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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-26 · 157 added, 181 removed, 323 unchanged (51% of the section changed)

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The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated financial statements and related notes included under Item 8 of this Annual Report on Form 10-K.

We are a diversified manufacturer of highly engineered industrial products.

Our operations are currently comprised of three segments:

Aerospace & Electronics, Process Flow Technologies, and Engineered Materials.

Our primary end markets include commercial and military aerospace, defense and space, chemical production, pharmaceutical production, water and wastewater, non-residential and municipal construction, energy, along with a wide range of general industrial and certain consumer related end markets.

Our strategy is to grow earnings and cash flow by focusing on the manufacturing of highly engineered industrial products for specific markets where our scale is a relative advantage, and where we can compete based on our proprietary and differentiated technology, our deep vertical expertise, and our responsiveness to unique and diverse customer needs.

Crane Company has delivered innovation and technology-led solutions for customers since its founding in 1855.

Today, Crane is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets.

The Company has two reporting segments:

Aerospace & Electronics and Process Flow Technologies.

Our strategy is to grow earnings and cash flow by focusing on the development and manufacturing of highly engineered industrial products for specific markets where our scale is a relative advantage, and where we can compete based on our proprietary and differentiated technology, our deep vertical expertise, and our responsiveness to unique and diverse customer needs.

We continuously evaluate our portfolio, pursue acquisitions that complement our existing businesses and are accretive to our growth profile, selectively divest businesses where appropriate, and pursue internal mergers to improve efficiency.

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and to put my whole mind upon the business."

References to changes in “core sales” or “core growth” in this report include sales and the change in sales excluding the impact of foreign currency translation as well as acquisitions and divestitures from closing up to the first anniversary, of such acquisitions or divestitures.

Due to rounding, numbers presented throughout this report may not add up precisely to totals we provide, and percentages may not precisely reflect the absolute figures.

Recent Transactions

Recent Events and Transactions

Divestiture of Engineered Materials

Effective on January 1, 2025, the Company completed the sale of the Engineered Materials segment to KPS Capital Partners, L.P (“KPS”) for approximately $208.0 million, on a cash-free and debt-free basis.

We determined that the Engineered Materials segment met the criteria of being reported as a discontinued operation as of December 31, 2024.

As a result, the related assets, liabilities and operating results of Engineered Materials are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented.

Throughout this Annual Report on Form 10-K, unless otherwise indicated, amounts and activity are presented on a continuing operations basis.

See Item 8 under Note 3, “Discontinued Operations,” in the Notes to Consolidated Financial Statements for additional detail.

Marion Site Hurricane Damage 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 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 year ended December 31, 2024, we incurred losses and expenses of $23.3 million related to damages caused by the hurricane, which included professional fees to restore and maintain the site and the write-off of damaged property, equipment and inventory.

For the year ended December 31, 2024 we have received insurance recoveries of $20.0 million and have an insurance receivable of $2.8 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 Consolidated Statements of Operations.

On April 3, 2023, Crane Holdings, Co.

completed the Separation into two independent, publicly-traded companies, Crane NXT, Co.

and Crane Company (the “Separation”).

Crane Holdings, Co.

was separated into two independent, publicly-traded companies in a transaction in which Crane Holdings, Co.

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stockholders (Crane Company).

Upon consummation of the Separation, each of its stockholders received one share of Crane Company common stock for every one share of its common stock held on March 23, 2023, the record date for the distribution.

On October 4, 2023, the Company completed the acquisition of Baum lined piping GmbH (“BAUM”) for approximately $93.5 million on a cash-free and debt-free basis, with $90.5 million paid in 2023 and $3 million to be paid in 2024, related to the final working capital adjustment.

BAUM is a German based company that designs, manufactures, and distributes lined piping products primarily focused on chemical and industrial end markets.

BAUM has been integrated into our Process Flow Technologies segment.

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

Acquisitions and Items Affecting Comparability of Reported Results

The comparability of our results for the years ended December 31, 2024, 2023 and 2022 is affected by the following significant items:

On November 1, 2024, the Company completed the acquisition of Technifab Products, Inc.

(“Technifab”).

Technifab, is a leading provider of vacuum insulated pipe systems and valves for cryogenic applications.

Technifab has been integrated into the Process Flow Technologies segment.

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

(“ CryoWorks ”) .

CryoWorks, is a leading supplier of vacuum insulated pipe systems for cryogenic and hydrogen applications.

CryoWorks has been integrated into the Process Flow Technologies segment.

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

(“Vian”) for $103 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 is 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.

Vian will be included in the Aerospace & Electronics segment.

Vian has been integrated into the Aerospace & Electronics segment.

On October 4, 2023, the Company completed the acquisition of Baum lined piping GmbH (“BAUM”).

BAUM is a German based company that designs, manufactures, and distributes lined piping products primarily focused on chemical and industrial end markets.

BAUM is included in our Process Flow Technologies segment.

Divestiture of asbestos-related assets and liabilities

On August 12, 2022, we recognized a loss on the divestiture of asbestos-related assets and liabilities of $162.4 million.

Please refer to item 8 under Note 13, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further discussion.

Sale of Crane Supply

On May 31, 2022, the Company divested its Crane Supply business.

In connection with the divestiture, the Company recognized a total gain on sale of $232.5 million which is presented within Gain on sale of business on the Consolidated Statement of Operations.

Termination of Agreement to Sell Engineered Materials

In 2021, we entered into an agreement to sell the Engineered Materials segment to Grupo Verzatec S.A.

(“Verzatec”).

In 2022, Verzatec terminated the sale agreement and paid $7.5 million to the Company in termination fees, which is presented within Miscellaneous income, net on the Consolidated Statements of Operations.

Restructuring and Related (Gains) Charges, net

In 2022, we recorded net pre-tax restructuring and related charges of $8.2 million primarily related to modest cost reduction efforts across our businesses in response to continued macroeconomic uncertainty.

There were no new restructuring programs in 2024 and 2023.

Transaction Related Expenses

In 2024, we recorded pre-tax transaction related expenses of $8.4 million primarily related to the Vian, CryoWorks and Technifab acquisitions and the divestiture of the Engineered Materials segment.

In 2023, we recorded pre-tax transaction related expenses of $39.3 million primarily related to the separation.

In 2022, we recorded pre-tax transaction related expenses of $48.3 million most of which related to the planned separation, coupled with expenses associated with defeasing the asbestos liability and, to a lesser extent, divestiture costs related to the intended sale of Engineered Materials and the completed sale of Crane Supply.

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

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(Unfavorable) Change

(in millions, except %) 2023 2022 2021 $ % $ %

(in millions, except %) 2024 2023 2022 $ % (a)

Aerospace & Electronics $ 932.7 $ 789.3 $ 667.3 $ 143.4 18.2 % $ 122.0 18.3 %

Process Flow Technologies 1,198.5 1,072.8 1,109.4 125.7 11.7 % (36.6) (3.3) %

Engineered Materials 224.3 258.3 228.0 (34.0) (13.2) % 30.3 13.3 %

Total net sales $ 2,131.2 $ 1,862.1 $ 1,776.7 $ 269.1 14.5 % $ 85.4 4.8 %

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Process Flow Technologies 240.3 208.5 168.2 31.8 15.3 % 40.3 24.0 %

Engineered Materials 33.4 32.6 26.9 0.8 2.5 % 5.7 21.2 %

Corporate expense (a) (b)

Corporate expense (b) (c)

(93.5) (117.1) (283.2) 23.6 20.2 % 166.1 58.7 %

Total operating profit $ 283.8 $ 37.9 $ 221.7 $ 245.9 648.8 % $ (183.8) (82.9) %

Total operating profit $ 355.8 $ 250.4 $ 5.3 $ 105.4 42.1 % $ 245.1 NM

Operating margin:

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Process Flow Technologies 20.1 % 19.4 % 15.2 %

Engineered Materials 14.9 % 12.6 % 11.8 %

Total operating margin 16.7 % 13.4 % 0.3 %

(a) For the years ended December 31, 2023, 2022 and 2021, Corporate expense included transaction related expenses of $41.5 million, $40.5 million and $8.2 million, respectively.

(b) For the year ended December 31, 2022, Corporate expense included a $162.4 million loss on the divestiture of asbestos-related assets and liabilities.

(a) Variances designated as “NM” indicates such calculation is not meaningful.

(b) For the years ended December 31, 2024, 2023 and 2022, Corporate expense included transaction related expenses of $9.8 million, $41.5 million and $40.5 million, respectively.

(c) For the year ended December 31, 2022, Corporate expense included a $162.4 million loss on the divestiture of asbestos-related assets and liabilities.

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

Items Affecting Comparability of Reported Results

The comparability of our results for the years ended December 31, 2023, 2022 and 2021 is affected by the following significant items:

Divestiture of asbestos-related assets and liabilities

In 2022, we recognized a loss on the divestiture of asbestos-related assets and liabilities of $162.4 million.

Please refer to item 8 under Note 13, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further discussion.

Sale of Crane Supply

On May 31, 2022, the Company divested its Crane Supply business.

In connection with the divestiture, the Company recognized a total gain on sale of $232.5 million which is presented within Gain on sale of business on the Consolidated Statement of Operations.

Termination of Agreement to Sell Engineered Materials

In 2021, we entered into an agreement to sell the Engineered Materials segment to Grupo Verzatec S.A.

(“Verzatec”).

Restructuring and Related (Gains) Charges, net

In 2022, we recorded net pre-tax restructuring and related charges of $8.7 million primarily related to modest cost reduction efforts across our businesses in response to continued macroeconomic uncertainty.

In 2021, we recorded total pre-tax restructuring and related gains of $5.9 million primarily related to a gain on the sale of real estate.

There were no new restructuring programs in 2023.

Transaction Related Expenses

In 2023, we recorded pre-tax transaction related expenses of $39.6 million primarily related to the separation.

In 2022, we recorded pre-tax transaction related expenses of $48.3 million most of which related to the planned separation, coupled with expenses associated with defending the asbestos liability and to a lesser extent, divestiture costs related to the intended sale of Engineered Materials and the completed sale of Crane Supply.

During 2021, we recorded pre-tax transaction related expenses of $8.2 million related to the previously proposed divestiture of Engineered Materials and other professional fees.

2024 compared with 2023

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The year-over-year higher sales included:

• an increase in core sales of $156.0 million, or 8.4%, which was driven primarily by higher pricing and to a lesser extent higher volumes;

• an increase in sales related to the BAUM, Vian, CryoWorks, and Technifab acquisitions of 110.2 million, or 5.9%;

• favorable foreign currency translation of 2.9 million, or 0.2%.

Cost of sales increased by $152.3 million, or 13.7%, to $1,263.4 million in 2024.

The increase is primarily related to the impact from the BAUM, Vian, CryoWorks, and Technifab acquisitions of $90.5 million, or 8.1%, coupled with higher material, labor and other manufacturing costs of $60.5 million, or 5.4%, higher volumes of $24.8 million, or 2.2%, and unfavorable mix of $22.1 million, or 2.0%, partially offset by strong productivity gains of $46.6 million, or 4.2%.

Selling, general and administrative expenses increased by $11.4 million, or 2.3%, to $512.0 million in 2024, primarily driven by higher merit increases, investments in core businesses and the BAUM, Vian, CryoWorks, and Technifab acquisitions, partially offset by the absence of expenses related to the Separation.

Operating profit increased by $105.4 million, or 42.1%, to $355.8 million in 2024.

The increase is primarily due to strong productivity gains of $51.0 million, or 20.4%, the absence of expenses related to the Separation and net higher pricing of $46.2 million, or 18.5%, coupled with higher volumes of $26.7 million, or 10.7%, partially offset by unfavorable mix of $22.0 million, or 8.8%.

2023 compared with 2022

Sales increased by $85.4 million, or 4.8%, to $1,862.1 million in 2023.

The year-over-year higher sales included:

• an increase in core sales of $175.3 million, or 9.9%, which was driven primarily by higher pricing;

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• favorable foreign currency translation of $0.5 million, and

• a decrease in sales related to the May 2022 divestiture Crane Supply of $105.8, or 5.2%.

• a decrease in sales related to the May 2022 divestiture Crane Supply of $105.8 million, or 6.0%.

Cost of sales decreased by $4.4 million, or 0.4%, to $1,111.1 million in 2023.

The decrease is primarily related to the sale of Crane Supply of $66.1 million, or 5.0%, strong productivity gains of $37.6 million, or 2.8%, lower volumes of $9.9 million, or 0.7%, partially offset by an increase in material, labor and other manufacturing costs of $52.7 million, or 4.0%, and unfavorable mix of $24.0 million, or 1.8%.

The decrease is primarily related to the sale of Crane Supply of $66.1 million, or 5.9% and strong productivity gains of $34.7 million, or 3.1%, partially offset by an increase in material, labor and other manufacturing costs of $56.2 million, or 5.0%, unfavorable mix net of savings of $23.2 million, or 2.1% and higher volumes of $16.0 million, or 1.4%.

Selling, general and administrative expenses increased b y $7.1 million, or 1.4%, to $500.6 million in 2023, reflecting an $17.8 million, or 3.6%, increase in administrative expenses primarily related to the Separation, partially offset by the net impact of the sale of Crane Supply $11.2 million, or 2.3%.

Operating profit increased by $245.9 million, or 648.8%, to $283.8 million in 2023.

The increase is primarily related to the absence of loss on divestiture of asbestos-related assets and liabilities of $162.4 million, an increase in core sales primarily

Operating profit increased by $245.1 million, to $250.4 million in 2023.

The increase is primarily related to the absence of loss on divestiture of asbestos-related assets and liabilities of $162.4 million, an increase in core sales primarily driven by higher pricing net of inflation of $68.9 million and strong productivity of $38.9 million, partially offset by unfavorable mix of $27.4 million.

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

driven by higher pricing net of inflation of $63.3 million, strong productivity of $41.8 million, partially offset by unfavorable mix of $24.0 million.

2022 compared with 2021

Sales decreased by $27.9 million, or 1.4%, to $2,035.0 million in 2022.

The year-over-year lower sales included:

• an increase in core sales of $159.5 million, or 7.7%;

• unfavorable foreign currency translation of $48.3 million, or 2.3%, and

• a decrease in sales related to the sale of Crane Supply of $139.1 million, or 6.7%.

Cost of sales decreased by $52.7 million, or 3.8%, to $1,321.4 million in 2022.

The decrease is primarily related to the impact of the sale of Crane Supply of $102.4 million, or 7.5%, favorable foreign currency translation of $30.5 million, or 2.2%, lower volumes of $9.1 million, or 0.7%, and strong productivity of $33.1 million, or 2.4%, partially offset by an increase in material, labor and other manufacturing costs of $109.6 million, or 8.0%, and unfavorable mix of $20.2 million, or 1.5%.

Selling general and administrative expenses increased by $46.2 million, or 9.9%, to $513.3 million in 2022.

The increase was driven primarily by increased costs of $65.3 million, or 14.0%, including transaction related expenses of $40.1 million, or 8.6%, primarily related to sale of Crane Supply, asbestos divestiture and the planned Separation, increased net restructuring costs of $12.7 million, or 2.7%, partially offset by favorable foreign currency translation of $10.5 million, or 2.2%, the impact of the sale of Crane Supply of $16.5 million, or 3.5%, and strong productivity of $4.7 million, or 1%.

Operating profit decreased by $183.8 million, or 82.9%, to $37.9 million in 2022.

The decrease in operating profit is primarily related to the loss on divestiture of asbestos-related assets and liabilities of $162.4 million, coupled with the divested operating profit of $20.2 million related to the sale of Crane Supply.

Operating segment performance was strong across the Company, with pricing actions and strong productivity more than offsetting higher material, labor and other manufacturing costs.

Operating profit in 2022 included net restructuring and related charges of $8.7 million and transaction related expenses of $48.3 million.

Operating profit in 2021 included net restructuring and related gains of $5.9 million and transaction related expenses of $8.2 million.

Comprehensive income

(in millions) For the year ended December 31, 2024 2023 2022

Net income before allocation to noncontrolling interests $ 255.9 $ 401.1 $ 435.4

Net income attributable to common shareholders $ 294.7 $ 255.9 $ 401.1

Other comprehensive income (loss), net of tax

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Comprehensive income before allocation to noncontrolling interests 290.6 286.6 337.8

Noncontrolling interests in comprehensive income (loss) (0.1) (0.2) 0.6

Noncontrolling interests in comprehensive income (0.2) (0.1) (0.2)

Comprehensive income attributable to common shareholders $ 290.8 $ 286.7 $ 338.0

For the year ended December 31, 2024, comprehensive income before allocation to noncontrolling interests was $290.6 million compared to $286.6 million in 2023.

The $51.2 million decrease was primarily driven by $145.2 million of lower net income before allocation to noncontrolling interests which reflects the 2022 gain on sale of Crane Supply of $232.5 million, a $20.0 million decrease primarily related to changes in pension discount rates and a $114.0 million favorable impact of foreign currency translation adjustments, primarily related to the British pound and euro.

The $4.0 million increase was primarily driven by $38.8 million of higher net income before allocation to noncontrolling interests, a $16.5 million increase primarily related to changes in pension discount rates and a $51.3 million unfavorable impact of foreign currency translation adjustments, primarily related to the British pound and euro.

For the year ended December 31, 2023, comprehensive income before allocation to noncontrolling interests was $286.6 million compared to $337.8 million in 2022.

The $124.4 million decrease was primarily driven by $34.3 million of lower net income before allocation to noncontrolling interests, a $66.0 million decrease primarily related to changes in pension discount rates and a $24.1 million unfavorable impact of foreign currency translation adjustments, primarily related to the British pound and euro.

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

AEROSPACE & ELECTRONICS

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2024 compared to 2023

Aerospace & Electronics sales increased $143.4 million, or 18.2%, to $932.7 million in 2024, primarily due to higher volumes and pricing of $102.7 million, or 13.0%, and the impact of Vian acquisition of $40.6 million, or 5.1%.

The commercial market and military market accounted for 61% and 39%, respectively, of total segment sales in 2024.

Sales to OEM and aftermarket customers in 2024 were 67% and 33% of total segment sales, respectively.

• Sales of Commercial Original Equipment increased by $58.0 million, or 19.9%, to $349.4 million in 2024, primarily reflecting strong demand from aircraft manufacturers and the impact of the Vian acquisition.

• Sales of Military Original Equipment increased by $20.7 million, or 8.2%, to $273.1 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 by $38.3 million, or 21.3%, to $218.5 million in 2024, primarily reflecting continued strong demand from airlines due to improving air traffic volumes.

• Sales of Military Aftermarket Products increased by $26.4 million, or 40.4%, to $91.7 million in 2024, reflecting stronger demand for military products, partly in response to heightened geopolitical tensions globally.

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

Cost of sales increased $79.2 million, or 16.0%, to $574.4 million in 2024 compared to 2023, primarily reflecting higher material, labor and other manufacturing costs of $40.0 million, or 8.1%, the impact from the Vian acquisition of $38.1 million, or 7.7%, increased volumes of $25.1 million, or 5.1%, partially offset by productivity gains of $20.3 million, or 4.1%, and favorable mix of $3.8 million, or 0.8%.

Selling, general and administrative expense increased by $14.2 million, or 10.5%, to $149.3 million in 2024, primarily related to higher selling and administrative costs of $19.2 million, or 14.2%, offset by lower engineering costs of $5.0 million, or 3.7%.

Operating profit increased $50.0 million, or 31.4%, to $209.0 million in 2024, t he increase primarily reflected the impact from higher volumes of $29.3 million, or 18.4%, coupled with productivity gains of $22.7 million, or 14.3%, partially offset by higher material, labor and other manufacturing costs net of higher pricing of $5.0 million, or 3.1%.

2023 compared to 2022

Aerospace & Electronics sales increased $122.0 million, or 18.3%, to $789.3 million in 2023 primarily due to higher volumes and strong pricing.

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• Sales of Military Aftermarket Products increased by $9.0 million, or 16.0%, to $65.3 million in 2023, reflecting stronger demand from military customers.

Cost of sales increased $77.5 million, or 18.6%, to $495.2 million in 2023 compared to 2022, primarily reflecting $48.7 million, or 11.7%, of increased material, labor and other manufacturing costs, increased volumes of $29.3 million, or 7.0%, unfavorable mix of $10.1 million, or 2.4%, partially offset by $ 11.1 million, or 2.7% of productivity gains.

Cost of sales increased $77.5 million, or 18.6%, to $495.2 million in 2023 compared to 2022, primarily reflecting $48.7 million, or 11.7%, of increased material, labor and other manufacturing costs, increased volumes of $29.3 million, or 7.0% and unfavorable mix of $10.1 million, or 2.4%, partially offset by $11.1 million, or 2.7% of productivity gains.

Selling, general and administrative expense increased by $5.8 million, or 4.5%, to $135.1 million in 2023, primarily reflecting higher engineering, administrative and selling costs of $12.9 million, or 10.0%, partially offset by restructuring savings of $5.1 million, or 4.0%, and productivity gains of $1.9 million, or 1.5%.

Operating profit increased $38.7 million, or 32.2%, to $159.0 million in 2023 compared to 2022, primarily reflecting the impact from higher volumes of $25.4 million, or 21.1%, coupled with higher pricing net of inflation, productivity gains and restructuring savings of $23.2 million, or 19.3%, partially offset by unfavorable mix of $10.1 million, or 8.4%.

2022 compared to 2021

Aerospace & Electronics sales increased $29.0 million, or 4.5%, to $667.3 million in 2022.

Price was the primary contribution to the growth for the year.

The commercial market and military market accounted for 57% and 43%, respectively, of total segment sales in 2022.

Sales to OEM and aftermarket customers in 2022 were 72% and 28% of total segment sales, respectively.

• Sales of Commercial Original Equipment increased by $21.1 million, or 9.2%, to $250.5 million in 2022, reflecting strong demand from aircraft manufacturers as the industry aircraft build rates continue to recover from the COVID-19 related slowdown, partially offset by material availability constraints.

• Sales of Military Original Equipment decreased by $8.5 million, or 3.5%, to $231.2 million in 2022, primarily reflecting lower shipments due to order timing and material availability constraints.

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

• Sales of Commercial Aftermarket increased by $24.8 million, or 23.7%, to $129.3 million in 2022, reflecting strong demand from the airlines due to improving air traffic as the industry continues to recover from the COVID-19 related slowdown, along with higher pricing.

• Sales of Military Aftermarket decreased by $8.4 million, or 13.0%, to $56.3 million in 2022, primarily reflecting timing of government orders for certain programs and material availability constraints.

Cost of sales increased $18.1 million, or 4.5%, to $417.7 million in 2022 compared to 2021, primarily reflecting $29.5 million, or 7.4%, of increased material, labor and other manufacturing costs supporting the higher sales, partially offset by $14.3 million, or 3.6%, of productivity gains.

Selling, general and administrative expense increased by $0.6 million, or 0.5%, to $129.3 million in 2022, as higher selling and engineering costs were offset by lower administrative costs.

Operating profit increased $10.3 million, or 9.4%, to $120.3 million in 2022 compared to 2021, primarily due to productivity gains of $16.0 million, or 14.5%, partially offset by increased material, labor and other costs of $2.4 million, or 2.2%, and unfavorable mix of $2.1 million, or 1.9%.

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

Process Flow Technologies

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Cost of sales $ 689.0 $ 615.9 $ 697.8

Selling, general and administrative (a)

$ 248.4 $ 243.4 $ 222.6

Selling, general and administrative $ 269.2 $ 248.4 $ 243.4

Operating profit $ 240.3 $ 208.5 $ 168.2

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Operating margin 20.1 % 19.4 % 15.2 %

(a) Selling, general and administrative expense includes net restructuring charges of $0.9 million, $2.3 million and net restructuring gain of $13.2 million in 2023, 2022 and 2021, respectively.

2024 compared to 2023

Sales increased by 125.7 million, or 11.7%, to $1,198.5 million in 2024, primarily driven by the impact of the BAUM, CryoWorks, and Technifab acquisitions of $69.6 million, or 6.5%, higher core sales of $53.3 million, or 5.0%, primarily driven by higher pricing, and to a lesser extent by favorable foreign currency translation of $2.8 million, or 0.2%.

• Sales of Process Valves and Related Products increased by $102.0 million, or 12.6%, to $913.3 million in 2024, primarily driven by the impact of the BAUM, CryoWorks and Technifab acquisitions of $69.6 million, or 8.6%, and higher core sales of $33.4 million, or 4.1%, driven by higher pricing.

• Sales of Commercial Valves increased by $21.5 million, or 18.5%, to $137.9 million in 2024, primarily driven by increase in core sales of $17.5 million, or 15.0%, and favorable foreign currency translation of $4.0 million, or 3.4%, as the British pound strengthened against the U.S.

• Sales of Pumps and Systems increased by $2.2 million, or 1.5%, to $147.3 million in 2024, reflecting an increase in core sales primarily driven by higher pricing.

Cost of sales increased by $73.1 million, or 11.9%, to $689.0 million, primarily reflecting the impact of the BAUM, CryoWorks, and Technifab acquisitions of $52.4 million, or 8.5%, unfavorable mix of $25.9 million, or 4.2%, and higher material, labor and other manufacturing costs of $20.4 million, or 3.3%, partially offset by productivity gains of $26.3 million, or 4.3%.

Selling, general and administrative expense increased by $20.8 million, or 8.4%, to $269.2 million, primarily driven by the impact of the BAUM, CryoWorks, and Technifab acquisitions of $16.3 million, or 6.6%, and higher selling expenses net of productivity and cost savings of $4.4 million, or 1.8%.

Operating profit increased by 31.8 million, or 15.3%, to $240.3 million in 2024.

The increase is primarily due to productivity gains of $28.3 million, or 13.6 %, and higher net pricing of $27.7 million, or 13.3%, partially offset by unfavorable mix of $25.9 million, or 12.4%.

2023 compared to 2022

Sales decreased by $36.6 million, or 3.3%, to $1,072.8 million in 2023, driven by the impact of the sale of Crane Supply of $105.8 million, or 9.5%, partially offset by the impact of the BAUM acquisition of $15.4 million or 1.4%, and higher core sales of $54.1 million, or 4.9%.

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• Sales of Pumps and Systems increased by $17.7 million, or 13.9%, to $145.1 million in 2023, reflecting an increase in core sales primarily driven by higher pricing and higher volumes across all key end markets.

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

Cost of sales decreased by $81.9 million, or 11.7%, to $615.9 million, primarily related to the net impacts of the sale of Crane Supply and the BAUM acquisition of $66.1 million or 9.5%, productivity gains of $23.6 million, or 3.4%, lower volumes of $13.3 million, or 1.9%, offset by unfavorable mix of 17.3 million, or 2.5%, and modestly higher material, labor and other manufacturing costs of $7.3 million, or 1.0%.

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The increase was primarily due to higher pricing net of inflation and productivity of $74.0 million, or 44.0%, partially offset by unfavorable mix of $17.3 million, or 10.3%, and the net impact from the sale of Crane Supply of $13.8 million, or 8.2%.

2022 compared to 2021

Sales decreased by $87.2 million, or 7.3%, to $1,109.4 million in 2022, driven by lost sales associated with the divestiture of Crane Supply of $139.1 million, or 11.6%, and unfavorable foreign currency translation of $46.6 million, or 3.9%, partially offset by higher core sales of $98.3 million, or 8.2%.

Core sales growth was driven primarily by higher pricing, with modestly higher volumes.

• Sales of Process Valves and Related Products increased by $32.7 million, or 4.6%, to $749.8 million in 2022.

The increase reflected higher core sales of $63.6 million, or 8.9%, driven by higher pricing, offset by unfavorable foreign currency translation of $31.1 million, or 4.3%, as the euro weakened against the U.S.

Demand remained strong across Chemical, Pharmaceutical and General Industrial end markets.

• Sales of Commercial Valves decreased by $142.0 million, or 37.9%, to $232.2 million in 2022, primarily driven by lost sales associated with the divestiture of Crane Supply of $139.1 million, or 37.2%, and unfavorable foreign currency translation of $15.1 million, or 4.0%, as the British pound weakened against the U.S.

dollar, partially offset by an

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

increase in core sales of $12.2 million, or 3.3%.

The higher core sales reflected higher demand in Canadian non-residential construction markets.

• Sales of Pumps and Systems increased by $22.1 million, or 21.0%, to $127.4 million in 2022, primarily driven by higher sales to municipal customers and non-residential construction end markets.

Cost of sales decreased by $93.7 million, or 11.8%, to $697.8 million, primarily related to $102.4 million of divested cost related to the sale of Crane Supply, or 12.9%, favorable foreign currency of $30.0 million, or 3.8%, and productivity gains of $17.1 million, or 2.2%, partially offset by a $45.3 million, or 5.7%, increase in material, labor and other manufacturing costs and unfavorable mix of $16.1 million, or 2.0%.

Selling, general and administrative expense increased by $20.8 million, or 9.3%, to $243.4 million primarily reflecting higher administrative and selling costs of $36.1 million, or 16.2%, and lower net restructuring gains of $15.5 million, or 7.0%, partially offset by favorable currency translation of $10.6 million, or 4.8%, and the divested cost related to the sale of Crane Supply of $16.5 million, or 7.4%.

Operating profit decreased by $14.3 million, or 7.8%, to $168.2 million in 2022.

The decrease was primarily due to divested operating profit of $20.2 million related to the sale of Crane Supply, or 11.1%, and lower net restructuring gains of $15.5 million, or 8.5%, partially offset by productivity gains of $20.1 million, or 11.0%.

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

Engineered Materials

(in millions, except %) For the year ended December 31, 2023 2022 2021

Net sales by product line:

FRP - Recreational Vehicles $ 73.0 $ 111.9 $ 102.5

FRP - Building Products 117.0 112.5 94.9

FRP - Transportation 34.3 33.9 30.6

Total net sales $ 224.3 $ 258.3 $ 228.0

Cost of sales $ 170.5 $ 206.2 $ 181.3

Selling, general and administrative (a)

$ 20.4 $ 19.5 $ 19.8

Operating profit $ 33.4 $ 32.6 $ 26.9

Assets $ 191.8 $ 218.6 $ 220.5

Backlog $ 11.3 $ 16.2 $ 20.1

Operating margin 14.9 % 12.6 % 11.8 %

(a) Selling, general and administrative expense includes net restructuring gain of $0.3 million, restructuring charges of $0.4 million and $0.0 million in 2023, 2022 and 2021, respectively.

2023 compared to 2022

Sales decreased by $34.0 million, or 13.2%, to $224.3 million in 2023 reflecting lower core sales of $34.0 million, or 13.2%, primarily due to lower volumes, partially offset by higher pricing.

The decrease was primarily driven by lower sales to recreational vehicle manufacturers.

Cost of sales decreased by $35.7 million, or 17.3%, to $170.5 million, primarily related to lower volumes of $25.8 million, or 12.5%, and cost savings, favorable mix and productivity gains of $9.8 million, or 4.7%.

Operating profit increased by $0.8 million, or 2.5%, to $33.4 million in 2023, primarily reflecting higher pricing net of inflation, productivity gains and favorable mix, offset by lower volumes.

2022 compared to 2021

Sales increased by $30.3 million, or 13.3%, to $258.3 million in 2022 with higher pricing more than offsetting a decline in volume, primarily related to softening end market demand in the RV industry.

The increase reflected higher sales to building products customers and recreational vehicle manufacturers.

Cost of sales increased by $24.9 million, or 13.7%, to $206.2 million, primarily related to an increase in material, labor and other manufacturing costs of $36.7 million, or 20.2%, offset by the impact of the lower volumes of $12.2 million, or 6.7%.

Selling, general and administrative expense decreased by $0.3 million, or 1.5%, to $19.5 million primarily reflecting lower selling costs.

Operating profit increased by $5.7 million, or 21.2%, to $32.6 million in 2022, primarily reflecting higher pricing net of inflation, and productivity gains, of $16.8 million, or 62.5%, partially offset by the impact of the lower volumes of $11.1 million, or 41.3%.

(in millions) For the year ended December 31, 2024 2023 2022

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Total Corporate expense $ (93.5) $ (117.1) $ (283.2)

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

Total Corporate expense decreased by $23.6 million, or 20.2%, in 2024, primarily reflecting the absence of separation related expenses of $19.4 million or 16.6%.

Total Corporate expense decreased by $166.1 million, or 58.7%, in 2023, primarily related to the absence of the loss on divestiture of asbestos related assets and liabilities of $162.4 million, or 57.3%.

Total Corporate expense increased by $185.5 million, or 189.9%, in 2022, primarily related to the loss on divestiture of asbestos related assets and liabilities of $162.4 million, or 166.2%, and higher transaction related expenses of $32.5 million, or 33.3%, partially offset by slightly lower compensation and benefit costs.

INTEREST AND MISCELLANEOUS INCOME, NET

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2024 compared to 2023

Interest expense increased by $12.6 million, or 124.7%, primarily due to interest on the $300 million, 3-year term loan facility .

Miscellaneous income, net, decreased $7.1 million, or 89.9%, primarily reflecting the absence of the 2022 $7.5 million termination fee paid to the Company related to the termination of agreement to sell the Engineered Materials segment.

Interest expense increased by $4.5 million, or 19.8%, primarily due to incremental borrowings under the revolving credit facility during 2024 to fund acquisitions.

Miscellaneous income, net, increased $4.1 million, primarily due to favorable settlements under the tax matters agreement resulting from the Separation.

2023 compared to 2022

Interest expense increased $5.2 million, or 106.1%, primarily due to interest on the 364-day credit facility that was entered into on August 11, 2022.

The $232.5 million gain on sale of business relates to the divestiture of Crane Supply.

Miscellaneous income, net, decreased $7.7 million, or 49.4%, primarily reflecting the absence of the 2021 $18.5 million gain on sale of property, offset by the $7.5 million termination fee paid to the Company in 2022 related to the termination of agreement to sell the Engineered Materials segment.

Interest expense increased by $12.6 million, or 124.7%, primarily due to interest on the $300 million, 3-year term loan facility .

Miscellaneous expense, net, decreased $5.3 million, or 94.6%, primarily reflecting the absence of the 2022 $7.5 million termination fee paid to the Company related to the termination of agreement to sell the Engineered Materials segment.

(in millions, except %) For the year ended December 31, 2024 2023 2022

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Investing activities from continuing operations (230.0) (128.8) 288.4

Financing activities (423.2) 106.0 (557.9)

Financing activities from continuing and discontinued operations (49.7) (423.2) 106.0

Discontinued operations 11.8 58.3 322.8

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At any given time, and from time to time, we may be evaluating one or more of these opportunities, although we cannot assure you if or when we will consummate any such transactions.

The Company raised the 2025 annual dividend by 12% to $0.92 per share.

Our current cash balance, together with cash we expect to generate from future operations and borrowing capacity available under our revolving credit facility, is expected to be sufficient to finance our short- and long-term capital requirements, as well as to fund expected pension contributions.

In March 2023, we entered into a senior secured credit agreement which provides for a $500 million, 5-year revolving credit facility through March 2028 and a $300 million, 3-year term loan facility through March 2026.

In October 2023, we exercised a portion of the accordion feature under the revolving credit facility to increase the available borrowing capacity from $500 million to $800 million.

In October 2023, we borrowed $100 million under the revolving credit facility and used approximately $91 million of the proceeds to acquire Baum lined piping GmbH.

In November 2023, we repaid the $100 million of the outstanding borrowings under the revolving credit facility.

At December 31, 2023, there was $249 million outstanding under the term loan facility.

On January 2, 2024, we borrowed $100 million under the revolving credit facility to fund the Vian acquisition.

Operating Activities

Cash provided by operating activities from continuing operations, a key source of our liquidity, was $193.6 million in 2023, compared to cash used for operating activities from continuing operations of $472.2 million in 2022.

The increase in cash provided by operating activities from continuing operations was primarily driven by the absence of a $550.0 million payment made in 2022 in connection with the divestiture of all asbestos-related assets and liabilities and, to a lesser extent, the $111.2 million increase in net income, adjusted for the exclusion of non-cash items.

Cash used for operating activities from continuing operations was $472.2 million in 2022, compared to cash provided by operating activities from continuing operations of $185.1 million in 2021.

The increase in cash used for operating activities from continuing operations was primarily driven by the $550.0 million payment in 2022 related to the divestiture of the asbestos-related assets and liabilities, together with increased working capital investments supporting higher levels of demand across most businesses.

Cash provided by operating activities from continuing operations, a key source of our liquidity, was $257.8 million in 2024, compared to $162.1 million in 2023.

The increase in cash provided by operating activities from continuing operations was primarily driven by the $109.1 million increase in net income from continuing operations, adjusted for the exclusion of non-cash items.

Cash provided by operating activities from continuing operations was $162.1 million in 2023, compared to cash used for operating activities from continuing operations of $498.8 million in 2022.

The increase in cash provided by operating activities from continuing operations was primarily driven by the $550.0 million payment in 2022 related to the divestiture of the asbestos-related assets and liabilities and, to a lesser extent, the $108.6 million increase in net income adjusted for the exclusion of non-cash items.

Investing Activities

Cash flows relating to investing activities from continuing operations consist primarily of cash used for capital expenditures, acquisitions of businesses and cash provided by divestitures of businesses or assets.

Cash used for investing activities from continuing operations was $230.0 million in 2024, compared to $128.8 million in 2023.

The increase in cash used for investing activities is primarily related to the acquisition of Vian for $99.5 million, the acquisition of CryoWorks for $59.1 million and the acquisition of Technifab for $38.8 million, partially offset by the 2023 acquisition of BAUM for $90.5 million.

Cash used for investing activities from continuing operations was $128.8 million in 2023, compared to cash provided by investing activities from continuing operations of $288.4 million in 2022.

The increase in cash used for investing activities is primarily related to the absence of $318.1 million in proceeds from the sale of Crane Supply in 2022, the acquisition of BAUM for $90.5 million and higher capital expenditures of $5.7 million.

Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development, and improving information systems.

Cash provided by investing activities from continuing operations was $285.3 million in 2022, compared to $18.2 million in 2021.

The increase in cash provided by investing activities from continuing operations was primarily related to $318.1 million of proceeds related to the divestiture of Crane Supply.

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

Financing Activities

Financing cash flows consist primarily of dividend payments to shareholders, share repurchases and repayments of indebtedness, proceeds from the issuance of long-term debt and proceeds from the issuance of common stock.

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 year 2023, financing cash flows also includes activities associated with the distribution of Crane NXT, Co.

in support of the Separation.

Cash used by financing activities was $423.2 million in 2023, compared to cash provided by financing activities of $106.0 million in 2022.

Cash used by financing activities was $49.7 million in 2024, compared to $423.2 million in 2023.

The decrease in cash used for financing activities was driven by:

• $578.1 million related to the Distribution of Crane NXT, Co.

in the prior year;

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

• $10.4 million decrease in dividends paid, reflecting a lower dividend per share established on April 3, 2023 in connection with the Separation;

• $9.0 million decrease in payments for debt issuance costs;

• $201.3 million decrease in net borrowings;

• $22.7 million increase in payments for taxes related to net share settlements of equity awards, net of proceeds from stock options.

Cash used for financing activities was $423.2 million in 2023, compared to cash provided by financing activities of $106.0 million in 2022.

Cash used for financing activities in 2023 was driven by:

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(discontinued operations) and the $300 million term loan issued to Crane Company.

Cash provided by financing activities was $106.0 million in 2022, compared to cash used for financing activities of $557.9 million in 2021.

The increase in cash provided by financing activities was primarily driven by $399.4 million in net borrowings from the 2022 364-Day Credit Agreement, compared to a $348.1 million repayment of the outstanding amount under the 364-Day Credit Agreement in 2021.

This was partially offset by an $107.4 million increase in share repurchases.

Financing Arrangements

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(in millions)

Short-term borrowings $ —

Long-term debt $ 248.5

Total debt $ 247.0

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Although the Company is currently unrated, we believe that we have adequate access to capital through the bank market and our current Revolving Credit Facility.

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

Contractual Obligations

Under various agreements, we are obligated to make future cash payments in fixed amounts.

These include payments under our short-term and long-term debt agreements and rent payments required under operating lease agreements.

These include payments under our short-term and long-term debt agreements and rent payments required under operating lease agreements from continuing operations.

The following table summarizes our fixed cash obligations as of December 31, 2024:

Payment due by Period

(in millions) Total 2024 2025

-2028 2029 and after

(in millions) Total 2025 2026 2027 2028 2029 2030 and after

$ 247.5 $ — $ 247.5 $ — $ — $ — $ —

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Other long-term liabilities reflected on Consolidated Balance Sheets (c)

— — — — — — —

Total $ 1,074.8 $ 283.2 $ 323.3 $ 67.0 $ 64.4 $ 58.9 $ 278.0

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

OUTLOOK - CONTINUING OPERATIONS

Our sales depend heavily on industries that are cyclical in nature or are subject to market conditions, which may cause customer demand for our products to be volatile and unpredictable.

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 7% to 9%, driven by approximately 3% to 5% core growth, and approximately 4% sales contribution from the Baum lined piping GmbH and the Vian Enterprises, Inc.

acquisitions.

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

For 2025, we expect a total year-over-year sales increase of approximately 5%, driven by approximately 4% to 6% core growth, and an acquisition benefit of approximately 1% to 2%, partially offset by an approximate 1% headwind from foreign exchange.

We expect an improvement in operating profit driven primarily by productivity benefits, operating leverages on higher volumes, lower transaction related expenses, higher pricing net of inflation and contributions from the Technifab and CryoWorks acquisitions, partially offset by unfavorable mix mainly in our Aerospace & Electronics segment (discussed below).

Aerospace & Electronics

In 2024, we expect Aerospace & Electronics core sales to increase in the mid-teens range compared to 2023, driven by approximately 10% core sales and a 4% to 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 a substantial improvement in our commercial aftermarket business given continued recovery in airline flight hours.

We expect our defense OEM sales to be approximately flat, 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 and productivity benefits.

In 2025, we expect Aerospace & Electronics sales to increase in the high single-digit range compared to 2024.

We expect a substantial improvement in our commercial OEM business driven by higher aircraft build rates, and our military OEM business driven by continued global geopolitical uncertainty which is driving increased demand.

We expect growth in our commercial and military aftermarket businesses driven by continued high utilization of aircraft, but at decelerating rates compared to 2023 and 2024 due to increasingly challenging year-over-year comparisons.

We expect segment operating profit and operating margin to increase compared to 2024 driven primarily by productivity benefits and the impact of operating leverage on higher volumes, partially offset by unfavorable mix as we expect higher growth in OEM shipments compared to the higher profit aftermarket product shipments.

Process Flow Technologies

In 2024, we expect Process Flow Technologies sales to increase approximately 4% to 5% driven by contribution from the Baum lined piping GmbH acquisition, with core sales approximately flat.

We expect Process Valves and Related Products sales to increase in the low- to mid-single digit range compared to 2023, driven by mid-single digit contribution from the Baum lined piping GmbH acquisition, partially offset by a slight decline in core sales.

We expect Commercial Valves sales to increase in the low- to mid-single digit range, and we expect Pumps and Systems sales to increase in the 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 higher pricing net of inflation, strong productivity and contribution from the Baum lined piping GmbH acquisition, partially offset by lower volumes and unfavorable mix.

Engineered Materials

In 2024, we expect Engineered materials sales to be flat compared to 2023, with a modest increase in sales to the Recreational Vehicle market, offset by a decline in sales to the Transportation market.

We expect operating profit and operating margin to be approximately flat compared to 2023.

In 2025, we expect Process Flow Technologies sales to increase approximately 4% to 5% driven by low- to mid-single digit core

sales growth, a 2% to 3% contribution from the Technifab and CryoWorks acquisitions, partially offset by approximately 1% of

unfavorable foreign exchange.

We expect Process Valves and Related Products sales to increase in the mid-single digit range compared to 2024, driven by contributions from the Technifab and CryoWorks acquisitions, as well as demand in the Chemical, Pharmaceutical, Industrial and Cryogenic markets.

We expect Commercial Valves sales to increase in the low- to mid-single digit range driven primarily by higher demand in the UK and Europe for water infrastructure, and we expect Pumps and Systems sales to increase in the mid-single digit range compared to 2024, driven by demand across the business’ end markets.

We expect an improvement in segment operating profit and operating margin compared to 2024, driven primarily by strong productivity and higher pricing net of inflation.

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

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The evidence we consider in reaching such conclusions includes, but is not limited to;

(1) future reversals of existing taxable temporary differences, (2) future taxable income exclusive of reversing taxable temporary differences, (3) taxable income in prior carryback year(s) if carryback is permitted under the tax law, (4) cumulative losses in recent years, (5) a history of tax losses or credit carryforwards expiring unused, (6) a carryback or carryforward period that is so brief it limits realization of tax

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

benefits, and (7) a strong earnings history exclusive of the loss that created the carryforward and support showing that the loss is an aberration rather than a continuing condition.

We account for unrecognized tax benefits in accordance with ASC 740, which prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized.

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As of December 31, 2024, we had four reporting units.

At December 31, 2024, Goodwill of $171.3 million related to the Engineered Materials reporting unit was classified as held for sale.

Please refer to Note 3, “Discontinued Operations” in the Notes to Consolidated Financial Statements for further discussion.

When performing our annual impairment assessment, we compare the fair value of each of our reporting units to our respective carrying value.

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We review all our definite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Examples of events or changes in circumstances could include, but are not limited to, a prolonged economic downturn, current period operating or cash flow losses combined with a history of

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

losses or a forecast of continuing losses associated with the use of an asset or asset group, or a current expectation that an asset or asset group will be sold or disposed of before the end of its previously estimated useful life.

Examples of events or changes in circumstances could include, but are not limited to, a prolonged economic downturn, current period operating or cash flow losses combined with a history of losses or a forecast of continuing losses associated with the use of an asset or asset group, or a current expectation that an asset or asset group will be sold or disposed of before the end of its previously estimated useful life.

Recoverability is based upon projections of anticipated future undiscounted cash flows associated with the use and eventual disposal of the definite-lived intangible asset (or asset group), as well as specific appraisal in certain instances.

Reviews occur at the lowest level for which identifiable cash flows are largely independent of cash flows associated with other long-lived assets or asset groups and include estimated future revenues, gross profit margins, operating profit margins and capital expenditures which are based on the businesses’ strategic plans and long-range planning forecasts, which change from year to year.

Reviews occur at the lowest level for

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

which identifiable cash flows are largely independent of cash flows associated with other long-lived assets or asset groups and include estimated future revenues, gross profit margins, operating profit margins and capital expenditures which are based on the businesses’ strategic plans and long-range planning forecasts, which change from year to year.

The revenue growth rates included in the forecasts represent our best estimates based on current and forecasted market conditions, and the profit margin assumptions are based on the current cost structure and anticipated net cost increases or reductions.

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The prior service cost (credit) is amortized over the average future working lifetime of plan participants whose prior service benefits were changed.

The net periodic pension cost was $4.3 million and $11.2 million in 2024 and 2023, respectively, and net periodic pension benefit of $2.3 million in 2022.

The net periodic pension cost decreased in 2024 compared to 2023, primarily driven by lower

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

The net periodic pension cost was $11.2 million in 2023 and net periodic pension benefit was, $2.3 million and $5.9 million in 2022 and 2021, respectively.

The net periodic pension cost increased in 2023 compared to 2022, primarily driven by higher interest costs for both U.S.

plans and lower expected return on assets.

interest costs and curtailments for U.S.

plans and higher expected return on assets for both U.S.

Employer cash contributions were $16.6 million, $18.1 million and $17.8 million in 2024, 2023 and 2022, respectively.

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pension plans.

Also, holding all other factors constant, a decrease in the discount rate used to determine net periodic pension cost by 0.25 percentage points would have increased 2023 pension expense by $0.1 million for U.S.

Also, holding all other factors constant, a decrease in the discount rate used to determine net periodic pension cost by 0.25 percentage points would have increased 2024 pension expense by less than $0.1 million for U.S.

pension plans and $0.1 million for non-U.S.

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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-K

Item 7. Management’s Discussion and Analysis