What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-03 compared with 2023-11-03 · 98 added, 191 removed, 173 unchanged (63% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (in millions, except share data)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (in millions)

FORWARD-LOOKING STATEMENTS

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In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential” or “continue” or the negative of those terms or other comparable terminology.

Risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include the following:

Particular risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include the following:

cyclical changes and specific industry events in the Company’s markets;

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We disclaim any responsibility to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.

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, 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 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 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 the three and nine months ended September 30, 2023 and October 2, 2022.

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

Ongoing geopolitical conflicts, and governmental actions implemented in response to these conflicts, did not have a significant adverse impact on our operating results during the three months ended March 30, 2024 and April 1, 2023.

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

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 the armed conflict involving Israel and Hamas, is currently unknown due to the uncertainty around their duration and broader impact.

These conflicts have created additional demand for certain products within our communication technologies business.

Any longer-term impact of these global events on our business is currently unknown due to the uncertainty around their duration and broader impact.

OTHER SIGNIFICANT MATTERS

• Acquisitions

◦ International Tower Lighting, LLC (“ITL”)

▪ Acquired on March 31, 2022 for cash consideration of $40.4, net of (i) cash acquired of $1.1 and (ii) an adjustment to the purchase price received during the third quarter of 2022 related to acquired working capital of $1.4.

▪ Post-acquisition operating results of ITL are included within our Detection and Measurement reportable segment.

Morrison & Co.

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◦ ASPEQ Heating Group (“ASPEQ”)

▪ Acquired on June 2, 2023 for cash consideration of $421.8, net of cash acquired of $0.9.

▪ The purchase price is subject to adjustment based upon the final settlement of working capital and cash as of the date of acquisition.

▪ Acquired on June 2, 2023 for cash consideration of $421.5, net of (i) an adjustment to the purchase price of $0.3 received during the fourth quarter of 2023 related to acquired working capital and (ii) cash acquired of $0.9.

▪ Post-acquisition operating results of ASPEQ are included within our HVAC reportable segment.

• Disposition of SPX Transformer Solutions, Inc.

(“Transformer Solutions”)

◦ On October 1, 2021, we completed the sale of Transformer Solutions, which is included in discontinued operations for all periods presented.

◦ During the first quarter of 2022, we paid $13.9 to the buyer of Transformer Solutions related primarily to the settlement of the final working capital balances of the business.

• Asbestos-Related Matters

◦ On November 1, 2022, we completed the divestiture of three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets (the “Asbestos Portfolio Sale”).

As a result of this transaction, the Company divested all obligations with respect to pending and future asbestos claims relating to these subsidiaries.

◦ During the nine months ended October 1, 2022, our payments for asbestos-related claims, net of respective insurance recoveries of $27.7, were $20.2.

◦ 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.

◦ During the three and nine months ended October 1, 2022, we recorded charges for asbestos-related matters of $21.7 and $24.0, respectively, with $16.5 and $18.8, respectively, recorded to continuing operations and the remainder to discontinued operations.

◦ See Notes 1 and 15 to our condensed 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 total cash consideration of $10.0.

◦ We paid $9.0 at the time of the transfer and an additional $1.0 during the second quarter of 2022.

◦ In connection with the transfer, we recorded a net charge of $0.3 within our first quarter 2022 results.

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

• Settlement and Actuarial Losses - U.S.

Pension Plan (“U.S.

◦ In connection with the sale of Transformer Solutions, a significant number of participants of the U.S.

Plan who were employees of Transformer Solutions elected to receive lump-sum payments from the U.S.

◦ The extent of these lump-sum payments, combined with other lump-sum payments that were made by the U.S.

Plan during the first nine months of 2022, required us to record settlement and actuarial losses of $2.4 and $6.2 during the three and nine months ended October 1, 2022, respectively.

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

• Repurchases of Common Stock — During the second quarter of 2022, we repurchased 0.7 shares of our common stock for $33.7.

◦ Ingénia Technologies Inc.

▪ Acquired on February 7, 2024 for cash consideration of Canadian Dollars (“CAD”) 396.8 (or $294.1 at the time of payment), net of cash acquired of $1.5.

▪ The purchase price is subject to adjustment based upon the final settlement of working capital and cash as of the date of acquisition.

▪ Under the terms of the purchase and sales agreement, the seller is eligible for additional cash consideration of up to CAD 3.0 (or $2.2 at the time of acquisition), with payment scheduled to be made in the event certain contingent liabilities do not materialize.

The estimated fair value of such contingent consideration is $0.3, which is reflected as a liability in our condensed consolidated balance sheet as of March 30, 2024.

▪ Post-acquisition operating results of Ingénia are included within our HVAC reportable segment.

• Changes in Estimated Fair Value of an Equity Security

◦ We recorded gains (losses) during the three and nine months ended September 30, 2023 and October 1, 2022 of $0.0 and $(7.4), respectively, and $3.6 and $(3.0), respectively.

◦ We recorded a loss of $4.2 and a gain of $3.6 during the three months ended March 30, 2024 and April 1, 2023, respectively.

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

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◦ See Note 12 to our condensed consolidated financial statements for additional details.

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

◦ On September 5, 2023, SPX Technologies and our DBT Technologies (PTY) LTD (“DBT”) business entered into an agreement with 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 three months ended September 30, 2023.

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

Such charge is included in “Loss from discontinued operations, net of tax” for the three and nine months ended September 30, 2023.

In addition, DBT made payments of $25.3 to MHI during the three and nine months ended September 30, 2023 in connection with the Settlement Agreement.

◦ See Notes 3 and 15 to our condensed consolidated financial statements for additional details.

OVERVIEW OF OPERATING RESULTS

Revenues for the three and nine months ended September 30, 2023 totaled $448.7 and $1,271.8, respectively, compared to $370.5 and $1,031.6 during the respective periods in 2022.

Th e increase in revenues during the three and nine months ended September 30, 2023, compared to the respective prior-year periods, 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.

During the three and nine months ended September 30, 2023, we generated operating income of $57.7 and $158.8, respectively, compared to $37.3 and $75.9 for the respective periods in 2022.

The increase in operating income during the three and nine months ended September 30, 2023, compared to the respective periods in 2022, was due primarily to (i) higher income for both our HVAC and Detection and Measurement reportable segments and (ii) lower corporate expense primarily related to higher costs incurred on strategic and transformational initiatives executed during 2022, as well as expenses incurred in connection with asbestos-related matters during 2022, prior to the Asbestos Portfolio Sale.

These increases in operating income were partially offset by increases in (i) intangible asset amortization, (ii) employee compensation, including increases in short-term incentive compensation expense, and (iii) acquisition-related and other integration costs, resulting from the acquisitions of TAMCO and ASPEQ.

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.

Revenues for the three months ended March 30, 2024 totaled $465.2, compared to $399.8 during the respective period in 2023.

The increase in revenues during the three months ended March 30, 2024, compared to the respective prior-year period, was due primarily to (i) inorganic revenue growth resulting from the Ingénia, ASPEQ, and TAMCO acquisitions (each within the HVAC reportable segment) and (ii) organic revenue growth within the Detection and Measurement reportable segment, partially offset by an organic revenue decline within the HVAC reportable segment.

Organic revenue growth within the Detection and Measurement reportable segment was due primarily to higher large project volume within the communication technologies business.

The organic revenue decline within the HVAC reportable segment was due primarily to decreased sales of heating products associated with (i) the unseasonably warm winter conditions prevalent in the relevant end markets during the first quarter of 2024 and (ii) higher volumes during the respective prior-year period that was supported by elevated backlog resulting from the effects of the COVID-19 Pandemic.

During the three months ended March 30, 2024, we generated operating income of $ 64.6 , compared to $49.8 for the r espective period in 2023.

The increase in operating income during the three months ended March 30, 2024 was due primarily to higher income for both our HVAC and Detection and Measurement reportable segments of $25.4, partially offset by increases in intangible asset amortization expense of $8.5 and acquisition-related costs (primarily related to the Ingénia and ASPEQ acquisitions) of $2.9 .

The increase in income for our HVAC reportable segment was primarily due to (i) the inorganic revenue growth mentioned above and (ii) favorable product mix.

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

Cash flows from operating activities associated with continuing operations totaled $120.0 for the nine months ended September 30, 2023, compared to cash flows used in operating activities of $89.4 during the nine months ended October 1, 2022.

The increase in c ash flows from operating activities was due primar ily to (i) the increase in income during the period discussed above, (ii) 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, (iii) 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, (iv) net payments for asbestos-related matters made prior to the Asbestos

Portfolio Sale in 2022, of $15.5, (v) income tax payments of $42.2 during 2023 compared to income tax payments of $55.7 during 2022, with a significant portion of the 2022 payments related to the gain on sale of Transformer Solutions, 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 condensed consolidated financial statements for additional details).

The increase in intangible asset amortiza tion expense was driven by the acquisitions mentioned above.

Cash flows from operating activities associated with continuing operations totaled $10.7 for the three months ended March 30, 2024, compared to cash flows from operating activities of $0.8 during the three months ended April 1, 2023.

The increase in cash flows from operating activities was due primarily to the increase in income discussed above, exclusive of the non-cash expenses incurred during the respective periods, partially offset by (i) $11.9 in additional short-term incentive compensation payments and (ii) a payment, during the three months ended March 30, 2024, related to the resolution of a dispute with a former representative at one of our businesses within the Detection and Measurement reportable segment of $9.0.

RESULTS OF CONTINUING OPERATIONS

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Our fourth quarter ends on December 31.

The interim closing dates for the first, second and third quarters of 2023 are April 1, July 1, and September 30, compared to the respective April 2, July 2, and October 1, 2022 dates.

We had one less day in the first quarter of 2023 and will have one more day in the fourth quarter of 2023 than in the respective 2022 periods.

It is not practicable to estimate the impact of the one less day on our consolidated operating results for the nine months ended September 30, 2023, when compared to the consolidated operating results for the respective 2022 period.

The interim closing dates for the first, second and third quarters of 2024 are March 30, June 29, and September 28, compared to the respective April 1, July 1 and September 30, 2023 dates.

We had one less day in the first quarter of 2024 and will have two more days in the fourth quarter of 2024 than in the respective 2023 periods.

Cyclicality of End Markets, Seasonality and Competition — The financial results of our businesses closely follow changes in the industries in which they operate and end markets in which they serve.

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This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States (“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.

The following table provides selected financial information for the three and nine months ended September 30, 2023 and October 1, 2022, including the reconciliation of organic revenue increase to the net revenue increase:

Three months ended Nine months ended

September 30,

2023 October 1,

2022 % Change September 30,

2023 October 1,

The following table provides selected financial information for the three months ended March 30, 2024 and April 1, 2023, including the reconciliation of the organic revenue increase to the net revenue increase:

Three months ended

2024 April 1,

2023 % Change

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Special charges, net 0.6 — *

Other operating expense, net — — * — 1.0 *

Other income (expense), net (4.0) 2.5 *

Interest expense, net (9.5) (1.9) 400.0

Loss on amendment/refinancing of senior credit agreement — (1.1) * — (1.1) *

Income from continuing operations before income taxes 51.1 50.4 1.4

Income tax (provision) benefit (12.4) 2.5 * (31.5) (4.5) *

Income tax provision (1.9) (11.3) (83.2)

Income from continuing operations 49.2 39.1 25.8

Components of revenue increase:

Organic 10.5 17.9

Foreign currency 0.1

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* Not meaningful for comparison purposes.

Revenues — For the three and nine months ended September 30, 2023, the increase in revenues, compared to the respective periods in 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 price and volume increases.

Revenues — For the three months ended March 30, 2024 , the increase in revenues, compared to the respective period in 2023, was due primarily to (i) inorganic revenue growth resulting from the Ingénia, ASPEQ, and TAMCO acquisitions (each within the HVAC reportable segment) and (ii) organic revenue growth within the Detection and Measurement reportable segment, partially offset by an organic revenue decline within the HVAC reportable segment.

Organic revenue growth within the Detection and Measurement reportable segment was due primarily to higher large project volume within the communication technologies business.

See “Results of Reportable Segments” for additional details.

Gross Profit — For the three and nine months ended September 30, 2023, the increase in gross profit and gross profit as a percentage of revenues, compared to the respective periods in 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.

Selling, General and Administrative (“SG&A”) Expense — For the three and nine months ended September 30, 2023, the increase in SG&A expense, compared to the respective periods in 2022, was due primarily to (i) increases in sales incentive plan expense driven by the higher revenues mentioned above, (ii) higher employee compensation, inclusive of increases in short-term incentive compensation expense, (iii) acquisition-related costs and SG&A expenses associated with the TAMCO and ASPEQ acquisitions, and (iv) higher travel expense.

These increases were partially offset during the three and nine months ended September 30, 2023, compared to the respective periods in 2022, by (i) lower costs related to various strategic and transformational initiatives during 2023 and (ii) expenses in connection with asbestos-related matters incurred during 2022 prior to the Asbestos Portfolio Sale.

Intangible Amortiz ation — For the three and nine months ended September 30, 2023, the increase i n i ntangible amortization, compared to the respective periods in 2022 , was primarily due to incremental intangible amortization related to

backlog and other intangible assets associated with the TAMCO and ASPEQ acquisitions.

In addition, the nine months ended September 30, 2023 included nine months of intangible amortization related to the ITL acquisition, compared to six months in the 2022 period.

Special Charges, net — Special charges, net, for the nine months ended October 1, 2022 related primarily to severance costs associated with a restructuring action at one of our HVAC reportable segment ’s cooling businesses.

See Note 7 to our condensed consolidated financial statements for the details of actions taken in the first nine months of 2022.

Other Operating Expense, net — Other operating expense, net, for the nine months ended October 1, 2022 related to asbestos-related charges of $2.3 , partially offset by a reduction in the fair value/liability associated with the contingent consideration related to the Enterprise Control Systems Ltd acquisition of $1.3.

Other Income (Expense), net — Other expense, net, for the three months ended September 30, 2023 was composed primarily of environmental remediation charges of $0.3 and pension and postretirement expense of $0.2, partially offset by foreign currency transaction gains of $0.3.

Other expense, net, for the three months ended October 1, 2022 was comprised primarily of (i) $16.5 of asbestos-related charges, (ii) a loss of $7.4 related to changes in the estimated fair value of an equity security we hold, (iii) pension and postretirement expense of $2.0 (inclusive of settlement and actuarial losses of $2.4), and (iv) environmental remediation charges of $1.1, partially offset by income of $1.3 derived from company-owned life insurance policies and $0.6 associated with a transition services agreement.

Other income, net, for the nine months ended September 30, 2023 was composed primarily of a gain 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, partially offset by foreign currency transaction losses of $0.4, pension and postretirement expense of $0.6, and environmental remediation charges of $0.5.

Other expense, net, for the nine months ended October 1, 2022 was comprised primarily of $16.5 of asbestos-related charges, a loss of $3.0 related to a change in the estimated fair value of an equity security that we hold, pension and postretirement expense (inclusive of actuarial and settlement losses of $6.2) of $3.9, and environmental remediation charges of $1.1, partially offset by income of $2.0 d erived from company-owned life insurance policies and $2.4 associated with a transition services agreement.

Interest Expense, net — Interest expense, net, includes both interest e xpense and interest income.

The increase in interest expense, net, during the three and nine months ended September 30, 2023 , compared to the respective periods in 2022, was the result of higher average debt balances and a higher average effective interest rate during the 2023 periods, with the higher average debt balances primarily resulting from borrowings in connection with the TAMCO and ASPEQ acquisitions.

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

In connection with the amendment, we recorded a charge $1.1, which consisted of the write-off of a portion of the unamortized deferred financing costs related to our senior credit facilities ($0.7) and certain expenses incurred in connection with the amendment ($0.4).

Income Tax (Provision) Benefit — For the three months ended September 30, 2023, we recorded an income tax provision of $12.4 on $48.1 of pre-tax income from continuing operations, resulting in an effective rate of 25.8%.

This compares to an income tax benefit for the three months ended October 1, 2022 of $2.5 on $10.0 of pre-tax income from continuing operations, resulting in an effective rate of (25.0)%.

The most significant items impacting the income tax expense for the third quarter 2023 are (i) $0.8 of foreign withholding tax, and (ii) $0.3 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period.

The most significant item impacting the income tax benefit for the third quarter of 2022 was a tax benefit of $4.2 related to the release of valuation allowances recognized against certain deferred tax assets as we now expect these deferred tax assets to be realized.

For the nine months ended September 30, 2023, we recorded an income tax provision of $31.5 on $144.6 of pre-tax income from continuing operations, resulting in an effective rate of 21.8%.

This compares to an income tax provision for the nine months ended October 1, 2022 of $4.5 on $49.1 of pre-tax income from continuing operations, resulting in an effective rate of 9.2%.

The most significant items impacting the income tax provision during the first nine months of 2023 and 2022 were (i) $1.8 and $4.2, respectively, of tax benefit related to the release of valuation allowances recognized against certain deferred tax assets as we now expect the deferred tax assets to be realized, (ii) $1.7 and $0.7, respectively, of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, and (iii) $1.2 and $0.7, respectively, of tax benefits related to revisions to liabilities for uncertain tax positions.

Gross Profit — For the three months ended March 30, 2024, the increase in gross profit and gross profit as a percentage of revenues, compared to the respective period in 2023, was due primarily to (i) the revenue growth mentioned above and associated operating leverage and (ii) favorable product mix within the HVAC reportable segment.

Selling, General and Administrative (“SG&A”) Expense — For the three months ended March 30, 2024, the increase in SG&A expense, compared to the respective period in 2023, was due primarily to (i) incremental SG&A resulting from the acquisitions of Ingénia, ASPEQ, and TA MCO of $8.4, (ii) hig her employee compensation expense primarily driven by merit increases and growth-related headcount additions, and (iii) higher acquisition-related costs of $2.0, partially offset by lower commissions primarily at our heating products businesses due to the lower revenues mentioned above.

Intangible Amortiz ation — For the three months ended March 30, 2024, th e increase in intangible asset amortization expense, compared to the respective period in 2023, was primarily related to incremental amortization associated with (i) backlog from the Ingénia acquisition and (ii) other intangible assets associated with the acquisitions of Ingénia, ASPEQ, and TAMCO.

Special Charges, net — Special charges, net for the three months ended March 30, 2024 related primarily to severance costs associated with restructuring actions at businesses within our HVAC and Detection and Measurement reportable segments.

See Note 7 to our condensed consolidated financial statements for additional details.

Other Income (Expense), net — Other expense, net, for the three months ended March 30, 2024 was composed primarily of a loss of $4.2 related to a change in the estimated fair value of an equity security that we hold, environmental remediation charges of $0.8, and pension and postretirement expense of $0.4, partially offset by income of $0.9 derived from company-owned life insurance (“COLI”) policies and foreign currency transaction gains of $0.5.

Other income, net, for the three months ended April 1, 2023 was composed primarily of a gain of $3.6 related to a change in the estimated fair value of an equity security that we hold, partially offset by foreign currency transaction losses of $0.6 and pension and postretirement expense of $0.2.

Interest Expense, net — Interest expense, net, includes both interest expense and interest incom e.

The increase in interest expense, net, during the three months ended March 30, 2024, compared to the respective period in 2023, was the result of higher average debt balances and a higher effective interest rate during the 2024 period.

The higher average debt balances primarily resulted from borrowings associated with the Ingénia, ASPEQ, and TAMCO acquisitions.

Refer to Note 12 to the condensed consolidated financial statements for additional details.

Income Tax Provision — For the three months ended March 30, 2024, we recorded an income tax provision of $1.9 on $51.1 of pre-tax income from continuing operations, resulting in an effective rate of 3.7%.

This compares to an income tax provision for the three months ended April 1, 2023 of $11.3 on $50.4 of pre-tax income from continuing operations, resulting in an effective rate of 22.4%.

The most significant item impacting the income tax provision for the first quarters of 2024 and 2023 was $10.9 and $0.9, respectively, of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the periods.

RESULTS OF REPORTABLE SEGMENTS

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Refer to the explanation of this measure and purpose of use by management under “Results of Continuing Operations—Non-GAAP Measures.”

Presentation of Segment Income — During 2022, we concluded that, although the assessment of our reportable segments was performed using the appropriate measures as defined by the Segment Reporting Topic of the Accounting Standards Codification (“Codification”), the disclosure of operating income for each of our reportable segments (“Segment Income”) was not consistent with these measures or the measures used by our Chief Operating Decision Maker (“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 quarterly report on Form 10-Q.

Refer to Notes 1 and 6 to our condensed consolidated financial statements for additional details.

HVAC Reportable Segment

Three months ended Nine months ended

September 30, 2023 October 1, 2022 % Change September 30, 2023 October 1, 2022 % Change

Three months ended

March 30, 2024 April 1, 2023 % Change

Revenues $ 302.4 $ 251.6 20.2

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Foreign currency (0.1)

Acquisition 16.3 8.7

Acquisitions 22.2

Net revenue increase 20.2

Revenues — For the three and nine months ended September 30, 2023, the increase in revenues, compared to the respective periods in 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.

Income — For the three and nine months ended September 30, 2023, the increase in income, compared to the respective periods in 2022, was due primarily to the impact of the revenue growth mentioned above.

For the three and nine months ended September 30, 2023, the increase in margin, compared to the respective periods in 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 associated with acquisitions.

The higher volumes were aided by improved operational execution resulting from investments in plant automation and more stable labor and supply chain environments.

Backlog — The segment had backlog of $338.2 and $287.7 as of September 30, 2023 and October 1, 2022, respectively.

Backlog associated with TAMCO and ASPEQ totaled $38.6 a s of September 30, 2023.

Revenues — For the three months ended March 30, 2024, the increase in revenues, compared to the respective period in 2023, was due primarily to inorganic revenue growth resulting from the Ingénia, ASPEQ, and TAMCO acquisitions, partially offset by an organic revenue decline.

The organic revenue decline was due primarily to decreased sales of heating products associated with (i) the unseasonably warm winter conditions prevalent in the relevant end markets during the first quarter of 2024 and (ii) higher volumes during the respective prior-year period that was supported by elevated backlog resulting from the effects of the COVID-19 Pandemic.

Income — For the three months ended March 30, 2024, the increase in income and margin, compared to the respective period in 2023, was due primarily to (i) the inorganic revenue growth mentioned above and (ii) favorable product mix.

Backlog — The segment had backlog of $461.9 and $270.3 as of March 30, 2024 and April 1, 2023, respectively.

Backlog associated with the Ingénia, ASPEQ, and TAMCO acquisitions totaled $137.5 as of March 30, 2024.

Detection and Measurement Reportable Segment

Three months ended Nine months ended

September 30, 2023 October 1, 2022 % Change September 30, 2023 October 1, 2022 % Change

Three months ended

March 30, 2024 April 1, 2023 % Change

Revenues $ 162.8 $ 148.2 9.9

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Components of revenue increase:

Organic 10.4 17.5

Foreign currency 0.3

Acquisitions — 0.5

Net revenue increase 9.9

Revenues — For the three and nine months ended September 30, 2023, the increase in revenues, compared to the respective periods in 2022, was due p rimarily to organic revenue growth and, for the nine month period, the 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.

Income — For the three and nine months ended September 30, 2023, the increase in income, compared to the respective periods in 2022, was due primarily to the revenue growth mentioned above.

For the three and nine months ended September 30, 2023, the decrease in margin, compared to the respective periods in 2022, was due primarily to a less favorable sales mix associated with certain of the large projects mentioned above.

Backlog — The segment had bac klog of $233.6 and $275.1 as of September 30, 2023 and October 1, 2022, respectively.

Revenues — For the three months ended March 30, 2024, the increase in revenues, compared to the respective period in 2023, was due primarily to organic revenue growth resulting from higher large project volume within the communication technologies business.

Income — For the three months ended March 30, 2024, the increase in income and margin, compared to the respective period in 2023, was primarily due to the organic revenue growth mentioned above and associated beneficial operating leverage.

Backlog — The segment had bac klog of $206.5 and $244.7 as of March 30, 2024 and April 1, 2023, respectively.

CORPORATE AND OTHER EXPENSES

Three months ended Nine months ended

September 30, 2023 October 1, 2022 % Change September 30, 2023 October 1, 2022 % Change

Three months ended

March 30, 2024 April 1, 2023 % Change

Total consolidated revenues $ 465.2 $ 399.8 16.4

2 unchanged sentences

Long-term incentive compensation expense 3.3 3.1 6.5

Corporate Expense — Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters.

The d ecrease in co rporate expense during the three and nine months ended September 30, 2023, compared to the respective periods in 2022, was d ue primarily to (i) higher costs related to various strategic and transformational initiatives 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, for the nine months ended, higher acquisition-related costs associated with the TAMCO and ASPEQ acquisitions.

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

The decrease in corporate expense during the three months ended March 30, 2024, compared to the respective period in 2023, was due primarily to lower short-term compensation expense during the first quarter of 2024.

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

F or the three and nine months ended September 30, 2023, the increase in long-term incentive compensation expense, compared to the respective periods in 2022, was due primarily to the impact of forfeitures resulting from various participant resignations 2022.

LIQUIDITY AND FINANCIAL CONDITION

Listed below are the cash flows from (used in) operating, investing, and financing activities of continuing operations and cash flows from (used in) discontinued operations, as well as the net change in cash and equivalents for the nine months ended September 30, 2023 and October 1, 2022.

Nine months ended

September 30, 2023 October 1, 2022

Listed below are the cash flows from (used in) operating, investing, and financing activities and discontinued operations, as well as the net change in cash and equivalents for the three months ended March 30, 2024 and April 1, 2023.

Three months ended

March 30, 2024 April 1, 2023

Continuing operations:

Cash flows from (used in) operating activities $ 120.0 $ (89.4)

Cash flows from operating activities $ 10.7 $ 0.8

Cash flows used in investing activities (303.9) (3.9)

Cash flows from (used in) financing activities 425.1 (41.2)

Cash flows from financing activities 292.7 62.9

Cash flows used in discontinued operations (0.2) (5.2)

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Net change in cash and equivalents $ 0.6 $ 55.6

Operating Activities — The increase in cash flows from operating activities of continuing operations during the nine months ended September 30, 2023 , compared to the respective period in 2022 , was due primar ily to (i) the increase in income during the period discussed above, (ii) 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, (iii) 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, (iv) net payments for asbestos-related matters made prior to the Asbestos Portfolio Sale in 2022, of $15.5, (v) income tax payments of $42.2 during 2023 compared to income tax payments of $55.7 during 2022, with a significant portion of the 2022 payments related to the gain on sale of Transformer Solutions, 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 condensed consolidated financial statements for additional details).

Investing Activities — Cash flows used in investing activities of continuing operations for the nine months ended September 30, 2023 were comprised of net cash utilized in the acquisitions of TAMCO and ASPEQ of $547.3 and capital expenditures of $16.5, partially offset by proceeds from company-owned life insurance policies of $2.6.

Cash flows used in investing activities of continuing operations for the nine months ended October 1, 2022 were comprised of cash utilized in the acquisition of ITL of $41.8 and capital expenditures of $10.0, partially offset by proceeds from company-owned life insurance policies of $4.6 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 nine months ended September 30, 2023 were comprised of net borrowings under the Credit Agreement and trade receivables financing arrangement of $396.3 and $32.0, respectively, primarily in connection with the TAMCO and ASPEQ acquisitions.

These borrowings were partially offset by minimum withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $1.5, 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 nine months ended October 1, 2022 were comprised 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 $4.9, and contingent consideration paid of $1.3 related to a prior acquisition.

Additionally, prior to the August 12, 2022 execution of our Amended and Restated Credit Agreement (the “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 $0.7.

Discontinued Operations — Cash flows used in discontinued operations for the nine months ended September 30, 2023 relate primarily to (i) cash payments of $25.3 made by DBT to MHI during the three months ended September 30, 2023 in connection with the Settlement Agreement, (ii) disbursements of $14.5 for professional fees and support costs incurred principally in connection with the claims resolved by the Settlement Agreement, and (iii) local taxes of $3.8 paid in South Africa, which we subsequently recovered during the fourth quarter of 2023, partially offset by the recovery of legal costs we were awarded in arbitration proceedings between DBT and MHI of $6.8.

Refer to Notes 3 and 15 to the condensed consolidated financial statements for additional details related to the Settlement Agreement.

Cash flo ws used in discontinued operat ions for the nine months ended October 1, 2022 related primarily to (i) disbursements for professional fees incurred in connection with the South Africa claims matters (see Notes 3 and 15 to the condensed consolidated financial statements for additional details), (ii) disbursements related to asbestos product liability

matters, (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 options exercised of $1.0.

Change in Cash and Equivalents due to Changes in Foreign Currency Exchange Rate s — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during the first nine months of 2023 and 2022.

Operating Activities — The increase in cash flows from operating activities during the three months ended March 30, 2024, compared to the respective period in 2023, was due primarily to the increase in income discussed above, exclusive of the non-cash expenses incurred during the respective periods, partially offset by (i) $11.9 in additional short-term incentive compensation payments and (ii) a payment, during the three months ended March 30, 2024, related to the resolution of a dispute with a former representative at one of our businesses within the Detection and Measurement reportable segment of $9.0.

Investing Activities — Cash flows used in investing activities for the three months ended March 30, 2024 were comprised primarily of net cash utilized in the acquisition of Ingénia of $294.1 and capital expenditures of $9.9.

Cash flows used in investing activities for the three months ended April 1, 2023 were comprised primarily of capital expenditures of $4.0.

Financing Activities — Cash flows from financing activities for the three months ended March 30, 2024 were comprised o f net borrowings under our credit facilities and trade receivables financing arrangement of $278.0 and $18.0, respectively, primarily in connection with the Ingénia acquisition.

T hese net borrowings were partially offset by minimum tax withholdings paid on behalf of employees related to long-term incentive awards, net of proceeds from options exercised, of $3.0 and net repayments under our other various debt instruments of $0.3.

Cash flows from financing activities for the three months ended April 1, 2023 were comprised of borrowings under our credit facilities and trade receivable financing arrangement of $20.0 and $47.0, respectively, in connection with the TAMCO acquisition, partially offset by minimum withholdings paid on behalf of employees related to long-term incentive awards, net of proceeds from options exercised, of $4.1.

Discontinued Operations — Cash used in discontinued operations for the three months ended March 30, 2024 relate primarily to disbursements for liabilities retained in connection with previous dispositions.

Cash used in discontinued operations for the three months ended April 1, 2023 relate primarily to disbursements for professional fees incurred in connection with the then-existing claim activities related to the large power projects in South Africa (see Notes 3 and 15 to the condensed consolidated financial statements for additional details).

Borrowings and Availability

Borrowings — The following summarizes our debt activity (both current and non-current) for the nine months ended September 30, 2023.

Borrowings — The following summarizes our debt activity (both current and non-current) for the three months ended March 30, 2024.

2023 Borrowings Repayments Other (5)

September 30,

Revolving loans (1)

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__________________________

(1) While not due for repayment until August 2027 under the terms of our senior credit agreement, we classify within current liabilities the portion of the outstanding balance that we believe will be repaid over the next year, with such amount based on an estimate of cash that is expected to be generated over such period.

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

(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 balance 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.

(1) While the revolving credit facility extends through August 2027 under the terms of our senior credit agreement, it is available in notes that mature, but may be reissued upon maturity, over varying terms of twelve months or less.

The revolving credit facility, classified within short-term debt, is primarily used to provide liquidity for general corporate and business needs or for funding acquisitions.

The revolving credit facility was utilized as the primary funding mechanism for the Ingénia acquisition.

(2) The term loans are repayable in quarterly installments equal to 0.625% of the initial term loan balances of $545.0, 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 $1.8 and $0.7 at September 30, 2023 and December 31, 2022, respectively.

Balances are net of unamortized debt issuance costs of $1.6 and $1.7 at March 30, 2024 and December 31, 2023, respectively.

(3) Under this arrangement, we can borrow, on a continuous basis, up to $60.0, as available.

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

At September 30, 2023, we had $18.0 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $32.0.

(5) Primarily includes balances under a purchase card program of $1.8 and $1.8 and finance lease obligations of $0.6 and $0.7 at September 30, 2023 and December 31, 2022, respectively.

At March 30, 2024, we had $5.0 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $34.0.

(4) Primarily includes balances under a purchase card program of $1.6 and $1.9 and finance lease obligations of $0.8 and $0.5 at March 30, 2024 and December 31, 2023, respectively.

The purchase card program allows for payment beyond the normal payment terms for goods and services acquired under the program.

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.

(6) “Other” includes the capitalization and amortization of debt issuance costs.

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

Senior Credit Facilities

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 interest rate applicable to the Incremental Term Loan is, at our option, equal to either (x) an alternate base rate (the highest of (a) the federal funds effective rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) the one-month Term SOFR rate plus 1.00%) or (y) the Term SOFR rate for the applicable interest period plus 0.10%, plus, in each case, an applicable margin percentage, which varies based on the Company’s 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).

SPX 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 SOFR borrowings.

SPX will also pay a commitment fee to the incremental lenders on the daily unused amount of the commitments for the Incremental Term Loan, payable quarterly at a per annum rate which also varies based on the Company’s Consolidated Leverage Ratio.

The commitment fee rate and interest rate margins for the Incremental Term Loan are as follows:

Consolidated Leverage Ratio Commitment Fee Term SOFR Loans

Less than 2.00 to 1.0 0.225 % 1.500 % 0.500 %

Greater than or equal to 2.00 to 1.0 but less than 3.00 to 1.0 0.250 % 1.625 % 0.625 %

Greater than or equal to 3.00 to 1.0 0.275 % 1.875 % 0.875 %

The Incremental Term Loan is guaranteed by certain domestic material subsidiaries of the Company and secured by a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries or the domestic subsidiary guarantors and 65% of the voting capital stock (and 100% of the non-voting capital stock) of material first-tier foreign subsidiaries, all subject to certain exceptions and on a pari passu basis with the other credit facilities under the Credit Agreement.

A detailed description of our remaining senior credit facilities under the Credit Agreement is included in our 2022 Annual Report on Form 10-K.

Availability — At September 30, 2023, we had $392.9 of available borrowing capacity under our revolving credit facilities, after giving effect to borrowings under the domestic revolving loan facility of $96.3 and $10.8 reserved for outstanding letters of credit.

In addition, at September 30, 2023, we had $9.7 of available issuance capacity under our foreign credit instrument facilities after giving effect to $15.3 reserved for outstanding letters of credit.

The weighted-average interest rate of outstanding borrowings under the Credit Agreement was approximately 7.0% at September 30, 2023.

At September 30, 2023, we were in compliance with all covenants of the Credit Agreement.

In connection with an 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.

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

At March 30, 2024, we were in compliance with all covenants of our senior credit agreement.

Availability — At March 30, 2024, we had $207.8 of available borrowing capacity under our revolving credit facilities, after giving effect to borrowings under the domestic revolving loan facility of $281.4 and $10.8 reserved for outstanding letters of credit.

In addition, at March 30, 2024, we had $8.6 of available issuance capacity under our foreign credit instrument facilities after giving effect to $16.4 reserved for outstanding letters of credit.

Financing instruments may be used from time to time including, but not limited to, public and private debt and equity offerings, operating leases, finance leases and securitizations.

We expect that we will continue to access these markets as appropriate to maintain liquidity and to provide sources of funds for general corporate purposes, acquisitions or to refinance existing debt.

The Company has investments in COLI policies, which are recorded at their cash surrender value of $75.8 and $76.7 at March 30, 2024 and December 31, 2023, respectively.

The Company has the ability to borrow against a portion of its investment in the COLI policies as an additional source of liquidity.

At March 30, 2024, the Company had not borrowed against any of its existing COLI policies’ cash surrender value.

See Note 12 to the consolidated financial statements for additional information.

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 forwards contracts.

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 swap and foreign currency forward contracts.

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

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Other Matters

Contractual Obligations — There have been no material changes in the amounts of our contractual obligations from those disclosed in our 2022 Annual Report on Form 10-K.

Our total net liabilities for unrecognized tax benefits including interest were $3.6 as of September 30, 2023.

Contractual Obligations — Other than the borrowings under our revolving loan facility in connection with the Ingénia acquisition discussed above, there have been no material changes in the amounts of our contractual obligations from those disclosed in our 2023 Annual Report on Form 10-K.

Our total net liabilities for unrecognized tax benefits including interest were $3.3 as of March 30, 2024.

Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $0.2.

Contingencies and Other Matters — 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., contracts, intellectual property, and competitive claims), environmental matters, product liability matters, 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, claims for contingent consideration on prior acquisitions, product liability matters, 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.

12 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis