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; 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. 34 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 nine months ended September 27, 2025 and September 28, 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 adverse impact to be material to our operating results. These conflicts have created significant 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 $340.0, inclusive of amounts related to future service obligations of certain existing employees of $46.5 and net of an adjustment to the purchase price of $2.4 received during the third quarter of 2025 related to acquired working capital. ▪ 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. • Financing Activities ◦ On September 9, 2025, we amended and restated our senior credit agreement (as amended, the “ Credit Agreement ” ) . ▪ The amendment provides for committed senior secured financing in the aggregate amount of $2,025.0, including a multicurrency revolving credit facility in an aggregate principal amount up to the equivalent of $1,500.0, and makes certain conforming changes and other amendments to the Credit Agreement. ▪ We expect to utilize the credit capacity to finance, in part, permitted acquisitions, to pay related fees, costs and expenses and for other lawful corporate purposes. ◦ During the second quarter of 2025, we renewed, and increased the capacity of, our trade receivables financing agreement for the next 12 months, whereby we can borrow, on a continuous basis, up to $100.0, as available. ◦ We have investments in company-owned life insurance (“COLI”) policies, which are recorded at their cash surrender value at each balance sheet date. During the first nine months of 2024, we borrowed $41.2 against the cash surrender value of these COLI policies. During the nine months ended September 27, 2025, we repaid the then-outstanding borrowings totaling $37.4, inclusive of accrued interest. ◦ See Note 12 to our condensed consolidated financial statements for additional details. 35 • Registered Direct Offering ◦ On August 12, 2025, the Company entered into an underwritten public offering with certain investors, pursuant to which the Company agreed to issue and sell in a registered direct offering to such investors 3.059 shares of the Company's common stock, at a purchase price of $188.0 per share (the “Offering”). ◦ The Offering was made pursuant to the shelf registration statement on Form S-3 (Registration No. 333-289489) and a related prospectus supplement and accompanying prospectus filed with the Securities and Exchange Commission. ◦ The net proceeds to the Company from the Offering, after deducting underwriting discounts, commissions, and offering expenses payable by the Company of $23.9, were $551.1. • Changes in Estimated Fair Value of an Equity Security ◦ We recorded no adjustments to the fair value during the three months ended September 27, 2025 and September 28, 2024. We recorded gains (losses) of $4.5 and $(4.2) during the nine months ended September 27, 2025 and September 28, 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. The Act has several provisions which have, and will continue to, reduce our taxes paid in 2025. We have included the impact of the Act in our condensed consolidated balance sheet at September 27, 2025. We do not expect the legislation to have a material impact on our results of operations. • 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. ◦ 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 nine months ended September 28, 2024. We expect this payment to be tax deductible in future periods. • 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, DBT made a payment of $25.1 (net of $2.0 received on a related foreign currency forward agreement) to MHI during the third quarter of 2024 in connection with the Settlement Agreement. ◦ There are no further payment obligations to MHI under the terms of the Settlement Agreement. ◦ See Note 3 to our condensed consolidated financial statements for additional details. OVERVIEW OF OPERATING RESULTS Revenues for the three months ended September 27, 2025 totaled $592.8, compared to $483.7 during the respective period in 2024. The increase in revenues, compared to the respective period in 2024, was due primarily to (i) organic revenue growth within the Detection and Measurement and the HVAC reportable segments, and (ii) inorganic revenue growth resulting from the Sigma & Omega acquisition within the HVAC reportable segment and the KTS acquisition within the Detection and Measurement reportable segment. 36 Revenues for the nine months ended September 27, 2025 totaled $1,627.8, compared to $1,450.2 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 and Detection and Measurement reportable segments. During the three and nine months ended September 27, 2025, we generated operating income of $97.1 and $250.3, respectively, compared to $78.9 and $218.1 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. 37 The following table provides selected financial information for the three and nine months ended September 27, 2025 and September 28, 2024: Three months ended Nine months ended September 27, 2025 September 28, 2024 % Change September 27, 2025 September 28, 2024 % Change Revenues $ 592.8 $ 483.7 22.6 $ 1,627.8 $ 1,450.2 12.2 Gross profit 239.5 197.6 21.2 664.3 581.3 14.3 % of revenues 40.4 % 40.9 % 40.8 % 40.1 % Selling, general and administrative expense 117.7 101.6 15.8 344.4 305.7 12.7 % of revenues 19.9 % 21.0 % 21.2 % 21.1 % Intangible amortization 24.6 16.6 48.2 68.9 48.2 42.9 Special charges, net 0.1 0.5 * 0.2 0.9 * Other operating expense, net — — * 0.5 8.4 * Other expense, net (3.2) (1.4) * (2.6) (7.1) * Interest expense, net (10.9) (11.5) (5.2) (36.9) (33.5) 10.1 Loss on amendment/refinancing of senior credit agreement (1.5) — * (1.5) — * Income from continuing operations before income taxes 81.5 66.0 23.5 209.3 177.5 17.9 Income tax provision (18.4) (15.1) 21.9 (42.0) (32.2) 30.4 Income from continuing operations 63.1 50.9 24.0 167.3 145.3 15.1 Components of revenue increase: Organic 14.3 5.7 Foreign currency 0.1 (0.1) Acquisitions 8.2 6.6 Net revenue increase 22.6 12.2 _________________________________ * Not meaningful for comparison purposes. Revenues — The increase in revenues for the three months ended September 27, 2025, compared to the respective period in 2024, was due primarily to (i) organic revenue growth within the Detection and Measurement and the HVAC reportable segments and (ii) inorganic revenue growth resulting from the Sigma & Omega acquisition within the HVAC reportable segment and the KTS acquisition within the Detection and Measurement reportable segment. The increase in revenues for the nine months ended September 27, 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 and Detection and Measurement reportable segments. See “Results of Reportable Segments” for additional details. Gross Profit — For the three months ended September 27, 2025, the increase in gross profit, compared to the respective period in 2024, was due primarily to the revenue growth mentioned above. The slight decrease in gross profit as a percentage of revenue was primarily due to a less favorable project mix within our Detection and Measurement reportable segment, partially offset by operating leverage on the revenue growth mentioned above. For the nine months ended September 27, 2025, the increase in gross profit and gross profit as a percentage of revenues, compared to the respective period in 2024, was due primarily to (i) the revenue growth mentioned above and associated operating leverage, and (ii) favorable project execution and more accretive mix within our HVAC reportable segment. Selling, General and Administrative (“SG&A”) Expense — For the three months ended September 27, 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 $5.5, (ii) increases in personnel costs primarily due to annual merit increases, growth-related headcount additions and higher short-term incentive compensation driven by strong operating performance, and (iii) incremental SG&A resulting from the acquisitions of KTS and Sigma & Omega of $2.7 . 38 For the nine months ended September 27, 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 $15.4, (ii) incremental SG&A resulting from the acquisitions of Ingénia, KTS and Sigma & Omega of $ 6.8 , (iii) increases in personnel costs primarily due to annual merit increases and growth-related headcount additions, and (iv) higher costs relating to lease renewals. Intangible Amortiz ation — For the three an d nine months ended September 27, 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 three and nine months ended September 27, 2025 and the three and nine months ended September 28, 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 nine months ended September 28, 2024 related to a charge of $8.4 regarding a settlement with the seller of ULC referred to previously. Other Expense, net — Other expense, net, for the three months ended September 27, 2025 was composed primarily of environmental remediation charges of $3.9, pension and postretirement expense of $0.6, and foreign currency transaction losses of $0.5, partially offset by income of $1.4 derived from COLI policies and a gain of $0.4 related to the settlement of our interest rate swaps. Other expense, net, for the three months ended September 28, 2024 was composed primarily of foreign currency transaction losses of $1.1, environmental remediation charges of $0.3, pension and postretirement expense of $0.2, and losses on fixed asset disposals of $0.2, partially offset by income of $0.5 derived from COLI policies. Other expense, net, for the nine months ended September 27, 2025 was composed primarily of environmental remediation charges of $5.7, pension and postretirement expense of $2.6 (including net settlement and actuarial losses of $0.8), and foreign currency transaction losses of $1.9, partially offset by a gain of $4.5 related to a change in the estimated fair value of an equity security that we hold, income of $3.1 derived from COLI policies and a gain of $0.4 related to the settlement of our interest rate swaps. Other expense, net, for the nine months ended September 28, 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 $2.1, pension and postretirement expense of $1.0, foreign currency transaction losses of $0.8, and losses on fixed asset disposals of $0.2, partially offset by income of $1.4 derived from COLI polices. Interest Expense, net — Interest expense, net, includes both interest e xpense and interest income. The decrease in interest expense, net, during the three months ended September 27, 2025, compared to the respective period in 2024, was due primarily to (i) increased interest income on higher cash balances and (ii) lower average debt balances as a result of the repayment of borrowings then outstanding under the revolving credit facility from a portion of the net proceeds of the Offering . Refer to Note 12 to the condensed consolidated financial statements for additional details. The increase in interest expense, net, during the nine months ended September 27, 2025, compared to the respective periods in 2024, was due primarily to higher average debt balances during the 2025 period, despite the impact of the repayment of the borrowings under the revolving credit facility from a portion of the net proceeds of the Offering, partially offset by an increase in interest income. The higher average debt balances primarily resulted from borrowings associated with acquisitions. The increase in interest income resulted from interest earned on higher cash balances. Refer to Note 12 to the condensed consolidated financial statements for additional details. Loss on Amendment/Refinancing of Senior Credit Agreement — During the third quarter of 2025, we recorded charges of $1.5 associated with the amendment to the Credit Agreement to “Loss on amendment/refinancing of senior credit agreement” related to the write-off of a portion of previously unamortized deferred financing costs totaling $1.0 and transaction costs of $0.5. Income Tax Provision — For the three months ended September 27, 2025, we recorded an income tax provision of $18.4 on $81.5 of pre-tax income from continuing operations, resulting in an effective rate of 22.6%. This compares to an income tax provision for the three months ended September 28, 2024 of $15.1 on $66.0 of pre-tax income from continuing operations, resulting in an effective rate of 22.9%. The most significant item impacting the income tax provision for the third quarters of 2025 and 2024 was $2.3 and $0.7, respectively, of tax benefits resulting from increased federal tax credits. 39 For the nine months ended September 27, 2025, we recorded an income tax provision of $42.0 on $209.3 of pre-tax income from continuing operations, resulting in effective rate of 20.1%. This compares to an income tax provision for the nine months ended September 28, 2024 of $32.2 on $177.5 of pre-tax income from continuing operations, resulting in an effective rate of 18.1%. The most significant items impacting the income tax provision during the first nine months of 2025 and 2024 were (i) $9.4 and $10.8, respectively, of excess tax benefits resulting from stock-based compensation awards that vested and/or were exercised during the periods, (ii) $2.3 and $0.7, respectively, of tax benefits resulting from increased federal tax credits, and (iii) $0.8 and $0.5 of tax provision, respectively, related to revisions to liabilities for uncertain tax positions. 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 Nine months ended September 27, 2025 September 28, 2024 % Change September 27, 2025 September 28, 2024 % Change Revenues $ 387.4 $ 335.3 15.5 $ 1,087.1 $ 994.2 9.3 Segment Income 94.4 80.0 18.0 264.1 232.1 13.8 % of revenues 24.4 % 23.9 % 24.3 % 23.3 % Components of revenue increase: Organic 9.0 4.6 Foreign currency (0.2) (0.2) Acquisitions 6.7 4.9 Net revenue increase 15.5 9.3 Revenues — For the three months ended September 27, 2025, the increase in revenues, compared to the respective period in 2024, was due primarily to organic revenue growth and, to a lesser extent, inorganic revenue growth from the Sigma & Omega acquisition. The organic revenue growth was due predominantly to higher volumes of both heating and cooling products driven by continued strength in demand and higher throughput primarily from increased production capacity. For the nine months ended September 27, 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 organic revenue growth. The organic revenue growth was due predominantly to higher volumes of both heating and cooling products driven by continued strength in demand and higher throughput primarily from increased production capacity, as well as the impact of higher volumes of heating products in the current period associated with the unseasonably warm winter conditions prevalent in the relevant end markets during the first quarter of 2024. Income — For the three and nine months ended September 27, 2025, the increase in income and margin, compared to the respective periods in 2024, was due primarily to the higher volumes mentioned above and associated operating leverage. In addition, the nine months ended September 27, 2025, compared to the respective period in 2024, included a more accretive mix and favorable project execution primarily within our cooling products business. Backlog — The segment had backlog of $578.5 and $437.7 as of September 27, 2025 and September 28, 2024, respectively. Backlog associated with the Sigma & Omega acquisition totaled $53.4 as of September 27, 2025. Detection and Measurement Reportable Segment Three months ended Nine months ended September 27, 2025 September 28, 2024 % Change September 27, 2025 September 28, 2024 % Change Revenues $ 205.4 $ 148.4 38.4 $ 540.7 $ 456.0 18.6 Segment Income 51.7 33.8 53.0 128.3 99.1 29.5 % of revenues 25.2 % 22.8 % 23.7 % 21.7 % Components of revenue increase: Organic 26.5 7.9 Foreign currency 0.3 0.3 Acquisition 11.6 10.4 Net revenue increase 38.4 18.6 Revenues — For the three months ended September 27, 2025, the increase in revenues, compared to the respective period in 2024, was due to organic revenue growth and, to a lesser extent, inorganic revenue growth resulting from the KTS 40 acquisition. The organic revenue growth was driven primarily by higher project volumes within our communication technologies business. For the nine months ended September 27, 2025, the increase in revenues, compared to the respective period in 2024, was due primarily to inorganic revenue growth resulting from the KTS acquisition and, to a lesser extent, organic revenue growth. The organic revenue growth was due primarily to higher project volumes within our communication technologies business, partially offset by lower project volumes primarily 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. Income — For the three months ended September 27, 2025, the increase in income and margin, compared to the respective period in 2024, was due primarily to the revenue growth mentioned above and associated leverage on our fixed costs, particularly within SG&A expenses. This increase was partially offset by the impact of a less favorable project mix primarily within our communications technologies and transportation systems businesses. For the nine months ended September 27, 2025, the increase in income and margin, compared to the respective periods in 2024, was due primarily to (i) higher project volumes and associated leverage on our fixed costs, particularly within SG&A expenses, and a more favorable product mix from projects primarily within our communication technologies business and (ii) income resulting from the KTS acquisition. These increases were partially offset by the impact of the lower project volumes within our aids to navigation business mentioned above and the impact of a less favorable project mix within our transportation systems business. Backlog — The segment had bac klog of $366.1 and $193.5 as of September 27, 2025 and September 28, 2024, respectively. Backlog associated with the KTS acquisition totaled $57.1 as of September 27, 2025. Corporate and Other Expenses Three months ended Nine months ended September 27, 2025 September 28, 2024 % Change September 27, 2025 September 28, 2024 % Change Total consolidated revenues $ 592.8 $ 483.7 22.6 $ 1,627.8 $ 1,450.2 12.2 Corporate expense 12.4 12.4 — 39.7 38.3 3.7 % of revenues 2.1 % 2.6 % 2.4 % 2.6 % Long-term incentive compensation expense 4.2 4.0 5.0 11.8 11.0 7.3 Corporate Expense — Corporate expense generally relates to the personnel and general operating costs of our corporate headquarters in Charlotte, North Carolina. Corporate expense remained flat during the three months ended September 27, 2025, compared to the respective period in 2024, as a result of increased costs incurred for professional services being offset by lower expense related to acquisition and integration-related costs of $0.2. The increase in corporate expense during the nine months ended September 27, 2025, compared to the respective period in 2024, was due primarily to higher expense related to acquisition and integration-related costs largely driven by expense incurred for the KTS and Sigma & Omega acquisitions in 2025, partially offset by 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 for the three and nine months ended September 27, 2025, compared to the respective periods in 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, (ii) the accumulation of awards related to recent changes in certain key management positions, and (iii) the immediate vesting of awards as a result of an executive officer reaching retirement eligibility, partially offset by the impact of forfeitures from participant resignations. 41 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 nine months ended September 27, 2025 and September 28, 2024. Nine months ended September 27, 2025 September 28, 2024 Continuing operations: Cash flows from operating activities $ 139.8 $ 146.4 Cash flows used in investing activities (499.2) (277.3) Cash flows from financing activities 424.6 176.9 Cash flows used in discontinued operations (1.7) (27.0) Change in cash and equivalents due to changes in foreign currency exchange rates 6.5 5.5 Net change in cash and equivalents $ 70.0 $ 24.5 Operating Activities — Cash flows from operating activities associated with continuing operations totaled $139.8 for the nine months ended September 27, 2025, compared to cash flows from operating activities of $146.4 during the nine months ended September 28, 2024. Th e decrease in cash flows from operating activities for the nine months ended September 27, 2025, compared to the nine months ended September 28, 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 to support the growth within our HVAC and Detection and Measurement reportable segments, partially offset by (i) the increase in income, exclusive of the non-cash items 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 nine months ended September 27, 2025 were comprised primarily of net cash utilized in acquisitions, including KTS and Sigma & Omega, of $445.3, net cash outflows from COLI policies activity of $30.3 (inclusive of repayments related to amounts previously borrowed under such policies of $37.4 - see Note 12 to the condensed consolidated financial statements for additional details) and capital expenditures of $23.6. Cash flows used in investing activities of continuing operations for the nine months ended September 28, 2024 were comprised of net cash utilized in the acquisition of Ingénia of $292.0 and capital expenditures of $28.2, 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 nine months ended September 27, 2025 were comprised primarily of net cash proceeds of $551.1 related to the completion of the Offering (see Note 14 to the condensed consolidated financial statements for additional details) and net borrowings under our other various debt instruments of $0.1, partially offset by (i) net repayments under the Credit Agreement and trade receivables financing arrangement of $104.6 and $9.0, respectively, (ii) minimum tax withholdings paid on behalf of employees related to long-term incentive awards, net of proceeds from options exercised, of $8.3 and (iii) financing fees paid in connection with an amendment to the Credit Agreement of $4.7. Cash flows from financing activities of continuing operations for the nine months ended September 28, 2024 were comprised of net borrowings under the Credit Agreement and trade receivables financing arrangement of $148.2 and $31.0, respectively, primarily in connection with the Ingénia acquisition. Additionally, proceeds from options exercised net of withholdings paid on behalf of employees related to long-term incentive awards of $1.1 were offset by financing fees paid in connection with an amendment to our senior credit agreement of $2.6, and net repayments under our other various debt instruments of $0.8. Discontinued Operations — Cash flows used in discontinued operations for the nine months ended September 27, 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 nine months ended September 28, 2024 relate primarily to the final payment under the Settlement Agreement of $25.1 (net of the cash received upon maturation of the related foreign currency forward contracts of $2.0) to MHI and disbursements for liabilities retained in connection with previous dispositions. 42 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 2025 and 2024. Borrowings and Availability Borrowings — The following summarizes our debt activity (both current and non-current) for the nine months ended September 27, 2025. December 31, 2024 Borrowings Repayments Other (5) September 27, 2025 Revolving loans (1) $ 80.0 $ 478.0 $ (558.0) $ — $ — Term loans (2) 523.4 500.0 (524.6) 0.3 499.1 Trade receivables financing arrangement (3) 9.0 280.0 (289.0) — — Other indebtedness (4) 2.3 0.6 (0.5) 0.1 2.5 Total debt 614.7 $ 1,258.6 $ (1,372.1) $ 0.4 501.6 Less: short-term debt 10.1 1.4 Less: current maturities of long-term debt 27.6 0.4 Total long-term debt $ 577.0 $ 499.8 ___________________________ (1) We amended the Credit Agreement on September 9, 2025. The amendment extends the revolving credit facility through September 9, 2030. The revolving credit facilities are primarily used to provide liquidity for funding acquisitions, including related fees and expenses and were utilized as a funding mechanism for the KTS and Sigma & Omega acquisitions. In connection with the consummation of the underwritten public offering, amounts then owing under our revolving credit facilities were fully repaid. (2) The term loan is repayable in quarterly installments equal to 0.625% of the initial term loan balance of $500.0, beginning in December 2026 and in each of the first three quarters of 2027, and 1.25% during the fourth quarter of 2027, all quarters of 2028 and 2029, and the first two quarters of 2030. The remaining balances are payable in full on September 9, 2030. Balances are net of unamortized debt issuance costs of $0.9 and $1.2 at September 27, 2025 and December 31, 2024, respectively. (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 September 27, 2025, we had $86.1 of available borrowing capacity under this facility after giving effect to outstanding borrowings of $0.0. (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 September 27, 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 capitalization and amortization of debt issuance costs incurred in connection with the term loan. At September 27, 2025, we were in compliance with all covenants of the Credit Agreement. During the second quarter of 2025, we renewed our trade receivables financing agreement for 12 months, whereby we can borrow, on a continuous basis, up to $100.0, as available. Availability — At September 27, 2025, we h ad $1,489.0 of available borrowing capacity under our revolving credit facilities, after giving effect to borrowings under the domestic revolving loan facility of $0.0 and $11.0 reserved for outstanding letters of credit. In addition, at September 27, 2025, we had $12.8 of available issuance capacity under our foreign credit instrument facilities after giving effect to $12.2 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 $60.9 and $36.2 at September 27, 2025 and December 31, 2024, respectively. 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 $0.0 and $39.0 at September 27, 2025 and December 31, 2024, respectively, and incur interest at a rate of 5.3%. At September 27, 2025, we had capacity to borrow approximately $35.0 against the policies. See Note 12 to the condensed consolidated financial statements for additional information. 43 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 — 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 $5.4 as of September 27, 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 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. 44 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.