What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-12 compared with 2025-02-14 · 95 added, 96 removed, 233 unchanged (45% of the section changed)

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For a discussion on the year ended December 31, 2024, compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 14, 2025.

MSA Safety Incorporated ("MSA") is organized into four geographical operating segments that are aggregated into three reportable segments:

Americas, International and Corporate.

MSA Safety Incorporated ("MSA") is organized into four geographical operating segments that are aggregated into two reportable segments:

Americas and International.

The Americas segment is comprised of our operations in North America and Latin America geographies.

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Please refer to Note 9—Segment Information of the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.

On January 5, 2023, the Company divested Mine Safety Appliances Company, LLC ("MSA LLC") a wholly owned subsidiary that held legacy product liability claims relating to coal dust, asbestos, silica, and other exposures, to a joint venture between R&Q Insurance Holdings Ltd.

and Obra Capital, Inc.

In connection with the closing, MSA contributed $341.2 million in cash and cash equivalents, while R&Q and Obra contributed an additional $35.0 million.

As a result of the transaction, MSA derecognized all legacy cumulative trauma product liability reserves, related insurance assets, and associated deferred tax assets of the divested subsidiary from its balance sheet in the first quarter of 2023.

Following completion of the transaction, R&Q and Obra assumed management of the divested subsidiary, including the management of its claims.

Refer to Note 20—Contingencies of the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.

On May 6, 2025, we acquired M&C TechGroup and its affiliated companies ("M&C") in a transaction valued at approximately $189 million, net of cash acquired.

Headquartered in Ratingen, Germany, M&C provides a comprehensive range of gas analysis systems that detect, measure and monitor gases in critical environments.

M&C’s product portfolio includes systems and solutions for gas sampling, gas conditioning, as well as advanced process control.

Refer to Note 15—Acquisitions to the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.

BUSINESS OVERVIEW

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We tailor our product and solution offerings and distribution strategy to satisfy distinct customer preferences that vary across geographic regions.

To best serve these customer preferences, we have organized our business into four geographical operating segments that are aggregated into three reportable segments:

Americas, International and Corporate.

To best serve these customer preferences, we have organized our business into four geographical operating segments that are aggregated into two reportable segments:

Americas and International.

In 2025, 67% and 33% of our net sales were made by our Americas and International segments, respectively.

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Although some of these companies may perform limited production, most of their sales are of products manufactured in our plants in Germany, France, the U.S., U.K., Ireland, Mexico, Morocco and China or are purchased from third-party vendors.

The Corporate segment primarily consists of general and administrative expenses incurred in our corporate headquarters, costs associated with corporate development initiatives, legal expense, interest expense, foreign exchange gains or losses and other centrally-managed costs.

Corporate general and administrative costs comprise the majority of the expense in the Corporate segment.

During the years ended December 31, 2024, and 2023, corporate general and administrative costs were $56.3 million and $52.7 million, respectively.

The increase is related to higher costs for centrally managed functions, including legal and other professional services associated with various strategic initiatives, partially offset by lower variable compensation expense.

Corporate expenses not allocated to the reportable segments consist of general and administrative expenses incurred in our corporate headquarters, costs associated with corporate development initiatives, legal expense, interest expense, foreign exchange gains or losses and other centrally-managed costs.

General and administrative costs and overhead comprise the majority of the corporate related expenses.

During the years ended December 31, 2025, and 2024, corporate expenses were $43.4 million and $50.4 million, respectively.

The decrease is related to lower professional service fees and variable compensation as well as other discretionary expense management partially offset by inflation.

We leverage the MSA Business System ("MBS") to develop and introduce innovative safety solutions, secure new business opportunities, and operate with greater efficiency.

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Currency translation effects 0.3% (2.8)% (0.7)%

Acquisitions (1.0)% (5.0)% (2.3)%

Organic sales change 0.5% 1.4% 0.7%

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Organic sales in the Americas segment increased 0.5% compared to the prior year.

This growth was driven by strength across detection, fire service and industrial PPE.

This increase was driven by double digit growth in detection and a minor increase in industrial PPE partially offset by a decrease in fire service partly due to a shift in Assistance to Firefighters Grant (AFG) funding as well as the 2025 U.S.

federal government shutdown.

M&C added $13.0 million of sales to the Americas segment during the period.

Net sales for the International segment were $613.0 million for the year ended December 31, 2025, an increase of $51.5 million, or 9.2%, compared to $561.5 million for the year ended December 31, 2024.

Organic sales in the International segment increased 1.4% compared to the prior year period.

This growth was driven by strength across fire service partially offset by a decline in industrial PPE.

This increase was driven by growth in detection primarily in China and Europe and to a lesser extent industrial PPE partially offset by a modest decline in fire service due to budgetary shifts within key European markets.

M&C added $27.9 million of sales to the International segment during the period.

The operating environment continues to be dynamic with an uncertain macroeconomic and geopolitical climate.

We remain cautiously optimistic in our outlook, which balances the opportunities and risks we see ahead of us given the resilient nature of our business.

We expect to generate low-single digit organic sales growth in 2025 and expect the year to follow normal seasonal patterns.

We expect to generate full-year mid-single digit organic sales growth in 2026.

We anticipate ongoing momentum in detection and fall protection as key growth drivers, as well as SCBA, which should benefit, in part, from the timing delays in 2025 that shifted some business to 2026.

Furthermore, pricing actions in 2025 and 2026, along with moderate volume growth, should also support our outlook.

Overall backlog remains healthy, and we have a solid commercial pipeline.

Our overall book-to-bill was slightly below one and above the year-ago period.

Refer to Note 9—Segment Information to the consolidated financial statements in Part II Item 8 of this Form 10-K, for information regarding sales by product category.

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The ratio of gross profit to net sales was 46.5% in 2025 compared to 47.6% in 2024.

Price realization and productivity efforts mostly offset inflationary pressures.

The decrease in gross profit margin is primarily related to inflation, transactional foreign currency challenges, tariffs and additional amortization related to the M&C acquisition partially offset by price realization, product mix and improved productivity.

Selling, general and administrative expenses.

Selling, general and administrative ("SG&A") expenses were $394.7 million for the year ended December 31, 2024, a decrease of $1.9 million, or 0.5%, compared to $396.6 million for the year ended December 31, 2023.

Selling, general and administrative ("SG&A") expenses were $414.3 million for the year ended December 31, 2025, an increase of $19.6 million, or 5.0%, compared to $394.7 million for the year ended December 31, 2024.

Selling, general and administrative expenses were 22.1% of net sales in 2025 compared to 21.8% of net sales in 2024.

Organic SG&A was consistent from 2023 to 2024.

Lower variable compensation and discretionary cost management offset inflation, net cost for product-related legal matter and higher professional service expenses.

Please refer to the Selling, general and administrative expenses table for a reconciliation of the year over year expense change.

Organic SG&A decreased $8.6 million, or 2.2%, driven primarily by the absence of the net cost for a product related legal matter from the prior year, lower variable compensation, discretionary expense management and lower professional service costs partially offset by inflation and higher sales commission expense on double-digit detection growth.

Selling, general, and administrative expenses Year Ended

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Currency translation effects (0.7)%

Acquisitions and related strategic transaction costs (6.5)%

Organic change (2.2)%

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Restructuring charges.

During the year ended December 31, 2024, the Company recorded restructuring charges of $6.4 million primarily related to our ongoing initiatives to optimize our manufacturing footprint and improve productivity as well as management restructuring.

This compared to restructuring charges of $9.9 million during the year ended December 31, 2023, primarily related to manufacturing footprint optimization activities and other initiatives to adjust our cost structure and improve productivity.

During the year ended December 31, 2025, the Company recorded restructuring charges of $3.9 million primarily related to initiatives to right-size the organization in response to macroeconomic conditions and ongoing initiatives to optimize our manufacturing footprint and improve productivity.

This compared to restructuring charges of $6.4 million during the year ended December 31, 2024, primarily related to our ongoing initiatives to optimize our manufacturing footprint and improve productivity as well as management restructuring.

We remain focused on executing programs to optimize our cost structure.

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Currency exchange losses were $15.8 million during the year ended December 31, 2025, compared to $3.6 million during the year ended December 31, 2024.

In 2024, we recognized non-cash net cumulative translation gains of $1.2 million associated with certain foreign subsidiaries.

In 2025 and 2024, we recognized non-cash net cumulative translation gains of $0.8 million and $1.2 million, respectively, associated with certain foreign subsidiaries.

The remaining currency exchange activity for both periods related primarily to foreign currency exposure on unsettled inter-company balances and recognized exchange loss for our Argentina affiliate operating in a hyper-inflationary environment.

Refer to Note 19—Derivative Financial Instruments of the consolidated financial statements in Part II Item 8 of this Form 10-K for information regarding our currency exchange rate risk management strategy.

Product liability expense.

Product liability expense during the years ended December 31, 2024, and 2023, was minimal due to our divestiture of MSA LLC in January 2023, as discussed further in Note 20—Contingencies of the consolidated financial statements in Part II Item 8 of this Form 10-K.

Loss on divestiture of MSA LLC .

The $129.2 million pre-tax loss on divestiture of MSA LLC for the year ended December 31, 2023, relates to the derecognition of all legacy cumulative trauma product liability reserves and related insurance assets of the divested subsidiary during the first quarter of 2023.

The loss also includes a $341.2 million contribution of cash and cash equivalents, as well as transaction related costs of $5.6 million.

Refer to Note 20—Contingencies to the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.

GAAP operating income.

Consolidated operating income for the year ended December 31, 2025, was $371.8 million compared to $389.2 million for the year ended December 31, 2024.

The increase in operating results was primarily driven by the absence of loss on divestiture of MSA LLC as recognized in 2023 in addition to higher sales.

The decrease in operating results was primarily driven by increased SG&A expenses and currency exchange losses, partially offset by higher sales and lower restructuring charges as discussed further above.

Adjusted operating income.

Americas adjusted operating income for the year ended December 31, 2024, was $380.1 million, an increase of $20.5 million, or 6%, compared to $359.6 million for the year ended December 31, 2023.

The increase in adjusted operating income is primarily attributable to higher sales and effective price/cost management as well as controlled SG&A expense.

International adjusted operating income for the year ended December 31, 2024, was $84.6 million, a decrease of $5.1 million, or 6%, compared to adjusted operating income of $89.7 million for the year ended December 31, 2023.

The decrease in adjusted operating income is primarily attributable to inflationary pressures, partially offset by pricing and discretionary cost management.

Corporate segment adjusted operating loss for the year ended December 31, 2024, was $50.4 million, a decrease of $1.2 million, or 2%, compared to an adjusted operating loss of $51.6 million for the year ended December 31, 2023, driven by lower variable compensation partially offset by inflation and increased professional service fees associated with various strategic initiatives.

The following tables represent a summary of adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA % by reportable segment.

Adjusted operating margin % is calculated as adjusted operating income (loss) divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.

(In thousands) Americas International Corporate Consolidated

Americas adjusted operating income for the year ended December 31, 2025, was $364.8 million, a decrease of $15.3 million, or 4%, compared to $380.1 million for the year ended December 31, 2024.

The decrease in adjusted operating income is attributable to lower gross profit and higher SG&A expenses.

International adjusted operating income for the year ended December 31, 2025, was $93.3 million, an increase of $8.7 million, or 10%, compared to adjusted operating income of $84.6 million for the year ended December 31, 2024.

The increase in adjusted operating income is primarily attributable higher sales volumes, including the contribution from M&C, and discretionary cost management partially offset by higher SG&A expense due to inflationary pressures.

Corporate expenses for the year ended December 31, 2025, were $43.4 million, a decrease of $7.0 million, or 14%, compared to $50.4 million for the year ended December 31, 2024, driven by lower professional service fees and variable compensation as well as other discretionary expense management partially offset by inflation.

The following tables represent a summary of adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA %.

Adjusted operating margin % is calculated as adjusted operating income divided by net sales and adjusted EBITDA margin % is calculated as adjusted EBITDA divided by net sales.

(In thousands) Americas International Total Reportable Segments Corporate Consolidated

Year ended December 31, 2025

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(In thousands) 2025 2024

Adjusted EBITDA $ 469,431 $ 449,243

Adjusted EBITDA from reportable segments $ 516,323 $ 518,936

Depreciation and amortization 58,313 54,279

Adjusted operating income $ 414,272 $ 397,716

Adjusted operating income from reportable segments $ 458,010 $ 464,657

Corporate expenses 43,412 50,385

Currency exchange losses, net 15,801 3,638

Amortization of acquisition-related intangible assets 9,174 9,246

Acquisition-related amortization 12,615 9,174

Restructuring charges (Note 4) 3,897 6,397

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Transaction costs (a)

Loss on divestiture of MSA LLC (Note 20) — 129,211

Product liability expense (Note 20) — 3

GAAP operating income $ 371,818 $ 389,177

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Net income $ 278,924 $ 284,967

(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during our evaluation of acquisitions and divestitures.

(a) Transaction costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred during our evaluation of or in connection with acquisitions and divestitures.

These costs are included in Selling, general and administrative expense in the Consolidated Statements of Operations.

Total other expense, net.

Total other expense, net, for the year ended December 31, 2024, was $14.2 million, a decrease of $10.4 million compared to $24.6 million for the year ended December 31, 2023, due primarily to decreased interest expense on reduced debt balances as well as increased pension income driven by a higher expected rate of return, partially offset by pension settlement expense recognized in the current year.

Total other expense, net, for the year ended December 31, 2025, was $5.4 million, a decrease of $8.8 million compared to $14.2 million for the year ended December 31, 2024, driven primarily by decreased interest expense related to lower interest rates as well as increased pension income driven by a higher expected rate of return.

We expect total interest expense for 2026 to be in the range of $28 million to $31 million.

This decrease is primarily related to significant long-term debt payments made during 2024.

We expect non-cash pension income to increase by $4 million to $5 million compared to 2024.

This decrease for 2026 is primarily related to significant long-term debt payments made during 2025.

We expect non-cash pension and other post-retirement benefits income to increase by $4 million to $5 million compared to 2025.

Income taxes.

The reported effective tax rate for the year ended December 31, 2025, was 23.9% compared to 24.0% for the year ended December 31, 2024.

This significant variance is primarily due to the prior year divestiture of MSA LLC and the non-deductible loss recorded on the derecognition of the product liability reserves and related assets.

Refer to Note 20— Contingencies to consolidated financial statements in Part II Item 8 of this Form 10-K for further information on the MSA LLC divestiture.

The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues above €750.0 million (referred to as Pillar 2), with effective dates beginning in January 2024.

We meet the overall revenue threshold and fall within the scope of Pillar 2 and as such, have complied with the requirements of the legislation for the year ended December 31, 2024.

The application of Pillar 2 resulted in additional tax expense of $1.1 million.

The decrease from the prior year was primarily driven by a decrease in state income taxes, partially offset by one-time benefits in foreign jurisdictions in 2024.

The Organization for Economic Co-operation and Development (OECD) framework for a global minimum corporate tax rate of 15% for companies with global revenues above €750.0 million (referred to as Pillar 2), with effective dates beginning in January 2024, has been enacted by a number of foreign jurisdictions.

We meet the overall revenue threshold and fall within the scope of Pillar 2.

As such, we have complied with the requirements of the legislation and the application of Pillar 2 resulted in additional tax expense of $2.2 million and $1.1 million, for the years ended December 31, 2025 and 2024, respectively.

We are subject to regular review and audit by both foreign and domestic tax authorities.

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Net income was $278.9 million for the year ended December 31, 2025, or $7.09 per diluted share, compared to $285.0 million, or $7.21 per diluted share, for the year ended December 31, 2024.

Non-GAAP Financial Information

Non-GAAP Financial Measures

This report includes certain non-GAAP financial measures and operating ratios derived from non-GAAP financial measures.

These financial measures and ratios include organic (referred to in our historical filings as constant currency) revenue growth, organic SG&A change, adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin %.

These financial measures and ratios include organic (referred to in our historical filings as constant currency) sales change, organic SG&A change, adjusted operating income, adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin %.

Organic sales and SG&A change are non-GAAP financial measures provided by the Company to give a better understanding of the Company's underlying business performance.

Organic sales and SG&A change are calculated by deducting the percentage impact from currency translation effects from the overall percentage change in net sales and SG&A.

The Company believes that organic revenue growth and SG&A change are useful metrics for investors, as foreign currency translation can have a material impact on revenue and SG&A trends.

Organic revenue growth and SG&A change highlight ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of the Company's control.

Adjusted operating income (loss), adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin % are non-GAAP financial measures and operating ratios derived from non-GAAP measures.

Organic sales and SG&A change are calculated by deducting the percentage impact from currency translation effects as well as the impact from acquisitions and divestitures completed in the preceding 12 months from the overall percentage change in net sales and SG&A.

The Company believes that organic sales and SG&A change are useful metrics for investors, as foreign currency translation can have a material impact on revenue and SG&A trends.

Organic sales and SG&A change highlight ongoing business performance excluding the impact of fluctuating foreign currencies, acquisitions and divestitures.

Adjusted operating income, adjusted operating margin %, adjusted EBITDA and adjusted EBITDA margin % are non-GAAP financial measures and operating ratios derived from non-GAAP measures.

Total reportable segment adjusted operating income is reconciled above to the nearest GAAP financial measure, operating income, and excludes restructuring, currency exchange, product liability expense, loss on divestiture of MSA LLC, net cost for product related legal matter, transaction costs and acquisition-related amortization.

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Adjusted operating margin % is defined as adjusted operating income (loss) divided by net sales to external customers and adjusted EBITDA margin % is defined as adjusted EBITDA divided by net sales to external customers.

These metrics are consistent with how management evaluates segment results and makes strategic decisions about the business.

Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities as well as to make strategic decisions about the business and allocate resources.

Additionally, these non-GAAP financial measures provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers.

Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities as well as to allocate resources.

The non-GAAP financial measures and key performance indicators we use, and computational methods with respect thereto, may differ from the non-GAAP financial measures and key performance indicators, and computational methods, that our peers use to assess their performance and trends.

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At December 31, 2025, approximately 51% of our long-term debt is at fixed interest rates with repayment schedules through 2036.

The remainder of our long-term debt is at variable rates on a term loan due in 2026.

The remainder of our long-term debt is at variable rates on an unsecured revolving credit facility due in 2030.

At December 31, 2025, approximately 81% of our borrowings are denominated in US dollars, which limits our exposure to currency exchange rate fluctuations.

At December 31, 2024, the Company had cash and cash equivalents totaling $164.6 million and access to sufficient capital, providing ample liquidity and flexibility to continue to maintain our balanced capital allocation strategy that prioritizes growth investments, funding our dividends and servicing debt obligations.

Cash, cash equivalents and restricted cash increased $16.7 million during the year ended December 31, 2024.

This compared to cash decreasing $16.0 million during the same period in 2023.

At December 31, 2024, we had no borrowings outstanding under our $900.0 million senior revolving credit facility.

The facility also provides an accordion feature that allows the Company to access an additional $400.0 million of capacity pending approval by MSA’s board of directors and from the bank group.

We believe MSA's healthy balance sheet and access to significant capital at the year ended December 31, 2025, positions us well to navigate through a dynamic operating environment and other unexpected events.

We maintain a balanced capital deployment strategy that focuses on investing for organic growth, returning cash to shareholders in the form of dividends and share buybacks, and pursuing inorganic growth opportunities.

We maintain a balanced capital deployment strategy that focuses on investing for organic growth and pursuing inorganic growth opportunities, returning cash to shareholders in the form of dividends and share buybacks.

At December 31, 2025, the Company had cash and cash equivalents totaling $165.1 million.

Cash and cash equivalents increased $0.5 million during the year ended December 31, 2025, compared to increasing $18.1 million during the same period in 2024.

At December 31, 2025, $1.0 billion of the existing $1.3 billion revolving credit facility was unused, including letters of credit issued under the facility.

Operating activities.

Operating activities provided cash of $296.4 million in 2024, compared to providing cash of $92.9 million in 2023.

The improved cash flow from operating activities as compared to the same period in 2023 was primarily related to the prior year contribution of $341.2 million in the divestiture of MSA LLC.

Refer to Note 20—Contingencies to the consolidated financial statements in Part II Item 8 of this Form 10-K for further information.

Excluding the cash flow impact of the MSA LLC divestiture for 2023, cash flow provided by operating activities decreased by $142.9 million related to higher cash usage for tax payments and variable compensation payouts, both driven by prior year performance.

Additionally, working capital cash usage increased related primarily to inventory purchases to support customer demand, which were partially offset by improved accounts payable and accounts receivable management.

Operating activities provided cash of $363.9 million in 2025, compared to providing $296.4 million in 2024.

The increased cash flow from operating activities was primarily related to lower cash used for variable compensation, income and other taxes, and restructuring as compared to the prior year partially offset by higher cash usage for working capital needs.

Investing activities.

Investing activities used cash of $257.6 million for the year ended December 31, 2025, compared to using $53.8 million in 2024.

The increase in cash used in investing activities as compared to the same period in 2023 was primarily related to increased capital expenditures to support our manufacturing footprint optimization activities, IT systems implementation, capitalized software development associated with new products, and other strategic initiatives.

The acquisition of M&C for $189 million and capital expenditures of $68.4 million, including a $19.6 million strategic footprint investment, drove the increase in cash outflows from investing activities during the year ended December 31, 2025.

We remain committed to evaluating acquisition opportunities that will allow us to continue to grow in key end markets and geographies.

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Financing activities used cash of $105.5 million for the year ended December 31, 2025, compared to using cash of $208.7 million in 2024.

During 2024, we had net payments on long-term debt of $94.3 million compared to net proceeds from long-term debt of $23.9 million during the same period in 2023 to fund the MSA LLC divestiture.

During 2025, we had net proceeds from long-term debt of $67.3 million, used primarily to fund the M&C acquisition, compared to net payments of $94.3 million during the same period in 2024.

We paid cash dividends of $82.3 million during 2025, compared to $78.8 million during 2024.

We used cash of $37.3 million during 2024 to repurchase shares, including $29.9 million related to our share repurchase program, and the remainder related to our employee stock compensation transactions compared to $4.0 million during 2023, all of which related to employee stock compensation transactions.

We used cash of $90.0 million during 2025 to repurchase shares, including $80.0 million related to our share repurchase program compared to using $37.3 million during 2024, including $29.9 million related to our share repurchase program.

The remainder in both periods related to our employee stock compensation transactions.

CUMULATIVE TRANSLATION ADJUSTMENTS

The position of the U.S.

dollar relative to international currencies, primarily the euro, at December 31, 2024, resulted in a translation loss of $42.5 million being recorded to cumulative translation adjustments shareholders' equity account for the year ended December 31, 2024, compared to a translation gain of $21.7 million being recorded to the cumulative translation adjustments account during 2023.

dollar relative to international currencies, primarily the euro and British pound, at December 31, 2025, resulted in a translation gain of $68.3 million being recorded to cumulative translation adjustments shareholders' equity account for the year ended December 31, 2025, compared to a translation loss of $42.5 million being recorded to the cumulative translation adjustments account during 2024.

COMMITMENTS AND CONTINGENCIES

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(In millions) Total 2026 2027 2028 2029 2030 Thereafter

Long-term debt $ 509.6 $ 26.4 $ 195.1 $ 32.6 $ 32.6 $ 7.6 $ 215.3

Long-term debt (principal) $ 584.5 $ 8.2 $ 33.2 $ 33.2 $ 8.2 $ 293.5 $ 208.2

Long-term debt (fixed rate interest) 55.6 9.5 9.2 7.6 6.0 5.7 17.6

Operating leases 69.3 15.2 11.9 9.3 7.0 4.5 21.4

Inventory costing method change tax 2.6 2.6 — — — — —

Totals $ 709.4 $ 32.9 $ 54.3 $ 50.1 $ 21.2 $ 303.7 $ 247.2

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We expect to meet our future debt service obligations through cash provided by operations.

Interest payments on fixed rate debt over the next five years are excluded from the table above and are expected to be approximately $9.6 million in 2025, $9.4 million in 2026, $9.1 million in 2027, $7.5 million in 2028 and $6.0 million in 2029.

We expect total interest expense for 2025 to be in the range of $24 million to $27 million.

The Company had outstanding bank guarantees and standby letters of credit with banks as of December 31, 2025 totaling $9.7 million, of which $1.5 million relate to the senior revolving credit facility.

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The more critical judgments and estimates used in the preparation of our consolidated financial statements are discussed below.

Business Combinations.

In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition.

The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed will be recognized as goodwill.

The valuations of the acquired assets and liabilities will impact the determination of future operating results.

In addition to using management estimates and negotiated amounts, the Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities including:

third-party appraisals for the estimated value and lives of identifiable intangible assets and property, plant and equipment;

third-party actuaries for the estimated obligations of defined benefit pension plans and similar benefit obligations;

and legal counsel or other experts to assess the obligations associated with legal, environmental and other contingent liabilities.

The business and technical judgment of management was used in determining which intangible assets have indefinite lives and in determining the useful lives of finite-lived intangible assets in accordance with the accounting guidance for goodwill and other intangible assets.

Income taxes.

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All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.

The $731.6 million of goodwill on our Consolidated Balance Sheet as of December 31, 2025, is primarily comprised of $480.4 million at the Northern North America reporting unit and $247.8 million at the Europe reporting unit.

The evaluation of impairment involves using either a qualitative or quantitative approach as outlined in Accounting Standards Codification ("ASC") Topic 350.

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RECENTLY ISSUED ACCOUNTING STANDARDS AND DISCLOSURE RULES

In December 2023, the FASB issued ASU No.

2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures .

ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid.

This standard also includes certain other amendments to improve the effectiveness of income tax disclosures.

ASU 2023-09 is effective for public business entities, for annual periods beginning after December 15, 2024.

With the exception of expanding disclosures, we do not expect the adoption of ASU 2023-09 to have a material effect on our consolidated financial statements taken as a whole.

In March 2024, the U.S.

Securities and Exchange Commission (the "SEC") adopted the final rule under SEC Release No.

33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors .

This rule would require registrants to disclose certain climate-related information in registration statements and annual reports.

In April 2024, the SEC voluntarily stayed the final rule as a result of pending legal challenges.

The disclosure requirements would apply to the Company's fiscal year ended December 31, 2025, pending resolution of the stay.

The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.

In November 2024, the FASB issued ASU No.

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With the exception of expanding disclosures to include more granular income statement expense categories, we do not expect the adoption of ASU 2024-03 to have a material effect on our consolidated financial statements taken as a whole.

In September 2025, the FASB issued ASU No.

2025-06 (“ASU 2025-06”), Targeted Improvements to the Accounting for Internal-Use Software .

ASU 2025-06 amends certain aspects of the accounting for a disclosure of software costs under ASC 350-40.

ASU 2025-06 makes targeted improvements to ASC 350-40, but does not fully align the framework for accounting for internally developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally that is subject to ASC 985-20.

ASU 2025-06 also does not amend the guidance on costs of software licenses that are within the scope of ASC 985-20.

ASU 2025-06’s amendments are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

The Company is still evaluating the impact that the adoption of ASU 2025-06 will have on the condensed consolidated financial statements.

In November 2025, the FASB issued ASU 2025‑09, Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements .

The amendments are intended to improve the clarity, operability, and decision‑usefulness of hedge accounting guidance.

ASU 2025‑09 is effective for the Company for annual and interim reporting periods beginning after December 15, 2026 with early adoption permitted.

The Company is currently evaluating the impact of ASU 2025‑09 on its consolidated financial statements and related disclosures.

Because the guidance primarily relates to hedge accounting mechanics and presentation, the Company does not expect the adoption of this update to have a material effect on our consolidated financial statements taken as a whole.

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