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What changed in SPX Technologies, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SPX Technologies, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+341 added−360 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in SPX Technologies, Inc.'s 2023 10-K

341 paragraphs added · 360 removed · 228 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

35 edited+10 added−14 removed31 unchanged
Biggest changeThe segment serves a cu stomer base in North America, Europe, and Asia. Core brands for our cooling products include Marley, Recold, SGS and Cincinnati Fan, while our heating and ventilation products are sold under the Berko, Qmark, Fahrenheat, Leading Edge, Patterson-Kelley, Weil-McLain, and Williamson-Thermoflo brands.
Biggest changeCore brands for our cooling products include Marley, Recold, SGS, Cincinnati Fan, TAMCO, and Ingénia , while our heating products are sold under the Berko, Qmark, Fahrenheat, Leading Edge, Patterson-Kelley, Weil-McLain, Williamson-Thermoflo, INDEECO, Heatrex, AccuTherm, Brasch, Spectrum, BannerDay PipeHeating, and Solar Products brands. 3 Detection and Measurement Reportable Segmen t Our Detection and Measurement reportable segment had revenues of $618.9, $547.1, and $467.4 in 2023, 2022 and 2021, respectively, and backlog of $244.5 and $251.0 as of December 31, 2023 and 2022 , respectively.
Based on 1 a review of our post-spin portfolio and the belief that a recovery within the power generation markets was unlikely in the foreseeable future, we decided coming out of the Spin-Off that our strategic focus at that time would be on our (i) scalable growth businesses that serve the heating, ventilation and cooling (“HVAC”) and detection and measurement markets and (ii) power transformer and process cooling systems businesses.
Based on a review of our post-spin portfolio and the belief that a recovery within the power generation markets was unlikely in the foreseeable future, we decided coming out of the Spin-Off that our strategic focus at that time would be on our (i) scalable growth businesses that serve the heating, ventilation and cooling (“HVAC”) and detection and measurement markets and (ii) power transformer and process cooling systems businesses.
Each share of Legacy SPX’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the consummation of the Holding Company Reorganization was automatically converted into an equivalent corresponding share of the Company's common stock having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Legacy SPX common stock being converted.
Each share of Legacy SPX’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the consummation of the Holding Company Reorganization was automatically converted into an equivalent corresponding share of the Company's common stock having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Legacy SPX 1 common stock being converted.
In addition, specific reliable 4 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.
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.
As previously indicated, we completed the wind-down of our DBT and Heat Transfer businesses in the fourth quarters of 2021 and 2020, res pectively. International Operations We are a multinational co rporation with operations in over 15 countries. Sales outside the United States were $237.4, $228.0 and $192.4 in 2022, 2021 and 2020, respectively.
As previously indicated, we completed the wind-down of our DBT and Heat Transfer businesses in the fourth quarters of 2021 and 2020, res pectively. International Operations We are a multinational co rporation with operations in over 15 countries. Sales outside the United States were $287.1 , $237.4 and $228.0 in 2023, 2022 and 2021, respectively.
For information regarding COVID-19 impacts, please refer to “MD&A - COVID-19 Pandemic, Supply Chain Disruptions and Labor Shortages, and Cost Increases.” Competition Our competitive position cannot be determined accurately in the aggregate or by reportable or operating segment since we and our competitors do not offer all the same product lines or serve all the same markets.
For information regarding supply chain disruptions and labor shortages refer to “MD&A - Supply Chain Disruptions, Labor Shortages, and Cost Increases.” Competition Our competitive position cannot be determined accurately in the aggregate or by reportable or operating segment since we and our competitors do not offer all the same product lines or serve all the same markets.
Human Capital Resources At December 31, 2022, we had approximately 3,300 employees, with approximately 2,600 employed in the United States. We also leverage temporary workers to provide flexibility for our business and manufacturing needs. Six domestic collective bargaining agreements cover approximately 340 of our employees. In addition, we have various collective labor arrangements covering certain of our non-U.S. employee groups.
Human Capital Resources At December 31, 2023, we had approximately 4,100 employees, with approximately 3,300 employed in the United States. We also leverage temporary workers to provide flexibility for our business and manufacturing needs. Six domestic collective bargaining agreements cover approximately 460 of our employees. In addition, we have various collective labor arrangements covering certain of our non-U.S. employee groups.
While we generally have experienced satisfactory labor relations, we are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes. We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.
While we generally have experienced satisfactory labor relations, we are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes. We believe that our future success is impacted by our continued ability to attract and retain highly skilled employees.
With operations in 15 countries and approximat ely 3,300 emp loyees, we offer a wide array of highly engineered infrastructure products with strong brands. HVAC solutions offered by our businesses include package and process cooling equipment, engineered air quality solutions, residential and commercial boilers, comfort heating, and ventilation products.
With operations in 15 countries and approximat ely 4,100 emp loyees, we offer a wide array of highly engineered infrastructure products with strong brands. HVAC solutions offered by our businesses include package and process cooling equipment, engineered air movement solutions, residential and commercial boilers, electrical heating, and ventilation products.
These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results.
These and other risks and uncertainties are further discussed in other sections of this document. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results.
As such, we strive to provide an environment where employees are developed and provided challenging career growth opportunities and know that their efforts and contributions are appreciated. We offer a “Total Rewards” program that provides comprehensive compensation and benefits packages that are competitive with the market and choices designed to reward employees and assist them in managing their well-being.
As such, we strive to provide an environment where employees are developed and provided challenging career growth opportunities. We offer a “Total Rewards” program that provides comprehensive compensation and benefits packages that are designed to reward employees and assist them in managing their well-being.
We are subject to increases in the prices of many of our key raw materials, including petroleum-based products and steel. In recent years, we have generally been able to offset increases in raw material costs through corresponding product pricing actions. Occasionally, we are subject to long-term supplier contracts, which may increase our exposure to pricing fluctuations.
In recent years, we have generally been able to offset increases in raw material costs through corresponding product pricing actions. Occasionally, we are subject to long-term supplier contracts, which may increase our exposure to pricing fluctuations.
Patents/Trademarks We o wn 141 domestic and 366 foreign patents (comprising 132 patent “families”) (foreign patents include patents in individual countries in the European Union (“EU”), as well as EU-level patents), including 18 patents that were issued in 2022, covering a variety of our products and manufacturing methods. We also own a number of registered trademark s.
Patents/Trademarks We own 160 domestic and 360 foreign patents (comprising 140 patent “families”) (foreign patents include patents in individual countries in the European Union (“EU”), as well as EU-level patents), including 13 patents that were issued in 2023, covering a variety of our products and manufacturing methods. We also own a number of registe red trademark s.
Our market leading brands, coupled with our commitment to continuous innovation and focus on our customers’ needs, enables our HVAC cooling and heating businesses to serve an expanding number of industrial, commercial and residential customers.
Our market leading brands, coupled with our commitment to continuous innovation and focus on our customers’ needs, enables our HVAC cooling and heating businesses to serve an expanding number of industrial, commercial and residential customers. Growth for our HVAC businesses will be driven by innovation, increased scalability, and our ability to meet the needs of broader markets.
The post-acquisition operating results of ULC and Sensors & Software are reflected within our Detection and Measurement reportable segment. On April 19, 2021 and August 2, 2021, we completed the acquisitions of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, “Sealite”), and Enterprise Control Systems Ltd (“ECS”), respectively.
On April 19, 2021 and August 2, 2021, we completed the acquisitions of Sealite Pty Ltd and affiliated entities, including Sealite USA, LLC (doing business as Avlite Systems) and Star2M Pty Ltd (collectively, “Sealite”), and of Enterprise Control Systems Ltd (“ECS”), respectively.
As previously indicated, we acquired ITL in 2022, Sealite, ECS, and Cincinnati Fan in 2021, and ULC and Sensors & Software in 2020. Divestitures We regularly review and negotiate potential divestitures in the ordinary course of business, some of which are or may be m aterial.
Acquisitions We regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material. As previously indicated, we acquired Ingénia in 2024, TAMCO and ASPEQ in 2023, ITL in 2022, and Sealite, ECS, and Cincinnati Fan in 2021.
In 2022, we continued deployment of our Frontline Leader Program and have now trained more than 180 leaders in the fundamentals of effective leadership, communication, and team development. We also launched the third cohort of our Executive Leadership Development Program expanding the bench strength of our most senior leaders.
In 2023, we continued deployment of our Frontline Leader Program and have now trained more than 240 leaders in the fundamentals of effective leadership, communication, and team development. We also continue expanding the strength of our most senior leaders through our Executive Leadership Development Program that has been conducted for three cohorts.
We intend to expand our portfolio of specialized products through new, innovative hardware and software solutions in an attempt to (i) further capitalize on the detection and measurement markets we currently serve and (ii) expand the number of markets that we serve. Reportable Segments Our operating segments are aggregated into the following two reportable segments: HVAC and Detection and Measurement.
Our technology and decades of experience have afforded us a strong position in specific detection and measurement markets. We intend to expand our portfolio of specialized products through new, innovative hardware and software solutions in an attempt to (i) further capitalize on the detection and measurement markets we currently serve and (ii) expand the number of markets that we serve.
The board of managers of the divested subsidiaries each received a solvency opinion from an independent advisory firm that the divested subsidiaries were solvent after giving effect to the divestiture.
The board of managers of the divested subsidiaries each received a solvency opinion from an independent advisory firm that the divested subsidiaries were solvent after giving effect to the Asbestos Portfolio Sale. On April 3, 2023, we completed the acquisition of T.A. Morrison & Co. Inc.
The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 6
Copies of these reports are available free of charge on our website as soon as reasonably practicable after we file the reports with the SEC. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 6
The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Financial Accounting Standards Board Codification (“Codification”).
Reportable Segments Our operating segments are aggregated into the following two reportable segments: HVAC and Detection and Measurement. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment.
Operating income for our reportable segments is determined before considering impairment and special charges, long-term incentive compensation, certain other operating income/expense, other indirect corporate expenses, intangible asset amortization expense, inventory step-up charges, and certain other acquisition-related costs. This is consistent with the way our Chief Operating Decision Maker (“CODM”) evaluates the results of each segment.
In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Financial Accounting Standards Board Codification (“Codification”). Operating income for our reportable segments is determined before considering impairment and special charges, long-term incentive compensation, certain other operating income/expense, other indirect corporate expenses, intangible asset amortization expense, inventory step-up charges, and certain other acquisition-related costs.
In addition, business difficulties experienced by a third-party supplier can lead to the interruption of our ability to obtain the outsourced product or component and ultimately to our inability to supply products to our customers. We believe that we generally will be able to continue to obtain adequate supplies of key products, components or appropriate substitutes at reasonable costs.
In addition, business difficulties experienced by a third-party supplier can lead to the interruption of our ability to obtain the outsourced product or component and ultimately to our inability to supply certain products to our customers on a timely basis or at all.
We believe that through these efforts we can unlock greater potential, provide new opportunities for our employees, and benefit from diverse backgrounds and points of view. Valuing diversity and inclusion is, and will be, an on-going part of the culture we are continuously working to strengthen.
We believe through these efforts we can unlock greater potential, provide new opportunities for our employees, and benefit from diverse backgrounds and points of view.
As previously indicated, the divestiture of three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets, was completed in the fourth quarter of 2022 and the divestiture of Transformer Solutions was completed in 2021. There were no divestitures in 2020.
Divestitures We regularly review and negotiate potential divestitures in the ordinary course of business, some of which are or may be m aterial. As previously indicated, the divestiture of three wholly-owned subsidiaries that hold asbestos liabilities and certain assets, including related insurance assets, was completed in 2022 and the divestiture of Transformer Solutions was completed in 2021.
The segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, fare collection systems, communication technologies, and obstruction lighting. The primary distribution channels for the segment’s products are direct to customers and third-party distributors. The segment serves a global customer base, with a strong presence in North America, Europe, Africa and Asia.
The primary distribution channels for the segment’s products are direct to customers and third-party distributors. The segment serves a global customer base in North America, Europe, Africa and Asia. Core brands for our underground pipe and cable locators and inspection and rehabilitation equipment are Radiodetection, Pearpoint, Schonstedt, Dielectric, Riser Bond, Cues, ULC Robotics, and Sensors & Software.
As a result of completing wind-down activities, we are reporting the DBT business as a discontinued operation for all periods presented. On September 2, 2020 and November 11, 2020, we completed the acquisitions of ULC Robotics (“ULC”) and Sensors & Software, Inc. (“Sensors & Software”), respectively.
As a result of completing wind-down activities, we are reporting the DBT business as a discontinued operation for all periods presented.
Many of our businesses closely follow changes in the industries and end markets they serve. In addition, certain businesses have seasonal fluctuations. Historically, our businesses generally tend to be stronger in the second half of the year. Our website address is www.spx.com. Information on our website is not incorporated by reference herein.
Historically, our businesses generally tend to be stronger in the second half of the year. Our website address is www.spx.com. Information on our website is not incorporated by reference herein. We file reports with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and certain amendments to these reports.
We have focused significant time on re-working many of our policies and programs to provide increased flexibility and work-life balance to our team members. Together, these opportunities present significant growth potential for our employees from a financial, professional, and personal standpoint.
We have focused many of our policies and programs to provide increased flexibility and work-life balance to our team members.
Other Matters No customer or group of customers that, to our knowledge, are under common control accounted for more than 10 % of our consolidated revenues for any period presented. Our businesses maintain sufficient levels of working capital to support customer requirements, particularly inventory. We believe our businesses’ sales and payment terms are generally similar to those of our competitors.
Valuing diversity and inclusion is, and will be, an on-going part of the culture we are continuously working to strengthen. 5 Other Matters No customer or group of customers that, to our knowledge, are under common control accounted for more than 10 % of our consolidated revenues for any period presented.
HVAC Reportable Segment Our HVAC reportable segment had revenues of $913.8, $752.1, and $740.8 in 2022, 2021 and 2020, respectively, and backlog of $243.1 and $226.9 as of December 31, 2022 and 2021 , respectively. Approximately 98% of the segment’s backlog as of December 31, 2022 is expected to be recognized as revenue during 2023.
This is consistent with the way our Chief Operating Decision Maker (“CODM”) evaluates the results of each segment. HVAC Reportable Segment Our HVAC reportable segment had revenues of $1,122.3 , $913.8, and $752.1 in 2023, 2022 and 2021, respectively, and backlog of $306.1 and $243.1 as of December 31, 2023 and 2022 , respectively.
Our fare collection systems are sold under the Genfare brand, our communication technologies products are sold under the TCI and ECS brands, and our obstruction lighting products are sold under the Flash Technology, ITL, Sabik Marine, Sealite, and Avlite brands. 3 Acquisitions We regularly review and negotiate potential acquisitions in the ordinary course of business, some of which are or may be material.
Our transportation systems are sold under the Genfare brand, our communication technologies products are sold under the TCI and ECS brands, and our aids to navigation products are sold under the Flash Technology, ITL, Sabik Marine, Sealite, and Avlite brands.
The results of the survey informed discussions about what is most important to our employees and helped us develop action plans to focus on those priorities. During 2022, we continued our focus on enhancing our Diversity & Inclusion programs, aimed at ensuring that we provide an inclusive environment where all employees feel valued and respected.
At the beginning of 2023, we launched our updated Global Employee Survey with over 90% employee participation. This annual survey captures employee feedback on topics related to Engagement and Diversity & Inclusion. The results of the survey informed discussions about what is most important to our employees and helped us develop action plans to focus on those priorities.
The segment engineers, designs, manufactures, installs and services cooling products and engineered air quality solutions for the HVAC and industrial markets, as well as heating and ventilation products for the residential and commercial markets. The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers.
Approximately 98 % of the segment’s backlog as of December 31, 2023 is expected to be recognized as revenue during 2024. The segment engineers, designs, manufactures, installs and services cooling products and engineered air movement solutions for the HVAC industrial and power generation markets, as well as heating and ventilation products for the residential, industrial, and commercial markets.
Our detection and measurement solutions enable utilities, telecommunication providers and regulators, and municipalities and transit authorities to build, monitor and maintain vital infrastructure. Our technology and decades of experience have afforded us a strong position in specific detection and measurement markets.
Our detection and measurement product lines encompass underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, transportation systems, communication technologies, and aids to navigation. Our detection and measurement solutions enable utilities, telecommunication providers and regulators, and municipalities and transit authorities to build, monitor and maintain vital infrastructure.
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Particular risks and uncertainties facing us include economic, business and other risks stemming from our internal operations, legal and regulatory risks, and uncertainties with respect to costs and availability of raw materials, availability of labor, pricing pressures, pension funding requirements, integration of acquisitions, and changes in the economy, as well as the impacts of the coronavirus disease (the “COVID-19 pandemic”), which is further discussed in other sections of this document.
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Particular risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include the following: cyclical changes and specific industry events in the Company’s markets; changes in anticipated capital investment and maintenance expenditures by customers; availability, limitations or cost increases of raw materials and/or commodities that cannot be recovered in product pricing; the impact of competition on profit margins and the Company’s ability to maintain or increase market share; inadequate performance by third-party suppliers and subcontractors for outsourced products, components and services and other supply-chain risks; the uncertainty of claims resolution with respect to environmental and other contingent liabilities; the impact of climate change and any legal or regulatory actions taken in response thereto; cyber-security risks; risks with respect to the protection of intellectual property, including with respect to the Company’s digitalization initiatives; the impact of overruns, inflation and the incurrence of delays with respect to long-term fixed-price contracts; defects or errors in current or planned products; the impact of pandemics and governmental and other actions taken in response; domestic economic, political, legal, accounting and business developments adversely affecting the Company’s business, including regulatory changes; changes in worldwide economic conditions, including as a result of geopolitical conflicts; uncertainties with respect to the Company’s ability to identify acceptable acquisition targets; uncertainties surrounding timing and successful completion of acquisition or disposition transactions, including with respect to integrating acquisitions and achieving cost savings or other benefits from acquisitions; the impact of retained liabilities of disposed businesses; potential labor disputes; and extreme weather conditions and natural and other disasters.
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ULC is a leading developer of robotic systems, mechanical learning applications, and inspection technology for the energy, utility, and industrial markets, while Sensors & Software is a manufacturer and distributor of ground penetrating radar products used for locating underground utilities, detecting unexploded ordinances, and geotechnical and geological investigations.
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(“TAMCO”), a market leader in motorized and non-motorized dampers that control airflow in large-scale specialty applications in commercial, industrial, and institutional markets. The post-acquisition operating results of TAMCO are reflected within our HVAC reportable segment.
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Growth for our HVAC businesses will be driven by innovation, increased scalability, and our ability to meet the needs of broader markets. 2 Our detection and measurement product lines encompass underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, fare collection systems, communication technologies, and obstruction lighting.
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On June 2, 2023, we completed the acquisition of ASPEQ Heating Group (“ASPEQ”), a leading provider of electrical heating solutions to customers in industrial and commercial markets. The post-acquisition operating results of ASPEQ are reflected within our HVAC reportable segment. 2 On February 7, 2024, we completed the acquisition of Ingénia Technologies Inc.
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During 2022, management concluded that, although the assessment of our reportable segments was performed using the appropriate measures as defined by the Segment Reporting Topic of the Codification, the disclosure of operating income for each of our reportable segments (“Segment Income”) was not consistent with the measure used by our CODM when evaluating the results of, or allocating resources to, our reportable segments.
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(“Ingénia”) which specializes in the design and manufacture of custom air handling units that demand high levels of precision and reliability in healthcare, pharmaceutical, education, food processing and industrial end markets. The post-acquisition results of Ingénia will be reflected within our HVAC reportable segment.
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We previously disclosed that Segment Income is determined before considering impairments and special charges, long-term incentive compensation, certain other operating income/expense, and other indirect corporate expenses. Our CODM also excludes the impact of intangible asset amortization expense, inventory step-up charges, and certain other acquisition-related costs from Segment Income.
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The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers. The segment serves a cu stomer base in North America, Europe, and Asia.
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Accordingly, Segment Income, as presented in Note 7 to the consolidated financial statements, now excludes all of the items noted above. This change had no impact to the amounts previously presented in our consolidated statements of operations for the years ended December 31, 2021 and 2020.
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Approximately 76 % of the segment’s backlog as of December 31, 2023 is expected to be recognized as revenue during 2024. The segment engineers, designs, manufactures, services, and installs underground pipe and cable locators, inspection and rehabilitation equipment, robotic systems, transportation systems, communication technologies, and aids to navigation.
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Although the impact of this change to previously disclosed Segment Income is not material, we revised the prior years’ presentation to be consistent with the current year disclosure. Refer to Notes 1 and 7 to our consolidated financial statements for additional details.
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We believe that we generally will be able to continue to obtain adequate supplies of key products, components or appropriate substitutes at reasonable costs. 4 We are subject to increases in the prices of many of our key raw materials, including petroleum-based products and steel.
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Detection and Measurement Reportable Segmen t Our Detection and Measurement reportable segment had revenues of $547.1, $467.4, and $387.3 in 2022, 2021 and 2020, respectively, and backlog of $251.0 and $153.6 as of December 31, 2022 and 2021 , respectively. Approximately 80% of the segment’s backlog as of December 31, 2022 is expected to be recognized as revenue during 2023.
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Additionally, in 2023 we implemented the final piece to our leadership development program with the launch of our Mid-level Program, “Amplified Leadership,” graduating 44 leaders. Further, we expanded the use of our online learning platform and offered several facilitated courses on focused topics, including training over 100 leaders on having “Better Conversations Every Day” with their teams.
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Core brands for our underground pipe and cable locators and inspection and rehabilitation equipment are Radiodetection, Pearpoint, Schonstedt, Dielectric, Riser Bond, Warren G-V, Cues, ULC Robotics, and Sensors & Software.
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During 2023, we continued our focus on enhancing our programs aimed at ensuring that we provide an inclusive environment where all employees feel valued and respected. We continued our annual leader training, engaging just under 600 people-leaders on techniques to have effective conversations on diversity and inclusion.
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We are looking forward to adding the final piece to our leadership development program in 2023 with the launch of our Mid-level Program, “Amplified Leadership.” At the beginning of 2022, we launched our updated Global Employee Survey. This annual survey captures employee feedback on topics related to Engagement and Diversity & Inclusion.
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Our businesses maintain sufficient levels of working capital to support customer requirements, particularly inventory. We believe our businesses’ sales and payment terms are generally similar to those of our competitors. Many of our businesses closely follow changes in the industries and end markets they serve. In addition, certain businesses have seasonal fluctuations.
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We launched a new program engaging our entire workforce in a conversation about Unconscious Bias and how we might mitigate biases that typically show up in the workplace.
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In addition, we were able to leverage our online learning platform for our leaders, providing continuing education on the value of Diversity & Inclusion and the importance of their roles as leaders, ensuring that all employees have opportunities to contribute their perspectives.
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We launched our Diversity & Inclusion calendar highlighting days of celebration or remembrance that further educate our employees on topics that are current and relevant and engaged our global workforce in activities related to World Humanitarian Day.
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We file reports with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and certain amendments to these reports. Copies of these reports are available free of charge on our website as soon as reasonably 5 practicable after we file the reports with the SEC.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

52 edited+27 added−18 removed113 unchanged
Biggest changeReduced demand may also erode average selling prices in the relevant market. We operate in highly competitive markets. Our failure to compete effectively could harm our business. We sell our products in highly competitive markets, which could result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products.
Biggest changeReduced demand for our products and services could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs. Reduced demand may also erode average selling prices in the relevant market. We operate in highly competitive markets. Our failure to compete effectively could harm our business.
Our business, reputation, operating results, and financial condition could be materially adversely affected if, as a result of a significant cyber event or otherwise, our operations or industrial processes are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; the performance or security of our cloud-based product offerings is impacted; our intranet and internet sites are compromised; data is manipulated or destroyed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information; we must dedicate significant resources to system repairs or increase cyber security protection; or we otherwise incur significant litigation or other costs.
Our business, reputation, operating results, 12 and financial condition could be materially adversely affected if, as a result of a significant cyber event or otherwise, our operations or industrial processes are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; the performance or security of our cloud-based product offerings is impacted; our intranet and internet sites are compromised; data is manipulated or destroyed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information; we must dedicate significant resources to system repairs or increase cyber security protection; or we otherwise incur significant litigation or other costs.
Our reliance on U.S. revenues and U.S. manufacturing bases exposes us to a number of risks, including: • Government embargoes or foreign trade restrictions such as antidumping duties, as well as the imposition of trade sanctions by the United States against a class of products imported from or sold and exported to, or the loss of “normal trade relations” status with, countries in which we conduct business, could significantly increase our cost of products imported into or exported from the United States or reduce our sales and harm our business and the relaxation of embargoes and foreign trade restrictions by the United States could adversely affect the market for our products in the United States; • Customs and tariffs may make it difficult or impossible for us to move our products or assets across borders in a cost-effective manner and may increase the cost of our raw materials, including raw materials sourced domestically; • Transportation and shipping expenses add cost to our products; • Complications related to shipping, including delays due to weather, labor action, or customs, may impact our profit margins or lead to lost business; • Environmental and other laws and regulations could increase our costs or limit our ability to run our business; and • Our ability to obtain supplies from foreign vendors and ship products internationally may be impaired during times of crisis or otherwise.
Our reliance on U.S. revenues and U.S. manufacturing bases exposes us to a number of risks, including: • Government embargoes or foreign trade restrictions such as antidumping duties, as well as the imposition of trade sanctions by the United States against a class of products imported from or sold and exported to, or the loss of “normal trade relations” status with, countries in which we conduct business, could significantly increase our cost of products imported into or exported from the United States or reduce our sales and harm our business and the relaxation of 10 embargoes and foreign trade restrictions by the United States could adversely affect the market for our products in the United States; • Customs and tariffs may make it difficult or impossible for us to move our products or assets across borders in a cost-effective manner and may increase the cost of our raw materials, including raw materials sourced domestically; • Transportation and shipping expenses may add additional cost to our products; • Complications related to shipping, including delays due to weather, labor action, or customs, may impact our profit margins or lead to lost business; • Environmental and other laws and regulations could increase our costs or limit our ability to run our business; and • Our ability to obtain supplies from foreign vendors and ship products internationally may be impaired during times of crisis or otherwise.
The occurrence of any defects, errors, failures or quality issues could result in cancellation of orders, product returns, diversion of our resources, legal actions by our customers or our customers’ end users and other losses to us or to any of our customers or end users, and could also result in the loss of or delay in market acceptance of our products and loss of sales, which would harm our business and adversely affect our revenues, profitability and cash flows.
The occurrence of any defects, errors, failures or quality issues could result in cancellation of orders, product returns, diversion of our resources, legal actions by our customers or our customers’ end users and other losses to us or to any of our customers or end users, and could also result in the loss of or delay in 13 market acceptance of our products and loss of sales, which would harm our business and adversely affect our revenues, profitability and cash flows.
Accordingly, we consider estimates and judgments that affect the future cash flow projections, including principal methods of competition such as volume, price, service, product performance and technical innovations and estimates associated with cost reduction initiatives, capacity utilization, and assumptions for inflation and foreign currency changes. We monitor impairment indicators across all of 16 our businesses.
Accordingly, we consider estimates and judgments that affect the future cash flow projections, including principal methods of competition such as volume, price, service, product performance and technical innovations and estimates associated with cost reduction initiatives, capacity utilization, and assumptions for inflation and foreign currency changes. We monitor impairment indicators across all of our businesses.
For example, our Radiodetection business manufactures a number of detection instruments in the United Kingdom and sells to customers in other countries, therefore increased strength of the British pound sterling will increase the effective price of these products sold in British pound sterling into other countries; and decreased strength of British pound sterling could have a material adverse effect on the cost of materials and products purchased outside of the United Kingdom.
For example, our Radiodetection business manufactures a number of detection instruments in the United Kingdom and sells to customers in other countries, therefore increased strength of the British pound sterling will increase the effective price of these products sold in British pound sterling 15 into other countries; and decreased strength of British pound sterling could have a material adverse effect on the cost of materials and products purchased outside of the United Kingdom.
No assurances can be made that we will have sufficient resources to continue to make the investment required to maintain or increase our market share or that our investments will be successful. If we do not 7 compete successfully, our business, financial condition, results of operations and cash flows could be materially adversely affected.
No assurances can be made that we will have sufficient resources to continue to make the investment required to maintain or increase our market share or that our investments will be successful. If we do not compete successfully, our business, financial condition, results of operations and cash flows could be materially adversely affected.
Significant changes in market conditions and estimates or judgments used to determine expected future cash flows that indicate a reduction in carrying value may give, and have given, rise to impairments in the period that the change becomes known. Cost reduction actions may affect our business. Cost reduction actions often result in charges against earnings.
Significant changes in market conditions and estimates or judgments used to determine expected future cash 16 flows that indicate a reduction in carrying value may give, and have given, rise to impairments in the period that the change becomes known. Cost reduction actions may affect our business. Cost reduction actions often result in charges against earnings.
There can be no assurance that these liabilities and costs will not have a material adverse effect on our financial position, results of operations, or cash flows. 9 See “MD&A - Critical Accounting Estimates - Contingent Liabilities” and Note 15 to our consolidated financial statements for further discussion.
There can be no assurance that these liabilities and costs will not have a material adverse effect on our financial position, results of operations, or cash flows. See “MD&A - Critical Accounting Estimates - Contingent Liabilities” and Note 15 to our consolidated financial statements for further discussion.
In addition, competitive environments in slow-growth markets, to which some of our businesses have exposure, have been inherently more influenced by pricing and domestic and global economic conditions. To remain competitive, we need to invest in manufacturing, marketing, customer service and support, and our distribution networks.
In addition, competitive environments in slow-growth markets, to which some of our businesses have exposure, have been inherently more influenced by pricing and 7 domestic and global economic conditions. To remain competitive, we need to invest in manufacturing, marketing, customer service and support, and our distribution networks.
To the extent we generate revenues outside of the United States, non-U.S. revenues and non-U.S. manufacturing bases exposes us to a number of risks, including: • Significant competition could come from local or long-term participants in non-U.S. markets who may have significantly greater market knowledge and substantially greater resources than we do; • Local customers may have a preference for locally-produced products; • Credit risk or financial condition of local customers and distributors could affect our ability to market our products or collect receivables; • Regulatory or political systems or barriers may make it difficult or impossible to enter or remain in new markets.
To the extent we generate revenues outside of the United States, non-U.S. revenues and non-U.S. manufacturing bases expose us to a number of risks, including: • Significant competition could come from local or long-term participants in non-U.S. markets who may have significantly greater market knowledge and substantially greater resources than we do; • Local customers may have a preference for locally-produced products; • Credit risk or financial condition of local customers and distributors could affect our ability to market our products or collect receivables; • Regulatory or political systems or barriers may make it difficult or impossible to enter or remain in new markets.
Additionally, many of the products we manufacture in the HVAC reportable segment use natural gas or oil as a fuel source and may be subject to 11 increasing regulatory restrictions aimed at “de-carbonization” or the elimination of such fuel sources.
Additionally, many of the products we manufacture in the HVAC reportable segment use natural gas or oil as a fuel source and may be subject to increasing regulatory restrictions aimed at “de-carbonization” or the elimination of such fuel sources.
We conduct annual impairment testing to determine if we will be able to recover all or a portion of the carrying value of goodwill and indefinite-lived intangibles. In addition, we review goodwill and indefinite-lived intangible assets for impairment more frequently if impairment indicators arise.
We conduct annual impairment testing to determine if we will be able to recover all or a portion of the carrying value of goodwill and indefinite-lived intangible assets. In addition, we review goodwill and indefinite-lived intangible assets for impairment more frequently if impairment indicators arise.
Further, certain of these contracts provide for penalties or liquidated damages for failure to timely perform our obligations under the contract, or require that we, at our expense, correct and remedy certain defects to the satisfaction of the other party.
Further, certain of these contracts provide for penalties or liquidated damages for failure to timely perform our obligations under the contract, or require that we, at our expense, correct and remedy certain defects to the satisfaction of the 8 other party.
As a result, anticipated benefits could be delayed, differ significantly from our estimates and the other information contained in this report, or not be realized. 13 Dispositions or liabilities retained in connection with dispositions could negatively affect us.
As a result, anticipated benefits could be delayed, differ significantly from our estimates and the other information contained in this report, or not be realized. 9 Dispositions or liabilities retained in connection with dispositions could negatively affect us.
Difficulties presented by domestic economic, political, legal, accounting and business factors could negatively affect our business. In 2022, approximately 84% of our revenues were generated inside the United States.
Difficulties presented by domestic economic, political, legal, accounting and business factors could negatively affect our business. In 2023, approximately 84% of our revenues were generated inside the United States.
As of December 31, 2022, we had the ability to issue up to an additional 3.851 s hares as restricted stock units, performance stock units, or stock options under our 2019 Stock Compensation Plan. We also may issue a significant number of additional shares, i n connection with acquisitions, through a registration statement, or otherwise.
As of December 31, 2023, we had the ability to issue up to an additional 3.597 s hares as restricted stock units, performance stock units, or stock options under our 2019 Stock Compensation Plan. We also may issue a significant number of additional shares, i n connection with acquisitions, through a registration statement, or otherwise.
Three of these collective bargaining agreements expire in 2023 and are scheduled for negotiation and renewal. We also have various co llective labor arrangements covering certain non-U.S. employee groups. We are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes.
Four of these collective bargaining agreements expire in 2024 and are scheduled for negotiation and renewal. We also have various co llective labor arrangements covering certain non-U.S. employee groups. We are subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes.
If the fair value is insufficient to recover the carrying value of our goodwill and indefinite-lived intangibles, we may be required to record a material non-cash charge to earnings.
If the fair value is insufficient to recover the carrying value of our goodwill and indefinite-lived intangible assets, we may be required to record a material non-cash charge to earnings.
Downturns in global economies could negatively impact our results of operations and prospects. In addition, economic instabilities resulting from geopolitical activities, including instabilities associated with the armed conflict in Ukraine, and the imposition of governmental sanctions in response thereto, and any conflict or threat of conflict that may affect Taiwan, could negatively impact our results of operations and prospects.
In addition, economic instabilities resulting from geopolitical activities, including instabilities associated with the armed conflict in Ukraine, and the imposition of governmental sanctions in response thereto, and any conflict or threat of conflict that may affect Taiwan or any other nations, could negatively impact our results of operations and prospects.
We have defined benefit pension and postretirement plans, including both qualified and non-qualified plans, which cover a portion of our salaried and hourly employees and retirees, including a portion of our employees and retirees in foreign countries. As of December 31, 2022, our net liability to these plans was $95.8.
We have defined benefit pension and postretirement plans, including both qualified and non-qualified plans, which cover a portion of our salaried and hourly employees and retirees, including a portion of our employees and retirees in foreign countries. As of December 31, 2023, our net liability to these plans was $100.1.
In addition, certain of our businesses are subject to market-specific cycles. Furthermore, contract timing on projects, including those relating to communication technologies, fare collection systems, obstruction lighting products, and process cooling systems and towers may cause significant fluctuations in revenues and profits from period to period.
In addition, certain of our businesses are subject to market-specific cycles. Furthermore, contract timing on projects, including those relating to communication technologies, transportation systems, aids to navigation products, and process cooling systems and towers may cause significant fluctuations in revenues and profits from period to period.
We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs. At December 31, 2022, we had six domestic collective bargaining agreements covering approximately 340 of our over 3,300 employees.
We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs. At December 31, 2023, we had six domestic collective bargaining agreements covering approximately 460 of our over 4,100 employees.
If the fair value of any of our reporting units is insufficient to recover the carrying value of the goodwill and other intangible assets of the respective reporting unit, a material non-cash charge to earnings could result. At December 31, 2022, we had goodwill and other intangible assets, net, of $856.9.
If the fair value of any of our reporting units is insufficient to recover the carrying value of the goodwill and other intangible assets of the respective reporting unit, a material non-cash charge to earnings could result. At December 31, 2023, we had goodwill and other intangible assets, net, of $1,385.6.
If that occurs, our reputation may be harmed and we may face additional costs. We cannot assure you that our product development, manufacturing and integration testing will be adequate to detect all defects, errors, failures and quality issues that could impact customer satisfaction or result in claims against us with regard to our products.
We cannot assure you that our product development, manufacturing and integration testing will be adequate to detect all defects, errors, failures and quality issues that could impact customer satisfaction or result in claims against us with regard to our products.
In addition, these barriers may impact our existing businesses, including making it more difficult for them to grow; • Local political, economic and social conditions, including the possibility of hyperinflationary conditions, political instability, nationalization of private enterprises, or unexpected changes relating to currency could adversely impact our revenues and operations; • Customs, tariffs and trade restrictions may make it difficult or impossible for us to move our products or assets across borders in a cost-effective manner; • Transportation and shipping expenses add cost to our products; • Complications related to shipping, including delays due to weather, labor action, or customs, may impact our profit margins or lead to lost business; • Local, regional or worldwide hostilities, including armed conflicts, could impact our operations; • Distance and language and cultural differences may make it more difficult to manage our business and employees and to effectively market our products and services; and • Public health crises, including the outbreak of a pandemic or other contagious disease.
In addition, these barriers may impact our existing businesses, including making it more difficult for them to grow; • Local political, economic and social conditions, including the possibility of hyperinflationary conditions, political instability, nationalization of private enterprises, or unexpected changes relating to currency could adversely impact our revenues and operations; • Customs, tariffs and trade restrictions may make it difficult or impossible for us to move our products or assets across borders in a cost-effective manner; • Transportation and shipping expenses may add additional cost to our products; • Complications related to shipping, including delays due to weather, labor action, or customs, may impact our profit margins or lead to lost business; • Local, regional or worldwide hostilities, including armed conflicts, could impact our operations; • Distance and language and cultural differences may make it more difficult to manage our business and employees and to effectively market our products and services; and • Public health crises, including the outbreak of a pandemic or other contagious disease. 11 Any of the above factors or other factors affecting social and economic activity in the United Kingdom and China or affecting the movement of people and products into and from these countries to our major markets, could have a significant negative effect on our operations.
Our senior credit facilities and agreements governing our other indebtedness contain, or future or revised instruments may contain, various restrictions and covenants that limit our ability to make distributions or other payments to our investors and creditors unless certain financial tests or other criteria are satisfied. We also must comply with certain specified financial ratios and tests.
Our senior credit facilities and agreements governing our other indebtedness contain, or future or revised instruments may contain, various restrictions and covenants that limit our ability to incur additional indebtedness, grant liens, and make investments unless certain financial tests or other criteria are satisfied. We also must comply with certain specified financial ratios and tests.
At December 31, 2022, we h a d $246.8 in total indebtedness. On that same date, we h ad $489.0 o f available borrowing capacity under our revolving credit facilities, after givin g effect to $11.0 reserved for outstanding letters of credit.
At December 31, 2023, we h a d $558.3 in total indebtedness. On that same date, we h ad $489.2 o f available borrowing capacity under our revolving credit facilities, after givin g effect to $10.8 reserved for outstanding letters of credit.
The strengthening or weakening of the U.S. dollar against other currencies in which we conduct business could result in unfavorable translation effects as the results of transactions in foreign countries are translated into U.S. dollars. 15 Increased strength of the U.S. dollar will increase the effective price of our products sold in U.S. dollars into other countries, including countries utilizing the Euro, which may have a material adverse effect on sales or require us to lower our prices, and also decrease our reported revenues or margins related to sales conducted in foreign currencies to the extent we are unable or determine not to increase local currency prices.
Increased strength of the U.S. dollar will increase the effective price of our products sold in U.S. dollars into other countries, including countries utilizing the Euro, which may have a material adverse effect on sales or require us to lower our prices, and also decrease our reported revenues or margins related to sales conducted in foreign currencies to the extent we are unable or determine not to increase local currency prices.
The level of capital expenditures by our customers fluctuates based on planned expansions, new builds and repairs, commodity prices, general economic conditions, availability of credit, and expectations of future market behavior.
Demand for most of our products and services depends on the level of new capital investment and planned maintenance expenditures by our customers. The level of capital expenditures by our customers fluctuates based on planned expansions, new builds and repairs, commodity prices, general economic conditions, availability of credit, and expectations of future market behavior.
Risks Related to Financial Matters We may not be able to finance future needs or adapt our business plan to react to changes in economic or business conditions because of restrictions placed on us by our senior credit facilities and any existing or future instruments governing our other indebtedness.
Further, we may be subject to work stoppages, which are beyond our control, at our suppliers or customers. 14 Risks Related to Financial Matters We may not be able to finance future needs or adapt our business plan to react to changes in economic or business conditions because of restrictions placed on us by our senior credit facilities and any existing or future instruments governing our other indebtedness.
In addition, new competitors may enter the markets in which we participate. Competitors may be able to offer lower prices, additional products or services or a more attractive mix of products or services, or services or other incentives that we cannot or will not match.
Competitors may be able to offer lower prices, additional products or services or a more attractive mix of products or services, or services or other incentives that we cannot or will not match.
Any of the above risks could have a material adverse impact on our business and consolidated financial results. Risks Related to Human Capital Resources The loss of key personnel and an inability to attract and retain qualified employees could have a material adverse effect on our operations. We are dependent on the continued services of our leadership team.
Risks Related to Human Capital Resources The loss of key personnel and an inability to attract and retain qualified employees could have a material adverse effect on our operations. We are dependent on the continued services of our leadership teams. The loss of these personnel without adequate replacement could have a material adverse effect on our operations.
Complying with our covenants may also cause us to take actions that are not favorable to us and may make it more difficult for us to successfully execute our business strategy and compete, including against companies that are not subject to such restrictions. Currency conversion risk could have a material impact on our reported results of business operations.
Complying with our covenants may also cause us to take actions that are not favorable to us and may make it more difficult for us to successfully execute our business strategy and compete, including against companies that are not subject to such restrictions.
In addition, at December 31, 2022, we had $10.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to $14.8 res erved for outstanding letters of credit. At December 31, 2022, our cash and equivalents balance wa s $157.1 .
In addition, at December 31, 2023, we had $13.4 of available issuance capacity under our foreign credit instrument facilities after giving effect to $11.6 res erved for outstanding letters of credit. At December 31, 2023, our cash and equivalents balance wa s $104.9 .
IT security threats are increasing in frequency and sophistication and we have detected numerous attempts to compromise the security of our IT systems. Cyber-attacks may be random, coordinated, or targeted, including sophisticated computer crime threats.
IT security threats are increasing in frequency and sophistication. We have experienced, and expect to continue to experience, cyber-attacks on our IT systems and networks. Cyber-attacks may be random, coordinated, or targeted, including sophisticated computer crime threats.
Despite our efforts to protect our proprietary rights, unauthorized parties or competitors may copy or otherwise obtain and use our products or technology. The steps we have taken may not prevent unauthorized use of our technology or knowledge, particularly in foreign countries where the laws may not protect our proprietary rights to the same extent as in the United States.
The steps we have taken may not prevent unauthorized use of our technology or knowledge, particularly in foreign countries where the laws may not protect our proprietary rights to the same extent as in the United States. Costs incurred to defend our rights may be material.
In recent years, we have faced volatility in the prices of many key raw materials (e.g., steel and oil) and key components (e.g., circuit boards), including price increases in response to trade laws and tariffs and shortages related to the COVID-19 pandemic.
In recent years, we have faced volatility in the prices of many key raw materials (e.g., steel and oil) and key components (e.g., circuit boards), including price increases in response to trade laws and tariffs and shortages related to supply chain disruptions, including as a result of public health crises, geopolitical events or other factors.
A number of factors outside our control, including fluctuating commodity prices, impact the demand for our products. Increased commodity prices, including as a result of new or increased tariffs or the impact of new trade laws, may increase our customers’ cost of doing business, thus causing them to delay or cancel large capital projects.
Increased commodity prices, including as a result of new or increased tariffs or the impact of new trade laws, may increase our customers’ cost of doing business, thus causing them to delay or cancel large capital projects. On the other hand, declining commodity prices may cause our customers to delay or cancel projects relating to the production of such commodities.
We compete on a number of fronts, including on the basis of service, product performance, technical innovation and price. We have a number of competitors with substantial technological and financial resources, brand recognition and established relationships with global service providers. Some of our competitors have lower cost structures, support from local governments, or both.
We have a number of competitors with substantial technological and financial resources, brand recognition and established relationships with global service providers. Some of our competitors have lower cost structures, support from local governments, or both. In addition, new competitors may enter the markets in which we participate.
Risks Related to Information, Technology and Cybersecurity If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted. We are increasingly dependent on cloud-based and other information technology (“IT”) networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information.
Risks Related to Information, Technology and Cybersecurity If we are unable to protect our information systems and networks against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.
Downturns in the business cycles of our different operations may occur at the same time, which could exacerbate any adverse effects on our business. In addition, certain of our businesses have seasonal and weather-related fluctuations. Historically, many of our key businesses generally have tended to have stronger performance in the second half of the year.
Downturns in the business cycles of our different operations may occur at the same time, which could exacerbate any adverse effects on our business. In addition, certain of our businesses have seasonal and weather-related fluctuations, particularly within certain of our heating products businesses within our HVAC reportable segment.
From time to time, there may be a shortage of qualified managers or skilled labor, which may make it more difficult and expensive for us to attract and retain qualified employees.
Additionally, we need qualified managers and skilled employees with technical and manufacturing industry experience in many locations in order to operate our business successfully. From time to time, there may be a shortage of qualified managers or skilled labor, which may make it more difficult and expensive for us to attract and retain qualified employees.
Our income tax obligations, however, may be higher due to numerous factors, including changes in tax laws or regulations and the outcome of audits and examinations of our tax returns.
In preparing our financial statements, we provide for income taxes based on current tax laws and regulations and the estimated taxable income within each of these jurisdictions. Our income tax obligations, however, may be higher due to numerous factors, including changes in tax laws or regulations and the outcome of audits and examinations of our tax returns.
Any of the above factors or other factors affecting the movement of people and products into and from various countries to North America could have a significant negative effect on our operations.
Any of the above factors or other factors affecting the movement of people and products into and from various countries to North America could have a significant negative effect on our operations. In addition, our concentration on U.S. business may make it difficult to enter new markets, making it more difficult for our businesses to grow.
Because some of our contracts are at a fixed price, we face the risk that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on our projects. 8 Our current and planned products may contain defects or errors that are detected only after delivery to customers.
Because some of our contracts are at a fixed price, we face the risk that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on our projects. Our operations are at risk of damage, destruction or disruption by natural disasters and other unexpected events.
In addition, our concentration on U.S. business may make it difficult to enter new markets, making it more difficult for our businesses to grow. 10 Worldwide economic conditions could negatively impact our businesses. Many of our customers historically have tended to delay capital projects, including expensive maintenance and upgrades, during economic downturns.
Worldwide economic conditions could negatively impact our businesses. Many of our customers historically have tended to delay capital projects, including expensive maintenance and upgrades, during economic downturns.
Certain digitalization initiatives important to our long-term success may require capital investment, have significant risks associated with their execution, and could take several years to implement.
Certain digitalization initiatives important to our long-term success may require capital investment, have significant risks associated with their execution, and could take several years to implement. If we do not accurately predict, prepare and respond to new technology innovations, market developments and changing customer needs, our revenues, profitability and long-term competitiveness could be materially adversely affected.
See “MD&A - Results of Continuing Operations and Results of Reportable Segments.” Our business depends on capital investment and maintenance expenditures by our customers. Demand for most of our products and services depends on the level of new capital investment and planned maintenance expenditures by our customers.
Historically, many of our key businesses generally have tended to have stronger performance in the second half of the year. See “MD&A - Results of Continuing Operations and Results of Reportable Segments.” Our business depends on capital investment and maintenance expenditures by our customers.
Any of these factors, whether individually or in the aggregate, could have a material adverse effect on our customers and, in turn, our business, financial condition, results of operations and cash flows. Our customers have been and could be impacted by commodity availability and prices.
Although no one customer accounted for more than 10% of our consolidated revenues, many of our businesses derive revenues from large projects or key customer relationships and any of the aforementioned factors, whether individually or in the aggregate, could have a material adverse effect on our customers and, in turn, our business, financial condition, results of operations and cash flows.
We depend on such IT infrastructure for electronic communications among our locations around the world and between our personnel and suppliers and customers.
We are increasingly dependent on cloud-based and other information technology (“IT”) systems and networks, some of which are managed by third parties, to process, transmit, and store electronic information. We depend on such IT infrastructure for electronic communications among our locations around the world and between our personnel and suppliers and customers.
We cannot assure you that expenses or losses for uncollectible amounts will not have a material adverse effect on our earnings and cash flows. Changes in tax laws and regulations or other factors could cause our income tax obligations to increase, potentially reducing our net income and adversely affecting our cash flows.
A default by such counterparties in performing their obligations under these hedging instruments could have an adverse effect on us. Changes in tax laws and regulations or other factors could cause our income tax obligations to increase, potentially reducing our net income and adversely affecting our cash flows. We are subject to taxation in various jurisdictions around the world.
Removed
On the other hand, declining commodity prices may cause our customers to delay or cancel projects relating to the production of such commodities. Reduced demand for our products and services could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs.
Added
Our customers have been and could be impacted by commodity availability and prices. A number of factors outside our control, including fluctuating commodity prices, impact the demand for our products.
Removed
Risks Related to Contingent Liabilities Our South African subsidiary is subject to various claims, disputes, enforcement actions, litigation, arbitration and other legal proceedings related to two large power projects in South Africa that could ultimately be resolved against it.
Added
We sell our products in highly competitive markets, which could result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products. We compete on a number of fronts, including on the basis of service, product performance, technical innovation and price.
Removed
Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has now substantially completed its scope of work.
Added
The loss of, or substantial damage to, one or more of our facilities, our information system infrastructure or the facilities of our suppliers could make it difficult to manufacture our products and fulfill customer orders.
Removed
Over such time, the business environment surrounding these projects was difficult, as DBT, along with many other contractors on the projects, experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers.
Added
Severe weather events (such as flooding, tornadoes or hurricanes), earthquakes, tsunamis, fires, explosions, acts of war, terrorism, civil unrest, or outbreaks, epidemics or pandemics of infectious diseases (such as the recent COVID-19 pandemic) could adversely impact our operations. Risks Related to Acquisitions and Dispositions Acquisitions involve a number of risks and present financial, managerial and operational challenges.
Removed
DBT is currently involved in a number of claims relating to these challenges and may be subject to other claims, which could be significant. SPX has provided parent company guarantees to certain counterparties in connection with these projects.
Added
Downturns in global economies could negatively impact our results of operations and prospects.
Removed
We cannot give assurance that these claims and the costs to assert DBT's claims and defend claims against DBT will not have a material adverse effect on our financial position, results of operations, or cash flows. See “MD&A - Critical Accounting Estimates - Contingent Liabilities” and Note 15 to our consolidated financial statements for further discussion.
Added
Failure to meet evolving expectations for reporting on environmental, social, and governance ( “ ESG ” ) matters could adversely affect our sales and results of operations.
Removed
Any of the above factors or other factors affecting social and economic activity in the United Kingdom and China or affecting the movement of people and products into and from these countries to our major markets, could have a significant negative effect on our operations.
Added
Expectations from investors, customers, team members, government agencies and other third parties concerning ESG reporting have increased, and our ability to meet those expectations is dependent on a variety of factors, including cooperation from sourcing vendors and other third parties and having access to consistent and reliable data.
Removed
If we do not accurately predict, prepare and respond to new technology innovations, market developments and changing customer needs, our revenues, profitability and long-term competitiveness could be materially adversely affected. 12 Failure to protect or unauthorized use of our intellectual property may harm our business.
Added
Negative customer perceptions regarding the safety and sourcing of the products we sell and the sufficiency and transparency of our reporting on such matters and events that give rise to actual, potential, or perceived sustainability, social responsibility and similar concerns could hurt our reputation, result in lost sales, cause our customers to seek alternative sources for their needs and make it difficult and costly for us to regain the confidence of our customers.
Removed
Costs incurred to defend our rights may be material. Risks Related to Acquisitions and Dispositions Acquisitions involve a number of risks and present financial, managerial and operational challenges.
Added
Furthermore, costs associated with responding to ESG related laws, regulations, or customer requirements may have an adverse impact on our business, financial condition and results of operations and cash flows.
Removed
Risks Related to the COVID-19 Pandemic The COVID-19 pandemic has had, and could continue to have, an adverse impact on our business. The COVID-19 pandemic had an adverse impact on our consolidated results of operations in the first half of 2020, with diminishing impacts during the second half of 2020 and during 2021 and 2022.
Added
Operation on multiple Enterprise Resource Planning (“ERP”) information systems and other applications may negatively impact our operations and internal control environment.
Removed
The COVID-19 pandemic could have an adverse impact on our business and consolidated financial results during 2023 and we are unable to determine the extent, duration, or nature at this time.
Added
We are highly dependent on our information systems infrastructure to prepare customer quotes, process orders, purchase materials, track inventory, ship products in a timely manner, prepare invoices to our customers, maintain internal controls, produce financial data, and otherwise carry on our businesses in the ordinary course.
Removed
The intensity, duration and governmental responses to the pandemic, as well as the pace of vaccination efforts and the emergence of new variants of the virus that cause COVID-19, are all highly uncertain and could contribute to the ultimate impact on our business.
Added
From time to time we also undertake projects to implement new, or update existing, ERP systems and other applications.
Removed
Specifically, the COVID-19 pandemic could impact: • Our suppliers’ ability to perform and the availability of materials and subcontractors’ services; • Our customers’ ability to access credit and to pay amounts due to us; • Our distributors’ ability to perform; and • Our ability to: ◦ Access credit; ◦ Meet contractual deadlines with customers, which could result in delays in payments from customers and customers possibly seeking delay damages; ◦ Complete acquisitions due to potential adverse impacts on targeted businesses or product lines; and ◦ Meet the financial covenants under our senior credit and other debt agreements.
Added
While we believe we have the experience, skill and management abilities, as well as access to the necessary experts and consultants, to plan and execute these projects without significant disruption to our businesses, ERP and other application implementations and updates are very complex and inherently subject to risks and uncertainty.
Removed
The impact of the COVID-19 pandemic has resulted, and could continue to result, in: • Disruptions in our supply chain or increased costs for certain components or commodities; • Labor shortages and difficulties filling the positions within our organization; • A prolonged reduction in the demand for certain of our products; • A prolonged shut-down of one or more of our facilities either due to exposure to the COVID-19 pandemic or to further restrictive government orders; • Asset impairment charges; • A loss of productivity, greater cybersecurity risk and other fraud risks, and difficulties in maintaining internal controls over financial reporting due to the impact of employees working remotely; • An adverse impact to the funded status of our defined benefit pension plans, which could result in additional funding requirements for the plans; 14 • The diversion of management’s attention from core business operations; and • Restructuring charges if we decide to reduce headcount as a result of a decline in customer demand.
Added
There is no assurance that the projects will succeed or that failures in the design, programming, software or implementation of these projects will not cause significant disruption to our businesses.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following is a summary of our principal properties as of December 31, 2022: No. of Approximate Square Footage Location Facilities Owned Leased (in millions) HVAC reportable segment 9 U.S. states and 2 foreign countries 16 1.7 1.5 Detection and Measurement reportable segment 8 U.S. states and 4 foreign countries 20 0.4 0.4 Corporate 1 U.S. state 1 — 0.1 Total 37 2.1 2.0 In addition to manufacturing plants, we own and lease various sales, service and other locations throughout the world.
Biggest changeProperties The following is a summary of our principal properties as of December 31, 2023: No. of Approximate Square Footage Location Facilities Owned Leased (in millions) HVAC reportable segment 11 U.S. states and 3 foreign countries 26 2.0 1.8 Detection and Measurement reportable segment 8 U.S. states and 5 foreign countries 21 0.4 0.4 Corporate 1 U.S. state 1 — 0.1 Total 48 2.4 2.3 In addition to manufacturing plants, we own and lease various sales, service and other locations throughout the world.
We consider these properties, as well as the related machinery and equipment, to be well maintained and suitable and adequate for their intended purposes. 18
We consider these properties, as well as the related machinery and equipment, to be well maintained and suitable and adequate for their intended purposes.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes an initial investment of $100 on December 31, 2017 and the reinvestment of dividends. 2017 2018 2019 2020 2021 2022 SPX Technologies, Inc. $ 100.00 $ 89.23 $ 162.09 $ 173.75 $ 190.12 $ 209.14 S&P 500 100.00 95.62 125.72 148.85 191.58 156.88 S&P 1500 Industrials 100.00 86.62 112.43 125.58 153.43 143.57 S&P 600 100.00 90.25 109.07 119.51 149.71 123.63 21
Biggest changeThe graph assumes an initial investment of $100 on December 31, 2018 and the reinvestment of dividends. 2018 2019 2020 2021 2022 2023 SPX Technologies, Inc. $ 100.00 $ 181.65 $ 194.72 $ 213.07 $ 234.38 $ 360.62 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P 1500 Industrials 100.00 129.80 144.98 177.13 165.75 199.52 S&P 600 100.00 120.86 132.43 165.89 137.00 156.02 22
Pursuant to this re-authorization, we repurchased 706,827 of our common stock for an aggregate purchase price of $33.7 million during the year ended December 31, 2022. As of December 31, 2022, the maximum approximate dollar value of our common stock that may be purchased under this authorization during the current fiscal year is $66.3 million.
Pursuant to the 2022 re-authorization, we repurchased 706,827 of our common stock for an aggregate purchase price of $33.7 million during the year ended December 31, 2022. As of December 31, 2023, the maximum approximate dollar value of our common stock that may be purchased under this authorization during the current fiscal year is $100.0 million.
The number of stockholders of record of our common stock as of February 17, 2023 was 2,268 . 20 Company Performance This graph shows a five-year comparison of cumulative total returns for SPX, the S&P 500 Index, the S&P 1500 Industrials Index, and the S&P 600 Index.
The number of stockholders of record of our common stock as of February 16, 2024 was 2,144. 21 Company Performance This graph shows a five-year comparison of cumulative total returns for SPX, the S&P 500 Index, the S&P 1500 Industrials Index, and the S&P 600 Index.
On May 10, 2022, our Board of Directors re-authorized management, in its sole discretion, to repurchase our capital stock in any fiscal year. Under the authorization, we may repurchase shares through open market purchases, privately negotiated transactions or otherwise, and at prices and times and in amounts as we determine, subject to applicable restrictions under our senior credit agreement.
Under the authorization, we may repurchase shares through open market purchases, privately negotiated transactions or otherwise, and at prices and times and in amounts as we determine, subject to applicable restrictions under our senior credit agreement.
Added
On May 9, 2023, and May 10, 2022, our Board of Directors re-authorized management, in its sole discretion, to repurchase our capital stock in any fiscal year.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdditional details on certain matters noted above as well as significant items impacting the financial results for 2022, 2021, and 2020 are as follows: 2022: • Transfer of Postretirement Life Insurance Benefit Obligation ◦ On February 17, 2022, we transferred our obligation for life insurance benefits under our postretirement benefit plans to an insurance carrier for cash consideration paid of $10.0. ◦ In connection with the transfer, we: • Recorded a net charge of $0.3 to “Other income (expense), net;” and • Eliminated the (i) third-party cost and (ii) internal resource requirements associated with administering these benefits. ◦ See Note 11 to our consolidated financial statements for additional details. • On March 31, 2022, we completed the acquisition of ITL. ◦ The purchase price for ITL was $40.4, net of cash acquired of $1.1. ◦ The post-acquisition operating results of ITL are included within our Detection and Measurement reportable segment. • Amendment of Senior Credit Agreement ◦ On August 12, 2022, we amended and restated our credit agreement (the “Credit Agreement”). ◦ The Credit Agreement provides for committed senior secured financing with an aggregate amount of $770.0, with a final maturity of August 12, 2027. ◦ See Note 13 to our consolidated financial statements for additional details. • Settlement and Actuarial Gains and Losses - Pension and Postretirement Plans ◦ In connection with the sale of Transformer Solutions, a significant number of participants of the U.S.
Biggest changeIn addition, DBT made payments of $25.3 to MHI during the year ended December 31, 2023 in connection with 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. 25 • Resolution of Dispute with Former Representative ◦ During the fourth quarter of 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 our consolidated financial statements for additional details. 2022: • Transfer of Postretirement Life Insurance Benefit Obligation ◦ On February 17, 2022, we transferred our obligation for life insurance benefits under our postretirement benefit plans to an insurance carrier for cash consideration paid of $10.0. ◦ In connection with the transfer, we recorded a net charge of $0.3 to “Other income (expense), net.” ◦ See Note 11 to our consolidated financial statements for additional details. • On March 31, 2022, we completed the acquisition of ITL ◦ The purchase price for ITL was $40.4, net of (i) an adjustment to the purchase price received during 2022 of $1.4 related to acquired working capital and (ii) cash acquired of $1.1. ◦ The post-acquisition operating results of ITL are included within our Detection and Measurement reportable segment. • Amendment of Senior Credit Agreement ◦ On August 12, 2022, we amended and restated our then-existing credit agreement. ◦ The then-existing credit agreement provided for committed senior secured financing with an aggregate amount of $770.0, with a final maturity of August 12, 2027. ◦ See Note 13 to our consolidated financial statements for additional details. • Settlement and Actuarial Gains and Losses - Pension and Postretirement Plans ◦ In connection with the sale of Transformer Solutions, a significant number of participants of the U.S.
The increase in organic revenue within the HVAC reportable segment was driven by increased sales of heating and cooling products associated with price increases and, to a lesser extent, volume increases.
The increase in organic revenue within the HVAC reportable segment was driven by increased sales of heating and cooling products associated with price increases and, to a lesser extent, volume increases.
Intangible Amortization — For 2022, the increase in intangible amortization, compared to 2021, was due to a full year's amortization related to the Cincinnati Fan and ECS acquisitions, as well as amortization associated with the ITL acquisition.
For 2022, the increase in intangible amortization, compared to 2021, was due to a full year's amortization related to the Cincinnati Fan and ECS acquisitions, as well as amortization associated with the ITL acquisition.
Other Income (Expense), Net – Other expense , net, for 2022 was composed primarily of $16.5 of asbestos-related charges incurred prior to the Asbestos Portfolio Sale, a loss of $3.0 related to a change in the estimated fair value of an equity security that we hold, environmental remediation charges of $2.9, and foreign currency transaction losses of $1.1, partially offset by pension and postretirement income (inclusive of net settlement and actuarial gains of $1.5) of $4.4, income of $2.0 derived from company-owned life insurance policies, and $3.0 of income associated with transition services agreements.
Other expense , net, for 2022 was composed primarily of $16.5 of asbestos-related charges incurred prior to the Asbestos Portfolio Sale, a loss of $3.0 related to a change in the estimated fair value of an equity security that we hold, environmental remediation charges of $2.9, and foreign currency transaction losses of $1.1, partially offset by pension and postretirement income (inclusive of net settlement and actuarial gains of $1.5) of $4.4, income of $2.0 derived from company-owned life insurance policies, and $3.0 of income associated with transition services agreements.
The most significant items impacting the effective income tax rate for 2021 were (i) earnings in jurisdictions with lower statutory rates, (ii) $4.3 of income tax benefits related to various valuation allowance adjustments, primarily due to foreign tax credits for which the future realization is now considered likely, and (iii) a benefit of $3.5 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims, partially offset by $13.2 of income tax expense associated with global intangible low-taxed income created by the liquidation of various acquired entities.
The most significant items impacting the effective income tax rate for 2021 were (i) earnings in jurisdictions with lower statutory tax rates, (ii) $4.3 of income tax benefits related to various valuation allowance adjustments, primarily due to foreign tax credits for which the future realization is now considered likely, and (iii) a benefit of $3.5 related to the resolution of certain liabilities for uncertain tax positions and interest associated with various refund claims, partially offset by $13.2 of income tax expense associated with global intangible low-taxed income created by the liquidation of various acquired entities.
As a result, we reversed the liability of $24.3 during the third quarter of 2021, with the offset recorded to “Other operating (income) expense, net.” On August 23, 2022, the seller of ULC initiated a breach-of-contract lawsuit against us in the United States District Court for the Eastern District of New York claiming that it is entitled to a portion of the additional cash consideration totaling $15.0 linked to certain operating performance milestones.
As a result, we reversed the liability of $24.3 during the third quarter of 2021, with the offset recorded to “Other operating (income) expense, net.” On August 23, 2022, the seller of ULC initiated a breach-of-contract lawsuit against us in the United States District Court for the Eastern District of New York claiming that it is entitled to a portion of the additional cash consideration linked to certain operating performance milestones totaling $15.0.
Our pension plans have not experienced any significant impact on liquidity or counterparty exposure due to the volatility in the credit markets. 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.
Our pension plans have not experienced any significant impact on liquidity or counterparty exposure due to volatility in the credit markets. 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.
Plan during the first nine months of 2022, required us to record settlement and actuarial losses of $6.2 during this period. ◦ In addition, we recorded settlement and actuarial gains o f $8.0 in t he fourth quarter of 2022 in connection with the annual remeasurement of our pension and postretirement plans, with such gains resulting primarily from the impact of increases in discount rates, partially offset by lower than expected returns on plan assets. ◦ See Notes 1 and 11 to our consolidated financial statements for additional details. • Repurchases of Common Stock — During the second quarter of 2022, we repurchased 706,827 shares of our common stock for $33.7. • Changes in Estimated Fair Value of an Equity Security ◦ We recorded losses of $3.0 within “ Other income (expense), net ” related to decreases in the estimated fair value of an equity security that we hold. ◦ See Note 17 to our consolidated financial statements for additional details. • Asbestos-Related Matters ◦ During the third quarter of 2022, we received a ruling from a North Carolina trial court that certain excess insurance carriers associated with our asbestos product liability matters are not required to cover the costs of defending suits that are dismissed without an indemnity payment. ◦ As a result of this ruling, we recorded charges of $21.7 during the third quarter, with $16.5 ref lected in “Income from continuing operations before income taxes” and the remainder in “Income (loss) on disposition of discontinued operations, net of tax.” 24 ◦ On November 1, 2022, we completed the Asbestos Portfolio Sale.
Plan during the first nine months of 2022, required us to record settlement and actuarial losses of $6.2 during this period. ◦ In addition, we recorded settlement and actuarial gains o f $8.0 in t he fourth quarter of 2022 in connection with the annual remeasurement of our pension and postretirement plans, with such gains resulting primarily from the impact of increases in discount rates, partially offset by lower than expected returns on plan assets. ◦ See Notes 1 and 11 to our consolidated financial statements for additional details. • Repurchases of Common Stock — During the second quarter of 2022, we repurchased 706,827 shares of our common stock for $33.7. • Changes in Estimated Fair Value of an Equity Security ◦ We recorded losses of $3.0 within “ Other income (expense), net ” related to decreases in the estimated fair value of an equity security that we hold. ◦ See Note 17 to our consolidated financial statements for additional details. • Asbestos-Related Matters ◦ During the third quarter of 2022, we received a ruling from a North Carolina trial court that certain excess insurance carriers associated with our asbestos product liability matters are not required to cover the costs of defending suits that are dismissed without an indemnity payment. ◦ As a result of this ruling, we recorded charges of $21.7 during the third quarter, with $16.5 ref lected in “Income from continuing operations before income taxes” and the remainder in “Gain (loss) on disposition of discontinued operations, net of tax.” ◦ On November 1, 2022, we completed the Asbestos Portfolio Sale.
Accruals for these uncertain tax 49 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.
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.
It is our policy to accrue for estimated losses from legal actions or claims when events exist that make the realization of the losses or expenses probable and they can be reasonably estimated. Our environmental accruals cover anticipated costs, including investigation, remediation, and operation and maintenance of clean-up sites.
It is our policy to accrue for estimated losses from legal actions or claims when events exist that make the realization of the losses or expenses probable and they can be reasonably estimated. Our environmental accruals cover anticipated costs, including investigation, remediation, and 45 operation and maintenance of clean-up sites.
While we maintain insurance for this type of liability, the liability could exceed the amount of the insurance coverage. 41 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.
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.
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.
While management believes that the assumptions used are appropriate, actual results may differ. 47 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.
Revenues - For 2022, th e increase in re venues, compared to 2021, was du e to organic revenue growth within both our HVAC and Detection and Measurement reportable segments and the impact of the Sealite, ECS and Cincinnati Fan acquisitions in 2021 and the ITL acquisition in 2022.
For 2022, th e increase in re venues, compared to 2021, was du e to organic revenue growth within both our HVAC and Detection and Measurement reportable segments and the impact of the Sealite, ECS and Cincinnati Fan acquisitions in 2021 and the ITL acquisition in 2022.
As a result, we are reporting Heat Transfer as a discontinued operation for all periods presented. 31 Sale of Transformer Solutions Business On October 1, 2021, we completed the sale of Transformer Solutions pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021.
As a result, we are reporting Heat Transfer as a discontinued operation for all periods presented. Sale of Transformer Solutions Business On October 1, 2021, we completed the sale of Transformer Solutions pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021.
The decrease in operating cash flows from continuing operations in 2022, compared to 2021, was due primarily to (i) a cash contribution of $138.8 associated with funding the Asbestos Portfolio Sale; (ii) income tax payments, net of refunds, of $59.6 (compared to income tax refunds, net of tax payments, of $5.5 during the year ended December 31, 2021), with a significant portion of the 2022 payments related to the gain on sale of Transformer Solutions; (iii) elevated purchases of inventory components in order to manage the potential risk associated with the current supply chain environment; (iv) decreases in cash flows at certain of our project-related businesses, as cash receipts for these businesses are often subject to contractual milestones that can impact cash receipts from period to period; (v) net payments for asbestos-related matters of $15.3 (compared to net recoveries of $0.3 during the year ended December 31, 2021); and (vi) cash payments of $10.0 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier.
The decrease in operating cash flows from continuing operations in 2022, compared to 2021, was due primarily to (i) a cash contribution of $138.8 associated with funding the Asbestos Portfolio Sale; (ii) income tax payments, net of refunds, of $59.6 (compared to income tax refunds, net of tax payments, of $5.5 during the year ended December 31, 2021), with a significant portion of the 2022 payments related to the gain on sale of Transformer Solutions; (iii) elevated purchases of inventory components in order to manage the potential risk associated with the then-existing supply chain environment; (iv) decreases in cash flows at certain of our project-related businesses, as cash receipts for these businesses are often subject to contractual milestones that can impact cash receipts from period to period; (v) net payments for asbestos-related matters of $15.3 (compared to net recoveries of $0.3 during the year ended December 31, 2021); and (vi) cash payments of $10.0 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier.
For example, 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.
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.
We include in our contract estimates additional revenue for unapproved change orders or claims when we believe we have an enforceable right to the unapproved 46 change order or claim and the amount can be reliably estimated.
We include in our contract estimates additional revenue for unapproved change orders or claims when we believe we have an enforceable right to the unapproved change order or claim and the amount can be reliably estimated.
See Notes 1 and 4 to our consolidated financial statements for additional detail. • Impairment of Goodwill and Indefinite-Lived Intangible Assets ◦ During the fourth quarter of 2022, we performed our annual impairment analyses of our goodwill and indefinite-lived intangible assets.
See Notes 1 and 4 to our consolidated financial statements for additional detail. 26 • Impairment of Goodwill and Indefinite-Lived Intangible Assets ◦ During the fourth quarter of 2022, we performed our annual impairment analyses of our goodwill and indefinite-lived intangible assets.
In addition, since the second half of 2021, certain of our businesses have experienced supply chain disruptions, as well as labor shortages, while all of our businesses have experienced increases in raw material, component, and transportation costs.
In addition, since the second half of 2021, certain of our businesses experienced supply chain disruptions, as well as labor shortages, while all of our businesses experienced increases in raw material, component, and transportation costs.
We are party to a trade receivables financing agreement, whereby we can borrow, on a continuous basis, up to $50.0. Availability of funds may fluctuate over time given, among other things, changes in eligible receivable balances, but will not exceed the $50.0 program limit. The facility contains representations, warranties, covenants and indemnities customary for facilities of this type.
We are party to a trade receivables financing agreement, whereby we can borrow, on a continuous basis, up to $60.0. Availability of funds may fluctuate over time given, among other things, changes in eligible receivable balances, but will not exceed the $60.0 program limit. The facility contains representations, warranties, covenants and indemnities customary for facilities of this type.
In connection with the wind-down, we recorded a charge of $19.9 to “Gain (loss) on disposition of discontinued operations, net of taxes” within our consolidated statement of operations for the year ended December 31, 2021 to reflect the write-off of historical currency translation amounts associated with DBT that had been previously reported within “Stockholders' equity” on our consolidated balance sheet.
In connection with the wind-down, we recorded a charge of $19.9 to “Gain (loss) on disposition of discontinued operations, net of tax” within our consolidated statement of operations for the year ended December 31, 2021 to reflect the write-off of historical currency translation amounts associated with DBT that had been previously reported within “Stockholders' equity” on our consolidated balance sheet.
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, 2022, 2021 and 2020.
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, 2023, 2022 and 2021.
As a result, we recorded an impairment charge of $24.3 during the quarter, with $23.3 related to goodwill and the remainder to trademarks.
As a result, we recorded an impairment charge of $24.3 during the third quarter, with $23.3 related to goodwill and the remainder to trademarks.
The expected pension contributions for the U.S. plans in 2022 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.
The expected pension contributions for the U.S. plans in 2024 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.
As indicated in Note 10 to the consolidated financial statements, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $24.3, with the offset to “Other operating (income) expenses, net.” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s goodwill and indefinite-lived intangible assets.
As indicated in Note 10 to the consolidated financial statements, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $24.3, with the offset recorded to “Other operating (income) expense, net.” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s goodwill and indefinite-lived intangible assets.
We applied the optional expedients per Accounting Standards Update ( “ASU”) No. 2020-04 and No. 2021-01 and, thus, continue to designate and account for our interest rate swap agreements as cash flow hedges. As of December 31, 2022 and 2021, the unrealized gain, net of tax, recorded in Accumulated Other Comprehensive Income ( “AOCI” ) was $11.0 and $0.5, respectively.
We applied the optional expedients per Accounting Standards Update (“ASU”) No. 2020-04, No. 2021-01, and No. 2022-06 and, thus, continue to designate and account for our interest rate swap agreements as cash flow hedges. As of December 31, 2023 and 2022, the unrealized gain, net of tax, recorded in Accumulated Other Comprehensive Income (“AOCI”) was $5.7 and $11.0, respectively.
Of these charges, $18.8, $48.6 and $19.2 were reflected in “Income from continuing operations before income taxes” for the years ended December 31, 2022, 2021, and 2020 , respectively, and $5.4, $2.6, and $2.1, respectively, were reflected in “Gain (loss) on disposition of discontinued operations, net of tax.” Large Power Projects in South Africa Overview - Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has substantially completed its scope of work.
Of these charges, $18.8 and $48.6 were reflected in “Income from continuing operations before income taxes” for the years ended December 31, 2022 and 2021 , respectively, and $5.4 and $2.6, respectively, were reflected in “Gain (loss) on disposition of discontinued operations, net of tax.” Large Power Projects in South Africa Overview - Since 2008, DBT had been executing on two large power projects in South Africa (Kusile and Medupi), on which it has completed its scope of work.
Over such time, the business environment surrounding these projects was difficult, as DBT, along with many other contractors on the projects, experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers.
During that time, the business environment surrounding these projects was difficult, as DBT, along with many other contractors on the projects, experienced delays, cost over-runs, and various other challenges associated with a complex set of contractual relationships among the end customer, prime contractors, various subcontractors (including DBT and its subcontractors), and various suppliers.
Changes in fair value of our interest rate swap agreements are reclass ified 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.
Changes in fair value of our interest rate swap agreements 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.
From time to time, we enter into forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to 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”).
From time to time, we enter into FX forward contracts to manage the exposure on contracts with forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/liabilities denominated in currencies other than the functional currency of certain subsidiaries.
In connection with the annual impairment testing of our trademarks during the fourth quarters of 2022, 2021, and 48 2020, we recorded impairment charges of $1.4 (including $0.9 related to ULC as noted above), $0.8 (including $0.3 related to ULC as noted above), and $0.7, respectively. See Note 10 to our consolidated financial statements for additional details.
In connection with the annual impairment testing of our trademarks during the fourth quarters of 2023, 2022, and 2021, we recorded impairment charges of $0.0, $1.4 (including $0.9 related to ULC as noted above), and $0.8 (including $0.3 related to ULC as noted above), respectively. See Note 10 to our consolidated financial statements for additional details.
These claims relate to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims), environmental matters, product liability matters (which, prior to the Asbestos Portfolio Sale, were predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims).
These claims relate to litigation matters (e.g., contracts, intellectual property and competitive claims), environmental matters, product liability matters (which, prior to the Asbestos Portfolio Sale, were predominately associated with alleged exposure to asbestos-containing materials), and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims).
In addition, and as previously noted, the year ended December 31, 2021 includes a charge of $19.9 related to the write-off of historical translation amounts. (4) Loss for the years ended December 31, 2022, 2021, and 2020 resulted primarily from asbestos-related charges and revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions.
In addition, and as previously noted, the year ended December 31, 2021 includes a charge of $19.9 related to the write-off of historical translation amounts. 33 (4) Loss for the years ended December 31, 2023, 2022, and 2021 resulted primarily from revisions to liabilities, including income tax liabilities, retained in connection with prior dispositions and, for the years ended December 31, 2022 and 2021, asbestos-related charges for businesses previously disposed of.
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, 2022 and 2021, the participating businesses had $1.8 and $2.2, respectively, outstanding under this arrangement.
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, 2023 and 2022, the participating businesses had $1.9 and $1.8, respectively, outstanding under this arrangement.
The year ended December 31, 2021 includes insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter. During the years ended December 31, 2022, 2021, and 2020 , we recorded charges of $24.2, $51.2, and $21.3, respectively, as a result of changes in estimates associated with the liabilities and assets related to asbestos-related claims.
The year ended December 31, 2021 included insurance proceeds of $15.0 associated with the settlement of an asbestos insurance coverage matter. During the years ended December 31 , 2022 and 2021 , we recorded charges of $24.2 and $51.2, respectively, as a result of changes in estimates associated with the liabilities and assets related to asbestos-related claims.
Potential Impacts of Russia/Ukraine Conflict The Russia/Ukraine conflict, and governmental actions implemented in response to the conflict, have not had a significant adverse impact on our operating results during 2022. We are monitoring the availability of certain raw materials that are supplied by businesses in these countries.
Potential Impacts of Geopolitical Conflicts The Russia/Ukraine conflict, and governmental actions implemented in response to the conflict, did not have a significant adverse impact on our operating results during 2023 and 2022. We are monitoring the availability of certain raw materials that are supplied by businesses in these countries.
The decrease in interest expense, net, during 2021, compared to 2020, was the result of lower average effective interest rates and lower average debt balances during 2021. Loss on Amendment/Refinancing of Senior Credit Agreement — During 2022, we amended our senior credit agreement.
The decrease in interest expense, net, during 2022, compared to 2021, was the result of lower average debt balances and increased interest rates on cash balances during 2022. Loss on Amendment/Refinancing of Senior Credit Agreement — During 2022, we amended our senior credit agreement.
The remaining balance is payable in full on August 12, 2027. We use operating leases to finance certain equipment, vehicles and properties. At December 31, 2022, we had $ 47.8 o f future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year.
The remaining balance is payable in full on August 12, 2027. We use operating leases to finance certain equipment, vehicles and properties. At December 31, 2023, we had $ 43.6 o f future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year.
The revenue for these long-term contracts is recorded based on the percentage of costs incurred to date for each contract to the estimated total costs for such a contract at completion. In 2022, 2021, and 2020 we recognized $167.8, $142.4 and $164.0, respectively, of revenues under such method.
The revenue for these long-term contracts is recorded based on the percentage of costs incurred to date for each contract to the estimated total costs for such a contract at completion. In 2023, 2022, and 2021 we recognized $173.2, $167.8 and $142.4, respectively, of revenues under such method.
Interest Rate Swaps We previously maintained interest rate swap agreements that matured in March 2021 and effectively converted borrowings under our senior credit facilities to a fixed rate of 2.535%, plus the applicable margin.
Interest Rate Swaps We previously maintained interest rate swap agreements that matured in March 2021 and effectively converted borrowings under our senior credit facilities to a fixed rate of 2.535%, plus the applicable margin. In 2020 we entered into additional interest swap agreements (“Swaps”).
Gross Profi t - For 2022, th e increase gross profit and gross profit as a percentage of revenues, compared to 2021, was due primarily to the increase in revenues noted above, including revenue increases associated with higher-margin, large projects within our communication technologies and obstruction lighting businesses.
For 2022, th e increase gross profit and gross profit as a percentage of revenues, compared to 2021, was due primarily to the increase in revenues noted above, including revenue increases associated with higher-margin large projects within our communication technologies and aids to navigation businesses.
In 2022, we made contributions and direct benefit payments of $11.0 to our defined benefit pension and postretirement benefit plans. We expect to make $10.3 of minimum required funding contributions and direct benefit payments in 2023. Our pension plans have not experienced any liquidity difficulties or counterparty defaults due to the volatility in the credit markets.
In 2023, we made contributions and direct benefit payments of $11.2 to our defined benefit pension and postretirement benefit plans. We expect to make $10.5 of minimum required funding contributions and direct benefit payments in 2024. Our pension plans have not experienced any liquidity difficulties or counterparty defaults due to the volatility in the credit markets.
Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and, to the extent the commodity contracts were effective in offsetting the variability of the forecasted purchases, the change in fair value was included in AOCI. We reclassified amounts associated with our commodity contracts out of AOCI when the forecasted transaction impacted earnings.
Prior to extinguishment, we designated and accounted for these contracts as cash flow hedges and the change in fair value was included in AOCI. We reclassified amounts associated with our commodity contracts out of AOCI when the forecasted transaction impacted earnings.
The decrease in long-term incentive compensation in 2022, compared to 2021, was due primarily to the impact of forfeitures resulting from various participant resignations during 2022.
The increase in long-term incentive compensation expense in 2023, compared to 2022, was due primarily to the impact of forfeitures resulting from various participant resignations during 2022. 35 The decrease in long-term incentive compensation in 2022, compared to 2021, was due primarily to the impact of forfeitures resulting from various participant resignations during 2022.
See Note 12 to our consolidated financial statements for additional details regarding our uncertain tax positions. 50 New Accounting Pronouncements See Note 3 to our consolidated financial statements for a discussion of recent accounting pronouncements. 51
See Note 12 to our consolidated financial statements for additional details regarding our uncertain tax positions. 48 New Accounting Pronouncements See Note 3 to our consolidated financial statements for a discussion of recent accounting pronouncements. 49
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 2022 pension expense by approximately $9.4, a nd a 50 basis point increase in the discount rate would have decreased our 2022 pension expense by appro ximately $8.8.
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 2023 pension expense by approximately $10.0, a nd a 50 basis point increase in the discount rate would have decreased our 2023 pension expense by appro ximately $9.1.
Corporate Expense and Other Expense Year Ended December 31, 2022 vs. 2021 % 2021 vs. 2020 % 2022 2021 2020 Total consolidated revenues $ 1,460.9 $ 1,219.5 $ 1,128.1 19.8 8.1 Corporate expense 68.6 60.5 49.7 13.4 21.7 % of revenues 4.7 % 5.0 % 4.4 % Long-term incentive compensation expense 10.9 12.8 13.1 (14.8) (2.3) Corporate Expense — Corporate expense generally relates to the cost associated with our Charlotte, NC corporate headquarters.
Corporate Expense and Other Expense Year Ended December 31, 2023 vs. 2022 % 2022 vs. 2021 % 2023 2022 2021 Total consolidated revenues $ 1,741.2 $ 1,460.9 $ 1,219.5 19.2 19.8 Corporate expense 58.4 68.6 60.5 (14.9) 13.4 % of revenues 3.4 % 4.7 % 5.0 % Long-term incentive compensation expense 13.4 10.9 12.8 22.9 (14.8) Corporate Expense — Corporate expense generally relates to the operating cost associated with our Charlotte, NC corporate headquarters.
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 2022, which is the weighted-average annual projected rate of increase in the per capita cost of covered benefits, is 7.0%.
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 2023, which is the weighted-average annual projected rate of increase in the per capita cost of covered benefits, is 6.8%.
Our pension fund assets had negative returns of approximately 24.0% in 2022. 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 income tax refunds (payments) totaled $(59.6) , $5.5, and $(7.6) in 2022, 2021, and 2020, respectively.
Our pension fund assets had returns of approximately 6.0% in 2023. 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 income tax refunds (pa yments) totaled $(58.4), $(59.6), and $5.5 in 2023, 2022, and 2021, respectively.
DBT has numerous defenses and, thus, we do not believe that DBT has a probable loss associated with any of these claims. ◦ In the fourth quarter of 2021, we completed the wind-down of DBT. ▪ The wind-down was a culmination of a strategic shift away from the power generation markets. ▪ As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented. • Asbestos Product Li ability Matters: ◦ During 2021, we recorded charg es of $51.2 related to asbestos product liability matters, with such charges related primarily to an unfavorable trend in the percentage of claims with payment (versus dismissed without payment). ◦ Of such charges, $48.6 were reflected in “Income from continuing operations before income taxes” and the remainder in “Gain (loss) on disposition of discontinued operations, net of tax.” ◦ Insurance recoveries for asbestos product liability matters, net of payments, totaled $0.3 in 2021. ◦ These recoveries included $15.0 associated with the settlement of an insurance coverage matter. ◦ See Note 15 to our consolidated financial statements for additional details. • Actuarial Gains on Pension and Postretirement Plans: ◦ During 2021, we recorded net actuarial gains o f $ 9.9 in t he fourth quarter of 2021 in connection with the annual remeasurement of our pension and postretirement plans, with such gains resulting primarily from increases in discount rates. ◦ See Notes 1 and 11 to our consolidated financial statements for additional details. • Changes in the Estimated Fair Value of an Equity Security: ◦ During 2021, we recorded gains of $ 11.8 within “Other income (expense), net” related to increases in the estimated fair value of an equity security that we hold. ◦ See Note 17 to our consolidated financial statements for additional details. • ULC Contingent Consideration, Indefinite-Lived Intangible Assets, and Goodwill: ◦ The seller of ULC was eligible for additional cash consideration of up to $45.0, upon achievement of certain operating and financial performance milestones. ◦ During the third quarter of 2021, we concluded that the operating and financial milestones associated with the ULC contingent consideration would not be achieved. ◦ As a result, we reversed the related liability of $24.3, with the offset to “Other operating (income) expense, net.” ◦ We also concluded that the lack of achievement of the above milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill. ◦ As such, we tested ULC’s infinite-lived intangible assets and goodwill for impairment during the third quarter of 2021. ◦ Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business. ◦ As a result, we recorded an impairment charge of $24.3, with $23.3 related to goodwill and the remainder to trademarks. 26 ◦ During the fourth quarter of 2021, we performed our annual analysis of ULC’s indefinite-lived intangible assets and goodwill.
MHI paid these amounts on October 14, 2022. • The remaining amounts related to the May 2021 and September 2020 bond draws, prior to the impact of the Settlement Agreement, are reflected within “Assets of DBT and Heat Transfer” on the consolidated balance sheet as of December 31, 2022 . ◦ In the fourth quarter of 2021, we completed the wind-down of DBT ▪ The wind-down was a culmination of a strategic shift away from the power generation markets. ▪ As a result of completing the wind-down plan, we are reporting DBT as a discontinued operation for all periods presented. ◦ All of the above matters, among other claims, were resolved by the Settlement Agreement. • Asbestos Product Li ability Matters: ◦ During 2021, we recorded charg es of $51.2 related to asbestos product liability matters, with such charges related primarily to an unfavorable trend in the percentage of claims with payment (versus dismissed without payment). ◦ Of such charges, $48.6 were reflected in “Income from continuing operations before income taxes” and the remainder in “Gain (loss) on disposition of discontinued operations, net of tax.” ◦ Insurance recoveries for asbestos product liability matters, net of payments, totaled $0.3 in 2021. ◦ These recoveries included $15.0 associated with the settlement of an insurance coverage matter. ◦ See Note 15 to our consolidated financial statements for additional details. • Actuarial Gains on Pension and Postretirement Plans: ◦ During 2021, we recorded net actuarial gains o f $ 9.9 in t he fourth quarter of 2021 in connection with the annual remeasurement of our pension and postretirement plans, with such gains resulting primarily from increases in discount rates. ◦ See Notes 1 and 11 to our consolidated financial statements for additional details. • Changes in the Estimated Fair Value of an Equity Security: ◦ During 2021, we recorded gains of $11.8 within “Other income (expense), net” related to increases in the estimated fair value of an equity security that we hold. ◦ See Note 17 to our consolidated financial statements for additional details. • ULC Robotics (“ULC”) Contingent Consideration, Indefinite-Lived Intangible Assets, and Goodwill: ◦ The seller of ULC was eligible for additional cash consideration of up to $45.0 upon achievement of certain operating and financial performance milestones. ◦ During the third quarter of 2021, we concluded that the operating and financial milestones associated with the ULC contingent consideration would not be achieved. ◦ As a result, we reversed the related liability of $24.3, with the offset to “Other operating (income) expense, net.” ◦ We also concluded that the lack of achievement of the above milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill. ◦ As such, we tested ULC’s indefinite-lived intangible assets and goodwill for impairment during the third quarter of 2021. ◦ Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business. ◦ As a result, we recorded an impairment charge of $24.3, with $23.3 related to goodwill and the remainder to trademarks. ◦ During the fourth quarter of 2021, we performed our annual analysis of ULC’s indefinite-lived intangible assets and goodwill.
The remaining balance is payable in full on August 12, 2027. Balances are net of unamortized debt issuance costs of $0.7 and $1.0 at December 31, 2022 and December 31, 2021, respectively. (3) Under this arrangement, we can borrow, on a continuous basis, up to $50.0, as available.
The remaining balances are payable in full on August 12, 2027. Balances are net of unamortized debt issuance costs of $1.7 and $0.7 at December 31, 2023 and December 31, 2022, respectively. (4) Under this arrangement, we can borrow, on a continuous basis, up to $60.0, as available.
In addition, the fair value of our interest rate swap agreements was $14.7 (with $8.7 recorded as a current asset and $6.0 as a non-current asset) as of December 31, 2022 , and $0.6 (with $2.5 recorded as a non-current asset and $1.9 as a current liability) as of December 31, 2021.
In addition, the fair value of our interest rate swap agreements was $7.5 (with $7.5 recorded as a current asset) as of December 31, 2023, and $14.7 (with $8.7 recorded as a current asset and $6.0 as a non-current asset) as of December 31, 2022.
Our term loan is repayable in quarterly installments equal to 0.625% of the initial term loan balance of $245.0, beginning in December 2023 and in each of the first three quarters of 2024, and 1.25% during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.
Our term loans are repayable in quarterly installments equal to 0.625% of the initial term loan balances of $545.0, beginning in December 2023 and in each of the first three quarters of 2024, and 1.25% during the fourth quarter of 2024, all quarters of 2025 and 2026, and the first two quarters of 2027.
For the years ended December 31, 2022, 2021 and 2020, results of operations from our businesses reported as discontinued operations were as follows: Year ended December 31, 2022 2021 2020 Transformer Solutions Income (loss) from discontinued operations (1) $ (0.6) $ 454.9 $ 56.9 Income tax (provision) benefit (2) 0.9 (51.8) (14.0) Income from discontinued operations, net 0.3 403.1 42.9 DBT Loss from discontinued operations (3) (17.3) (37.8) (16.6) Income tax benefit 2.1 2.7 2.4 Loss from discontinued operations, net (15.2) (35.1) (14.2) Heat Transfer Income (loss) from discontinued operations (0.4) (0.3) 0.3 Income tax (provision) benefit 0.1 — (0.1) Income (loss) from discontinued operations, net (0.3) (0.3) 0.2 All other (4) Loss from discontinued operations (6.0) (7.6) (4.8) Income tax benefit 1.6 6.3 1.1 Loss from discontinued operations, net (4.4) (1.3) (3.7) Total Income (loss) from discontinued operations (24.3) 409.2 35.8 Income tax (provision) benefit 4.7 (42.8) (10.6) Income (loss) from discontinued operations, net $ (19.6) $ 366.4 $ 25.2 ________________________________________________ (1) Loss for the year ended December 31, 2022 resulted primarily from revisions to liabilities retained in connection with the disposition.
For the years ended December 31, 2023, 2022 and 2021, results of operations from our businesses reported as discontinued operations were as follows: Year ended December 31, 2023 2022 2021 Transformer Solutions Income (loss) from discontinued operations (1) $ — $ (0.6) $ 454.9 Income tax (provision) benefit (2) — 0.9 (51.8) Income from discontinued operations, net — 0.3 403.1 DBT Loss from discontinued operations (69.0) (17.3) (37.8) Income tax benefit 15.3 2.1 2.7 Loss from discontinued operations, net (3) (53.7) (15.2) (35.1) All other (4) Loss from discontinued operations (1.3) (6.4) (7.9) Income tax benefit 0.2 1.7 6.3 Loss from discontinued operations, net (1.1) (4.7) (1.6) Total Income (loss) from discontinued operations (70.3) (24.3) 409.2 Income tax (provision) benefit 15.5 4.7 (42.8) Income (loss) from discontinued operations, net $ (54.8) $ (19.6) $ 366.4 ________________________________________________ (1) Loss for the year ended December 31, 2022 resulted primarily from revisions to liabilities retained in connection with the disposition.
At December 31, 2022, we had $489.0 of available borrowing capacity under our revolving credit facilities, after giving effect to $11.0 reserved for outstanding letters of credit. In addition, at December 31, 2022, we had $10.2 of available issuance capacity under our foreign credit instrument facilities after giving effect to $14.8 reserved for outstanding letters of credit.
At December 31, 2023, we had $489.2 of available borrowing capacity under our revolving credit facilities, after giving effect to $10.8 reserved for outstanding letters of credit. In addition, at December 31, 2023, we had $13.4 of available issuance capacity under our foreign credit instrument facilities after giving effect to $11.6 reserved for outstanding letters of credit.
We believe the underlying factors used to estimate our 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.
We record changes in estimates of revenues and costs when identified using the cumulative catch-up method. 46 We believe the underlying factors used to estimate our 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.
Other income, net, for 2021 was composed primarily of pension and post retirement income of $16.4 (including actuarial gains of $9.9), a gain of $11.8 related to changes in the estimated fair value of an equity security we hold, and income derived from company- owned life insurance policies of $3.2, partially offset by charges of $21.0 associated with asbestos product liability matters. 30 Other expense, net, for 2020 was composed primarily of charges of $7.6 associated with asbestos product liability matters, pension and postretirement expense of $3.0 (including actuarial losses of $6.8), environmental remediation charges of $1.5, and foreign currency transaction losses of $0.6, partially offset by a gain of $8.6 related to changes in the estimated fair value of an equity security we hold and income derived from company-owned life insurance policies of $5.0.
Other income, net, for 2021 was composed primarily of pension and post retirement income of $16.4 (including actuarial gains of $9.9), a gain of $11.8 related to changes in the estimated fair value of an equity security we hold, and income derived from company- owned life insurance policies of $3.2, partially offset by charges of $21.0 associated with asbestos product liability matters.
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 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.
See Note 11 to our consolidated financial statements for additional information on expected future contributions and benefit payments. (2) Represents contractual commitments to purchase goods and services at specified dates. (3) Represents rental payments under operating leases with remaining non-cancelable terms in excess of one year. (4) Represents interest payments exclusive of the impact of our interest rate swap agreements.
See Note 11 to our consolidated financial statements for additional information on expected future contributions and benefit payments. (2) Represents contractual commitments to purchase goods and services at specified dates and DBT's remaining obligation under the Settlement Agreement. (3) Represents rental payments under operating leases with remaining non-cancelable terms in excess of one year.
During 2021, we reduced the issuance capacity of our then-existing foreign credit instrument facilities resulting in a charge of $0.2 associated with the write-off of unamortized deferred financing costs. Income Taxes — During 2022, we recorded an income tax provision of $7.3 on $27.1 of pre-tax income from continuing operations, resulting in an effective rate of 26.9%.
During 2021, we reduced the issuance capacity of our then-existing foreign credit instrument facilities resulting in a charge of $0.2 associated with the write-off of unamortized deferred financing costs. Income Taxes — 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%.
Cash flows used in financing activities during 2021 were comprised primarily of net repayments on various debt instruments of $164.5 . 35 Discontinued Operations – Cash flows used in discontinued operations during 2022 related primarily to (i) disbursements for professional fees incurred in connection with the claims activities related to the large power projects in South Africa (see Note 15 to the consolidated financial statements for additional details), (ii) disbursements related to asbestos product liability matters made prior to the Asbestos Portfolio Sale, (iii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business, and (iv) disbursements for liabilities retained in connection with dispositions, including fees associated with the sale of Transformer Solutions.
Cash flows used in discontinued operations for the year ended December 31, 2022 related primarily to (i) disbursements for professional fees incurred in connection with the claims activities related to the large power projects in South Africa (see Note 15 to the consolidated financial statements for additional details), (ii) disbursements related to asbestos product liability matters made prior to the Asbestos Portfolio Sale, (iii) a payment of $13.9 to the buyer of Transformer Solutions related to the settlement of the final working capital balances for the business, and (iv) disbursements for liabilities retained in connection with dispositions, including fees associated with the sale of Transformer Solutions.
For 2021, the increase in gross profit and gross profit as a percentage of revenues, compared to 2020, was due primarily to the revenue increases noted above. 29 Selling, General a nd Administrative (“SG&A”) Expense — For 2022, th e increase in SG&A expense, compared to 2021, was due primarily t o (i) incremental SG&A resulting from the acquisitions noted above, (ii) higher corporate expense associated with increased costs associated with various strategic and transformational initiatives, including the Asbestos Portfolio Sale, and higher short-term incentive compensation in 2022, and (iii) higher travel expenses due to the easing of COVID-19 pandemic restrictions in 2022.
For 2022, th e increase in SG&A expense, compared to 2021, was due primarily t o (i) incremental SG&A resulting from the acquisitions noted above, (ii) higher corporate expense associated with increased costs associated with various strategic and transformational initiatives, including the Asbestos Portfolio Sale, and higher short-term incentive compensation in 2022, and (iii) higher travel expenses due to the easing of COVID-19 pandemic restrictions in 2022.
Also, while we believe we are entitled to indemnification from third parties for some of these claims, these rights may be insufficient or unavailable to protect us against potential loss exposures. Our recorded liabilities related to these matters totaled $39.5 and $658.8 at December 31, 2022 and 2021, respectively.
Also, while we believe we are entitled to indemnification from third parties for some of these claims, these rights may be insufficient or unavailable to protect us against potential loss exposures. Our recorded liabilities related to these matter s, primarily associated with environmental matters, totaled $37.9 and $39.5 at December 31, 2023 and 2022, respectively.
Although it is reasonably possible that some loss may be incurred in connection with these claims, we currently are unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims; (ii) complexity of contractual relationships between the end customer, MHI, and DBT; (iii) legal interpretation of the contract provisions and application of South African law to the contracts; and (iv) unpredictable nature of any dispute resolution processes that may occur in connection with these claims.
Although it was reasonably possible that some loss may have been incurred in connection with these claims (which totaled approximately South African Rand 2,815.2 or $153.2), we were unable to estimate the potential loss or range of potential loss associated with these claims due to the (i) lack of support provided by MHI for these claims; (ii) complexity of contractual relationships between the end customer, MHI, and DBT; (iii) legal interpretation of the contract provisions and application of South African law to the contracts; and (iv) unpredictable nature of any dispute resolution processes that may have occurred in connection with these claims.
As our long-term contracts generally range from six to eighteen months in duration, we typically reassess the estimated revenues and costs of these contracts on a quarterly basis, but may reassess more often as situations warrant. We record changes in estimates of revenues and costs when identified using the cumulative catch-up method.
As our long-term contracts generally range from six to eighteen months in duration, we typically reassess the estimated revenues and costs of these contracts on a quarterly basis, but may reassess more often as situations warrant.
Year Ended December 31, 2022 2021 2020 Continuing operations: Cash flows from (used in) operating activities $ (115.2) $ 131.2 $ 105.2 Cash flows used in investing activities (52.2) (306.0) (119.9) Cash flows from (used in) financing activities (39.9) (167.8) 16.3 Cash flows from (used in) discontinued operations (34.5) 663.7 14.5 Change in cash and equivalents due to changes in foreign currency exchange rates 2.9 6.6 (2.5) Net change in cash and equivalents $ (238.9) $ 327.7 $ 13.6 2022 Compared to 2021 Operating Activities – The decrease in cash flows from operating activities, compared to 2021, was due primarily to (i) a cash contribution to the divested subsidiaries of $138.8 in connection with the Asbestos Portfolio Sale; (ii) income tax payments, net of refunds, of $59.6 (compared to income tax refunds, net of tax payments, of $5.5 during the year ended December 31, 2021), with a significant portion of the 2022 payments related to the gain on sale of Transformer Solutions; (iii) elevated purchases of inventory components in order to manage the potential risk associated with the current supply chain environment; (iv) decreases in cash flows at certain of our project-related businesses, as cash receipts for these businesses are often subject to contractual milestones that can impact cash receipts from period to period; (v) net payments for asbestos-related matters of $15.3 (co mpared to net recoveries of $0.3 during the year ended December 31, 2021); and (vi) cash payments of $10.0 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier.
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 2023 and 2022. 2022 Compared to 2021 Operating Activities - The decrease in cash flows from operating activities, compared to 2021, was due primarily to (i) a cash contribution to the divested subsidiaries of $138.8 in connection with the Asbestos Portfolio Sale; (ii) income tax payments, net of refunds, of $59.6 (compared to income tax refunds, net of tax payments, of $5.5 during the year ended December 31, 2021), with a significant portion of the 2022 payments related to the gain on sale of Transformer Solutions; (iii) elevated purchases of inventory components in order to manage the potential risk associated with the then-existing supply chain environment; (iv) decreases in cash flows at certain of our project-related businesses, as cash receipts for these businesses are often subject to contractual milestones that can impact cash receipts from period to period; (v) net payments for asbestos-related matters of $15.3 (co mpared to net recoveries of $0.3 during the year ended December 31, 2021); and (vi) cash payments of $10.0 in connection with the transfer of our postretirement life insurance benefit obligation to an insurance carrier.
We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter and continually assess whether a triggering event has occurred to determine whether the carrying value exceeds the implied fair value.
Impairment of Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets are not amortized, but instead are subject to annual impairment testing. We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter and continually assess whether a triggering event has occurred to determine whether the carrying value exceeds the implied fair value.
Organic growth within the Detection and Measurement reportable segment was due to continued strong order trends for our short-cycled businesses and execution of large projects within the fare collection, communication technologies, and obstruction lighting businesses.
Organic growth within the Detection and Measurement reportable segment was due to strong order trends for our short-cycled businesses and execution of large projects within the transportation, communication technologies, and aids to navigation businesses.
The increase in corporate expense during 2021, compared to 2020, was due primarily to increased costs associated with continuous improvement and other strategic initiatives and higher short-term incentive compensation during 2021. 34 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 corporate expense during 2022, compared to 2021, was due primarily to increased costs associated with various strategic and transformational initiatives, including the Asbestos Portfolio Sale, and higher short-term incentive compensation in 2022. Long- Term Incentive Compensation Expense — Long-term incentive compensation expense represents our consolidated expense, which we do not allocate for segment reporting purposes.
Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, and interest rate swap and foreign currency 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.
Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, COLI policies, and interest rate swaps and FX forward contracts. These financial instruments, other 40 than trade accounts receivable, are placed with high-quality financial institutions throughout the world.
Capital expenditures for 2022 t otaled $15.9 , compared to $9.6 and $15.3 in 2021 and 2020, respectively. Capital expenditures in 2022 related prima ril y to upgrades to manufacturing facilities, including replacement of equipment. We expect 2023 capital expenditures to approximate $20.0 to $30.0, with a significant portion related to upgrades to manufacturing facilities.
Capital expenditures for 2023 t otaled $23.9 , compared to $15.9 and $9.6 in 2022 and 2021, respectively. Capital expenditures in 2023 related prima ril y to upgrades to manufacturing facilities, including replacement of equipment. We expect 2024 capital expenditures to approximate $35.0 to $45.0, with a significant portion related to upgrades to existing, and expansion into new, manufacturing facilities.
As a result of such analyses, we recorded impairment charges of $13.4, with $12.0 related to goodwill and remainder to trademarks. ◦ See Notes 1 and 10 to our consolidated financial statements for additional details. 2021: • On April 19, 2021, we completed the acquisition of Sealite. ◦ The purchase price for Sealite was $80.3, net of cash acquired of $2.3. ◦ The post-acquisition operating results of Sealite are reflected within our Detection and Measurement reportable segment. • On August 2, 2021, we completed the acquisition of ECS. ◦ The purchase price for ECS was $39.4 , net of cash acquired of $5.1 . ◦ The seller was eligible for additional cash consideration of up to $15.0, upon achievement of certain financial performance milestones. ▪ The estimated fair value of such contingent consideration was $ 8.2 as of the date of acquisition. ▪ During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of a large order, resulting in a reduction of the estimated fair value/liability of $6.7, with such amount recorded to “Other operating (income) expense, net” during the quarter. ▪ During the first and second quarters of 2022, we further reduced the estimated fair value/liability by $0.9 and $0.4, respectively, with such amounts recorded to “Other operating (income) expense, net.” ▪ The financial performance milestones were not achieved and, thus, as of December 31, 2022, the estimated fair value/liability related to the contingent consideration was $0.0. ◦ The post-acquisition operating results of ECS are included within our Detection and Measurement reportable segment. • O n December 15, 2021 , we completed the acquisition of Cincinnati Fan. ◦ The purchase price for Cincinnati Fan was $145.2, net of cash acquired of $2.5. ◦ During the second quarter of 2022, we agreed to a final adjustment to the purchase price, related to acquired working capital, resulting in our receipt of $0.4 of cash during the quarter. ◦ The post-acquisition operating results of Cincinnati Fan are included within our HVAC reportable segment. • On October 1, 2021, we completed the sale of Transformer Solutions. ◦ Transformer Solutions is included in discontinued operations for all periods presented. ◦ We received net cash proceeds of $620.6 and recorded a gain of $382.2 to “Gain (loss) on disposition of discontinued operations, net of tax” in 2021. ◦ During the first quarter of 2022, we paid $13.9 to the buyer of Transformer Solutions related primarily to the settlement of the final working capital balances of the business. • DBT (our South Africa subsidiary): ◦ Large Power Projects ▪ On February 22, 2021 and April 28, 2021, DBT received favorable rulings from dispute adjudication panels. • In connection with the rulings, DBT received South African Rand 126.6 ($8.6 at time of payment) and South African Rand 82.0 ($6.0 at the time of payment), respectively. • As the rulings are subject to further arbitration, such amounts have not been reflected in our consolidated statements of operations. • On July 5, 2021, DBT received notice from Mitsubishi Heavy Industries Power – ZAF (or “MHI”) of its intent to seek final and binding arbitration on the first ruling.
As a result of such analyses, we recorded impairment charges of $13.4, with $12.0 related to goodwill and remainder to trademarks. ◦ See Notes 1 and 10 to our consolidated financial statements for additional details. 2021: • On April 19, 2021, we completed the acquisition of Sealite ◦ The purchase price for Sealite was $80.3, net of cash acquired of $2.3. ◦ The post-acquisition operating results of Sealite are reflected within our Detection and Measurement reportable segment. • On August 2, 2021, we completed the acquisition of ECS ◦ The purchase price for ECS was $39.4 , net of cash acquired of $5.1 . ◦ The seller was eligible for additional cash consideration of up to $16.0, upon achievement of certain financial performance milestones. ▪ The estimated fair value of such contingent consideration was $ 8.2 as of the date of acquisition. ▪ During the fourth quarter of 2021, we concluded that the probability of achieving the above financial performance milestones had lessened due to a delay in the execution of a large order, resulting in a reduction of the estimated fair value/liability of $6.7, with such amount recorded to “Other operating (income) expense, net” during the quarter. ▪ During the first and second quarters of 2022, we further reduced the estimated fair value/liability by $0.9 and $0.4, respectively, with such amounts recorded to “Other operating (income) expense, net.” ▪ The financial performance milestones were not achieved and, thus, as of December 31, 2023 and 2022, the estimated fair value/liability related to the contingent consideration was $0.0. ◦ The post-acquisition operating results of ECS are included within our Detection and Measurement reportable segment. • O n December 15, 2021 , we completed the acquisition of Cincinnati Fan ◦ The purchase price for Cincinnati Fan was $145.2, net of (i) an adjustment to the purchase price received during 2022 of $0.4 related to acquired working capital and (ii) cash acquired of $2.5. ◦ The post-acquisition operating results of Cincinnati Fan are included within our HVAC reportable segment. • On October 1, 2021, we completed the sale of Transformer Solutions ◦ Transformer Solutions is included in discontinued operations for all periods presented. ◦ We received net cash proceeds of $620.6 and recorded a gain of $382.2 to “Gain (loss) on disposition of discontinued operations, net of tax” in 2021. ◦ During the first quarter of 2022, we paid $13.9 to the buyer of Transformer Solutions related primarily to the settlement of the final working capital balances of the business. • DBT (our South Africa subsidiary): ◦ Large Power Projects ▪ On February 22, 2021 and April 28, 2021, DBT received favorable rulings from dispute adjudication panels. • In connection with the rulings, DBT received South African Rand 126.6 ($8.6 at time of payment) and South African Rand 82.0 ($6.0 at the time of payment), respectively. • As the rulings were subject to further arbitration, such amounts were not reflected in our consolidated statements of operations prior to the Settlement Agreement. ▪ In May 2021, and in connection with certain claims made by MHI, MHI made a demand and received payment of South African Rand 178.7 (or $12.5 at the time of payment) on bonds issued by a bank. • Under the terms of the bonds and our senior credit agreement, we were required to fund the payment. • DBT denied liability for these claims and believed it was legally entitled reimbursement of the amounts demanded. • On October 11, 2022, a dispute adjudication panel ruled MHI drew (in both the May 2021 and September 2020 bond draws) on amounts in excess of the bond values stipulated in the contracts and was required to refund DBT South African Rand 90.8 (or $5.3) of the 27 previously demanded amounts, plus interest of South African Rand 12.5 (or $0.7).
The combination of these matters negatively impacted our operating results during the first half of 2022, particularly during the first quarter of 2022, as we experienced lower absorption of manufacturing costs and, in some cases, the negative impact of cost increases on fixed-price customer contracts.
The combination of these matters negatively impacted our operating results during the first half of 2022, as we experienced lower absorption of manufacturing costs and, in some cases, the negative impact of cost increases on fixed-price customer contracts. During 2023, we experienced more stable labor and supply chain environments and continue to actively manage these matters.
As a result of such analysis, we recorded impairment charges of $5.2, with $0.3 related to trademarks and $4.9 to goodwill. ◦ See Note 1 and 10 to our consolidated financial statements for additional details. • Sensors & Software Contingent Consideration: ◦ The seller of Sensors & Software was eligible for additional cash consideration of up to $3.9, upon achievement of certain financial performance milestones. ◦ During the fourth quarter of 2021, we concluded that certain of the financial performance milestones associated with the Sensors & Software contingent consideration had been achieved. ◦ As a result, we recorded an additional charge of $0.6 to “Other operating (income) expense, net” and the resulting fair value of such contingent consideration of $1.3 is reflected as a liability in our consolidated balance sheet at December 31, 2021. ◦ The $1.3 was paid during 2022 and is reflected within cash flows from financing activities in our consolidated statement of cash flows for the year ended December 31, 2022. 2020: • In February 2020, and as a result of the December 2019 amendment that extended the maturity date of our senior credit facilities to December 17, 2024, we entered into additional interest rate swap agreements.
As a result of such analysis, we recorded impairment charges of $5.2, with $0.3 related to trademarks and $4.9 to goodwill. ◦ See Notes 1 and 10 to our consolidated financial statements for additional details. • Sensors & Software Contingent Consideration: ◦ The seller of Sensors & Software was eligible for additional cash consideration of up to $3.8, upon achievement of certain financial performance milestones. ◦ During the fourth quarter of 2021, we concluded that certain of the financial performance milestones associated with the Sensors & Software contingent consideration had been achieved. ◦ As a result, we recorded an additional charge of $0.6 to “Other operating (income) expense, net.” 28 ◦ The contingent consideration of $1.3 was paid during 2022 and is reflected within cash flows from financing activities in our consolidated statement of cash flows for the year ended December 31, 2022.
Senior Credit Facilities On August 12, 2022, we entered into the Credit Agreement to, among other things, extend the term of the facilities under the Credit Agreement (with the aggregate of each facility comprising the “Senior Credit Facilities”) and provide for committed senior secured financing with an aggregate amount of $770.0 which consists of the following facilities at December 31, 2022 (each with a final maturity of August 12, 2027): • A term loan facility in an aggregate principal amount of $245.0; • A multicurrency revolving credit facility, available for loans and letters of credit in Dollars, Euro, Sterling and other currencies, in an aggregate principal amount up to the equivalent of $500.0 (with sub-limits equal to the equivalents of $200.0 for financial letters of credit, $50.0 for non-financial letters of credit, and $150.0 for non-U.S. exposure); and • A bilateral foreign credit instrument facility, available for performance letters of credit and bank undertakings, in an aggregate principal amount in various currencies up to the equivalent of $25.0.
The credit facilities (the “Senior Credit Facilities”) under the Credit Agreement consist of the following at December 31, 2023 (each with a final maturity of August 12, 2027): • Term loan facilities in an aggregate principal amount of $545.0 ($245.0 and $300.0 related to our original term loan and the Incremental Term Loan, respectively); 38 • A multicurrency revolving credit facility, available for loans and letters of credit in Dollars, Euro, Sterling and other currencies, in an aggregate principal amount up to the equivalent of $500.0 (with sub-limits equal to the equivalents of $200.0 for financial letters of credit, $50.0 for non-financial letters of credit, and $150.0 for non-U.S. exposure); and • A bilateral foreign credit instrument facility, 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 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.
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.
Approximately 98% of the segment’s backlog as of December 31, 2022 is expected to be recognized as revenue during 2023. 33 Detection and Measurement Reportable Segment Year Ended December 31, 2022 vs. 2021 % 2021 vs. 2020 % 2022 2021 2020 Revenues $ 547.1 $ 467.4 $ 387.3 17.1 20.7 Income 114.1 92.9 80.9 22.8 14.8 % of revenues 20.9 % 19.9 % 20.9 % Components of revenue increase: Organic 11.0 5.0 Foreign currency (3.1) 1.1 Acquisitions 9.2 14.6 Net revenue increase 17.1 20.7 Revenues — For 2022, the increase in revenues, compared to 2021, was due to organic growth across all product lines and the impact of the acquisitions of Sealite, ECS, and ITL.
Approximately 98% of the segment’s backlog as of December 31, 2023 is expected to be recognized as revenue during 2024. 34 Detection and Measurement Reportable Segment Year Ended December 31, 2023 vs. 2022 % 2022 vs. 2021 % 2023 2022 2021 Revenues $ 618.9 $ 547.1 $ 467.4 13.1 17.1 Income 118.8 114.1 92.9 4.1 22.8 % of revenues 19.2 % 20.9 % 19.9 % Components of revenue increase: Organic 12.4 11.0 Foreign currency 0.3 (3.1) Acquisitions 0.4 9.2 Net revenue increase 13.1 17.1 Revenues — For 2023, the increase in revenues, compared to 2022, was due primarily to organic revenue growth and, to a lesser extent, the full year impact of the ITL acquisition.
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.
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.
In 2022, we made paym en ts of $64.2 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $4.6. T he amount of income taxes that we receive or pay annually is dependent on various factors, including the timing of certain deductions.
In 2023, we made payments of $59.9 associated with the actual and estimated tax liability for federal, state and foreign tax obligations and received refunds of $1.5. The amount of income taxes that we receive or pay annually is dependent on various factors, including the timing of certain deductions.
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.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed3 unchanged
Biggest changeWe believe that cash and equivalents, cash flows from operations, and availability under revolving credit facilities and our trade receivables financing arrangement will be sufficient to fund working capital needs, planned capital expenditures, other operational cash requirements and required debt service obligations.
Biggest changeThe fair value of these swaps was $7.5 at December 31, 2023, recorded as a current asset. We believe that cash and equivalents, cash flows from operations, and availability under revolving credit facilities and our trade receivables financing arrangement will be sufficient to fund working capital needs, planned capital expenditures, other operational cash requirements and required debt service obligations.
Our exposures for commodity raw materials vary, with the highest concentration relating to steel and oil. See Note 14 to our consolidated financial statements for further details. The following table provides information, as of December 31, 2022, about our primary outstanding debt obligations and presents principal cash flows by expected maturity dates, weighted-average interest rates and fair values.
Our exposures for commodity raw materials vary, with the highest concentration relating to steel and oil. See Note 14 to our consolidated financial statements for further details. The following table provides information, as of December 31, 2023, about our primary outstanding debt obligations and presents principal cash flows by expected maturity dates, weighted-average interest rates and fair values.
Expected Maturity Date 2023 2024 2025 2026 Thereafter Total Fair Value Senior Credit Facilities $ 1.5 $ 7.7 $ 12.3 $ 12.3 $ 211.2 $ 245.0 $ 245.0 Average interest rate 5.8 % At December 31, 2022, we had swaps with a notional amount of $231.3 that cover the period through November 2024, and effectively convert this portion of the borrowings under our senior credit facilities to a fixed rate of 1.077%, plus the applicable margin.
Expected Maturity Date 2024 2025 2026 2027 Thereafter Total Fair Value Senior Credit Facilities $ 17.0 $ 27.3 $ 27.3 $ 470.0 $ — $ 541.6 $ 541.6 Average interest rate 6.9 % At December 31, 2023, we had swaps with a notional amount of $218.8 that cover the period through November 2024, and effectively convert this portion of the borrowings under our senior credit facilities to a fixed rate of 1.077%, plus the applicable margin.
We had FX forward contracts with an aggregate notional amount of $6.9 at December 31, 2022, with all of the $6.9 scheduled to mature within one year. The fair value of our FX forward contracts was less than $0.1 at December 31, 2022. 52
We had FX forward contracts with an aggregate notional amount of $35.6 at December 31, 2023, all of which are scheduled to mature within one year. The fair value of our FX forward contracts was $1.3 at December 31, 2023. 50
Removed
The fair value of these swaps was $14.7 at December 31, 2022, with $8.7 recorded as a current asset and $6.0 as a non-current asset.

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