What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-07-31 · 98 added, 82 removed, 264 unchanged (41% of the section changed)

29 unchanged sentences

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Recent Transactions

Recent Transactions and Events

Marion Site Hurricane and Recovery

In September 2024, our manufacturing site in Marion, North Carolina was directly affected by flooding from Hurricane Helene.

Our insurance generally covers the repair or replacement of assets that suffered damage or loss and also provides business interruption coverage, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered.

The extent of the damage to the facility is still being assessed but the loss, net of insurance recoveries is not expected to be material.

The recovery related to business interruption will be recognized when realized and received.

We are working with our insurance carrier to assess the damage and ascertain the amount of insurance recoveries due to us as a result of the damage and loss we incurred, as such the timing of insurance proceeds may lag behind actual losses incurred.

For the three months ended September 30, 2024, we incurred losses of $3.7 million related to the write-off of damaged property, equipment and inventory and have recorded an insurance receivable of $3.2 million, which is net of the $0.5 million deductible.

These costs and insurance recoveries are included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Effective May 1, 2024, the Company completed the acquisition of CryoWorks, Inc.

(“CryoWorks”) for $60.7 million on a cash-free and debt-free basis, subject to a net working capital adjustment.

(“CryoWorks”) for $60.7 million on a cash-free and debt-free basis.

On April 29, 2024, we borrowed approximately $50 million under the Company’s existing Revolving Facility to fund the CryoWorks acquisition.

During the third quarter of 2024, the Company received $1.6 million from the seller related to a final working capital adjustment.

CryoWorks, a leading supplier of vacuum insulated pipe systems for hydrogen and cryogenic applications, has been integrated into the Process Flow Technologies segment.

On January 2, 2024, the Company completed the acquisition of Vian Enterprises, Inc.

(“Vian”) for $102.5 million on a cash-free and debt-free basis, subject to a net working capital adjustment and potential additional payments of up to $7.5 million depending on the resolution of outstanding contingencies.

(“Vian”) for $102.5 million on a cash-free and debt-free basis subject to potential additional payments of up to $7.5 million depending on the resolution of outstanding contingencies.

On January 2, 2024, we borrowed $100 million under the Company’s existing Revolving Facility to fund the Vian acquisition.

During the third quarter of 2024, the Company received $3.0 million from the seller related to a final working capital adjustment.

Vian, a global designer and manufacturer of multi-stage lubrication pumps and lubrication system components technology for critical aerospace and defense applications with sole-sourced and proprietary content on the highest volume commercial and military aircraft platforms, has been integrated into the Aerospace & Electronics segment.

1 unchanged sentence

Demand in these industries is affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors.

For 2024, we expect a total year-over-year sales increase of approximately 11%, driven by approximately 5% to 7% core growth, and approximately 5% sales contribution from the Baum lined piping GmbH, Vian Enterprises, Inc.

and CryoWorks, Inc.

acquisitions.

We expect an improvement in operating profit driven primarily by lower transaction related expenses, productivity benefits, operating leverages on higher volumes, higher pricing net of inflation and contributions from acquisitions, partially offset by unfavorable mix.

Aerospace & Electronics

In 2024, we expect Aerospace & Electronics sales to increase in the mid-teens range compared to 2023, driven by approximately 12% core sales growth and a 4% to 5% contribution from the Vian Enterprises, Inc.

In 2024, we expect Aerospace & Electronics sales to increase in the mid-teens range compared to 2023, and inclusive of a 5% contribution from the Vian Enterprises, Inc.

We expect a substantial improvement in our commercial OEM business driven by higher aircraft build rates, and we expect an improvement in our commercial aftermarket business given continued recovery in airline flight hours.

We expect our defense OEM sales to grow slightly, but the defense aftermarket businesses are expected to grow significantly given continued global geopolitical uncertainty which is driving increased demand to replace legacy product sales.

We expect segment operating profit and operating margin to increase compared to 2023 driven primarily by the impact of operating leverage on higher volumes, pricing and productivity benefits.

We expect our defense OEM sales to grow modestly, but the defense aftermarket businesses are expected to grow significantly given continued global geopolitical uncertainty which is driving increased demand to replace legacy product sales.

We expect segment operating profit and operating margin to increase compared to 2023 driven primarily by the impact of operating leverage on higher volumes, higher pricing and productivity benefits.

Process Flow Technologies

In 2024, we expect Process Flow Technologies sales to increase approximately 10% driven by contribution from the Baum lined piping GmbH and CryoWorks, Inc.

acquisitions, along with core sales increasing approximately 4%.

In 2024, we expect Process Flow Technologies sales to increase low double-digits driven by contribution from the Baum lined piping GmbH and CryoWorks acquisitions, along with a mid-single digit increase in core sales.

We expect Process Valves and Related Products sales to increase in the low double-digit range compared to 2023, driven by mid- to high-single digit contribution from acquisitions, with mid-single digit cores sales growth driven primarily by sales to chemical and pharmaceutical end markets.

We expect Commercial Valves sales to increase in the low- to mid-single digit range as end markets in the U.K.

begin to improve from the depressed levels, and we expect Pumps and Systems sales to increase in the mid- to high-single digit range compared to 2023, driven by strong demand across municipal and non-residential U.S.

We expect an improvement in segment operating profit and operating margin compared to 2023, driven primarily by productivity, higher pricing net of inflation and higher volumes, partially offset by unfavorable mix.

We expect Commercial Valves sales to increase in the low- to mid-teens range as end markets in the U.K.

begin to improve from the depressed levels, and we expect Pumps and Systems sales to increase

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

in the low-single digit range compared to 2023.

We expect an improvement in segment operating profit and operating margin compared to 2023, driven primarily by productivity, higher pricing net of inflation, partially offset by unfavorable mix.

Engineered Materials

In 2024, we expect Engineered materials sales, operating profit, and operating margin to be approximately flat compared to 2023.

In 2024, we expect Engineered materials sales to decline in the mid-single digit range, and operating profit, and operating margin are expected to be lower compared to last year driven by the deleverage on lower volumes, partially offset by higher productivity.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results from Continuing Operations – Three Months Ended June 30,

Results from Continuing Operations – Three Months Ended September 30,

The following information should be read in conjunction with our condensed consolidated financial statements and related notes.

All comparisons below refer to the second quarter 2024 versus the second quarter 2023, unless otherwise specified.

Second Quarter Favorable/(Unfavorable) Change

All comparisons below refer to the third quarter 2024 versus the third quarter 2023, unless otherwise specified.

Third Quarter Favorable/(Unfavorable) Change

(dollars in millions) 2024 2023 $ % (a)

7 unchanged sentences

Other income (expense):

Interest income 1.3 0.8 0.5 62.5 %

Interest income 1.5 1.5 — NM

Interest expense (7.3) (4.8) (2.5) (52.1) %

Miscellaneous income (expense), net 1.1 (1.3) 2.4 NM

Miscellaneous income, net 0.7 1.3 (0.6) NM

Total other expense, net (5.1) (2.0) (3.1) (155.0) %

5 unchanged sentences

The period-over-period change in sales included:

• an increase in core sales of $44.0 million, or 8.6%, which was driven primarily by higher pricing, and to a lesser extent, higher volume;

• an increase in core sales of $31.8 million, or 6.0%, which was driven primarily by higher pricing, offset by lower volumes;

• an increase in sales related to the BAUM, Vian and CryoWorks acquisitions of $34.0 million, or 6.4%;

partially offset by

• unfavorable foreign currency translation of $1.2 million, or 0.2%.

• favorable foreign currency translation of $1.3 million, or 0.3%.

Cost of sales increased by $32.3 million, or 9.9%, to $359.2 million in 2024.

The increase is primarily related to the impact from the BAUM, Vian and CryoWorks acquisitions of $25.8 million, or 8.4%, coupled with higher material, labor and other manufacturing costs of $22.0 million, or 7.1%, driven by the higher sales, and unfavorable mix of $7.4 million or 2.4%, partially offset by strong productivity gains and other cost savings of $12.7 million, or 4.1%.

Selling, general and administrative expenses decreased by $10.7 million, or 7.8%, to $127.3 million in 2024, primarily driven by a decrease in administrative expenses of $14.0 million, or 10.1%, related to the absence of expenses related to the Separation, partially offset by the higher selling costs of $4.5 million, or 3.3%.

The increase is primarily related to the impact from the BAUM, Vian and CryoWorks acquisitions of $26.4 million, or 8.1%, unfavorable mix of $13.1 million, or 4.0%, coupled with higher material, labor and other manufacturing costs $8.6 million, or 2.6%, partially offset by strong productivity gains $13.0 million, or 4.0%, and impact from lower volumes of $3.2 million, or 1.0%.

Selling, general and administrative expenses increased by $5.9 million, or 4.6%, to $132.8 million in 2024, primarily driven by the impact from the BAUM, Vian and CryoWorks acquisitions.

Operating profit increased by $28.9 million, or 37.9%, to $105.2 million in 2024.

The increase is primarily due to higher pricing net of inflation and higher volumes of $27.1 million, or 43%, strong productivity gains of $13.6 million, or 21.6%, and the absence of expenses related to the Separation, partially offset by unfavorable mix of $7.4 million, or 11.7%.

Our effective tax rate for the three months ended June 30, 2024, is lower than the prior year’s comparable tax rate primarily due to lower non-U.S.

taxes and lower statutorily non-deductible costs.

Our effective tax rate for the three months ended June 30, 2024, is slightly higher than the statutory U.S.

The increase is primarily due to higher pricing net of inflation of $24.7 million, or 32.4%, strong productivity gains of $14.1 million, or 18.5%, partially offset by unfavorable mix of $13.1 million, or 17.2%.

Our effective tax rate for the three months ended September 30, 2024, is lower than the prior year’s comparable period primarily due to lower non-U.S.

taxes and lower statutorily non-deductible costs, partially offset by the statutory U.S.

deduction related to our non-U.S.

subsidiaries’ income.

Our effective tax rate for the three months ended September 30, 2024 is higher than the statutory U.S.

federal tax rate of 21% primarily due to earnings in jurisdictions with statutory tax rates higher than the United States, expenses that are statutorily non-deductible for income tax purposes and the impact of U.S.

5 unchanged sentences

Three Months Ended

September 30,

(in millions) 2024 2023

3 unchanged sentences

Changes in pension and postretirement plan assets and benefit obligation, net of tax 3.0 3.6

Other comprehensive (loss) income, net of tax (0.3) 3.3

Other comprehensive income (loss), net of tax 28.3 (12.1)

Comprehensive income before allocation to noncontrolling interests 105.6 43.1

1 unchanged sentence

Comprehensive income attributable to common shareholders $ 105.5 $ 43.1

For the three months ended June 30, 2024, comprehensive income before allocation to noncontrolling interests was $71.3 million compared to $48.9 million in the same period of 2023.

The $22.4 million increase was primarily driven by higher net income before allocation to noncontrolling interests of $26.0 million, partially offset by a $4.0 million year-over-year unfavorable impact of foreign currency translation, primarily related to the British pound and euro.

For the three months ended September 30, 2024, comprehensive income before allocation to noncontrolling interests was $105.6 million compared to $43.1 million in the same period of 2023.

The $62.5 million increase was primarily driven by higher net income before allocation to noncontrolling interests of $22.1 million, and $41.0 million year-over-year favorable impact of foreign currency translation, primarily related to the British pound and euro.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results of Operations - Three Months Ended June 30,

Segment Results of Operations - Three Months Ended September 30,

Aerospace & Electronics

Second Quarter Favorable/(Unfavorable) Change

Third Quarter Favorable/(Unfavorable) Change

(dollars in millions) 2024 2023 $ %

7 unchanged sentences

as a percentage of sales 60.6 % 63.5 %

Selling, general and administrative $ 34.3 $ 34.3 $ — NM

Selling, general and administrative $ 39.4 $ 35.5 $ (3.9) (11.0) %

as a percentage of sales 16.5 % 17.1 %

3 unchanged sentences

$ 833.3 $ 677.9 $ 155.4 22.9 %

(a) Includes $62.3 million of backlog as of June 30, 2024, pertaining to the Vian acquisition.

Sales increased $41.7 million, or 22.0%, to $230.9 million in 2024, primarily due to higher volumes and pricing of $31.1 million, or 16.4%, and the impact of the Vian acquisition of $10.6 million, or 5.6%.

• Sales of Commercial Original Equipment increased $18.8 million, or 26.9%, to $88.6 million in 2024, reflecting strong demand from aircraft manufacturers, partially offset by component availability constraints.

• Sales of Military Original Equipment increased $4.1 million, or 6.5%, to $66.9 million in 2024, primarily reflecting strong demand from defense customers.

(a) Includes $59.1 million of backlog as of September 30, 2024, pertaining to the Vian acquisition.

Sales increased $31.9 million, or 15.4%, to $239.1 million in 2024, primarily due to higher pricing and higher volumes of $20.8 million, or 10.0%, and the impact of the Vian acquisition of $11.0 million, or 5.3%.

• Sales of Commercial Original Equipment increased $14.7 million, or 19.4%, to $90.5 million in 2024, reflecting strong demand from aircraft manufacturers and the impact of the Vian acquisition, partially offset by component availability constraints.

• Sales of Military Original Equipment increased $5.6 million, or 8.7%, to $70.0 million in 2024, primarily reflecting strong demand from defense customers and the impact of the Vian acquisition.

• Sales of Commercial Aftermarket Products increased $5.9 million, or 12.2%, to $54.4 million in 2024, reflecting continued strong demand from the airlines due to improving air traffic and inventory restocking.

• Sales of Military Aftermarket Products increased $5.7 million, or 30.8%, to $24.2 million in 2024, reflecting stronger demand for military products, partly in response to heightened geopolitical tensions globally.

Cost of sales increased by $27.3 million, or 23.4%, to $143.9 million in 2024, primarily reflecting higher material, labor and other manufacturing costs of $13.9 million, or 11.9%, the impact from the Vian acquisition of $9.8 million, or 8.4%, increased volumes of $7.5 million, or 6.4%, partially offset by productivity gains of $4.7 million, or 4.0%.

Cost of sales increased by $13.3 million, or 10.1%, to $144.8 million in 2024, primarily reflecting the impact from the Vian acquisition of $9.8 million, or 7.5%, higher material, labor and other manufacturing costs of $3.6 million, or 2.7%, increased volumes of $2.1 million, or 1.6%, unfavorable mix of $3.0 million, or 2.3%, partially offset by strong productivity gains of $5.2 million, or 4.0%.

Selling, general and administrative expense increased by $3.9 million , or 11.0% , to $39.4 million in 2024, primarily related to higher administrative costs of $3.3 million, or 9.3%.

Operating profit increased by $14.7 million, or 36.6%, to $54.9 million in 2024.

The increase primarily reflected the impact from higher volumes of $9.0 million, or 23.5%, coupled with productivity gains of $5.3 million, or 13.8%.

The increase primarily reflected the impact from higher pricing net of inflation and higher volumes of $11.4 million, or 28.4%, coupled with productivity gains net of unfavorable mix of $2.8 million, or 7.0%.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Process Flow Technologies

Second Quarter Favorable/(Unfavorable) Change

Third Quarter Favorable/(Unfavorable) Change

(dollars in millions) 2024 2023 $ %

12 unchanged sentences

$ 392.0 $ 352.9 $ 39.1 11.1 %

(a) includes $18.0 million of backlog as of June 30, 2024 pertaining to the Baum and CryoWorks acquisitions.

Sales increased by $34.5 million, or 13.1%, to $297.7 million in 2024, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $18.2 million, or 6.9%, higher core sales of $17.4 million, or 6.6%, primarily driven by higher pricing, partially offset by unfavorable foreign currency translation of $1.1 million, or 0.4%.

(a) includes $19.2 million of backlog as of September 30, 2024 pertaining to the Baum and CryoWorks acquisitions.

Sales increased by $42.5 million, or 15.9%, to $309.2 million in 2024, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $23.0 million, or 8.6%, higher core sales of $18.3 million, or 6.9%, primarily driven by higher pricing, and to a lesser extent by favorable foreign currency translation of $1.1 million, or 0.4%.

• Sales of Process Valves and Related Products increased by $37.6 million, or 19.1%, to $234.9 million in 2024, primarily driven by the impact of the BAUM and CryoWorks acquisitions and higher core sales.

• Sales of Commercial Valves increased by $5.6 million, or 17.9%, to $36.8 million in 2024, reflecting an increase in core sales driven by higher volumes and pricing.

Cost of sales increased by $23.8 million, or 15.9%, to $173.2 million, primarily related to the impact of the BAUM and CryoWorks acquisitions of $15.9 million, or 10.6%, higher material, labor and other manufacturing costs of $6.3 million, or 4.2%, unfavorable mix of $6.0 million, or 4.0%, and higher volumes of $2.9 million, or 1.9%, partially offset by net productivity gains and favorable foreign currency translation of $7.3 million, or 4.9%.

Selling, general and administrative expenses increased by $1.8 million, or 2.8%, to $65.0 million, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $4.4 million, or 7.0%, partially offset by productivity gains and other net cost savings of $3.1 million, or 4.9%.

Cost of sales increased by $24.3 million, or 16.0%, to $176.5 million, primarily related to the impact of the BAUM and CryoWorks acquisitions of $16.6 million, or 10.9%, unfavorable mix of $9.6 million, or 6.3%, higher material, labor and other manufacturing costs of $3.7 million, or 2.4%, partially offset by productivity gains of $6.9 million, or 4.5%.

Selling, general and administrative expenses increased by $3.9 million, or 6.2%, to $67.2 million, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $5.2 million, or 8.2%, partially offset by other net cost savings and productivity gains of $1.8 million, or 2.8%.

Operating profit increas ed by $14.3 million, or 27.9%, to $65.5 million in 2024.

The increase is primarily due to higher pricing net of inflation and higher volumes of $7.5 million, or 14.8%, productivity gains of $7.3 million, or 14.4%, partially offset by unfavorable mix and foreign currency translation of $6.4 million, or 12.6%.

The increase is primarily due to higher pricing net of inflation and higher volumes of $14.6 million, or 28.5%, productivity gains and other net cost savings of $7.9 million, or 15.4%, partially offset by unfavorable mix of $9.6 million, or 18.8%.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Engineered Materials

Second Quarter Favorable/(Unfavorable) Change

Third Quarter Favorable/(Unfavorable) Change

(dollars in millions) 2024 2023 $ %

13 unchanged sentences

Sales decreased $7.3 million, or 13.0%, to $48.9 million in 2024, reflecting lower volumes partially offset by higher pricing.

The decrease was primarily driven by lower sales in Building Products and Transportation end markets.

Cost of sales decreased $2.3 million, or 5.4%, to $40.2 million in 2024, primarily related to lower volumes.

Operating profit decreased by $2.5 million, or 25.5%, to $7.3 million in 2024, primarily reflecting the impact from lower volumes.

The decrease was primarily driven by lower sales in Recreational vehicle and Transportation end markets.

Cost of sales decreased $5.7 million, or 13.2%, to $37.6 million in 2024, primarily related to lower volumes of $6.1 million or 14.1%, partially offset by higher material, labor and other manufacturing costs of $0.8 million, or 1.8%.

Operating profit decreased by $1.5 million, or 19.5%, to $6.2 million in 2024, primarily reflecting the impact from lower volumes of $3.2 million, or 41.6%, and higher pricing net of inflation and productivity gains, partially offset by unfavorable mix of $1.8 million, or 23.4%.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results from Continuing Operations – Six Months Ended June 30,

Results from Continuing Operations – Nine Months Ended September 30,

The following information should be read in conjunction with our condensed consolidated financial statements and related notes.

All comparisons below refer to the first six months of 2024 versus the first six months of 2023, unless otherwise specified.

All comparisons below refer to the first nine months of 2024 versus the first nine months of 2023, unless otherwise specified.

Year-to-Date Favorable/(Unfavorable) Change

11 unchanged sentences

Interest expense (21.9) (16.7) (5.2) (31.1) %

Miscellaneous expense, net (0.2) (1.9) 1.7 NM

Miscellaneous income (expense), net 0.5 (0.5) 1.0 NM

Total other expense, net (17.4) (14.0) (3.4) (24.3) %

8 unchanged sentences

Cost of sales increased by $119.0 million, or 12.6%, to $1,061.3 million in 2024.

The increase is primarily related to the higher material, labor and other manufacturing costs of $52.8 million, or 8.6%, driven by the higher sales, coupled with impact from the BAUM, Vian and CryoWorks acquisitions of $47.7 million, or 7.8%, and higher volumes of $7.8 million, or 1.3%, partially offset by strong productivity gains of $24.6 million, or 4.0%.

Selling, general and administrative expenses decreased by $9.0 million, or 3.4%, to $258.4 million in 2024, primarily driven by a decrease in administrative expenses of $17.3 million, or 6.5%, related to the absence of expenses related to the Separation, partially offset by higher selling costs of $8.8 million, or 3.3%.

The increase is primarily related to the impact from the BAUM, Vian and CryoWorks acquisitions of $74.1 million, or 7.9%, coupled with higher material, labor and other manufacturing costs of $61.3 million, or 6.5%, unfavorable mix of $16.0 million, or 1.7%, and higher volumes of $4.5 million, or 0.5%, partially offset by strong productivity gains of $37.7 million, or 4.0%.

Selling, general and administrative expenses decreased by $3.1 million, or 0.8%, to $391.2 million in 2024, primarily driven by a decrease in administrative expenses of $15.5 million, or 3.9%, related to the absence of expenses related to the Separation, offset by higher selling costs of $12.4 million, or 3.1%.

Operating profit increased by $74.3 million, or 34.3%, to $291.2 million in 2024.

The increase is primarily due to strong productivity gains of $26.8 million, or 19.1%, coupled with higher volumes of $12.2 million, or 8.7%, and higher pricing net of inflation of $8.5 million, or 6.0%, and the absence of expenses related to the Separation, partially offset by unfavorable mix of $2.9 million, or 2.0%.

Our effective tax rate for the six months ended June 30, 2024, is lower than the prior year’s comparable tax rate primarily due to lower non-U.S.

taxes and lower statutorily non-deductible costs.

Our effective tax rate for the six months ended June 30, 2024 is slightly higher than the statutory U.S.

The increase is primarily due to strong productivity gains of $40.9 million, or 18.9%, the absence of expenses related to the Separation and net higher pricing to a lesser extent of $33.2 million, or 15.3%, coupled with higher volumes of $12.9 million, or 5.9%, and, partially offset by unfavorable mix of $16.0 million, or 7.4%.

Our effective tax rate for the nine months ended September 30, 2024, is lower than the prior year’s comparable period primarily due to lower non-U.S.

taxes and lower statutorily non-deductible costs, partially offset by the statutory U.S.

deduction related to our non-U.S.

subsidiaries’ income.

Our effective tax rate for the nine months ended September 30, 2024 is higher than the statutory U.S.

4 unchanged sentences

Comprehensive Income

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2024 2023

3 unchanged sentences

Changes in pension and postretirement plan assets and benefit obligation, net of tax 9.0 8.9

Other comprehensive (loss) income, net of tax (9.7) 18.7

Other comprehensive income, net of tax 18.6 6.6

Comprehensive income before allocation to noncontrolling interests 232.3 213.1

1 unchanged sentence

Comprehensive income attributable to common shareholders $ 232.3 $ 213.3

For the six months ended June 30, 2024, comprehensive income before allocations to noncontrolling interests was $126.7 million compared to $170.0 million in the same period of 2023.

The $43.3 million decrease was primarily driven by a $29.1 million unfavorable impact of foreign currency translation, primarily related to the British pound and euro and lower net income before allocation to noncontrolling interests of $14.9 million, reflecting the absence of income from discontinued operations in 2024.

For the nine months ended September 30, 2024, comprehensive income before allocations to noncontrolling interests was $232.3 million compared to $213.1 million in the same period of 2023.

The $19.2 million increase was primarily driven by a $11.9 million favorable impact of foreign currency translation, primarily related to the British pound and euro and higher net income before allocation to noncontrolling interests of $7.2 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results of Operations - Six Months Ended June 30,

Segment Results of Operations - Nine Months Ended September 30,

Aerospace & Electronics

14 unchanged sentences

Sales increased $119.4 million, or 20.7%, to $695.9 million in 2024, primarily due to higher volumes and pricing of $88.6 million, or 15.4%, and the impact of the Vian acquisition of $30.7 million, or 5.3%.

• Sales of Commercial Original Equipment increased $35.9 million, or 26.0%, to $174.1 million in 2024, reflecting strong demand from aircraft manufacturers, partially offset by material availability constraints.

• Sales of Military Original Equipment increased $13.5 million, or 10.8%, to $138.3 million in 2024, primarily reflecting strong demand from defense and space customers.

• Sales of Commercial Original Equipment increased $50.5 million, or 23.6%, to $264.6 million in 2024, reflecting strong demand from aircraft manufacturers and the impact of the Vian acquisition, partially offset by material availability constraints.

• Sales of Military Original Equipment increased $19.2 million, or 10.2%, to $208.3 million in 2024, primarily reflecting strong demand from defense and space customers and the impact of the Vian acquisition.

• Sales of Commercial Aftermarket Products increased $30.2 million, or 23.7%, to $157.4 million in 2024, reflecting continued strong demand from the airlines due to improving air traffic and inventory restocking.

• Sales of Military Aftermarket Products increased $19.5 million, or 42.3%, to $65.6 million in 2024, reflecting stronger demand for military products, partly in response to heightened geopolitical tensions globally.

Cost of sales increased by $58.0 million, or 25.5%, to $285.6 million in 2024, primarily reflecting higher material, labor and other manufacturing costs of $33.1 million, or 14.5%, increased volumes of $19.9 million, or 8.7%, the impact from the Vian acquisition of $19.2 million, or 8.4%, partially offset by productivity gains of $10.0 million, or 4.4%, and favorable mix of $4.3 million, or 1.9%

Cost of sales increased by $71.3 million, or 19.9%, to $430.4 million in 2024, primarily reflecting higher material, labor and other manufacturing costs of $36.7 million, or 10.2%, the impact from the Vian acquisition of $29.0 million, or 8.1%, increased volumes of $21.9 million, or 6.1%, partially offset by productivity gains of $15.3 million, or 4.3%, and favorable mix of $1.3 million, or 0.4%.

Selling, general and administrative expense increased by $8.3 million, or 8.2%, to $109.6 million in 2024, primarily related to higher administrative costs of $8.1 million, or 8.0%.

17 unchanged sentences

Sales increased by $89.9 million, or 11.2%, to $891.2 million in 2024, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $57.9 million, or 7.2%, higher core sales of $30.3 million, or 3.8%, primarily driven by higher pricing.

• Sales of Process Valves and Related Products increased by $40.5 million, or 10.1%, to $440.8 million in 2024, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $35.0 million, or 8.7%, and higher core sales of $6.8 million, or 1.7%, driven by higher pricing, partially offset by unfavorable foreign currency translation of $1.3 million, or 0.3%.

• Sales of Process Valves and Related Products increased by $78.0 million, or 13.1%, to $675.6 million in 2024, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $57.9 million, or 9.7%, and higher core sales of $20.8 million, or 3.5%, driven by higher pricing.

• Sales of Commercial Valves increased by $12.9 million, or 14.3%, to $103.4 million in 2024, primarily driven by increase in core sales of $10.4 million, or 11.5%, and favorable foreign currency translation of $2.5 million, or 2.8%, as the British pound strengthened against the U.S.

Cost of sales increased by $59.7 million, or 13.2%, to $511.4 million, primarily related to the impact of the BAUM and CryoWorks acquisitions of $45.1 million, or 10.0%, higher material, labor and other manufacturing costs of $21.0 million, or 4.6%, unfavorable mix of $16.9 million, or 3.7%, partially offset by productivity gains of $20.0 million, or 4.4%, and the impact of lower volumes of $3.8 million, or 0.8%.

Selling, general and administrative expense increased by $9.5 million, or 7.8%, to $130.7 million, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $7.4 million, or 6.1%, and to a lesser extent, higher selling costs.

Selling, general and administrative expense increased by $13.4 million, or 7.3%, to $197.9 million, primarily driven by the impact of the BAUM and CryoWorks acquisitions of $12.6 million, or 6.8%.

Operating profit increased by $16.8 million, or 10.2%, to $181.9 million in 2024.

The increase is primarily due to productivity gains and other net savings of $15.9 million, or 14.0 %, partially offset by unfavorable mix of $7.3 million, or 6.4%, and the impact of lower volumes of $6.5 million, or 5.7%.

The increase is primarily due to productivity gains and other cost savings of $25.5 million, or 15.4 %, higher net pricing of $13.3 million, or 8.1%, partially offset by unfavorable mix of $16.9 million, or 10.2%, and the impact of lower volumes of $5.3 million, or 3.2%.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

14 unchanged sentences

Sales decreased $19.1 million, or 10.9%, to $156.6 million in 2024, reflecting lower volumes.

The decrease was primarily driven by lower sales in Building Products and Transportation end markets.

Cost of sales decreased by $6.7 million, or 7.6%, to $81.6 million, primarily related to lower volumes of $7.5 million, or 8.5%, partially offset by higher material, labor and other manufacturing costs, net of productivity gains of $1.0 million, or 1.1%.

Operating profit decreased by $5.8 million, or 27.4%, to $15.4 million in 2024, primarily reflecting the impact of lower volumes of $4.3 million, or 20.3%, and higher material, labor and other manufacturing costs, net of productivity gains and favorable mix of $1.5 million, or 7.1%.

The decrease was primarily driven by lower sales in all end markets.

Cost of sales decreased by $12.4 million, or 9.4%, to $119.2 million, primarily related to lower volumes of $13.6 million, or 10.3%, partially offset by higher material, labor and other manufacturing costs, unfavorable mix, net of productivity gains of $1.2 million, or 0.9%.

Operating profit decreased by $7.3 million, or 25.3%, to $21.6 million in 2024, primarily reflecting the impact of lower volumes of $7.5 million, or 26.0%, partially offset by higher net pricing, productivity gains, net of unfavorable mix of $0.3 million, or 1.0%.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2024 2023

10 unchanged sentences

We have available borrowing capacity of $800 million under a 5-year revolving credit facility (“Revolving Facility”) through March 2028 and a $300 million, 3-year term loan facility (“Term Facility”) through March 2026.

At June 30, 2024, there was $247 million outstanding under the Term Facility and $130 million outstanding under the Revolving Facility.

At September 30, 2024, there was $247 million outstanding under the Term Facility and $85 million outstanding under the Revolving Facility.

For more information regarding our borrowings under the Revolving Facility in connection with our acquisitions, see “Recent Transactions – “Acquisitions” above.

Operating Activities

Cash used for operating activities from continuing operations was $17.9 million in the first six months of 2024, as compared to $53.0 million during the same period last year.

The decrease in cash used for operating activities from continuing operations was primarily driven by the $45.2 million increase in net income from continuing operations adjusted for the exclusion of non-cash items, partially offset by an increase in working capital investments of $3.1 million, primarily due to changes in accounts payable and accrued liabilities, driven by the timing of payments.

Cash provided by operating activities from continuing operations was $63.8 million in the first nine months of 2024, as compared to $33.9 million during the same period last year.

The increase in cash provided by operating activities from continuing operations was primarily driven by the $61.7 million increase in net income from continuing operations adjusted for the exclusion of non-cash items, partially offset by an increase in working capital investments of $26.1 million.

Investing Activities

Cash flows relating to investing activities from continuing operations consist primarily of cash used for capital expenditures and acquisitions of businesses.

Cash used for investing activities from continuing operations was $177.1 million in the first six of 2024, as compared to $20.8 million in the comparable period of 2023.

Cash used for investing activities from continuing operations was $181.6 million in the first nine months of 2024, as compared to $29.1 million in the comparable period of 2023.

The increase in cash used for investing activities is primarily related to the acquisition of Vian for $99.5 million and the acquisition of CyroWorks for $59.1 million.

1 unchanged sentence

Financing cash flows consist primarily of dividend payments to shareholders, repayments of indebtedness, proceeds from our Credit Facilities and proceeds from the issuance of common stock in connection with employee stock plans.

During the first six months of 2023, financing cash flows also includes activities associated with the distribution of Crane NXT, Co.

During the first nine months of 2023, financing cash flows also includes activities associated with the distribution of Crane NXT, Co.

in support of the Separation.

Cash provided by financing activities was $99.6 million during the first six months of 2024 compared to cash used for financing activities of $395.6 million in the comparable period of 2023.

Cash provided by financing activities was $44.5 million during the first nine months of 2024 compared to cash used for financing activities of $415.7 million in the comparable period of 2023.

The increase in cash provided by financing activities was driven by:

3 unchanged sentences

• $7.5 million decrease in payments for debt issuance costs;

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

• $118.1 million decrease in net borrowings;

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

• $19.2 million increase in payments for taxes related to net share settlements of equity awards, net of proceeds from stock options.

2 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