SPX Technologies, Inc. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (in millions) FORWARD-LOOKING STATEMENTS Some of the statements in this document and any documents incorporated by reference, including any statements as to operational and financial projections, constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses’ or our industries’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements may address our plans, our strategies, our prospects, changes and trends in our business and the markets in which we operate under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) or in other sections of this document. 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. 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 our markets; changes in anticipated capital investment and maintenance expenditures by customers; changes in economic conditions in relevant global and North American markets, including as a result of the imposition, or threat of imposition, of tariffs, such as the significant tariffs announced by the U.S. government in 2025 and retaliatory tariffs announced in response thereto and other trade barriers or geopolitical conflicts; availability, limitations or cost increases of raw materials and/or commodities, including as a result of new or increased tariffs, as well as the potential impact of retaliatory tariffs and other penalties that cannot be recovered in product pricing; the impact of competition on profit margins and our ability to maintain or increase market share; inadequate performance by third-party suppliers and subcontractors for outsourced products, components and services and other supply-chain risks; the uncertainty of claims resolution with respect to environmental and other contingent liabilities; the impact of climate change and any legal or regulatory actions taken in response thereto; cyber-security risks; risks with respect to the protection of intellectual property, including with respect to our digitalization initiatives; the impact of overruns, inflation and the incurrence of delays with respect to long-term fixed-price contracts; defects or errors in current or planned products; the impact of pandemics and governmental and other actions taken in response; domestic economic, political, legal, accounting and business developments adversely affecting our business, including regulatory changes; uncertainties with respect to our ability to identify acceptable acquisition targets; uncertainties surrounding timing and successful completion of acquisition or disposition transactions, including with respect to integrating acquisitions and achieving cost savings, synergistic sales or other benefits from acquisitions, including from the acquisition of Sigma & Omega; the impact of retained liabilities of disposed businesses; potential labor disputes; and extreme weather conditions and natural and other disasters. These and other risks and uncertainties are further discussed in other sections of this document. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results. In addition, management’s estimates of future operating results are based on our current complement of businesses, which is subject to change as management selects strategic markets. All the forward-looking statements are qualified in their entirety by reference to the factors discussed under the heading “Risk Factors” in our 2024 Annual Report on Form 10-K, in any subsequent filing with the U.S. Securities and Exchange Commission, as well as in any documents incorporated by reference that describe risks, uncertainties and other factors that could cause results to differ materially from those projected in these forward-looking statements. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on forward-looking statements as a prediction of actual results. We disclaim any responsibility to update or publicly revise any forward-looking statements, except to the extent we are legally required to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document. IMPACTS OF TARIFFS AND OTHER COST INCREASES During 2025, the U.S. government announced significant additional tariffs on goods imported to the U.S., which have subsequently been modified, including by extending the date the announced tariffs would become applicable. In response, certain governments have announced significant retaliatory tariffs on goods imported from the U.S. We continue to analyze the impact of these announced tariffs on our business. While we do not expect these new tariffs to have a direct material impact on our results of operations in fiscal year 2025, we are unable to determine the full extent or duration at this time, as well as the impact of such tariffs, if implemented on announced terms, on general economic conditions in relevant global and North American markets. We believe that our diverse set of businesses, along with our strong balance sheet and available liquidity, position us well to manage the direct adverse impacts of the announced tariffs. We have taken actions to manage near-term costs and cash flows, and implemented actions to address potential material sourcing challenges we could face over the near-term. Lastly, we will continue to assess the actual and expected impacts of the tariffs and the need for further actions. 32 POTENTIAL IMPACTS OF GEOPOLITICAL CONFLICTS 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 and six months ended June 28, 2025 and June 29, 2024. 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. These conflicts have created additional demand for certain products within our communication technologies business. The 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 ◦ Ingénia Technologies Inc. (“Ingénia”) ▪ Acquired on February 7, 2024 for cash consideration of $292.0, net of (i) an adjustment to the purchase price of $2.1 received during the third quarter of 2024 related to acquired working capital and (ii) cash acquired of $1.5. ▪ Post-acquisition operating results of Ingénia are included within our HVAC reportable segment. ◦ Kranze Technology Solutions, Inc. (“KTS”) ▪ Acquired on January 27, 2025 for cash consideration of $342.4, inclusive of amounts related to future service obligations of certain existing employees of $46.5. ▪ The purchase price is subject to adjustment based upon the final settlement of working capital and cash as of the date of acquisition. ▪ Post-acquisition operating results of KTS are included within our Detection and Measurement reportable segment. ▪ See Note 3 to our condensed consolidated financial statements for additional details. ◦ Sigma Heating and Cooling and Omega Heat Pump (“ Sigma & Omega ”) ▪ Acquired on April 15, 2025 for cash consideration of $143.6, net of cash acquired of $0.2. ▪ The purchase price is subject to adjustment based upon the final settlement of working capital and cash as of the date of acquisition. ▪ Post-acquisition operating results of Sigma & Omega are included within our HVAC reportable segment. ▪ See Note 3 to our condensed consolidated financial statements for additional details. • Changes in Estimated Fair Value of an Equity Security ◦ We recorded no adjustments to the fair value during the three months ended June 28, 2025 and June 29, 2024. We recorded gains (losses) of $4.5 and $(4.2) during the six months ended June 28, 2025 and June 29, 2024, respectively. ◦ See Note 17 to our condensed consolidated financial statements for additional details. • One Big Beautiful Bill Act ◦ On July 4, 2025, new legislation commonly referred to as the One Big Beautiful Bill Act (“the Act”) was signed into law in the United States and contains a broad range of tax provisions affecting businesses. We are evaluating the full impact of the Act on our estimated annual effective tax rate and balance sheet positions, but we do not expect the legislation to have a material impact on our statements of operations. As the Act was signed into law after June 28, 2025, no impacts are included in our condensed consolidated balance sheet at June 28, 2025, statement of operations for the three and six months ended June 28, 2025, or statement of cash flows for the six months ended June 28, 2025. • Resolution of Dispute with Seller of ULC Robotics (“ULC”) ◦ In connection with our acquisition of ULC in September 2020, the seller of ULC was eligible for contingent consideration of up to $45.0 under an earn-out provision. ◦ During the third quarter of 2021, we concluded that none of the milestones for the payment of any of the contingent consideration had been achieved. ◦ On May 20, 2024, we entered into a settlement agreement with the seller of ULC to resolve a lawsuit it commenced in August 2022 seeking contingent consideration of $15.0, prejudgment interest on that amount, and attorney's fees. 33 ◦ The settlement agreement required a payment by us to the seller of ULC of $8.4, which was paid during the second quarter of 2024, with a corresponding charge recorded within “Other operating expense, net” within our condensed consolidated statements of operations for the three and six months ended June 29, 2024. We expect this payment to be tax deductible in future periods. OVERVIEW OF OPERATING RESULTS Revenues for the three months ended June 28, 2025 totaled $552.4, compared to $501.3 during the respective period in 2024. The increase in revenues, compared to the respective period in 2024, was due primarily to (i) inorganic revenue growth resulting from the KTS acquisition within the Detection and Measurement reportable segment and the Sigma & Omega acquisition within the HVAC reportable segment, and (ii) organic revenue growth within the Detection and Measurement reportable segment and, to a lesser extent, the HVAC reportable segment. Revenues for the six months ended June 28, 2025 totaled $1,035.0, compared to $966.5 during the respective period in 2024. The increase in revenues, compared to the respective period in 2024, was due primarily to (i) inorganic revenue growth resulting from the Ingénia and Sigma & Omega acquisitions within the HVAC reportable segment and the KTS acquisition within the Detection and Measurement reportable segment and (ii) organic revenue growth within the HVAC reportable segment, partially offset by an organic revenue decline within the Detection and Measurement reportable segment. During the three and six months ended June 28, 2025, we generated operating income of $86.6 and $153.2, respectively, compared to $74.6 and $139.2 for the respective periods in 2024. RESULTS OF CONTINUING OPERATIONS The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our 2024 Annual Report on Form 10-K. Interim results are not necessarily indicative of results for the full year. We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of 2025 are March 29, June 28, and September 27, compared to the respective March 30, June 29, and September 28, 2024 dates. We had two less days in the first quarter of 2025 and will have one more day in the fourth quarter of 2025 than in the respective 2024 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. In addition, certain of our businesses have seasonal fluctuations. For example, our heating 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 tend to be stronger in the second half of the year. Although our businesses operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment since none of our competitors offer all the same product lines or serve all the same markets as we do. In addition, specific reliable comparative figures are not available for many of our competitors. In most product groups, competition comes from numerous concerns, both large and small. The principal methods of competition are service, product performance, technical innovation and price. These methods vary with the type of product sold. We believe we compete effectively on the basis of each of these factors. 34 The following table provides selected financial information for the three and six months ended June 28, 2025 and June 29, 2024: Three months ended Six months ended June 28, 2025 June 29, 2024 % Change June 28, 2025 June 29, 2024 % Change Revenues $ 552.4 $ 501.3 10.2 $ 1,035.0 $ 966.5 7.1 Gross profit 228.9 200.8 14.0 424.8 383.7 10.7 % of revenues 41.4 % 40.1 % 41.0 % 39.7 % Selling, general and administrative expense 117.2 101.2 15.8 226.7 204.1 11.1 % of revenues 21.2 % 20.2 % 21.9 % 21.1 % Intangible amortization 24.6 16.8 46.4 44.3 31.6 40.2 Special charges, net — (0.2) * 0.1 0.4 * Other operating expense, net 0.5 8.4 * 0.5 8.4 * Other income (expense), net (2.1) (1.7) * 0.6 (5.7) * Interest expense, net (14.6) (12.5) 16.8 (26.0) (22.0) 18.2 Income from continuing operations before income taxes 69.9 60.4 15.7 127.8 111.5 14.6 Income tax provision (17.4) (15.2) 14.5 (23.6) (17.1) 38.0 Income from continuing operations 52.5 45.2 16.2 104.2 94.4 10.4 Components of revenue increase: Organic 2.1 1.3 Foreign currency 0.3 — Acquisitions 7.8 5.8 Net revenue increase 10.2 7.1 _________________________________ * Not meaningful for comparison purposes. Revenues — The increase in revenues for the three months ended June 28, 2025, compared to the respective period in 2024, was due primarily to (i) inorganic revenue growth resulting from the KTS acquisition within the Detection and Measurement reportable segment and the Sigma & Omega acquisition within the HVAC reportable segment, and (ii) organic revenue growth within the Detection and Measurement reportable segment and, to a lesser extent, the HVAC reportable segment. The increase in revenues for the six months ended June 28, 2025, compared to the respective period in 2024, was due primarily to (i) inorganic revenue growth resulting from the Ingénia and Sigma & Omega acquisitions within the HVAC reportable segment and the KTS acquisition within the Detection and Measurement reportable segment, and (ii) organic revenue growth within the HVAC reportable segment, partially offset by an organic revenue decline within the Detection and Measurement reportable segment. See “Results of Reportable Segments” for additional details. Gross Profit — For the three and six months ended June 28, 2025, the increase in gross profit and gross profit as a percentage of revenues, compared to the respective periods in 2024, was due primarily to (i) the revenue growth mentioned above, and (ii) favorable project execution and more accretive mix, primarily within our HVAC reportable segment. Selling, General and Administrative (“SG&A”) Expense — For the three months ended June 28, 2025, the increase in SG&A expense, compared to the respective period in 2024, was due primarily to (i) higher acquisition and integration-related costs of $5.7, (ii) incremental SG&A resulting from the acquisitions of KTS and Sigma & Omega of $2.6, (iii) increases in personnel costs due to annual merit increases and growth-related headcount additions, and (iv) higher costs relating to lease renewals. For the six months ended June 28, 2025, the increase in SG&A expense, compared to the respective period in 2024, was due primarily to (i) higher acquisition and integration-related costs of $9.9, (ii) incremental SG&A resulting from the acquisitions of Ingénia, KTS and Sigma & Omega of $4.1, (iii) increases in personnel costs due to annual merit increases and growth-related headcount additions, and (iv) higher costs relating to lease renewals. 35 Intangible Amortiz ation — For the three an d six months ended June 28, 2025, the increase in intangible asset amortization, compared to the respective periods in 2024, was p rimarily related to incremental amortization associated with (i) backlog from the KTS and Sigma & Omega acquisitions and (ii) other intangible assets associated with the acquisitions of Ingénia, KTS and Sigma & Omega. Special Charges, net — Special charges, net, for the six months ended June 28, 2025 and the three and six months ended June 29, 2024 related primarily to recording, and subsequent adjustments of, 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 Operating Expense, net — Other operating expense, net for the three and six months ended June 29, 2024 related to a charge of $8.4 regarding a settlement with the seller of ULC referred to previously. Other Income (Expense), net — Other expense, net, for the three months ended June 28, 2025 was composed primarily of foreign currency transaction losses of $0.9, pension and postretirement expense of $0.6, and environmental remediation charges of $0.6. Other expense, net, for the three months ended June 29, 2024 was composed primarily of environmental remediation charges of $1.0, pension and postretirement expense of $0.4, and foreign currency transaction losses of $0.4. Other income, net, for the six months ended June 28, 2025 was composed primarily of a gain of $4.5 related to a change in the estimated fair value of an equity security that we hold and income of $1.7 derived from company-owned life insurance (“COLI”) policies, partially offset by pension and postretirement expense of $2.0 (including net settlement and actuarial losses of $0.8), environmental remediation charges of $1.8, and foreign currency transaction losses of $1.4. Other expense, net, for the six months ended June 29, 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 $1.8, and pension and postretirement expense of $0.8, partially offset by income of $0.9 derived from COLI polices. Interest Expense, net — Interest expense, net, includes both interest e xpense and interest income. The increase in interest expense, net, during the three and six months ended June 28, 2025, compared to the respective periods in 2024, was due primarily to higher average debt balances during the 2025 periods. The higher average debt balances primarily resulted from borrowings associated with the Ingénia, KTS, and Sigma & Omega acquisitions. Refer to Note 12 to the condensed consolidated financial statements for additional details. Income Tax Provision — For the three months ended June 28, 2025, we recorded an income tax provision of $17.4 on $69.9 of pre-tax income from continuing operations, resulting in an effective rate of 24.9%. This compares to an income tax provision for the three months ended June 29, 2024 of $15.2 on $60.4 of pre-tax income from continuing operations, resulting in an effective rate of 25.2%. The most significant item impacting the income tax provision for the second quarters of 2025 and 2024 was $0.8 and $0.5 of tax provision, respectively, related to revisions to liabilities for uncertain tax positions. For the six months ended June 28, 2025, we recorded an income tax provision of $23.6 on $127.8 of pre-tax income from continuing operations, resulting in effective rate of 18.5%. This compares to an income tax provision for the six months ended June 29, 2024 of $17.1 on $111.5 of pre-tax income from continuing operations, resulting in an effective rate of 15.3%. The most significant items impacting the income tax provision during the first half of 2025 and 2024 were (i) $8.8 and $11.1, respectively, of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the periods and (ii) $0.8 and $0.5 of tax provision, respectively, related to revisions to liabilities for uncertain tax positions. 36 RESULTS OF REPORTABLE SEGMENTS AND CORPORATE EXPENSE The following information should be read in conjunction with our condensed consolidated financial statements and related notes. These results exclude the operating results of discontinued operations for all periods presented. See Note 6 to our condensed consolidated financial statements for a description of our reportable segments. HVAC Reportable Segment Three months ended Six months ended June 28, 2025 June 29, 2024 % Change June 28, 2025 June 29, 2024 % Change Revenues $ 376.7 $ 356.5 5.7 $ 699.7 $ 658.9 6.2 Segment Income 95.8 83.7 14.5 169.7 152.1 11.6 % of revenues 25.4 % 23.5 % 24.3 % 23.1 % Components of revenue increase: Organic 0.7 2.4 Foreign currency 0.1 (0.2) Acquisitions 4.9 4.0 Net revenue increase 5.7 6.2 Revenues — For the three months ended June 28, 2025, the increase in revenues, compared to the respective period in 2024, was due primarily to inorganic revenue growth from the Sigma & Omega acquisition and, to a lesser extent, organic revenue growth. The organic revenue growth was due primarily to higher volumes of both heating and cooling products, partially offset by the execution of a larger than typical service project within our cooling products business in the second quarter of 2024. For the six months ended June 28, 2025, the increase in revenues, compared to the respective period in 2024, was due primarily to inorganic revenue growth resulting from the Ingénia and Sigma & Omega acquisitions and, to a lesser extent, organic revenue growth. The organic revenue growth was due primarily to higher volumes of both heating and cooling products. This net volume increase included the impact of (i) higher volumes of heating products associated with the unseasonably warm winter conditions prevalent in the relevant end markets during the first quarter of 2024 and (ii) the execution of a larger than typical service project within our cooling products business in the second quarter of 2024. Income — For the three and six months ended June 28, 2025, the increase in income and margin, compared to the respective periods in 2024, was due primarily to the higher volumes mentioned above with a more accretive mix and favorable project execution primarily within our cooling products business. Backlog — The segment had backlog of $539.5 and $433.7 as of June 28, 2025 and June 29, 2024, respectively. Backlog associated with the Sigma & Omega acquisition totaled $57.3 as of June 28, 2025. Detection and Measurement Reportable Segment Three months ended Six months ended June 28, 2025 June 29, 2024 % Change June 28, 2025 June 29, 2024 % Change Revenues $ 175.7 $ 144.8 21.3 $ 335.3 $ 307.6 9.0 Segment Income 40.0 33.9 18.0 76.6 65.3 17.3 % of revenues 22.8 % 23.4 % 22.8 % 21.2 % Components of revenue increase: Organic 5.5 (1.1) Foreign currency 0.9 0.3 Acquisition 14.9 9.8 Net revenue increase 21.3 9.0 Revenues — For the three months ended June 28, 2025, the increase in revenues, compared to the respective period in 2024, was due to inorganic revenue growth resulting from the KTS acquisition and, to a lesser extent, organic revenue growth. The organic revenue growth was driven by higher project volumes within our communication technologies and transportation systems businesses. These increases were partially offset by lower project volumes within our aids to navigation business. Project volumes, primarily within our communication technologies, aids to navigation, and transportation systems businesses, can vary from period to period based on the timing of project execution. For the six months ended June 28, 2025, the increase in revenues, compared to the respective period in 2024, was due primarily to inorganic revenue growth resulting from the KTS acquisition, partially offset by an organic revenue decline. The organic revenue decline was due primarily to lower project volumes within our aids to navigation business. This decline was partially offset by higher project volumes primarily within our communication technologies and transportation systems 37 businesses. Project volumes, primarily within our communication technologies, aids to navigation, and transportation systems businesses, can vary from period to period based on the timing of project execution. Income — For the three months ended June 28, 2025, the increase in income, compared to the respective period in 2024, was due primarily to the revenue growth mentioned above. The decrease in margin for the three months ended June 28, 2025, compared to the respective period in 2024, was primarily due to less favorable project mix within our transportation systems, communications technologies, and aids to navigation businesses. For the six months ended June 28, 2025, the increase in income and margin, compared to the respective periods in 2024, was due primarily to (i) income resulting from the KTS acquisition and (ii) higher volumes and more favorable product mix from large projects primarily within our communication technologies business. These increases were partially offset by the impact of the lower project volumes within our aids to navigation business mentioned above. Backlog — The segment had bac klog of $365.4 and $205.4 as of June 28, 2025 and June 29, 2024, respectively. Backlog associated with the KTS acquisition totaled $52.0 as of June 28, 2025. CORPORATE AND OTHER EXPENSES Three months ended Six months ended June 28, 2025 June 29, 2024 % Change June 28, 2025 June 29, 2024 % Change Total consolidated revenues $ 552.4 $ 501.3 10.2 $ 1,035.0 $ 966.5 7.1 Corporate expense 13.3 12.0 10.8 27.3 25.9 5.4 % of revenues 2.4 % 2.4 % 2.6 % 2.7 % Long-term incentive compensation expense 3.9 3.7 5.4 7.6 7.0 8.6 Corporate Expense — Corporate expense generally relates to the personnel and general operating costs of our corporate headquarters in Charlotte, North Carolina. The increase in corporate expense during the three months ended June 28, 2025, compared to the respective period in 2024, was due primarily to higher expense related to acquisition and integration-related costs of $0.7 largely driven by the Sigma & Omega acquisition. The increase in corporate expense during the six months ended June 28, 2025, compared to the respective period in 2024, was due primarily to higher expense related to (i) an increase in costs incurred for professional services and (ii) acquisition and integration-related costs of $0.5 largely driven by the KTS and Sigma & Omega acquisitions in 2025, partially offset by expense incurred for the Ingénia acquisition in 2024. 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 2025, compared to 2024, was due primarily to (i) an increase in the fair value of performance-based share awards resulting from plan design changes affected beginning in 2024, which increased the maximum potential payout range from 150% to 200% of target, and (ii) the accumulation of awards related to recent changes in certain key management positions. LIQUIDITY AND FINANCIAL CONDITION 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 six months ended June 28, 2025 and June 29, 2024. Six months ended June 28, 2025 June 29, 2024 Continuing operations: Cash flows from operating activities $ 33.0 $ 69.4 Cash flows used in investing activities (457.8) (271.5) Cash flows from financing activities 395.3 230.5 Cash flows used in discontinued operations (1.4) (1.4) Change in cash and equivalents due to changes in foreign currency exchange rates 6.4 1.1 Net change in cash and equivalents $ (24.5) $ 28.1 Operating Activities — Cash flows from operating activities associated with continuing operations totaled $33.0 for the six months ended June 28, 2025, compared to cash flows from operating activities of $69.4 during the six months ended 38 June 29, 2024. Th e decrease in cash flows from operating activities for the six months ended June 28, 2025, compared to the six months ended June 29, 2024, was due primarily to (i) amounts paid into an escrow account in connection with the KTS acquisition related to future service obligations of certain employees of $46.5 and (ii) investments in working capital in support of increased backlog within our HVAC and Detection and Measurement reportable segments, partially offset by (i) the increase in income, exclusive of the non-cash expenses incurred during the 2025 period, (ii) a payment, during the first quarter of 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, and (iii) a payment of $8.4 during the second quarter of 2024 associated with a settlement with the seller of ULC for additional contingent consideration, as discussed above. Investing Activities — Cash fl ows used in investing activities of continuing operations for the six months ended June 28, 2025 were comprised primarily of net cash utilized in acquisitions, including KTS and Sigma & Omega, of $447.7 and capital expenditures of $13.2, partially offset by net proceeds from COLI policies of $3.1. Cash flows used in investing activities of continuing operations for the six months ended June 29, 2024 were comprised of net cash utilized in the acquisition of Ingénia of $294.1 and capital expenditures of $20.3, partially offset by net proceeds from COLI policies of $42.9, inclusive of borrowings of $41.2 against the cash surrender value of these COLI policies. See Note 12 to the condensed consolidated financial statements for additional details. Financing Activities — Cash flows from financing activities of continuing operations for the six months ended June 28, 2025 were comprised primarily of net borrowings under the Credit Agreement and trade receivables financing arrangement of $373.2 and $31.0, respectively, primarily in connection with the KTS and Sigma & Omega acquisitions. These 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 $9.1. Cash flows from financing activities of continuing operations for the six months ended June 29, 2024 were comprised of net borrowings under the Credit Agreement and trade receivables financing arrangement of $193.2 and $39.0, respectively, primarily in connection with the Ingénia acquisition. These 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 $0.9, and net repayments under our other various debt instruments of $0.8. Discontinued Operations — Cash flows used in discontinued operations for the six months ended June 28, 2025 relate primarily to disbursements for costs incurred to support our wound-down DBT Technologies (PTY) LTD (“DBT”) subsidiary through processes associated with the liquidation of a subcontractor. Cash flows used in discontinued operations for the six months ended June 29, 2024 relate primarily to disbursements for liabilities retained in connection with previous dispositions. 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 six months of 2025 and 2024. Borrowings and Availability Borrowings — The following summarizes our debt activity (both current and non-current) for the six months ended June 28, 2025. December 31, 2024 Borrowings Repayments Other (5) June 28, 2025 Revolving loans (1) $ 80.0 $ 478.0 $ (98.0) $ — $ 460.0 Term loans (2) 523.4 — (6.8) 0.2 516.8 Trade receivables financing arrangement (3) 9.0 179.0 (148.0) — 40.0 Other indebtedness (4) 2.3 0.6 (0.4) — 2.5 Total debt 614.7 $ 657.6 $ (253.2) $ 0.2 1,019.3 Less: short-term debt 10.1 41.4 Less: current maturities of long-term debt 27.6 27.6 Total long-term debt, net $ 577.0 $ 950.3 ___________________________ (1) The revolving credit facility extends through August 2027 under the terms of our senior credit agreement and is primarily used to provide liquidity for funding acquisitions, including related fees and expenses, and was utilized as a funding mechanism for the KTS and Sigma & Omega acquisitions. (2) The term loans are repayable in quarterly installments equal to 1.25% of the initial term loan balances of $545.0, in 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 $1.0 and $1.2 at June 28, 2025 and December 31, 2024, respectively. 39 (3) Under this arrangement, we can borrow, on a continuous basis, up to $100.0, as available. Borrowings under this arrangement are collateralized by eligible trade receivables of certain of our businesses. At June 28, 2025, we had $49.1 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $40.0. (4) Primarily includes balances under a purchase card program of $1.4 and $1.1 and finance lease obligations of $1.1 and $1.2 at June 28, 2025 and December 31, 2024, 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. (5) “Other” includes the impact of amortization of debt issuance costs associated with the term loans. At June 28, 2025, we were in compliance with all covenants of the senior credit agreement. During the second quarter of 2025, we renewed our trade receivables financing agreement for the next 12 months, whereby we can borrow, on a continuous basis, up to $100.0, as available. Availability — At June 28, 2025, we h ad $529.0 of available borrowing capacity under our revolving credit facilities, after giving effect to borrowings under the domestic revolving loan facility of $460.0 and $11.0 reserved for outstanding letters of credit. In addition, at June 28, 2025, we had $11.9 of available issuance capacity under our foreign credit instrument facilities after giving effect to $13.1 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. We have investments in COLI policies, which are recorded at their net cash surrender value of $36.2 at June 28, 2025 and December 31, 2024. We have the ability to borrow against a portion of our investment in the COLI policies as an additional source of liquidity. The amounts borrowed totaled $39.0 at June 28, 2025 and December 31, 2024 and incur interest at a rate of 5.3%. After such borrowings, minimal capacity to borrow against the policies remains. See Note 12 to the condensed 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, cash surrender values of 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. We periodically evaluate the credit standing of these financial institutions. We maintain cash levels in bank accounts that, at times, may exceed federally-insured limits. We have not experienced, and believe we are not exposed to, significant risk of loss in these accounts. We have credit loss exposure in the event of nonperformance by counterparties to the above financial instruments, but have no other off-balance-sheet credit risk of accounting loss. We anticipate, however, that counterparties will be able to fully satisfy their obligations under the contracts. We do not obtain collateral or other security to support financial instruments subject to credit risk, but we do monitor the credit standing of counterparties. Concentrations of credit risk arising from trade accounts receivable are due to selling to customers in a particular industry. Credit risks are mitigated by performing ongoing credit evaluations of our customers’ financial conditions and obtaining collateral, advance payments, or other security when appropriate. No one customer, or group of customers that to our knowledge are under common control, accounted for more than 10% of our revenues for any period presented. Other Matters Contractual Obligations — Other than the borrowings under our revolving loan facility in connection with the KTS and Sigma & Omega acquisitions discussed above, there have been no material changes in the amounts of our contractual obligations from those disclosed in our 2024 Annual Report on Form 10-K. Our total net liabilities for unrecognized tax benefits including interest were $5.3 as of June 28, 2025. 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 $2.0. 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, claims for contingent 40 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. We accrue for these contingencies when we believe a liability is probable and can be reasonably estimated. As events change and resolutions occur, these accruals may be adjusted and could differ materially from amounts originally estimated. See Note 15 to the condensed consolidated financial statements for a further discussion of contingencies and other matters. Our Certificate of Incorporation provides that we shall indemnify our officers and directors to the fullest extent permitted by the Delaware General Corporation Law for any personal liability in connection with their employment or service with us. While we maintain insurance for this type of liability, the liability could exceed the amount of the insurance coverage. In addition, you should read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Other Matters” herein, and “Risk Factors” in our 2024 Annual Report on Form 10-K, as well as similar sections in any future filings for an understanding of the risks, uncertainties, and trends facing our businesses. Critical Accounting Policies and Use of Estimates The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. The accounting policies that we believe are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties are discussed in our 2024 Annual Report on Form 10-K , the discussion within which is incorporated herein by reference . We have affected no material change in either our critical accounting policies or use of estimates since the filing of our 2024 Annual Report on Form 10-K. 41 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk Management does not believe our exposure to market risk has significantly changed since December 31, 2024 and does not believe that such risks will result in significant adverse impacts to our financial condition, results of operations or cash flows.