What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-08 · 145 added, 113 removed, 510 unchanged (34% of the section changed)

3 unchanged sentences

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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

Interest expense, net ( 2.7 ) ( 3.3 ) ( 7.5 ) ( 11.0 )

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 )

Net foreign currency transaction (loss) gain ( 0.4 ) ( 0.4 ) 0.1 0.5

Other (expense) income, net — ( 1.1 ) 0.2 ( 1.8 )

Income before income taxes 27.5 29.9 99.5 101.8

7 unchanged sentences

Diluted 19,093,873 18,878,311 19,120,455 18,747,128

See accompanying notes to consolidated financial statements.

TENNANT COMPANY

1 unchanged sentence

(In millions) Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 20.8 $ 22.9 $ 77.1 $ 78.5

Other comprehensive (loss) income:

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

Other comprehensive income (loss):

Foreign currency translation adjustments (net of related tax benefit (expense) of $ 0.5 , $( 0.2 ), $ 0.4 , and $ 0.1 , respectively)

12.9 ( 10.6 ) ( 2.4 ) ( 5.2 )

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

Pension and postretirement medical benefits (net of related tax expense of $ 0 , $ 0 , $ 0 , and $ 0 , respectively)

( 0.2 ) — ( 0.2 ) —

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

Comprehensive income $ 21.1 $ 32.5 $ 42.3 $ 61.5

Derivative financial instruments (net of related tax benefit (expense) of $ 0.5 , $( 0.4 ), $ 0.1 , and $( 0.2 ), respectively)

( 1.7 ) 0.2 ( 0.4 ) 0.7

Total other comprehensive income (loss), net of tax 11.0 ( 10.4 ) ( 3.0 ) ( 4.5 )

Total comprehensive income $ 31.8 $ 12.5 $ 74.1 $ 74.0

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

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

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

2024 December 31,

37 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) Six Months Ended

(In millions) Nine Months Ended

September 30,

OPERATING ACTIVITIES

24 unchanged sentences

Repayments of borrowings ( 32.5 ) ( 98.7 )

Payment of debt financing costs ( 2.2 ) —

Proceeds from exercise of stock options, net of employee tax withholdings obligations 19.6 18.1

1 unchanged sentence

Dividends paid ( 15.9 ) ( 14.8 )

Net cash provided by (used) in financing activities 12.4 ( 38.1 )

Net cash used in financing activities ( 8.1 ) ( 87.1 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 0.8 ) ( 2.7 )

3 unchanged sentences

SUPPLEMENTAL CASH FLOW INFORMATION

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2024 2023

3 unchanged sentences

Operating cash flows from operating leases 15.1 13.9

Financing cash flows from financing leases 0.1 —

Lease assets obtained in exchange for new operating lease liabilities 24.0 13.0

Lease assets obtained in exchange for new financing lease liabilities 1.0 0.6

Supplemental non-cash investing and financing activities:

17 unchanged sentences

Other comprehensive income — — — ( 7.2 ) ( 7.2 ) — ( 7.2 )

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings and repurchases of 27,808 shares

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 27,808 shares

388,179 0.1 19.5 — — 19.6 — 19.6

13 unchanged sentences

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

Net income — — 20.8 — 20.8 — 20.8

Other comprehensive income — — — 11.0 11.0 — 11.0

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 1,026 shares

2,246 — — — — — — —

Share-based compensation — 4.1 — — 4.1 — 4.1

Repurchases of common stock ( 80,115 ) — ( 8.0 ) — — ( 8.0 ) — ( 8.0 )

Dividends paid $ 0.280 per common share

— — ( 5.3 ) — ( 5.3 ) — ( 5.3 )

Balance, September 30, 2024 18,872,792 $ 7.1 $ 76.8 $ 608.6 $ ( 45.3 ) $ 647.2 $ 1.3 $ 648.5

See accompanying notes to consolidated financial statements.

Tennant Company Shareholders

10 unchanged sentences

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

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

93,073 — 0.8 — — 0.8 — 0.8

6 unchanged sentences

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

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

69,345 — 3.4 — — 3.4 — 3.4

4 unchanged sentences

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

Net income — 22.9 — 22.9 — 22.9

Other comprehensive income — — ( 10.4 ) ( 10.4 ) — ( 10.4 )

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 148 shares

222,566 — 13.9 — — 13.9 — 13.9

Share-based compensation — 4.7 — — 4.7 — 4.7

Repurchases of common stock ( 21,793 ) — ( 1.7 ) — — ( 1.7 ) — ( 1.7 )

Dividends paid $ 0.265 per common share

— — ( 5.0 ) — ( 5.0 ) — ( 5.0 )

Balance, September 30, 2023 18,741,371 $ 7.0 $ 71.0 $ 521.7 $ ( 54.7 ) $ 545.0 $ 1.3 $ 546.3

See accompanying notes to consolidated financial statements.

14 unchanged sentences

Newly Adopted Accounting Pronouncements

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

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

Disaggregation of Revenue

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

September 30, Nine Months Ended

September 30,

2024 2023 % Change 2024 2023 % Change

Americas $ 218.7 $ 211.2 3.6 % $ 662.1 $ 632.2 4.7 %

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

15 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 21.2 $ 20.0

5 unchanged sentences

We sell separately priced prepaid contracts to our customers where we receive payment at the inception of the contract and defer recognition of the consideration received because we have to satisfy future performance obligations.

Our deferred revenue balance is primarily attributed to prepaid maintenance contracts on our

machines ranging from 12 months to 60 months.

Our deferred revenue balance includes autonomous subscription sales and prepaid maintenance contracts on our machines ranging from 12 months to 60 months.

In circumstances where prepaid contracts are bundled with machines, we use an observable price to determine stand-alone selling price for separate performance obligations.

The change in the deferred revenue balance was as follows:

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 10.3 $ 9.3

3 unchanged sentences

Ending balance $ 16.3 $ 8.8

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.

At September 30, 2024, $ 8.3 million and $ 8.0 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 and six months ended June 30, 2024 and June 30, 2023, we incurred restructuring expenses as part of our ongoing global reorganization efforts.

During the three and nine months ended September 30, 2024 and September 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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

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 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.

Our consolidated financial results for the three months ended September 30, 2024 include $ 7.5 million of revenue and $ 1.1 million of net income related to TCS.

Our consolidated financial results for the nine months ended September 30, 2024 include $ 16.6 million of revenue and $ 2.3 million of net income related to TCS.

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

24 unchanged sentences

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.

There were no adjustments to purchase price allocation in the third quarter of 2024.

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

1 unchanged sentence

Inventories are valued at the lower of cost or net realizable value and consisted of the following:

September 30,

2024 December 31,

15 unchanged sentences

Goodwill and Intangible Assets

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

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

Goodwill Accumulated

3 unchanged sentences

Foreign currency fluctuations 3.0 ( 1.5 ) 1.5

Balance as of June 30, 2024

Balance as of September 30, 2024

$ 233.2 $ ( 34.8 ) $ 198.4

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 additions to goodwill recorded during the first nine 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 June 30, 2024

Balance as of September 30, 2024

Original cost $ 165.5 $ 29.6 $ 16.6 $ 211.7

9 unchanged sentences

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

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.

Amortization expense on intangible assets for the three and nine months ended September 30, 2024 was $ 3.6 million and $ 11.4 million, respectively.

Amortization expense on intangible assets for the three and nine months ended September 30, 2023 was $ 3.5 million and $ 11.0 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:

8 unchanged sentences

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

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.

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 our 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 our leverage ratio.

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

In connection with the 2021 Credit Agreement, we reaffirmed our security interest in favor of the lenders in substantially all our personal property and pledged the stock of our domestic subsidiaries and 65 % of the stock of our first-tier foreign subsidiaries.

The obligations under the 2021 Credit Agreement are also guaranteed by certain of our first-tier domestic subsidiaries, and those subsidiaries also provided a security interest in their similar personal property.

The 2021 Credit Agreement restricts the payment of dividends or repurchasing of stock requiring that, after giving effect to such payments, no default exists or would result from such payment.

Additionally, cash dividends are restricted to $ 7.5 million per quarter and approved levels of other restricted payments range from $ 60.0 million to unlimited based on our net leverage ratio (not taking into account any acquisition holiday) after giving effect to such payment.

The 2021 Credit Agreement contains customary representations, warranties and covenants, including but not limited to covenants restricting our ability to incur indebtedness and liens and to merge or consolidate with another entity.

On August 7, 2024, we and certain of our foreign subsidiaries entered into an Amended and Restated Credit Agreement (the "2024 Credit Agreement") with JPMorgan Chase Bank, N.A.

as administrative agent, which amends and restates the 2021 Credit Agreement as amended by the Amendment.

The 2024 Credit Agreement provides us and certain of our 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, with the consent of the lenders willing to provide additional borrowings in the form of increases to their revolving facility commitment or funding of incremental term loans.

Borrowings may be denominated in U.S.

dollars or certain other currencies.

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 our 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 (as defined in the 2024 Credit Agreement) plus 0.50 % and (iii) the Adjusted Term SOFR Rate (as defined in the 2024 Credit Agreement) 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 our leverage ratio, (b) the Adjusted Term SOFR Rate plus an additional spread of 1.25 % to 2 %, depending on our leverage ratio, or (c) the Adjusted Daily Simple RFR (as defined in the 2024 Credit Agreement) plus an additional spread of 1.25 % to 2 %, depending on our leverage ratio.

In connection with the 2024 Credit Agreement, we reaffirmed our security interest in favor of the lenders in substantially all its personal property and pledged the stock of certain of its domestic and foreign subsidiaries.

The obligations under the 2024 Credit Agreement are also guaranteed by certain of the Company’s subsidiaries and those subsidiaries also provided a security interest in their similar personal property.

The 2024 Credit Agreement contains customary representations, warranties and covenants, including but not limited to covenants restricting the Company’s ability to incur indebtedness and liens and merge or consolidate with another entity.

Further, the 2024 Credit Agreement contains the following covenants:

• A covenant requiring us to maintain an indebtedness to EBITDA ratio, determined as of the end of each of our fiscal quarters, of no greater than 3.50 to 1.00, with certain alternative requirements for permitted acquisitions greater than $ 50.0 million;

• a covenant requiring us 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 us 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 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.

• 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, in such case limiting such payments to the greater of 10% of consolidated total assets and $ 100.0 million during any fiscal year.

We are in compliance with the covenants as of September 30, 2024.

Debt Outstanding

Debt outstanding consisted of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Credit facility borrowings:

6 unchanged sentences

Long-term debt $ 208.6 $ 194.2

(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.

(a) As of September 30, 2024, the Company was required to repay $ 0.6 million of finance lease liabilities, and no amounts in outstanding credit facility borrowings, over the next 12 months.

As of September 30, 2024, we had outstanding borrowings of $ 207.5 million under our revolving credit facility.

We had letters of credit and bank guarantees outstanding in the amount of $ 3.2 million, leaving approximately $ 439.3 million of unused borrowing capacity on our revolving facility.

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

Commitment fees on unused lines of credit for the nine months ended September 30, 2024 were $ 0.4 million.

The overall weighted average cost of debt was approximately 6.6 % 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.

Further details regarding the cross-currency swap instrument and fixed rate interest rate swap instrument are discussed in Note 10.

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

3 unchanged sentences

The changes in warranty reserves were as follows:

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 11.1 $ 10.9

7 unchanged sentences

We evaluate hedge effectiveness on our hedges that are designated and qualify for hedge accounting at the inception of the hedge prospectively, as well as retrospectively, and record any ineffective portion of the hedging instruments along with the time value of purchased contracts in the same line item of the income statement as the item being hedged on our consolidated statements of income.

Our hedging policy establishes maximum limits for each counterparty to mitigate any concentration of risk.

Our hedging policy establishes maximum limits for each counterparty to minimize concentration of risk.

Balance Sheet Hedges

2 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 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.

At September 30, 2024 and December 31, 2023, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $ 77.0 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 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.

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

As of September 30, 2024, the aggregated scheduled interest payments over the course of the loan and related swaps amounted to € 5.8 million.

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

5 unchanged sentences

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

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

As of September 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 June 30, 2024 December 31, 2023 Balance Sheet Location June 30, 2024 December 31, 2023

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

Derivatives designated as cash flow hedges:

9 unchanged sentences

Foreign currency forward contracts Other current assets $ 0.1 $ — Other current liabilities $ 0.3 $ 1.6

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.

As of September 30, 2024, we anticipate reclassifying $ 2.3 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 June 30,

Total Gain on Hedging Total Gain (Loss) on Hedging

Three Months Ended September 30,

Total Gain (Loss) on Hedging Total Gain on Hedging

Derivatives designated as cash flow hedges:

Interest expense, net $ ( 2.7 ) $ 0.3 $ ( 3.3 ) $ 0.3

Net foreign currency transaction gain 0.7 — 1.0 —

Net foreign currency transaction loss ( 0.4 ) — ( 0.4 ) —

Derivatives designated as fair value hedges:

Interest expense, net ( 2.7 ) 0.2 ( 3.3 ) 0.3

Net foreign currency transaction gain (loss) 0.7 0.5 1.0 ( 0.4 )

Net foreign currency transaction (loss) gain ( 0.4 ) ( 2.5 ) ( 0.4 ) 2.0

Derivatives designated as net investment hedges:

Interest expense, net $ ( 2.7 ) $ 0.2 $ ( 3.3 ) $ 0.2

Six Months Ended June 30,

Total Gain on Hedging Total Gain on Hedging

Nine Months Ended September 30,

Total Gain (Loss) on Hedging Total Gain on Hedging

Derivatives designated as cash flow hedges:

3 unchanged sentences

Interest expense, net ( 7.5 ) 0.8 ( 11.0 ) 1.7

Net foreign currency transaction gain 0.5 1.9 0.9 0.8

Net foreign currency transaction gain (loss) 0.1 ( 0.6 ) 0.5 2.8

Derivatives designated as net investment hedges:

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Derivatives designated as cash flow hedges:

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

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

$ ( 1.7 ) $ 1.2 $ 0.4 $ 2.6

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

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.3 0.3 0.9 0.6

Derivatives designated as fair value hedges:

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

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

0.6 ( 0.5 ) 0.9 ( 0.5 )

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

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.3 0.2 0.8 0.8

Derivatives designated as net investment hedges:

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

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

( 1.8 ) 1.3 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

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.2 0.2 0.7 0.7

Derivatives not designated as hedging instruments:

Net gain recognized in income (b)

Net (loss) gain recognized in income (b)

$ ( 1.9 ) $ 0.1 $ 1.0 $ 1.0

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

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

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

1 unchanged sentence

Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair value measurements.

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

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).

5 unchanged sentences

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

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

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

Value Level 1 Level 2 Level 3

14 unchanged sentences

Total assets 3.3 — 3.3 —

Foreign currency forward exchange contracts 1.6 — 1.6 —

Foreign currency forward contracts 1.6 — 1.6 —

Cross-currency swaps 6.7 — 6.7 —

11 unchanged sentences

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.

As of September 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, 2029.

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.

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

Fair value adjustments for debt securities were not material as of September 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 $ 215.6 million and $ 213.4 million, respectively, as of June 30, 2024.

The fair value and carrying value of total debt, including current portion, was $ 209.2 million as of September 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.

7 unchanged sentences

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

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Foreign Currency

5 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss ( 0.7 ) — ( 1.7 ) ( 2.4 )

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

Net current period other comprehensive loss ( 2.4 ) ( 0.2 ) ( 0.4 ) ( 3.0 )

Ending balance $ ( 48.0 ) $ 3.5 $ ( 0.8 ) $ ( 45.3 )

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Foreign Currency

3 unchanged sentences

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

Other comprehensive income before reclassifications 5.9 — 1.4 7.3

Other comprehensive (loss) income before reclassifications ( 4.5 ) — 2.1 ( 2.4 )

Amounts reclassified from accumulated other comprehensive loss ( 0.7 ) — ( 1.4 ) ( 2.1 )

Net current period other comprehensive income 5.4 — 0.5 5.9

Net current period other comprehensive (loss) income ( 5.2 ) — 0.7 ( 4.5 )

Ending balance $ ( 59.1 ) $ 2.7 $ 1.7 $ ( 54.7 )

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 $ 4.4 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.

In addition to the liability of $ 4.7 million for unrecognized tax benefits as of September 30, 2024, there was approximately $ 0.6 million for accrued interest and penalties.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of September 30, 2024 was $ 4.1 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 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.

During the three months ended September 30, 2024 and 2023, we recognized total share-based compensation expense of $ 4.1 million and $ 4.7 million, respectively.

During the nine months ended September 30, 2024 and 2023, we recognized total share-based compensation expense of $ 9.4 million and $ 8.6 million, respectively.

The total excess tax recognized for share-based compensation arrangements during the nine months ended September 30, 2024 and 2023 was a tax benefit of $ 3.0 million and tax expense of $ 0.1 million, respectively.

Earnings Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Diluted earnings per share $ 1.09 $ 1.21 $ 4.03 $ 4.19

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.

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 4,124 and 169,458 shares of common stock during the three months ended September 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 88,992 and 325,862 shares of common stock during the nine months ended September 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