What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-23 compared with 2023-02-24 · 297 added, 359 removed, 500 unchanged (57% of the section changed)

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Unless otherwise indicated, amounts provided in Item 7 pertain to continuing operations only.

COVID-19 Pandemic, Supply Chain Disruptions and Labor Shortages, and Cost Increases

The COVID-19 pandemic had an adverse impact on our consolidated results of operations in the first half of 2020, with diminishing impacts during the second half of 2020 and 2021.

However , during January 2022, there was an increase in COVID-19 cases at certain of our manufacturing facilities, which resulted in a high-level of absenteeism at such facilities during the month.

In addition, since the second half of 2021, certain of our businesses have experienced supply chain disruptions, as well as labor shortages, while all of our businesses have experienced increases in raw material, component, and transportation costs.

The combination of these matters negatively impacted our operating results during the first half of 2022, particularly during the first quarter of 2022, as we experienced lower absorption of manufacturing costs and, in some cases, the negative impact of cost increases on fixed-price customer contracts.

During the second half of 2022, the supply chain disruptions and labor shortages lessened, resulting in improved productivity at a number of our manufacturing facilities.

In addition, the negative impact of cost increases diminished due to the effect of pricing initiatives that were implemented throughout 2022.

Potential Impacts of Russia/Ukraine Conflict

The Russia/Ukraine conflict, and governmental actions implemented in response to the conflict, have not had a significant adverse impact on our operating results during 2022.

Supply Chain Disruptions, Labor Shortages, and Cost Increases

The impact of the COVID-19 pandemic on our operating results throughout 2023 was minimal.

However, during January 2022, there was an increase in pandemic cases at certain of our manufacturing facilities, which resulted in a high-level of absenteeism at such facilities during the month.

In addition, since the second half of 2021, certain of our businesses experienced supply chain disruptions, as well as labor shortages, while all of our businesses experienced increases in raw material, component, and transportation costs.

The combination of these matters negatively impacted our operating results during the first half of 2022, as we experienced lower absorption of manufacturing costs and, in some cases, the negative impact of cost increases on fixed-price customer contracts.

During 2023, we experienced more stable labor and supply chain environments and continue to actively manage these matters.

Potential Impacts of Geopolitical Conflicts

The Russia/Ukraine conflict, and governmental actions implemented in response to the conflict, did not have a significant adverse impact on our operating results during 2023 and 2022.

We are monitoring the availability of certain raw materials that are supplied by businesses in these countries.

However, at this time, we do not expect the conflict to have a significant adverse impact to our operating results.

However, at this time, we do not expect the potential impact to be material to our operating results.

The Russia/Ukraine conflict has created additional demand for certain products within our communication technologies business.

Any longer-term impact of these global events on our business, as well as impacts from various conflicts in the Middle East region, is currently unknown due to the uncertainty around their duration and broader impact.

Executive Overview

Revenues for 2023 totaled $1,741.2, compared to $1,460.9 in 2022 (and $1,219.5 in 2021).

The increase in revenues during 2023, compared to 2022, was due primarily to the impact of organic revenue growth within the HVAC and Detection and Measurement reportable segments and, to a lesser extent, the impact of the TAMCO and ASPEQ acquisitions.

The organic revenue growth within the HVAC reportable segment was due primarily to increased sales of cooling products associated with both volume and price increases.

Organic revenue growth within the Detection and Measurement reportable segment was due primarily to higher volumes of large projects within the communication technologies, transportation and aids to navigation businesses.

The increase in revenues during 2022, compared to 2021, was due to organic revenue growth within both our HVAC and Detection and Measurement reportable segments and the impact of the Sealite, ECS and Cincinnati Fan acquisitions in 2021 and the ITL acquisition in 2022 .

The increase in organic revenue within the HVAC reportable segment was driven by increased sales of heating and cooling products associated with price increases and, to a lesser extent, volume increases.

Organic growth within the Detection and Measurement reportable segment was due to continued strong order trends for our short-cycled businesses and execution of large projects within the fare collection, communication technologies, and obstruction lighting businesses.

The increase in revenues in 2021, compared to 2020, was due primarily to (i) the impact of the ULC and Sensors & Software acquisitions in 2020 and the Sealite, ECS and Cincinnati Fan acquisitions in 2021 and (ii) an increase in organic revenue.

The increase in organic revenue was due primarily to higher sales of heating and underground pipe and locator products, partially offset by lower sales of cooling products.

During the first half of 2020, sales of heating and underground pipe and locator products were impacted negatively by the COVID-19 pandemic.

Sales of cooling products declined in 2021, as several large cooling projects favorably impacted sales in 2020.

Organic growth within the Detection and Measurement reportable segment was due to strong order trends for our short-cycled businesses and execution of large projects within the transportation, communication technologies, and aids to navigation businesses.

For 2023, operating income totaled $221.9 , compared to $51.0 in 2022 (and $73.7 in 2021).

The increase in operating income in 2023, compared to 2022, was due primarily to (i) higher income for both our HVAC and Detection and Measurement reportable segments of $103.6, (ii) the loss on the Asbestos Portfolio Sale of $73.9 incurred in 2022, and (iii) lower corporate expense of $10.2 primarily related to higher costs incurred on strategic and transformational initiatives executed during 2022, primarily related to the Asbestos Portfolio Sale, as well as expenses incurred in connection with asbestos-related matters during 2022, prior to the Asbestos Portfolio Sale.

The impact of these factors was partially offset by increases in (i) employee compensation, including increases in short-term incentive compensation expense, (ii) intangible asset amortization expense of $15.4, (iii) acquisition-related and other integration costs resulting from the acquisitions of TAMCO and ASPEQ, and (iv) a charge of $9.0 related to the resolution of a dispute with a former representative at one of our businesses within the Detection and Measurement reportable segment.

The increase in income for our HVAC reportable segment was primarily due to the organic revenue growth mentioned above and greater absorption of manufacturing costs resulting from higher volumes and more stable labor and supply chain environments, as well as the income associated with the TAMCO and ASPEQ acquisitions.

The increase in income for our Detection and Measurement reportable segment was due primarily to the organic revenue growth mentioned above.

The de crease in operating income in 2022, compared to 2021, was due primarily to the loss on the Asbestos Portfolio Sale of $73.9, partially offset by an increase in income within our HVAC and Detection and Measurement reportable segments of $49.0 associated with the increase in revenue noted above.

The decrease in operating income in 2021, compared to 2020, was due primarily to increases in asbestos product liability charges of $16.9, corporate expense of $10.8, amortization and acquisition-related costs of $11.4, partially offset by an increase in segment income of $13.5.

The increase in asbestos product liability charges was due primarily to an unfavorable trend in the percentage of claims with payment (versus claims dismissed without payment), while the increase in corporate expense was due to additional costs associated with continuous improvement and strategic initiatives and higher incentive compensation expense in 2021.

The increase in segment income was due primarily to the increase in revenues noted above.

Operating cash flows used in continuing operations totaled $115.2 in 2022, compared to operating cash flows from continuing operations of $131.2 in 2021 (and $105.2 in 2020).

Operating cash flows from continuing operations totaled $243.8 in 2023, compared to operating cash flows used in continuing operations of $115.2 in 2022 and operating cash flows from continuing operations of $131.2 in 2021.

The increase in cash flows from operating activities was due primarily to (i) the increase in income during the period discussed above, (ii) cash contributed during 2022 to the divested subsidiaries of $138.8 in connection with the Asbestos Portfolio Sale, (iii) a reduction in the level of elevated purchases of raw materials and components during 2023, primarily within our HVAC reportable segment, due to a more stable supply chain environment, (iv) working capital improvements at certain of our project-related businesses, as

cash flows for these businesses are often subject to contract milestones that can impact the timing of cash flows from period to period, (v) net payments for asbestos-related matters made prior to the Asbestos Portfolio Sale in 2022, of $15.3, and (vi) a cash payment of $10.0 during the first half of 2022 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier (see Note 11 to our consolidated financial statements for additional details).

The decrease in operating cash flows from continuing operations in 2022, compared to 2021, was due primarily to (i) a cash contribution of $138.8 associated with funding the Asbestos Portfolio Sale;

(ii) income tax payments, net of refunds, of $59.6 (compared to income tax refunds, net of tax payments, of $5.5 during the year ended December 31, 2021), with a significant portion of the 2022 payments related to the gain on sale of Transformer Solutions;

(iii) elevated purchases of inventory components in order to manage the potential risk associated with the current supply chain environment;

(iii) elevated purchases of inventory components in order to manage the potential risk associated with the then-existing supply chain environment;

(iv) decreases in cash flows at certain of our project-related businesses, as cash receipts for these businesses are often subject to contractual milestones that can impact cash receipts from period to period;

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and (vi) cash payments of $10.0 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier.

The increase in operating cash flows from continuing operations in 2021, compared to 2020, was due primarily to (i) improved

cash flows within our heating and underground pipe and locator businesses associated with improved profitability, (ii) a decline in working capital at certain of our businesses, (iii) insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter, and (iv) income tax refunds, net of tax payments, of $5.5 in 2021 (compared to income tax payments, net of refunds, of $7.6 in 2020).

Additional details on certain matters noted above as well as significant items impacting the financial results for 2023, 2022, and 2021 are as follows:

• On April 3, 2023, we completed the acquisition of TAMCO

◦ The purchase price for TAMCO was $125.5, inclusive of an adjustment of $0.2 paid during 2023 related to acquired working capital, and net of cash acquired of $1.0.

◦ The post-acquisition operating results of TAMCO are included within our HVAC reportable segment.

• On June 2, 2023, we completed the acquisition of ASPEQ

◦ The purchase price for ASPEQ was $421.5, net of (i) an adjustment to the purchase price of $0.3 related to acquired working capital and (ii) cash acquired of $0.9.

◦ The post-acquisition operating results of ASPEQ are included within our HVAC reportable segment.

• Incremental Term Loan

◦ On April 21, 2023, we amended and restated our senior credit agreement (the “Credit Agreement”).

◦ The amendment provided for an additional senior secured term loan in the aggregate amount of $300.0, which was borrowed during the second quarter of 2023.

◦ The funds from the additional term loan (“Incremental Term Loan”) were used to partially fund the acquisition of ASPEQ.

◦ See Note 13 to our consolidated financial statements for additional details.

• Resolution of Claims with Prime Contractor of South Africa Power Projects

◦ On September 5, 2023, SPX Technologies and DBT entered into an agreement with Mitsubishi Heavy Industries Power — ZAF (f.k.a.

Mitsubishi-Hitachi Power Systems Africa (PTY) LTD) (“MHI”) to affect the negotiated resolution of all claims between the parties with respect to DBT’s involvement in two large power projects in South Africa - Kusile and Medupi (the “Settlement Agreement”).

◦ In connection with the Settlement Agreement, the Company incurred a charge, net of tax, of $54.2 during the third quarter of 2023.

The charge included the write-off of $15.2 in net amounts due from MHI.

Such charge is included in “Gain (loss) on disposition of discontinued operations, net of tax” for the year ended December 31, 2023.

In addition, DBT made payments of $25.3 to MHI during the year ended December 31, 2023 in connection with the Settlement Agreement.

◦ See Notes 4 and 15 to our consolidated financial statements for additional details.

• Actuarial Losses on Pension and Postretirement Plans

◦ During 2023, we recorded actuarial losses of $11.3 in the fourth quarter in connection with the annual remeasurement of our pension and postretirement plans with such losses resulting primarily from decreases in discount rates.

◦ See Notes 1 and 11 to our consolidated financial statements for additional details.

• Resolution of Dispute with Former Representative

◦ During the fourth quarter of 2023 we recorded a charge of $9.0 related to the resolution of a dispute with a former representative at one of our businesses within the Detection and Measurement reportable segment.

◦ See Note 15 to our consolidated financial statements for additional details.

• Transfer of Postretirement Life Insurance Benefit Obligation

◦ On February 17, 2022, we transferred our obligation for life insurance benefits under our postretirement benefit plans to an insurance carrier for cash consideration paid of $10.0.

◦ In connection with the transfer, we:

• Recorded a net charge of $0.3 to “Other income (expense), net;” and

• Eliminated the (i) third-party cost and (ii) internal resource requirements associated with administering these benefits.

◦ In connection with the transfer, we recorded a net charge of $0.3 to “Other income (expense), net.”

◦ See Note 11 to our consolidated financial statements for additional details.

• On March 31, 2022, we completed the acquisition of ITL

◦ The purchase price for ITL was $40.4, net of cash acquired of $1.1.

◦ The purchase price for ITL was $40.4, net of (i) an adjustment to the purchase price received during 2022 of $1.4 related to acquired working capital and (ii) cash acquired of $1.1.

◦ The post-acquisition operating results of ITL are included within our Detection and Measurement reportable segment.

• Amendment of Senior Credit Agreement

◦ On August 12, 2022, we amended and restated our credit agreement (the “Credit Agreement”).

◦ The Credit Agreement provides for committed senior secured financing with an aggregate amount of $770.0, with a final maturity of August 12, 2027.

◦ On August 12, 2022, we amended and restated our then-existing credit agreement.

◦ The then-existing credit agreement provided for committed senior secured financing with an aggregate amount of $770.0, with a final maturity of August 12, 2027.

◦ See Note 13 to our consolidated financial statements for additional details.

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◦ During the third quarter of 2022, we received a ruling from a North Carolina trial court that certain excess insurance carriers associated with our asbestos product liability matters are not required to cover the costs of defending suits that are dismissed without an indemnity payment.

◦ As a result of this ruling, we recorded charges of $21.7 during the third quarter, with $16.5 ref lected in “Income from continuing operations before income taxes” and the remainder in “Income (loss) on disposition of discontinued operations, net of tax.”

◦ As a result of this ruling, we recorded charges of $21.7 during the third quarter, with $16.5 ref lected in “Income from continuing operations before income taxes” and the remainder in “Gain (loss) on disposition of discontinued operations, net of tax.”

◦ On November 1, 2022, we completed the Asbestos Portfolio Sale.

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▪ During the first and second quarters of 2022, we further reduced the estimated fair value/liability by $0.9 and $0.4, respectively, with such amounts recorded to “Other operating (income) expense, net.”

▪ The financial performance milestones were not achieved and, thus, as of December 31, 2022, the estimated fair value/liability related to the contingent consideration was $0.0.

▪ The financial performance milestones were not achieved and, thus, as of December 31, 2023 and 2022, the estimated fair value/liability related to the contingent consideration was $0.0.

◦ The post-acquisition operating results of ECS are included within our Detection and Measurement reportable segment.

• O n December 15, 2021 , we completed the acquisition of Cincinnati Fan

◦ The purchase price for Cincinnati Fan was $145.2, net of cash acquired of $2.5.

◦ During the second quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receipt of $0.4 of cash during the quarter.

◦ The purchase price for Cincinnati Fan was $145.2, net of (i) an adjustment to the purchase price received during 2022 of $0.4 related to acquired working capital and (ii) cash acquired of $2.5.

◦ The post-acquisition operating results of Cincinnati Fan are included within our HVAC reportable segment.

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• In connection with the rulings, DBT received South African Rand 126.6 ($8.6 at time of payment) and South African Rand 82.0 ($6.0 at the time of payment), respectively.

• As the rulings are subject to further arbitration, such amounts have not been reflected in our consolidated statements of operations.

• On July 5, 2021, DBT received notice from Mitsubishi Heavy Industries Power – ZAF (or “MHI”) of its intent to seek final and binding arbitration on the first ruling.

The arbitration occurred in December 2022 with the ruling from such arbitration yet to be received.

• As the rulings were subject to further arbitration, such amounts were not reflected in our consolidated statements of operations prior to the Settlement Agreement.

▪ In May 2021, and in connection with certain claims made by MHI, MHI made a demand and received payment of South African Rand 178.7 (or $12.5 at the time of payment) on bonds issued by a bank.

• Under the terms of the bonds and our senior credit agreement, we were required to fund the payment.

• DBT denies liability for these claims and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the amounts demanded.

• On October 11, 2022, a dispute adjudication panel ruled MHI drew (in both the May 2021 and September 2020 bond draws) on amounts in excess of the bond values stipulated in the contracts and was required to refund DBT South African Rand 90.8 (or $5.3) of the previously demanded amounts, plus interest of South African Rand 12.5 (or $0.7).

• DBT denied liability for these claims and believed it was legally entitled reimbursement of the amounts demanded.

previously demanded amounts, plus interest of South African Rand 12.5 (or $0.7).

MHI paid these amounts on October 14, 2022.

• We have reflected the remaining amounts related to the May 2021 and September 2020 bond draws within “Assets of DBT and Heat Transfer” on the consolidated balance sheet as of December 31, 2022 .

▪ On June 4, 2021, DBT received a revised version of the interim claim that had been provided by MHI.

On September 21, 2022, an arbitration tribunal ruled that only South African Rand 349.6 (or $20.4) of MHI's revised claim had been brought appropriately before a dispute adjudication board as required under the relevant subcontracts, with MHI's other claims dismissed from the arbitration proceedings.

MHI subsequently notified DBT of its intent to refer the claims dismissed to a new adjudication panel.

DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with any of these claims.

• The remaining amounts related to the May 2021 and September 2020 bond draws, prior to the impact of the Settlement Agreement, are reflected within “Assets of DBT and Heat Transfer” on the consolidated balance sheet as of December 31, 2022 .

◦ In the fourth quarter of 2021, we completed the wind-down of DBT

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▪ As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented.

◦ All of the above matters, among other claims, were resolved by the Settlement Agreement.

• Asbestos Product Li ability Matters:

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◦ See Note 17 to our consolidated financial statements for additional details.

• ULC Contingent Consideration, Indefinite-Lived Intangible Assets, and Goodwill:

• ULC Robotics (“ULC”) Contingent Consideration, Indefinite-Lived Intangible Assets, and Goodwill:

◦ The seller of ULC was eligible for additional cash consideration of up to $45.0 upon achievement of certain operating and financial performance milestones.

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◦ We also concluded that the lack of achievement of the above milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill.

◦ As such, we tested ULC’s infinite-lived intangible assets and goodwill for impairment during the third quarter of 2021.

◦ As such, we tested ULC’s indefinite-lived intangible assets and goodwill for impairment during the third quarter of 2021.

◦ Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business.

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As a result of such analysis, we recorded impairment charges of $5.2, with $0.3 related to trademarks and $4.9 to goodwill.

◦ See Note 1 and 10 to our consolidated financial statements for additional details.

◦ See Notes 1 and 10 to our consolidated financial statements for additional details.

• Sensors & Software Contingent Consideration:

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◦ During the fourth quarter of 2021, we concluded that certain of the financial performance milestones associated with the Sensors & Software contingent consideration had been achieved.

◦ As a result, we recorded an additional charge of $0.6 to “Other operating (income) expense, net” and the resulting fair value of such contingent consideration of $1.3 is reflected as a liability in our consolidated balance sheet at December 31, 2021.

◦ The $1.3 was paid during 2022 and is reflected within cash flows from financing activities in our consolidated statement of cash flows for the year ended December 31, 2022.

• In February 2020, and as a result of the December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest rate swap agreements.

These additional swaps:

◦ Had an initial notional amount of $248.4;

◦ Cover the period March 2021 to November 2024;

◦ Effectively convert a portion of the borrowings under our senior credit facilities to a fixed rate, plus an applicable margin, during the period noted above.

◦ See Note 14 to our consolidated financial statements for additional details.

• On September 2, 2020, we completed the acquisition of ULC.

◦ The purchase price for ULC was $89.2, net of cash acquired of $4.0.

◦ The post-acquisition operating results of ULC are reflected within our Detection and Measurement reportable segment.

• In September 2020, MHI made a demand and received payment of South African Rand 239.6 (or $14.3 at the time of payment) on certain bonds that were issued by a bank in favor of MHI.

◦ As required under the terms of the bonds and our senior credit agreement, we funded the South African Rand 239.6.

◦ In its demand, MHI purported that DBT failed to carry out certain contractual obligations.

◦ DBT denies liability and, thus, intends to seek, and believes it is fully entitled to, reimbursement of the South African Rand 239.6 that has been paid.

◦ As such, we have reflected the South African Rand 239.6 (or $14.0 and $15.0 at December 31, 2022 and 2021, respectively) within “Assets of DBT and Heat Transfer” on our consolidated balance sheets as of December 31, 2022 and 2021.

◦ See Note 15 to our consolidated financial statements for additional details.

• On November 11, 2 020, we completed the acquisition of Sensors & Software.

◦ The purchase price for Sensors & Software was $15.5, net of cash acquired of $0.3.

◦ The post-acquisition operating results of Sensors & Software are reflected within our Detection and Measurement reportable segment.

• In the fourth quarter of 2020, we completed the wind-down of Heat Transfer.

◦ The wind-down was initiated in 2018 after an unsuccessful attempt to sell the business.

◦ The wind-down was part of a strategic shift away from the power generation markets.

◦ As a result of completing the wind-down plan, we are reporting Heat Transfer as a discontinued operation for all periods presented.

• Asbestos Product Liability Matters:

◦ During 2020, we recorded charges of $21.3 related to asbestos product liability matters.

◦ Of such charges, $19.2 were reflected in “Income from continuing operations before income taxes” and the remainder in “Gain (loss) on disposition of discontinued operations, net of tax.”

◦ Payments for asbestos product liability matters, net of insurance recoveries, totaled $19.3 in 2020.

• Actuarial Losses on Pension and Postretirement Plans:

◦ We recorded net actuarial losses of $6.8 in the fourth quarter of 2020 in connection with the annual remeasurement of our pension and postretirement plans, with such losses resulting primarily from declines in discount rates on our unfunded pension and postretirement plans.

◦ See Notes 1 and 11 to our consolidated financial statements for additional details.

• Changes in the Estimated Fair Value of an Equity Security:

◦ During 2020, we:

▪ Recorded gains of $8.6 within “Other income (expense), net” related to increases in the estimated fair value of an equity security that we hold;

▪ Received distributions of $ 3.5 , which are included in “Cash flows from operating activities.”

◦ See Note 17 to our consolidated financial statements for additional details.

◦ As a result, we recorded an additional charge of $0.6 to “Other operating (income) expense, net.”

◦ The contingent consideration of $1.3 was paid during 2022 and is reflected within cash flows from financing activities in our consolidated statement of cash flows for the year ended December 31, 2022.

Results of Continuing Operations

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In addition, certain of our businesses have seasonal fluctuations.

For example, our heating products businesses tend to be stronger in the third and fourth quarters, as customer buying habits are driven largely by seasonal weather patterns.

For example, certain of our heating products businesses tend to be stronger in the third and fourth quarters, as customer buying habits are driven largely by seasonal weather patterns.

In aggregate, our businesses generally tend to be stronger in the second half of the year.

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We believe we compete effectively on the basis of each of these factors.

Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations, acquisitions/dives titures, and the impact of a reduction in revenue during 2021 associated with the settlement of claims on a legacy dry cooling project.

Non-GAAP Measures — Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations and acquisitions/dives titures.

We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods pre sented, as, when read in conjunction with our revenues, it presents a useful tool to evaluate our ongoing operations and provides investors with a tool they can use to evaluate our management of assets held from period to period.

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This metric, however, is not a measure of financial performance under GAAP, should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.

Presentation of Segment Income — During 2022, management concluded that, although the assessment of our reportable segments was performed using the appropriate measures as defined by the Segment Reporting Topic of the Codification, the disclosure of income from segments was not consistent with these measures or the measures used by our CODM when evaluating the results of, or allocating resources to, our reportable segments.

We previously disclosed that segment income was determined before considering impairment and special charges, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses.

Our CODM also excludes the impact of intangible asset amortization, inventory step-up charges, and other acquisition related costs from Segment Income.

Accordingly, these amounts have now been excluded, for all periods presented, from Segment Income and presented separately in our reconciliation of Segment Income to consolidated operating income within this annual report on Form 10-K.

Refer to Notes 1 and 7 to our consolidated financial statements for additional details.

The following table provides selected financial information for the years ended December 31, 2023, 2022, and 2021, including the reconciliation of organic revenue increase to net revenue increase:

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Foreign currency 0.1 (1.7)

Settlement of legacy dry cooling contract — (0.4)

Acquisitions 6.9 9.7

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* Not meaningful for comparison purposes .

Revenues - For 2022, th e increase in re venues, compared to 2021, was du e to organic revenue growth within both our HVAC and Detection and Measurement reportable segments and the impact of the Sealite, ECS and Cincinnati Fan acquisitions in 2021 and the ITL acquisition in 2022.

Revenues — For 2023, the increase in revenues, compared to 2022, was due to the impact of organic revenue growth within the HVAC and Detection and Measurement reportable segments and, to a lesser extent, the impact of the TAMCO and ASPEQ acquisitions.

The organic revenue growth within the HVAC reportable segment was due primarily to increased sales of cooling products associated with both volume and price increases.

For 2022, th e increase in re venues, compared to 2021, was du e to organic revenue growth within both our HVAC and Detection and Measurement reportable segments and the impact of the Sealite, ECS and Cincinnati Fan acquisitions in 2021 and the ITL acquisition in 2022.

For 2021, the increase in revenues, compared to 2020, was due primarily to (i) the impact of the acquisitions of ULC and Sensors & Software in 2020 and Sealite, ECS and Cincinnati Fan in 2021 and (ii) an increase in organic revenue.

The increase in organic revenue was due primarily to higher sales of heating and underground pipe and locator products, partially offset by lower sales of cooling products.

During the first half of 2020, sales of heating and underground pipe and locator products were impacted negatively by the COVID-19 pandemic.

Sales of cooling products declined in 2021, as there were several large cooling projects that favorably impacted sales in 2020.

Gross Profi t - For 2022, th e increase gross profit and gross profit as a percentage of revenues, compared to 2021, was due primarily to the increase in revenues noted above, including revenue increases associated with higher-margin, large projects within our communication technologies and obstruction lighting businesses.

For 2021, the increase in gross profit and gross profit as a percentage of revenues, compared to 2020, was due primarily to the revenue increases noted above.

Selling, General a nd Administrative (“SG&A”) Expense — For 2022, th e increase in SG&A expense, compared to 2021, was due primarily t o (i) incremental SG&A resulting from the acquisitions noted above, (ii) higher corporate expense associated with increased costs associated with various strategic and transformational initiatives, including the Asbestos Portfolio Sale, and higher short-term incentive compensation in 2022, and (iii) higher travel expenses due to the easing of COVID-19 pandemic restrictions in 2022.

For 2021, the increase in SG&A expense, compared to 2020, was due primarily to SG&A associated with Sealite, ECS and Cincinnati Fan since their dates of acquisition in 2021 and the impact of a full year’s SG&A associated with the 2020 acquisitions of ULC and Sensors & Software.

Also, additional corporate expense in 2021 associated with (i) increased costs associated with continuous improvement and strategic initiatives and (ii) higher short-term incentive compensation contributed to the increase in SG&A in 2021.

Intangible Amortization — For 2022, the increase in intangible amortization, compared to 2021, was due to a full year's amortization related to the Cincinnati Fan and ECS acquisitions, as well as amortization associated with the ITL acquisition.

For 2021, the increase in intangible amortization, compared to 2020, was due to the amortization expense associated with Sealite, ECS and Cincinnati Fan since their dates of acquisition in 2021 and the impact of a full year’s amortization expense on the 2020 acquisitions of ULC and Sensors & Software.

Gross Profi t — For 2023, the increase in gross profit as a percentage of revenues, compared to 2022, was due primarily to the increase in revenues noted above and greater absorption of manufacturing costs as a result of higher volumes.

The higher volumes were aided by improved operational execution resulting from investments in plant automation and more stable labor and supply chain environments, particularly within our HVAC reportable segment.

The resulting favorable impact on gross profit as a percentage of revenue was partially offset by less favorable sales mix within our Detection and Measurement reportable segment.

For 2022, th e increase gross profit and gross profit as a percentage of revenues, compared to 2021, was due primarily to the increase in revenues noted above, including revenue increases associated with higher-margin large projects within our communication technologies and aids to navigation businesses.

Selling, General a nd Administrative (“SG&A”) Expense — For 2023, the increase in SG&A expense, compared to 2022, was due primarily to (i) higher employee compensation, inclusive of increases in short-term incentive compensation expense, (ii) increases in sales incentive plan expense driven by the higher revenues mentioned above, (iii) acquisition-related costs and incremental SG&A expenses associated with the acquired TAMCO and ASPEQ businesses, and (iv) higher travel expense.

These increases were partially offset by (i) lower costs related to various strategic and transformational initiatives during 2023, as 2022 included spend related to the Asbestos Portfolio Sale, and (ii) expenses in connection with asbestos-related matters incurred during 2022 prior to the Asbestos Portfolio Sale.

For 2022, th e increase in SG&A expense, compared to 2021, was due primarily t o (i) incremental SG&A resulting from the acquisitions noted above, (ii) higher corporate expense associated with increased costs associated with various strategic and transformational initiatives, including the Asbestos Portfolio Sale, and higher short-term incentive compensation in 2022, and (iii) higher travel expenses due to the easing of COVID-19 pandemic restrictions in 2022.

Intangible Amortization — For 2023, the increase in intangible amortization, compared to 2022, was primarily due to incremental intangible amortization related to backlog and other intangible assets associated with the TAMCO and ASPEQ acquisitions.

In addition, 2023 included a full year's amortization related to the ITL acquisition, compared to nine months in the 2022 period.

For 2022, the increase in intangible amortization, compared to 2021, was due to a full year's amortization related to the Cincinnati Fan and ECS acquisitions, as well as amortization associated with the ITL acquisition.

Impairment of Goodwill and Intangible Assets — During 2022, we recorded impairment charges of $12.9 related to the goodwill and trademarks of ULC and $0.5 related to certain other trademarks.

During 2021, we recorded impairment charges of $29.5 related to the goodwill and trademarks of ULC and $0.5 related to certain other trademarks.

During 2020, we recorded $0.7 of impairment charges related to certain trademarks.

See Note 10 to our consolidated financial statements for additional details.

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Employee termination costs $ 0.8 $ 0.1 $ 1.0

Other cash costs, net — — 1.0

Non-cash asset write-downs — 0.3 —

Total $ 0.8 $ 0.4 $ 1.0

Other Operating (Income) Expense, Net – During 2022, and in connection with the Asbestos Portfolio Sale, we recorded a loss of $73.9.

Other Operating (Income) Expense, Net — During 2023, we recorded a charge of $9.0 related to the resolution of a dispute with a former representative at one of our businesses within the Detection and Measurement reportable segment.

See Note 15 to the consolidated financial statements for additional details.

During 2022, and in connection with the Asbestos Portfolio Sale, we recorded a loss of $73.9.

Additionally, prior to the Asbestos Portfolio Sale, we recorded charges of $2.3 for asbestos product liability matters, partially offset by a reduction in the fair value/liability associated with the contingent consideration related to the ECS acquisition of $1.3.

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This income was partially offset by charges of $26.3 for asbes tos product liability matters, along with a charge of $0.6 related to finalizing the contingent consideration liability associated with the Sensors & Software acquisition.

During 2020, we recorded charges of $9.4 for asbestos product liability matters, net of a gain of $0.4 related to revisions to estimates of certain liabilities retained in connection with the 2016 sale of the dry cooling business.

Other Income (Expense), Net – Other expense , net, for 2022 was composed primarily of $16.5 of asbestos-related charges incurred prior to the Asbestos Portfolio Sale, a loss of $3.0 related to a change in the estimated fair value of an equity security that we hold, environmental remediation charges of $2.9, and foreign currency transaction losses of $1.1, partially offset by pension and postretirement income (inclusive of net settlement and actuarial gains of $1.5) of $4.4, income of $2.0 derived from company-owned life insurance policies, and $3.0 of income associated with transition services agreements.

Other Income (Expense), Net — Other expense, net, for 2023 was composed primarily of (i) pensi on and postretirement expense of $12.2 (including actuarial losses of $11.3), (ii) foreign currency transaction losses of $0.9 , and (iii) environmental remediation charges of $0.9, partially offset by gains of (i) $3.6 related to a change in the estimated fair value of an equity security that we hold and (ii) $0.4 related to income derived from company-owned life insurance policies .

Other expense , net, for 2022 was composed primarily of $16.5 of asbestos-related charges incurred prior to the Asbestos Portfolio Sale, a loss of $3.0 related to a change in the estimated fair value of an equity security that we hold, environmental remediation charges of $2.9, and foreign currency transaction losses of $1.1, partially offset by pension and postretirement income (inclusive of net settlement and actuarial gains of $1.5) of $4.4, income of $2.0 derived from company-owned life insurance policies, and $3.0 of income associated with transition services agreements.

Other income, net, for 2021 was composed primarily of pension and post retirement income of $16.4 (including actuarial gains of $9.9), a gain of $11.8 related to changes in the estimated fair value of an equity security we hold, and income derived from company- owned life insurance policies of $3.2, partially offset by charges of $21.0 associated with asbestos product liability matters.

Other expense, net, for 2020 was composed primarily of charges of $7.6 associated with asbestos product liability matters, pension and postretirement expense of $3.0 (including actuarial losses of $6.8), environmental remediation charges of $1.5, and foreign currency transaction losses of $0.6, partially offset by a gain of $8.6 related to changes in the estimated fair value of an equity security we hold and income derived from company-owned life insurance policies of $5.0.

Interest Expense, Ne t — Interest expense, net, includes both interest expense and interest income.

The increase in interest expense, net, during 2023, compared to 2022, was the result of higher average debt balances and a higher average effective interest rate during 2023, with the higher average debt balances primarily resulting from borrowings in connection with the TAMCO and ASPEQ acquisitions.

The decrease in interest expense, net, during 2022, compared to 2021, was the result of lower average debt balances and increased interest rates on cash balances during 2022.

The decrease in interest expense, net, during 2021, compared to 2020, was the result of lower average effective interest rates and lower average debt balances during 2021.

Loss on Amendment/Refinancing of Senior Credit Agreement — During 2022, we amended our senior credit agreement.

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Income Taxes — During 2023, we recorded an income tax provision of $41.6 on $186.3 of pre-tax income from continuing operations, resulting in an effective rate of 22.3%.

The most significant items impacting the income tax provision during the year 2023 were (i) $2.3 of tax benefits related to changes in our estimate of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets, (ii) $1.8 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, and (iii) $1.1 of tax benefits related to revisions to liabilities for uncertain tax positions.

During 2022, we recorded an income tax provision of $ 7.3 on $ 27.1 of pre-tax income from continuing operations, resulting in an effective rate of 26.9% .

The most significant item impacting the effective tax rate for 2022 was the $73.9 loss on the Asbestos Portfolio Sale, which generated a tax benefit of only $1.1.

In addition, the 2022 effective income tax rate was also impacted by (i) a $4.7 tax benefit related to the release of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets primarily due to the Holding Company Reorganization completed in 2022, (ii) $3.0 of tax benefits related to statute expirations and other revisions to liabilities for uncertain tax positions.

and (iii) $1.7 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the year.

During 2021, we recorded an income tax provision of $10.9 on $69.9 of pre-tax income from continuing operations, resulting in an effective tax rate of 15.6%.

The most significant items impacting the effective income tax rate for 2021 were (i) earnings in jurisdictions with lower statutory rates, (ii) $4.3 of income tax benefits related to various valuation allowance adjustments, primarily due to foreign tax credits for which the future realization is now considered likely, and (iii) a benefit of $3.5 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims, partially offset by $13.2 of income tax expense associated with global intangible low-taxed income created by the liquidation of various acquired entities.

During 2021, we recorded an income tax provision of $10.9 on $69.9 of pre-tax income from continuing operations, resulting in an effective tax rate of 15.6%.

The most significant items impacting the effective income tax rate for 2020 were (i) earnings in jurisdictions with lower statutory tax rates, (ii) $4.2 of tax benefits related to various audit settlements, statute expirations, and other adjustments to liabilities for uncertain tax positions, and (iii) $2.8 of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the year.

The most significant items impacting the effective income tax rate for 2021 were (i) earnings in jurisdictions with lower statutory tax rates, (ii) $4.3 of income tax benefits related to various valuation allowance adjustments, primarily due to foreign tax credits for which the future realization is now considered likely, and (iii) a benefit of $3.5 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims, partially offset by $13.2 of income tax expense associated with global intangible low-taxed income created by the liquidation of various acquired entities.

Results of Discontinued Operations

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As a result, we are reporting DBT as a discontinued operation in our consolidated financial statements for all periods presented.

In connection with the wind-down, we recorded a charge of $19.9 to “Gain (loss) on disposition of discontinued operations, net of taxes” within our consolidated statement of operations for the year ended December 31, 2021 to reflect the write-off of historical currency translation amounts associated with DBT that had been previously reported within “Stockholders' equity” on our consolidated balance sheet.

DBT continues to be engaged in various dispute resolution matters related to two large power projects, as indicated in Note 15 to the consolidated financial statements.

In connection with the wind-down, we recorded a charge of $19.9 to “Gain (loss) on disposition of discontinued operations, net of tax” within our consolidated statement of operations for the year ended December 31, 2021 to reflect the write-off of historical currency translation amounts associated with DBT that had been previously reported within “Stockholders' equity” on our consolidated balance sheet.

As previously disclosed, DBT had asserted claims against the remaining prime contractor on two large projects, MHI, of approximately South African Rand 1,000.0 (or $54.4) and MHI had asserted, or issued letters of intent to claim for, alleged damages against DBT.

Although it was reasonably possible that some loss may have been incurred in connection with these claims (which totaled approximately South African Rand 2,815.2 or $153.2), we were unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims;

(ii) complexity of contractual relationships between the end customer, MHI, and DBT;

(iii) legal interpretation of the contract provisions and application of South African law to the contracts;

and (iv) unpredictable nature of any dispute resolution processes that had occurred or may have occurred in connection with these claims.

Although we have experienced success in enforcing and defending our rights through the dispute resolution process over the past few years (including the matters mentioned below), we have invested, and would have continued to invest, significant management and financial resources to defend and pursue these matters.

On September 5, 2023, DBT and SPX entered into an agreement with MHI to resolve all claims between the parties with respect to the two large power projects in South Africa.

The Settlement Agreement provides for full and final settlement and

mutual release of all claims between the parties with respect to the projects, including any claim against SPX Technologies, Inc.

as guarantor of DBT's performance on the projects.

It also provides that the underlying subcontracts are terminated and all obligations of both parties under the subcontracts have been satisfied in full.

In connection with the Settlement Agreement, we incurred a charge, net of tax, of $54.2 during the third quarter of 2023.

The charge included the write-off of $15.2 in net amounts due from MHI.

Such charge is included in “Gain (loss) on disposition of discontinued operations, net of tax” for the year ended December 31, 2023.

Prior to the Settlement Agreement, on February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT against MHI related to costs incurred in connection with delays on two units of the Kusile project.

In connection with the ruling, DBT received South African Rand 126.6 (or $8.6 at the time of payment).

This ruling was subject to final and binding arbitration in this matter.

In March 2023, an arbitration tribunal upheld the decision of the dispute adjudication panel.

As a result, the South African Rand 126.6 (or $7.0) was recorded as income during the first quarter of 2023, with such amount recorded within “Gain (loss) on disposition of discontinued operations, net of tax.” Additionally, in June 2023, the arbitration tribunal ruled DBT was entitled to recover $1.3 of legal costs incurred related to the arbitration.

Such amount received from MHI was recorded to “Gain (loss) on disposition of discontinued operations, net of tax” during the year ended December 31, 2023.

Additionally, in May 2023, a separate arbitration tribunal ruled DBT was entitled to recover $5.5 of legal costs incurred related to a prior arbitration hearing.

Such amount received from MHI was recorded to “Gain (loss) on disposition of discontinued operations, net of tax” during the year ended December 31, 2023.

For the years ended December 31, 2023, 2022 and 2021, results of operations from our businesses reported as discontinued operations were as follows:

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Income tax (provision) benefit (2)

0.9 (51.8) (14.0)

Income from discontinued operations, net — 0.3 403.1

Loss from discontinued operations (69.0) (17.3) (37.8)

(17.3) (37.8) (16.6)

Income tax benefit 15.3 2.1 2.7

Loss from discontinued operations, net (3)

Heat Transfer

Income (loss) from discontinued operations (0.4) (0.3) 0.3

Income tax (provision) benefit 0.1 — (0.1)

Income (loss) from discontinued operations, net (0.3) (0.3) 0.2

(53.7) (15.2) (35.1)

All other (4)

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Income for the year ended December 31, 2021 resulted primarily from the gain on sale of the business of $382.2, as well as the results of operations for the year.

Income for the year ended December 31, 2020 related to the results of operations for the year.

(2) During the fourth quarter of 2021, we liquidated certain recently acquired entities.

As a result of this action, we recorded a net income tax benefit of $16.5 within our 2021 consolidated statement of operations, which included an income tax charge of $10.9 within continuing operations and income tax benefit of $27.4 within discontinued operations.

(3) Loss for the years ended December 31, 2022, 2021, and 2020 resulted primarily from legal costs incurred in connection with various dispute resolution matters related to two large power projects.

As a result of this action, we recorded a net income tax benefit of $16.5 within our 2021 consolidated statement of operations, which included an income tax charge of $10.9 within continuing operations and an income tax benefit of $27.4 within discontinued operations.

(3) Loss for the year ended December 31, 2023 resulted primarily from the charge, and related income tax impacts, recorded in connection with the Settlement Agreement referred to above and legal costs in connection with the various dispute resolution matters.

This loss for the year ended December 31, 2023 was partially offset by the arbitration awards received, which are discussed above.

Loss for the years ended December 31, 2022 and 2021 resulted primarily from legal costs incurred in connection with various dispute resolution matters prior to the Settlement Agreement.

In addition, and as previously noted, the year ended December 31, 2021 includes a charge of $19.9 related to the write-off of historical translation amounts.

(4) Loss for the years ended December 31, 2022, 2021, and 2020 resulted primarily from asbestos-related charges and revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.

(4) Loss for the years ended December 31, 2023, 2022, and 2021 resulted primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions and, for the years ended December 31, 2022 and 2021, asbestos-related charges for businesses previously disposed of.

Results of Reportable Segments

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Foreign currency (0.2) (0.8)

Settlement of legacy dry cooling contract — (0.6)

Acquisitions 10.8 10.0

Net revenue increase 22.8 21.5

Revenues — For 2022, the increase in revenues, compared to 2021, was due to an increase in organic revenue within our heating businesses and, to a lesser extent, within our cooling businesses and the impact of the acquisition of Cincinnati Fan.

Revenues — For 2023, the increase in revenues, compared to 2022, was due primarily to (i) organic revenue growth driven primarily by increased sales of cooling products and (ii) the impact of the TAMCO and ASPEQ acquisitions.

The increase in organic revenue was associated with volume increases, primarily of cooling products, resulting from greater plant throughput and more stable labor and supply chain environments, and price increases.

For 2022, the increase in revenues, compared to 2021, was due to an increase in organic revenue within our heating businesses and, to a lesser extent, within our cooling businesses and the impact of the acquisition of Cincinnati Fan.

The increase in organic revenue was due to increased pricing and, to a lesser extent, volume increases.

For 2021, the increase in revenues, compared to 2020, was due primarily to an increase in organic revenue within our heating businesses, partially offset by a decline in organic revenue within our cooling businesses due to several large projects that contributed significant revenue to our results in 2020.

Sales of heating products during the first half of 2020 were impacted negatively by (i) a warmer than normal winter and (ii) the COVID-19 pandemic.

Income — For 2022, th e increase i n income, compared to 2021, was due primarily to the increase in revenues noted above, while the increase in margin was due primarily to a more favorable project/product sales mix in 2022.

For 2021, the increase in income, compared to 2020, was due primarily to the increase in revenues noted above.

Income — For 2023, the increase in income, compared to 2022, was due primarily to the impact of the revenue growth mentioned above.

For 2023, the increase in margin, compared to 2022, was due primarily to price increases and greater absorption of manufacturing costs as a result of higher volumes, as well as favorable sales mix primarily associated with acquisitions.

The higher volumes were aided by improved operational execution across our heating and cooling businesses resulting from more stable labor and supply chain environments and facility-related investments.

For 2022, th e increase i n income, compared to 2021, was due primarily to the increase in revenues noted above, while the increase in margin was due primarily to a more favorable project/product sales mix in 2022.

Backlog — The segment had backlog of $306.1 and $243.1 as of December 31, 2023 and 2022, respectively.

Backlog associated with TAMCO and ASPEQ totaled $30.6 as of December 31, 2023.

Approximately 98% of the segment’s backlog as of December 31, 2023 is expected to be recognized as revenue during 2024.

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Net revenue increase 13.1 17.1

Revenues — For 2022, the increase in revenues, compared to 2021, was due to organic growth across all product lines and the impact of the acquisitions of Sealite, ECS, and ITL.

The organic growth was driven by continued strong order trends for our short-cycled businesses and execution of large projects within our fare collection, communication technologies, and obstruction lighting businesses.

For 2021, the increase in revenues, compared to 2020, was due to the impact of the acquisitions of ECS and Sealite in 2021 and ULC and Sensors & Software in 2020 and, to a lesser extent, organic revenue growth and the impact of foreign currency exchange rates.

The increase in organic revenue was primarily the result of higher sales of underground pipe and locator products and, to a lesser extent, higher sales of communication technologies and obstruction lighting products.

These increases in organic revenue were offset partially by lower sales of fare collection systems.

During the first half of 2020, sales of underground pipe and locator products were impacted negatively by the COVID-19 pandemic, while the decline in sales of fare collection systems in 2021 was due primarily to the timing of large projects, as the extent of such projects can fluctuate from year-to-year.

Income — For 2022, the increase i n income and margin, compared to 2021, was due primarily to the increase in revenues noted above, including revenue increases associated with higher-margin large projects within our communication technologies and obstruction lighting businesses.

For 2021, the increase in income, compared to 2020, was due primarily to the increase in reven ues noted above.

The year-over-year decrease in margin was due primarily to volume declines in our robotic systems business.

Backlog — The segment had backlog of $251.0 (including $0.4 related to ITL) and $153.6 as of December 31, 2022 and 2021, respectively.

Revenues — For 2023, the increase in revenues, compared to 2022, was due primarily to organic revenue growth and, to a lesser extent, the full year impact of the ITL acquisition.

The organic revenue growth was driven primarily by higher volumes of large projects within the communication technologies, transportation, and aids to navigation businesses.

For 2022, the increase in revenues, compared to 2021, was due to organic growth across all product lines and the impact of the acquisitions of Sealite, ECS, and ITL.

The organic growth was driven by strong order trends for our short-cycled businesses and execution of large projects within our transportation, communication technologies, and aids to navigation businesses.

Income — For 2023, the increase in income, compared to 2022, was due primarily to the revenue growth mentioned above.

For 2023, the decrease in margin, compared to 2022, was due primarily to a less favorable sales mix associated with our short-cycled businesses and certain of the large projects mentioned above, primarily within our communication technology business.

For 2022, the increase i n income and margin, compared to 2021, was due primarily to the increase in revenues noted above, including revenue increases associated with higher-margin large projects within our communication technologies and aids to navigation businesses.

Backlog — The segment had backlog of $244.5 and $251.0 as of December 31, 2023 and 2022, respectively.

Approximately 76% of the segment’s backlog as of December 31, 2023 is expected to be recognized as revenue during 2024.

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Long-term incentive compensation expense 13.4 10.9 12.8 22.9 (14.8)

Corporate Expense — Corporate expense generally relates to the cost associated with our Charlotte, NC corporate headquarters.

Corporate Expense — Corporate expense generally relates to the operating cost associated with our Charlotte, NC corporate headquarters.

The decrease in corporate expense during 2023, compared to 2022, was due primarily to (i) higher costs related to various strategic and transformational initiatives, including the Asbestos Portfolio Sale, during 2022 and (ii) expenses in connection with asbestos-related matters incurred during 2022 prior to the Asbestos Portfolio Sale, partially offset by higher short-term incentive compensation and higher acquisition-related and other integration costs primarily associated with the TAMCO and ASPEQ acquisitions.

The increase in corporate expense during 2022, compared to 2021, was due primarily to increased costs associated with various strategic and transformational initiatives, including the Asbestos Portfolio Sale, and higher short-term incentive compensation in 2022.

The increase in corporate expense during 2021, compared to 2020, was due primarily to increased costs associated with continuous improvement and other strategic initiatives and higher short-term incentive compensation during 2021.

Long- Term Incentive Compensation Expense — Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes.

The increase in long-term incentive compensation expense in 2023, compared to 2022, was due primarily to the impact of forfeitures resulting from various participant resignations during 2022.

The decrease in long-term incentive compensation in 2022, compared to 2021, was due primarily to the impact of forfeitures resulting from various participant resignations during 2022.

The decrease in long-term incentive compensation in 2021, compared to 2020, was due primarily to revisions to/finalization of the liability associated with the 2018 long-term cash awards during the first quarter of 2021, partially offset by the impact of a lower amount of award forfeitures during 2021.

See Note 16 to our consolidated financial statements for further details on our long-term incentive compensation plans.

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Change in cash and equivalents due to changes in foreign currency exchange rates (0.1) 2.9 6.6

2.9 6.6 (2.5)

Net change in cash and equivalents $ (52.2) $ (238.9) $ 327.7

2023 Compared to 2022

Operating Activities - The increase in cash flows from operating activities of continuing operations during the year ended December 31, 2023, compared to 2022, was due primarily to (i) the increase in income during the period discussed previously, (ii) cash contributed during 2022 to the divested subsidiaries of $138.8 in connection with the Asbestos Portfolio Sale, (iii) a reduction in the level of elevated purchases of raw materials and components, primarily within our HVAC reportable segment, during 2023, due to a more stable supply chain environment, (iv) working capital improvements at certain of our project-related businesses, as cash flows for these businesses are often subject to contract milestones that can impact the timing of cash flows from period to period, (v) net payments for asbestos-related matters made prior to the Asbestos Portfolio Sale in 2022, of $15.3, and (vi) a cash payment of $10.0 during the first half of 2022 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier (see Note 11 to our consolidated financial statements for additional details).

Investing Activiti es - Cash flows used in investing activities of continuing operations for the year ended December 31, 2023 were comprised of net cash utilized in the acquisitions of TAMCO and ASPEQ of $547.0 and capital expenditu res of $23.9, partially offset by net proceeds from company-owned life insurance policies of $0.7.

Cash flows used in investing activities of continuing operations for the year ended December 31, 2022 were comprised of cash utilized in the acquisition of ITL of $41.8 and capital expenditures of $15.9, partially offset by net proceeds from company-owned life insurance policies of $3.7 and $1.8 received upon agreement with the sellers on acquired working capital balances associated with the Cincinnati Fan and ITL acquisitions.

Financing Activities - Cash flows from financing activities of continuing operations for the year ended December 31, 2023 were comprised of net borrowings under the Credit Agreement and trade receivables financing arrangement of $296.6 and $16.0, respectively, primarily in connection with the TAMCO and ASPEQ acquisitions.

These borrowings were partially offset by minimum tax withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $1.3, and fees paid in connection with the Incremental Term Loan of $1.3.

Net repayments under our other various debt instruments totaled $0.4.

Cash flows used in financing activities of continuing operations for the year ended December 31, 2022 were comprised primarily of repurchases of common stock of $33.7, minimum tax withholdings paid on behalf of employees on net-share settlements of long-term incentive awards, net of proceeds from options exercised, of $3.5, and contingent consideration of $1.3 paid in relation to the Sensors & Software acquisition.

Additionally, prior to the August 12, 2022 amendment of our Credit Agreement, we made scheduled repayments under our then-existing term loan of $6.3 and in connection with entering the Credit Agreement, we received $245.0 under our new term loan and (i) repaid the remaining balance under the then-existing term loan of $237.4 and (ii) paid fees in connection with the refinancing of $1.9.

Net repayments under our various other debt instruments totaled $0.8.

Discontinued Operations - Cash flows used in discontinued operations for the year ended December 31, 2023 relate primarily to (i) cash payments of $25.3 made by DBT to MHI during the third quarter of 2023 in connection with the Settlement Agreement, and (ii) disbursements of $14.7 for professional fees and support costs incurred principally in connection with the claims resolved by the Settlement Agreement, partially offset by the recovery of legal costs we were awarded in arbitration proceedings between DBT and MHI of $6.8.

Refer to Notes 4 and 15 to the consolidated financial statements for additional details related to the Settlement Agreement.

Cash flows used in discontinued operations for the year ended December 31, 2022 related primarily to (i) disbursements for professional fees incurred in connection with the claims activities related to the large power projects in South Africa (see Note 15 to the consolidated financial statements for additional details), (ii) disbursements related to asbestos product liability matters made prior to the Asbestos Portfolio Sale, (iii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business, and (iv) disbursements for liabilities retained in connection with dispositions, including fees associated with the sale of Transformer Solutions.

These disbursements were partially offset by proceeds from stock options exercised of $1.0.

Change in Cash and Equivalents Due to Changes in Foreign Currency Exchange Rates - Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during 2023 and 2022.

2022 Compared to 2021

Operating Activities - The decrease in cash flows from operating activities, compared to 2021, was due primarily to (i) a cash contribution to the divested subsidiaries of $138.8 in connection with the Asbestos Portfolio Sale;

(iii) elevated purchases of inventory components in order to manage the potential risk associated with the current supply chain environment;

(iii) elevated purchases of inventory components in order to manage the potential risk associated with the then-existing supply chain environment;

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Cash flows used in financing activities during 2021 were comprised primarily of net repayments on various debt instruments of $164.5 .

Discontinued Operations – Cash flows used in discontinued operations during 2022 related primarily to (i) disbursements for professional fees incurred in connection with the claims activities related to the large power projects in South Africa (see Note 15 to the consolidated financial statements for additional details), (ii) disbursements related to asbestos product liability matters made prior to the Asbestos Portfolio Sale, (iii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business, and (iv) disbursements for liabilities retained in connection with dispositions, including fees associated with the sale of Transformer Solutions.

Discontinued Operations - Cash flows used in discontinued operations during 2022 related primarily to (i) disbursements for professional fees incurred in connection with the claims activities related to the large power projects in South Africa prior to the Settlement Agreement, (ii) disbursements related to asbestos product liability matters made prior to the Asbestos Portfolio Sale, (iii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business, and (iv) disbursements for liabilities retained in connection with dispositions, including fees associated with the sale of Transformer Solutions.

These disbursements were partially offset by proceeds from stock options exercised of $1.0.

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2021 Compared to 2020

Operating Activities – The increase in cash flows from operating activities, compared to 2020, was due primarily to (i) improved cash flows within our heating and underground pipe and locator businesses associated with improved profitability, (ii) a decline in working capital at certain of our businesses, (iii) insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter, and (iv) income tax refunds, net of tax payments, of $5.5 in 2021 (compared to income tax payments, net of refunds, of $7.6 in 2020).

Investing Activiti es – Cash flows used in investing activities for 2021 were comprised primarily of cash utilized in the acquisitions of Sealite, ECS and Cincinnati Fan of $264.9 , net expenditures related to company-owned life insurance policies of $ 31.2 , and capital expenditures of $ 9.6 .

Cash flows used in investing activities in 2020 were comprised primarily of cash utilized in the acquisitions of ULC and Sensors & Software of $104.4 and capital expenditures of $15.3.

Financing Activities – Cash flows used in financing activities during 2021 were comprised primarily of net repayments on our various debt instruments of $164.5.

Cash flows from financing activities during 2020 were comprised primarily of net borrowings on our various debt instruments of $15.6.

Discontinued Operations – Cash flows from discontinued operations for 2021 related primarily to proceeds received in connection with the sale of Transformer Solutions of $ 620.6 .

In addition, cash flows from discontinued operations included cash flows from operations generated by Transformer Solutions, partially offset by cash flows used in DBT's operations and disbursements related to liabilities retained in connection with other dispositions.

Cash flows from discontinued operations for 2020 related primarily to cash flows generated by Transformer Solutions and Heat Transfer, partially offset by cash flows used in DBT's operations and disbursements for liabilities retained in connection with other dispositions.

The following summarizes our debt activity (both current and non-current) for the year ended December 31, 2023:

2021 Borrowings Repayments Other (5) December 31,

2022 Borrowings Repayments Other (6)

Revolving loans (1)

Term loan (1)(2)

$ — $ 569.1 $ (569.1) $ — $ —

Term loans (2)(3)

244.3 300.0 (3.4) (1.0) 539.9

Trade receivables financing arrangement (4)

— 178.0 (162.0) — 16.0

Other indebtedness (5)

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_____________________________________________________________

(1) As noted below, we amended our senior credit agreement on August 12, 2022.

The amendment made available a new term loan facility in the amount of $245.0, the proceeds of which were primarily used to repay the outstanding balance of $237.4 under the then-existing term loan facility.

(2) The term loan is repayable in quarterly installments equal to 0.625% of the initial term loan balance of $245.0, beginning in December 2023 and in each of the first three quarters of 2024, and 1.25% during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.

The remaining balance is payable in full on August 12, 2027.

(1) The revolving loan facility was utilized as the initial funding mechanism for the TAMCO and ASPEQ acquisitions and was repaid with the funds borrowed on the Incremental Term Loan (see additional discussion below) and cash generated from operations.

(2) As noted below, we amended our senior credit agreement on April 21, 2023, with the amendment making available an incremental term loan facility (“Incremental Term Loan”) in the amount of $300.0.

The proceeds from the Incremental Term Loan were primarily used to fund the acquisition of ASPEQ.

(3) The term loans are repayable in quarterly installments equal to 0.625% of the initial term loan balances of $545.0, beginning in December 2023 and in each of the first three quarters of 2024, and 1.25% during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.

The remaining balances are payable in full on August 12, 2027.

Balances are net of unamortized debt issuance costs of $1.7 and $0.7 at December 31, 2023 and December 31, 2022, respectively.

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Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses.

At December 31, 2022, we had $45.7 of available borrowing capacity under this facility .

At December 31, 2023, we had $44.0 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $16.0.

(5) Primarily includes balances under a purchase card program of $1.9 and $1.8 and finance lease obligations of $0.5 and $0.7 at December 31, 2023 and December 31, 2022, respectively.

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As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

(5) “Other” includes the impact of amortization of debt issuance costs associated with the term loan.

Maturities of long-term debt payable during each of the five years subsequent to December 31, 2022 are $2.0, $7.9, $12.3, $12.3, and $211.2 respectively.

(6) “Other” includes the impact of amortization of debt issuance costs associated with the term loans.

During the second quarter of 2023 we capitalized $1.3 of debt issuance costs associated with the Incremental Term Loan.

Maturities of long-term debt payable during each of the five years subsequent to December 31, 2023 a re $17.3, $27.4, $27.4, $470.0, and $0.0, respectively.

Senior Credit Facilities

On August 12, 2022, we entered into the Credit Agreement to, among other things, extend the term of the facilities under the Credit Agreement (with the aggregate of each facility comprising the “Senior Credit Facilities”) and provide for committed senior secured financing with an aggregate amount of $770.0 which consists of the following facilities at December 31, 2022 (each with a final maturity of August 12, 2027):

• A term loan facility in an aggregate principal amount of $245.0;

On April 21, 2023 (the “Incremental Amendment Effective Date”), we entered into an Incremental Facility Activation Notice (the “Incremental Amendment”) with Bank of America, N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto, which amends the Amended and Restated Credit Agreement, dated as of August 12, 2022 (as amended, the “Credit Agreement”), among the Company, the lenders party thereto, Deutsche Bank AG, as foreign trade facility agent, and the Administrative Agent.

The Incremental Amendment provides for an Incremental Term Loan in the aggregate amount of $300.0, which was available in up to three drawings (subject to customary conditions) from the Incremental Amendment Effective Date to October 18, 2023.

The proceeds of the Incremental Term Loan were available to be used to finance, in part, permitted acquisitions, to pay related fees, costs and expenses and for other lawful corporate purposes.

The Incremental Term Loan will mature on August 12, 2027.

We may voluntarily prepay the Incremental Term Loan, in whole or in part, without premium or penalty.

In June 2023, we borrowed $300.0 under the Incremental Term Loan in connection with the ASPEQ acquisition.

The credit facilities (the “Senior Credit Facilities”) under the Credit Agreement consist of the following at December 31, 2023 (each with a final maturity of August 12, 2027):

• Term loan facilities in an aggregate principal amount of $545.0 ($245.0 and $300.0 related to our original term loan and the Incremental Term Loan, respectively);

• A multicurrency revolving credit facility, available for loans and letters of credit in Dollars, Euro, Sterling and other currencies, in an aggregate principal amount up to the equivalent of $500.0 (with sub-limits equal to the equivalents of $200.0 for financial letters of credit, $50.0 for non-financial letters of credit, and $150.0 for non-U.S.

• A bilateral foreign credit instrument facility, available for performance letters of credit and bank undertakings, in an aggregate principal amount in various currencies up to the equivalent of $25.0.

The Credit Agreement also:

• Requires that we maintain a Consolidated Leverage Ratio (defined in the Credit Agreement) as of the last day of any fiscal quarter of not more than 3.75 to 1.00 (or (i) 4.00 to 1.00 for the four fiscal quarters after certain permitted acquisitions or (ii) 4.25 to 1.00 for the four fiscal quarters after certain permitted acquisitions with a minimum amount financed by unsecured debt);

• Requires that we maintain a Consolidated Interest Coverage Ratio (defined in the Credit Agreement) as of the last day of any fiscal quarter of at least 3.00 to 1.00;

• Allows SPX to seek additional commitments, without consent from the existing lenders, to add incremental term loan facilities and/or increase the commitments in respect of the revolving credit facility and/or the bilateral foreign credit instrument facility by up to an aggregate principal amount not to exceed (x) the greater of (i) $200.0 and (ii) the amount of Consolidated EBITDA (as defined in the Credit Agreement) for the four fiscal quarters ended most recently before the date of determination, plus (y) an unlimited amount so long as, immediately after giving effect thereto, our Consolidated Senior Secured Leverage Ratio (defined in the Credit Agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings, or analogous instruments and net of unrestricted cash and cash equivalents) at the date of determination secured by liens to Consolidated EBITDA for the four fiscal quarters ended most recently before such date) does not exceed 2.75:1.00, plus (z) an amount equal to all voluntary prepayments of the term loan facility and voluntary prepayments accompanied by permanent commitment reductions of the revolving credit facility and foreign credit instrument facility;

• Establishes per annum fees charged and applies interest rate margins, as follows:

Ratio Revolving Commitment Fee Financial Letter of Credit Fee Foreign Credit Instrument (“FCI”) Commitment Fee

FCI Fee and Non-Financial Letter of Credit Fee Term Secured Overnight Financing Rate (“SOFR”) Loans/Alternative Currency Loans

Greater than or equal to 3.00 to 1.00

0.275 % 1.750 % 0.275 % 1.000 % 1.750 % 0.750 %

Between 2.00 to 1.00 and 3.00 to 1.00

0.250 % 1.500 % 0.250 % 0.875 % 1.500 % 0.500 %

Between 1.50 to 1.00 and 2.00 to 1.00

0.225 % 1.375 % 0.225 % 0.800 % 1.375 % 0.375 %

Less than 1.50 to 1.00

0.200 % 1.250 % 0.200 % 0.750 % 1.250 % 0.250 %

The interest rates applicable to loans under the Senior Credit Facilities are, at our option, equal to either (i) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.5%, (b) the prime rate of Bank of America, N.A., and (c) the one-month Term SOFR rate plus 1.0%) or (ii) the Term SOFR rate for the applicable interest period plus 0.1%, plus, in each case, an applicable margin percentage, which varies based on the Consolidated Leverage Ratio (defined in the Credit Agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings or analogous instruments and net of unrestricted cash and cash equivalents) at the date of determination to Consolidated EBITDA for the four fiscal quarters ended most recently before such date).

The interest rates applicable to loans in other currencies under the Senior Credit Facilities are, at the applicable borrower’s option, equal to either (a) an adjusted alternative currency daily rate or (b) an adjusted alternative currency term rate for the applicable interest period, plus, in each case, the applicable margin percentage.

The borrowers may elect interest periods of one, three or six months (and, if consented to by all relevant lenders, any other period not greater than twelve months) for term rate borrowings, subject in each case to availability in the applicable currency.

The weighted-average interest rate of outstanding borrowings under our Senior Credit Facilities was approximately 5.8% at December 31, 2022.

The fees and bilateral foreign credit commitments are as specified above for foreign credit commitments unless otherwise agreed with the bilateral foreign issuing lender.

We also pay fronting fees on the outstanding amounts of letters of credit and foreign credit instruments (in the participation facility) at the rates of 0.125% per annum and 0.25% per annum, respectively.

SPX Enterprises, LLC, the direct wholly owned subsidiary of the Company, is the borrower under each of above facilities, and SPX may designate certain foreign subsidiaries to be borrowers under the revolving credit facility and the foreign credit instrument facility.

All borrowings and other extensions of credit under the Credit Agreement are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties.

The letters of credit under the revolving credit facility are stand-by letters of credit requested by SPX on behalf of any of our subsidiaries or certain joint ventures.

The foreign credit instrument facility is used to issue foreign credit instruments, including bank undertakings to support our operations.

The Credit Agreement requires mandatory prepayments in amounts equal to the net proceeds from the sale or other disposition of (including from any casualty to, or governmental taking of) property in excess of specified values (other than in the ordinary course of business and subject to other exceptions) by SPX.

Mandatory prepayments will be applied first to repay amounts outstanding under any term loans and then to amounts outstanding under the revolving credit facility (without reducing the commitments thereunder).

No prepayment is required generally to the extent the net proceeds are reinvested (or committed to be reinvested) in permitted acquisitions, permitted investments or assets to be used in the business of SPX within 360 days (and if committed to be reinvested, actually reinvested within 180 days after the end of such 360-day period) of the receipt of such proceeds.

We may voluntarily prepay loans under the Credit Agreement, in whole or in part, without premium or penalty.

Any voluntary prepayment of loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of term rate borrowings other than on the last day of the relevant interest period.

Indebtedness under the Credit Agreement is guaranteed by:

• Each existing and subsequently acquired or organized domestic material subsidiary with specified exceptions;

• SPX with respect to the obligations of our foreign borrower subsidiaries under the revolving credit facility and the bilateral foreign credit instrument facility.

Indebtedness under the Credit Agreement is secured by a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries (with certain exceptions) or our domestic subsidiary guarantors and 65% of the voting capital stock (and 100% of the non-voting capital stock) of material first-tier foreign subsidiaries (with certain exceptions).

If SPX obtains a corporate credit rating from Moody’s and S&P and such corporate credit rating is less than “Ba2” (or not rated) by Moody’s and less than “BB” (or not rated) by S&P, then SPX and our domestic subsidiary guarantors are required to grant security interests, mortgages and other liens on substantially all of their assets.

If SPX’s corporate credit rating is “Baa3” or better by Moody’s or “BBB-” or better by S&P and no defaults would exist, then all collateral security is to be released and the indebtedness under the Credit Agreement will be unsecured.

The Credit Agreement also contains covenants that, among other things, restrict our ability to incur additional indebtedness, grant liens, make investments, loans, guarantees, or advances, make restricted junior payments, including dividends, redemptions of capital stock, and voluntary prepayments or repurchase of certain other indebtedness, engage in mergers, acquisitions or sales of assets, enter into sale and leaseback transactions, or engage in certain transactions with affiliates, and otherwise restrict certain corporate activities.

The Credit Agreement contains customary representations, warranties, affirmative covenants and events of default.

We are permitted under the Credit Agreement to repurchase capital stock and pay cash dividends in an unlimited amount if our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) less than 2.75 to 1.00.

If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.75 to 1.00, the aggregate amount of such repurchases and dividend declarations cannot exceed (A) $100.0 in any fiscal year plus (B) an additional amount for all such repurchases and dividend declarations made after September 1, 2015 equal to the sum of (i) $100.0 plus (ii) a positive amount equal to 50% of cumulative Consolidated Net Income (as defined in the Credit Agreement generally as consolidated net income subject to certain adjustments solely for the purposes of determining this basket) during the period from September 1, 2015 to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit) plus (iii) certain other amounts, less our previous usage of such additional amount for certain other investments and restricted junior payments.

At December 31, 2023, we had $489.2 of available borrowing capacity under our revolving credit facilities, after giving effect to $10.8 reserved for outstanding letters of credit.

In addition, at December 31, 2023, we had $13.4 of available issuance capacity under our foreign credit instrument facilities after giving effect to $11.6 reserved for outstanding letters of credit.

At December 31, 2022, we were in compliance with all covenants of the Credit Agreement.

In connection with the August 2022 amendment of the Credit Agreement, we recorded charges of $1.1 to “Loss on amendment/refinancing of senior credit agreement” related to the write-off of unamortized deferred financing costs totaling $0.7 and transaction costs of $0.4.

Additionally, $1.5 of fees paid in connection with the August 2022 amendment were capitalized, with $1.2 related to our revolving loans and $0.3 related to the term loan.

During 2021, we reduced the issuance capacity of our then-existing foreign credit instrument facilities resulting in a charge of $0.2 to “Loss on amendment/refinancing of senior credit agreement” associated with the write-off of unamortized deferred financing costs.

At December 31, 2023, we were in compliance with all covenants of our Credit Agreement.

Refer to Note 13 to the consolidated financial statements for additional details of the Credit Agreement, including details of covenants, applicable interest rate margins and fees.

On February 7, 2024, we completed the acquisition of Ingénia.

We purchased Ingénia for net cash consideration of CAD 398.8 (or $295.7 at the time of payment) which was funded through borrowings on our revolving credit facilities under our Credit Agreement.

Refer to Note 18 to the consolidated financial statements for additional information.

Other Borrowings and Financing Activities

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At December 31, 2023, the aggregate amount of borrowing capacity under these facilities was $20.0, while there were no borrowings outstanding.

Company-owned Life Insurance

The Company has investments in company-owned life insurance (“COLI”) policies, which are recorded at their cash surrender value at each balance sheet date.

The Company has the ability to monetize its investment in the COLI policies as an additional source of liquidity.

At December 31, 2023, the Company had not monetized any of its existing COLI policies’ cash surrender value.

See Note 1 to the consolidated financial statements for additional information.

Financial Instruments

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We previously maintained interest rate swap agreements that matured in March 2021 and effectively converted borrowings under our senior credit facilities to a fixed rate of 2.535%, plus the applicable margin.

In February 2020, and as a result of a December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest swap agreements (“Swaps”).

In 2020 we entered into additional interest swap agreements (“Swaps”).

The Swaps have a remaining notional amount of $218.8, cover the period through November 2024, and effectively convert this portion of the borrowings under our senior credit facilities to a fixed rate of 1.077%, plus the applicable margin.

In connection with entering into the Credit Agreement, the Swaps were amended to be based on SOFR as opposed to LIBOR.

We have designated, and are accounting for, the Swaps as cash flow hedges.

In connection with an August 2022 amendment of the Credit Agreement, the Swaps were amended to be based on SOFR as opposed to the London Interbank Offered Rate (“LIBOR”).

We applied the optional expedients per Accounting Standards Update (“ASU”) No.

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As of December 31, 2023 and 2022, the unrealized gain, net of tax, recorded in Accumulated Other Comprehensive Income (“AOCI”) was $5.7 and $11.0, respectively.

In addition, the fair value of our interest rate swap agreements was $14.7 (with $8.7 recorded as a current asset and $6.0 as a non-current asset) as of December 31, 2022 , and $0.6 (with $2.5 recorded as a non-current asset and $1.9 as a current liability) as of December 31, 2021.

Changes in fair value of our interest rate swap agreements are reclass ified into earnings as a component of interest expense, when the forecasted transaction impacts earnings.

In addition, the fair value of our interest rate swap agreements was $7.5 (with $7.5 recorded as a current asset) as of December 31, 2023, and $14.7 (with $8.7 recorded as a current asset and $6.0 as a non-current asset) as of December 31, 2022.

Changes in fair value of our interest rate swap agreements are reclassified into earnings as a component of interest expense when the forecasted transaction impacts earnings.

Currency Forward Contracts

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Our principal currency exposures relate to the South African Rand, British Pound Sterling, and Euro.

From time to time, we enter into forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries (“FX forward contracts”).

From time to time, we enter into FX forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries.

We had FX forward contracts with an aggregate notional amount of $9.4 and $6.9 outstanding as of December 31, 2023 and 2022, respectively, with all of the $9.4 scheduled to mature within one year.

The fair value of our FX forward contracts was less than $0.1 at December 31, 2023 and 2022.

In addition to the above, we entered FX forward contracts associated with the Settlement Agreement, to mitigate our exposure to fluctuations in the South African Rand, with a notional amount of South African Rand 480.9 (or $24.9 at the time of execution) and a fair value of $1.3, which is included within “Assets of DBT and Heat Transfer” on the consolidated balance sheet as of December 31, 2023, all of which are scheduled to mature within one year.

Refer to Note 4 to the consolidated financial statements for additional details.

Commodity Contracts

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Immediately prior to the sale, we extinguished the existing commodity contracts and reclassified from AOCI a net loss of $0.6 to “Gain (loss) on disposition of discontinued operations, net of tax” within our consolidated statement of operations for the year ended December 31, 2021.

Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and, to the extent the commodity contracts were effective in offsetting the variability of the forecasted purchases, the change in fair value was included in AOCI.

Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and the change in fair value was included in AOCI.

We reclassified amounts associated with our commodity contracts out of AOCI when the forecasted transaction impacted earnings.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, and interest rate swap and foreign currency forward contracts.

These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions throughout the world.

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, COLI policies, and interest rate swaps and FX forward contracts.

These financial instruments, other

than trade accounts receivable, are placed with high-quality financial institutions throughout the world.

We periodically evaluate the credit standing of these financial institutions.

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Balances under the Credit Agreement are payable in full on August 12, 2027.

Our term loan is repayable in quarterly installments equal to 0.625% of the initial term loan balance of $245.0, beginning in December 2023 and in each of the first three quarters of 2024, and 1.25% during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.

Our term loans are repayable in quarterly installments equal to 0.625% of the initial term loan balances of $545.0, beginning in December 2023 and in each of the first three quarters of 2024, and 1.25% during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.

The remaining balance is payable in full on August 12, 2027.

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Capital expenditures in 2023 related prima ril y to upgrades to manufacturing facilities, including replacement of equipment.

We expect 2023 capital expenditures to approximate $20.0 to $30.0, with a significant portion related to upgrades to manufacturing facilities.

We expect 2024 capital expenditures to approximate $35.0 to $45.0, with a significant portion related to upgrades to existing, and expansion into new, manufacturing facilities.

In 2023, we made contributions and direct benefit payments of $11.2 to our defined benefit pension and postretirement benefit plans.

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Our pension plans have not experienced any liquidity difficulties or counterparty defaults due to the volatility in the credit markets.

Our pension fund assets had negative returns of approximately 24.0% in 2022.

Our pension fund assets had returns of approximately 6.0% in 2023.

See Note 11 to our consolidated financial statements for further disclosure of expected future contributions and benefit payments.

On a ne t basis, both from continuing and discontinued operations, net income tax refunds (payments) totaled $(59.6) , $5.5, and $(7.6) in 2022, 2021, and 2020, respectively.

In 2022, we made paym en ts of $64.2 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $4.6.

T he amount of income taxes that we receive or pay annually is dependent on various factors, including the timing of certain deductions.

On a ne t basis, both from continuing and discontinued operations, net income tax refunds (pa yments) totaled $(58.4), $(59.6), and $5.5 in 2023, 2022, and 2021, respectively.

In 2023, we made payments of $59.9 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $1.5.

The amount of income taxes that we receive or pay annually is dependent on various factors, including the timing of certain deductions.

Deductions and the amount of income taxes can and do vary from year-to-year.

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Off-Balance Sheet Arrangements

A s of December 31, 2022, except as discussed in Note 15 to our consolidated financial statements and in the contractual obligations table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments other than the following:

A s of December 31, 2023, except as discussed in the contractual obligations table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments other than the following:

(i) $26.1 of certain standby letters of credit outstanding, all of which relate to self-insurance or environmental matters and $10.8 of which reduce the available borrowing capacity on our domestic revolving credit facility, (ii) $11.6 of letters of credit outstanding, all of which reduce the available borrowing capacity on our foreign trade facilities, and (iii) $81.6 of surety bonds.

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See Note 11 to our consolidated financial statements for additional information on expected future contributions and benefit payments.

(2) Represents contractual commitments to purchase goods and services at specified dates.

(2) Represents contractual commitments to purchase goods and services at specified dates and DBT's remaining obligation under the Settlement Agreement.

(3) Represents rental payments under operating leases with remaining non-cancelable terms in excess of one year.

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(5) Contingent obligations, such as environmental accruals and those relating to uncertain tax positions generally do not have specific payment dates and accordingly have been excluded from the above ta ble.

We believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease up to $3.0.

We believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits cou ld decrease up to $1.0.

In addition, the above table does not include potential payments under our derivative financial instruments.

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This section should be read in conjunction with Notes 1 and 2 to our consolidated financial statements, which include a detailed discussion of these and other accounting policies.

Acquisition Accounting

We regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material.

The acquired assets and liabilities are recorded at estimates of fair value as determined by management, based on information available and assumptions as to future operations and are subject to change upon completion of the acquisition method of accounting.

Final determination of the fair value of certain assets and liabilities are completed within the measurement period of up to one year from the acquisition date, as permitted under GAAP.

These fair market value assessments require judgments and estimates that can be affected by various factors over time, which may cause final amounts to be materially adjusted from original estimates in subsequent periods.

The significant judgments include (i) the estimation of future cash flows, which are dependent on forecasts, (ii) the estimation of a long-term rate of growth, (iii) the estimation of the useful life of the assets, and (iv) the determination of a risk-adjusted weighted average cost of capital.

When appropriate, our estimates of the acquired fair values include assistance from an independent third-party.

Inventories, long-lived assets (primarily property, plant and equipment), goodwill, and intangible assets generally represent the largest components of our acquisitions.

In addition, we also acquire other categories of assets and liabilities which can include, but are not limited to, accounts receivable, accounts payable and other working capital.

Due to their short-term nature,

the fair values of these assets and liabilities generally approximate the carrying values reflected on the acquired balance sheet.

However, when appropriate, we adjust these carrying values for factors such as collectability, existence, and consistency with Company accounting policies.

We record the excess of consideration transferred over the fair value of the identifiable net assets acquired as goodwill.

The primary identifiable intangible assets that we acquire typically consist of customer relationships, indefinite-lived and definite-lived trademarks, technology, and backlog.

We record trademarks at a fair value equal to the present value of the hypothetical or potential royalty income attributable to it.

The royalty income attributable to a trademark represents the hypothetical cost savings that are derived from owning the trademark instead of paying royalties to license the trademark.

Inventories acquired in the transaction are recorded at fair value, which approximates a market participant’s estimated selling price adjusted for (i) costs to complete, (ii) costs to sell, and (iii) a reasonable profit allowance to the seller for costs incurred.

Impairment of Goodwill and Indefinite-Lived Intangible Assets

Goodwill and indefinite-lived intangible assets are not amortized, but instead are subject to annual impairment testing.

We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter and continually assess whether a triggering event has occurred to determine whether the carrying value exceeds the implied fair value.

We monitor the results of each of our reporting units as a means of identifying trends and/or matters that may impact their financial results and, thus, be an indicator of a potential impairment.

The trends and/or matters that we specifically monitor for each of our reporting units are as follows:

• Significant variances in financial performance (e.g., revenues, earnings and cash flows) in relation to expectations and historical performance;

• Significant changes in end markets or other economic factors;

• Significant changes or planned changes in our use of a reporting unit’s assets;

• Significant changes in customer relationships and competitive conditions.

The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units.

We have the option to assess impairment through a qualitative assessment, which includes factors such as general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which a reporting unit operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others.

When a potential impairment is indicated, we perform quantitative testing by comparing the estimated fair value of the reporting unit to the carrying value of the reported net assets.

Under our quantitative testing, fair value is generally based on discounted projected cash flows, but we also consider factors such as comparable industry price multiples.

The revenue growth rates included in the financial projections are our best estimates based on current and forecasted market conditions, and the profit margin assumptions are projected by each reporting unit based on current cost structure and, when applicable, anticipated net cost increases/reductions.

The calculation of fair value for our reporting units incorporates many assumptions including future growth rates, profit margin and discount factors.

Changes in economic and operating conditions impacting these assumptions could result in impairment charges in future periods.

As indicated in Note 10 to the consolidated financial statements, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $24.3, with the offset recorded to “Other operating (income) expense, net.” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s goodwill and indefinite-lived intangible assets.

As such, we performed quantitative analyses on ULC’s goodwill and indefinite-lived intangible assets for impairment during the third quarter of 2021.

Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business.

As a result, we recorded an impairment charge of $24.3 during the third quarter, with $23.3 related to goodwill and the remainder to trademarks.

In connection with our annual impairment analyses of ULC’s goodwill and indefinite-lived intangibles during the fourth quarters of 2022 and 2021, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business.

As a result, we recorded impairment charges of $12.9 ($12.0 related to goodwill, which represented all of ULC’s goodwill prior to impairment, and $0.9 related to trademarks) and $5.2 ($4.9 related to goodwill and $0.3 related to trademarks) during the fourth quarters of 2022 and 2021, respectively.

During the fourth quarter of 2023, we performed a quantitative analysis on the goodwill of our Engineered Air Movement (“EAM”) reporting unit (the aggregation of our Cincinnati Fan and TAMCO businesses).

The EAM analysis indicated that the fair value of its net assets exceeded the related carrying value by approximately 30%.

A change in assumptions used in EAM's quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in the reporting unit’s estimated fair value being less than the carrying value.

If EAM is unable to achieve its current financial forecast, we may be required to record an impairment charge in a future period related to its goodwill.

As of December 31, 2023, EAM’s goodwill totaled $106.7.

In addition to EAM, the fair value of the assets related to the ASPEQ acquisition approximate their carrying value.

If ASPEQ is unable to achieve its current financial forecast, we may be required to record an impairment charge in a future period related its goodwill or indefinite-lived intangible assets.

As of December 31, 2023, ASPEQ's goodwill and indefinite-lived intangible assets totaled $191.1 and $51.5, respectively.

We perform our annual trademarks impairment testing during the fourth quarter, or on a more frequent basis if there are indications of potential impairment.

The fair values of our trademarks are determined by applying estimated royalty rates to projected revenues, with resulting cash flows discounted at a rate of return that reflects current market conditions.

The basis for these projected revenues is the annual operating plan for each of the related businesses, which is prepared in the fourth quarter of each year.

In connection with the annual impairment testing of our trademarks during the fourth quarters of 2023, 2022, and 2021, we recorded impairment charges of $0.0, $1.4 (including $0.9 related to ULC as noted above), and $0.8 (including $0.3 related to ULC as noted above), respectively.

See Note 10 to our consolidated financial statements for additional details.

Contingent Liabilities

Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”).

These claims relate to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, product liability matters (which, prior to the Asbestos Portfolio Sale, were predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims).

These claims relate to litigation matters (e.g., contracts, intellectual property and competitive claims), environmental matters, product liability matters (which, prior to the Asbestos Portfolio Sale, were predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims).

Additionally, we may become subject to other claims of which we are currently unaware, which may be significant, or the claims of which we are aware may result in our incurring significantly greater loss than we anticipate.

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Also, while we believe we are entitled to indemnification from third parties for some of these claims, these rights may be insufficient or unavailable to protect us against potential loss exposures.

Our recorded liabilities related to these matters totaled $39.5 and $658.8 at December 31, 2022 and 2021, respectively.

Of these amounts, $30.8 and $584.3 are included in “Other long-term liabilities” within our consolidated balance sheets at December 31, 2022 and 2021, respectively, with the remainder included in “Accrued expenses.” The decline in liabilities is primarily related to the Asbestos Portfolio Sale.

The liabilities we record for these matters are based on a number of assumptions, inc luding historical claims and payment experience.

Our recorded liabilities related to these matter s, primarily associated with environmental matters, totaled $37.9 and $39.5 at December 31, 2023 and 2022, respectively.

Of these amounts, $29.4 and $30.8 are included in “Other long-term liabilities” within our consolidated balance sheets at December 31, 2023 and 2022, respectively, with th e remainder included in “Accrued expenses.” The liabilities we record for these matters are based on a number of assumptions, inc luding historical claims and payment experience.

While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties.

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These variances relative to current expectations could have a material impact on our financial position and results of operations.

Resolution of Dispute with Former Representative

On January 18, 2024, a jury ruled that one of our businesses within the Detection and Measurement reportable segment had breached its contract and implied duties of good faith and fair dealings in connection with an agreement entered into with a former representative.

On January 26, 2024, we negotiated a settlement requiring a payment to the former representative of $9.0 to resolve all claims related to the matter.

This amount was recorded to “Other operating (income) expense, net” within the consolidated statement of operations for the year ended December 31, 2023.

Asbestos Matters

Prior to the Asbestos Portfolio Sale, our asbestos-related claims were typical in certain of the industries in which we operate or pertain to legacy businesses we no longer operate.

Our recorded assets and liabilities related to asbestos-related claims were as follows at December 31, 2021:

Insurance recovery assets (1)

Liabilities for claims (2)

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(1) Of these amounts, $473.6 are included in “ Other assets” at December 31, 2021, while the remainder is included in “ Other current assets.”

(2) Of these amounts, $561.4 are included in “ Other long-term liabilities” at December 31, 2021, while the remainder is included in “ Accrued expenses.”

The liabilities we recorded for asbestos-related claims were based on a number of assumptions.

In estimating our liabilities for asbestos-related claims, we considered, among other things, the following:

• The number of pending claims by disease type and jurisdiction.

• Historical information by disease type and jurisdiction with regard to:

◦ Average number of claims settled with payment (versus dismissed without payment);

◦ Average claim settlement amounts.

• The period over which we could reasonably project asbestos-related claims (projected through 2057 at December 31, 2021 ).

The assets we recorded for asbestos-related claims represent amounts that we believe we were entitled to recover under agreements we had with insurance companies.

The amount of these assets were based on a number of assumptions, including the continued solvency of the insurers and our legal interpretation of our rights for recovery under the agreements we had with the insurers.

During the years ended December 31, 2022, 2021, and 2020, our (receipts) payments for asbestos-related claims, net of respective insurance recoveries of $31.6, $53.9, and $35.4, were $20.1, $(0.3) and $19.3, respectively.

The year ended December 31, 2021 includes insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter.

As indicated in Note 1 to our consolidated financial statements, we completed the Asbestos Portfolio Sale on November 1, 2022, which resulted in the divestiture of three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets.

As a result of this transaction, all asbestos obligations and liabilities and related insurance assets have been removed from our consolidated balance sheets effective November 12, 2022.

During the years ended December 31, 2022 and 2021, our (receipts) payments for asbestos-related claims, net of respective insurance recoveries of $31.6, and

$53.9, were $20.1 and $(0.3), respectively.

The year ended December 31, 2021 included insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter.

During the years ended December 31 , 2022 and 2021 , we recorded charges of $24.2 and $51.2, respectively, as a result of changes in estimates associated with the liabilities and assets related to asbestos-related claims.

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Large Power Projects in South Africa

Overview - Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has substantially completed its scope of work.

Over such time, the business environment surrounding these projects was difficult, as DBT, along with many other contractors on the projects, experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers.

DBT’s remaining responsibilities relate largely to resolution of various claims, primarily between itself and one of its prime contractors, MHI.

The challenges related to the projects have resulted in (i) significant adjustments to our revenue and cost estimates for the projects, (ii) DBT’s submission of numerous change orders to the prime contractors, (iii) various claims and disputes between DBT and other parties involved with the projects (e.g., prime contractors, subcontractors, suppliers, etc.), and (iv) the possibility that DBT may become subject to additional claims, which could be significant.

It is possible that some outstanding claims may not be resolved until after the prime contractors complete their scopes of work.

Our future financial position, operating results, and cash flows could be materially impacted by the resolution of current and any future claims.

Claims by DBT - DBT has asserted claims against MHI of approximately South African Rand 1,000.0 (or $58.4).

As DBT prepares these claims for dispute resolution processes, the amounts, along with the characterization, of the claims could change.

Of these claims, South African Rand 732.6 (or $42.8), which is inclusive of the amounts awarded in the adjudications referred to below, are currently proceeding through contractual dispute resolution processes and DBT is likely to initiate additional dispute resolution processes.

DBT is also pursuing several claims to force MHI to abide by its contractual obligations and provide DBT with certain benefits that MHI may have received from its customer on the projects.

In addition to existing asserted claims, DBT believes it has additional claims and rights to recovery based on its performance under the contracts with, and actions taken by, MHI.

DBT is continuing to evaluate the claims and the amounts owed to it under the contracts based on MHI's failure to comply with its contractual obligations.

The amounts DBT may recover for current and potential future claims against MHI are not currently known given (i) the extent of current and potential future claims by MHI against DBT (see below for further discussion) and (ii) the unpredictable nature of any dispute resolution processes that may occur in connection with these current and potential future claims.

No revenue has been recorded in the consolidated financial statements with respect to current or potential future claims against MHI.

On July 23, 2020, a dispute adjudication panel issued a ruling in favor of DBT on certain matters related to the Kusile and Medupi projects.

The panel (i) ruled that DBT had achieved ta keover on 9 of the units;

(ii) ordered MHI to return $2.3 of bonds (which have been subsequently returned by MHI);

(iii) ruled that DBT is entitled to the return of an additional $4.3 of bonds upon the completion of certain administrative milestones;

(iv) ordered MHI to pay South African Rand 18.4 (or $1.1 at the time of the ruling) in incentive payments for work performed by DBT (which MHI has subsequently paid);

and (v) ruled that MHI waived its rights to assert delay damages against DBT on one of the units of the Kusile project.

The ruling is subject to MHI’s rights to seek further arbitration in the matter, as provided in the contracts.

As such, the incentive payments noted above have not been recorded in our consolidated statements of operations.

On February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on two units of the Kusile project.

In connection with the ruling, MHI paid DBT South African Rand 126.6 (or $8.6 at the time of payment).

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our consolidated statements of operations.

On July 5, 2021, DBT received notice from MHI of its intent to seek final and binding arbitration in this matter.

The hearing on this matter occurred in December 2022, with the ruling from such hearing yet to be received.

On April 28, 2021, a dispute adjudication panel issued a ruling in favor of DBT related to costs incurred in connection with delays on two units of the Medupi project.

In connection with the ruling, MHI paid DBT South African Rand 82.0 (or $6.0 at the

time of payment).

This ruling is subject to MHI’s rights to seek further arbitration in the matter and, thus, the amount awarded has not been reflected in our consolidated st atements of operations.

Claims by MHI - On February 26, 2019, DBT received notification of an interim claim consisting of both direct and consequential damages from MHI alleging, among other things, that DBT (i) provided defective product and (ii) failed to meet certain project milestones.

In September 2020, MHI made a demand on certain bonds issued in its favor by DBT, based solely on these alleged defects, but without further substantiation or other justification (see further discussion below).

On December 30, 2020, MHI notified DBT of its intent to take these claims to binding arbitration even though the vast majority of these claims had not been brought appropriately before a dispute adjudication board as required under the relevant subcontracts.

On June 4, 2021, in connection with the arbitration, DBT received a revised version of the claim.

Similar to the interim claim, we believe the vast majority of the damages summarized in the revised claim are unsubstantiated and, thus, any loss for the majority of these claims is considered remote.

The remainder of the claims in both the interim notification and the revised version largely appear to be direct in nature (approximately South African Rand 790.0 or $46.1).

On November 25, 2022, MHI notified DBT of its intent to refer the claims dismissed from the arbitration to a new dispute adjudication panel.

DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with any of these claims.

As such, no loss has been recorded in the consolidated financial statements with respect to these claims.

DBT intends to vigorously defend itself against these claims.

Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims;

Overview - Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has completed its scope of work.

During that time, the business environment surrounding these projects was difficult, as DBT, along with many other contractors on the projects, experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers.

Since substantial completion of the works, DBT’s remaining responsibilities related largely to resolution of various claims, primarily between itself and MHI, the remaining prime contractor.

As noted below, SPX and DBT entered into a Settlement Agreement with MHI during the third quarter of 2023.

Prior to the Settlement Agreement, DBT had asserted claims against MHI of approximately South African Rand 1,000.0 (or $54.4) and MHI had asserted, or issued letters of intent to claim for, alleged damages against DBT.

(ii) complexity of contractual relationships between the end customer, MHI, and DBT;

(iii) legal interpretation of the contract provisions and application of South African law to the contracts;

and (iv) unpredictable nature of any dispute resolution processes that may occur in connection with these claims.

In April and July 2019, DBT received notifications of intent to claim liquidated damages totaling South African Rand 407.2 (or $23.8) from MHI alleging that DBT failed to meet certain project milestones related to the construction of the filters for both the Kusile and Medupi projects.

DBT has numerous defenses against these claims and, thus, we do not believe that DBT has a probable loss associated with these claims.

As such, no loss has been recorded in the consolidated financial statements with respect to these claims.

Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss.

MHI has made other claims against DBT totaling South African Rand 176.2 (or $10.3), and has also alleged that it has incurred additional remedial costs related to portions of DBT’s scope of work.

DBT has numerous defenses against these claims, as well as claims, if any, that may result from the above unsubstantiated allegations, and, thus, we do not believe that DBT has a probable loss associated with these claims.

As such, no loss has been recorded in the consolidated financial statements with respect to these claims and allegations.

Bonds Issued in Favor of MHI - DBT is obligated with respect to bonds issued by banks in favor of MHI.

In September of 2020, MHI made a demand, and received payment of South African Rand 239.6 (or $14.3 at the time of payment), on certain of these bonds.

In May 2021, MHI made an additional demand, and received payment of South African Rand 178.7 (or $12.5 at time of payment), on certain of the remaining bonds at such time.

In both cases, we funded the payment as required under the terms of the bonds and our senior credit agreement.

In its demands, MHI purported that DBT failed to carry out its obligations to rectify certain alleged product defects and that DBT failed to meet certain project milestones.

DBT denies liability for such allegations and, thus, fully intends to seek, and believes it is legally entitled to, reimbursement of the South African Rand 418.3 (or $24.4) that has been paid.

On October 11, 2022, a dispute adjudication panel ruled MHI drew on amounts in excess of the bond values stipulated in the contracts and was required to refund DBT South African Rand 90.8 (or $5.0 at the time of payment) of the previously demanded amounts, plus interest of South African Rand 12.5 (or $0.7 at the time of payment).

MHI paid these amounts on October 14, 2022.

We have reflected the remaining South African Rand 327.5 (or $19.1) within “ Assets of DBT and Heat Transfer” on the consolidated balance sheet as of December 31, 2022.

The remaining bond of South African Rand 29.2 (or $1.7) was issued to MHI as a performance guarantee in the event of a breach of DBT’s contractual obligations.

In the event that MHI were to receive payment on a portion, or all, of the remaining bond, we would be required to reimburse the issuing bank.

In addition SPX Technologies, Inc.

has guaranteed DBT’s performance on these projects to the prime contractors, including MHI.

Claim against Surety - On February 5, 2021, DBT received payment of $6.7 on bonds issued in support of performance by one of DBT’s sub-contractors.

The sub-contractor maintains a right to seek recovery o f such amount and, thus, the amount received by DBT has not been reflected in our consolidated statements of operations.

and (iv) unpredictable nature of any dispute resolution processes that may have occurred in connection with these claims.

Prior to the Settlement Agreement, DBT had experienced success in enforcing its rights through dispute resolution processes, including favorable arbitration rulings during 2023 related to awards for (i) costs incurred in connection with delays on the Kusile project of South African Rand 126.6 (or $7.0) during the first quarter of 2023 and (ii) recovery of legal costs related to arbitration proceedings of $6.8 during the second quarter of 2023, with such amounts recorded within “Gain (loss) on disposition of discontinued operations, net of tax.”

Resolution of Remaining Prime Contractor Claims - We have invested, and would have continued to invest, significant management and financial resources to defend and pursue the above matters.

On September 5, 2023, SPX Technologies and DBT entered into the Settlement Agreement with MHI to affect the negotiated resolution of all outstanding claims between the parties with respect to the large power projects.

The Settlement Agreement provides for full and final settlement and the mutual release of all claims between the parties with respect to the projects, including any claim against SPX Technologies, Inc.

as guarantor of DBT’s performance on the projects.

Refer to Note 4 to the consolidated financial statements for additional details.

Claim against Surety - On February 5, 2021, DBT received payment of $6.7 on bonds issued in support of performance by one of DBT’s subcontractors.

The subcontractor maintains a right to seek recovery o f such amount and, thus, the amount received by DBT has not been reflected in our consolidated statements of operations.

Claim for Contingent Consideration Related to ULC Acquisition

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As a result, we reversed the liability of $24.3 during the third quarter of 2021, with the offset recorded to “Other operating (income) expense, net.”

On August 23, 2022, the seller of ULC initiated a breach-of-contract lawsuit against us in the United States District Court for the Eastern District of New York claiming that it is entitled to a portion of the additional cash consideration totaling $15.0 linked to certain operating performance milestones.

SPX has numerous defenses against this claim and, thus, we do not believe we have a probable loss associated with the claim.

On August 23, 2022, the seller of ULC initiated a breach-of-contract lawsuit against us in the United States District Court for the Eastern District of New York claiming that it is entitled to a portion of the additional cash consideration linked to certain operating performance milestones totaling $15.0.

If successful with their claim, the plaintiff is also eligible to recover prejudgment interest and attorney's fees.

We have defenses against the claim and, thus, while we do not believe we have a probable loss associated with the claim, it is reasonably possible we may incur a loss associated with it.

Environmental Matters

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It is our policy to accrue for estimated losses from legal actions or claims when events exist that make the realization of the losses or expenses probable and they can be reasonably estimated.

Our environmental accruals cover anticipated costs, including investigation, remediation, and operation and maintenance of clean-up sites.

Our environmental accruals cover anticipated costs, including investigation, remediation, and

operation and maintenance of clean-up sites.

Accordingly, our estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, or alteration to the expected remediation plans.

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Our long-term contracts often include unapproved change orders and claims.

We include in our contract estimates additional revenue for unapproved change orders or claims when we believe we have an enforceable right to the unapproved

change order or claim and the amount can be reliably estimated.

We include in our contract estimates additional revenue for unapproved change orders or claims when we believe we have an enforceable right to the unapproved change order or claim and the amount can be reliably estimated.

In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs, and the objective evidence available to support the claim.

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See Notes 1 and 5 to our consolidated financial statements for further information on our revenue recognition policies.