What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-12-18 compared with 2023-12-20 · 126 added, 90 removed, 151 unchanged (59% of the section changed)

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We use an independent valuation specialist to assist with refining our assumptions and methods used to determine fair values.

To test for goodwill impairment, we estimate the fair value of each of our reporting units using a combination of the Income Approach and the Market Approach.

The discounted cash flow method ("Income Approach") uses assumptions for revenue growth, operating margin and working capital turnover that are based on management’s strategic plans tempered by performance trends and reasonable expectations about those trends.

To test for goodwill impairment, we estimate the fair value of each of our reporting units using a combination of the discounted cash flow method ("Income Approach") and the Market Approach.

The Income Approach uses assumptions for revenue growth, operating margin and working capital turnover that are based on management’s strategic plans tempered by performance trends and reasonable expectations about those trends.

Terminal value calculations employ a published formula known as the Gordon Growth Model Method that essentially captures the present value of perpetual cash flows beyond the last projected period assuming a constant Weighted Average Cost of Capital ("WACC") methodology and growth rate.

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Industrial Precision Solutions Segment - Industrial Coating Systems 9.0% 3,451% $ 24,083

Advanced Technology Solutions Segment - Electronics

9.0% 387% $ 27,534

Advanced Technology Solutions Segment - Electronics Systems 8.5% 252% $ 27,442

Advanced Technology Solutions Segment - Test & Inspection 8.5% 173% $ 375,707

Medical and Fluid Solutions Segment - Fluid

9.0% 186% $ 1,175,938

Medical and Fluid Solutions Segment - Fluid Management 8.5% 170% $ 1,175,199

Pension plan in the United States - The measurement of the liabilities related to our domestic pension plan is based on management’s assumptions related to future factors, including interest rates, return on pension plan assets, compensation increases, mortality and turnover assumptions and health care cost trend rates.

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Bracketed numbers represent decreases in expense and obligation amounts.

United States

Increase 1% Point

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Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain changes in valuation allowances.

We provide valuation allowances

We provide valuation allowances against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Management believes the valuation allowances are adequate after considering future taxable income, allowable carryforward periods and ongoing prudent and feasible tax planning strategies.

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Any resulting differences are recorded in the period they become known.

ARAG Group Acquisition

On August 24, 2023, the Company completed the acquisition of the ARAG Group pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company and the Sellers.

ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying.

ARAG operates as a division of our Industrial Precision Solutions segment.

In anticipation of the acquisition, the Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the “364-Day Term Loan Facility”).

The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using borrowings under the 364-Day Term Loan Facility and the Company's revolving credit facility.

The 364-Day Term Loan Facility was subsequentially paid off in September 2023 with the net proceeds of a senior notes offering (see Note 9 to the Consolidated Financial Statements for additional details).

Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $694,900 and identifiable intangible assets of $353,500 were recorded.

The identifiable intangible assets consist primarily of $27,500 of tradenames (amortized over nine years), $31,000 of technology (amortized over five years), and $295,000 of customer relationships (amortized over twenty-two years).

The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.

Atrion Acquisition

On August 21, 2024, the Company completed the acquisition of Atrion, pursuant to the terms of the Merger Agreement with Merger Sub and Atrion.

Pursuant to the Merger Agreement, Merger Sub merged with and into Atrion (the “Merger”), with Atrion surviving the Merger as a wholly owned subsidiary of Nordson.

Atrion is a leader in proprietary medical infusion fluid delivery and niche cardiovascular solutions and will operate within our Medical and Fluid Solutions segment.

The all-cash acquisition of Atrion of $789,996, net of cash acquired, was funded using borrowings under our revolving credit facility, and the 364-day term loan agreement with a group of banks for a delayed draw term loan facility in the aggregate principal amount of $500,000 (the "364-Day Term Loan Agreement") (see Note 8 to the Consolidated Financial Statements for additional details) and cash on hand.

Based on the fair value of the assets acquired and the liabilities assumed, a preliminary purchase price allocation resulted in the recognition of $494,279 of goodwill and $129,600 of identifiable intangible assets.

The identifiable intangible assets consist primarily of $40,100 of tradenames (amortized over 15 years), $24,900 of technology (amortized over 15 years), and $64,600 of customer relationships (amortized over 19 years).

The financial results of the Atrion acquisition are not expected to have a material impact on our Consolidated Financial Statements.

Results of Operations

Below is a detailed discussion comparison of our results of operations for the fiscal years ended October 31, 2023 and October 31, 2022.

Below is a detailed comparison of our results of operations for the fiscal years ended October 31, 2024 and October 31, 2023.

For a discussion of other changes from the fiscal year ended October 31, 2023 to the fiscal year ended October 31, 2022, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.

As used throughout this annual report, geographic regions include the Americas (United States, Canada, Mexico and Central and South America), Asia Pacific and Europe.

2023 compared to 2022

Worldwide sales for 2023 were $2,628,632, an increase of 1.5 percent from 2022 sales of $2,590,278.

The increase consisted of a 3.8 percent increase from acquisitions, partially offset by a 1.4 percent decline in organic sales and unfavorable currency translation effects that decreased sales by 0.9 percent.

Sales outside the United States accounted for 66.2 percent of total sales in 2023, as compared to 66.8 percent in 2022.

On a geographic basis, sales in the Americas region were $1,149,760, an increase of 4.8 percent from 2022, with organic sales increasing 2.0 percent, a 2.4 percent increase from acquisitions, and favorable currency effects of 0.4 percent.

Sales in the Asia Pacific region were $796,196, a decrease of 6.1 percent from 2022, with organic sales decreasing 8.2 percent and unfavorable currency effects of 3.1 percent, partially offset by a 5.2 percent increase from acquisitions.

Sales in Europe were $682,676, an increase of 5.7 percent from 2022, with organic sales increasing 1.4 percent, a 4.2 percent increase from acquisitions, and favorable currency effects of 0.1 percent.

Cost of sales were $1,203,227 in 2023, up 3.4 percent from $1,163,742 in 2022.

Gross profit, expressed as a percentage of sales, decreased to 54.2 percent in 2023 from 55.1 percent in 2022.

The 0.9 percentage point decrease in gross margin was primarily driven by incremental inventory step-up amortization related to acquisitions in 2023 of $8,862 and unfavorable foreign currency effects.

Consolidated Financial Results

Consolidated financial results for the years ended October 31, 2024, 2023 and 2022 were as follows:

Change Change

(In thousands except for per-share amounts) 2024 from 2023

2023 from 2022

Sales $ 2,689,921 2.3 % $ 2,628,632 1.5 % $ 2,590,278

Cost of sales 1,203,792 — % 1,203,227 3.4 % 1,163,742

Gross margin 1,486,129 4.3 % 1,425,405 (0.1) % 1,426,536

Gross margin % 55.2% 1.0 % 54.2% (0.9) % 55.1%

Selling and administrative expenses 812,128 7.9 % 752,644 3.9 % 724,176

Operating profit 674,001 0.2 % 672,761 (4.2) % 702,360

Interest expense (88,924) 49.4 % (59,505) 165.5 % (22,413)

Interest and investment income 4,913 83.3 % 2,680 32.3 % 2,026

Pension settlement charge for U.S.

Plans — — (41,221)

Other - net (4,509) 655.3 % (597) (107.0) % 8,527

Income before income taxes 585,481 (4.9) % 615,339 (5.2) % 649,279

Income tax expense 118,197 (7.5) % 127,846 (6.1) % 136,176

Net income $ 467,284 (4.1) % $ 487,493 (5.0) % $ 513,103

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Selling and administrative expenses were $752,644 in 2023, up from $724,176 in 2022.

The 3.9 percent increase was driven by a 8.3 percent increase due to the first-year effect of an acquisition, including acquisition costs, partially offset by lower base business costs and favorable currency translation effects which decreased costs by 5.3 percent.

Selling and administrative expenses as a percentage of sales increased slightly to 28.6 percent in 2023 from 28.0 percent in 2022.

The 0.6 percentage point increase was primarily due to cost structure simplification actions taken in 2023.

Operating profit as a percentage of sales decreased to 25.6 percent in 2023 compared to 27.1 percent in 2022.

The 1.5 percent decrease in operating margin was primarily driven by inventory step-up amortization and other costs related to the first-year effect of acquisitions.

Net sales for the Industrial precision solutions (IPS), Medical and Fluid Solutions (MFS) and Advanced technology solutions (ATS) segments were as follows:

Twelve Months Ended Variance - Increase (Decrease)

Oct 31, 2024 % of Total Oct 31, 2023 % of Total Organic Acquisitions Currency Total

IPS $ 1,484,249 55.2% $ 1,391,046 52.9% 0.1 % 6.6 % — % 6.7 %

MFS 695,452 25.9% 660,316 25.1% (0.2) % 5.4 % 0.1 % 5.3 %

ATS 510,220 19.0% 577,270 22.0% (11.4) % — % (0.2) % (11.6) %

Total $ 2,689,921 $ 2,628,632 (2.5) % 4.8 % — % 2.3 %

The IPS organic sales increase of 0.1 percent was driven by increases in packaging, nonwovens, and industrial coatings product lines, principally offset by declines in measurements and controls and polymer processing.

The MFS organic sales decrease of 0.2% was driven by a decrease in the medical fluid components product line, partially offset by an increase in the fluid solutions product line.

The ATS organic sales decrease of 11.4 percent was driven by lower demand in electronics dispense product lines as well as test and inspection product lines.

Net Sales by region were as follows:

Twelve Months Ended Variance - Increase (Decrease)

Oct 31, 2024 % of Total Oct 31, 2023 % of Total Organic Acquisitions Currency Total

Americas $ 1,178,626 43.8% $ 1,149,760 43.7% (1.9) % 4.3 % 0.1 % 2.5 %

Europe 726,100 27.0% 682,676 26.0% (5.1) % 10.2 % 1.3 % 6.4 %

Asia Pacific 785,195 29.2% 796,196 30.3% (1.0) % 1.0 % (1.4) % (1.4) %

Total $ 2,689,921 $ 2,628,632 (2.5) % 4.8 % — % 2.3 %

Sales outside the United States accounted for 66.6 percent of total sales in 2024, as compared to 66.2 percent in 2023.

Operating Profit

Operating profit for the IPS, MFS and ATS segments were as follows:

Twelve Months Ended

Oct 31, 2024 % of Sales Oct 31, 2023 % of Sales % of Sales Change Increase (Decrease)

IPS $ 470,559 31.7% $ 460,889 33.1% (1.4)% $ 9,670 2.1 %

MFS 187,731 27.0% 189,367 28.7% (1.7)% (1,636) (0.9) %

ATS 94,231 18.5% 101,662 17.6% 0.9% (7,431) (7.3) %

Corporate (78,520) (79,157) 637 (0.8) %

Total $ 674,001 25.1% $ 672,761 25.6% (0.5)% $ 1,240 0.2 %

Consolidated operating margin decreased by 50 basis points primarily driven by costs related to the first-year effect of acquisitions, which more than offset favorable product mix.

Gross margins improved 1.0 percentage point reflecting the impact of favorable product mix and lower incremental inventory step-up amortization related to acquisitions of $7,703 in 2024 versus $8,862 in 2023, while the increase in selling and administrative expenses was primarily driven by acquisitions.

IPS operating profit declined 140 basis points due to an unfavorable acquisition impact and severance costs.

MFS operating margin declined 170 basis points due to $10,761 in fees, severance, and non-cash inventory charges associated with the Atrion acquisition which offset improvements in operating efficiencies.

ATS operating margin improved by 90 basis points on lower sales volumes due to cost reduction actions and favorable mix.

Interest and Other expenses

Interest expense in 2024 was $88,924, an increase of $29,419, or 49.4 percent, from 2023 .

The increase was due to higher average debt levels and higher average interest rates compared to the prior year primarily driven by acquisitions.

During 2022, the Company recognized non-cash pension settlement charges of $41,221 related to the purchase of an annuity contract to relieve the Company of certain U.S.

pension benefit obligations.

Other expense in 2023 was $597 compared to other income of $8,527 in 2022 .

Included in other expense in 2023 w ere $7,742 in net foreign currency losses, which were largely offset by pension gains.

Included in the prior year’s other income were $6,270 in foreign currency gains.

The increase reflects higher average debt levels compared to the prior year due to funding of acquisitions.

Other expense in 2024 was $4,509 compared to other expense of $597 in 2023 .

Included in other expense in 2024 were $5,499 in net foreign currency losses, which were partially offset by pension gains.

Included in the prior year’s other expense were $7,742 in foreign currency losses, which were largely offset by pension gains.

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Income tax expense

Income tax expense in 2024 was $118,197, or 20.2 percent of pre-tax income, as compared to $127,846, or 20.8 percent of pre-tax income in 2023 .

The effective tax rate decreased 60 basis points primarily due to a decline in the impact of foreign tax rate variances.

The income tax provision for 2024 included a tax benefit of $4,037 due to our share-based payment transactions.

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This represented a 4.1 percent decrease in net income and a 4.1 percent decrease in diluted earnings per share.

The decrease of $0.35 per diluted share was primarily driven by higher interest expense and acquisition-related expenses in 2023 compared to non-cash pension settlement charges in 2022.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $1,391,046 in 2023, an increase of 4.0 percent, from 2022 sales of $1,337,242.

The increase was the result of an organic sales increase of 3.1 percent and an increase of 1.9 percent from acquisitions, partially offset by unfavorable currency effects of 1.0 percent.

Organic sales growth was generally strong across most product lines and regions.

Operating profit as a percentage of sales increased to 33.1 percent in 2023 compared to 32.5 percent in 2022.

The 0.6 percentage point improvement in operating margin was primarily the result of improved selling and administrative expense leverage due to increased sales volumes.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $660,316 in 2023, a decrease of 4.3 percent from 2022 sales of $690,177.

The decrease was the result of an organic sales decrease of 3.7 percent and unfavorable currency effects that decreased sales by 0.6 percent.

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

Operating profit as a percentage of sales decreased to 28.7 percent in 2023 compared to 31.5 percent in 2022.

The 2.8 percent percentage point decline in operating margin was principally driven by 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 $577,270 in 2023, an increase of 2.6 percent from 2022 sales of $562,859.

The increase consisted of a volume increase of 3.7 percent, inclusive of an organic sales decrease of 9.2 percent and a 12.9 percent increase from acquisitions, partially offset by unfavorable currency effects that decreased sales by 1.1 percent.

The organic sales decrease was driven by lower demand in electronics dispense product lines, partially offset by stronger demand in test and inspection product lines.

Operating profit as a percentage of sales decreased to 17.6 percent in 2023 compared to 23.7 percent in 2022.

The 6.1 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 factory inefficiencies due to reduced volumes.

The decrease of $0.35 per diluted share was primarily driven by higher interest expense in 2024 compared to 2023.

Liquidity and Capital Resources

Cash and cash equivalents decreased $47,778 in 2023 to $115,679 as of October 31, 2023 compared to $163,457 as of October 31, 2022.

Cash and cash equivalents increased $273 in 2024 to $115,952 as of October 31, 2024 compared to $115,679 as of October 31, 2023.

Approximately 81 percent of our consolidated cash and cash equivalents were held at various foreign subsidiaries as of October 31, 2024.

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Cash provided by operating activities was $641,282 in 2023, compared to $513,131 in 2022.

The primary sources were net income adjusted for non-cash income and expenses (consisting of depreciation and amortization, non-cash stock compensation, provision for losses on receivables, deferred income taxes, other non-cash expense, gain/loss on sale of property, plant and equipment, and non-cash pension settlement charges), which were $615,496 in 2023, compared to $676,200 in 2022.

Changes in working capital items used cash of $3,571 compared to $107,314 used in 2022 principally driven by decreases in receivables and inventory while cash provided by other operating items was $29,357 in 2023 compared to cash used of $55,755 in 2022.

Cash used in investing activities was $1,436,879 in 2023, compared to $222,761 in 2022.

In 2023, $1,422,780 in cash was used for acquisitions, utilizing borrowings and cash from operations, compared to $171,613 used in 2022.

Capital expenditures were $34,583 in 2023 compared to $51,428 in 2022.

Cash provided by financing activities was $750,512 in 2023, compared to $416,006 cash used in 2022.

Proceeds and repayments of long-term debt provided $976,043 of cash in 2023, compared to $33,908 used in 2022.

In 2023, cash of $89,708 was used for the purchase of treasury shares, down from $262,869 used in 2022.

Dividend payments were $150,356 in 2023, up from $125,914 in 2022 due to an increase in dividends on our common shares, on an annual basis, to $2.63 per share from $2.18 per share.

Issuance of common shares related to employee benefit plans generated $21,373 of cash in 2023, up from $12,124 in 2022.

The following is a summary of significant changes by balance sheet caption from October 31, 2022 to October 31, 2023.

Receivables-net and inventories-net combined increased $124,950, goodwill increased $979,508 , and i ntangible assets-net increased $343,342 principally due to the acquisitions of the ARAG Group and Cy berOptics.

Long-term debt, including current maturities, increased $999,199, principally due to the acquisition of the ARAG Group.

We have a $1,150,000 unsecured multi-currency credit facility with a group of banks which provides for a term loan facility in the aggregate principal amount of $300,000, maturing in June 2026, and a multicurrency revolving credit facility in the aggregate principal amount of $850,000, maturing in June 2028.

In anticipation of the ARAG acquisition, the Company entered into the 364-Day Term Loan Facility in August 2023.

A comparison of cash flow changes from 2024 to 2023 as follows:

Twelve Months Ended

October 31, 2024 October 31, 2023 Increase (Decrease)

Net Income and non-cash items $ 609,342 $ 615,496 $ (6,154)

Changes in operating assets and liabilities (53,149) 25,786 (78,935)

Net cash provided by operating activities 556,193 641,282 (85,089)

Additions to property, plant and equipment (64,410) (34,583) (29,827)

Acquisitions of businesses, net of cash acquired (789,996) (1,422,780) 632,784

Other - net 10,008 20,484 (10,476)

Net cash used in investing activities (844,398) (1,436,879) 592,481

Issuance of long-term debt 464,353 976,043 (511,690)

Repayment of finance lease obligations (6,148) (6,840) 692

Dividends paid (161,438) (150,356) (11,082)

Issuance of common shares 31,067 21,373 9,694

Purchase of treasury shares (33,339) (89,708) 56,369

Net cash provided by financing activities $ 294,495 $ 750,512 $ (456,017)

The changes in operating assets and liabilities were principally driven by decreases in customer advance payments and income taxes payable.

Additions to property, plant and equipment were largely driven by productivity and growth projects, including a new manufacturing facility.

We have a $1,150,000 unsecured multi-currency credit facility with a group of banks that provides for a term loan facility in the aggregate principal amount of $300,000, maturing in June 2026, and a multicurrency revolving credit facility in the aggregate principal amount of $850,000, maturing in June 2028.

In anticipation of the ARAG acquisition, the Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the "364-Day Term Loan Facility").

On September 13, 2023, the Company completed an underwritten public offering of $350,000 aggregate principal amount of the Company’s 5.600% Notes due 2028 (the “2028 Notes”) and $500,000 aggregate principal amount of the Company’s 5.800% Notes due 2033 (together with the 2028 Notes, the “Notes").

The Company used the net proceeds from the sale of the Notes to repay its borrowings under the 364-Day Term Loan Facility.

At October 31, 2023, we had $300,000 outstanding on the term loan facility and $248,000 outstanding on the revolving credit facility compared to no outstanding balance at October 31, 2022 under the old revolving credit facility.

At October 31, 2024, we had $280,000 outstanding on the term loan facility and $240,000 outstanding on the revolving credit facility.

In anticipation of the Atrion acquisition, the Company entered into a 364-Day Term Loan Agreement with Morgan Stanley Senior Funding for $500,000 on June 21, 2024, with a maturity date of August 20, 2025.

In September 2024, the Company completed an underwritten public offering of $600,000 aggregate principal amount of 4.500% Notes due 2029 (the "2029 Notes").

The Company used a portion of the net proceeds from the sale of the 2029 Notes to repay all of the outstanding borrowings under the 364-Day Term Loan Agreement plus accrued and unpaid interest.

Nordson Corporation 30

Our operating performance, balance sheet position and financial ratios for 2024 remained strong.

Total debt increased $999,199 during 2023 primarily d ue to the acquisition of the ARAG Group.

The Company is well-positioned to manage liquidity needs that arise from working capital requirements, capital expenditures and contributions related to pension and postretirement obligations, as well as principal and interest payments on our outstanding debt.

Primary sources of capital to meet these needs, as well as other opportunistic investments, are a combination of cash provided by operations and borrowings under our loan agreements.

Primary sources of capital to meet these needs, as well as other opportunistic investments, are a combination of cash on hand, which was $115,952 as of October 31, 2024, cash provided by operations, which was $556,193 in 2024, and available borrowings under our loan agreements and unused bank lines of credit which totaled $785,880 as of October 31, 2024.

Cash from operations, which when combined with our available borrowing capacity and ready access to capital markets, is expected to be more than adequate to fund our liquidity needs over the twelve months and the foreseeable future thereafter.

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(2) Refer to Note 9 to the Consolidated Financial Statements for further discussion.

Nordson Corporation 28

(3) Pension and postretirement plan funding amounts will be determined based on the future funded status of the plans and therefore cannot be estimated at this time.

(3) Pension and postretirement plan funding amounts reflect known amounts over the next twelve months.

Future amounts will be determined based on the future funded status of the plans and therefore cannot be estimated at this time.

Refer to Note 6 to the Consolidated Financial Statements for further discussion.

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New Accounting Standards

There have been no new accounting standards issued which would require either disclosure or adoption during the current period by the Company.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023-07 requires enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods.

The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of ASU 2023-07 will have on its consolidated financial statements and disclosures and anticipates adoption in 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 is intended to improve income tax disclosure requirements by requiring specific disclosure in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold.

The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact that the adoption of ASU 2023-09 will have on its consolidated financial statements and disclosures and anticipates adoption in fiscal 2026.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220):

Reporting Comprehensive Income.

ASU 2024-03 does not change or remove current expense presentation requirements within the Consolidated Statements of Income.

However, the amendments require disclosure, on an annual and interim basis, disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements.

The amendments in this update are

Nordson Corporation 31

effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statements and disclosures and anticipates adoption in fiscal 2028.

Effects of Foreign Currency

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As a general rule, a weakening of the United States dollar relative to foreign currencies has a favorable effect on sales and net income, while a strengthening of the dollar has a detrimental effect.

In 2023, as compared with 2022, the United States dollar was generally stronger against foreign currencies.

In 2024, as compared with 2023, the United States dollar was slightly stronger against foreign currencies.

If 2023 exchange rates had been in effect during 2024, sales would have been approximately $3,352 higher and third-party costs would have been approximately $903 higher.

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Statements in this annual report that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” use of the future tense and similar words or phrases.

These statements reflect management’s current expectations and involve a number of risks and uncertainties.

These forward-looking statements reflect management’s current expectations and involve a number of risks and uncertainties.

These risks and uncertainties include, but are not limited to, U.S.

and international economic conditions;

and international economic and political conditions;

financial and market conditions;

currency exchange rates and devaluations;

possible acquisitions including the Company’s ability to complete and successfully integrate acquisitions, including the integration of the ARAG Group and CyberOptics;

possible acquisitions including the Company’s ability to complete and successfully integrate acquisitions, including the integration of Atrion and ARAG;

the Company’s ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan;

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and the possible effects of events beyond our control, such as political unrest, including the conflicts in Europe and the Middle East, acts of terror, natural disasters and pandemics.

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.

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

Readers are cautioned not to place undue reliance on such forward-looking statements.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis