What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-25 compared with 2023-02-23 · 106 added, 62 removed, 61 unchanged (73% of the section changed)

6 unchanged sentences

COVID-19 Update

In December 2019, a novel strain of coronavirus (COVID-19) emerged and has since spread to other countries, including the United States.

In December 2019, a novel strain of coronavirus (COVID-19) emerged and spread to other countries, including the United States.

In March 2020, the World Health Organization declared COVID-19 as a pandemic (the COVID-19 pandemic).

The COVID-19 pandemic, including multiple variants, has resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business interruptions and other measures.

Throughout the COVID-19 pandemic, we have supported, and continue to support, multiple “critical infrastructure” sectors by manufacturing materials and products needed for medical supply chains, packaging, transportation, energy, communications, and other critical infrastructure industries.

We have benefited from our geographical and product diversification as the end markets we serve have remained resilient in response to the COVID-19 pandemic, and we continue to invest in the businesses, people, and strategies necessary to achieve our long-term priorities as we focus on driving profitable growth.

We have continued to operate during the COVID-19 pandemic in all our production facilities, having taken the recommended public health measures to ensure worker and workplace safety.

As a result, there have been unfavorable impacts on our manufacturing efficiencies.

Additionally, we are taking steps to offset cost increases from COVID-19 pandemic-related supply chain disruptions.

We continue to actively monitor the rapidly evolving circumstances and impact of the COVID-19 pandemic, which has negatively disrupted, and may continue to negatively disrupt, our business and results of operations in the future.

The COVID-19 pandemic, including multiple variants, resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business interruptions and other measures.

Although the World Health Organization declared an end to the COVID-19 pandemic on May 5, 2023, we continue to actively monitor the impact of COVID-19, which has negatively disrupted, and may continue to negatively disrupt, our business and results of operations in the future.

For example, in the first quarter of 2023, our revenue growth in Asia-Pacific was negatively impacted by labor shortages and business disruption from the spread of COVID-19.

The full extent of the COVID-19 pandemic on our operations and the markets we serve remains highly uncertain and will depend largely on future developments related to the COVID-19 pandemic, including infection rates increasing or returning in various geographic areas, variations of COVID-19, the ultimate duration of the COVID-19 pandemic, actions by government authorities to contain the outbreak or treat its impact, such as reimposing previously lifted measures or putting in place additional restrictions, and the widespread distribution and acceptance of an effective vaccine, among other things.

These developments are constantly evolving and cannot be accurately predicted.

The full extent of COVID-19 on our operations and the markets we serve remains uncertain and will depend largely on future developments related to COVID-19, including infection rates increasing or returning in various geographic areas, variations of COVID-19, actions by government authorities to contain the outbreak or treat its impact, such as reimposing previously lifted measures or putting in place additional restrictions, and the widespread distribution and acceptance of an effective vaccine, among other things.

Future developments regarding COVID-19 and its effects cannot be accurately predicted.

CyberOptics Acquisition

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There have been no significant changes in critical accounting policies, management estimates or accounting policies followed since the year ended October 31, 2022.

Nordson Corporation

Results of Operations

Three months ended January 31, 2023

Worldwide sales for the three months ended January 31, 2023 were $610,477, an increase of 0.2% from sales of $609,166 for the comparable period of 2022.

The increase consisted of a 1.4% increase in organic sales and a favorable 2.8% increase due to an acquisition, which was partially offset by an unfavorable effect from currency translation of 4.0%.

The organic sales increase was driven by strong demand in Europe and the Americas region, partially offset by weakness in the Asia Pacific region, predominantly in China.

In the Americas region, sales were $264,878 for the three months ended January 31, 2023, an increase of 10.4% from 2022, consisting of an organic sales increase of 8.6% and an increase due to an acquisition of 2.1%, partially offset by unfavorable currency effects of 0.3%.

In the Asia Pacific region, sales were $182,660, a decrease of 14.4% from 2022, consisting of an organic sales decrease of 13.3% and a 5.8% decrease due to unfavorable currency effects, partially offset by a 4.7% increase due to an acquisition.

In Europe, sales were $162,939, an increase of 4.5% from 2022, consisting of an organic sales increase of 10.7% and a 1.3% increase due to an acquisition, partially offset by unfavorable currency effects of 7.5%.

Cost of sales for the three months ended January 31, 2023 were $281,610, up from $269,032 in the comparable period of 2022.

Three months ended April 30, 2023

Worldwide sales for the three months ended April 30, 2023 were $650,165, an increase of 2.3% from sales of $635,403 for the comparable period of 2022.

The increase consisted of a 1.3% increase in organic sales and a 2.8% increase due to an acquisition, which was partially offset by an unfavorable effect from currency translation of 1.8%.

The organic sales increase was driven by strong growth in the Asia Pacific region.

In the Americas region, sales were $278,731 for the three months ended April 30, 2023, an increase of 1.8% from the comparable period of 2022, consisting of an increase due to an acquisition of 2.4%, partially offset by an organic sales decrease of 0.6%.

In the Asia Pacific region, sales were $203,530, an increase of 7.5% from the comparable period of 2022, consisting of an organic sales increase of 7.4% and a 4.2% increase due to an acquisition, partially offset by unfavorable currency effects of 4.1%.

Nordson Corporation

Europe, sales were $167,904, a decrease of 2.5% from the comparable period of 2022, consisting of an organic sales decrease of 2.3% and unfavorable currency effects of 2.3%, partially offset by a 2.1% increase due to an acquisition.

Cost of sales for the three months ended April 30, 2023 were $298,040, up from $277,768 in the comparable period of 2022.

Gross profit, expressed as a percentage of sales, decreased to 54.2% from 56.3% in the comparable period of 2022.

The 1.9 percentage point decrease in gross margin was primarily driven by the impact of passing through inflationary cost increases and incremental inventory step-up amortization of $2,743.

Selling and administrative expenses for the three months ended January 31, 2023 were $184,648, up from $184,274 in the comparable period of 2022.

The 0.2% increase was primarily driven by the first-year effect of an acquisition, partially offset by favorable currency translation effects and a reduction in variable expenses.

Operating profit decreased to $144,219 for the three months ended January 31, 2023, compared to $155,860 in the comparable period of 2022.

Operating profit as a percentage of sales decreased to 23.6% f or the three months ended January 31, 2023 compared to 25.6% in the comparable period of 2022 .

The 2.0 percentage point decline in operating margin was primarily driven by fees, severance and non-cash inventory charges associated with the CyberOptics acquisition, as well as unfavorable currency translation effects.

Interest expense for the three months ended January 31, 2023 was $10,530, compared to $5,650 in the comparable period of 2022.

The 2.1 percentage point decrease in gross margin was primarily driven by reduced manufacturing efficiency in sites dealing with meaningful volume decreases and unfavorable sales mix.

Selling and administrative expenses for the three months ended April 30, 2023 were $179,618, up from $173,662 in the comparable period of 2022.

The 3.4% increase was primarily driven by the first-year effect of an acquisition and severance-related cost structure simplification actions, partially offset by favorable currency translation effects and lower incentive costs.

Operating profit decreased to $172,507 for the three months ended April 30, 2023, compared to $183,973 in the comparable period of 2022.

Operating profit as a percentage of sales decreased to 26.5% f or the three months ended April 30, 2023, compared to 29.0% in the comparable period of 2022 .

The 2.5 percentage point decline in operating margin was primarily driven by unfavorable currency translation effects and lower gross margins.

Interest expense for the three months ended April 30, 2023 was $9,913, compared to $5,361 in the comparable period of 2022.

The increase was primarily due to higher average debt levels compared to the prior year period, as well as increases in interest rates.

Other expense was $3,196 compared to other income of $1,292 in the comparable period of 2022.

Other expense was $1,405 compared to $39,764 in the comparable period of 2022.

Included in 2023 other expense were pension and postretirement income of $1,332 and $2,168 of foreign currency losses.

Included in 2022 other income were pension and postretirement income of $281 and $364 of foreign currency gains.

Net income for the three months ended January 31, 2023 was $104,261, or $1.81 per diluted share, compared to $120,409, or $2.05 per diluted share, in the same period of 2022.

This represents a 13.4% decrease in net income, and a 11.7% decrease in diluted earnings per share.

The decrease was driven by a combination of fees, severance, and non-cash inventory charges associated with the CyberOptics acquisition, increased interest expense, and foreign currency losses.

Included in 2022 other expense were non-cash pension settlement charges of $41,221 related to the purchase of an annuity contract to relieve the Company of certain pension benefit obligations, pension and postretirement income of $746 and $1,000 in foreign currency gains.

Net income for the three months ended April 30, 2023 was $127,563, or $2.21 per diluted share, compared to $109,634, or $1.88 per diluted share, in the same period of 2022.

This represents a 16.4% increase in net income, and a 17.6% increase in diluted earnings per share.

Net income for the three months ended April 30, 2022 includes after tax non-cash pension settlement charges of $32,450, or $0.56 per diluted share, related to the purchase of an annuity contract to relieve the Company of certain pension benefit obligations.

Excluding the prior year pension settlement charges, the reduction in income was driven by lower margins and increased interest expense.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $311,546 in the three months ended January 31, 2023, a decrease of 3.8% from sales in the comparable period of 2022 of $323,933.

The decrease consisted of an organic sales increase of 1.2%, which was offset by unfavorable currency effects that decreased sales by 5.0%.

The organic sales increase was driven primarily by steady demand across most product lines and regions, offset by softness in the Asia Pacific region due to labor shortages and business disruption from the spread of COVID-19, as well as the timing of the Chinese New Year.

Operating profit as a percentage of sales increased to 32.8% for the three months ended January 31, 2023 compared to 31.5% in the comparable period of 2022 .

The 1.3 percentage point improvement in operating margin was primarily due to favorable product mix.

Sales of the Industrial Precision Solutions segment were $335,807 in the three months ended April 30, 2023, an increase of 6.1% from sales of $316,434 for the comparable period of 2022.

The increase consisted of an organic sales increase of 8.5%, which was partially offset by unfavorable currency effects that decreased sales by 2.4%.

The organic sales increase was driven primarily by robust demand in the polymer processing product lines and for products in the consumer non-durable end market across most regions.

Operating profit as a percentage of sales increased to 33.3% for the three months ended April 30, 2023, compared to 32.3% in the comparable period of 2022 .

The 1.0 percentage point improvement in operating margin was primarily due to lower selling and administrative expenses as a percentage of sales.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $154,287 in the three months ended January 31, 2023, a decrease of 2.8% from sales in the comparable period of 2022 of $158,784.

Sales of the Medical and Fluid Solutions segment were $166,526 in the three months ended April 30, 2023, a decrease of 3.3% from sales of $172,212 for the comparable period of 2022.

The decrease consisted of an organic sales decrease of 2.3% and unfavorable currency effects that decreased sales by 1.0%.

The organic sales decrease was driven by lower demand for the medical fluid components product lines and fluid solutions product lines in China, offset by strong demand for medical interventional solutions product lines.

The organic sales decrease was driven by significant softness in the medical fluid components and fluid solutions product lines, offset by strong demand for medical interventional solutions product lines.

Operating profit as a percentage of sales decreased to 28.8% for the three months ended April 30, 2023 compared to 33.9% in the comparable period of 2022 .

T he 5.1 percentage point decline in operating margin was primarily due to meaningful sales mix changes within medical product lines and related factory inefficiencies due to reduced volumes.

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $147,832 in the three months ended April 30, 2023, an increase of 0.7% from sales of $146,757 for the comparable period of 2022.

The increase was the result of a 12.3% increase due to an acquisition, substantially offset by an organic sales decrease of 9.9% and unfavorable currency effects of 1.7%.

The organic sales decrease was driven by lower demand in electronic dispense product lines, more than offsetting steady demand in test and inspection product lines, particularly strong in the Asia Pacific region.

Nordson Corporation

Operating profit as a percentage of sales decreased to 25.5% for the three months ended January 31, 2023 compared to 30.9% in the comparable period of 2022 .

Operating profit as a percentage of sales decreased to 17.6% for the three months ended April 30, 2023, compared to 27.4% in the comparable period of 2022 .

T he 9.8 percentage point decline in operating margin was driven by the organic sales decrease, partially offset by profitable acquisition growth .

Six months ended April 30, 2023

Worldwide sales for the six months ended April 30, 2023 were $1,260,642, an increase of 1.3% from sales of $1,244,569 for the comparable period of 2022.

The increase consisted of a 1.3% increase in organic sales volume and a 2.8% increase due to an acquisition, partially offset by an unfavorable effect from currency translation of 2.8%.

Strength in consumer non-durable end markets and medical interventional solutions product lines were the primary drivers of the growth.

In the Americas region, sales were $543,610 for the six months ended April 30, 2023, an increase of 5.8% from the comparable period of 2022, consisting of an organic sales increase of 3.7% and an increase due to an acquisition of 2.2%, minimally offset by an unfavorable effect from currency translation of 0.1%.

In the Asia Pacific region, sales were $386,189, a decrease of 4.1% from the comparable period of 2022, consisting of an organic sales decrease of 3.6% and a 4.9% decrease from unfavorable currency translation effects, partially offset by a 4.4% increase due to an acquisition.

In Europe, sales were $330,843, an increase of 0.8% from the comparable period of 2022, consisting of an organic sales increase of 3.6% and a 1.7% increase due to an acquisition, significantly offset by unfavorable currency effects of 4.5%.

Cost of sales for the six months ended April 30, 2023 were $579,650, up from $546,800 in the comparable period of 2022.

Gross profit, expressed as a percentage of sales, decreased to 54.0% from 56.1% in the comparable period of 2022.

The 2.1 percentage point decrease in gross margin was driven by an unfavorable product mix impact, reduced manufacturing efficiency in sites dealing with meaningful volume decreases and incremental inventory step-up amortization of $2,743 incurred in the first quarter of 2023 compared to 2022 .

Selling and administrative expenses for the six months ended April 30, 2023 were $364,266, up from $357,936 in the comparable period of 2022.

The 1.8% increase was primarily driven by the first-year effect of acquisitions and severance related to cost structure simplification actions, partially offset by favorable currency translation effects and lower incentive costs.

Operating profit decreased to $316,726 for the six months ended April 30, 2023, compared to $339,833 in the comparable period of 2022.

Operating profit as a percentage of sales decreased to 25.1% f or the six months ended April 30, 2023, compared to 27.3% in the comparable period of 2022 .

The 2.2 percentage point decline in operating margin was primarily driven by unfavorable sales mix, unfavorable foreign currency translation and a combination of fees, severance and non-cash inventory charges associated with the CyberOptics acquisition .

Interest expense for the six months ended April 30, 2023 was $20,443, compared to $11,011 in the comparable period of 2022.

The increase was due to higher average debt levels and higher variable interest rates compared to the prior year period.

Other expense was $4,601 compared to $38,472 in the comparable period of 2022.

Included in 2023 other expense were pension income of $2,701 and $6,739 in foreign currency losses.

Included in 2022 other expense were non-cash pension settlement charges of $41,221 related to the purchase of an annuity contract to relieve the Company of certain pension benefit obligations, other pension and postretirement income of $1,027 and $1,364 in foreign currency gains.

Net income for the six months ended April 30, 2023 was $231,824, or $4.02 per diluted share, compared to $230,043, or $3.93 per diluted share, in the same period of 2022.

This represents a 0.8% increase in net income, and a 2.3% increase in diluted earnings per share.

Net income for the six months ended April 30, 2022 includes after tax non-cash pension settlement charges of $32,450, or $0.56 per diluted share, related to the purchase of an annuity contract to relieve the Company of certain pension benefit obligations.

Excluding the prior year pension settlement charges, the decrease was driven primarily by a combination of lower margins;

fees, severance and non-cash inventory charges associated with the CyberOptics acquisition;

and higher interest expense.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $647,353 in the six months ended April 30, 2023, an increase of 1.1% from sales of $640,367 for the comparable period of 2022.

The increase consisted of an organic sales increase of 4.8%, partially offset by unfavorable currency effects that decreased sales by 3.7%.

The organic sales increase was driven primarily by strong demand in polymer processing product lines and consumer non-durable end markets.

Operating profit as a percentage of sales increased to 33.1% for the six months ended April 30, 2023, compared to 31.9% in the comparable period of 2022 .

The 1.2 percentage point improvement in operating margin was driven by favorable margins and lower selling and administrative expenses as a percentage of sales.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $320,813 in the six months ended April 30, 2023, a decrease of 3.1% from sales of $330,996 for the comparable period of 2022.

The decrease consisted of an organic sales decrease of 1.5% and unfavorable

Nordson Corporation

currency effects that decreased sales by 1.6%.

The organic sales decrease was driven by lower demand for the medical fluid components and fluid solutions product lines, partially offset by strong demand for medical interventional solutions product lines.

Operating profit as a percentage of sales decreased to 27.2% for the six months ended April 30, 2023, compared to 32.4% in the comparable period of 2022 .

T he 5.2 percentage point decline in operating margin was primarily due to meaningful sales mix changes within medical product lines and related factory inefficiencies due to reduced volumes.

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $144,644 in the three months ended January 31, 2023, an increase of 14.4% from sales in the comparable period of 2022 of $126,449.

The increase was the result of organic sales increase of 4.6% and a 13.5% increase due to an acquisition, partially offset by an unfavorable currency effect of 3.7%.

The organic sales increase was driven by test and inspection product lines.

Operating profit as a percentage of sales decreased to 11.7% for the three months ended January 31, 2023 compared to 21.5% in the comparable period of 2022 .

T he 9.8 percentage point decline in operating margin was primarily due to fees, severance and non-cash inventory charges of $10,295 associated with the CyberOptics acquisition and unfavorable sales mix.

Sales of the Advanced Technology Solutions segment were $292,476 in the six months ended April 30, 2023, an increase of 7.1% from sales of $273,206 for the comparable period of 2022.

The increase was the result of a 12.9% increase due to an acquisition, partially offset by an organic sales volume decrease of 3.3% and unfavorable currency effects of 2.5%.

The organic sales decrease was driven by lower demand in electronic dispense product lines, partially offset by stronger demand in test and inspection product lines in the Asia Pacific region.

Operating profit as a percentage of sales decreased to 14.7% for the six months ended April 30, 2023, compared to 24.7% in the comparable period of 2022 .

T he 10.0 percentage point decline in operating margin was primarily due to fees, severance and non-cash inventory charges of $10,295 associated with the CyberOptics acquisition incurred in the first quarter of 2023 and factory inefficiencies due to reduced volumes.

We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period.

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We review our tax positions on a regular basis and adjust the balances as new information becomes available.

The effective tax rate for the three months ended January 31, 2023 was 20.5%, compared to 20.8% for the three months ended January 31, 2022.

The effective tax rate for the three and six months ended April 30, 2023 was 21.1% and 20.8% respectively, compared to 21.3% and 21.0% for the three and six months ended April 30, 2022, respectively.

Due to our share-based payment transactions, our income tax provision included a discrete tax benefit of $583 and $1,749, for the three months and six months ended April 30, 2023, respectively, compared to $309 and $1,424 for the three and six months ended April 30, 2022, respectively.

Foreign Currency Effects

2 unchanged sentences

It is not possible to precisely measure the impact on operating results arising from foreign currency exchange rate changes, because of changes in selling prices, sales volume, product mix and cost structure in each country in which we operate.

However, if transactions for the three months ended January 31, 2023 were translated at exchange rates in effect during the same period of 2022, we estimated that sales would have been approximately $24,800 higher while costs of sales and selling and administrative expenses would have been approximately $16,600 higher.

However, if transactions for the three months ended April 30, 2023 were translated at exchange rates in effect during the same period of 2022, we estimated that sales would have been approximately $14,200 higher while costs of sales and selling and administrative expenses would have been approximately $8,800 higher.

If transactions for the six months ended April 30, 2023 were translated at exchange rates in effect during the same period of 2022, we estimated that sales would have been approximately $39,000 higher while costs of sales and selling and administrative expenses would have been approximately $25,400 higher.

Financial Condition

Liquidity and Capital Resources

During the three months ended January 31, 2023, cash and cash equivalents decreased $41,463 as cash was used to fund the CyberOptics acquisition, partially offset by incremental borrowings and cash generated from operations in the period.

Cash provided by operations during this period was $123,337 compared to $118,087 for the three months ended January 31, 2022.

Changes in operating assets and liabilities decreased cash by $58,371 in the three months ended January 31, 2023, primarily driven by a decrease in accounts payable and accrued liabilities, compared to decreasing cash by $29,217 in the comparable period of 2022.

During the six months ended April 30, 2023, cash and cash equivalents decreased $34,384 as cash was used to fund the CyberOptics acquisition, partially offset by incremental borrowings and cash generated from operations in the period.

Cash provided by operations during this period was $287,905 compared to $214,501 for the six months ended April 30, 2022.

Changes in operating assets and liabilities decreased cash by $45,857 in the six months ended April 30, 2023 and decreased cash by $85,070 in the comparable period of 2022.

The decrease in cash from operating assets and liabilities was due primarily to a decrease in accrued liabilities in both periods.

Other improved year over year due primarily to cash inflows related to settlement of foreign exchange contracts.

Cash used in investing activities was $387,136 for the three months ended January 31, 2023, compared to $184,097 used in the comparable period of 2022.

During the three months ended January 31, 2023, cash of $377,843 was used for the CyberOptics acquisition and cash of $9,302 was used for capital expenditures.

During the three months ended January 31, 2022, cash of $171,613 was used for the NDC acquisition and $12,491 was used for capital expenditures.

The decrease in capital expenditures related primarily to 2022 expenditures being higher as a result of capacity expansion in our medical fluid dispensing and components product lines.

Cash provided by financing activities was $215,693 for the three months ended January 31, 2023, compared to $61,902 cash used in the comparable period of 2022.

In the three months ended January 31, 2023, cash of $37,199 was used for dividend payments and cash of $6,875 was used for the purchase of treasury shares, compared to $29,724 and $35,002, respectively, in the comparable period of 2022.

The three months ended January 31, 2023 included net borrowings of long-term debt of $252,278, used primarily to fund the acquisition of CyberOptics, compared to net repayments of $1,257 during the three months ended January 31, 2022 .

The following is a summary of significant changes in balance sheet captions from October 31, 2022 to January 31, 2023.

Cash used in investing activities was $393,153 for the six months ended April 30, 2023, compared to $196,374 used in the comparable period of 2022.

During the six months ended April 30, 2023, cash of $377,843 was used for the CyberOptics acquisition and cash of $15,349 was used for capital expenditures.

During the six months ended April 30, 2022, cash of $171,613 was used for the NDC acquisition and $24,776 was used for capital expenditures.

Nordson Corporation

Cash provided by financing activities was $64,822 for the six months ended April 30, 2023, compared to $192,935 cash used in the comparable period of 2022.

In the six months ended April 30, 2023, cash of $74,463 was used for dividend payments and cash of $54,365 was used for the purchase of treasury shares, compared to $59,301 and $140,466, respectively, in the comparable period of 2022.

The six months ended April 30, 2023 included net borrowings of long-term debt of $184,617, used primarily to fund the acquisition of CyberOptics, compared to net repayments of $1,654 during the six months ended April 30, 2022 .

The following is a summary of significant changes in balance sheet captions from October 31, 2022 to April 30, 2023.

Inventories-net increased by $56,781, primarily as a result of the CyberOptics acquisition.

Goodwill and intangibles increased by $279,630 and $58,600, respectively, due to the CyberOptics acquisition.

Accrued liabilities decreased by $49,964 due primarily to incentive compensation payments made in the three months ended January 31, 2023, and long-term debt increased principally as result of borrowing $250,000 under the revolving credit facility for the CyberOptics acquisition.

Nordson Corporation

We believe the combination of present capital resources, cash from operations and unused financing sources, such as our credit facilities, which includes our revolving credit facility and new term loan entered in January 2023, are more than adequate to meet cash requirements for the next twelve months and for the foreseeable future thereafter.

Accrued liabilities decreased by $48,520 due primarily to incentive compensation payments made in the six months ended April 30, 2023, and Current maturities of long-term debt and notes payable increased principally as result of borrowings under the revolving credit facility for the CyberOptics acquisition.

We believe the combination of present and expected capital resources, cash from operations and unused financing sources, such as our credit facilities, which includes our revolving credit facility and new term loan entered in January 2023, are more than adequate to meet cash requirements for the next twelve months and for the foreseeable future thereafter.

There are no significant restrictions limiting the transfer of funds from international subsidiaries to the parent Company.

We were in compliance with all debt covenants as of January 31, 2023.

We were in compliance with all debt covenants as of April 30, 2023.

Refer to our Long-term debt Note in the notes to our condensed consolidated financial statements for additional details regarding our debt outstanding.

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the effects of changes in tax law;

and the possible effects of events beyond our control, such as political unrest, including the conflict between Russia and Ukraine and tensions between the United States and China, acts of terror, natural disasters and pandemics, including the COVID-19 pandemic.

In light of these risks and uncertainties, actual events and results may vary significantly from those included in or contemplated or implied by such statements.

4 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