ITEM 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(in millions, except share data)
The following should be read in conjunction with our consolidated financial statements and the related notes thereto. Unless otherwise indicated, amounts provided in Item 7 pertain to continuing operations only.
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 periods presented. 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.
Impacts of Tariffs and Other Cost Increases
Beginning in 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 these new tariffs did not have a direct material impact on our results of operations in fiscal year 2025, we are unable to determine the full impact of such tariffs, if implemented on announced terms, on our results of operations or 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.
Executive Overview
Revenues for 2025 totaled $2,265.1, compared to $1,983.9 in 2024 (and $1,741.2 in 2023). The increase in revenues during 2025, compared to 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. The increase in revenues during 2024, compared to 2023 was due primarily to (i) inorganic revenue growth resulting from the Ingénia, ASPEQ, and TAMCO acquisitions (each within the HVAC reportable segment) and (ii) organic revenue growth within the HVAC reportable segment.
For 2025 , operating income totaled $350.4 , compared to $308.3 in 2024 (and $221.9 in 2023 ).
Additional details on certain matters noted above as well as significant items impacting the financial results for 2025, 2024, and 2023 are as follows:
• On January 27, 2025, we completed the acquisition of KTS
◦ The purchase price for KTS was $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 2025 related to acquired working capital.
◦ The post-acquisition operating results of KTS are included within our Detection and Measurement reportable segment.
• On April 15, 2025, we completed the acquisition of Sigma & Omega
◦ The purchase price for Sigma & Omega was $143.3 , net of (i) an adjustment to the purchase price of $0.3 received during 2025 related to acquired working capital and (ii) cash acquired of $0.2 .
◦ The post-acquisition operating results of Sigma & Omega are included within our HVAC reportable segment.
• Registered Public Offering
◦ On August 12, 2025, the Company entered into an underwriting agreement, pursuant to which the Company agreed to issue and sell in a registered public offering 3.059 shares of the Company's common stock, at a purchase price of $188.0 per share (the “Offering”).
◦ 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.
• Financing Activities
◦ On September 9, 2025, we amended and restated our senior credit agreement (as amended, the “Amended 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.
▪ We 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 our trade receivables financing agreement for the following 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 2024, we borrowed $41.2 against the cash surrender value of these COLI policies. During 2025, we repaid the then-outstanding borrowings totaling $37.4, inclusive of accrued interest.
◦ See Note 13 to our consolidated financial statements for additional details.
• Changes in Estimated Value of an Equity Security - Filtran Group Equity, LLC (“Filtran”)
◦ During 2025, we recorded gains of $23.0 within “ Other income (expense), net ” related to increases in the estimated value of an equity security in Filtran that we hold.
◦ In the fourth quarter of 2025, Parker-Hannifin Corporation entered into an agreement to acquire the majority of the underlying businesses indirectly held by an investee of Filtran through a planned merger, while Donaldson Company, Inc. entered into an agreement to acquire the remaining business on February 2, 2026. Based on an updated net asset value provided by the investee considering these transactions, we recorded a gain of $18.5 in the fourth quarter of 2025.
◦ See Note 17 to our consolidated financial statements for additional detail.
• 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 reduced our taxes paid in 2025 by approximately $15.0. We have included the impact of the Act in our consolidated balance sheet at December 31, 2025. The legislation did not have a material impact on our results of operations.
• Actuarial Gains/Losses on Pension and Postretirement Plans
◦ During 2025, we recorded actuarial losses of $5.5 in connection with the annual remeasurement of our pension and postretirement plans with such losses resulting primaril y from decreases in discount rates.
◦ See Notes 1 and 11 to our consolidated financial statements for additional details.
• Facility Expansion
◦ During the fourth quarter of 2025, we entered into an agreement to purchase land and buildings related to a new facility. This property will be enhanced through acquisition and installation of further machinery and equipment in 2026 to increase the capacity for our engineered air movement and handling and cooling products businesses. Total capital expenditures related to these expansion efforts totaled $62.0 in 2025.
• On February 7, 2024, we completed the acquisition of Ingénia
◦ The purchase price for Ingénia was $292.0, net of (i) an adjustment to the purchase price of $2.1 received during 2024 related to acquired working capital and (ii) cash acquired of $1.5.
◦ The post-acquisition operating results of Ingénia are included within our HVAC reportable segment.
• Financing Activities
◦ On August 30, 2024, we entered into an amendment to the prior iteration of our senior credit agreement.
◦ The amendment increased the aggregate revolving credit commitments available under the prior senior credit agreement from $500.0 to $1,000.0 and made certain conforming changes and other amendments.
◦ We utilized the increased revolving credit capacity to finance, in part, permitted acquisitions, to pay related fees, costs and expenses and for other lawful corporate purposes.
◦ During the third quarter of 2024, we renewed, and increased the capacity of, our trade receivables financing agreement for a period of 12 months, whereby we could borrow, on a continuous basis, up to $100.0, as available.
◦ See Note 13 to our consolidated financial statements for additional details of our indebtedness.
• Changes in Estimated Value of an Equity Security - Filtran
◦ We recorded a loss of $4.2 within “Other income (expense), net” related to decreases in the estimated value of the equity security in Filtran that we hold.
◦ See Note 17 to our consolidated financial statements for additional details.
• Actuarial Losses on Pension and Postretirement Plans
◦ During 2024, we recorded actuarial losses of $2.6 in the fourth quarter in connection with the annual remeasurement of our pension and postretirement plans with such losses resulting primarily from lower than expected returns on plan assets, partially offset by increases in discount rates.
◦ See Notes 1 and 11 to our consolidated financial statements for additional details.
• Resolution of Dispute with Seller of ULC
◦ In connection with our acquisition of the ULC Technologies (“ULC”) business 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 were 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” within our consolidated statement of operations. We expect this payment to be tax deductible in future periods.
• Resolution of claims with Prime Contractor of the South Africa Power Projects
◦ On September 5, 2023, SPX and our DBT Technologies (PTY) LTD (“DBT”) subsidiary entered into an agreement with Mitsubishi Heavy Industries Power — ZAF (f.k.a. Mitsubishi-Hitachi Power Systems Africa (PTY) LTD) (“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) during the year ended December 31, 2024.
◦ See Notes 4 and 15 to our consolidated financial statements for additional details.
• On April 3, 2023, we completed the acquisition of TAMCO
◦ The purchase price for TAMCO was $125.5, inclusive of an adjustment of $0.2 paid during 2023 related to acquired working capital, and net of cash acquired of $1.0.
◦ The post-acquisition operating results of TAMCO are included within our HVAC reportable segment.
• On June 2, 2023, we completed the acquisition of ASPEQ
◦ The purchase price for ASPEQ was $421.5, net of (i) an adjustment to the purchase price of $0.3 received during 2023 related to acquired working capital and (ii) cash acquired of $0.9.
◦ The post-acquisition operating results of ASPEQ are included within our HVAC reportable segment.
• Incremental Term Loan
◦ On April 21, 2023, a prior iteration of our senior credit agreement was amended to provide for an additional senior secured term loan in the aggregate amount of $300.0, which was borrowed during the second quarter of 2023.
◦ The funds from the additional term loan were used to partially fund the acquisition of ASPEQ.
◦ See Note 13 to our consolidated financial statements for additional details of our indebtedness.
• Resolution of Claims with Prime Contractor of South Africa Power Projects
◦ In connection with the Settlement Agreement, the Company incurred a charge, net of tax, of $54.2 during the third quarter of 2023. The charge included the write-off of $15.2 in net amounts due from MHI. Such charge is included in “Loss on disposition of discontinued operations, net of tax” for the year ended December 31, 2023. In addition, DBT made a payment of $25.3 to MHI during the year ended December 31, 2023, in connection to the Settlement Agreement.
◦ See Notes 4 and 15 to our consolidated financial statements for additional details.
• Actuarial Losses on Pension and Postretirement Plans
◦ During 2023, we recorded actuarial losses of $11.3 in the fourth quarter in connection with the annual remeasurement of our pension and postretirement plans with such losses resulting primarily from decreases in discount rates.
◦ See Notes 1 and 11 to our consolidated financial statements for additional details.
• Resolution of Dispute with Former Representative
◦ During the fourth quarter of 2023, we recorded a charge within “Other operating expense” of $9.0 related to the resolution of a dispute with a former representative at one of our businesses within the Detection and Measurement reportable segment.
◦ See Note 15 to our consolidated financial statements for additional details.
Results of Continuing Operations
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, certain of our heating products 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 generally 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.
The following table provides selected financial information for the years ended December 31, 2025, 2024, and 2023, including the reconciliation of organic revenue increase to net revenue increase:
Year ended December 31,
Revenues
Gross profit
% of revenues
Selling, general and administrative expense
% of revenues
Selling, general and administrative — intangible amortization
Impairment of intangible assets
Special charges, net
Other operating expense
Other income (expense), net
Interest expense, net
Loss on amendment/refinancing of senior credit agreement
Income from continuing operations before income taxes
Income tax provision
Income from continuing operations
Components of consolidated revenue increase:
Organic
Foreign currency
Acquisitions
Net revenue increase
* Not meaningful for comparison purposes .
Revenues — For 2025, the increase in revenues, compared to 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.
For 2024, the increase in revenues, compared to 2023, was due primarily to (i) inorganic revenue growth resulting from the Ingénia, ASPEQ, and TAMCO acquisitions within the HVAC reportable segment and (ii) organic revenue growth within the HVAC reportable segment.
Gross Profi t — For 2025, the increase in gross profit and gross profit as a percentage of revenues, compared to 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.
For 2024, the increase in gross profit and gross profit as a percentage of revenues, compared to 2023, was due primarily to (i) the revenue growth mentioned above and associated operating leverage, (ii) more favorable project execution and product mix, primarily within the Detection and Measurement reportable segment, and (iii) the impact of continuous improvement initiatives, partially offset by increases in personnel costs, primarily within our HVAC reportable segment, due to annual merit increases and growth-related headcount additions.
Selling, General and Administrative (“SG&A”) Expense — For 2025, the increase in SG&A expense, compared to 2024, was due primarily to (i) higher acquisition and integration-related costs of $23.8, (ii) incremental SG&A resulting from the acquisitions of Ingénia, KTS and Sigma & Omega of $12.5, (iii) increases in personnel costs primarily due to annual merit increases and growth-related headcount additions of $4.5, and (iv) higher corporate expense of $3.8.
For 2024, the increase in SG&A expense, compared to 2023, was due primarily to incremental SG&A resulting from (i) the acquisitions of Ingénia, ASPEQ, and TAMCO of $20.7 (including integration costs of $3.3), (ii) increases in personnel costs,
primarily within our HVAC reportable segment, due to annual merit increases and growth-related headcount additions, and (iii) $1.6 of additional long-term incentive compensation, partially offset by a reduction in corporate expense of $4.8.
Selling, General and Administrative - Intangible Amortization — For 2025, the increase in intangible asset amortization, compared to 2024, was p rimarily related to (i) incremental amortization of intangible assets associated with the acquisitions of KTS and Sigma & Omega, and a full year of amortization for the Ingénia acquisition and (ii) higher acquired backlog amortization from the KTS and Sigma & Omega acquisitions compared to Ingénia of $5.7.
For 2024, the increase in intangible amortization, compared to 2023, was primarily related to incremental amortization associated with (i) backlog from the Ingénia acquisition and (ii) other intangible assets associated with the acquisition of Ingénia and a full year of amortization for the TAMCO and ASPEQ acquisitions.
Impairment of Intangible Assets — During 2025, we recorded an impairment charge of $0.7 related to the indefinite-lived trademark associated with ULC.
Special Charges, Net — Special charges, net, relate primarily to recording, and subsequent adjustments of, severance costs and non-cash asset write-downs associated with restructuring actions at businesses within our HVAC and Detection and Measurement reportable segments to consolidate manufacturing, distribution, sales and administrative facilities, reduce workforce, and rationalize certain product lines. See Note 8 to our consolidated financial statements for the details of actions taken in 2025 , 2024 , and 2023 . The components of special charges, net, are as follows:
Year ended December 31,
Employee termination costs
Facility consolidation costs
Non-cash asset write-downs
Total
Other Operating Expense — During 2024, we recorded a charge of $8.4 related to a settlement with the seller of ULC regarding additional contingent consideration. See Note 15 to the consolidated financial statements for additional details.
During 2023, we recorded a charge of $9.0 related to the resolution of a dispute with a former representative at one of our businesses within the Detection and Measurement reportable segment. See Note 15 to the consolidated financial statements for additional details.
Other Income (Expense), Net — Other income (expense), net, for 2025 was composed primarily of gains of $23.0 related to changes in the net asset value of our equity interest in Filtran, income of $5.2 derived from COLI policies and a gain of $0.4 related to the settlement of our interest rate swaps which were settled commensurate with the amendment of our Amended Credit Agreement, partially offset by (i) environmental remediation charges of $9.1, (ii) pension and postretirement expense of $8.2 (including net settlement and actuarial losses of $5.8), and (iii) foreign currency transaction losses of $2.5.
Other income (expense), net, for 2024 was composed primarily of (i) environmental remediation charges of $6.7, (ii) a loss of $4.2 related to a change in the estimated fair value of an equity security that we hold, and (iii) pension and postretirement expense of $4.5 (including actuarial losses of $2.6), partially offset by gains on disposal of property, plant and equipment of $3.2, income derived from COLI policies of $2.3, and foreign currency transaction gains of $0.8.
Other income (expense), net, for 2023 was composed primarily of (i) pensi on and postretirement expense of $12.2 (including actuarial losses of $11.3), (ii) foreign currency transaction losses of $0.9 , and (iii) environmental remediation charges of $0.9, partially offset by gains of (i) $3.6 related to a change in the estimated value of an equity security that we hold and (ii) $0.4 related to income derived from COLI policies .
Interest Expense, Ne t — Interest expense, net, includes both interest expense and interest income. The decrease in interest expense, net, during 2025, compared to 2024, was due to an increase in interest income on available cash balances, partially offset by higher interest expense due to higher average debt balances during 2025, despite the impact of the repayment of the borrowings under the revolving credit facility from a portion of the net proceeds of the Offering. The higher average debt balances prior to the post-Offering repayment primarily resulted from borrowings associated with acquisitions made during the year. Refer to Note 13 to the consolidated financial statements for additional details.
The increase in interest expense, net, during 2024, compared to 2023, was due primarily to higher average debt balances during the 2024 periods, primarily resulting from borrowings associated with the Ingénia, ASPEQ, and TAMCO acquisitions. Refer to Note 13 to the consolidated financial statements for additional details.
Loss on Amendment/Refinancing of Senior Credit Agreement — During 2025, we recorded charges of $1.5 associated with the amendment of our 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 Taxes — During 2025, we recorded an income tax provision of $68.6 on $314.1 of pre-tax income from continuing operations, resulting in an effective rate of 21.8%. The most significant items impacting the income tax provision for 2025 were (i) $9.3 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period and (ii) $1.4 of tax benefits resulting from increased federal tax credits and incentives.
During 2024, we recorded an income tax provision of $53.6 on $255.4 of pre-tax income from continuing operations, resulting in an effective rate of 21.0% The most significant items impacting the income tax provision for 2024 were (i) $11.0 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period and (ii) $0.7 of tax benefits related to changes in our estimate of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets.
During 2023, we recorded an income tax provision of $41.6 on $186.3 of pre-tax income from continuing operations, resulting in an effective rate of 22.3% . The most significant items impacting the income tax provision for 2023 were (i) $2.3 of tax benefits related to changes in our estimate of valuation allowances recognized against certain deferred tax assets, as we now expect to realize these deferred tax assets, (ii) $1.8 of excess tax benefits associated with stock-based compensation awards that vested and/or were exercised during the period, and (iii) $1.1 of tax benefits related to revisions to liabilities for uncertain tax positions.
Results of Discontinued Operations
Wind-Down of the Heat Transfer Business
During the fourth quarter of 2020, we completed a wind-down plan for our Heat Transfer business, which included providing all products and services on the business’s remaining contracts with customers. As a result, we are reporting Heat Transfer as a discontinued operation for all periods presented.
Wind-Down of DBT Business
We completed the wind-down of our DBT business during the fourth quarter of 2021 after it ceased all operations, including those related to two large power projects in South Africa (Kusile and Medupi). As a result, we are reporting DBT as a discontinued operation in our consolidated financial statements for all periods presented.
On September 5, 2023, DBT and SPX entered into the Settlement Agreement with MHI. The Settlement Agreement provides for full and final settlement and mutual release of all claims between the parties with respect to the projects, including any claim against SPX Technologies, Inc. as guarantor of DBT's performance on the projects. It also provides that the underlying subcontracts are terminated and all obligations of both parties under the subcontracts have been satisfied in full. In connection with the Settlement Agreement, we incurred a charge, net of tax, of $54.2 during the third quarter of 2023. The charge included the write-off of $15.2 in net amounts due from MHI. Such charge is included in “Loss on disposition of discontinued operations, net of tax” for the year ended December 31, 2023.
Prior to the Settlement Agreement, on February 22, 2021, a dispute adjudication panel issued a ruling in favor of DBT against MHI related to costs incurred in connection with delays on two units of the Kusile project. In connection with the ruling, DBT received South African Rand 126.6 (or $8.6 at the time of payment). This ruling was subject to final and binding arbitration in this matter. In March 2023, an arbitration tribunal upheld the decision of the dispute adjudication panel. As a result, the South African Rand 126.6 (or $7.0) was recorded as income during the first quarter of 2023, with such amount recorded within “Loss on disposition of discontinued operations, net of tax.” Additionally, in June 2023, the arbitration tribunal ruled DBT was entitled to recover $1.3 of legal costs incurred related to the arbitration. Such amount received from MHI was recorded to “Loss on disposition of discontinued operations, net of tax” during the year ended December 31, 2023. Additionally, in May 2023, a separate arbitration tribunal ruled DBT was entitled to recover $5.5 of legal costs incurred related to another prior arbitration. Such amount received from MHI was recorded to “ on disposition of operations, net of tax” during the year ended December 31, 2023.
For the years ended December 31, 2025, 2024 and 2023, results of operations from our businesses reported as discontinued operations were as follows:
Year ended December 31,
DBT (1)
Loss from discontinued operations
Income tax benefit (provision)
Loss from discontinued operations, net
All other (2)
Loss from discontinued operations
Income tax benefit (provision)
Loss from discontinued operations, net
Total
Loss from discontinued operations
Income tax benefit (provision)
Loss from discontinued operations, net
(1) Loss for the years ended December 31, 2025 and 2024 related primarily to costs incurred to support DBT through a liquidation process related to a subcontractor engaged by DBT during the Kusile project. Loss for the year ended December 31, 2023 resulted primarily from the charge, and related income tax impacts, recorded in connection with the Settlement Agreement referred to above and legal costs incurred in connection with the various dispute resolution matters. This loss for the year ended December 31, 2023 was partially offset by arbitration awards received, which are discussed above.
(2) Loss for the years ended December 31, 2024, and 2023 resulted primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.
Results of Reportable Segments and Corporate Expense
The following information should be read in conjunction with our consolidated financial statements and related notes. These results exclude the operating results of discontinued operations for all periods presented. See Note 7 to our consolidated financial statements for a description of each of our reportable segments.
HVAC Reportable Segment
Year Ended December 31,
Revenues
Segment Income
% of revenues
Components of revenue increase:
Organic
Foreign currency
Acquisitions
Net revenue increase
Revenues — For 2025, the increase in revenues, compared to 2024, was due primarily to organic revenue growth and inorganic revenue growth resulting from the Ingénia and Sigma & Omega acquisitions. The organic revenue growth was due predominantly to higher volumes of both heating and cooling products driven by (i) continued strength in demand and higher throughput primarily from continued production capacity expansion, and (ii) the impact of lower volumes of heating products in 2024 associated with the unseasonably warm winter conditions prevalent in the relevant end markets during the first quarter of 2024.
For 2024, the increase in revenues, compared to 2023, was due primarily to (i) inorganic revenue growth resulting from the Ingénia, ASPEQ, and TAMCO acquisitions and (ii) organic revenue growth. The organic revenue growth was due primarily to (i) increased volume of cooling products driven by continued strength in demand and higher throughput resulting from expanded
production capacity and (ii) execution of a larger-than-typical service project within our cooling business. These increases were partially offset by modest organic revenue declines of heating products due primarily to the unseasonably warm winter conditions prevalent in relevant end markets during the first quarter of 2024.
Income — For 2025, the increases in income and margin, compared to 2024, were due primarily to the higher volumes mentioned above and associated operating leverage, and a more accretive mix and favorable project execution primarily within our cooling products business, partially offset by increases in personnel costs due to annual merit increases and growth-related headcount additions.
For 2024, the increase in income, compared to 2023, was due primarily to the revenue growth mentioned above and associated operating leverage, as well as the impact of continuous improvement initiatives, partially offset by increases in personnel costs due to annual merit increases and growth-related headcount additions.
Backlog — The segment had backlog of $584.5 and $436.8 as of December 31, 2025 and 2024, respectively. Backlog associated with the Sigma & Omega acquisition totaled $51.3 as of December 31, 2025. Approximately 83% of the segment’s backlog as of December 31, 2025 is expected to be recognized as revenue during 2026.
Detection and Measurement Reportable Segment
Year Ended December 31,
Revenues
Segment Income
% of revenues
Components of revenue increase:
Organic
Foreign currency
Acquisitions
Net revenue increase
Revenues — For 2025, the increase in revenues, compared to 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 and transportation businesses.
For 2024, the increase in revenues, compared to 2023, was due primarily to foreign currency translation benefits offset by a minor organic revenue decline. The minor organic revenue decline was primarily driven by lower project volume within our communication technologies business associated with a larger-than-typical project that executed throughout 2023 and completed in the first quarter of 2024, partially offset by higher project volumes at our aids to navigation business.
Project volumes within our Detection and Measurement reportable segment can vary from period to period based on execution timing.
Income — For 2025, the increases in income and margin, compared to 2024, were due primarily to (i) income resulting from the KTS acquisition and (ii) higher project volumes and associated leverage on our fixed costs, particularly within SG&A expenses. These increases were partially offset by a less favorable project mix within our transportation systems and communication technologies businesses.
For 2024, the increase in income and margin, compared to 2023, was due primarily to (i) increased volume at our aids to navigation business, (ii) more favorable project execution and product mix within our communications technologies, aids to navigation, and transportation businesses, and (iii) the impact of continuous improvement initiatives. These impacts were partially offset by the reduction in income associated with volume declines from the larger-than-typical project within our communications technologies business mentioned above.
Backlog — The segment had backlog of $350.3 and $220.9 as of December 31, 2025 and 2024, respectively. Backlog associated with the KTS acquisition totaled $34.0 as of December 31, 2025. Approximately 66% of the segment’s backlog as of December 31, 2025 is expected to be recognized as revenue during 2026.
Corporate and Other Expense
Year Ended December 31,
Total consolidated revenues
Corporate expense
% of revenues
Long-term incentive compensation expense
Corporate Expense — Corporate expense generally relates to the personnel and general operating costs of our corporate headquarte rs in Charlotte, North Carolina. The increase in corporate expense during 2025, compared to 2024, was due primarily to higher personnel costs, including merit increases and employee benefit costs, an increase of $1.8 in acquisition and integration-related costs largely driven by expense for the KTS, Sigma & Omega, Thermolec and Crawford acquisitions incurred in 2025 relative to the acquisition and integration-related costs for the KTS and Ingénia acquisitions incurred in 2024, and higher periodic maintenance costs of $1.3 on corporate assets.
The decrease in corporate expense during 2024, compared to 2023, was due primarily to (i) a reduction of $2.8 in various acquisition and integration-related costs, largely associated with the acquisitions of ASPEQ and TAMCO acquired in 2023, partially offset by expense incurred for the Ingénia acquisition in 2024 and (ii) a reduction in short-term incentive compensation expense. These declines were partially offset by annual personnel merit increases.
Long- Term Incentive Compensation Expense — Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes. The increase in long-term incentive compensation expense in 2025, compared to 2024, was due primarily to (i) an increase in the fair value of performance-based share awards resulting from plan design changes effected 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 executive officers reaching retirement eligibility, partially offset by the impact of forfeitures from participant departures.
The increase in long-term incentive compensation expense in 2024, compared to 2023, was due primarily to an increase in the fair value of performance based share awards resulting from plan design changes in 2024, which increased the maximum potential payout range from 150% to 200% of target, and the accumulation of awards related to recent changes in certain key management positions.
See Note 16 to our consolidated financial statements for further details on our long-term incentive compensation plans.
Liquidity and Financial Condition
Cash Flows
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 years ended December 31, 2025, 2024 and 2023.
Year Ended December 31,
Continuing operations:
Cash flows from operating activities
Cash flows used in investing activities
Cash flows from financing activities
Cash flows used in discontinued operations
Change in cash and equivalents due to changes in foreign currency exchange rates
Net change in cash and equivalents
2025 Compared to 2024
Operating Activities — The increase in cash flows from operating activities of continuing operations during the year ended December 31, 2025, compared to 2024, was due primarily to (i) the increase in income, exclusive of the non-cash items incurred during the 2025 period (primarily intangible asset amortization and depreciation expense, gains on the estimated value of the equity security in Filtran, and amortization of compensation costs related to acquired retention agreements from the KTS acquisition), (ii) down payments received on large data center projects scheduled to execute in 2026 and 2027, (iii) 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 (iv) a payment of $8.4 during the second quarter of 2024 associated with a settlement with the seller of ULC for additional contingent consideration. These increases were partially offset by (i) amounts paid into an escrow account in connection with the KTS acquisition related to future service obligations of certain employees of $46.5, (ii) increases in working capital driven by the timing of billing milestones related to fourth quarter revenues which are due to be collected in 2026, as well as increases in receivables related to growth within our HVAC and Detection and Measurement reportable segments, and (iii) increased income tax payments on the higher income generated in 2025 of $13.8.
Investing Activiti es — Cash flows used in investing activities of continuing operations for the year ended December 31, 2025 were comprised primarily of net cash utilized in acquisitions, including KTS and Sigma & Omega, of $445.0, net cash outflows from activity related to our COLI policies of $23.9 (inclusive of repayments related to amounts previously borrowed under such policies of $37.4 - see Note 13 to the consolidated financial statements for additional details) and capital expenditures of $92.1 (inclusive of approximately $62.0 related to capacity expansions for our engineered air movement and handling and cooling products businesses).
Financing Activities — Cash flows from financing activities of continuing operations for the year ended December 31, 2025 were comprised primarily of net cash proceeds of $551.1 related to the completion of the Offering (see Note 16 to the 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 our senior 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 $7.4 and (iii) financing fees paid in connection with an amendment to our senior credit agreement of $4.7.
Discontinued Operations — Cash flows used in discontinued operations for the year ended December 31, 2025 relate primarily to disbursements for costs incurred to support DBT through processes associated with the liquidation of a subcontractor.
Change in Cash and Equivalents Due to Changes in Foreign Currency Exchange Rates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during 2025 and 2024.
2024 Compared to 2023
Operating Activities — The increase in cash flows from operating activities of continuing operations during the year ended December 31, 2024, compared to 2023, was due primarily to (i) cash inflows resulting from the increase in operating income discussed previously, exclusive of non-cash expenses (primarily intangible asset amortization and depreciation expense) incurred during the respective periods, (ii) lower income tax payments of $14.9, primarily resulting from the acceleration of certain acquired tax attributes, and (iii) reductions in the level of raw material and component purchases during the 2024 period due to stabilization of the supply chain environment. These impacts were partially offset by (i) additional interest payments of $17.8 due to higher average debt balances resulting from borrowings associated with the Ingénia, ASPEQ, and TAMCO acquisitions, (ii) $11.9 in additional short-term incentive compensation payments, (iii) 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 (iv) a payment of $8.4 associated with a settlement for additional contingent consideration to the seller of ULC mentioned previously.
Investing Activiti es — Cash flows used in investing activities of continuing operations for the year ended December 31, 2024 were comprised of net cash utilized in the acquisition of Ingénia of $292.0 and capital expenditures of $38.0, partially offset by net proceeds from COLI policies of $41.9, inclusive of borrowings of $41.2 against the cash surrender value of these COLI policies (see Note 13 to the consolidated financial statements for additional details) and proceeds of $3.6 received for the sale of property, plant and equipment. Cash flows used in investing activities of continuing operations for the year ended December 31, 2023, were comprised of net cash utilized in the acquisitions of TAMCO and ASPEQ of $547.0 and capital expenditures of $23.9, partially offset by net proceeds from COLI policies of $0.7.
Financing Activities — Cash flows from financing activities of continuing operations for the year ended December 31, 2024 were comprised of (i) net borrowings under our senior credit agreement of $63.0, primarily in connection with the Ingénia acquisition, (ii) net repayments under our trade receivables financing arrangement of $7.0 and other various debt instruments of $1.2, and (iii) fees paid in connection with the August 30, 2024 amendment of our senior credit agreement of $2.6. These net borrowings were partially offset by proceeds from options exercised, net of minimum tax withholdings paid on behalf of employees related to long-term incentive awards, of $0.9. Cash flows from financing activities of continuing operations for the year ended December 31, 2023 were comprised of net borrowings under our senior credit agreement and trade receivables financing arrangement of $296.6 and $16.0, respectively, primarily in connection with the TAMCO and ASPEQ acquisitions. These borrowings were partially offset by minimum tax withholdings paid on behalf of employees on long-term incentive awards, net of proceeds from options exercised, of $1.3, and fees paid in connection with the Incremental Term Loan of $1.3. Net repayments under our other various debt instruments totaled $0.4.
Discontinued Operations — Cash flows used in discontinued operations for the year ended December 31, 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. Cash flows used in discontinued operations for the year ended December 31, 2023 relate primarily to (i) cash payments of $25.3 made by DBT to MHI during the third quarter of 2023 in connection with the Settlement Agreement, and (ii) disbursements of $14.7 for professional fees and support costs incurred principally in connection with the various dispute resolution matters resolved by the Settlement Agreement, partially offset by the recovery of legal costs we were awarded in arbitration proceedings between DBT and MHI of $6.8. Refer to Notes 4 and 15 to the consolidated financial statements for additional details related to the Settlement Agreement.
Change in Cash and Equivalents Due to Changes in Foreign Currency Exchange Rates — Changes in foreign currency exchange rates did not have a significant impact on our cash and equivalents during 2024 and 2023.
Borrowings
The following summarizes our debt activity (both current and non-current) for the year ended December 31, 2025:
December 31,
Borrowings
Repayments
Other (5)
December 31,
Revolving loans (1)
Term loans (2)
Trade receivables financing arrangement (3)
Other indebtedness (4)
Total debt
Less: short-term debt
Less: current maturities of long-term debt
Total long-term debt
(1) As noted below, we amended our senior 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 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 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 December 31, 2025 and 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 December 31, 2025, we had $100.0 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 December 31, 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 loans.
Maturities of long-term debt payable (excluding finance lease obligations) during each of the five years subsequent to December 31, 2025 are $3.1, $15.6, $25.0, $25.0, and $431.3, respectively.
Senior Credit Facilities
On September 9, 2025, we entered into a Third Amendment to the Amended and Restated Credit Agreement and Amendment to the Amended and Restated Guarantee and Collateral Agreement (the “Third Amendment”) to amend and restate our senior credit agreement.
The Amended Credit Agreement provides for committed senior secured financing in the aggregate amount of $2,025.0, consisting of the following facilities, each with a final maturity of September 9, 2030:
• A term loan facility in the aggregate principal amount of $500.0;
• A multicurrency revolving credit facility, which will be available for loans and letters of credit in U.S. Dollars, Euros, British Pounds Sterling and other currencies, in an aggregate principal amount up to the equivalent of $1,500.0 (with sublimits equal to the equivalents of $200.0 for financial letters of credit, $50.0 for non-financial letters of credit, and $250.0 for non-U.S. exposure); and
• A bilateral foreign credit instrument facility, which will be available for performance letters of credit and bank undertakings, in an aggregate principal amount in various currencies up to the equivalent of $25.0.
In connection with the Third Amendment, we capitalized $4.2 of debt issuance costs and recorded charges of $1.5 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.
At December 31, 2025, we had $1,489.5 of available borrowing capacity under our revolving credit facilities, after giving effect to borrowings under the domestic revolving loan facilities of $0.0 and $10.5 reserved for outstanding letters of credit. In addition, at December 31, 2025, we had $17.8 of available issuance capacity under our foreign credit instrument facilities after giving effect to $7.2 reserved for outstanding letters of credit.
At December 31, 2025, we were in compliance with all covenants of the Amended Credit Agreement.
Refer to Note 13 to the consolidated financial statements for additional details of the Amended Credit Agreement, including details of covenants, applicable interest rate margins and fees.
Other Borrowings and Financing Activities
Certain of our businesses purchase goods and services under a purchase card program allowing for payment beyond their normal payment terms. As of December 31, 2025 and 2024, the participating businesses had $1.4 and $1.1, respectively, outstanding under this arrangement.
We are party to a trade receivables financing agreement, which was renewed for 12 months during the second quarter of 2025, whereby we can borrow, on a continuous basis, up to $100.0. Availability of funds may fluctuate over time given, among other things, changes in eligible receivable balances, but will not exceed the $100.0 program limit. The facility contains representations, warranties, covenants and indemnities customary for facilities of this type. The facility does not contain any covenants that we view as materially constraining to the activities of our business.
In addition, we maintain an uncommitted line of credit facility in China which is available to fund operations in this region, when necessary, at the discretion of the lender. At December 31, 2025, the aggregate amount of borrowing capacity under this facility was $10.0, with no borrowings outstanding.
Company-owned Life Insurance
The Company has investments in COLI policies, which are recorded at their cash surrender value at each balance sheet date. Changes in the cash surrender value during the period are recorded as a gain or loss within “Other income (expense), net” within our consolidated statements of operations. The Company has the ability to borrow against a portion of its investments in the COLI policies as an additional source of liquidity. During 2024, the Company borrowed $41.2 against the cash surrender value of these COLI policies. During 2025, the Company repaid the then-outstanding borrowings totaling $37.4, inclusive of accrued interest. The amounts borrowed totaled $0.0 and $39.0 at December 31, 2025 and 2024, respectively, and incurred interest at a rate of 5.3%. At December 31, 2025, the Company had capacity to borrow approximately $34.0 against the policies. The cash surrender value of our investments in COLI assets, net of any aforementioned borrowings, was $60.3 and $36.2 at December 31, 2025 and 2024, respectively, recorded in “Other assets” on the consolidated balance sheets. See Notes 1 and 13 to the consolidated financial statements for additional details of the COLI policies.
Financial Instruments
We measure our financial assets and liabilities on a recurring basis, and nonfinancial assets and liabilities on a non-recurring basis, at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that we believe market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2) or significant unobservable inputs (Level 3).
Our derivative financial assets and liabilities include interest rate swap agreements and forward contracts to manage exposure on contracts with forecasted transactions denominated in non-functional currencies which manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries (“FX forward contracts”) that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk, and our counterparties’ credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. Based on our continued ability to enter into FX forward contracts and interest rate swap agreements, we consider the markets for our fair value instruments active.
As of December 31, 2025, there was no significant impact to the fair value of our derivative liabilities due to our own credit risk as the related instruments are collateralized under our Senior Credit Facilities. Similarly, there was no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risk.
We primarily use the income approach, which uses valuation techniques to convert future amounts to a single present amount. Assets and liabilities measured at fair value on a recurring basis are further discussed below.
Interest Rate Swaps
In 2020, we entered into interest swap agreements (“Initial Swaps”) that covered the period through November 2024, and effectively converted borrowings under our senior credit facilities to a fixed rate of 1.077%, plus the applicable margin. In September 2024, commensurate with an amendment to our senior credit agreement, we entered into additional interest rate swap agreements (“Additional Swaps”). During 2025, commensurate with the Third Amendment, we settled the Additional Swaps which resulted in a gain recorded to “Other income (expense), net” and cash received of $0.4. Prior to the settlement, the Additional Swaps covered the period from December 2024 to June 2026 and effectively converted a portion of the borrowings under our senior credit facilities to a fixed rate of 3.58%, plus the applicable margin. We had designated, and accounted for, our Additional Swaps (and, prior to their maturity, accounted for the Initial Swaps) as cash flow hedges.
As of December 31, 2025 and 2024, the unrealized gain, net of tax, recorded in AOCI was $0.0 a nd $2.6, respectively. In addition, as of December 31, 2025 and 2024, the fair value of our interest rate swap agreements was $0.0 and $3.4 (with $2.7 recorded as a current asset and $0.7 as a non-current asset), respectively. Changes in fair value of our Swaps are reclassified into earnings, as a component of interest expense, when the forecasted transaction impacts earnings.
Currency Forward Contracts
We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency exchange rates. Our objective is to preserve the economic value of non-functional currency-denominated cash flows and to minimize the impact of changes as a result of currency fluctuations. Our principal currency exposures relate to the British Pound Sterling, Canadian Dollar, Euro, and South African Rand.
From time to time, we enter into FX forward contracts. Certain of our FX forward contracts are designated as cash flow hedges. Changes in these derivatives’ fair value are included in AOCI and are reclassified into earnings as a component of revenues or cost of products sold, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable of occurring, the cumulative change in the derivatives’ fair value is recorded into earnings in the period in which the transaction is no longer considered probable of occurring.
We had FX forward contracts with an aggregate notional amount of $19.3 and $22.9 outstanding as of December 31, 2025 and 2024, respectively, with all of the $19.3 scheduled to mature within one year. There were no unrealized gains/losses recorded in AOCI related to the FX forward contracts designated as cash flow hedges as of December 31, 2025 and 2024. The fair value of our FX forward contracts was less than $0.1 at December 31, 2025 and 2024.
In addition to the above, we entered FX forward contracts associated with the Settlement Agreement to mitigate our exposure to fluctuations in the South African Rand, with a notional amount of South African Rand 480.9 (or $24.9 at the time of execution). We designated and accounted for these FX forward contracts as fair value hedges. These FX forward contracts matured during the third quarter of 2024 commensurate with the final payment under the Settlement Agreement, resulting in cash received of $2.0 presented within “Net cash used in discontinued operations” within the consolidated statement of cash flows for the year ended December 31, 2024. Refer to Note 4 to the consolidated financial statements for additional details.
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, interest rate swaps, and FX forward contracts. These financial instruments, other than trade accounts receivable, are placed with high-quality financial institutions throughout the world. 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 significant loss, 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.
Cash and Other Commitments
Balances under the Amended Credit Agreement are payable in full on September 9, 2030. Our 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 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 balance is payable in full on September 9, 2030.
We use operating leases to finance certain equipment, vehicles and properties. At December 31, 2025, we h ad $87.9 of future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year.
Capital expenditures for 2025 t otaled $92.1 , compared to $38.0 and $23.9 in 2024 and 2023, respectively. Capital expenditures in 2025 related prima ril y to upgrades to existing, and expansion into new, manufacturing facilities, including replacement of equipment. 2025 included $62.0 related to capacity expansions for our engineered air movement and handling and cooling products businesses within our HVAC reportable segment. We expect 2026 capital expenditures to approximate $135.0 to $165.0, with a significant portion related to upgrades to existing, and continued expansion into the new manufacturing facilities.
In 2025, we made contributions and direct benefit payments of $14.2 to our defined benefit pension and postretirement benefit plans. We expect to make $16.5 of minimum required funding contributions and direct benefit payments in 2026. Our pension plans have not experienced any liquidity difficulties or counterparty defaults due to the volatility in the credit markets. Our pension fund assets had returns of approximately 6.0% in 2025. See Note 11 to our consolidated financial statements for further disclosure of expected future contributions and benefit payments.
On a ne t basis, both from continuing and discontinued operations, net incom e tax payments totaled $57.3, $43.5, and $58.4 in 2025, 2024, and 2023, respectively. In 2025, we made payments of $63.6 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $6.3. The amount of income taxes that we receive or pay annually is dependent on various factors, including the timing of certain deductions. Deductions and the amount of income taxes can and do vary from year-to-year.
Our Certificate of Incorporation provides that we 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, subject to limited exceptions. While we maintain insurance for this type of liability, the liability could exceed the amount of the insurance coverage.
We continually review each of our businesses in order to determine their long-term strategic fit. These reviews could result in selected acquisitions to expand an existing business or result in the disposition of an existing business. In addition, you should read “Risk Factors,” “Results for Reportable Segments and Corporate Expense” included in this MD&A, and “Business” for an understanding of the risks, uncertainties and trends facing our businesses.
Off-Balance Sheet Arrangements
A s of December 31, 2025 , except as discussed in the contractual obligations table below, we did not have any material guarantees, off-balance sheet arrangements or purchase commitments other than the following: (i) $26.6 of certain standby letters of credit outstanding, all of which relate to self-insurance or environmental matters and $10.5 of which reduce the available borrowing capacity on our domestic revolving credit facility, (ii) $7.2 of letters of credit outstanding, all of which reduce the available borrowing capacity on our foreign trade facilities, and (iii) $63.5 of surety bonds.
Contractual Obligations
The following is a summary of our primary contractual obligations as of December 31, 2025:
Total
Due
Within
1 Year
Due in
1-3 Years
Due in
3-5 Years
Due After
5 Years
Long-term debt obligations (1)
Pension and postretirement benefit plan contributions and payments (2)
Purchase and other contractual obligations (3)
Future minimum operating lease payments (4)
Interest payments (1)
Total contractual cash obligations (5)
(1) These amounts do not include $215.0 of borrowing incurred in February 2026 in connection with the Crawford acquisition, the repayment of which is due on September 9, 2030, with associated interest payments (assuming no subsequent payments of the principal balance until September 9, 2030) of $10.1, $21.9, and $19.7 due within one year, 1-3 years, and 3-5 years, respectively, with no amounts due thereafter.
(2) Estimated minimum required pension funding and pension and postretirement benefit payments are based on actuarial estimates using current assumptions for, among other things, discount rates, expected long-term rates of return on plan assets (where applicable), and health care cost trend rates. The expected pension contributions for the U.S. plans in 2026 and therea fter reflect the minimum required contributions under the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008. These contributions do not reflect potential voluntary contributions, or additional contributions that may be required in connection with acquisitions, dispositions or related plan mergers. See Note 11 to our consolidated financial statements for additional information on expected future contributions and benefit payments.
(3) Represents contractual commitments to purchase goods and services at specified dates.
(4) Represents rental payments under operating leases with remaining non-cancelable terms in excess of one year.
(5) Contingent obligations, such as environmental accruals and those relating to uncertain tax positions generally do not have specific payment dates and accordingly have been excluded from the above table. We believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $4.0. In addition, the above table does not include potential payments under our derivative financial instruments.
Critical Accounting 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. We base these estimates and judgments on historical experience, the current economic environment and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and judgments. The accounting estimates 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 listed below. This section should be read in conjunction with Notes 1 and 2 to our consolidated financial statements, which include a detailed discussion of our accounting policies and the application of estimates.
Acquisition Accounting
We regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material. The acquired assets and liabilities are recorded at estimates of fair value as determined by management, based on information available and assumptions as to future operations, which impact the amount of future amortization expense and possible impairment charges.
Goodwill, intangible assets, long-lived assets (primarily property, plant and equipment), and inventories, generally represent the largest assets of our acquisitions. The primary identifiable intangible assets that we acquire typically consist of customer relationships and contracts, indefinite-lived and definite-lived trademarks, technology, and backlog. The fair market value assessment for intangible assets requires judgment and estimates that can be affected by various factors over time, which may cause final amounts to be materially adjusted from original estimates in subsequent periods. The fair value of the customer relationships and contracts and backlog identifiable intangible assets has been estimated using the multi-period excess earnings method. Significant model inputs and judgments used in the multi-period excess earnings method include economic life,
estimated future revenue growth rates, expenses based on historical results and forecasts, and a discount rate based on a weighted average cost of capital. The weighted average cost of capital was determined based on a market participant capital structure, cost of capital, inherent business risk profile and long-term growth expectations. The definite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis that reflects the economic benefit of the asset. The determination of the useful lives is based upon the nature, competitive position, life cycle position, and historical and expected future cash flows of each acquired asset, as well as our commitment to support these assets through continued investment and legal infringement protection.
Additionally, the fair value of the trademark and technology identifiable intangible assets has been estimated using the relief-from-royalty-method, which values the intangible assets by estimating royalties saved through ownership of an asset. Significant model inputs and judgments used in the relief-from-royalty-method include estimated future revenue growth rates, economic life, an estimated royalty rate, and a discount rate based on a weighted average cost of capital. The weighted average cost of capital was determined based on a market participant capital structure, cost of capital, inherent business risk profile and long-term growth expectations. The definite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis that reflects the economic benefit of the asset. The determination of the useful lives (or the indefinite life) is based upon the nature, competitive position, life cycle position, and historical and expected future cash flows of each acquired asset, as well as our commitment to support these assets through continued investment and legal infringement protection. Inventories acquired in an acquisition are recorded at fair value, which approximates a market participant’s estimated selling price adjusted for (i) costs to complete, (ii) costs to sell, and (iii) a reasonable profit allowance to the seller for costs incurred. We record the excess of consideration transferred over the fair value of the identifiable net assets acquired as goodwill.
We believe the accounting estimates and assumptions are reasonable based on historical experience and information obtained from management of the acquired entity at or near the acquisition. When appropriate, our estimates of the acquired fair values include assistance from an independent third-party. There is inherent uncertainty in the accounting estimates as assumptions are forward-looking and could be affected by future economic and market conditions, among other factors.
Impairment of Goodwill and Indefinite-Lived Intangible Assets
Goodwill and indefinite-lived intangible assets are not amortized, but instead are subject to impairment testing. We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently as we continually assess whether a triggering event has occurred that indicates the carrying value may exceed the implied fair value. Monitoring the results of each of our reporting units as a means of identifying trends and/or matters that may impact their financial results, and be an indicator of a potential impairment, requires judgment. The trends and/or matters that we specifically monitor for each of our reporting units include:
• Significant variances in financial performance (e.g., revenues, earnings and cash flows) in relation to expectations and historical performance;
• Significant changes in end markets or other economic factors;
• Significant changes or planned changes in our use of a reporting unit’s assets; and
• Significant changes in customer relationships and competitive conditions.
The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units. We have the option to assess impairment through a qualitative assessment, which includes factors such as general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which a reporting unit operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. When a potential impairment is indicated, we perform quantitative testing by comparing the estimated fair value of the reporting unit to the carrying value of the reported net assets. Under our quantitative testing, fair value is generally based on discounted projected cash flows, but we also consider factors such as comparable industry price multiples. The revenue growth rates included in the financial projections are our best estimates based on current and forecasted market conditions, and the profit margin assumptions are projected by each reporting unit based on current cost structure and, when applicable, anticipated net cost increases/reductions.
The calculation of fair value for our reporting units incorporates many assumptions which have inherent uncertainties including future growth rates, profit margin, tax rates and discount factors. Changes in economic and operating conditions impacting these assumptions could result in impairment charges in future periods.
As mentioned above, we estimate the fair value of indefinite-lived intangible assets (certain of our trademarks) using a relief-from-royalty method. The royalty rate, which is based on the estimated rate applied against forecasted sales, is tax-effected and discounted to present value using a discount rate commensurate with the relative risk of achieving the cash flows attributable
to the asset. Management judgment is necessary to determine key assumptions, including revenue growth rates, perpetual revenue growth rates, royalty rates and discount rates.
During the fourth quarter of 2025, we performed our analyses on the goodwill of our reporting units. The fair value of the assets related to the KTS and Sigma & Omega acquisitions approximate their carrying value. If KTS and Sigma & Omega are unable to achieve their current financial forecasts or there is a change in assumptions used in KTS's and Sigma & Omega's analyses (e.g. projected revenues and profit growth rates, discount rates, industry price multiples, etc.), we may be required to record an impairment charge in a future period related to their goodwill. As of December 31, 2025, KTS's and Sigma & Omega's goodwill totaled $104.4 and $77.4, respectively. A 10% decline in KTS's and Sigma & Omega's fair value would result in an impairment of approximately $28.4 and $7.1, respectively.
During the fourth quarter of 2025, in connection with the annual impairment analyses of indefinite-lived intangible assets, we determined that the implied value of ASPEQ's trademarks approximated their carry value. If ASPEQ is unable to achieve its current revenue forecast, or there is a change in assumptions used in ASPEQ’s analysis (e.g., projected revenues, royalty rates, and discount rates, etc.), we may be required to record an impairment charge in a future period related to its trademarks. As of December 31, 2025, ASPEQ’s trademarks totaled $51.5. A 10% reduction in ASPEQ's revenues projections or a 1% increase in the discount rate used in the impairment analysis would result in an impairment of $5.1 or $6.5, respectively.
Additionally, during the fourth quarter of 2025, a decision was made to exit a minor product line within our ULC business. As a result, we recorded an impairment of $0.7 related to the indefinite-lived trademark associate with ULC. The remaining fair value of the ULC trademark is $4.7.
See Note 10 to our consolidated financial statements for additional details.
Definite-lived Intangible Assets
Determining whether an impairment loss occurred for finite-lived intangible assets requires a comparison of the carrying amount to the undiscounted cash flows expected to be generated by the assets. These analyses require management to make judgments and estimates about future revenues, expenses, and market conditions. The calculation of fair value for our reporting units incorporates many assumptions that have inherent uncertainties including future growth rates, profit margin, and tax rates. Changes in economic and operating conditions impacting these assumptions could result in impairment charges in future periods.
Contingent Liabilities
Numerous claims, complaints and proceedings arising in the ordinary course of business have been asserted or are pending against us or certain of our subsidiaries (collectively, “claims”). These claims relate to litigation matters (e.g., contracts, intellectual property and competitive claims), environmental matters, product liability matters, and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). 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 continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable , and recognize a liability, if any, for these contingencies based on an analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Such analysis includes making judgments concerning matters such as the costs associated with environmental matters, the outcome of negotiations, and the impact of evidentiary requirements, including historical and payment experience. As many contingencies are resolved over long periods of time, liabilities may change in the future due to new developments (including new discovery of facts, changes in legislation, and outcomes of similar cases through the judicial system), changes in assumptions, or changes in our settlement strategy. While we base our assumptions on facts currently known to us, they entail inherently subjective judgments and uncertainties. As a result, our current assumptions for estimating these liabilities may not prove accurate, and we may be required to adjust these liabilities in the future, which could result in charges to earnings. These variances relative to current expectations could have a material impact on our financial position and results of operations in future periods.
Our recorded liabilities related to these matter s, primarily associated with environmental matters, totaled $43.7 and $39.9 at December 31, 2025 and 2024, respectively.
Our environmental accruals relate predominantly to legacy sites that the Company no longer operates as part of its ongoing business. These environmental accruals cover anticipated costs, including investigation, remediation, and maintenance of clean-up sites. Accordingly, our estimates may change based on future developments, including new or changes in existing environmental laws or policies, differences in costs required to complete anticipated actions from estimates provided, future findings of investigation or remediation actions, changes in our allocation of shared remediation costs, or alteration to the expected remediation plans. Our estimates are based primarily on investigations and remediation plans established by
independent consultants, regulatory agencies and potentially responsible third parties. A 10% increase in our environmental reserves would result in a charge of approximately $3.2.
See Note 15 to our consolidated financial statements for additional discussion.
Revenue Recognition
We recognize revenue in accordance with Accounting Standards Codification 606, which requires revenue to be recognized over-time or at a point in time.
Most of our businesses recognize revenue at a point in time as satisfaction of the related performance obligations occur at the time of shipment or delivery, while certain of our businesses recognize revenue and costs for certain complex long-term, subscription, or service contracts over-time.
The revenue for complex long-term contracts is often recorded based on the percentage of costs incurred to date for each contract to the estimated total costs for such a contract at completion (cost-to-cost input method) because it best depicts the transfer of control to the customer that occurs as we incur costs. The revenue for subscription or service contracts are typically recorded based on the period of subscription delivered or service progress made. In 2025, 2024, and 2023 we recognized revenues of $238.9, $213.4 and $173.2, respectively, under such methods.
Our estimation process for determining revenues and costs for our complex long-term contracts is based upon (i) our historical experience, (ii) the professional judgment and knowledge of our engineers, project managers, operations, and financial professionals, (iii) historical award experience and objective evidence related to unapproved change orders and claims, and (iv) an assessment of the key underlying factors (see below).
We believe the underlying factors used to estimate our complex long-term contracts costs to complete and percentage-of-completion are sufficiently reliable to provide a reasonable estimate of revenue and profit; however, due to the length of time over which revenues are generated and costs are incurred, along with the judgment required in developing the underlying factors, the variability of revenue and cost can be significant. Factors that may affect revenue and costs relating to complex long-term contracts include, but are not limited to, the following:
• Cost Recovery for Product Design Changes and Claims — On occasion, design specifications may change during the course of the contract. Any additional costs arising from these changes may be supported by change orders, or we may submit a claim to the customer. Our rights to, and amount we anticipate we will, collect requires judgment.
• Material Availability and Costs — Our estimates of material costs generally are based on existing supplier relationships, adequate availability of materials, prevailing market prices for materials, and, in some cases, long-term supplier contracts. Changes in our supplier relationships, delays in obtaining materials, or changes in material prices can have a significant impact on our cost and profitability estimates.
• Use of Subcontractors — Our arrangements with subcontractors are generally based on fixed prices; however, our estimates of the cost and profitability can be impacted by subcontractor delays, customer claims arising from subcontractor performance issues, or a subcontractor’s inability to fulfill its obligations.
• Labor Costs and Anticipated Productivity Levels — Where applicable, we include the impact of labor improvements in our estimation of costs, such as in cases where we expect a favorable learning curve over the duration of the contract. In these cases, if the improvements do not materialize, costs and profitability could be adversely impacted. Additionally, to the extent we are more or less productive than originally anticipated, estimated costs and profitability may also be impacted.
• Effect of Foreign Currency Fluctuations — Fluctuations between currencies in which our long-term contracts are denominated and the currencies under which contract costs are incurred can have an impact on profitability. When the impact on profitability is potentially significant, we may enter into FX forward contracts or prepay certain vendors for raw materials to manage the potential exposure. See Note 14 to our consolidated financial statements for additional details on our FX forward contracts.
Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation's percentage of completion. Anticipated losses on long-term contracts are recognized when such losses become evident.
In contracts where a portion of the price may vary, we estimate the variable consideration at the amount to which we expect to be entitled, which is included in the transaction price to the extent it is probable that a significant reversal of cumulative
revenue recognized will not occur. We analyze the risk of a significant revenue reversal and, if necessary, constrain the amount of variable consideration recognized in order to mitigate this risk.
See Notes 1 and 5 to our consolidated financial statements for further information on our revenue recognition policies.
Employee Benefit Plans
Defined benefit plans cover a portion of our salaried and hourly paid employees, including certain employees in foreign countries. Additionally, domestic postretirement plans provide health and life insurance benefits for certain retirees and their dependents. We recognize changes in the fair value of plan assets and actuarial gains and losses into earnings during the fourth quarter of each year, unless earlier remeasurement is required, as a component of net periodic benefit expense. The remaining components of pension/postretirement expense, primarily interest costs and expected return on plan assets, are recorded on a quarterly basis.
The costs and obligations associated with these plans are determined based on actuarial valuations. The critical assumptions used in determining these related expenses and obligations are discount rates and healthcare cost projections. These critical assumptions are calculated based on company data and appropriate market indicators, and are evaluated at least annually by us in consultation with outside actuaries. Other assumptions involving demographic factors, such as retirement patterns and mortality, are evaluated periodically and are updated to reflect our experience and expectations for the future. While management believes that the assumptions used are appropriate, actual results may differ.
The discount rate enables us to state expected future cash flows at a present value on the measurement date. This rate is the yield on high-quality fixed income investments at the measurement date. A lower discount rate increases the present value of benefit obligations and increases pension expense. Including the effects of recognizing actuarial gains and losses into earnings as described above, a 50 basis point decrease in the discount rate for our domestic plans would have increased our 2025 pension expense by approximately $6.9, a nd a 50 basis point increase in the discount rate would have decreased our 2025 pension expense by appro ximately $6.5.
The trend in healthcare costs is difficult to e stimate, and it can significantly impact our postretirement liabilities and costs. The healthcare cost trend rate for 2025, which is the weighted-average annual projected rate of increase in the per capita cost of covered benefits, is 6.25%. This rate is assumed to decrease to 5.0% by 2031 and then remain at that level.
See Note 11 to our consolidated financial statements for further information on our pension and postretirement benefit plans.
Income Taxes
We record our income taxes based on the Income Taxes Topic of the Codification, which includes an estimate of the amount of income taxes payable or refundable for the current year and deferred income tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.
Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, federal or foreign statutory tax audits or estimates and judgments used.
Realization of deferred tax assets involves estimates regarding (i) the timing and amount of the reversal of taxable temporary differences, (ii) expected future taxable income, and (iii) the impact of tax planning strategies. We believe that it is more likely than not that we will not realize the benefit of certain deferred tax assets and, accordingly, have established a valuation allowance against them. In assessing the need for a valuation allowance, we consider all available positive and negative evidence, including past operating results, projections of future taxable income and the feasibility of and potential changes to ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that the remaining deferred tax assets will be realized through future taxable earnings or alternative tax strategies. However, deferred tax assets could be reduced in the near term if our estimates of taxable income are significantly reduced or tax strategies are no longer viable.
The amount of income tax that we pay annually is dependent on various factors, including the timing of certain deductions and ongoing audits by federal, state and foreign tax authorities, which may result in proposed adjustments. We perform reviews of our income tax positions on a quarterly basis and accrue for potential uncertain tax positions. Accruals for these uncertain tax positions are classified as “Income taxes payable” and “Deferred and other income taxes” in our consolidated balance sheets based on an expectation as to the timing of when the matter will be resolved. As events change or resolutions occur, these accruals are adjusted, such as in the case of audit settlements with taxing authorities. We believe we have adequately provided
for any reasonably foreseeable outcome related to these matters. An increase of 1.0% in our 2025 nominal tax rate would have resulted in an additional income tax provision for continuing operations for the year ended December 31, 2025 of $3.1.
Our future results may include favorable or unfavorable adjustments to our estimated tax liabilities due to closure of income tax examinations, statute expirations, new regulatory or judicial pronouncements, changes in tax laws, changes in projected levels of taxable income, future tax planning strategies, or other relevant events. See Note 12 to our consolidated financial statements for additional details regarding our uncertain tax positions.
New Accounting Pronouncements
See Note 3 to our consolidated financial statements for a discussion of recent accounting pronouncements.
