What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-08 · 139 added, 146 removed, 188 unchanged (60% of the section changed)

52 unchanged sentences

The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

Current Events

Supply Chain and Logistics Constraints

The Company continues to actively monitor global supply chain and logistics constraints which had a negative impact on the Company’s ability to timely source parts, complete and ship units, and service cranes for the three and six months ended June 30, 2024.

While the Company has experienced some relief of the supply chain and logistics constraints in certain regions, the ongoing crisis in the Red Sea has caused logistic constraints and further disruptions for certain key components.

The Company continues to actively monitor and manage supply chain constraints through alternative sourcing of parts and adapting production to limit waste and inefficiencies in the facilities.

Continuing or worsening supply chain and logistics constraints may have a material adverse impact on the Company’s financial condition, results of operations, or cash flows.

Results of Operations For The Three and Six Months Ended June 30, 2024 and 2023:

Orders and Backlog

Orders and backlog are not measures defined by GAAP and our methodology for determining orders and backlog may vary from the methodology used by other companies.

Management uses orders and backlog for capacity and resource planning.

The Company believes this information is useful to investors to provide an indication of future revenues.

Backlog represents the dollar value of orders which are expected to be recognized in net sales in the future.

Orders are included in backlog when an executed binding contract with a price that has a floor has been received but has not been recognized in net sales.

Orders for the three months ended September 30, 2024 decreased 20.0% to $424.7 million from $531.2 million for the same period in 2023.

The decrease was primarily attributable to lower demand in the Americas.

Demand was impacted by uncertainty related to the U.S.

presidential election and the high-interest rate environment.

Orders were favorably impacted by $1.5 million from changes in foreign currency exchange rates.

Orders for the nine months ended September 30, 2024 decreased 12.4% to $1,407.2 million from $1,606.5 million for the same period in 2023.

The decrease was primarily attributable to lower demand in the Americas and EURAF segments.

the Americas was impacted by uncertainty related to the U.S.

presidential election and the high-interest rate environment.

Orders were favorably impacted by $1.5 million from changes in foreign currency exchange rates.

As of September 30, 2024, total backlog was $742.1 million, a 19.1% decrease from the December 31, 2023 backlog of $917.2 million, and a 27.8% decrease from the September 30, 2023 backlog of $1,028.1 million.

The decrease in backlog from December 31, 2023, was primarily attributable to lower demand during the year.

Backlog was favorably impacted from changes in foreign currency exchange rates by $1.4 million and $11.4 million from December 31, 2023 and September 30, 2023, respectively.

Results of Operations For The Three and Nine Months Ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Percentage Change

7 unchanged sentences

*Measure not meaningful

Orders and Backlog

Backlog represents the dollar value of orders which are expected to be recognized in net sales in the future.

Orders are included in backlog when an executed binding contract with a price that has a floor has been received but has not been recognized in net sales.

Orders and backlog are not measures defined by GAAP and our methodology for determining orders and backlog may vary from the methodology used by other companies.

Management uses orders and backlog for capacity and resource planning.

We believe this information is useful to investors to provide an indication of our future revenues.

Orders for the three months ended June 30, 2024 decreased 22.2% to $428.4 million from $550.5 million for the same period in 2023.

The decrease was primarily attributable to lower demand in the Americas and EURAF.

The lower demand in EURAF was mainly in the Company’s tower crane product offering.

Demand was impacted by higher interest rates and economic uncertainties.

Orders were unfavorably impacted by $2.0 million from changes in foreign currency exchange rates.

Orders for the six months ended June 30, 2024 decreased 8.6% to $982.5 million from $1,075.3 million for the same period in 2023.

The decrease was primarily attributable to lower demand in the Americas and EURAF.

The lower demand in EURAF was mainly in the Company’s tower crane product offering.

Demand was impacted by higher interest rates and economic uncertainties.

As of June 30, 2024, total backlog was $836.3 million, an 8.8% decrease from the December 31, 2023 backlog of $917.2 million, and a 18.4% decrease from the June 30, 2023 backlog of $1,024.6 million.

The decrease in backlog from December 31, 2023, was primarily attributable to lower demand during the year.

Backlog was unfavorably impacted from changes in foreign currency exchange rates by $8.0 million and $4.4 million from December 31, 2023 and June 30, 2023, respectively.

Consolidated net sales for the three months ended June 30, 2024 decreased 6.8% to $562.1 million from $602.8 million in the same period in 2023.

The decrease was primarily attributable to a lower number of crane shipments in the EURAF segment, primarily in the Company’s tower crane product offering, and unfavorable product mix in the Americas segment.

In addition, part shortages, logistic constraints and commercial issues impacted the Company’s ability to manufacture and ship products during the period.

Non-new machine sales for the three months ended June 30, 2024 declined $3.1 million when compared to the same period for 2023, primarily due to lower aftermarket part shipments.

Net sales were unfavorably impacted by $2.7 million from changes in foreign currency exchange rates.

Consolidated net sales for the six months ended June 30, 2024 decreased 4.9% to $1,057.2 million from $1,111.1 million for the same period in 2023.

The decrease was primarily attributable to a lower number of crane shipments in the EURAF segment, primarily in the Company’s tower crane product offering.

In addition, part shortages, logistic constraints and commercial issues impacted the Company’s ability to manufacture and ship products during the period.

Non-new machine sales for the six months ended June 30, 2024 declined $9.7 million when compared to the same period for 2023, primarily due to lower aftermarket parts and used crane shipments.

Net sales were unfavorably impacted by $0.3 million from changes in foreign currency exchange rates.

Gross profit for the three months ended June 30, 2024 was $99.7 million, a decrease of $23.3 million as compared to $123.0 million for the same period in 2023.

The decrease was primarily attributable to the lower net sales, unfavorable product mix, and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit was unfavorably impacted by $0.3 million from changes in foreign currency exchange rates.

Gross profit percentage decreased in the three months ended June 30, 2024 to 17.7% from 20.4% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit for the six months ended June 30, 2024 was $192.2 million, a decrease of $37.1 million as compared to $229.3 million for the same period in 2023.

Consolidated net sales for the three months ended September 30, 2024 were relatively flat at $524.8 million compared to $520.9 million in the same period in 2023.

During the three months ended September 30, 2024, there were a lower number of new crane shipments in the EURAF segment, primarily in the Company’s tower crane product offerings.

This was partially offset by a higher number of new crane shipments in the Americas segment.

Non-new machine sales for the three months ended September 30, 2024 increased $14.5 million when compared to the same period for 2023, primarily due to higher used crane sales.

Net sales were favorably impacted by $2.2 million from changes in foreign currency exchange rates.

Consolidated net sales for the nine months ended September 30, 2024 decreased 3.1% to $1,582.0 million from $1,632.0 million for the same period in 2023.

The decrease was primarily attributable to a lower number of tower crane shipments in the EURAF segment.

Non-new machine sales for the nine months ended September 30, 2024 increased $4.8 million when compared to the same period for 2023.

Net sales were favorably impacted by $1.9 million from changes in foreign currency exchange rates.

Gross profit for the three months ended September 30, 2024 was $87.6 million, a decrease of $9.2 million as compared to $96.8 million for the same period in 2023.

The decrease was primarily attributable to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit was favorably impacted by $0.4 million from changes in foreign currency exchange rates.

Gross profit percentage decreased in the three months ended September 30, 2024 to 16.7% from 18.6% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit for the nine months ended September 30, 2024 was $279.8 million, a decrease of $46.3 million as compared to $326.1 million for the same period in 2023.

The decrease was primarily attributable to the lower net sales, unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit percentage decreased during the six months ended June 30, 2024 to 18.2% from 20.6% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit was favorably impacted by $0.4 million from changes in foreign currency exchange rates.

Gross profit percentage decreased during the nine months ended September 30, 2024 to 17.7% from 20.0% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Engineering, Selling, and Administrative Expenses

Engineering, selling, and administrative expenses decreased 4.5% to $83.7 million for the three months ended June 30, 2024 as compared to $87.6 million for the same period in 2023.

The decrease was primarily attributable to a $10.8 million charge related to a legal matter with the U.S.

EPA in the prior year, compared to a $5.3 million charge in the current year.

This was partially offset by higher trade show costs related to the Company’s Crane Days event.

Engineering, selling, and administrative expenses were favorably impacted by $0.4 million from changes in foreign currency exchange rates.

Engineering, selling and administrative expenses decreased 1.8% to $159.7 million for the six months ended June 30, 2024 as compared to $162.7 million for the same period in 2023.

The decrease was primarily attributable to a $10.8 million charge related to a legal matter with the U.S.

EPA in the prior year, compared to a $5.3 million charge in the current year.

This was partially offset by higher trade show costs related to the Company’s Crane Days event.

Engineering, selling, and administrative expenses remained relatively flat at $78.9 million for the three months ended September 30, 2024 as compared to $77.4 million for the same period in 2023.

During the three months ended September 30, 2024, there was $2.6 million of costs associated with a legal matter with the U.S.

EPA, which was partially offset by lower employee related costs.

Engineering, selling, and administrative expenses were unfavorably impacted by $0.4 million from changes in foreign currency exchange rates.

Engineering, selling and administrative expenses remained relatively flat at $238.6 million for the nine months ended September 30, 2024 as compared to $240.1 million for the same period in 2023.

The decrease is primarily due to $2.9 million of lower costs associated with a legal matter with the U.S.

EPA when compared to the prior year.

Engineering, selling, and administrative expenses were unfavorably impacted by $0.4 million from changes in foreign currency exchange rates.

Interest Expense

Interest expense for the three months ended June 30, 2024 was $9.6 million as compared to $9.0 million for the same period in 2023.

Interest expense for the three months ended September 30, 2024 was $9.6 million as compared to $8.4 million for the same period in 2023.

Interest expense increased year-over-year primarily due to higher average debt during the period and higher interest rates on borrowings from the Company's ABL revolving credit facility.

See further detail at Note 10, “Debt” to the Condensed Consolidated Financial Statements.

Interest expense for the six months ended June 30, 2024 was $18.8 million as compared to $17.1 million for the same period in 2023.

Interest expense for the nine months ended September 30, 2024 was $28.4 million as compared to $25.5 million for the same period in 2023.

Interest expense increased year-over-year primarily due to higher average debt during the period and higher interest rates on borrowings from the Company's ABL revolving credit facility.

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Other Income (Expense) - Net

Other income (expense) - net was $0.3 million during the three months ended June 30, 2024 and $(10.0) million for the same period in 2023.

Other income (expense) – net during the three months ended June 30, 2024 was primarily composed of $0.7 million of currency gain, partially offset by $0.7 million of pension related costs.

Other income (expense) – net during the three months ended June 30, 2023 was primarily composed of a $9.3 million non-cash write-off of foreign currency translation adjustments related to the curtailment of operations in Russia and $1.5 million of pension benefit and postretirement health costs.

This was partially offset by $1.4 million of net foreign currency gains and a $0.2 million gain on disposal of property, plant and equipment.

Other income (expense) - net was $1.0 million during the six months ended June 30, 2024 and $(11.1) million for the same period in 2023.

Other income (expense) - net during the six months ended June 30, 2024 was primarily composed of $1.8 million of currency gain.

This was partially offset by $1.5 million of pension related costs.

Other income (expense) – net during the six months ended June 30, 2023 was primarily composed of a $9.3 million non-cash write-off of foreign currency translation adjustments related to the curtailment of operations in Russia and $3.1 million of pension benefit and postretirement health costs.

This was partially offset by $1.8 million of net foreign currency gains and a $0.2 million gain on disposal of property, plant and equipment.

Other income (expense) - net was $(4.9) million during the three months ended September 30, 2024 and $1.1 million for the same period in 2023.

Other income (expense) – net during the three months ended September 30, 2024 was primarily composed of $3.2 million of currency loss and $1.1 million of non-cash losses associated with the refinancing of the Company’s 2026 Notes.

Other income (expense) – net during the three months ended September 30, 2023 was primarily composed of $3.0 million of net foreign currency transaction gains, partially offset by $1.5 million of pension benefit and postretirement health costs.

Other income (expense) - net was $(3.9) million during the nine months ended September 30, 2024 and $(10.0) million for the same period in 2023.

Other income (expense) - net during the nine months ended September 30, 2024 was primarily composed of $2.2 million of pension related costs, $1.4 million of currency loss, and $1.1 million of non-cash losses associated with the refinancing of the Company’s 2026 Notes, partially offset by $0.7 million of interest income.

Other income (expense) – net during the nine months ended September 30, 2023 was primarily composed of a $9.3 million non-cash write-off of foreign currency translation adjustments related to the curtailment of operations in Russia and $4.5 million of pension benefit and postretirement health costs, partially offset by $4.8 million of net foreign currency transaction gains.

Provision (Benefit) for Income Taxes

For the three months ended June 30, 2024, and 2023, the Company recorded a provision (benefit) for income taxes of $1.6 million and $(5.2) million, respectively.

For the six months ended June 30, 2024, and 2023, the Company recorded a provision (benefit) for income taxes of $3.5 million and a provision (benefit) for income taxes of $(1.0) million, respectively.

During the three and six months ended June 30, 2023, a discrete net tax benefit of $13.5 million was recorded, mainly attributable to the release of a valuation allowance.

There were no material discrete items recorded for the three and six months ended June 30, 2024.

The increase in the Company’s tax provision (benefit) for the three and six months ended June 30, 2024, relative to the prior year primarily relates to a decrease in the discrete tax benefit recorded year over year.

In addition, the Company’s effective tax rate varies from the U.S.

federal statutory rate of 21% due to results of foreign operations that are subject to income taxes at different statutory rates and losses in jurisdictions where no tax benefit can be realized.

For the three months ended September 30, 2024, and 2023, the Company recorded a benefit for income taxes of $0.3 million and zero, respectively.

The year-over-year increase in the Company’s benefit for income taxes for the three months ended September 30, 2024, is driven by the tax impact of lower income compared to the prior year.

This was partially offset by $2.0 million of discrete tax expense recorded in the current year as compared to $3.1 million of discrete tax benefit recorded in the prior year.

For the nine months ended September 30, 2024, and 2023, the Company recorded a provision for income taxes of $3.2 million and a benefit for income taxes of $1.0 million, respectively.

The increase in the Company’s tax provision for the nine months ended September 30, 2024, relative to the prior year primarily relates to changes in the discrete tax recorded year over year, partially offset by lower income compared to the prior year.

Segment Operating Performance

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Dollar Change

4 unchanged sentences

*Measure not meaningful

Americas segment net sales decreased 7.1% for the three months ended June 30, 2024 to $296.7 million from $319.4 million for the same period in 2023.

The decrease was primarily attributable to unfavorable product mix.

In addition, part shortages, logistic constraints and commercial issues impacted the Company’s ability to manufacture and ship products during the period.

Non-new machine sales for the three months ended June 30, 2024 declined $3.4 million when compared to the same period in 2023, primarily due to lower aftermarket parts and used crane shipments.

Americas segment operating income decreased $5.7 million for the three months ended June 30, 2024 to $23.9 million from $29.6 million for the same period in 2023.

The decrease was primarily attributable to lower net sales and higher trade show costs recorded in engineering, selling and administrative expenses.

Americas segment net sales for the six months ended June 30, 2024 was $579.9 million as compared to the $583.8 million for the same period in 2023.

Non-new machine sales for the six months ended June 30, 2024 declined $2.8 million when compared to the same period in 2023, primarily due to lower aftermarket parts and used crane shipments.

Americas segment operating income decreased $4.7 million for the six months ended June 30, 2024 to $53.4 million from $58.1 million for the same period in 2023.

The decrease was primarily attributable to lower net sales and higher costs in engineering, selling and administrative expenses.

EURAF segment net sales decreased 5.2% for the three months ended June 30, 2024 to $176.2 million from $185.8 million for the same period in 2023.

The decrease was primarily attributable to a lower number of crane shipments, primarily in the Company’s tower crane product offering.

This was partially offset by a higher number of crane shipments in the Company’s mobile product offering.

Non-new machine sales for the three months ended June 30, 2024 increased $0.5 million when compared to the same period in 2023, primarily due to an increase in rental utilization and higher used crane shipments.

was partially offset by lower aftermarket part shipments.

Segment net sales was unfavorably impacted by $1.6 million from changes in foreign currency exchange rates.

EURAF segment operating loss increased $13.2 million for the three months ended June 30, 2024 to $6.8 million from operating income of $6.4 million for the same period in 2023.

The increase in the operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

Segment operating loss was favorably impacted by $0.1 million from changes in foreign currency exchange rates.

EURAF segment net sales decreased 12.3% for the six months ended June 30, 2024 to $319.2 million from $364.0 million for the same period in 2023.

The decrease was primarily attributable to a lower number of crane shipments, primarily in the Company’s tower crane product offering.

This was partially offset by a higher number of crane shipments in the Company’s mobile product offering.

Non-new machine sales for the six months ended June 30, 2024 declined $9.0 million when compared to the same period in 2023, primarily due to lower aftermarket parts and used crane shipments.

Americas segment net sales increased 3.7% for the three months ended September 30, 2024 to $287.1 million from $276.8 million for the same period in 2023.

The increase was primarily attributable to higher new crane shipments.

Non-new machine sales for the three months ended September 30, 2024 increased $2.6 million when compared to the same period in 2023, primarily due to higher used crane shipments and remanufacturing work.

Americas segment operating income remained relatively flat at $23.1 million for the three months ended September 30, 2024 as compared to $23.5 million for the same period in 2023.

The decline was primarily due to unfavorable product mix, offset by higher net sales.

Americas segment net sales for the nine months ended September 30, 2024 was $867.0 million as compared to the $860.6 million for the same period in 2023.

The increase was primarily attributable to higher new crane shipments.

Non-new machine sales for the nine months ended September 30, 2024 were flat when compared to the same period in 2023.

Americas segment operating income decreased $5.1 million for the nine months ended September 30, 2024 to $76.5 million from $81.6 million for the same period in 2023.

The decrease was primarily attributable to unfavorable product mix, $2.3 million of higher engineering, selling, and administrative expenses and $0.6 million of higher restructuring costs.

This was partially offset by higher net sales.

EURAF segment net sales decreased 15.8% for the three months ended September 30, 2024 to $126.8 million from $150.6 million for the same period in 2023.

The decrease was primarily attributable to a lower number of new crane shipments, primarily in the Company’s tower crane product offering.

Non-new machine sales for the three months ended September 30, 2024 increased $2.7 million when compared to the same period in 2023, primarily due to an increase in field service work.

Segment net sales was favorably impacted by $1.6 million from changes in foreign currency exchange rates.

EURAF segment operating loss increased $28.6 million for the six months ended June 30, 2024 to $18.6 million from operating income of $10.0 million for the same period in 2023.

The increase in the operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

MEAP segment net sales decreased 8.6% for the three months ended June 30, 2024 to $89.2 million from $97.6 million for the same period in 2023.

The decrease was primarily attributable to lower crane shipments.

Non-new machine sales for the three months ended June 30, 2024 was flat when compared to the same period.

Segment net sales was unfavorably impacted by $1.2 million from changes in foreign currency exchange rates.

MEAP segment operating income decreased $9.7 million for the three months ended June 30, 2024 to $9.3 million from $19.0 million for the same period in 2023.

The decrease was primarily attributable to the lower net sales, higher manufacturing costs, and price attrition.

Segment operating income was unfavorably impacted by $0.1 million from changes in foreign currency exchange rates.

MEAP segment net sales decreased 3.2% for the six months ended June 30, 2024 to $158.1 million from $163.3 million for the same period in 2023.

The decrease was primarily attributable to a lower number of crane shipments.

Non-new machine sales for the six months ended June 30, 2024 increased $2.1 million when compared to the same period in 2023, primarily due to higher used crane shipments, partially offset by lower aftermarket part shipments.

EURAF segment operating loss increased $7.2 million for the three months ended September 30, 2024 to $14.9 million from $7.7 million for the same period in 2023.

The increase in operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

EURAF segment net sales decreased 13.3% for the nine months ended September 30, 2024 to $446.0 million from $514.6 million for the same period in 2023.

The decrease was primarily attributable to a lower number of new crane shipments.

Non-new machine sales for the nine months ended September 30, 2024 declined $6.2 million when compared to the same period in 2023, primarily due to lower aftermarket parts and used crane shipments.

Segment net sales was favorably impacted by $2.3 million from changes in foreign currency exchange rates.

EURAF segment operating loss increased $35.8 million for the nine months ended September 30, 2024 to $33.5 million from operating income of $2.3 million for the same period in 2023.

The increase in operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

MEAP segment net sales increased 18.6% for the three months ended September 30, 2024 to $110.9 million from $93.5 million for the same period in 2023.

The increase was primarily attributable to $9.1 million of higher non-new machine sales, as a

result of higher used crane shipments.

Segment net sales was favorably impacted by $0.8 million from changes in foreign currency exchange rates.

MEAP segment operating income decreased $2.7 million for the three months ended September 30, 2024 to $10.0 million from $12.7 million for the same period in 2023.

The decrease was primarily attributable to unfavorable product mix.

MEAP segment net sales increased 4.8% for the nine months ended September 30, 2024 to $269.0 million from $256.8 million for the same period in 2023.

The increase was primarily attributable to $11.2 million of higher non-new machine sales, as a result of higher used crane shipments.

Segment net sales was unfavorably impacted by $0.6 million from changes in foreign currency exchange rates.

MEAP segment operating income decreased $10.1 million for the six months ended June 30, 2024 to $17.5 million from $27.6 million for the same period in 2023.

The decrease was primarily attributable to the lower net sales, higher manufacturing costs, and price attrition.

MEAP segment operating income decreased $12.8 million for the nine months ended September 30, 2024 to $27.5 million from $40.3 million for the same period in 2023.

The decrease was primarily attributable to higher manufacturing costs and unfavorable product mix.

Financial Condition

A summary of cash flows for the six months ended June 30, 2024 and 2023 are as follows:

Six Months Ended

A summary of cash flows for the nine months ended September 30, 2024 and 2023 are as follows:

Nine Months Ended

September 30,

Dollar Change

Net cash used for operating activities

Net cash provided by (used for) operating activities

Net cash used for investing activities

Net cash provided by (used for) financing activities

Net cash provided by financing activities

Cash and cash equivalents

Cash Flows From Operating Activities

Cash flows used for operating activities of $19.6 million for the six months ended June 30, 2024 increased $16.5 million from $3.1 million for the same period in 2023.

The increase in net cash used for operating activities was primarily due to lower net income adjusted for non-cash items.

Cash flows used for operating activities of $63.2 million for the nine months ended September 30, 2024 increased $86.4 million from cash flows provided by operating activities of $23.2 million for the same period in 2023.

The increase in net cash used for operating activities was primarily due to lower net income (loss) adjusted for non-cash items and an increase in net working capital primarily related to higher inventory.

Cash Flows From Investing Activities

Net cash used for investing activities of $21.6 million for the six months ended June 30, 2024 decreased $9.6 million from $31.2 million for the same period in 2023.

The decrease in net cash used for investing activities was primarily due to $11.2 million of lower capital expenditures.

This was partially offset by $1.6 million of lower proceeds from the sale of property, plant and equipment.

Net cash used for investing activities of $29.1 million for the nine months ended September 30, 2024 decreased $25.5 million from $54.6 million for the same period in 2023.

The decrease in net cash used for investing activities was due to $25.5 million of lower capital expenditures.

Cash Flows From Financing Activities

Net cash provided by financing activities of $45.7 million for the six months ended June 30, 2024 increased $50.1 million from net cash used for financing activities of $4.4 million for the same period in 2023.

The increase in net cash provided by financing activities was primarily due to $35.5 million of additional proceeds from the revolving credit facility when compared to the prior year, $10.1 million of proceeds from other debt – net compared to $1.2 million of payments in the prior year, and $10.0 million of payments on the revolving credit facility in the prior year compared to zero in the current year.

This was partially offset by $6.2 million of payments for other financing activities.

Net cash provided by financing activities of $81.0 million for the nine months ended September 30, 2024 increased $73.6 million from $7.4 million for the same period in 2023.

The increase in net cash provided by financing activities was primarily due to $77.4 million of additional proceeds from the revolving credit facility and a $9.6 million increase of proceeds from other debt – net when compared to the prior year.

This was partially offset by $6.7 million of payments for other financing activities and $6.2 million of payments for debt issuance costs related to the refinancing of the ABL Revolving Credit Facility and 2026 Notes.

Liquidity and Capital Resources

The Company’s liquidity position as of June 30, 2024, December 31, 2023 and June 30, 2023 is summarized as follows:

June 30, 2024

The Company’s liquidity position as of September 30, 2024, December 31, 2023 and September 30, 2023 is summarized as follows:

September 30, 2024

December 31, 2023

June 30, 2023

September 30, 2023

Cash and cash equivalents

11 unchanged sentences

The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2031 Notes and the related guarantees.

The ABL Revolving Credit Facility has a maturity date of May 19, 2027 (with a springing maturity date of December 30, 2025 if the 2026 Notes have not been repaid in full or refinanced prior to December 30, 2025), and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company’s German subsidiary that is a borrower under the ABL Revolving Credit Facility.

The ABL Revolving Credit Facility has a maturity date of September 18, 2029, and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the German Borrower.

In addition to the ABL Revolving Credit Facility, the Company has access to committed and non-committed lines of credit to fund working capital in Europe and China.

There are six lines of credit, of which five are denominated in Euros totaling €37.0 million and one denominated in Chinese Yuan for ¥30.0 million.

dollar availability as of June 30, 2024 for the six lines of credit is $43.8 million, with $20.3 million outstanding.

Outstanding debt as of June 30, 2024 and December 31, 2023 is summarized as follows:

June 30, 2024

dollar availability as of September 30, 2024 for the six lines of credit is $45.5 million, with $39.5 million outstanding.

Outstanding debt as of September 30, 2024 and December 31, 2023 is summarized as follows:

September 30, 2024

December 31, 2023

1 unchanged sentence

Senior secured second lien notes due 2026

Senior secured second lien notes due 2031

Deferred financing costs

19 unchanged sentences

Income taxes are defined as income tax payables/receivables, net deferred tax assets/liabilities, and uncertain tax positions.

The Company’s Adjusted ROIC as of June 30, 2024 was 7.1%.

Below is the calculation of Adjusted ROIC as of June 30, 2024.

The Company’s Adjusted ROIC as of September 30, 2024 was 6.2%.

Below is the calculation of Adjusted ROIC as of September 30, 2024.

Three Months Ended

September 30, 2024

June 30, 2024

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December 31, 2023

September 30, 2023

Trailing Twelve Months

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Adjusted NOPAT

September 30, 2024

June 30, 2024

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September 30, 2023

June 30, 2023

5-Quarter Average

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Adjusted ROIC

(1) Other non-recurring items - net for the three months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the U.S.

EPA and $0.1 million of one-time costs.

(1) Other non-recurring items - net for the three months ended September 30, 2024 relate to $2.6 million of costs associated with a legal matter with the U.S.

Other non-recurring items – net for the trailing twelve months relate to $18.3 million of costs associated with a legal matter with the U.S.

EPA and $0.6 million of one-time costs.

Refer to the Company’s previously filed Form 10-K and Form 10-Qs for a description of other non-recurring items - net for the three months ended March 31, 2024, December 31, 2023, and September 30, 2023.

Refer to the Company’s previously filed Form 10-K and Form 10-Qs for a description of other non-recurring items - net for the three months ended June 30, 2024, March 31, 2024, and December 31, 2023.

EBITDA and Adjusted EBITDA

The Company defines EBITDA as net income before interest, taxes, depreciation, and amortization.

The Company defines adjusted EBITDA as EBITDA plus the addback or subtraction of restructuring expense, other (income) expense - net, and other non-recurring items.

The reconciliation of net income to EBITDA, and further to adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 and trailing twelve months is summarized as follows.

The Company defines EBITDA as net income (loss) before interest, taxes, depreciation, and amortization.

The Company defines adjusted EBITDA as EBITDA plus the addback or subtraction of restructuring expense, other (income) expense - net, and other non-recurring items - net.

The reconciliation of net income (loss) to EBITDA, and further to adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 and trailing twelve months is summarized as follows.

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Trailing Twelve

Net income (loss)

Interest expense and amortization of deferred

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Adjusted EBITDA margin percentage

(1) Other non-recurring items - net for the three months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the U.S.

(1) Other non-recurring items - net for the three months ended September 30, 2024 relate to $2.6 million of costs associated with a legal matter with the U.S.

Other non-recurring items - net for the nine months ended September 30, 2024 relate to $7.9 million of costs associated with a legal matter with the U.S.

EPA and $0.2 million of one-time costs.

Other non-recurring items - net for the six months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the U.S.

Other non-recurring items - net for the three months ended September 30, 2023 relate to $0.2 million of one-time costs.

Other non-recurring items - net for the nine months ended September 30, 2023 relate to $10.8 million of costs associated with a legal matter with the U.S.

EPA and $0.2 million of one-time costs.

Other non-recurring items - net for the three and six months ended June 30, 2023 relate to $10.8 million of costs associated with a legal matter with the U.S.

Other non-recurring items – net for the trailing twelve months relate to $18.3 million of costs associated with a legal matter with the U.S.

EPA and $0.6 million of one-time costs.

(2) Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three and trailing twelve months ended June 30, 2024 and the three months ended June 30, 2023.

Other expense – net for the three and six months ended June 30, 2023 includes a $9.3 million write-off of non-cash foreign currency translation adjustments from the curtailment of operations in Russia.

(2) Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three, nine, and trailing twelve months ended September 30, 2024 and the three and nine months ended September 30, 2023.

Other expense – net for the nine and trailing twelve months ended September 30, 2023 includes a $9.3 million write-off of non-cash foreign currency translation adjustments from the curtailment of operations in Russia.

Free Cash Flows

Free cash flows is defined as net cash used for operating activities less cash outflow from investment in capital expenditures.

The reconciliation of net cash used for operating activities to f ree cash flows for the six months ended June 30, 2024 and 2023 is summarized as follows.

Six Months Ended

Net cash used for operating activities

Free cash flows is defined as net cash provided by (used for) operating activities less cash outflow from investment in capital expenditures.

The reconciliation of net cash used for operating activities to f ree cash flows for the nine months ended September 30, 2024 and 2023 is summarized as follows.

Nine Months Ended

September 30,

Net cash provided by (used for) operating activities

Capital expenditures

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis