increase in cash received from customers offset by purchases of inventory for orders in 2020.

Cash used in investing activities during the nine months ended September 30, 2021 resulted primarily from purchases of property, plant and equipment of $63.6 million, purchases of short-term investments of $48.0 million and acquisitions of $45.0 million offset by $8.6 million of net proceeds from our cross-currency swap agreements.

Cash used in investing activities during the nine months ended September 30, 2020 was primarily attributed to cash paid for purchases of property, plant and equipment of $68.4 million, cash paid for acquisitions of $58.8 million and purchases of short-term investments of $100.0 million offset by $7.1 million of net proceeds from our cross-currency swap agreements and $56.1 million of maturities in short-term investments.

Net cash used in financing activities during the nine months ended September 30, 2021 was primarily from cash paid for purchases of common stock under our repurchase program of $71.1 million and $18.2 million for the payment of dividends.

Net cash used in financing activities during the nine months ended September 30, 2020 was primarily attributable to $54.4 million of repurchases of common stock under our repurchase program, $18.5 million for the payment of dividends, $7.6 million in net payments of borrowings under the 2019 Revolving Credit Agreement and $6.2 million payment of contingent consideration.

Share Repurchase Program

In May 2019, our Board of Directors approved our share repurchase program (the “2019 Repurchase Program”) under which repurchases of common stock in the amount of up to $300.0 million were authorized to occur from time to time, in amounts, at prices, and at such times as we deem appropriate, subject to market conditions, legal requirements and other considerations.

During the three months ended June 30, 2021, we purchased 24,873 shares of common stock with an aggregate cost of approximately $1.7 million under the 2019 Repurchase Program.

During the six months ended June 30, 2021, we repurchased a total of 555,602 shares at an aggregate cost of $34.5 million under the 2019 Repurchase Program.

During the nine months ended September 30, 2021, we repurchased a total of 555,602 shares at an aggregate cost of $34.5 million under the 2019 Repurchase Program.

We completed the 2019 Repurchase Program in April 2021, after reaching the maximum cumulative spend.

1 unchanged sentence

period from time to time, in amounts, at prices, and at such times as we deem appropriate, subject to market conditions, legal requirements and other considerations.

During the three months ended June 30, 2021, we purchased 530,703 shares of common stock with an aggregate cost of approximately $36.6 million under the 2021 Repurchase Program.

At June 30, 2021, $463.4 million remained for future purchase under the 2021 Repurchase Program.

During the nine months ended September 30, 2021, we purchased 530,703 shares of common stock with an aggregate cost of approximately $36.6 million under the 2021 Repurchase Program.

No shares were purchased during the three months ended September 30, 2021.

At September 30, 2021, $463.4 million remained for future purchase under the 2021 Repurchase Program.

We intend to fund any additional repurchases from cash on hand, future cash flows from operations and available borrowings under our revolving credit facility.

The purchased shares are reflected within Treasury stock in the accompanying unaudited condensed consolidated balance sheets.

At December 31, 2020 and in accordance with the tax reform legislation signed by the president of the United States on December 22, 2017, or the 2017 Tax Act, we recorded state and foreign withholding taxes, as well as subsequent foreign currency translations on these withholding taxes as they are an obligation of the parent company, on the cash and liquid assets portion of the

unremitted earnings and profits (E&P) of foreign subsidiaries expected to be repatriated from our foreign subsidiaries to the United States.

We continue to be indefinitely reinvested in the amount of $436 million of non-cash

3 unchanged sentences

The amount of unrecognized deferred withholding taxes on the undistributed E&P was $63 million at December 31, 2020.

As of June 30, 2021, we had approximately $66.0 million of net operating loss carryforwards available to reduce state taxable income that are expected to expire at various times beginning in 2021;

As of September 30, 2021, we had approximately $66.0 million of net operating loss carryforwards available to reduce state taxable income that are expected to expire at various times beginning in 2021;

approximately $95.1 million of net operating losses available to reduce German federal income and trade taxes that are carried forward indefinitely and $12.5 million of other foreign net operating losses that are expected to expire at various times beginning in 2021.

16 unchanged sentences

The cross-currency swaps hedge our net investment in our Euro denominated net assets.

As a result of entering into these interest rate and cross currency swap agreements, we reduced our interest expense by $1.3 million and $1.8 million for the three months ended June 30, 2021 and 2020, respectively and by $2.7 million and $4.4 million for the six months ended June 30, 2021 and 2020, respectively.

As a result of entering into these interest rate and cross currency swap agreements, we reduced our interest expense by $1.4 million for each of the three months ended September 30, 2021 and 2020, and by $4.1 million and $5.8 million for the nine months ended September 30, 2021 and 2020, respectively.

We anticipate these swap agreements will lower net interest expense in future years.

We had the following debt outstanding (dollars in millions):

September 30,

US Dollar notes under the 2012 Note Purchase Agreement

5 unchanged sentences

Total long-term debt, less current portion

As of June 30, 2021, there are no material changes to our contractual obligations from those disclosed in our Annual Report on Form 10-K

As of September 30, 2021, there are no material changes to our contractual obligations from those disclosed in our Annual Report on Form 10-K

for the fiscal year ended December 31, 2020.

As of June 30, 2021, we had no off-balance

As of September 30, 2021, we had no off-balance

sheet arrangements.

The following is a summary of the maximum commitments and the net amounts available to us under the 2019 Credit Agreement and other lines of credit with various financial institutions located primarily in Germany and Switzerland that are unsecured and typically due upon demand with interest payable monthly, at June 30, 2021 (dollars in millions):

Interest Rate

2 unchanged sentences

Total revolving lines of credit

As of June 30, 2021, we

As of September 30, 2021, we

were in compliance with the financial covenants of these debt agreements.

4 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis