What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-03 · 150 added, 73 removed, 473 unchanged (32% of the section changed)

3 unchanged sentences

(In millions, except shares and per share data) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net sales $ 331.0 $ 321.7 $ 642.0 $ 627.5

5 unchanged sentences

Interest expense, net ( 2.5 ) ( 4.0 ) ( 4.8 ) ( 7.7 )

Net foreign currency transaction loss ( 0.2 ) ( 0.1 )

Net foreign currency transaction gain 0.7 1.0 0.5 0.9

Other income (expense), net 0.1 ( 0.6 ) 0.2 ( 0.7 )

11 unchanged sentences

(In millions) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 27.9 $ 31.3 $ 56.3 $ 55.6

1 unchanged sentence

Foreign currency translation adjustments (net of related tax (expense) benefit of $ 0.1 , $ 0.2 , $( 0.1 ), and $ 0.3 , respectively)

Derivative financial instruments (net of related tax (expense) benefit of $( 0.3 ), $ 0.2 , respectively)

( 7.1 ) 0.1 ( 15.3 ) 5.4

Derivative financial instruments (net of related tax expense of $ 0.1 , $ 0.4 , $ 0.4 , and $ 0.2 , respectively)

0.3 1.1 1.3 0.5

Total other comprehensive (loss) income, net of tax ( 6.8 ) 1.2 ( 14.0 ) 5.9

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In millions, except shares and per share data) March 31,

(In millions, except shares and per share data) June 30,

2024 December 31,

37 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) Three Months Ended

(In millions) Six Months Ended

OPERATING ACTIVITIES

24 unchanged sentences

Repayments of borrowings ( 27.5 ) ( 42.5 )

Change in finance lease obligations — 0.2

Proceeds from exercise of stock options, net of employee tax withholdings obligations 19.6 4.2

7 unchanged sentences

SUPPLEMENTAL CASH FLOW INFORMATION

Three Months Ended

Six Months Ended

(In millions) 2024 2023

30 unchanged sentences

Balance, March 31, 2024 19,006,838 $ 7.1 $ 86.5 $ 570.5 $ ( 49.5 ) $ 614.6 $ 1.3 $ 615.9

Net income — — 27.9 — 27.9 — 27.9

Other comprehensive income — — — ( 6.8 ) ( 6.8 ) — ( 6.8 )

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 5,132 shares

21,337 — 0.1 — — 0.1 — 0.1

Share-based compensation — 2.1 — — 2.1 — 2.1

Repurchases of common stock ( 77,514 ) — ( 8.0 ) — — ( 8.0 ) — ( 8.0 )

Dividends paid $ 0.28 per common share

— — ( 5.3 ) — ( 5.3 ) — ( 5.3 )

Balance, June 30, 2024 18,950,661 $ 7.1 $ 80.7 $ 593.1 $ ( 56.3 ) $ 624.6 $ 1.3 $ 625.9

Tennant Company Shareholders

9 unchanged sentences

Net income — — 24.3 — 24.3 — 24.3

Other comprehensive loss — — — 4.7 4.7 — 4.7

Other comprehensive income — — — 4.7 4.7 — 4.7

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings and repurchases of 18,468 shares

1 unchanged sentence

Share-based compensation — 1.2 — — 1.2 — 1.2

Repuchases of common stock ( 73,525 ) — ( 5.0 ) — — ( 5.0 ) — ( 5.0 )

Repurchases of common stock ( 73,525 ) — ( 5.0 ) — — ( 5.0 ) — ( 5.0 )

Dividends paid $ 0.265 per common share

1 unchanged sentence

Balance, March 31, 2023 18,541,033 $ 7.0 $ 53.0 $ 477.4 $ ( 45.5 ) $ 491.9 $ 1.3 $ 493.2

Net income $ — $ — $ 31.3 $ — $ 31.3 $ — $ 31.3

Other comprehensive income $ — $ — $ — $ 1.2 $ 1.2 $ — $ 1.2

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings and repurchases of 4,258 shares

69,345 $ — $ 3.4 $ — $ — $ 3.4 $ — $ 3.4

Share-based compensation $ — $ 2.7 $ — $ — $ 2.7 $ — $ 2.7

Repurchases of common stock ( 69,780 ) $ — $ ( 5.0 ) $ — $ — $ ( 5.0 ) $ — $ ( 5.0 )

Dividends paid $ 0.265 per common share

$ — $ — $ ( 4.9 ) $ — $ ( 4.9 ) $ — $ ( 4.9 )

Balance, June 30, 2023 18,540,598 $ 7.0 $ 54.1 $ 503.8 $ ( 44.3 ) $ 520.6 $ 1.3 $ 521.9

See accompanying notes to consolidated financial statements.

14 unchanged sentences

Newly Adopted Accounting Pronouncements

There are no newly adopted accounting pronouncements during the three months ended March 31, 2024 that impacted the Company.

There are no newly adopted accounting pronouncements during the six months ended June 30, 2024 that impacted the Company.

Disaggregation of Revenue

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Americas $ 227.8 $ 216.6 $ 443.4 $ 421.0

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Equipment $ 210.7 $ 203.2 $ 400.5 $ 389.6

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Sales direct to consumer $ 229.7 $ 218.7 $ 451.1 $ 423.8

14 unchanged sentences

The change in our sales incentive accrual balance was as follows:

Three Months Ended

Six Months Ended

Beginning balance $ 21.2 $ 20.0

9 unchanged sentences

The change in the deferred revenue balance was as follows:

Three Months Ended

Six Months Ended

Beginning balance $ 10.3 $ 9.3

3 unchanged sentences

Ending balance $ 12.5 $ 8.9

At March 31, 2024, $ 7.1 million and $ 3.8 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.

At June 30, 2024, $ 7.0 million and $ 5.5 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.

Of these amounts, we expect to recognize the following approximate amounts in net sales in the following periods:

4 unchanged sentences

Restructuring Actions

During the three months ended March 31, 2024 and March 31, 2023, we incurred no restructuring expenses as part of our ongoing global reorganization efforts.

A reconciliation of the beginning and ending liability balances for severance-related costs is as follows:

During the three and six months ended June 30, 2024 and June 30, 2023, we incurred restructuring expenses as part of our ongoing global reorganization efforts.

The following pre-tax restructuring charges were included in selling and administrative expense in the consolidated statements of income.

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Severance-related costs $ 0.6 $ 1.2 $ 0.6 $ 1.2

Total pre-tax restructuring costs $ 0.6 $ 1.2 $ 0.6 $ 1.2

The expense in 2024 impacted the Europe, Middle East and Africa (EMEA) operating segment.

The expense in 2023 impacted the EMEA and Asia Pacific (APAC) operating segments.

A reconciliation of the beginning and ending liability balances for severance-related costs is as follows:

Six Months Ended

Beginning balance $ 2.4 $ 1.7

7 unchanged sentences

The acquisition gives Tennant a knowledgeable and experienced sales force and an established direct channel into countries including Romania, Hungary, Czech Republic, and Slovakia, along with an expanded network in Austria, Switzerland, Poland, and other nations in the region, as well as the Middle East and Africa.

Our consolidated financial results for the three months ended March 31, 2024 include $ 2.1 million of revenue and immaterial net income related to TCS.

Our consolidated financial results for the three months ended June 30, 2024 include $ 7.0 million of revenue and $ 1.2 million of net income related to TCS.

Our consolidated financial results for the six months ended June 30, 2024 include $ 9.1 million of revenue and $ 1.2 million of net income related to TCS.

The proforma impact of this acquisition is immaterial to our operations.

1 unchanged sentence

The preliminary purchase price allocation is subject to further refinement and may require adjustments to arrive at the final purchase price allocation.

These changes will primarily relate to the fair value of intangible assets and impacts associated with income taxes.

These changes will

primarily relate to the impacts associated with income taxes.

Such finalization may result in material changes from the preliminary purchase price allocation.

The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition:

2024 Adjustments June 30,

Components of purchase price:

2 unchanged sentences

Total purchase price 34.7 0.2 34.9

Cash 5.3 0.1 5.4

Other current assets 8.0 ( 0.7 ) 7.3

1 unchanged sentence

Customer lists 13.6 ( 0.4 ) 13.2

Backlog 0.6 — 0.6

Other assets 5.3 0.3 5.6

5 unchanged sentences

Goodwill $ 8.4 $ 1.1 $ 9.5

The total purchase price was paid on the acquisition date of February 29, 2024.

Included in the transaction is cash paid of $ 30.8 million and the settlement of $ 3.9 million of preexisting transactions.

Included in the total purchase price is cash paid of $ 31.0 million and the settlement of $ 3.9 million of preexisting transactions.

In connection with the acquisition, we paid cash totaling $ 30.8 million on the acquisition date of February 29, 2024 and $ 0.2 million in the second quarter of 2024.

The goodwill is not expected to be deductible for income tax purposes.

18 unchanged sentences

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the three months ended March 31, 2024 were as follows:

The changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:

Goodwill Accumulated

3 unchanged sentences

Foreign currency fluctuations ( 6.2 ) 0.3 ( 5.9 )

Balance as of March 31, 2024

Balance as of June 30, 2024

$ 224.0 $ ( 33.0 ) $ 191.0

The additions to goodwill recorded during the first six months of 2024 were related to our acquisition of TCS, as described further in Note 5.

The balances of acquired intangible assets, excluding goodwill, were as follows:

Customer Lists Trade Names Technology Total

Balance as of March 31, 2024

Balance as of June 30, 2024

Original cost $ 159.8 $ 28.5 $ 16.2 $ 204.5

7 unchanged sentences

Weighted average original life (in years) 15 11 11

The additions to Goodwill recorded during the first quarter of 2024 were related to our acquisition of TCS, as described further in Note 5.

As part of our acquisition of TCS, we acquired customer lists and backlog with a combined preliminary fair value of $ 14.2 million.

As part of our acquisition of TCS, we acquired customer lists and backlog with a combined fair value of $ 13.8 million.

Further details regarding the preliminary purchase price allocation of TCS are described further in Note 5.

Amortization expense on intangible assets for the three months ended March 31, 2024 and March 31, 2023 was $ 3.9 million.

Amortization expense on intangible assets for the three and six months ended June 30, 2024 was $ 3.9 million and $ 7.8 million, respectively.

Amortization expense on intangible assets for the three and six months ended June 30, 2023 was $ 3.6 million and $ 7.5 million, respectively.

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets for each of the five succeeding years and thereafter is as follows:

1 unchanged sentence

Thereafter 20.2

2021 Credit Agreement

On April 5, 2021, we and certain of our foreign subsidiaries entered into an Amended and Restated Credit Agreement (the “2021 Credit Agreement”) with JPMorgan Chase Bank, N.A.

4 unchanged sentences

On November 10, 2022, we amended the 2021 Credit Agreement (the "Amendment") to update the benchmark provisions to replace LIBOR with Term SOFR (as defined in the Amendment) as the reference rate for purposes of calculating interest under the 2021 Credit Agreement.

Pursuant to the Amendment, borrowings denominated

dollars bear interest at a rate per annum equal to (a) the Term SOFR Rate (as defined in the Amendment) plus a credit spread adjustment of 0.10 % per annum, but in any case, not less than 0 %, plus an additional spread of 1.10 % to 1.70 %, depending on the Company’s leverage ratio, or (b) the Alternate Base Rate (as defined in the Amendment), which is the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) the adjusted Term SOFR Rate for a one month period, but in any case, not less than 1.0 %, plus, in any such case, 1.0 %, plus an additional spread of 0.10 % to 0.70 %, depending on the Company’s leverage ratio.

Pursuant to the Amendment, borrowings denominated in U.S.

0.50 % and (iii) the adjusted Term SOFR Rate for a one month period, but in any case, not less than 1.0 %, plus, in any such case, 1.0 %, plus an additional spread of 0.10 % to 0.70 %, depending on the Company’s leverage ratio.

All other material terms included in the 2021 Credit Agreement remain unchanged as a result of the Amendment.

8 unchanged sentences

• A covenant restricting us from paying dividends or repurchasing stock if, after giving effect to such payments and assuming no default exists or would result from such payment, our leverage ratio is greater than 2.50 to 1.00, in such case limiting such payments to $ 60.0 million during any fiscal year.

The Company is in compliance with the covenants as of June 30, 2024.

Debt Outstanding

Debt outstanding consisted of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Credit facility borrowings:

6 unchanged sentences

Long-term debt $ 205.6 $ 194.2

(a) As of March 31, 2024, the Company is required to repay $ 6.9 million in outstanding credit facility borrowings and $ 0.3 million of finance lease liabilities over the next 12 months.

As of March 31, 2024, we had outstanding borrowings of $ 125.0 million and $ 88.8 million under our revolving facility and term loan facility, respectively.

(a) As of June 30, 2024, the Company is required to repay $ 7.5 million in outstanding credit facility borrowings and $ 0.3 million of finance lease liabilities over the next 12 months.

As of June 30, 2024, we had outstanding borrowings of $ 125.0 million and $ 87.5 million under our revolving facility and term loan facility, respectively.

We had letters of credit and bank guarantees outstanding in the amount of $ 3.2 million, leaving approximately $ 321.8 million of unused borrowing capacity on our revolving facility.

Commitment fees on unused lines of credit for the three months ended March 31, 2024 were $ 0.1 million.

The overall weighted average cost of debt was approximately 6.5 % and net of related cross-currency

swap instruments and fixed rate interest rate swap instruments was approximately 5.1 %.

Commitment fees on unused lines of credit for the six months ended June 30, 2024 were $ 0.2 million.

The overall weighted average cost of debt was approximately 6.5 % and net of related cross-currency swap instruments and fixed rate interest rate swap instruments was approximately 5.1 %.

Further details regarding the cross-currency swap instrument are discussed in Note 10.

In August 2024, we signed an agreement that amended our existing credit agreement.

We plan to use the proceeds from the amended agreement to pay off the existing credit facility.

See Note 17 for more detail on the amended credit agreement.

We record a liability for warranty claims at the time of sale.

3 unchanged sentences

The changes in warranty reserves were as follows:

Three Months Ended

Six Months Ended

Beginning balance $ 11.1 $ 10.9

12 unchanged sentences

These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged.

At March 31, 2024 and December 31, 2023, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $ 81.5 million and $ 73.0 million, respectively.

At June 30, 2024 and December 31, 2023, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $ 80.6 million and $ 73.0 million, respectively.

Cash Flow Hedges

1 unchanged sentence

Fixed rate swaps are used to reduce our risk of the possibility of increased interest costs.

We entered into an aggregate $ 120 million notional amount of interest rate swaps effective December 1, 2022 that exchange a variable rate of interest for a fixed rate of interest of 4.076 %.

We entered into an aggregate $ 120 million notional amount of interest rate swaps effective December 1, 2022, that exchange a variable rate of interest for a fixed rate of

interest of 4.076 %.

These interest rate swaps are designated as cash flow hedges.

5 unchanged sentences

These cross-currency swaps are designated as fair value hedges.

As of March 31, 2024 and December 31, 2023, these cross-currency swaps included € 75.0 million of total notional value.

As of March 31, 2024, the aggregated scheduled interest payments over the course of the loan and related swaps amounted to € 6.9 million.

The scheduled maturity and principal payment of the loan and related interest payments of € 81.9 million are due in April 2027.

As of June 30, 2024 and December 31, 2023, these cross-currency swaps included € 75.0 million of total notional value.

As of June 30, 2024, the aggregated scheduled interest payments over the course of the loan and related swaps amounted to € 6.4 million.

The scheduled maturity and principal payment of the loan of € 75.0 million is due in April 2027.

Net Investment Hedges

4 unchanged sentences

These cross-currency swaps are designated as net investment hedges.

As of March 31, 2024 and December 31, 2023, the cross-currency swaps included € 75.0 million of total notional value.

As of June 30, 2024 and December 31, 2023, the cross-currency swaps included € 75.0 million of total notional value.

These swaps are scheduled to mature in April 2027.

1 unchanged sentence

Derivative Assets Derivative Liabilities

Balance Sheet Location March 31, 2024 December 31, 2023 Balance Sheet Location March 31, 2024 December 31, 2023

Balance Sheet Location June 30, 2024 December 31, 2023 Balance Sheet Location June 30, 2024 December 31, 2023

Derivatives designated as cash flow hedges:

9 unchanged sentences

Foreign currency forward contracts Other current assets $ 0.4 $ — Other current liabilities $ 0.1 $ 1.6

As of March 31, 2024, we anticipate reclassifying $ 2.4 million of gains from accumulated other comprehensive loss to net income during the next 12 months.

As of June 30, 2024, we anticipate reclassifying $ 3.4 million of gains from accumulated other comprehensive loss to net income during the next 12 months.

The following tables include the amounts in the consolidated statements of income in which the effects of derivatives designated as hedging instruments are recorded:

Three Months Ended March 31,

Three Months Ended June 30,

Total Gain on Hedging Total Gain (Loss) on Hedging

1 unchanged sentence

Interest expense, net $ ( 2.5 ) $ 0.3 $ ( 4.0 ) $ 0.2

Net foreign currency transaction (loss) ( 0.2 ) — ( 0.1 ) —

Net foreign currency transaction gain 0.7 — 1.0 —

Derivatives designated as fair value hedges:

3 unchanged sentences

Interest expense, net $ ( 2.5 ) $ 0.2 $ ( 4.0 ) $ 0.3

Six Months Ended June 30,

Total Gain on Hedging Total Gain on Hedging

Derivatives designated as cash flow hedges:

Interest expense, net $ ( 4.8 ) $ 0.6 $ ( 7.7 ) $ 0.3

Net foreign currency transaction gain 0.5 — 0.9 —

Derivatives designated as fair value hedges:

Interest expense, net ( 4.8 ) 0.6 ( 7.7 ) 1.4

Net foreign currency transaction gain 0.5 1.9 0.9 0.8

Derivatives designated as net investment hedges:

Interest expense, net $ ( 4.8 ) $ 0.5 $ ( 7.7 ) $ 1.2

The effect of derivative instruments designated as hedges and derivative instruments not designated as hedges in our consolidated statements of income was as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Derivatives designated as cash flow hedges:

Net gain (loss) recognized in other comprehensive loss, net of tax (a)

Net gain recognized in other comprehensive (loss) income, net of tax (a)

$ 0.5 $ 2.3 $ 2.1 $ 1.4

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.3 0.1

Net gain reclassified from accumulated other comprehensive (loss) income into income, net of tax, effective portion to interest expense, net 0.3 0.2 0.6 0.3

Derivatives designated as fair value hedges:

Net gain recognized in other comprehensive loss, net of tax (a)

Net gain (loss) reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.3 0.3

Net gain (loss) recognized in other comprehensive loss, net of tax (a)

0.3 ( 0.7 ) 0.3 —

Net gain reclassified from accumulated other comprehensive (loss) income into income, net of tax, effective portion to interest expense, net 0.2 0.3 0.5 0.6

Derivatives designated as net investment hedges:

Net (loss) recognized in other comprehensive loss, net of tax (a)

Net gain (loss) recognized in other comprehensive loss, net of tax (a)

0.7 ( 1.0 ) 2.0 ( 1.1 )

Net gain (loss) reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.2 0.2

Net gain reclassified from accumulated other comprehensive (loss) income into income, net of tax, effective portion to interest expense, net 0.3 0.3 0.5 0.5

Derivatives not designated as hedging instruments:

Net (loss) recognized in income (b)

(a) Net change in the fair value of the effective portion classified in other comprehensive income (loss).

Net gain recognized in income (b)

$ 1.1 $ 0.1 $ 2.9 $ 0.9

(a) Net change in the fair value of the effective portion classified in other comprehensive (loss) income.

(b) Classified in net foreign currency transaction gain (loss).

2 unchanged sentences

The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures.

The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash

flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost).

The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost).

The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

4 unchanged sentences

Unobservable inputs that reflect the reporting entity’s own assumptions.

Our population of assets and liabilities subject to fair value measurements at March 31, 2024 was as follows:

Our population of assets and liabilities subject to fair value measurements at June 30, 2024 was as follows:

Value Level 1 Level 2 Level 3

1 unchanged sentence

Debt securities 12.1 — — 12.1

Foreign currency forward exchange contracts 0.9 — 0.9 —

Foreign currency forward contracts 0.4 — 0.4 —

Cross-currency swaps 2.6 — 2.6 —

1 unchanged sentence

Total assets 36.2 — 4.1 32.1

Foreign currency forward exchange contracts 0.1 — 0.1 —

Foreign currency forward contracts 0.1 — 0.1 —

Cross-currency swaps 2.6 — 2.6 —

10 unchanged sentences

Total liabilities $ 10.2 $ — $ 10.2 $ —

Our foreign currency forward exchange contracts, cross-currency swaps and interest rate swaps are valued using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount.

Our foreign currency forward contracts, cross-currency swaps and interest rate swaps are valued using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount.

Further details regarding our derivative instruments are discussed in Note 10.

6 unchanged sentences

For debt instruments, the carrying amount will be adjusted to fair value each period through other comprehensive income.

The securities will be measured to fair value based on a Level 3 fair value calculation.

As of March 31, 2024, the total carrying value of our equity and debt instruments was $ 20.0 million and $ 12.1 million, respectively, which is recorded in other assets on the consolidated balance sheet.

The securities will be measured to fair value based on Level 3 inputs.

As of June 30, 2024, the total carrying value of our equity and debt instruments was $ 20.0 million and $ 12.1 million, respectively, which is recorded in other assets on the consolidated balance sheet.

The debt instruments will mature on February 21,

There have been no remeasurements of the equity or debt securities as of March 31, 2024.

There have been no remeasurements of the equity securities as of June 30, 2024.

Fair value adjustments for debt securities were not material as of June 30, 2024.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value due to their short-term nature.

The fair value and carrying value of total debt, including current portion, was $ 215.8 million and $ 214.6 million, respectively, as of March 31, 2024.

The fair value and carrying value of total debt, including current portion, was $ 215.6 million and $ 213.4 million, respectively, as of June 30, 2024.

The fair value and carrying value of total debt, including current portion, was $ 198.2 million and $ 200.6 million, respectively, as of December 31, 2023.

The fair value was calculated based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities, which is a Level 2 in the fair value hierarchy.

The fair value was estimated using Level 2 inputs based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities.

Commitments and Contingencies

5 unchanged sentences

The changes in components of accumulated other comprehensive loss, net of tax, are as follows:

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

Foreign Currency

5 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss ( 0.5 ) — ( 1.1 ) ( 1.6 )

Net current period other comprehensive income ( 8.2 ) — 1.0 ( 7.2 )

Net current period other comprehensive (loss) income ( 15.3 ) — 1.3 ( 14.0 )

Ending balance $ ( 60.9 ) $ 3.7 $ 0.9 $ ( 56.3 )

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Foreign Currency

3 unchanged sentences

Beginning balance $ ( 53.9 ) $ 2.7 $ 1.0 $ ( 50.2 )

Other comprehensive income (loss) before reclassifications 5.5 — ( 0.2 ) 5.3

Other comprehensive income before reclassifications 5.9 — 1.4 7.3

Amounts reclassified from accumulated other comprehensive loss ( 0.5 ) — ( 0.9 ) ( 1.4 )

Net current period other comprehensive income (loss) 5.3 — ( 0.6 ) 4.7

Net current period other comprehensive income 5.4 — 0.5 5.9

Ending balance $ ( 48.5 ) $ 2.7 $ 1.5 $ ( 44.3 )

8 unchanged sentences

We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

In addition to the liability of $ 4.3 million for unrecognized tax benefits as of March 31, 2024, there was approximately $ 0.5 million for accrued interest and penalties.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2024 was $ 3.9 million.

In addition to the liability of $ 4.4 million for unrecognized tax benefits as of June 30, 2024, there was approximately $ 0.5 million for accrued interest and penalties.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2024 was $ 3.9 million.

To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be revised and reflected as an adjustment of the income tax expense.

1 unchanged sentence

Our share-based compensation plans are described in Note 18 of our annual report on Form 10-K for the year ended December 31, 2023.

During the three months ended March 31, 2024 and 2023, we recognized total share-based compensation expense of $ 3.2 million and $ 1.2 million, respectively.

The total excess tax recognized for share-based compensation arrangements during the three months ended March 31, 2024 and 2023 was a tax benefit of $ 2.4 million and tax expense of $ 0.1 million, respectively.

During the three months ended June 30, 2024 and 2023, we recognized total share-based compensation expense of $ 2.1 million and $ 2.7 million, respectively.

During the six months ended June 30, 2024 and 2023, we recognized total share-based compensation expense of $ 5.3 million and $ 3.9 million, respectively.

The total excess tax recognized for share-based compensation arrangements during the six months ended June 30, 2024 and 2023 was a tax benefit of $ 3.0 million and tax expense of $ 0.2 million, respectively.

Earnings Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 27.9 $ 31.3 $ 56.3 $ 55.6

4 unchanged sentences

Diluted earnings per share $ 1.45 $ 1.68 $ 2.94 $ 2.98

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 37,508 and 393,242 shares of common stock during the three months ended March 31, 2024 and 2023, respectively.

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 13,644 and 261,376 shares of common stock during the three months ended June 30, 2024 and 2023, respectively.

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 73,185 and 449,763 shares of common stock during the six months ended June 30, 2024 and 2023, respectively.

These exclusions were made if the exercise prices of the options are greater than the average market price of our common stock for the period, if the number of shares we can repurchase under the treasury stock method exceeds the weighted average shares outstanding in the options or if we have a net loss, as these effects would be anti-dilutive.

Subsequent Event

On August 7, 2024, the Company entered into a Second Amended and Restated Credit Agreement (the “2024 Credit Agreement”) that provides the Company and certain of its foreign subsidiaries access to a senior secured

credit facility until August 7, 2029, consisting of a revolving facility in an amount up to $ 650.0 million, with an option to expand the revolving facility or obtain incremental term loans by up to $ 325.0 million.

Proceeds from the new credit facility are expected to be utilized to repay the $ 212.5 million outstanding debt under the existing credit facility and for general corporate purposes.

The fee for undrawn committed funds under the revolving facility of the 2024 Credit Agreement ranges from an annual rate of 0.15 % to 0.30 %, depending on the Company’s leverage ratio.

Borrowings denominated in U.S.

dollars under the 2024 Credit Agreement bear interest at a rate per annum equal to (a) the greatest of (i) the prime rate, (ii) the NYFRB Rate plus 0.50 % and (iii) the Adjusted Term SOFR Rate for a one month period plus 1 %;

but in any case not less than 1 %, plus an additional spread of 0.25 % to 1 %, depending on the Company’s leverage ratio, (b) the Adjusted Term SOFR Rate plus an additional spread of 1.25 % to 2 %, depending on the Company’s leverage ratio, or (c) the Adjusted Daily Simple RFR plus an additional spread of 1.25 % to 2 %, depending on the Company’s leverage ratio.

The 2024 Credit Agreement contains the following covenants:

• a covenant requiring the Company to maintain an indebtedness to EBITDA ratio, determined as of the end of each of its fiscal quarters, of no greater than 3.75 to 1.00, with certain alternative requirements for permitted acquisitions of at least $ 50.0 million;

• a covenant requiring the Company to maintain an EBITDA to interest expense ratio for a period of four consecutive fiscal quarters as of the end of each quarter of no less than 3.00 to 1;

• a covenant restricting the Company from paying dividends or repurchasing stock if, after giving effect to such payments and assuming no default exists or would result from such payment, the Company’s leverage ratio is greater than 2.50 to 1, in such case limiting such payments to the greater of 10% of consolidated total assets and $ 100.0 million during any fiscal year.

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

What changed 10-Q

Item 1. Financial Statements