What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-20 compared with 2023-02-21 · 275 added, 231 removed, 367 unchanged (58% of the section changed)

4 unchanged sentences

The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those listed under Item 1A- Risk Factors and included elsewhere in this Form 10-K.

This MD&A is a supplement to our financial statements and notes thereto included elsewhere in this 10-K and is provided to enhance your understanding of our results of operations and financial condition.

This MD&A is a supplement to our financial statements and notes thereto included elsewhere in this Form 10-K and is provided to enhance your understanding of our results of operations and financial condition.

Our discussion of results of operations is presented in millions throughout the MD&A and due to rounding may not sum or calculate precisely to the totals and percentages provided in the tables.

9 unchanged sentences

Company Overview

We are a leading global provider of windows, doors, wall systems, and other building products.

We design, produce, and distribute an extensive range of interior and exterior doors, wood, vinyl, and aluminum windows, and related products for use in the new construction, R&R of residential homes, and, to a lesser extent, non-residential buildings.

We operate manufacturing and distribution facilities in 19 countries, located primarily in North America, Europe, and Australia.

We are a leading global designer, manufacturer, and distributor of high performance interior and exterior doors, windows, and related building products, serving the new construction and R&R sectors.

We operate manufacturing and distribution facilities in 15 countries, located primarily in North America and Europe.

For many product lines, our manufacturing processes are vertically integrated, enhancing our range of capabilities, our ability to innovate, and our quality control as well as providing supply chain, transportation, and working capital savings.

1 unchanged sentence

Our business is organized in geographic regions to ensure integration across operations serving common end markets and customers.

We have three reportable segments:

North America, Europe, and Australasia.

Financial information related to our business segments can be found in Note 14 - Segment Information of our financial statements included elsewhere in this 10-K.

Acquisitions and Divestitures

We have two reportable segments:

North America and Europe.

Financial information related to our business segments can be found in Note 14 - Segment Information of our financial statements included elsewhere in this Form 10-K.

During 2021, the Company ceased the appeal process for its litigation with Steves & Sons, Inc.

2 unchanged sentences

We have reclassified certain assets and liabilities to assets held for sale in the accompanying financial statements.

We plan to continue to be reporting Towanda within our North America operations until the divestiture is finalized.

For additional information on the Steves litigation and divestiture, see Note 24 - Commitments and Contingencies of our financial statements included elsewhere in this 10-K.

We plan to continue reporting Towanda within our North America operations until the divestiture is finalized.

For additional information on the Steves litigation and divestiture, see Note 25 - Commitments and Contingencies of our financial statements included elsewhere in this Form 10-K.

On April 17, 2023, we entered into a Share Sale Agreement with Aristotle Holding III Pty Limited, a subsidiary of Platinum Equity Advisors, LLC, to sell our Australasia business.

On July 2, 2023, we completed the sale.

The net assets and operations of the disposal group met the criteria to be classified as “discontinued operations” and are reported as such in all periods presented unless otherwise noted.

The consolidated statements of cash flows include cash flows from discontinued operations through the divestiture date of July 2, 2023.

See Note 2 - Discontinued Operations of our financial statements included elsewhere in this Form 10-K.

Factors and Trends Affecting Our Business

Components of Net Revenues

The key components of our net revenues include core net revenues (which we define to include the impact of pricing and volume/mix, as discussed further under the heading, “Product Pricing and Volume/Mix” below), contribution from acquisitions and divestitures made within the prior twelve months, and the impact of foreign exchange.

The key components of our net revenues include Core Revenues (which we define to include the impact of pricing and volume/mix, as discussed further under the heading, “Product Pricing and Volume/Mix” below), contribution from acquisitions and divestitures made within the prior twelve months, and the impact of foreign exchange.

Net revenues reported in our financial statements are impacted by the fluctuating currency values in the geographies in which we operate, which we refer to as the impact from foreign exchange.

4 unchanged sentences

• the strength of the economy;

• employment rates and consumer confidence and spending rates;

• employment rates, consumer confidence, and spending rates;

• the availability and cost of credit;

• interest rate fluctuations (including mortgage and credit card interest rates) and the availability of financing for our customers and consumers;

• the amount and type of residential and non-residential construction;

1 unchanged sentence

• the age of existing home stock, home vacancy rates, and foreclosures;

• interest rate fluctuations for our customers and consumers;

• volatility in both debt and equity capital markets;

18 unchanged sentences

• increasing rigor and alignment around capital expenditures with a clear linkage to our strategy and optimizing returns;

• generating value through supplier contracting to enable better supplier performance, strengthen our partnerships with strategic suppliers, and unlock additional value within the supply chain;

• reducing or minimizing increases in material costs and improving product function through value-added re-engineering of components;

• reducing or minimizing increases in material usage and costs through value-added engineering;

• investing in logistics optimization programs to reduce freight costs and increase throughput;

• redesigning our supply chain network to reduce lead times and optimize inventory levels to increase cash flow;

• reducing warranty costs by improving quality.

We continue to implement our cost-reduction and productivity strategic initiatives under JEM to develop the culture and processes of operational excellence and continuous improvement.

We continue to implement our strategic cost-reduction and productivity initiatives to develop the culture and processes of operational excellence and continuous improvement.

These cost reduction initiatives, which may include plant closures and consolidations, headcount reductions, and other various initiatives aimed at lowering production and overhead costs, may not produce the intended results within the intended timeframe.

Raw Material Costs

Commodities such as vinyl extrusions, glass, aluminum, wood, steel, plastics, fiberglass, and other composites are major components in the production of our products.

Commodities such as wood, steel, glass, fiberglass, aluminum and vinyl are major components in the production of our products.

Changes in the underlying prices of these commodities have a direct impact on the cost of goods sold.

9 unchanged sentences

Working Capital and Seasonality

Working capital, which we define as accounts receivable plus inventory less accounts payable, fluctuates throughout the year and is affected by seasonality of sales of our products and of customer payment patterns.

The peak season for home construction and remodeling in our North America and Europe segments, which represent the substantial majority of our revenues, generally corresponds with the second and third calendar quarters, and therefore our sales volume is usually higher during those quarters.

Working capital fluctuates throughout the year and is affected by seasonality of sales of our products and of customer payment patterns.

The peak season for home construction and remodeling in our North America and Europe segments generally corresponds with the second and third calendar quarters, and therefore our sales volume is usually higher during those quarters.

Typically, working capital increases at the end of the first quarter and beginning of the second quarter in conjunction with, and in preparation for, our peak season, and working capital decreases starting in the third quarter as inventory levels and accounts receivable decline.

Inventories fluctuate as we manage availability in our supply chain due to the impacts of COVID-19 and the ongoing conflict between Russia and Ukraine, and for certain raw materials with long delivery lead times, as we work through prior shipments and take delivery of new orders.

Our working capital balances have been impacted by inflation in the current year due to rising costs in raw materials impacting both inventory and accounts payable as well as higher accounts receivable balances as a result of price realization across our product portfolio.

Global supply markets and supply chains have been impacted by certain events, resulting in shortages and extended lead times impacting our operations and profitability.

We continue to apply a number of different strategies to mitigate the impact of these challenges on our operations, including extending our demand planning, seeking alternative sources, utilizing substitute products and leveraging our supplier relationships.

Foreign Currency Exchange Rates

2 unchanged sentences

dollar can affect our reported operating results and our cash flows as we translate our foreign subsidiaries’ financial statements from their reporting currencies into U.S.

The exchange rates used to translate our foreign subsidiaries’ financial results for the year ended December 31, 2022 compared to the year ended December 31, 2021 reflected, on average, the U.S.

dollar strengthened against the Australian dollar, Canadian dollar, and Euro by 8%, 4% and 13%, respectively.

See Item 1A - Risk Factors - Risks Relating to Our Business and Industry, Item 1A - Risk Factors - Exchange rate fluctuations may impact our business, financial condition, and results of operations, and Item 7A - Quantitative and Qualitative Disclosures About Market Risk- Exchange Rate Risk.

1 unchanged sentence

Our net revenues are a function of sales volumes and selling prices, each of which is a function of product mix, and consist primarily of:

• sales of a wide variety of interior and exterior doors, including patio doors, for use in residential and non-residential applications, with and without frames, to a broad group of wholesale and retail customers in all of our geographic markets;

• sales of a wide variety of windows for both residential and certain non-residential uses, to a broad group of wholesale and retail customers primarily in North America and Australia;

• other sales, including sales of moldings, trim board, cut-stock, glass, hardware and locks, door skins, shower enclosures, wardrobes, window screens, and miscellaneous installation and other services revenue.

• sales of a wide variety of windows for both residential and certain non-residential uses, to a broad group of wholesale and retail customers in North America;

• other sales, including sales of trim board, glass, hardware and locks, door skins, window screens, and miscellaneous installation and other services.

We also sell molded door skins to certain customers pursuant to long-term contracts, and these customers in turn use the molded door skins to manufacture interior doors and compete directly against us in the marketplace.

Net revenues do not include internal transfers of products between our component manufacturing, product manufacturing and assembly, and distribution facilities.

3 unchanged sentences

The single largest component of cost of sales is material costs, which include raw materials, components, and finished goods purchased for use in manufacturing our products or for resale.

Our most significant material costs include glass, wood, wood components, doors, door facings, door parts, hardware, vinyl extrusions, steel, fiberglass, packaging materials, adhesives, resins and other chemicals, core material, and aluminum extrusions.

Our most significant material costs include wood, wood composites, wood components, steel, glass, internally produced door skins, fiberglass compound, hardware, petroleum-based products such as resin and binders, as well as aluminum and vinyl extrusions.

The cost of each of these items is impacted by global supply and demand trends, both within and outside our industry, as well as commodity price fluctuations, conversion costs, energy costs, and transportation costs.

We have and may continue to experience inflation in our material costs, including increased costs for inbound freight, due to supply chain challenges as a result of COVID-19 and the ongoing conflict between Ukraine and Russia.

Material costs also include purchased finished goods.

We have and may continue to experience inflation in our material costs, including increased costs for inbound freight, due to supply chain challenges from economic and geopolitical uncertainties, including the ongoing conflict between Russia and Ukraine.

The imposition of new tariffs on imports, new trade restrictions, or changes in tariff rates or trade restrictions may further impact material costs.

16 unchanged sentences

Insurance and Benefits, Supervision, and Tax Expenses.

• Insurance and benefit costs are the expenses relating to our insurance programs, health benefits, retirement benefit programs (including the pension plan), and other benefits that are not included in direct labor and benefits costs.

• Insurance and benefit costs are the expenses relating to our insurance programs, health benefits, retirement benefit programs (including the pension plan), and other benefits for employees that are not included in direct labor and benefits costs.

• Supervision costs are the wages and bonus expenses related to plant managers.

15 unchanged sentences

Goodwill Impairment

Goodwill impairment consists of goodwill impairment charges associated with our Europe reporting unit.

For more information, refer to Note 5 - Goodwill in our consolidated financial statements included in this 10-K.

Restructuring and Asset Related Charges, Net

Goodwill impairment consists of goodwill impairment charges associated with our Europe reporting unit in the year ended December 31, 2022.

For more information, refer to Note 6 - Goodwill of our consolidated financial statements included in this Form 10-K.

Restructuring and Asset Related Charges

Restructuring charges, net consist primarily of all salary-related severance benefits that are accrued and expensed when a restructuring plan has been put into place, the plan has received approval from the appropriate level of management and the benefit is probable and reasonably estimable.

6 unchanged sentences

Debt issuance costs are included as an offset to long-term debt in the accompanying consolidated balance sheets and are amortized to interest expense over the life of the related facility using the effective interest method.

For additional details, see Note 11 - Long-Term Debt in our financial statements for the year ended December 31, 2022 included elsewhere in this 10-K .

For additional details, see Note 12 - Long-Term Debt of our financial statements for the year ended December 31, 2023 included elsewhere in this Form 10-K .

Other Income, Net

Other income, net, includes profit and losses related to various miscellaneous non-operating expenses primarily relating to pension benefit income and expenses, governmental assistance, insurance reimbursements, loss on extinguishment of debt, recovery of cost from interest received on impaired notes, gains and losses on sale of business units, property, and equipment, legal settlement income, credit for overpayments of utility expenses, and certain foreign currency related gains and losses, including from our hedging activities used to mitigate foreign exchange impacts.

Other income, net, includes income and losses related to various miscellaneous non-operating expenses.

For more information, refer to Note 22 - Other Income, Net of our consolidated financial statements included in this Form 10-K .

Income taxes are recorded using the asset and liability method of accounting for income taxes.

5 unchanged sentences

Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

We record interest related to unrecognized tax benefits in income tax expense.

As of December 31, 2022, our U.S.

federal, state, and foreign net operating loss (“NOL”) carryforwards were $1,449.6 million in the aggregate and $331.1 million of such NOL carryforwards do not expire.

For additional details, see Note 13 - Income Taxes in our financial statements for the year ended December 31, 2022 included elsewhere in this 10-K.

Significant Developments

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic.

Many of the limitations and mandates on operations have been lifted, however, the scope and nature of impacts from COVID-19, most of which are beyond our control, continue to evolve, and the outcome is uncertain.

The ultimate effects of the COVID-19 pandemic on us and the end markets we service, are highly uncertain and will depend on future developments.

Such effects could exist for an extended period even after the pandemic ends.

In February 2022, the Russian military commenced an invasion of Ukraine, which is ongoing as of the date of this report.

As a result, we have experienced shortages in materials and heightened inflation on materials, freight, and other variable costs, such as utilities, primarily in our European operations.

The impact of the ongoing military conflict between Russia and Ukraine and COVID-19 on the global economy including rising prices of raw materials , freight, energy and other critical inputs due to inflation, supply chain disruptions, and the increase in interest rates including home mortgage rates are unpredictable and there may be developments outside our control that may adversely impact our business, operations, and results.

For more information, refer to Note 15 - Income Taxes to our consolidated financial statements included in this Form 10-K.

Results of Operations

3 unchanged sentences

Accordingly, totals may not equal the sum of the line items in the tables below.

We present several financial metrics in “Core” terms, such as Core Revenue, which excludes the impact of foreign exchange, acquisitions and divestitures completed in the last twelve months.

We believe Core Revenue assists management, investors, and analysts in understanding the organic performance of our operations.

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

7 unchanged sentences

Goodwill impairment — — % 54,885 1.2 %

Restructuring and asset related charges, net 18,233 0.4 % 2,950 0.1 %

Restructuring and asset related charges 35,741 0.8 % 17,622 0.4 %

Operating income 141,600 3.3 % 59,336 1.3 %

Interest expense, net 72,258 1.7 % 82,505 1.8 %

Loss on extinguishment of debt

6,487 0.2 % — — %

Other income, net (25,719) (0.6) % (53,433) (1.2) %

Income before taxes 79,037 1.5 % 204,362 4.3 %

Income from continuing operations before taxes 88,574 2.1 % 30,264 0.7 %

Income tax expense 63,339 1.5 % 18,041 0.4 %

Income from continuing operations, net of tax 25,235 0.6 % 12,223 0.3 %

Gain on sale of discontinued operations, net of tax 15,699 0.4 % — — %

Income from discontinued operations, net of tax 21,511 0.5 % 33,504 0.7 %

Net income $ 62,445 1.5 % $ 45,727 1.0 %

Consolidated Results

Net Revenues – Net revenues increased $357.5 million, or 7.5%, to $5,129.2 million in the year ended December 31, 2022 from $4,771.7 million in the year ended December 31, 2021.

The increase was driven by core revenue growth of 12%, partially offset by a 5% adverse foreign exchange impact.

Core revenues increased due to a 13% benefit from price realization mostly related to significant cost inflation, partially offset by reductions in volume/mix of 1%.

Gross Margin – Gross margin decreased $29.8 million, or 3.1%, to $945.4 million in the year ended December 31, 2022 from $975.3 million in the year ended December 31, 2021.

Net Revenues – Net revenues decreased $239.5 million, or 5.3%, to $4,304.3 million in the year ended December 31, 2023 from $4,543.8 million in the year ended December 31, 2022.

The decrease was driven by a decrease in Core Revenues of 5% and a nominal impact from foreign exchange.

Core Revenues decreased 5% due to a 10% decrease in volume/mix, partially offset by a 5% benefit from price realization.

Gross Margin – Gross margin increased $46.7 million, or 5.9%, to $832.6 million in the year ended December 31, 2023 from $785.9 million in the year ended December 31, 2022.

Gross margin as a percentage of net revenues was 19.3% in the year ended December 31, 2023 and 17.3% in the year ended December 31, 2022.

The decrease in gross margin percentage was due primarily to the timing differences between increased input costs and our pricing actions in our end markets.

The increase in gross margin percentage was due primarily to favorable price/cost, partially offset by accelerated depreciation in North America from reviews of equipment capacity optimization.

SG&A Expense – SG&A expense increased $1.2 million, or 0.2%, to $655.3 million in the year ended December 31, 2023 from $654.1 million in the year ended December 31, 2022.

SG&A expense as a percentage of net revenues increased to 15.2% in the year ended December 31, 2023 from 14.4% in the year ended December 31, 2022.

The increase in SG&A expense and SG&A as a percentage of net revenues was primarily due to increased variable compensation expenses, self-insurance costs, and sales and marketing expenses, partially offset by decreased legal and professional fees.

Goodwill Impairment – Goodwill impairment charges of $54.9 million in the year ended December 31, 2022 relate to goodwill impairment charges associated with our Europe reporting unit.

For more information, refer to Note 5 - Goodwill in our consolidated financial statements included in this 10-K.

Restructuring and Asset Related Charges, Net – Restructuring and asset related charges, net, increased $15.3 million, or 518.1%, to $18.2 million in the year ended December 31, 2022 from $3.0 million in the year ended December 31, 2021.

The increase in restructuring charges is primarily due to strategic transformation initiatives, cost savings, and footprint rationalization activities in our North America and Europe segments as well as changes to the management structure to align with our operations.

Interest Expense, Net – Interest expense, net, increased $4.5 million, or 5.8%, to $82.1 million in the year ended December 31, 2022 from $77.6 million in the year ended December 31, 2021.

The increase was primarily due to an increase to the cost of borrowing on our Term Loan Facility and increased borrowings on the ABL Facility in the current period, partially offset by interest income from interest rate derivatives in the current period, higher interest income earned on cash balances, and the repayment of the term loan portion of the Australia Facility during the second quarter of 2021.

Other Income, Net – Other income, net increased $40.4 million, or 278.4%, to $54.9 million in the year ended December 31, 2022 from $14.5 million in the year ended December 31, 2021.

Other income in the year ended December 31, 2022 primarily consisted of the recovery of cost from interest received on impaired notes of $14.0 million, legal settlement income of $10.5 million, a net gain on sale or disposal of property and equipment of $8.1 million, reimbursements from governmental assistance and insurance of $8.0 million, pension income of $4.5 million, foreign currency gains of $2.3 million, and a credit for overpayments of utility expenses of $2.0 million.

Other income, net in the year ended December 31, 2021 primarily consisted of foreign currency gains of $9.9 million and reimbursements from governmental pandemic assistance relating to COVID-19 and insurance of $3.2 million, partially offset by a loss on sale or disposal of property and equipment of $2.0 million and a loss on extinguishment of debt of $1.3 million.

Income Taxes – Income tax expense decreased $2.2 million, or 6.3%, to $33.3 million in the year ended December 31, 2022 from $35.5 million in the year ended December 31, 2021.

The increase in SG&A expense was primarily due to increased performance-based variable compensation expenses and accelerated amortization of an ERP system that we intend to not utilize upon completion of the JW Australia Transition Services Agreement period, partially offset by decreased labor expenses driven by a reduction in headcount and lower bad debt expense in our North America segment due to improved collections.

Goodwill Impairment – Goodwill impairment charges of $54.9 million in the year ended December 31, 2022 relate to goodwill impairment charges in our Europe reporting unit.

For further information, refer to Note 6 - Goodwill of our consolidated financial statements included in this Form 10-K.

Restructuring and Asset Related Charges – Restructuring and asset related charges of $35.7 million in the year ended December 31, 2023 increased 102.8% from $17.6 million in the year ended December 31, 2022.

The increase in restructuring charges was primarily due to an increase in charges incurred to close certain manufacturing facilities in our North America segment.

For more information, refer to Note 19 - Restructuring and Asset Related Charges of our consolidated financial statements included in this Form 10-K.

Interest Expense, Net – Interest expense, net, decreased $10.2 million, or 12.4%, to $72.3 million in the year ended December 31, 2023 from $82.5 million in the year ended December 31, 2022.

The decrease was primarily due to higher interest income from interest rate derivatives, the redemption of our Senior Secured Notes and partial redemption of our Senior Notes, and decreased borrowings on our Revolving Credit Facilities during the year ended December 31, 2023, partially offset by an increase to the cost of borrowing on our variable rate Term Loan Facility.

Loss on Extinguishment of Debt – The $6.5 million loss on extinguishment of debt is related to the redemption of our Senior Secured Notes and partial redemption of our Senior Notes during the year ended December 31, 2023.

Refer to Note 12 - Long-Term Debt of our consolidated financial statements included in this Form 10-K.

Other Income, Net – Other income, net decreased $27.7 million, or 51.9%, to $25.7 million in the year ended December 31, 2023 from $53.4 million in the year ended December 31, 2022.

Other income, net in the year ended December 31, 2023 primarily consisted of recovery of the JW Australia transition services costs incurred of $8.3 million, income from the refund of deposits from antidumping duties of $7.0 million, an ERC from the U.S.

government of $6.1 million, recovery of cost from interest received on impaired notes of $3.5 million, and income from short-term investments and forward contracts related to the JW Australia divestiture of $3.1 million, partially offset by pension expense of $6.5 million and a $4.3 million settlement loss associated with our U.S.

defined benefit pension plan.

Other income, net in the year ended December 31, 2022 primarily consisted of the recovery of cost from interest received on impaired notes of $14.0 million, legal settlement income of $10.5 million, reimbursements from governmental assistance and insurance of $8.0 million, pension income of $4.9 million, credit for overpayments of utility expenses of $2.0 million, and foreign currency gains of $1.0 million.

Income Taxes – Income tax expense was $63.3 million and $18.0 million in the years ended December 31, 2023 and December 31, 2022, respectively.

The effective tax rate in the year ended December 31, 2023 was 71.5% compared to 59.6% in the year ended December 31, 2022.

The increase in the effective tax rate in the year ended December 31, 2022 was primarily due to the goodwill impairment charge of $54.9 million.

The decrease in tax expense of $2.2 million in the current period was primarily due to a decrease in income before taxes, partially offset by the mix of income earned between jurisdictions in which the Company does business.

For more information, refer to Note 13 - Income Taxes in our consolidated financial statements included in this 10-K.

The effective tax rate increased primarily due to the impacts of the $32.7 million net valuation allowance recorded in the year ended December 31, 2023, partially offset by the $54.9 million non-deductible goodwill impairment charge recorded for the year ended December 31, 2022 not recorded in the year ended December 31, 2023.

For more information, refer to Note 15 - Income Taxes of our consolidated financial statements included in this Form 10-K.

Gain on Sale of Discontinued Operations, net of tax – The $15.7 million gain on sale of discontinued operations, net of tax is related to the July 2, 2023 sale of JW Australia.

Refer to Note 2 - Discontinued Operations of our consolidated financial statements included in this Form 10-K.

Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

6 unchanged sentences

Selling, general and administrative 654,077 14.4 % 604,514 14.5 %

Restructuring and asset related charges, net 2,950 0.1 % 10,469 0.2 %

Goodwill impairment 54,885 1.2 % — — %

Restructuring and asset related charges 17,622 0.4 % 2,556 0.1 %

Operating income 59,336 1.3 % 215,847 5.2 %

1 unchanged sentence

Other income, net (53,433) (1.2) % (13,241) (0.3) %

Loss on extinguishment of debt — — % 1,342 — %

Income before taxes 30,264 0.7 % 150,958 3.6 %

Income tax expense 18,041 0.4 % 19,636 0.5 %

Income from continuing operations, net of tax

12,223 0.3 % 131,322 3.1 %

Income from discontinued operations, net of tax 33,504 0.7 % 37,500 0.9 %

Net income $ 45,727 1.0 % $ 168,822 4.0 %

1 unchanged sentence

Net Revenues – Net revenues increased $362.1 million, or 8.7%, to $4,543.8 million in the year ended December 31, 2022 from $4,181.7 million in the year ended December 31, 2021.

The increase was due to an improvement in core revenues of 10% and a positive impact from foreign exchange of 3%.

Core revenues increased due to a 7% benefit from price realization and favorable volume/mix of 3%.

Gross Margin – Gross margin increased $73.4 million, or 8.1%, to $975.3 million in the year ended December 31, 2021 from $901.9 million in the year ended December 31, 2020.

The increase was due to an improvement in Core Revenues of 12%, partially offset by a 4% adverse impact from foreign exchange.

Core Revenues increased due to a 13% benefit from price realization and unfavorable volume/mix of 1%.

Gross Margin – Gross margin decreased $37.0 million, or 4.5%, to $785.9 million in the year ended December 31, 2022 from $822.9 million in the year ended December 31, 2021.

Gross margin as a percentage of net revenues was 17.3% in the year ended December 31, 2022 and 19.7% in the year ended December 31, 2021.

The decrease in gross margin percentage was primarily due to the impact of inflation on material costs, freight, and labor compensation in the current period, partially offset by improved pricing, positive manufacturing variances, and favorable volume/mix.

The decrease in gross margin percentage was due primarily to the timing differences between increased input costs and our pricing actions in our end markets.

SG&A Expense – SG&A expense increased $49.6 million, or 8.2%, to $654.1 million in the year ended December 31, 2022 from $604.5 million in the year ended December 31, 2021.

The increase in SG&A expense was primarily due to the non-recurrence of certain savings from cost reduction measures implemented in 2020 in response to COVID-19, primarily related to salary and benefits, and the impact of inflation on compensation in the current period, partially offset by reduced variable compensation and litigation related expenses.

Restructuring and Asset Related Charges, Net – Restructuring and asset related charges, net decreased $7.5 million, or 71.8%, to $3.0 million in the year ended December 31, 2021 from $10.5 million in the year ended December 31, 2020.

Charges incurred in 2021 primarily relate to ongoing restructuring projects within our Europe segment and asset related charges in North America.

Charges incurred in 2020 primarily related to severance charges for ongoing restructuring projects across all segments as well as asset related charges primarily related to accelerated amortization of capitalized costs of certain ERP modules due to delays in implementation and uncertainty of their future use.

For more information, refer to Note 19 - Impairment and Asset Related Charges, Net to our consolidated financial statements included in this 10-K.

SG&A expense as a percentage of net revenues decreased to 14.4% in the year ended December 31, 2022 from 14.5% in the year ended December 31, 2021.

The increase in SG&A expense was primarily due to increased variable compensation expenses, self-insurance costs, and sales and marketing expenses, partially offset by decreased legal and professional fees.

Goodwill Impairment – Goodwill impairment charges of $54.9 million in the year ended December 31, 2022 relate to goodwill impairment charges for our Europe reporting unit.

For further information, refer to Note 5 - Goodwill of our consolidated financial statements included in this Form 10-K.

Restructuring and Asset Related Charges – Restructuring and asset related charges increased $15.1 million, or 589.4%, to $17.6 million in the year ended December 31, 2022 from $2.6 million in the year ended December 31, 2021.

For more information, refer to Note 19 - Impairment and Asset Related Charges of our consolidated financial statements included in this Form 10-K.

Interest Expense, Net – Interest expense, net, increased $5.7 million, or 7.4%, to $82.5 million in the year ended December 31, 2022 from $76.8 million in the year ended December 31, 2021.

The increase was primarily due to interest on our Senior Secured Notes issued in May 2020, partially offset by lower interest rates throughout 2021.

The increase was primarily due to an increase to the cost of borrowing on our Term Loan Facility and increased borrowings on the ABL Facility, partially offset by interest income from interest rate derivatives in the in the year ended December 31, 2022 and higher interest income earned on cash balances.

Other Income, Net – Other income, net increased $40.2 million, or 303.5%, to $53.4 million in the year ended December 31, 2022 from $13.2 million in the year ended December 31, 2021.

Other income, net in the year ended December 31, 2020 primarily consisted of foreign currency losses of $11.9 million and pension expense of $1.6 million, offset by reimbursements from governmental pandemic assistance relating to COVID-19 of $7.4 million, a gain on sale of property and equipment of $4.1 million, and insurance reimbursements of $1.4 million.

Income Taxes – Income tax expense increased $10.5 million, or 41.7%, to $35.5 million in the year ended December 31, 2021 from $25.1 million in the year ended December 31, 2020.

Other income, net in the year ended December 31, 2022 primarily

consisted of the recovery of cost from interest received on impaired notes of $14.0 million, legal settlement income of $10.5 million, reimbursements from governmental assistance and insurance of $8.0 million, pension income of $4.9 million, a credit for overpayments of utility expenses of $2.0 million, and foreign currency gains of $1.0 million.

Other income, net in the year ended December 31, 2021 primarily consisted of foreign currency gains of $7.1 million and reimbursements from governmental pandemic assistance relating to COVID-19 and insurance of $3.2 million.

Loss on Extinguishment of Debt – The $1.3 million loss on extinguishment of debt is related to an amendment of our Term Loan Facility during the year ended December 31, 2021.

Refer to Note 12 - Long-Term Debt of our consolidated financial statements included in this Form 10-K.

Income Taxes – Tax expense was $18.0 million and $19.6 million in the years ended December 31, 2022 and December 31, 2021, respectively.

The effective tax rate in the year ended December 31, 2022 was 59.6% compared to 13.0% in the year ended December 31, 2021.

The increase in income tax expense in the year ended December 31, 2021 was primarily due to an increase in income before taxes of $87.7 million, partially offset by a tax benefit from tax credits and GILTI HTE as well as a partial release of U.S.

state valuation allowances.

For more information, refer to Note 13 - Income Taxes to our consolidated financial statements included in this 10-K.

The increase in the effective tax rate in the year ended December 31, 2022 was primarily due to the non-deductible goodwill impairment charge of $54.9 million.

For more information, refer to Note 15 - Income Taxes of our consolidated financial statements included in this Form 10-K.

Segment Results

We report our segment information in the same way management internally organizes the business in assessing performance and making decisions regarding allocation of resources in accordance with ASC 280-10 - Segment Reporting .

We have three reportable segments, organized and managed principally by geographic region.

Our reportable segments are North America, Europe, and Australasia.

We report all other business activities in Corporate and unallocated costs.

We define Adjusted EBITDA as net income (loss), adjusted for the following items:

(income) loss from discontinued operations, net of tax;

income tax (benefit) expense;

We define Adjusted EBITDA from continuing operations as income (loss) from continuing operations, net of tax, adjusted for the following items:

income tax expense (benefit);

depreciation and amortization;

interest expense, net ;

restructuring and asset related charges, net;

and certain special items consisting of non-recurring net legal and professional expenses and settlements;

goodwill impairment;

restructuring and asset related charges;

other facility closure, consolidation, and related costs and adjustments;

M&A related costs;

net (gain) loss on sale of property and equipment;

loss on extinguishment of debt;

share-based compensation expense;

pension settlement charges;

non-cash foreign exchange transaction/translation (income) loss;

and other items.

Reconciliations of net income to Adjusted EBITDA for our segments’ operations are as follows:

and other special items.

This non-GAAP financial measure should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

We have two reportable segments in our continuing operations, organized and managed principally by geographic region:

North America and Europe.

We report all other business activities in Corporate and unallocated costs.

Reconciliations of net income to Adjusted EBITDA from continuing operations for our segments’ operations are as follows:

Year Ended December 31, 2023

(amounts in thousands) North America Europe Australasia Total Operating Segments Corporate and Unallocated Costs Total Consolidated

Net income (loss) $ 260,590 $ (50,796) $ 25,355 $ 235,149 $ (189,422) $ 45,727

Income tax expense (1)

(amounts in thousands) North America Europe Total Operating Segments Corporate and Unallocated Costs Total Consolidated

Income (loss) from continuing operations, net of tax $ 175,980 $ (3,335) $ 172,645 $ (147,410) $ 25,235

Income tax expense (benefit) (1)

79,210 44,095 123,305 (59,966) 63,339

Depreciation and amortization (2)

79,900 30,185 110,085 24,911 134,996

Interest expense, net 4,713 3,224 7,937 64,321 72,258

Goodwill impairment — 54,885 — 54,885 — 54,885

Restructuring and asset related charges, net 7,338 6,042 611 13,991 4,242 18,233

Net (gain) loss on sale of property and equipment (8,397) 354 (22) (8,065) 8 (8,057)

Special items:

Net legal and professional expenses and settlements 946 3,726 4,672 23,512 28,184

Restructuring and asset-related charges 29,207 5,738 34,945 796 35,741

Other facility closure, consolidation, and related costs and adjustments (5) 2,242 2,237 — 2,237

M&A related costs 759 — 759 5,816 6,575

Net loss (gain) on sale of property and equipment 1,223 (5,101) (3,878) (6,645) (10,523)

Loss on extinguishment of debt — — — 6,487 6,487

Share-based compensation expense 5,121 1,890 7,011 10,466 17,477

Non-cash foreign exchange transaction/translation loss 148 876 1,024 2,048 12,500 14,548

Other items (2)

7,935 19,596 2,899 30,430 3,098 33,528

Adjusted EBITDA $ 352,885 $ 74,325 $ 65,574 $ 492,784 $ (70,628) $ 422,156

(1) Income tax expense in Corporate and unallocated costs includes the tax impact of US Operations.

(2) Other non-recurring items not core to ongoing business activity for the year ended December 31, 2022 is primarily driven by $16,304 of facility closure, consolidation, and other related costs and adjustments in our European segment;

as well as Corporate and unallocated costs of $8,784 in net legal and professional expenses and settlements, primarily relating to litigation, M&A evaluations, and strategic transformation initiatives, including $(10,500) of income resulting from a legal settlement, and $2,929 relating primarily to exit costs for executives.

Pension settlement charge 4,349 — 4,349 — 4,349

Non-cash foreign exchange transaction/translation (income) loss (261) 1,628 1,367 (772) 595

Other special items 1,047 (2,837) (1,790) (4,721) (6,511)

Adjusted EBITDA from continuing operations $ 382,189 $ 81,455 $ 463,644 $ (83,205) $ 380,439

(1) Income tax expense in our Europe segment includes an increase in valuation allowance against net operating loss carryforwards of $30.0 million.

Refer to Note 15 - Income Tax es of our consolidated financial statements for further information.

(2) North America depreciation and amortization expense includes accelerated depreciation of $9.1 million from reviews of equipment capacity optimization.

Corporate and unallocated depreciation and amortization expense includes software accelerated amortization of $14.1 million for an ERP system that we intend to not utilize upon completion of the JW Australia Transition Services Agreement period.

(3) For the definitions of the Special items listed above, refer to Note 14 - Segment Information of our consolidated financial statements included in this Form 10-K.

Year Ended December 31, 2022

(amounts in thousands) North America Europe Australasia Total Operating Segments Corporate and Unallocated Costs Total Consolidated

Net income (loss) $ 255,975 $ 66,596 $ 32,163 $ 354,734 $ (185,912) $ 168,822

Income tax expense (benefit) (1)

(amounts in thousands) North America Europe Total Operating Segments Corporate and Unallocated Costs Total Consolidated

Income (loss) from continuing operations, net of tax $ 260,590 $ (50,796) $ 209,794 $ (197,571) $ 12,223

Income tax expense (1)

6,963 3,307 10,270 7,771 18,041

1 unchanged sentence

Interest expense, net 4,011 6,193 10,204 72,301 82,505

Restructuring and asset related charges, net 1,200 1,453 394 3,047 (97) 2,950

Net loss (gain) on sale of property and equipment 1,589 584 (37) 2,136 (87) 2,049

Special items:

Net legal and professional expenses and settlements 12 1,674 1,686 (1,973) (287)

Goodwill impairment — 54,885 54,885 — 54,885

Restructuring and asset-related charges 7,338 6,042 13,380 4,242 17,622

Other facility closure, consolidation, and related costs and adjustments 2,587 16,304 18,891 — 18,891

M&A related costs 736 — 736 9,016 9,752

Net (gain) loss on sale of property and equipment (8,397) 354 (8,043) 7 (8,036)

Share-based compensation expense 4,870 2,729 7,599 6,978 14,577

Non-cash foreign exchange transaction/translation (income) (51) (10,108) (585) (10,744) (3,025) (13,769)

Other items (2)

4,817 7,554 329 12,700 21,765 34,465

Adjusted EBITDA $ 352,881 $ 127,292 $ 71,448 $ 551,621 $ (86,542) $ 465,079

(1) Income tax expense (benefit) in Corporate and unallocated costs includes the tax impact of US Operations.

(2) Other non-recurring items not core to ongoing business activity for the year ended December 31, 2021 is primarily driven by Corporate and unallocated costs of $17,752 in legal and professional expenses relating primarily to litigation.

Non-cash foreign exchange transaction/translation loss 148 876 1,024 11,413 12,437

Other special items 4,600 1,618 6,218 (3,113) 3,105

Adjusted EBITDA from continuing operations $ 352,885 $ 74,325 $ 427,210 $ (78,363) $ 348,847

(1) Income tax expense in Corporate and unallocated costs includes the tax impact of U.S.

(2) For the definitions of the Special items listed above, refer to Note 14 - Segment Information of our financial statements included in this Form 10-K.

Year Ended December 31, 2021

(amounts in thousands) North America Europe Australasia Total Operating Segments Corporate and Unallocated Costs Total Consolidated

Net income (loss) $ 217,407 $ 66,403 $ 21,954 $ 305,764 $ (214,178) $ 91,586

(amounts in thousands) North America Europe Total Operating Segments Corporate and Unallocated Costs Total Consolidated

Income (loss) from continuing operations, net of tax $ 255,975 $ 66,596 $ 322,571 $ (191,249) $ 131,322

Income tax expense (benefit) (1)

2 unchanged sentences

Interest expense, net 6,080 9,282 15,362 61,426 76,788

Special items:

Net legal and professional expenses and settlements 1,450 563 2,013 13,585 15,598

Restructuring and asset-related charges, net 1,200 1,453 2,653 (97) 2,556

Net (gain) loss on sale of property and equipment (4,102) (164) 45 (4,221) 68 (4,153)

Other facility closure, consolidation, and related costs and adjustments — 2,326 2,326 — 2,326

M&A related costs 664 375 1,039 4,167 5,206

Net loss (gain) on sale of property and equipment 1,589 584 2,173 (87) 2,086

Loss on extinguishment of debt — 1,342 1,342

Share-based compensation expense 5,472 2,096 7,568 12,420 19,988

Non-cash foreign exchange transaction/translation (income) loss (39) 9,499 1,245 10,705 2,199 12,904

Other items (2)

7,664 2,762 631 11,057 73,640 84,697

Adjusted EBITDA $ 315,952 $ 136,363 $ 62,449 $ 514,764 $ (68,350) $ 446,414

(1) Income tax expense in Corporate and unallocated costs includes the tax impact of US Operations.

(2) Other non-recurring items not core to ongoing business activity for the year ended December 31, 2020 is primarily driven by Corporate and allocated costs of $66,565 in legal and professional expenses relating primarily to litigation and $6,700 in environmental matters.

Non-cash foreign exchange transaction/translation gain (51) (10,108) (10,159) (262) (10,421)

Other special items 2,703 4,290 6,993 2,999 9,992

Adjusted EBITDA from continuing operations $ 352,881 $ 127,292 $ 480,173 $ (87,399) $ 392,774

(1) Income tax benefit in Corporate and unallocated costs includes the tax impact of U.S.

(2) For the definitions of the Special items listed above, refer to Note 14 - Segment Information of our financial statements included in this Form 10-K.

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

3 unchanged sentences

Europe 1,181,278 1,284,455 (8.0) %

Australasia 585,371 590,029 (0.8) %

Total Consolidated $ 4,304,334 $ 4,543,808 (5.3) %

2 unchanged sentences

Europe 27.4 % 28.3 %

Australasia 11.5 % 12.4 %

Total Consolidated 100.0 % 100.0 %

Adjusted EBITDA

Adjusted EBITDA from continuing operations (1)

North America $ 382,189 $ 352,885 8.3 %

Europe 81,455 74,325 9.6 %

Australasia 65,574 71,448 (8.2) %

Corporate and unallocated costs (83,205) (78,363) 6.2 %

Total Consolidated $ 380,439 $ 348,847 9.1 %

Adjusted EBITDA as a percentage of segment net revenues

Adjusted EBITDA from continuing operations as a percentage of segment net revenues

North America 12.2 % 10.8 %

Europe 6.9 % 5.8 %

Australasia 11.2 % 12.1 %

Total Consolidated 8.8 % 7.7 %

(1) Adjusted EBITDA from continuing operations is a financial measure that is not calculated in accordance with GAAP.

For a discussion of our presentation of Adjusted EBITDA from continuing operations, see Note 14 - Segment Information of our financial statements included in this Form 10-K.

North America

Net revenues in North America increased $430.1 million, or 15.2%, to $3,259.4 million in the year ended December 31, 2022 from $2,829.2 million in the year ended December 31, 2021.

The increase was due to an increase in core revenues of 15%.

Core revenues increased due to a 14% benefit from price realization mostly related to significant cost inflation, and positive volume/mix of 1%.

Adjusted EBITDA in North America remained relatively consistent at $352.9 million in the year ended December 31, 2022 and December 31, 2021, respectively.

While Adjusted EBITDA increased slightly primarily driven by improved volume/mix and productivity, the increase was offset by higher SG&A expenses.

Net revenues in North America decreased $136.3 million, or 4.2%, to $3,123.1 million in the year ended December 31, 2023 from $3,259.4 million in the year ended December 31, 2022.

The decrease was primarily due to a decrease in Core Revenues of 4.0%.

Core Revenues decreased due to an 8% unfavorable volume/mix driven by weakened market demand, partially offset by a 4% benefit from price realization.

Adjusted EBITDA from continuing operations in North America increased $29.3 million to $382.2 million, or 8.3%, in the year ended December 31, 2023 from $352.9 million in the year ended December 31, 2022.

The increase was primarily due to favorable price/cost and positive productivity, partially offset by unfavorable volume/mix and higher SG&A.

The increase in SG&A was primarily driven by increased performance-based variable compensation and the impact of inflation on labor expenses, partially offset by a reduction in bad debt expense due to improved collections.

Additionally, a decrease in other income, net, was primarily driven by net pension expense in the current period compared to gains in the same period last year, partially offset by income recognized for a refund of deposits for antidumping duties and an ERC during the year ended December 31, 2023.

Net revenues in Europe decreased $103.2 million, or 8.0%, to $1,181.3 million in the year ended December 31, 2023 from $1,284.5 million in the year ended December 31, 2022.

The decrease was primarily due to a 12% adverse impact from foreign exchange, partially offset by an increase in core revenue of 7%.

Core revenues increased due to an 11% benefit from price realization mostly related to significant cost inflation, partially offset by lower volume/mix of 4%.

Adjusted EBITDA in Europe decreased $53.0 million, or 41.6%, to $74.3 million in the year ended December 31, 2022 from $127.3 million in the year ended December 31, 2021.

The decrease was primarily due to lower volume/mix, higher SG&A expenses, and negative price/cost, partially offset by improved productivity.

Net revenues in Australasia decreased $4.7 million, or 0.8%, to $585.4 million in the year ended December 31, 2022 from $590.0 million in the year ended December 31, 2021.

The decrease was primarily due to a negative impact from foreign exchange of 8%, partially offset by an increase in core revenues of 7%.

Core revenues increased due to an 8% benefit from price realization mostly related to significant cost inflation, partially offset by reduced volume/mix of 1%.

Adjusted EBITDA in Australasia decreased $5.9 million, or 8.2%, to $65.6 million in the year ended December 31, 2022 from $71.4 million in the year ended December 31, 2021.

The decrease was primarily due to higher SG&A expenses and unfavorable volume/mix, partially offset by favorable price/cost.

The decrease was primarily due to a decrease in Core Revenues of 9%.

Core Revenues decreased due to unfavorable volume/mix of 15% primarily due to market softness across the region, partially offset by a 7% benefit from price realization.

Adjusted EBITDA from continuing operations in Europe increased $7.1 million, or 9.6%, to $81.5 million in the year ended December 31, 2023 from $74.3 million in the year ended December 31, 2022.

The increase was primarily due to favorable productivity and positive price/cost, partially offset by unfavorable volume/mix.

Corporate and unallocated costs

Corporate and unallocated costs decreased in the year ended December 31, 2022 by $15.9 million, or 18.4%, compared to the year ended December 31, 2021 primarily due to the recovery of cost from interest received on impaired notes, a gain on foreign exchange transactions, reduced legal and professional fees, and insurance recoveries, partially offset by increased variable compensation and self-insurance costs in the current period.

Corporate and unallocated costs increased by $4.8 million, or 6.2%, to $83.2 million in the year ended December 31, 2023, from $78.4 million in the year ended December 31, 2022.

The increase in cost is primarily due to losses on foreign exchange transactions in the current period compared to gains in the same period last year, and a reduction in the recovery of cost from interest received on impaired notes, partially offset by lower labor costs due to reduced headcount.

Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

3 unchanged sentences

Europe 1,284,455 1,352,450 (5.0) %

Australasia 590,029 518,907 13.7 %

Total Consolidated $ 4,543,808 $ 4,181,690 8.7 %

2 unchanged sentences

Europe 28.3 % 32.3 %

Australasia 12.4 % 12.3 %

Total Consolidated 100.0 % 100.0 %

Adjusted EBITDA (1)

Adjusted EBITDA from continuing operations (1)

North America $ 352,885 $ 352,881 — %

Europe 74,325 127,292 (41.6) %

Australasia 71,448 62,449 14.4 %

Corporate and Unallocated costs (78,363) (87,399) (10.3) %

Total Consolidated $ 348,847 $ 392,774 (11.2) %

Adjusted EBITDA as a percentage of segment net revenues

Adjusted EBITDA from continuing operations as a percentage of segment net revenues

North America 10.8 % 12.5 %

Europe 5.8 % 9.4 %

Australasia 12.1 % 12.0 %

Total Consolidated 7.7 % 9.4 %

(1) Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP.

For a discussion of our presentation of Adjusted EBITDA, see Note 14 - Segment Information in our consolidated financial statements.

(1) Adjusted EBITDA from continuing operations is a financial measure that is not calculated in accordance with GAAP.

For a discussion of our presentation of Adjusted EBITDA from continuing operations, see Note 14 - Segment Information to our financial statements included in this Form 10-K.

North America

1 unchanged sentence

The increase was primarily due to an increase in Core Revenues of 15%.

Core revenues increased due to a 10% benefit from price realization and favorable volume/mix of 2%.

Adjusted EBITDA in North America increased $36.9 million, or 11.7%, to $352.9 million in the year ended December 31, 2021 from $316.0 million in the year ended December 31, 2020.

The increase was due to favorable pricing, volume growth, and positive manufacturing variances, partially offset by the impact of inflation on material costs, freight, and labor compensation.

Net revenues in Europe increased $164.7 million, or 13.9%, to $1,352.5 million in the year ended December 31, 2021 from $1,187.8 million in the year ended December 31, 2020.

The increase was primarily due to an increase in core revenue of 9% and a positive impact from foreign exchange of 5%.

Core revenues increased due to a 5% benefit from price realization and favorable volume/mix of 4%.

Core Revenues increased due to a 14% benefit from price realization mostly related to significant cost inflation, and positive volume/mix of 1%.

Adjusted EBITDA in North America remained relatively consistent at $352.9 million in the year ended December 31, 2022 from $352.9 million in the year ended December 31, 2021.

While Adjusted EBITDA increased slightly primarily driven by improved volume/mix and productivity, the increase was offset by higher SG&A expenses.

Net revenues in Europe decreased $68.0 million, or 5.0%, to $1,284.5 million in the year ended December 31, 2022 from $1,352.5 million in the year ended December 31, 2021.

The decrease was primarily due to a 12% adverse impact from foreign exchange, partially offset by an increase in Core Revenues of 7%.

Core Revenues increased due to a 11% benefit from price realization mostly related to significant cost inflation, partially offset by lower volume/mix of 4%.

Adjusted EBITDA in Europe decreased $53.0 million, or 41.6%, to $74.3 million in the year ended December 31, 2022 from $127.3 million in the year ended December 31, 2021.

The decrease was primarily due to the impact of inflation on material costs, freight, and labor compensation in the current period, partially offset by favorable pricing and positive manufacturing variances.

Net revenues in Australasia increased $71.1 million, or 13.7%, to $590.0 million in the year ended December 31, 2021 from $518.9 million in the year ended December 31, 2020.

The increase was primarily due to a positive impact from foreign exchange of 9% and an increase in core revenues of 5%.

Core revenues increased due to favorable volume/mix of 3% and 2% benefit from price realization.

Adjusted EBITDA in Australasia increased $9.0 million, or 14.4%, to $71.4 million in the year ended December 31, 2021 from $62.4 million in the year ended December 31, 2020.

The increase was primarily due to improved volume/mix and positive manufacturing variances, partially offset by the impact of inflation on material costs.

The decrease was primarily due to lower volume/mix, higher SG&A expenses, and negative price/cost, partially offset by improved productivity.

Corporate and unallocated costs

Corporate and unallocated costs increased in the year ended December 31, 2021 by $18.2 million, or 26.6%, compared to the year ended December 31, 2020 primarily due to the non-recurrence of certain savings from cost reduction measures implemented in 2020 in response to COVID-19, primarily related to salary and benefits, and the impact of inflation as well as increased health benefit costs and software related expenditures, partially offset by reduced variable compensation expenses.

Corporate and unallocated costs decreased in the year ended December 31, 2022 by $9.0 million, or 10.3%, compared to the year ended December 31, 2021 primarily due to the recovery of cost from interest received on impaired notes, a gain on foreign exchange transactions, reduced legal and professional fees, and insurance recoveries, partially offset by increased variable compensation and self-insurance costs in the current periods.

Liquidity and Capital Resources

We have historically funded our operations through a combination of cash from operations, draws on our revolving credit facilities, and the issuance of non-revolving debt such as our Term Loan Facility, Senior Notes, and Senior Secured Notes.

We place a strong emphasis on cash flow generation, which includes an operating discipline focused on working capital management.

Working capital fluctuates throughout the year and is impacted by inflation, the seasonality of our sales, customer payment patterns, supply availability, and the translation of the balance sheets of our foreign operations into the U.S.

Typically, working capital increases at the end of the first quarter and beginning of the second quarter in conjunction with, and in preparation for, the peak season for home construction and remodeling in our North America and Europe segments, which represent the substantial majority of our revenues, and decreases starting in the fourth quarter as inventory levels and accounts receivable decline.

Inventories fluctuate for raw materials with long delivery lead times, such as steel, as we work through prior shipments and take delivery of new orders.

As of December 31, 2022, we had total liquidity (a non-GAAP measure) of $645.5 million, consisting of $219.4 million in unrestricted cash, $410.7 million available for borrowing under the ABL Facility, and AUD 22.8 million ($15.4 million) available for borrowing under the Australia Senior Secured Credit Facility, compared to total liquidity of $837.8 million as of December 31, 2021.

The decrease in total liquidity was primarily due to both lower cash balances and lower availability on our ABL Facility at December 31, 2022 compared to December 31, 2021.

The main drivers to our lower cash balances are decreased earnings, higher working capital balances, and share repurchases, partially offset by the non-recurrence of legal settlements paid in 2021.

The reduced ABL Facility availability is driven by increased borrowings in the current period compared to the prior year end.

Typically, working capital increases at the end of the first quarter and beginning of the second quarter in conjunction with, and in preparation for, the peak season for home construction and remodeling in our North America and Europe segments, and decreases starting in the fourth quarter as inventory levels and accounts receivable decline.

Inventories fluctuate for raw materials that have long delivery lead times, as we work through prior shipments and take delivery of new orders.

As of December 31, 2023, we had total liquidity (a non-GAAP measure) of $750.6 million, consisting of $288.3 million in unrestricted cash, $462.3 million available for borrowing under the ABL Facility, compared to total liquidity of $575.2 million as of December 31, 2022 (on a continuing operations basis and excluding JW Australia).

The increase in total liquidity was primarily due to both higher cash balances and lower borrowings on our ABL Facility at December 31, 2023 compared to December 31, 2022.

As of December 31, 2023, our cash balances, including $0.8 million of restricted cash, consisted of $72.9 million in the U.S.

1 unchanged sentence

subsidiaries.

During the fiscal year ended December 31, 2022, the Company repatriated $132.8 million from non-U.S.

subsidiaries and repaid a portion of the outstanding ABL Facility.

Based on our current level of operations, the seasonality of our business and anticipated growth, we believe that cash provided by operations and other sources of liquidity, including cash, cash equivalents, and availability under our revolving credit facilities, will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments, and debt service requirements for at least the next twelve months.

The company repatriated $21.8 million and $132.8 million from non-U.S.

subsidiaries during the year ended December 31, 2023 and December 31, 2022, respectively.

The Company utilized cash repatriated from non-U.S.

subsidiaries to repay a portion of the outstanding ABL Facility during the year ended December 31, 2022.

Based on our current and forecasted level of operations and seasonality of our business, we believe that cash provided by operations and other sources of liquidity, including cash, cash equivalents, and availability under our revolving credit facilities, will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments, and debt service requirements for at least the next twelve months.

We may, from time to time, refinance, reprice, extend, retire, or otherwise modify our outstanding debt to lower our interest payments, reduce our debt, or otherwise improve our financial position.

1 unchanged sentence

The amount of debt that may be refinanced, repriced, extended, retired, or otherwise modified, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants, and other considerations.

Based on hypothetical variable rate debt that would have resulted from drawing each revolving credit facility up to the full commitment amount, a 1.0% decrease in interest rates would have reduced our interest expense by $7.2 million in the year ended December 31, 2022.

A 1.0% increase in interest rates would have increased our interest expense by $7.3 million in the same period.

The impact of a hypothetical decrease would have been partially mitigated by interest rate floors that apply to certain of our debt agreements.

We may, from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open market purchases, privately negotiated transactions or otherwise.

Such repurchases or exchanges, if any, will be on such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

The amounts involved may be material.

Based on hypothetical variable rate debt that would have resulted from drawing each revolving credit facility up to the full commitment amount, a 100 basis point decrease in interest rates would have reduced our interest expense by $10.8 million in the year ended December 31, 2023.

A 100 basis point increase in interest rates would have increased our interest expense by $10.8 million in the same period.

In certain instances, the impact of a hypothetical decrease would have been partially mitigated by interest rate floors that apply to certain of our debt agreements.

Contractual Obligations

1 unchanged sentence

• Long-term debt and interest obligations – As of December 31, 2023 our outstanding debt balance was $1,232.8 million.

See Note 11 - Long-Term Debt to our consolidated financial statements for additional details regarding the timing of

expected future principal payments.

See Note 12- Long-Term Debt of our consolidated financial statements for additional details regarding the timing of expected future principal payments.

Interest on long-term debt is calculated based on debt outstanding and interest rates in effect on December 31, 2023, taking into account scheduled maturities and amortization payments.

1 unchanged sentence

• Finance and operating lease obligations – As of December 31, 2023, our remaining contractual commitments for finance and operating leases was $192.7 million.

See Note 7 - Leases to our consolidated financial statements for additional details regarding the timing of expected future payments

See Note 8 - Leases of our consolidated financial statements for additional details regarding the timing of expected future payments.

• Purchase obligations – As of December 31, 2023, we have purchase obligations of $26.7 million due in 2024 and $28.1 million due in 2025 and thereafter.

These purchase obligations are primarily relating to software hosting services and in-bound freight.

These purchase obligations are primarily relating to software hosting services and equipment purchase agreements.

Purchase obligations are defined as purchase agreements that are enforceable and legally binding and that specify all significant terms, including quantity, price, and the approximate timing of the transaction.

Borrowings and Refinancings

In December 2021, we amended our Australia Senior Secured Credit Facility resulting in reduced borrowing fees and reinstated maintenance financial covenant ratios to pre-pandemic thresholds.

In July 2021, we refinanced our existing Term Loan Facility and ABL Facility by issuing replacement loans that aggregated to $550.0 million in principal amount under the Term Loan Facility and added $100.0 million in potential additional revolving loan capacity to our ABL Facility.

In the fourth quarter of 2020, we began to include the eligible accounts receivable and inventory balances of certain recently acquired U.S.

businesses in determining our borrowing base on our U.S.

ABL Facility, which increased our availability.

In May 2020, we issued $250.0 million of Senior Secured Notes, the proceeds of which were used to repay the outstanding balance under our ABL Facility, with the remainder to be used for general corporate purposes.

In addition, we amended our Australia Senior Credit Facility to add AUD 30.0 million of additional revolving loan capacity.

This supplemental facility matured on June 30, 2021 and was not renewed.

As of December 31, 2022, we were in compliance with the terms of all of our Credit Facilities and the indentures governing the Senior Notes and Senior Secured Notes.

In June 2023, we amended the Term Loan Facility to replace LIBOR with a Term SOFR based rate as the successor benchmark rate and made certain other technical amendments and related conforming changes.

All other material terms and conditions were unchanged.

On August 3, 2023, we redeemed all $250.0 million of our 6.25% Senior Secured Notes and $200.0 million of our 4.63% Senior Notes.

The Company recognized a pre-tax loss of $6.5 million on the redemption in year ended December 31, 2023, consisting of $3.9 million in call premium and $2.6 million in accelerated amortization of debt issuance costs.

In January 2024, we amended the Term Loan Facility to lower the applicable margin for replacement term loans, remove certain provisions no longer relevant to the parties, and make certain other technical amendments related to related conforming changes.

Pursuant to the amendment, replacement term loans bear interest at SOFR plus a margin of 1.75% to 2.00% depending on JWI’s corporate credit ratings, compared to a margin of 2.00% to 2.25% under the previous amendment.

All other material terms and conditions of the Term Loan Agreement were unchanged.

As of December 31, 2023, we were in compliance with the terms of all of our Credit Facilities and the indentures governing the Senior Notes.

Our results have been and will continue to be impacted by substantial changes in our net interest expense throughout the periods presented and into the future.

See Note 11 - Long-Term Debt to our consolidated financial statements for additional details.

See Note 12 - Long-Term Debt of our consolidated financial statements for additional details.

Cash Flows (1)

The following table summarizes the changes to our cash flows for the periods presented:

7 unchanged sentences

Net change in cash and cash equivalents $ 68,279 $ (176,022) $ (339,704)

(1) C ash flow information is inclusive of cash flows from JW Australia as discontinued operations through the divestiture date of July 2, 2023.

Cash Flow from Operations

Net cash provided by operating activities decreased $145.3 million to $30.3 million net cash used in the year ended December 31, 2022 compared to $175.7 million net cash provided in the year ended December 31, 2021.

The decrease in cash provided by operating activities was primarily due to increased working capital and decreased earnings in the current year, partially offset by non-recurrence of legal settlements paid in 2021.

Net cash provided by operating activities decreased $180.0 million to $175.7 million in the year ended December 31, 2021 compared to $355.7 million in the year ended December 31, 2020.

The decrease in cash provided by operating activities was due primarily to increased inventory costs, increased accounts receivable, cash paid for legal settlements, and increased cash taxes, partially offset by increased earnings.

Net cash provided by operating activities increased $314.9 million to a $345.2 million source of cash in the year ended December 31, 2023 compared to a $30.3 million source of cash in the year ended December 31, 2022.

The increase in cash provided by operating activities was primarily due to a $342.5 million improvement in net cash provided by our working capital accounts.

Cash flow provided by Inventory was $193.1 million favorable compared to the year ended December 31, 2022, primarily driven by demand planning that drove lower inventory days on hand, which mitigated inflation on raw materials.

Cash flow provided by Accounts receivable, net of $90.6 million was favorable in the year ended December 31, 2023 compared to the year ended December 31, 2022, which was primarily due to decreased sales, partially offset by slightly deteriorated days sales outstanding.

Cash flow provided by Accounts payable was $58.8 million favorable compared to the year ended December 31, 2022, which was primarily due to lower raw material inflation on purchases in the current year as compared to prior year, partially offset by demand planning that drove moderated purchasing.

Net cash provided by operating activities decreased $145.3 million to a $30.3 million source of cash in the year ended December 31, 2022 compared to a $175.7 million source of cash in the year ended December 31, 2021 .

The decrease in cash provided by operating activities was primarily due to increased working capital and decreased earnings in the year ended December 31, 2022, partially offset by non-recurrence of legal settlements paid in 2021.

Cash Flow from Investing Activities

Net cash used in investing activities decreased $25.3 million to $67.0 million in the year ended December 31, 2022 compared to $92.4 million in the year ended December 31, 2021 primarily due to cash received from the recovery of cost from interest received on impaired notes of $14.0 million, an increase in cash received from the sale of property and equipment, and a reduction in capital expenditures.

Net cash used in investing activities increased $10.4 million to $92.4 million in the year ended December 31, 2021 compared to $82.0 million in the year ended December 31, 2020 primarily due to a decrease in proceeds from the sale of property, plant and equipment.

Net cash provided by (used in) investing activities improved to a $279.2 million source of cash in the year ended December 31, 2023 compared to a $67.0 million use of cash in the year ended December 31, 2022, primarily driven by $365.6 million in net proceeds (payments) related to the sale of JW Australia, partially offset by an increase in capital expenditures of $18.7 million and a decrease in cash received from the recovery of cost from interest received on impaired notes of $10.4 million.

Net cash used in investing activities decreased $25.3 million to a $67.0 million use of cash in the year ended December 31, 2022 compared to a $92.4 million use of cash in the year ended December 31, 2021 primarily due to cash received from the recovery of cost from interest received on impaired notes of $14.0 million, an increase in cash received from the sale of property and equipment, and a reduction in capital expenditures.

Cash Flow from Financing Activities

Net cash used in financing activities was $120.0 million in the year ended December 31, 2022 and consisted primarily of repurchases of our Common Stock of $132.0 million, partially offset by net borrowings of $12.7 million.

Net cash used in financing activities was $401.2 million in the year ended December 31, 2021 and consisted primarily of repurchases of our Common Stock of $323.7 million and net debt repayments of $86.1 million.

Net cash provided by financing activities was $207.9 million in the year ended December 31, 2020 and consisted primarily of net borrowings of $210.9 million, partially offset by repurchases of our Common Stock of $5.0 million.

Net cash used in financing activities increased $443.1 million to $563.2 million in the year ended December 31, 2023 compared to $120.0 million in the year ended December 31, 2022, primarily due to net debt payments and payments of debt extinguishment costs of $561.3 million in the year ended December 31, 2023 compared to net debt borrowings of $12.7 million in the year ended December 31, 2022, partially offset by the non-recurrence of repurchases of our Common Stock of $132.0 million in the year ended December 31, 2022.

Net cash used in financing activities decreased $281.2 million to $120.0 million in the year ended December 31, 2022 compared to $401.2 million in the year ended December 31, 2021, primarily due to a decrease of $191.7 million in repurchases of our Common Stock and net debt borrowings of $12.7 million in the year ended December 31, 2022, compared to net debt payments and payments of debt extinguishment cost of $86.1 million in the year ended December 31, 2021.

Holding Company Status

1 unchanged sentence

The majority of our operating income is derived from JWI, our main operating subsidiary.

The ability of our subsidiaries to pay dividends to us is subject to applicable local law and may be limited due to the terms of other contractual arrangements, including our Credit Facilities, Senior Notes, and Senior Secured Notes.

The Australia Senior Secured Credit Facility also contains restrictions on dividends that limit the amount of cash that the obligors under these facilities can distribute to JWI.

Obligors under the Australia Senior Secured Credit Facility may pay dividends only to the extent they do not exceed 80% of after tax net profits (with a one-year carryforward of unused amounts) and only while no default is continuing under such agreement.

For further information regarding the Australia Senior Secured Credit Facility, see Note 11 - Long-Term Debt in our consolidated financial statements.

The amount of our consolidated net assets that were available to be distributed under our Credit Facilities as of December 31, 2023 was $889.6 million.

Critical Accounting Policies and Estimates

The following disclosure is provided to supplement the description of our accounting policies contained in Note 1 - Description of Company and Summary of Significant Accounting Policies in our consolidated financial statements.

Our MD&A is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.

5 unchanged sentences

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.

If the fair value of the acquired assets exceeds the purchase price the difference is recorded as a bargain purchase in other (income) expense, net.

If the fair value of the acquired assets exceeds the purchase price the difference is recorded as a bargain purchase in other income, net.

Such valuations require us to make significant estimates and assumptions, especially with respect to intangible assets.

As a result, during the measurement period, which may be up to one year from the acquisition date, material adjustments must be reflected in the comparative consolidated financial statements in the period in which the adjustment amount will be determined.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

10 unchanged sentences

Goodwill is tested for impairment on an annual basis during the fourth quarter and between annual tests if indicators of potential impairment exist.

Current accounting guidance provides an entity the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is impaired.

If we do not perform a qualitative assessment, or if we determine that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount, we perform a quantitative goodwill impairment test using the income approach (implied fair value measured on a non-recurring basis using level 3 inputs).

Under the income approach, the fair value of a reporting unit is based on discounted cash flow analysis of management's short-term and long-term forecast of operating performance.

Current accounting guidance provides an entity the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount.

If we do not perform a qualitative assessment, or if we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative goodwill impairment test.

Prior to 2023, the estimated fair values of reporting units were derived using only an income approach (implied fair value measured on a non-recurring basis using level 3 inputs).

Beginning in 2023, the estimated fair values of our reporting units were derived using a combination of income and market approaches, both of which yielded substantially equivalent indications of fair value.

Absent an indication of fair value from a potential buyer or similar specific transactions, we believe that the use of these methods provides a reasonable estimate of a reporting unit’s fair value.

Fair value computed by these models is arrived at using a number of factors and inputs.

There are inherent uncertainties, however, related to fair value models, the inputs, factors and our judgment in applying them to this analysis.

Nonetheless, we believe that the combination of these methods provides a reasonable approach to estimate the fair values of our reporting units.

Under the income approach, the fair value of a reporting unit is based on a discounted cash flow analysis of management's short-term and long-term forecast of operating performance.

This analysis contains significant assumptions and estimates including revenue growth rates, expected EBITDA margins, discount rates, capital expenditures, and terminal growth rates.

Changes in assumptions or estimates used in our goodwill impairment testing could materially affect the determination of the fair value of a reporting unit, and therefore, could eliminate the excess of fair value over carrying value of a reporting unit and, in some cases, could result in impairment.

We identified three reporting units for the purpose of conducting our goodwill impairment assessment:

Changes in assumptions or estimates used in our goodwill impairment testing could materially affect the determination of the fair value of a reporting unit, and therefore, could eliminate the excess of fair value over carrying amount of a reporting unit and, in some cases, could result in impairment.

Such changes in assumptions could be caused by items such as a loss of one or more significant customers, decline in the demand for our products due to changing economic conditions, or failure to control cost increases above what can be recouped in sale price increases.

These types of changes would negatively affect our profits, revenues, and growth over the long term and such a decline could significantly affect the fair value assessment of our reporting units and cause our goodwill to become impaired.

During the year ended 2022, we identified three reporting units for the purpose of conducting our goodwill impairment assessment:

North America, Europe and Australasia.

After the divestiture of our Australasia reporting unit in the third quarter of 2023, we identified two reporting units:

North America and Europe.

In determining our reporting units, we considered (i) whether an operating segment or a component of an operating segment was a business, (ii) whether discrete financial information was available, and (iii) whether the financial information is regularly reviewed by management of the operating segment.

D uring the quarter ended September 24, 2022, management identified various qualitative and quantitative factors which collectively indicated a triggering event had occurred within our North America and Europe reporting units.

These factors included the macroeconomic environment in each region including increasing interest rates, persistent inflation, and operational inefficiencies

attributable to ongoing global supply chain disruptions, the continuing geopolitical environment in Europe associated with the war in Ukraine, and foreign exchange fluctuations.

We performed our annual impairment assessment during the fourth quarter of 2023 using a quantitative analysis for our North America and Europe reporting units.

No indication of goodwill impairment was identified.

We determined that the fair value of our North America reporting unit would have to decline significantly to be considered for potential impairment.

We determined the fair value of our Europe reporting unit would have to decline by approximately 3% to be considered for potential impairment.

Keeping all other assumptions consistent, an increase in the discount rate of 1% would result in the carrying amount exceeding fair value by approximately 1% for our Europe reporting unit.

As further described below, we recorded an impairment of goodwill for our Europe reporting unit during the third quarter of 2022.

Following this partial impairment, the reporting unit’s carrying amount equaled the fair value.

We believe that our Europe reporting unit is at risk of impairment in the near term if the reporting unit’s operating performance does not improve in line with management’s expectations, or if there is a change in the long-term outlook for the business or in other factors, such as the discount rate.

The current goodwill impairment analysis for our Europe reporting unit incorporates mid-to-low market outlook growth assumptions and realization of certain improvement plans.

During the quarter ended September 24, 2022, management identified various qualitative and quantitative factors which collectively indicated a triggering event had occurred within our North America and Europe reporting units.

These factors included the macroeconomic environment in each region including increasing interest rates, persistent inflation, and operational inefficiencies attributable to ongoing global supply chain disruptions, the continuing geopolitical environment in Europe associated with the conflict between Russia in Ukraine, and foreign exchange fluctuations.

These factors have negatively impacted our business performance.

Based upon the results of our interim impairment analysis, we concluded that the carrying value of our Europe reporting unit exceeded its fair value, and we recorded a goodwill impairment charge of $54.9 million, representing a partial impairment of goodwill assigned to the Europe reporting unit.

Based upon the results of our interim impairment analysis, we concluded that the carrying amount of our Europe reporting unit exceeded its fair value, and we recorded a goodwill impairment charge of $54.9 million, representing a partial impairment of goodwill assigned to the Europe reporting unit.

In addition, we determined that our North America reporting unit was not impaired.

We performed our annual impairment assessment as of the beginning of our December fiscal month of 2022 using a quantitative analysis for our North American and Europe reporting units and a qualitative analysis for our Australasia reporting unit.

At the assessment date, our qualitative analysis of Australasia supported a conclusion that there is more than a 50% likelihood that the fair value of the reporting exceeds its carrying value.

Quantitatively, we determined that the fair value of our North America and Europe reporting units would have to decline by approximately 11% and 9%, respectively, to be considered for potential impairment.

Keeping all other assumptions consistent, an increase in the discount rate of 1% would result in the fair value of a reporting unit over its carrying value of 2% for our North American reporting unit and would result in the carrying value exceeding fair value by 2% for our Europe reporting units.

We performed our annual impairment assessment during the fourth quarter of 2022 and 2021 using a quantitative analysis for each of our reporting units.

No indication of goodwill impairment was identified.

Income taxes are accounted for under the asset and liability method.

3 unchanged sentences

We evaluate both the positive and negative evidence that is relevant in assessing whether we will realize the deferred tax assets.

A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized.

A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not

This projected realization is directly related to our future projections of the performance of our business and management’s planning initiatives at any point in time.

12 unchanged sentences

We have elected to account for the impact of GILTI in the period in which it is incurred.

The Company continues to monitor and evaluate legislative developments related to the Global Anti-Base Erosion Proposal (“GloBE”) established by the Organization of Economic Cooperation and Development’s (“OECD”) Pillar Two framework.

Several countries in which the Company’s subsidiaries operate have adopted those rules into legislation.

The Company continues to evaluate impacts as further guidance is released.

Contingent Liabilities

10 unchanged sentences

Compensation expense is recorded in the consolidated statements of operations and is recognized over the requisite service period.

The determination of obligations and compensation expense requires the use of several mathematical and judgmental factors, including stock price, expected volatility, the anticipated life of the option, estimated risk-free rate, and the number of shares

or share options expected to vest.

Any difference in the number of shares or share options that actually vest can affect future compensation expense.

16 unchanged sentences

The discount rate used to determine the benefit obligations was computed through a projected benefit cash flow model.

This approach determines the discount rate as the rate that equates the present value of the cash flows (determined using that single rate) to the present value of the cash flows where each cash flows' present value is determined using the spot rates from the Willis Towers Watson RATE:

Link 10:90 Yield Curve.

The discount rate utilized to calculate the projected benefit obligation at the measurement date for our U.S.

pension plan increased to 5.39% at December 31, 2022 from 2.88% at December 31, 2021.

As the discount rate is reduced or increased, the pension and post retirement obligation would increase or decrease, respectively, and future pension and post-retirement expense would increase or decrease, respectively.

pension plan decreased to 5.05% at December 31, 2023 from 5.39% at December 31, 2022.

Lowering the discount rate by 0.25% would increase the U.S.

pension and post-retirement obligation at December 31, 2022 by approximately $8.9 million, however the estimated fiscal year 2023 pension expense would remain unchanged.

Increasing the discount rate by 0.25% would decrease the U.S.

pension and post-retirement obligation at December 31, 2023 by approximately $7.2 million and would decrease estimated fiscal year 2024 pension expense by approximately $0.1 million.

Increasing the discount rate by 0.25% would decrease the U.S.

pension and post-retirement obligation at December 31, 2023 by approximately $6.9 million and would increase estimated fiscal year 2024 pension expense by approximately $0.3 million.

We determine the expected long-term rate of return on plan assets based on the plan assets’ historical long-term investment performance, current asset allocation, and estimates of future long-term returns by asset class.

6 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-K

Item 7. Management’s Discussion and Analysis