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What changed in Vontier Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vontier Corp's 2023 and 2024 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 2024 report.

+217 added−228 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Vontier Corp's 2024 10-K

217 paragraphs added · 228 removed · 180 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeBacklog Backlog includes unfilled orders that are expected to be fulfilled in the next 12 months and the annual contract value of long-term contracts, including our SaaS product offerings. Backlog as of December 31, 2023 and 2022 was $626.0 million and $677.3 million, respectively.
Biggest changeIn addition, our sales and payment terms are generally similar to those of our competitors. Backlog Backlog includes unfilled orders that are expected to be fulfilled in the next 12 months and the annual contract value of long-term contracts, including our software as a service (“SaaS”) product offerings.
Offerings include convenience retail operating platform, point-of-sale and payment solutions, remote diagnostics and site-management tools, IoT-based fleet telematics and workflow automation solutions, data analytics, operating software platform for electric vehicle charging networks and integrated solutions for alternative fuel dispensing.
Offerings include convenience retail operating platform, point-of-sale and payment solutions, remote diagnostics and site-management tools, workflow automation solutions, data analytics, operating software platform for electric vehicle charging networks, integrated solutions for alternative fuel dispensing and IoT-based fleet telematics.
Customers in this segment choose suppliers based on several factors, including product features, performance and functionality, the supplier’s geographic coverage and the other factors described under “Competition.” Sales are generally made to independent distributors or through our direct sales personnel.
Customers in this segment choose suppliers based on several factors, including product features, performance and functionality, the supplier’s geographic coverage and the other factors described under “Competition.” Sales are generally made to independent distributors or through our direct sales personnel.
To support these objectives, the Company’s human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, comprehensive benefit and perquisite programs; enhance the Company’s culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing, diverse workforce and innovative culture; and invest in technology, tools, and resources to enable employees at work.
To support these objectives, the Company’s human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, comprehensive benefit and perquisite programs; enhance the Company’s culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing workforce and innovative culture; and invest in technology, tools, and resources to enable employees at work.
We believe that DRB’s market leading integrated technology, superior reliability, high customer retention and unique business model position us well to capitalize on numerous paths for accelerated growth, including customer consolidation, continued shift from full service to express car washes, increasing adoption of workflow technology-as-a-service, shorter upgrade cycles, labor challenges and water efficiency programs and usage restrictions.
We believe that DRB’s market leading integrated technology, superior reliability, high customer retention and unique business model position us well to capitalize on numerous paths for growth, including customer consolidation, continued shift from full service to express car washes, increasing adoption of workflow technology-as-a-service, shorter upgrade cycles, labor challenges and water efficiency programs and usage restrictions.
Through brands including Gilbarco, Veeder-Root, and Fafnir, we serve independent and company owned retail and commercial fueling operators with industry-leading environmental monitoring and leak detection systems, forecourt controllers, vapor recovery equipment and fuel dispenser systems for petroleum. Our large installed base of products provides a recurring revenue stream for aftermarket parts and service offerings.
Through brands including Gilbarco and Veeder-Root, we serve independent and company owned retail and commercial fueling operators with industry-leading environmental monitoring and leak detection systems, forecourt controllers, vapor recovery equipment and fuel dispenser systems for petroleum. Our large installed base of products provides a recurring revenue stream for aftermarket parts and service offerings.
Mobility Technologies serves major markets with tailored solutions for customers based on their unique needs. 3 Table of Contents Invenco by GVR serves convenience retail stores and energy retailing providers globally.
Mobility Technologies serves major end markets with tailored solutions for customers based on their unique needs. 3 Table of Contents Invenco by GVR serves convenience retail stores and energy retailing providers globally.
Of our United States employees, approximately 850 were hourly-rated, unionized employees. Outside the United States, we have government-mandated collective bargaining arrangements and union contracts in certain countries, particularly in Europe where certain of our employees are represented by unions and/or works councils. The Company believes that its relationship with employees is good.
Of our United States employees, approximately 750 were hourly-rated, unionized employees. Outside the United States, we have government-mandated collective bargaining arrangements and union contracts in certain countries, particularly in Europe where certain of our employees are represented by unions and/or works councils. The Company believes that its relationship with employees is good.
Government Contracts Although the substantial majority of our revenue in 2023 was from customers other than governmental entities, we have agreements relating to the sale of products to government entities. As a result, we are subject to various statutes and regulations that apply to companies doing business with governments and government-owned entities.
Government Contracts Although the substantial majority of our revenue in 2024 was from customers other than governmental entities, we have agreements relating to the sale of products to government entities. As a result, we are subject to various statutes and regulations that apply to companies doing business with governments and government-owned entities.
To complement our offering of vehicle repair tools, we have developed a software as a service (“SaaS”) suite of diagnostic tools and software to enhance repair shop workflow and strengthen relationships with our customers. We also generate sales from initial and recurring franchise fees as well as various financing programs that include installment sales to franchisees.
To complement our offering of vehicle repair tools, we have developed a suite of diagnostic tools and software to enhance repair shop workflow and strengthen relationships with our customers. We also generate sales from initial and recurring franchise fees as well as various financing programs that include installment sales to franchisees.
For a discussion of the environmental laws and regulations that our operations, products and services are subject to and other environmental contingencies, please refer to Note 18. Litigation and Contingencies to the Consolidated Financial Statements included in this Annual Report.
For a discussion of the environmental laws and regulations that our operations, products and services are subject to and other environmental contingencies, please refer to Note 17. Litigation and Contingencies to the Consolidated Financial Statements included in this Annual Report.
The Company’s Global Traffic Technologies and Coats (formerly part of Hennessy) businesses, which were divested during April 2023 and January 2024, respectively, are presented in Other for periods prior to the divestitures. Mobility Technologies Mobility Technologies provides digitally enabled equipment and operating software solutions to drive automation, productivity and compliance across the mobility ecosystem.
The Company’s Global Traffic Technologies and Coats businesses, which were divested during April 2023 and January 2024, respectively, are presented in Other for periods prior to the divestitures. Mobility Technologies Mobility Technologies provides digitally enabled equipment and operating software solutions to drive automation, productivity and compliance across the mobility ecosystem.
We seek to continue to attract, develop and retain world-class leaders and employees globally and to drive their engagement with our customer-centric approach. As of December 31, 2023, we employed approximately 8,000 persons, of whom approximately 3,900 were employed in the United States and approximately 4,100 were employed outside of the United States.
We seek to continue to attract, develop and retain world-class leaders and employees globally and to drive their engagement with our customer-centric approach. As of December 31, 2024, we employed approximately 8,000 persons, of whom approximately 3,500 were employed in the United States and approximately 4,500 were employed outside of the United States.
Our commitment to VBS and goal of creating long-term shareholder value has enabled us to drive customer satisfaction and profitability, significant improvements in innovation, growth and disciplined acquisitions to execute our strategy and expand our portfolio into new and attractive markets.
Our commitment to VBS and goal of creating long-term shareholder value has enabled us to drive customer satisfaction and profitability through innovation, growth and disciplined acquisitions to execute our strategy and expand our portfolio into new and attractive markets.
Research and Development We conduct research and development activities for the purpose of developing new products, enhancing the functionality, effectiveness, ease of use and reliability of our existing products and expanding the applications for which uses of our products are appropriate. Research and development costs are expensed as incurred.
Research and Development We conduct research and development activities for the purpose of developing new products, enhancing the functionality, effectiveness, ease of use and reliability of our existing products and expanding the applications for which uses of our products are appropriate.
Our business in Russia, Ukraine and Israel was not material to our results. We did not have any sales in Russia during the year ended December 31, 2023. Sales in Ukraine and Israel accounted for less than 60 basis points of our total sales for the year ended December 31, 2023.
Our business in Russia, Ukraine and Israel was not material to our results. We did not have any sales in Russia during the year ended December 31, 2024. Sales in Ukraine and Israel accounted for approximately 60 basis points of our total sales for the year ended December 31, 2024.
Vontier Corporation is a Delaware corporation that was incorporated in 2019 in connection with the separation of Vontier from Fortive Corporation (“Fortive”) on October 9, 2020, as an independent, publicly-traded company, listed on the New York Stock Exchange (the “Separation”).
Vontier Corporation is a Delaware corporation that was incorporated in 2019 in connection with the separation of Vontier from Fortive Corporation (“Fortive”) on October 9, 2020, as an independent, publicly-traded company.
We now operate through three reportable segments comprised of three operating segments. Our three operating segments, and businesses within, are as follows: • Mobility Technologies: Invenco by GVR, DRB, Teletrac Navman, ANGI and EVolve. • Repair Solutions: Matco Tools. • Environmental & Fueling Solutions: Gilbarco Veeder-Root.
Our three operating segments, and businesses within, are as follows: • Mobility Technologies: Invenco by GVR, DRB, Teletrac Navman, ANGI and EVolve. • Repair Solutions: Matco Tools. • Environmental & Fueling Solutions: Gilbarco Veeder-Root.
This geographic diversity allows us to draw on the skills of a worldwide workforce, provides greater stability to our operations, allows us to drive economies of scale, provides revenue streams that may help offset economic trends that are specific to individual economies and offers us an opportunity to access new markets for products.
This geographic diversity allows us to draw on the skills of a worldwide workforce, provides greater stability to our operations, allows us to drive economies of scale, provides revenue streams that may help offset economic trends that are specific to individual economies and offers us an opportunity to access new markets for products. 7 Table of Contents The manner in which our products and services are sold outside the United States differs by business and by region.
Repair Solutions Repair Solutions comprises the Matco Tools business, a leading manufacturer and distributor of aftermarket vehicle repair tools, toolboxes, automotive diagnostic equipment and software through a robust network of mobile franchisees.
Repair Solutions Repair Solutions comprises the Matco Tools business, a leading manufacturer and distributor of aftermarket vehicle repair tools, toolboxes, automotive diagnostic equipment and software through a robust network of mobile franchisees, who purchase vehicle repair tools, equipment and services from us and resell primarily to professional mechanics directly.
We expect that a majority of the unfilled orders as of December 31, 2023 will be delivered to customers within the first half of 2024.
Backlog as of December 31, 2024 and 2023 was $702.4 million and $626.0 million, respectively. We expect that a majority of the unfilled orders as of December 31, 2024 will be delivered to customers within the first half of 2025.
However, as a whole, we are not subject to material seasonality. 5 Table of Contents Working Capital We maintain an adequate level of working capital to support our business needs. There are no unusual industry practices or requirements relating to working capital items. In addition, our sales and payment terms are generally similar to those of our competitors.
For example, capital equipment sales are often stronger in the fourth calendar quarter. However, as a whole, we are not subject to material seasonality. 5 Table of Contents Working Capital We maintain an adequate level of working capital to support our business needs. There are no unusual industry practices or requirements relating to working capital items.
Through our VBS-led execution of our Connected Mobility strategy, we are accelerating the transformation to a connected, smart mobility ecosystem by creating enhanced and interconnected platforms throughout our segments. Segments In the first quarter of 2023, we realigned our internal organization to align with our strategy, resulting in changes to our operating segments.
Through our VBS-led execution of our Connected Mobility strategy, we are accelerating the transformation to a connected, smart mobility ecosystem by creating enhanced and interconnected platforms throughout our segments. Segments The Company operates through three reportable segments comprised of three operating segments.
During 2023, we experienced normalizing supply chain conditions, with the supply chain constraints that we experienced in 2022 for certain raw materials, including resins, semiconductors and electronic components, easing during the year. For a further discussion of risks related to the materials and components required for our operations, please refer to “Item 1A.
During 2024, the normalizing of supply chain conditions we experienced during 2023 continued, with costs and lead times generally returning to historical levels during the year. For a further discussion of risks related to the materials and components required for our operations, please refer to “Item 1A.
Vontier markets its products and services to retail and commercial fueling operators, convenience store operators, car wash operators, commercial vehicle repair businesses, fleet owners/operators and electric vehicle charging network operators on a global basis.
We are headquartered in Raleigh, North Carolina and serve end markets across the mobility ecosystem, including convenience retail and fueling, fleets and auto repair, marketing our products and services to retail and commercial fueling operators, convenience store operators, car wash operators, commercial vehicle repair businesses, fleet owners/operators and electric vehicle charging network operators on a global basis.
We serve individual customer sites and have long-standing relationships with the majority of the top 20 car wash platforms in North America.
We provide an end-to-end technology platform combining embedded point-of-sale, workflow and monitoring software, customer support, digital marketing and payment facilitation services. We serve individual customer sites and have long-standing relationships with the majority of the top 20 car wash platforms in North America.
Some examples of key programs and initiatives that are focused to attract, motivate, develop and retain our diverse workforce include: • Inclusion, diversity and equity (ID&E) .
Some examples of key programs and initiatives that are focused to attract, motivate, develop and retain our workforce include: • Health, wellness and family resources. Our benefit offerings are designed to meet the varied and evolving needs of our workforce across businesses and geographies.
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The Company serves a diverse set of end markets across the mobility ecosystem, supplying a wide range of solutions spanning advanced environmental sensing and monitoring equipment, fueling equipment, field payment hardware, point-of-sale, workflow and monitoring software, vehicle tracking and fleet management, software platform for EV charging, alternative fuel dispensing solutions and vehicle service technicians’ equipment.
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In 2024, we launched a new employee resource group called LIFE (Lifestyle Improvements for Everyone) that focuses on empowering employees and providing resources to achieve wellness by fostering a balanced approach to physical, mental, social, and financial wellbeing.
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We provide an end-to-end technology platform combining embedded point-of-sale, workflow and monitoring software, customer support, digital marketing and payment facilitation services. Our car wash solutions are marketed under a variety of brands, including Patheon, SiteWatch, Suds, TunnelWatch, NoPileups, FastPass, Washify, InvoMax, Auto Data and Sage Microsystems.
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Through educational and collaborative initiatives, we aim to inspire personal growth and sustainable wellbeing for all our team. • Talent Development and Inclusion. At Vontier, we are dedicated to cultivating a dynamic learning and growth culture, representing Skills-Based Talent Development and Inclusion, that fosters growth throughout our organization.
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Under the Matco Tools brand, we manufacture and distribute vehicle repair tools, toolboxes and automotive diagnostic equipment and software through our network of franchised mobile distributors, who purchase vehicle repair tools, equipment and services from us and resell primarily to professional mechanics directly.
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This commitment is exemplified by the approximately 4,500 learners who have completed training in our newly launched peer-to-peer learning program, promoting a growth mindset that flows throughout our enterprise. To enhance our workplace culture, we have launched a Leadership Program aimed at building trust, driving business results, and inspiring careers.
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For example, capital equipment sales are often stronger in the fourth calendar quarter and sales to original equipment manufacturers (“OEMs”) are often stronger immediately preceding and following the launch of new products.
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This program equips leaders with the tools to empower their teams, creating an environment where everyone can thrive. Additionally, our Executive Sponsorship Program provides guidance and support to emerging leaders, helping them navigate their career paths and achieve their professional aspirations.
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Our ID&E objectives are intended to build teams where employees feel empowered and able to be their authentic selves at work, while employing and supporting a diverse array of voices. ▪ Champion diverse recruiting and promotions, specifically for underrepresented employees and candidates; ▪ Sponsor eight employee-led Employee Resource Groups (ERGs), including Allies for Inclusion, Asian Pacific Islander Network Alliance, Black Network, La Vida!, myAbilities, Pride, Veterans and Women’s Guild, that represent and support the diverse communities that make up our workforce.
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Furthermore, high-potential leaders completed an intensive six-week “Communicating with Impact” training, significantly enhancing their communication skills and enabling them to make a greater impact. Our dedication to inclusion is further exemplified by the approximately 2,000 attendees at our monthly learning events.
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Our ERGs have three pillars of focus: Development, Community and Recruiting. Our ERGs’ goals include the facilitation of networking and connections with peers, outreach, mentoring, leadership and skill development.
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We actively support nine Employee Resource Groups (ERGs), including our newly established LIFE ERG, which champion communities within our workforce. These ERGs emphasize development, community, growth, and wellness, and in 2024, they have been instrumental in fostering a culture of belonging by providing multicultural learning opportunities that enrich our collective experience.
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In 2023, our ERGs continued to serve as a cornerstone for building allyship and fostering belonging by offering a range of multi-lingual learning opportunities including live events, micro-learning pathways, online self-paced modules, leader-led labs, and group coaching.
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To elevate our leadership capabilities, we have successfully implemented a comprehensive program with the goal of empowering over 200 learners to develop their leadership voice and influence within the organization in order to create positive impact. We also introduced seven new learning opportunities. Our CEO took two pledges: the CEO Action for Diversity and Inclusion and The Valuable 500.
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Our 2023 ERG participation rate increased four times from 2022 participation rates; and ▪ Our CEO took two pledges: the CEO Action for Diversity and Inclusion and The Valuable 500. • Health, wellness and family resources. Our benefit offerings are designed to meet the varied and evolving needs of a diverse workforce across businesses and geographies.
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Additionally, the Company was named to Newsweek’s Most Responsible Companies 2025 and TIME’s World’s Most Sustainable Companies 2024 lists. 6 Table of Contents • Community and Social Impact. We are committed to supporting the communities in which we live and work. One primary way we do this is through our employee connection program – Vontier Cares.
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In 2023, we launched a new student loan repayment program in the U.S. that supports employee student debt relief. We also expanded our communications to employees by launching a new, interactive benefits website. • Talent Development. We prioritize and invest in creating opportunities to help employees grow and build their careers, through a multitude of training and development programs.
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In 2024, our teams across the globe continued to support their local communities by participating in a Day of Caring event, from cleaning up parks, to providing aid to those in need, to supporting local organizations that work with children and the elderly.
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These include online, instructor-led and on-the-job learning formats as well as executive talent and succession planning paired with an individualized development approach.
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Our Vontier Cares volunteers have made a significant impact in their communities throughout the year and around the globe. • Safety. The Company has received ongoing recognition for its exceptional safety programs, notably being awarded the British Safety Council’s ‘International Safety Award 2024’ with Distinction. Our comprehensive safety initiatives emphasize the health and wellbeing of employees in all workplace settings.
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In 2023, we launched a skills-based digital badging program across the Company, which empowers employees to unlock their true potential and provide the Company with more capabilities to skills for now and the future. 6 Table of Contents • Community & Social Impact.
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We implement established best practices for risk control, combined with active employee participation, to foster a culture that goes beyond mere compliance, with regular evaluations in place.
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We are committed to providing comfort to those in need and opportunity to those who want to improve their world. One primary way we do this is through our unique employee connection programs – Vontier Cares and Day of Caring. Throughout the year, employees make a positive impact in their local communities through volunteering and other support.
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We utilize systematic management systems that are either certified to, or in the process of obtaining the internationally recognized ISO 45001 management system certification, along with performance indicators that are focused on proactive measures to assess our progress.
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In 2023, over 4,200 Vontier employees around the world participated in Day of Caring initiatives supporting disaster relief, education, and fighting hunger and homelessness. • Safety. Our robust safety program prioritizes employee safety and wellbeing across all workplace environments.
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Established risk control best practices are used, in conjunction with employee input and engagement to create a “beyond compliance” mindset that is under constant review. Systematic management systems either meet or are working towards internationally recognized ISO:45001 management system accreditation, and performance indicators that are biased towards proactive actions are used to measure progress.
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In addition, we believe that our future growth depends in part on our ability to continue developing products and sales models that successfully target high-growth markets, which we define as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure, which include Eastern Europe, the Middle East, Africa, Latin America and Asia Pacific (with the exception of Japan and Australia). 7 Table of Contents The manner in which our products and services are sold outside the United States differs by business and by region.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn most of these agreements, however, the liability of the former owners is limited and certain former owners may be unable to meet their indemnification responsibilities. We cannot assure you that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial statements.
Biggest changeWe cannot assure you that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial statements. We may also become subject to lawsuits as a result of past or further acquisitions. Our restructuring actions could have long-term adverse effects on our business.
In addition, due to the highly competitive nature of the industries that we serve, the cost-containment efforts of our customers and the terms of certain contracts we are party to, if commodity prices rise, we may be unable to pass along cost increases through higher prices.
In addition, due to the highly competitive nature of the industries that we serve, the cost-containment efforts of our customers and the terms of certain contracts we are party to, if commodity prices rise, we may be unable to pass along cost increases through higher prices to our customers.
There can be no assurance that these agreements will adequately protect our trade secrets and other proprietary rights and will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets or other proprietary rights.
There can be no assurance that these agreements will adequately protect our trade secrets and other proprietary rights, will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets or other proprietary rights.
In addition, in certain of our markets our growth depends in part upon the introduction of new regulations or implementation of industry standards on the timeline we expect.
In addition, in certain of our markets our growth depends in part upon the introduction of new regulations or the implementation of industry standards on the timeline we expect.
Significant negative industry or economic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of our assets, changes in the structure of our business, divestitures, market capitalization declines, or increases in associated discount rates may impair our goodwill and other intangible assets in the future.
Significant negative industry or economic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in the use of our assets, changes in the structure of our business, divestitures, market capitalization declines, or increases in associated discount rates may impair our goodwill and other intangible assets in the future.
See the section entitled “Liquidity and Capital Resources.” This debt could have important, adverse consequences to us and our investors, including: • requiring a substantial portion of our cash flow from operations to make interest payments; • making it more difficult to satisfy other obligations; • increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing; • increasing our vulnerability to general adverse economic and industry conditions; • reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our businesses; • limiting our flexibility in planning for, or reacting to, changes in our businesses and industries; and • limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase shares of our common stock.
See the section entitled “Liquidity and Capital Resources.” This debt could have important, adverse consequences to us and our investors, including: • requiring a substantial portion of our cash flow from operations be used to make interest payments; • making it more difficult to satisfy other obligations; • increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing; • increasing our vulnerability to general adverse economic and industry conditions; • reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our businesses; • limiting our flexibility in planning for, or reacting to, changes in our businesses and industries; and • limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase shares of our common stock.
We are subject to potential work stoppages, union and works council campaigns and other labor disputes, any of which could adversely impact our financial statements and business, including our productivity and reputation. Risks Related to Our International Operations International economic, political, legal, compliance, supply chain, epidemic, pandemic and business factors could negatively affect our financial statements.
We are subject to potential work stoppages, union and works council campaigns and other labor disputes, any of which could adversely impact our financial statements and business, including our productivity and reputation. Risks Related to Our International Operations Global economic, political, legal, compliance, supply chain, epidemic, pandemic and business factors could negatively affect our financial statements.
Risks Related to Legal, Regulatory and Compliance Matters Changes in, or status of implementation of, industry standards and governmental regulations, including interpretation or enforcement thereof, may reduce demand for our products or services, increase our expenses or otherwise adversely impact our business model.
Risks Related to Legal, Regulatory and Compliance Matters Changes in, or status of implementation of, industry standards and governmental regulations, including the interpretation or enforcement thereof, may reduce demand for our products or services, increase our expenses or otherwise adversely impact our business model.
Our facilities, supply chains, distribution systems and information technology systems are subject to catastrophic loss due to fire, flood, earthquake, hurricane, public health crisis, war, terrorism or other natural or man-made disasters.
Our facilities, supply chains, distribution systems and information technology systems are subject to catastrophic loss due to fire, flood, earthquake, hurricane, public health crisis, war, terrorism, cyberattack or other natural or man-made disasters.
These provisions include, among others: • the inability of our stockholders to call a special meeting; • the inability of our stockholders to act by written consent; • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; 19 Table of Contents • the right of the Board to issue preferred stock without stockholder approval; • until our 2025 Annual Meeting of Stockholders, the division of the Board into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult; • provision that stockholders may only remove directors with cause; • the ability of our directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of the Board) on the Board.
These provisions include, among others: • the inability of our stockholders to call a special meeting; • the inability of our stockholders to act by written consent; • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; • the right of the Board to issue preferred stock without stockholder approval; • until our 2025 Annual Meeting of Stockholders, the division of the Board into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult; • provision that stockholders may only remove directors with cause; • the ability of our directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of the Board) on the Board.
If demand for our products is less than we expect, we may experience additional excess and obsolete inventories and be forced to incur additional charges and our profitability may suffer. In addition, some of our businesses purchase certain requirements from sole or limited source suppliers for reasons of quality assurance, contractual commitment, cost effectiveness, availability or uniqueness of design.
If demand for our products is less than we expect, we may experience additional excess and obsolete inventories and be forced to incur additional charges and our profitability may suffer. In addition, some of our businesses purchase certain requirements from sole or limited source suppliers for reasons such as quality assurance, contractual commitment, cost effectiveness, availability or uniqueness of design.
The third-party insurance coverage that we maintain will vary from time to time in both type and amount depending on cost, availability and our decisions regarding risk retention, and may be unavailable or insufficient to protect us against such losses. Our ability to attract, develop and retain talented executives and other key employees is critical to our success.
The third-party insurance coverage that we maintain will vary from time to time in both type and amount depending on cost, availability and our decisions regarding risk retention, and may be unavailable or insufficient to protect us against any losses. Our ability to attract, develop and retain talented executives and other key employees is critical to our success.
We rely on information technology systems, some of which are managed by third parties and some of which are managed on a decentralized, independent basis by our operating companies, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers and other business partners), and to manage or support a variety of critical business processes and activities (such as receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations).
We rely on information technology systems, some of which are managed by third parties and some of which are managed on a decentralized, independent basis by our operating companies, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, customer’s employees and end users and other business partners), and to manage or support a variety of critical business processes and activities (such as receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations).
The realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position or cause us to fail to meet our public financial reporting obligations; • in connection with acquisitions and joint ventures, we may enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations and indemnification obligations, which may have unpredictable financial results; • in connection with acquisitions and investments, we have recorded significant goodwill and other intangible assets on our balance sheet.
The realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position or cause us to fail to meet our public financial reporting obligations; • in connection with acquisitions and joint ventures, we may enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations and indemnification obligations, which may have unpredictable financial results; • in connection with acquisitions and investments, we have in the past recorded and may in the future record significant goodwill and other intangible assets on our balance sheet.
If we cannot purchase sufficient products at competitive prices and quality and on a timely enough basis to meet demand, we may not be able to satisfy market demand, product shipments may be delayed, our costs may increase or we may breach our contractual commitments and incur liabilities.
If we cannot purchase sufficient materials at competitive prices and quality and on a timely enough basis to meet demand, we may not be able to satisfy market demand, product shipments may be delayed, our costs may increase or we may breach our contractual commitments and incur liabilities.
Increased strength of the U.S. dollar increases the effective price of our products sold in U.S. dollars into other countries, which may require us to lower our prices or adversely affect sales to the extent we do not increase local currency prices.
Increased strength of the U.S. dollar increases the effective price of our products sold in U.S. dollars into other countries, which may require us to lower our prices or adversely affect sales to the extent we do not adjust local currency prices.
During a market upturn or general supply chain disruption, suppliers may extend lead times, limit supplies or increase prices.
During a market upturn or supply chain disruption, suppliers may extend lead times, limit supplies or increase prices.
Even if we successfully defend against claims of infringement or misappropriation, we may incur significant costs and diversion of management attention and resources, which could adversely affect our business and financial statements. If we suffer a loss to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our operations could be seriously harmed.
Even if we successfully defend against claims of infringement or misappropriation, we may incur significant costs and diversion of management attention and resources, which could adversely affect our business and financial statements. 14 Table of Contents If we suffer a loss to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our operations could be seriously harmed.
Any or all of these problems could result in the loss of customers, provide an opportunity for competing products to gain market acceptance and otherwise adversely affect our profitability. 8 Table of Contents Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation.
Any or all of these problems have in the past and could in the future result in the loss of customers, provide an opportunity for competing products to gain market acceptance and otherwise adversely affect our profitability. 8 Table of Contents Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation.
These restructuring activities and our regular ongoing cost reduction activities (including in connection with the integration of acquired businesses) reduce our available talent, assets and other resources and could slow improvements in our products and services, adversely affect our ability to respond to customers and limit our ability to increase production quickly if demand for our products increases.
These restructuring activities and our regular ongoing cost reduction activities (including in connection with the integration of acquired businesses) reduce our available talent, assets and other resources and have in the past and could in the future slow improvements in our products and services, adversely affect our ability to respond to customers and limit our ability to increase production quickly if demand for our products increases.
Our failure to compete effectively and/or pricing pressures resulting from competition may adversely impact our financial statements, and our expansion into new markets may result in greater-than-expected risks, liabilities and expenses. Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners.
Our failure to compete effectively and/or pricing pressures resulting from competition may adversely impact our financial statements, and our expansion into new markets may result in greater-than-expected risks, liabilities and expenses. 13 Table of Contents Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners.
Any of the circumstances described above could adversely impact our business and financial statements. 9 Table of Contents As of December 31, 2023, we have outstanding indebtedness of approximately $2.3 billion and the ability to incur an additional $750.0 million of indebtedness under the Revolving Credit Facility and in the future we may incur additional indebtedness.
Any of the circumstances described above could adversely impact our business and financial statements. 9 Table of Contents As of December 31, 2024, we have outstanding indebtedness of approximately $2.2 billion and the ability to incur an additional $750.0 million of indebtedness under the Revolving Credit Facility and in the future we may incur additional indebtedness.
Compliance with the various import laws that apply to our businesses can restrict our access to, and increase the cost of obtaining, certain products and at times can interrupt our supply of imported inventory; • We also have agreements to sell products and services to government entities and are subject to various statutes and regulations that apply to companies doing business with government entities.
Compliance with the various import laws that apply to our businesses can restrict our access to, and increase the cost of obtaining, certain products and at times can interrupt our supply of imported inventory; 16 Table of Contents • We also have agreements to sell products and services to government entities and are subject to various statutes and regulations that apply to companies doing business with government entities.
These forum selection provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors, officers, employees and stockholders. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. 20 Table of Contents
These forum selection provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors, officers, employees and stockholders. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Furthermore, as our customer base as a 15 Table of Contents whole progresses or completes the implementation of such regulations or standards the incremental demand generated by the initial adoption thereof will abate and our revenue will decline incrementally as demand drops, which may have an adverse impact on our financial results.
Furthermore, as our customer base as a whole progresses or completes the implementation of such regulations or standards, the incremental demand generated by the initial adoption thereof will abate and our revenue will decline incrementally as demand drops, which may have an adverse impact on our financial results.
As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time consuming, costly, and complicated.
As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. 19 Table of Contents The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time consuming, costly, and complicated.
For additional information regarding these risks, please refer to the section entitled “Business—Regulatory Matters.” We are party to asbestos-related product litigation that could adversely affect our financial condition, results of operations and cash flows.
For additional information regarding these risks, please refer to the section entitled “Business—Regulatory Matters.” 17 Table of Contents We are party to asbestos-related product litigation that could adversely affect our financial condition, results of operations and cash flows.
Depending on the nature of the information compromised, we may also have obligations to notify consumers and/or employees about the incident, and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident.
Depending on the nature of the information compromised, we may also have obligations to notify consumers and/or employees as well as regulatory agencies about the incident, and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident.
This indebtedness could adversely affect our businesses and our ability to meet our obligations and pay dividends. As of December 31, 2023, we have outstanding indebtedness of approximately $2.3 billion, and have the ability to incur an additional $750.0 million of indebtedness under the Revolving Credit Facility.
This indebtedness could adversely affect our businesses and our ability to meet our obligations and pay dividends. As of December 31, 2024, we have outstanding indebtedness of approximately $2.2 billion, and have the ability to incur an additional $750.0 million of indebtedness under the Revolving Credit Facility.
Risks Related to Our Accounting and Tax Matters We may be required to recognize impairment charges for our goodwill and other intangible assets. As of December 31, 2023, the net carrying value of our goodwill and other intangible assets totaled approximately $2.3 billion.
Risks Related to Our Accounting and Tax Matters We may be required to recognize impairment charges for our goodwill and other intangible assets. As of December 31, 2024, the net carrying value of our goodwill and other intangible assets totaled approximately $2.2 billion.
Conversely, in order to secure supplies for the production of products, we sometimes enter into noncancelable purchase commitments with vendors, which could impact our ability to adjust our inventory to reflect declining market demands.
Conversely, in order to secure supplies for the production of products, we sometimes enter into noncancelable purchase commitments with vendors, which could impact our ability to adjust our inventory or reduce our costs to reflect declining market demands.
In addition, the steps that we and our licensors have taken to maintain and protect our intellectual property may not prevent it from being challenged, invalidated, circumvented, designed-around or becoming 13 Table of Contents subject to compulsory licensing, particularly in countries where intellectual property rights are not highly developed or protected.
In addition, the steps that we and our licensors have taken to maintain and protect our intellectual property may not prevent it from being challenged, invalidated, circumvented, designed-around or becoming subject to compulsory licensing, particularly in countries where intellectual property rights are not highly developed or protected.
Since our growth strategy depends in part on our ability to further penetrate markets 14 Table of Contents outside the U.S. and increase the localization of our products and services, we expect to continue to increase our sales and presence outside the U.S., particularly in high-growth markets.
Since our growth strategy depends in part on our ability to further penetrate markets outside the U.S. and increase the localization of our products and services, we expect to continue to increase our sales and presence outside the U.S., particularly in high-growth markets.
We are also subject to investigation and audit for compliance with the requirements governing government contracts; • We are also required to comply with increasingly complex and changing data privacy regulations in multiple jurisdictions that regulate the collection, use, protection and transfer of personal data, including the transfer of personal data between or among countries.
We are also subject to investigation and audit for compliance with the requirements governing government contracts; • We are also required to comply with increasingly complex and changing data privacy regulations in multiple jurisdictions that regulate the collection, use, protection and transfer of personal data, including the transfer of personal data between or among countries as well as customer requirements in diligence and contracts.
Our international business (and particularly our business in high-growth markets) is subject to risks that are customarily encountered in non-U.S. operations, including: • interruption in the transportation of materials to us and finished goods to our customers; • differences in terms of sale, including payment terms; • local product preferences and product requirements; • changes in a country’s or region’s political or economic conditions, including changes in relationship with the U.S.; • trade protection measures, embargoes and import or export restrictions and requirements; • unexpected changes in laws or regulatory requirements, including changes in tax laws; • capital controls and limitations on ownership and on repatriation of earnings and cash; • epidemics or pandemics, such as the COVID-19 pandemic, that adversely impact travel, production or demand; • the potential for nationalization of enterprises; • limitations on legal rights and our ability to enforce such rights; • difficulty in staffing and managing widespread operations; • differing labor regulations; • difficulties in implementing restructuring actions on a timely or comprehensive basis; • differing protection of intellectual property; and • greater uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, including with respect to product and other regulatory approvals.
Our global business (and particularly our business in high-growth markets) is subject to risks that are customarily encountered in non-U.S. operations, including: • interruption in the transportation of materials to us and finished goods to our customers; • differences in terms of sale, including payment terms; • local product preferences and product requirements; • changes in a country’s or region’s political or economic conditions, including changes in a country’s relationship with the U.S.; • trade protection measures, embargoes and import or export restrictions and requirements; • unexpected changes in laws or regulatory requirements, including changes in tax laws; • capital controls and limitations on ownership and on repatriation of earnings and cash; • epidemics, pandemics or other public health crises, that adversely impact travel, production or demand; • the potential for nationalization of enterprises; • limitations on legal rights and our ability to enforce such rights; • difficulty in staffing and managing widespread operations; • differing labor regulations; • difficulties in implementing restructuring actions on a timely or comprehensive basis; 15 Table of Contents • differing protection of intellectual property; and • greater uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, including with respect to product and other regulatory approvals.
Our success will depend on several factors, including our ability to correctly identify customer needs and preferences, and predict future needs and preferences, including from new developments and innovation related to, among other things, electric vehicles and autonomous vehicles.
Our success depends on several factors, including our ability to correctly identify customer needs and preferences, and predict future needs and preferences, including from new developments and innovation related to, among other things, electric vehicles and autonomous vehicles.
The supply chains for our businesses could also be disrupted by supplier capacity constraints, cybersecurity issues, bankruptcy or exiting of the business for other reasons, decreased availability of key raw materials or commodities and external events such as natural disasters, pandemic health issues, war, terrorist actions, governmental actions and legislative or regulatory changes.
The supply chains for our businesses have in the past and could in the future be disrupted by supplier capacity constraints, cybersecurity issues, bankruptcy or exiting of the business for other reasons, decreased availability of key raw materials or commodities and external events such as natural disasters, pandemic health issues, war, terrorist actions, governmental actions and legislative or regulatory changes.
In addition, our reliance upon sole or limited sources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies. We purchase materials, components and equipment from third parties for use in our manufacturing operations.
In addition, our reliance upon sole or limited sources of supply for certain materials, components and services has in the past and could in the future cause production interruptions, delays and inefficiencies. We purchase materials, components and equipment from third parties for use in our manufacturing operations.
As a global organization, we are subject to data privacy and security laws, regulations, and customer-imposed controls in numerous jurisdictions as a result of having access to and processing confidential, personal and/or sensitive data in the course of our 17 Table of Contents business.
As a global organization, we are subject to data privacy and security laws, regulations, and customer-imposed controls in numerous jurisdictions as a result of having access to and processing confidential, personal, special category and/or sensitive data in the course of our business.
If we are unable to access capital and credit markets on terms that are acceptable to us or our lenders are unable to provide financing in accordance with their contractual obligations, we may not be able to make certain investments or acquisitions or fully execute our business plans and strategies.
If we are exposed to significant fluctuations in interest rates on our debt obligations or are unable to access capital and credit markets on terms that are acceptable to us or our lenders are unable to provide financing in accordance with their contractual obligations, we may not be able to make certain investments or acquisitions or fully execute our business plans and strategies.
Limitations on the ability of customers, suppliers or financial counterparties to access credit at interest rates and on terms that are acceptable to them could lead to insolvencies of key suppliers and customers, limit or prevent customers from obtaining credit to finance purchases of our products and services and cause delays in the delivery of key products from suppliers.
Limitations on the ability of customers, suppliers or financial counterparties to access credit at interest rates and on terms that are acceptable to them could lead to insolvencies of key suppliers and customers, limit or prevent customers from obtaining credit to finance purchases of our products and services which could decrease our revenue and cause delays in the delivery of key products from suppliers which could lengthen our supply cycle and decrease our revenue.
If regulatory authorities or courts determine that our franchisees are not independent contractors, we may be required to withhold and pay certain taxes in respect of such franchisees, may be liable for unpaid past taxes, unpaid wages and potential penalties, and may be subject to wage and hour laws and requirements (such as those pertaining to minimum wage and overtime), claims for employee benefits, social security contributions, and workers’ compensation and unemployment insurance, which could have an adverse effect on our business and financial position. 16 Table of Contents These are not the only regulations that our businesses must comply with.
If regulatory authorities or courts determine that our franchisees are not independent contractors, we may be required to withhold and pay certain taxes in respect of such franchisees, may be liable for unpaid past taxes, unpaid wages and potential penalties, and may be subject to wage and hour laws and requirements (such as those pertaining to minimum wage and overtime), claims for employee benefits, social security contributions, and workers’ compensation and unemployment insurance, which could have an adverse effect on our business and financial position.
The regulations we are subject to have tended to become more stringent over time and may be inconsistent across jurisdictions. We, our representatives and the industries in which we operate may at times be under review and/or investigation by regulatory authorities.
These are not the only regulations that our businesses must comply with. The regulations we are subject to have tended to become more stringent over time and may be inconsistent across jurisdictions. We, our representatives and the industries in which we operate may at times be under review and/or investigation by regulatory authorities.
However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that the Board determines is not in the best interests of us and our stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.
However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that the Board determines is not in the best interests of us and our stockholders.
In 2023, 30% of our sales were derived from customers outside the U.S. In addition, many of our manufacturing operations, suppliers and employees are located outside the U.S.
In 2024, approximately 32% of our sales were derived from customers outside the U.S. In addition, many of our manufacturing operations, suppliers and employees are located outside the U.S.
Our income could be adversely impacted if we are unable to adjust our purchases and supply chain management to reflect any supply chain disruptions or changes in customer demand and market fluctuations, including those caused by a pandemic, increases in demand outpacing supply chain capabilities, labor shortages, seasonality or cyclicality.
Our income has in the past and could in the future be adversely impacted if we are unable to adjust our manufacturing capacity, purchases required for our manufacturing activities and supply chain management to reflect any supply chain disruptions or changes in customer demand and market fluctuations, including those caused by a pandemic, natural disaster or other catastrophe, increases in demand outpacing supply chain capabilities, labor shortages, seasonality or cyclicality.
Our amended and restated certificate of incorporation designates the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders.
These provisions may also prevent or discourage attempts to remove and replace incumbent directors. 21 Table of Contents Our amended and restated certificate of incorporation designates the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders.
Our restructuring actions could have long-term adverse effects on our business. In recent years, we have implemented restructuring activities across our businesses to adjust our cost structure, and we may engage in similar restructuring activities in the future.
In recent years, we have implemented restructuring activities across our businesses to adjust our cost structure, and we may engage in similar restructuring activities in the future.
If growth in the global economy or in any of the markets we serve slows for a significant period, if there is significant deterioration in the global economy or such markets, if there is instability in global capital and credit markets, or if improvements in the global economy do not benefit the markets we serve, our business and financial statements could be adversely affected.
If growth in the global economy or in any of the markets we serve slows for a significant period, if there is significant deterioration in the global economy or such markets, if there is instability in global capital and credit markets, or if improvements in the global economy do not benefit the markets we serve, our business and financial statements could be adversely affected. 12 Table of Contents Changes in U.S. trade policy, including changes to existing trade agreements and any resulting changes in international trade relations, may have a material adverse effect on us.
Our customer acquisition and renewal rates may decline or fluctuate as a result of a number of factors, including overall economic conditions, the health of their businesses, competitive offerings, and customer dissatisfaction with our services. If customers do not renew their contracts for our products, our maintenance and subscription revenue will decline, and our financial results will suffer.
Our customer acquisition and renewal rates have in the past and may in the future decline or fluctuate as a result of a number of factors, including overall economic conditions, the health of their businesses, competitive offerings, and customer dissatisfaction with our services.
Our financial results are subject to fluctuations in the cost and availability of commodities that we use in our operations. As further discussed in the section entitled “Business—Materials,” our manufacturing and other operations employ a wide variety of components, raw materials and other commodities.
As further discussed in the section entitled “Business—Materials,” our manufacturing and other operations employ a wide variety of components, raw materials and other commodities. Prices for and availability of these components, raw materials and other commodities have fluctuated significantly in the past.
We cannot assure you that our liabilities in connection with litigation and other legal and regulatory proceedings will not exceed our estimates or adversely affect our financial statements and business. 18 Table of Contents If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.
If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.
Adverse changes in our relationships with these distributors and other partners, or adverse developments in their financial condition, performance or purchasing patterns, could adversely affect our financial statements.
Adverse changes in our relationships with these distributors and other partners, or adverse developments in their financial condition, performance or purchasing patterns, could adversely affect our financial statements. The levels of inventory maintained by our distributors and other channel partners, and changes in those levels, can also significantly impact our results of operations in any given period.
Risks Related to Our Common Stock Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. 20 Table of Contents Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.
The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities. Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the acquired company before we acquired it.
Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the acquired company before we acquired it. In most of these agreements, however, the liability of the former owners is limited and certain former owners may be unable to meet their indemnification responsibilities.
We continually assess the strategic fit of our existing businesses and may divest, spin-off, split-off or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. These transactions pose risks and challenges that could negatively impact our business and financial statements.
We continually assess the strategic fit of our existing businesses and may divest, spin-off, split-off or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. For example, during the year ended December 31, 2024, we divested our Coats business in an all-cash transaction.
Prices for and availability of these components, raw materials and other commodities have fluctuated significantly in the past. Any sustained interruption in the supply of these items could adversely affect our business.
Any sustained interruption in the supply of these items has in the past and could in the future adversely affect our business.
In addition, compliance with the varying data privacy regulations across the United States and around the world has required significant expenditures and may require additional expenditures, and may require further changes in our products or business models that increase competition or reduce revenue.
In addition, compliance with the varying data privacy regulations across the United States and around the world, including the EU Data Act and artificial intelligence regulations in the United States and Europe, has required significant expenditures and may require additional expenditures, and may require further changes in our products or business models that increase competition or reduce revenue. 18 Table of Contents Our operations, products and services expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our business, reputation and financial statements.
The Organization for Economic Cooperation and Development (OECD) is issuing guidelines that are different, in some respects, than long-standing international tax principles. As countries unilaterally amend their tax laws to adopt certain parts of the OECD guidelines, this may increase tax uncertainty and may adversely impact our effective tax rates.
The Organization for Economic Cooperation and Development (OECD) has issued guidelines that are different, in some respects, than long-standing international tax principles.
The levels of inventory maintained by our 12 Table of Contents distributors and other channel partners, and changes in those levels, can also significantly impact our results of operations in any given period. In addition, the consolidation of distributors and customers in certain of our served industries could adversely impact our profitability.
In addition, the consolidation of distributors and customers in certain of our served industries could adversely impact our profitability. Our financial results are subject to fluctuations in the cost and availability of commodities that we use in our operations.
Removed
Our operations, products and services expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our business, reputation and financial statements.
Added
If customers do not renew their contracts for our products, our maintenance and subscription revenue will decline, and our financial results will suffer. The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.
Added
These transactions pose risks and challenges that could negatively impact our business and financial statements.
Added
The U.S. may continue to alter its approach to international trade, which may impact existing bilateral or multi-lateral trade agreements and treaties with foreign countries. The U.S. has imposed tariffs on certain foreign goods and may increase tariffs or impose new ones, and certain foreign governments have retaliated and may continue to do so.
Added
We derive a significant portion of our revenues from international sales, which makes us especially vulnerable to increased tariffs. Changes in U.S. trade policy have created ongoing turmoil in international trade relations, and it is unclear what future actions governments will or will not take with respect to tariffs or other international trade agreements and policies.
Added
During his campaign, President Trump expressed various intentions to impose tariffs on imports. It is unclear what action the new presidential administration or Congress will take with respect to these proposals.
Added
Ongoing or new trade wars or other governmental action related to tariffs or international trade agreements or policies could reduce demand for our products and services, increase our costs, reduce our profitability, adversely impact our supply chain or otherwise have a material adverse effect on our business and results of operations.
Added
We cannot assure you that our liabilities in connection with litigation and other legal and regulatory proceedings will not exceed our estimates or adversely affect our financial statements and business.
Added
Certain countries have amended their tax laws to adopt certain parts of the OECD guidelines and additional countries may adopt parts of the OECD guidelines in the future, which has increased tax uncertainty and may adversely impact our effective tax rates.
Added
Risks Related to Our Common Stock The trading price of our common stock may be volatile, which may be exacerbated by share repurchases under our Share Repurchase Program.
Added
The market price of our common stock may be subject to wide fluctuations in response to, among other things, the risk factors described in this periodic report, news about us and our financial results, news about our competitors and their results, and other factors such as rumors or fluctuations in the valuation of companies perceived by investors to be comparable to us.
Added
For example, during the fiscal year ended December 31, 2024, the closing price of our common stock ranged from $31.95 to $45.36 per share. Furthermore, stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
Added
These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock.
Added
In the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, we review our cybersecurity maturity assessment on an ongoing basis to measure the Company’s ability to detect, protect, respond and recover from a cyber incident. The VISEC addresses relevant cybersecurity issues and provides guidance and updates on information security programs and projects.
Biggest changeAdditionally, we review our cybersecurity maturity assessment on an ongoing basis to measure the Company’s ability to detect, protect, respond and recover from a cyber incident. 22 Table of Contents The VISEC addresses relevant cybersecurity issues and provides guidance and updates on information security programs and projects.
This ERM program is driven by Vontier’s Executive Risk Committee, which is led by the SVP, Chief Administrative Officer and comprised of business and functional leaders. Our Audit Committee oversees the ERM program and the Board of Directors have regular updates on topics that are identified through the RAP and overall risk management process.
The ERM program is driven by Vontier’s Executive Risk Committee, which is led by the SVP, Chief Administrative Officer and comprised of business and functional leaders. Our Audit Committee oversees the ERM program and the Board of Directors have regular updates on topics that are identified through the RAP and overall risk management process.
We have developed information security policies and standards based on the NIST Cybersecurity Framework, an internationally recognized framework; and we engage with third parties on our incident response processes, cybersecurity maturity assessment, as well as on our cyber security awareness, data security governance and vendor cyber risk management.
We have developed information security policies and standards informed by the NIST Cybersecurity Framework, an internationally recognized framework; and we engage with third parties on our incident response processes, cybersecurity maturity assessment, as well as on our cyber security awareness, data security governance and vendor cyber risk management.
Through the RAP, which is a tool in our ERM program, we identify and assess cybersecurity risks at a business unit level, evaluating the likelihood and potential impact of a risk universe encompassing finance, human capital, operations, information technology, legal and regulatory compliance, and strategy.
Through the RAP, which is a tool in our ERM program, we identify and assess cybersecurity risks at an operating company level, evaluating the likelihood and potential impact of a risk universe encompassing finance, human capital, operations, information technology, legal and regulatory compliance, and strategy.
Added
Because we are aware of the risks associated with third-party service providers, we implement processes to oversee and manage these risks. We conduct security assessments of third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLeases to the Consolidated Financial Statements for additional information with respect to our lease commitments. 21 Table of Contents
Biggest changeLeases to the Consolidated Financial Statements for additional information with respect to our lease commitments.
Approximately 15 of these facilities are located in the United States and approximately 15 are located outside the United States. We own an approximately 0.7 million square foot mixed use facility in Greensboro, North Carolina that provides manufacturing and office space utilized by businesses within our Mobility Technologies and Environmental & Fueling Solutions segments.
Approximately 10 of these facilities are located in the United States and approximately 15 are located outside the United States. We own an approximately 0.7 million square foot mixed use facility in Greensboro, North Carolina that provides manufacturing and office space utilized by businesses within our Mobility Technologies and Environmental & Fueling Solutions segments.
We consider our facilities suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities. We believe our properties and equipment have been well-maintained. Please refer to Note 10.
We consider our facilities suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities. We believe our properties and equipment have been well-maintained. Please refer to Note 9.
ITEM 2. PROPERTIES Our corporate headquarters are located in Raleigh, North Carolina in a facility that we lease. As of December 31, 2023, our facilities included approximately 30 significant facilities, which are used for manufacturing, distribution, warehousing, research and development, general administrative and/or sales functions.
ITEM 2. PROPERTIES Our corporate headquarters are located in Raleigh, North Carolina in a facility that we lease. As of December 31, 2024, our facilities included approximately 25 significant facilities, which are used for manufacturing, distribution, warehousing, research and development, general administrative and/or sales functions.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBased upon our experience, current information and applicable law, we do not believe that these proceedings and claims will have a material effect on our financial position, results of operations or cash flows. Please refer to Note 18. Litigation and Contingencies to the Consolidated Financial Statements for more information.
Biggest changeBased upon our experience, current information and applicable law, we do not believe that these proceedings and claims will have a material effect on our financial position, results of operations or cash flows. Please refer to Note 17. Litigation and Contingencies to the Consolidated Financial Statements for more information.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES Not applicable. 22 Table of Contents EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below are the names, ages, positions and experience of our executive officers as of February 15, 2024. All of our executive officers hold office at the pleasure of our Board. Name Age Position Officer Since Mark D.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES Not applicable. 23 Table of Contents EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below are the names, ages, positions and experience of our executive officers as of February 13, 2025. All of our executive officers hold office at the pleasure of our Board. Name Age Position Officer Since Mark D.
Rowen served at Raytheon Company in legal roles of increasing responsibility from October 2011 to January 2017. 23 Table of Contents PART II
Rowen served at Raytheon Company in legal roles of increasing responsibility from October 2011 to January 2017. 24 Table of Contents PART II
Morelli 60 President and Chief Executive Officer 2020 Anshooman Aga 48 Senior Vice President, Chief Financial Officer 2022 Kathryn K. Rowen 45 Senior Vice President, Chief Administrative Officer 2020 Mark D. Morelli has served as our President and Chief Executive Officer since January 2020. Mr.
Morelli 61 President and Chief Executive Officer 2020 Anshooman Aga 49 Senior Vice President, Chief Financial Officer 2022 Kathryn K. Rowen 46 Senior Vice President, Chief Administrative Officer 2020 Mark D. Morelli has served as our President and Chief Executive Officer since January 2020. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth our share repurchase activity for the three months ended December 31, 2023: Period Total Number of Shares Purchased (in millions) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions) September 30, 2023 to October 27, 2023 0.2 $ 29.78 0.2 $ 362.3 October 28, 2023 to November 24, 2023 — — — 362.3 November 25, 2023 to December 31, 2023 0.2 34.71 0.2 354.3 Total 0.4 0.4 Recent Issuances of Unregistered Securities None. 24 Table of Contents Company Stock Performance The following graph shows a comparison from October 8, 2020 (the date trading commenced on our common stock on the New York Stock Exchange) through December 31, 2023 of the cumulative return of our common stock, the S&P 500 Index and the S&P Industrials Index.
Biggest changeThe following table sets forth our share repurchase activity for the three months ended December 31, 2024: Period Total Number of Shares Purchased (in millions) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions) September 28, 2024 to October 25, 2024 0.6 $ 34.12 0.6 $ 169.6 October 26, 2024 to November 22, 2024 (a) 0.9 38.66 0.9 135.7 November 23, 2024 to December 31, 2024 0.2 38.86 0.2 129.6 Total 1.7 1.7 (a) The average price paid per share under the share repurchase agreement included in the table above was determined using the volume-weighted average price of the Company’s common stock over the term of the agreed-upon trading period, less a discount.
The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of dividends). ITEM 6. [RESERVED] 25 Table of Contents
The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of dividends). ITEM 6. [RESERVED] 26 Table of Contents
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the New York Stock Exchange under the symbol VNT. As of February 12, 2024, there were 840 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the New York Stock Exchange under the symbol VNT. As of February 10, 2025, there were 773 holders of record of our common stock.
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During the three months ended December 31, 2024, the Company entered into a share repurchase agreement with a third-party institution, whereupon the Company made a payment of $25.0 million.
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At the end of an agreed-upon trading period during the three months ended December 31, 2024, the Company received 0.6 million of the Company’s shares at an average price per share of $39.57 under the share repurchase agreement.
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Recent Issuances of Unregistered Securities None. 25 Table of Contents Company Stock Performance The following graph shows a comparison from October 8, 2020 (the date trading commenced on our common stock on the New York Stock Exchange) through December 31, 2024 of the cumulative return of our common stock, the S&P 500 Index and the S&P Industrials Index.

Item 7. Management's Discussion & Analysis

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

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Biggest changeCorporate & Other Unallocated Costs Corporate & other unallocated costs increased $2.3 million, or 1.1%, during the year ended December 31, 2023, as compared to the prior year, primarily due to an increase in costs associated with restructuring activities, intangible asset amortization and variable and stock-based compensation expense, partially offset by a decrease in transaction and deal-related costs.
Biggest changeThe increase in segment operating profit margin was due to a 170 basis points increase from the net impact of our productivity initiatives that have reduced manufacturing, procurement and other costs and unfavorable product mix as compared to the prior year, offset by increased costs from inflationary pressures. 30 Table of Contents Corporate & Other Unallocated Costs Corporate & other unallocated costs consists of the following for the periods indicated: Year Ended December 31, ($ in millions) 2024 2023 Amortization of acquisition-related intangible assets $ (79.7) $ (81.2) Stock-based compensation expense (31.6) (31.5) Restructuring and other related charges (13.5) (25.2) Other unallocated expense (0.9) (1.2) Corporate costs (109.0) (109.9) Repair Solutions Capital Charge 43.9 41.7 Total corporate & other unallocated costs $ (190.8) $ (207.3) Corporate & other unallocated costs decreased $16.5 million, or 8.0%, during the year ended December 31, 2024, as compared to the prior year, due to an $11.7 million decrease in costs associated with restructuring activities.
For a detailed discussion on the application of these and other accounting estimates, refer to Note 2. Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated Financial Statements. Accounts and Financing Receivables We maintain allowances for credit losses to reflect expected credit losses inherent in our portfolio of receivables.
For a detailed discussion on the application of these and other accounting estimates, refer to Note 2. Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated Financial Statements. Accounts and Financing Receivables Allowances We maintain allowances for credit losses to reflect expected credit losses inherent in our portfolio of receivables.
Investing Activities Net cash provided by investing activities was $69.3 million during the year ended December 31, 2023, driven primarily by proceeds from the sale of our Global Traffic Technologies business and equity securities, partially offset by payments for additions to property, plant and equipment.
Net cash provided by investing activities was $69.3 million during the year ended December 31, 2023, driven by proceeds from the sale of our Global Traffic Technologies business and equity securities, partially offset by payments for additions to property, plant and equipment.
If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated, and a charge would need to be taken against net earnings which would adversely affect our financial statements. No goodwill or other intangible assets impairment charges were recorded during the years ended December 31, 2023, 2022 and 2021.
If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated, and a charge would need to be taken against net earnings which would adversely affect our financial statements. No goodwill or other intangible assets impairment charges were recorded during the years ended December 31, 2024, 2023 and 2022.
Approximately 50% of our cash was held outside of the United States. We have made an assertion regarding the amount of earnings that we do not intend to repatriate due to local working capital needs, local law restrictions, high foreign remittance costs, previous investments in physical assets and acquisitions, or future growth needs.
Approximately 55% of our cash was held outside of the United States. We have made an assertion regarding the amount of earnings that we do not intend to repatriate due to local working capital needs, local law restrictions, high foreign remittance costs, previous investments in physical assets and acquisitions, or future growth needs.
Subsequent to the realignment, we now operate through three reportable segments which align to our three operating segments: (i) Mobility Technologies, which provides digitally enabled equipment and solutions to support efficient operations across the mobility ecosystem, including point-of-sale and payment systems, workflow automation solutions, telematics, data analytics, software platform for electric vehicle charging networks, and integrated solutions for alternative fuel dispensing; (ii) Repair Solutions, which manufactures and distributes aftermarket vehicle repair tools, toolboxes, automotive diagnostic equipment and software through a network of mobile franchisees; and (iii) Environmental & Fueling Solutions, which provides environmental and fueling hardware and software, and aftermarket solutions for global fueling infrastructure.
We operate through three reportable segments which align to our three operating segments: (i) Mobility Technologies, which provides digitally enabled equipment and solutions to support efficient operations across the mobility ecosystem, including point-of-sale and payment systems, workflow automation solutions, telematics, data analytics, software platform for electric vehicle charging networks, and integrated solutions for alternative fuel dispensing; (ii) Repair Solutions, which manufactures and distributes aftermarket vehicle repair tools, toolboxes, automotive diagnostic equipment and software through a network of mobile franchisees; and (iii) Environmental & Fueling Solutions, which provides environmental and fueling hardware and software, and aftermarket solutions for global fueling infrastructure.
As of December 31, 2023, we had $750.0 million of borrowing capacity under our revolving credit facility. We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions. As of December 31, 2023, we believe that we have sufficient liquidity to satisfy our cash needs.
As of December 31, 2024, we had $750.0 million of borrowing capacity under our revolving credit facility. We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions. As of December 31, 2024, we believe that we have sufficient liquidity to satisfy our cash needs.
Our MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements included elsewhere in this Annual Report. Discussion and analysis of our financial condition and results of operations as of and for the year ended December 31, 2022 compared to December 31, 2021 is included under the heading “Item 7.
Our MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements included elsewhere in this Annual Report. Discussion and analysis of our financial condition and results of operations as of and for the year ended December 31, 2023 compared to December 31, 2022 is included under the heading “Item 7.
The registered notes and the guarantees thereof are the Company’s and the Guarantor Subsidiaries’ senior unsecured obligations and: • rank without preference or priority among themselves and equally in right of payment with our existing and any future unsecured and unsubordinated indebtedness, including, without limitation, indebtedness under our credit agreement; • are senior in right of payment to any of our existing and future indebtedness that is subordinated to the notes; • are effectively subordinated to any of our existing and future secured indebtedness to the extent of the assets securing such indebtedness; and • are structurally subordinated to all existing and any future indebtedness and any other liabilities of our Non-Guarantor Subsidiaries.
The registered notes and the guarantees thereof are the Company’s and the Guarantor Subsidiaries’ senior unsecured obligations and: • rank without preference or priority among themselves and equally in right of payment with our existing and any future unsecured and unsubordinated indebtedness, including, without limitation, indebtedness under our credit agreement; • are senior in right of payment to any of our existing and future indebtedness that is subordinated to the notes; • are effectively subordinated to any of our existing and future secured indebtedness to the extent of the assets securing such indebtedness; and 35 Table of Contents • are structurally subordinated to all existing and any future indebtedness and any other liabilities of our Non-Guarantor Subsidiaries.
We have cash requirements to support working capital needs, capital expenditures, pay interest and service debt, pay taxes and any related interest or penalties, fund our restructuring activities and pension plans as required and support other business needs or objectives. Refer to Note 10. Leases and Note 11.
We have cash requirements to support working capital needs, capital expenditures, pay interest and service debt, pay taxes and any related interest or penalties, fund our restructuring activities and pension plans as required and support other business needs or objectives. Refer to Note 9. Leases and Note 10.
Capital Stock and Earnings per Share to the Consolidated Financial Statements for a description of the Company’s share repurchase program. Dividends We paid regular quarterly cash dividends of $0.025 per share during the year ended December 31, 2023.
Capital Stock and Earnings per Share to the Consolidated Financial Statements for a description of the Company’s share repurchase program. Dividends We paid regular quarterly cash dividends of $0.025 per share during the year ended December 31, 2024.
If the reserves established with respect to these contingent liabilities are inadequate, we would be required to incur an expense equal to the amount of the loss incurred in excess of the reserves, which would adversely affect our financial statements. Revenue Recognition We derive revenues from the sale of products and services.
If the reserves established with respect to these contingent liabilities are inadequate, we would be required to incur an expense equal to the amount of the loss incurred in excess of the reserves, which would adversely affect our financial statements. 38 Table of Contents Revenue Recognition We derive revenues from the sale of products and services.
LEGAL PROCEEDINGS Refer to Note 18. Litigation and Contingencies to the Consolidated Financial Statements for information regarding legal proceedings, contingencies, and guarantees. For a discussion of risks related to legal proceedings and contingencies, refer to “Item 1A.
LEGAL PROCEEDINGS Refer to Note 17. Litigation and Contingencies to the Consolidated Financial Statements for information regarding legal proceedings, contingencies, and guarantees. For a discussion of risks related to legal proceedings and contingencies, refer to “Item 1A.
Holding other estimates constant, a hypothetical 100 basis points increase in the expected loss rate on the financing receivables portfolio would have resulted in an increase in the allowance for credit losses of approximately $6.0 million as of December 31, 2023. No customer accounted for more than 10% of sales during all periods presented.
Holding other estimates constant, a hypothetical 100 basis points increase in the expected loss rate on the financing receivables portfolio would have resulted in an increase in the allowance for credit losses of approximately $5.0 million as of December 31, 2024. No customer accounted for more than 10% of sales during all periods presented.
As of December 31, 2023, we had $700.0 million outstanding of debt that was subject to variable interest rates. As a result, increases in interest rates could increase the cost of servicing our debt and could materially reduce our profitability and cash flows. We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities.
As of December 31, 2024, we had $550.0 million outstanding of debt that was subject to variable interest rates. As a result, increases in interest rates could increase the cost of servicing our debt and could materially reduce our profitability and cash flows. We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities.
Commodity Price Risk For a discussion of risks relating to commodity prices, refer to “Item 1A. Risk Factors.” LIQUIDITY AND CAPITAL RESOURCES We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.
Commodity Price Risk For a discussion of risks relating to commodity prices, refer to “Item 1A. Risk Factors.” 33 Table of Contents LIQUIDITY AND CAPITAL RESOURCES We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.
In addition, our broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on our operating profit as a whole. Interest Rate Risk We are exposed to interest rate risk through fluctuations in interest rates on our debt obligations.
In addition, our broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on our operating profit as a whole. 32 Table of Contents Interest Rate Risk We are exposed to interest rate risk through fluctuations in interest rates on our debt obligations.
Risk Factors.” 36 Table of Contents CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
Risk Factors.” CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
Refer to Note 11. Financing to the Consolidated Financial Statements for additional information regarding the terms of our notes and the term loans.
Refer to Note 10. Financing to the Consolidated Financial Statements for additional information regarding the terms of our notes and the term loans.
Based on these reviews, the results of discussions and resolutions of matters with certain tax authorities, tax rulings and court decisions and the expiration of statutes of limitations reserves for contingent tax liabilities are accrued or adjusted as necessary. The IRS started an examination of the Company’s initial U.S. federal income tax return for the post-Separation period in 2020.
Based on these reviews, the results of discussions and resolutions of matters with certain tax authorities, tax rulings and court decisions and the expiration of statutes of limitations reserves for contingent tax liabilities are accrued or adjusted as necessary. The IRS concluded examination procedures on the Company’s initial U.S. federal income tax return for the post-Separation period of 2020.
Segment operating profit represents total segment sales less operating costs attributable to the segment, which does not include unallocated corporate costs and other operating costs not allocated to the reportable segments as part of the CODM’s assessment of reportable segment operating performance, including stock-based compensation expense, amortization of acquisition-related intangible assets, restructuring costs, transaction- and deal-related costs, and other costs not indicative of the segment’s core operating performance.
Segment operating profit represents total segment sales less operating costs attributable to the segment, which does not include unallocated corporate costs and other operating costs not allocated to the reportable segments as part of the CODM’s assessment of reportable segment operating performance, including amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring and other related charges and other unallocated income or expense not indicative of the segment’s core operating performance.
Currency exchange rates negatively impacted reported sales for the year ended December 31, 2023 by 0.6% as compared to the prior year, as the U.S. dollar was, on average, stronger against most major currencies during the year ended December 31, 2023 as compared to exchange rate levels during the prior year.
Currency exchange rates negatively impacted reported sales for the year ended December 31, 2024 by 0.8% as compared to the prior year, as the U.S. dollar was, on average, stronger against most major currencies during the year ended December 31, 2024 as compared to exchange rate levels during the prior year.
As part of our 2023 annual impairment analysis, we elected to apply the qualitative goodwill impairment assessment guidance in ASC 350-20, Goodwill , for all four of our reporting units as of the assessment date, or approximately $1.7 billion of goodwill as of the assessment date.
As part of our 2024 annual impairment analysis, we elected to apply the qualitative goodwill impairment assessment guidance in ASC 350-20, Goodwill , for all three of our reporting units as of the assessment date, or approximately $1.7 billion of goodwill as of the assessment date.
Guarantees As of December 31, 2023, the Company had guarantees consisting primarily of outstanding standby letters of credit, bank guarantees, and performance and bid bonds of $79.2 million. These guarantees have been provided in connection with certain arrangements with vendors, customers, financing counterparties, and governmental entities to secure the Company’s obligations and/or performance requirements related to specific transactions.
Guarantees As of December 31, 2024, the Company had guarantees consisting primarily of outstanding standby letters of credit, bank guarantees, and performance and bid bonds of $81.4 million. These guarantees have been provided in connection with certain arrangements with vendors, customers, financing counterparties, and governmental entities to secure the Company’s obligations and/or performance requirements related to specific transactions.
The year-over-year change in operating cash flows was primarily attributable to the following factors: • The aggregate of accounts receivable and long-term financing receivables used $6.9 million of operating cash flows during the year ended December 31, 2023 as compared to using $76.9 million in the prior year.
The year-over-year change in operating cash flows was primarily attributable to the following factors: • The aggregate of accounts receivable and long-term financing receivables used $56.0 million of operating cash flows during the year ended December 31, 2024 as compared to using $6.9 million in the prior year.
Supplemental Guarantor Financial Information As of December 31, 2023, we had $1.6 billion in aggregate principal amount of registered notes and $700.0 million in aggregate principal amount outstanding of term loans.
Supplemental Guarantor Financial Information As of December 31, 2024, we had $1.6 billion in aggregate principal amount of registered notes and $550.0 million in aggregate principal amount outstanding of term loans.
Refer also to Note 11. Financing to the Consolidated Financial Statements for additional information.
Refer also to Note 10. Financing to the Consolidated Financial Statements for additional information.
A hypothetical 100 basis points increase in market interest rates as of December 31, 2023 on our variable-rate debt obligations as of December 31, 2023 would increase our annual interest expense by approximately $7.0 million.
A hypothetical 100 basis points increase in market interest rates as of December 31, 2024 on our variable-rate debt obligations as of December 31, 2024 would increase our annual interest expense by approximately $5.5 million.
Additional uncertainties are identified in “Information Relating to Forward-Looking Statements” in this Form 10-K.
Additional uncertainties are identified in “Information Relating to Forward-Looking Statements” and “Risk Factors” in this Form 10-K.
NON-GAAP FINANCIAL MEASURES Core Sales We define core sales as total sales excluding (i) sales from acquired and certain divested businesses; (ii) the impact of currency translation; and (iii) certain other items. • References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales attributable to certain divested or exited businesses or product lines not considered discontinued operations. • The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales from acquired businesses) and (b) the period-to-period change in sales, including foreign operations (excluding sales from acquired businesses), after applying the current period foreign exchange rates to the prior year period. • The portion of sales attributable to other items is calculated as the impact of those items which are not directly correlated to core sales which do not have an impact on the current or comparable period. 30 Table of Contents Core sales should be considered in addition to, and not as a replacement for or superior to, total sales, and may not be comparable to similarly titled measures reported by other companies.
NON-GAAP FINANCIAL MEASURES Core Sales We define core sales as total sales excluding (i) sales from acquired and certain divested businesses; (ii) the impact of currency translation; and (iii) certain other items. • References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales attributable to certain divested or exited businesses or product lines not considered discontinued operations. • The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales from acquired businesses) and (b) the period-to-period change in sales, including foreign operations (excluding sales from acquired businesses), after applying the current period foreign exchange rates to the prior year period. • The portion of sales attributable to other items is calculated as the impact of those items which are not directly correlated to core sales which do not have an impact on the current or comparable period.
A 10% change in major currencies relative to the U.S. dollar as of December 31, 2023 would have resulted in an impact to equity of approximately $85 million.
A 10% change in major currencies relative to the U.S. dollar as of December 31, 2024 would have resulted in an impact to equity of approximately $87.0 million.
Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two proposals, including the European Union (“EU”) Member States which unanimously adopted the EU Pillar Two Directive, providing for a minimum effective tax rate of 15%.
Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two proposals, including the European Union (“EU”) Member States which unanimously adopted the EU Pillar Two Directive, providing for a minimum effective tax rate of 15%. As of December 31, 2024, various EU Member States have enacted Pillar Two legislation.
Estimating the net realizable value of inventory is inherently uncertain because levels of demand, technological advances and pricing competition in many of our markets can fluctuate significantly from period to period due to circumstances beyond our control.
We estimate the net realizable value of inventory based on assumptions of future demand and related pricing. Estimating the net realizable value of inventory is inherently uncertain because levels of demand, technological advances and pricing competition in many of our markets can fluctuate significantly from period to period due to circumstances beyond our control.
As a result, originations of certain financing receivables are non-cash transactions. • The aggregate of other operating assets and liabilities generated $6.8 million of cash during the year ended December 31, 2023 compared to using $93.1 million in the prior year. This difference is due primarily to working capital needs and the timing of accruals and payments and tax-related amounts.
As a result, originations of certain financing receivables are non-cash transactions. • The aggregate of other operating assets and liabilities used $30.7 million of cash during the year ended December 31, 2024 compared to generating $6.8 million in the prior year. This difference is due primarily to working capital needs and the timing of accruals and payments and tax-related amounts.
Repair Solutions Segment operating profit for our Repair Solutions segment increased $0.3 million, or 0.2%, during the year ended December 31, 2023, as compared to the prior year, and segment operating profit margin decreased 170 basis points during the same period.
Repair Solutions Segment operating profit for our Repair Solutions segment decreased $29.3 million, or 17.2%, during the year ended December 31, 2024, as compared to the prior year, and segment operating profit margin decreased 390 basis points during the same period.
Corporate & other unallocated costs as a percentage of total sales increased 20 basis points during the year ended December 31, 2023, as compared to the prior year.
Corporate & other unallocated costs as a percentage of total sales decreased 30 basis points during the year ended December 31, 2024, as compared to the prior year.
Our decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced by a number of factors, inclusive of the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition. 37 Table of Contents In the first quarter of 2023, we realigned our internal organization, as further discussed in Note 16.
Our decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced by a number of factors, inclusive of the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition.
Sales The components of our consolidated sales growth were as follows for the periods indicated: 2023 vs 2022 2022 vs 2021 Total sales growth (GAAP) (2.8) % 6.5 % Core sales (Non-GAAP) (2.1) % 2.6 % Acquisitions & divestitures (Non-GAAP) (0.1) % 6.5 % Currency exchange rates (Non-GAAP) (0.6) % (2.6) % Sales for each of our segments were as follows for the periods indicated: Year Ended December 31, ($ in millions) 2023 2022 2021 Mobility Technologies $ 1,003.8 $ 907.8 $ 739.3 Repair Solutions 651.5 611.5 594.4 Environmental & Fueling Solutions 1,323.7 1,493.6 1,481.7 Other 118.8 171.5 175.3 Intersegment eliminations (2.6) — — Total $ 3,095.2 $ 3,184.4 $ 2,990.7 Mobility Technologies The components of sales growth for our Mobility Technologies segment were as follows for the periods indicated: 2023 vs 2022 2022 vs 2021 Total sales growth (GAAP) 10.6 % 22.8 % Core sales (Non-GAAP) 6.1 % 0.7 % Acquisitions (Non-GAAP) 5.6 % 26.1 % Currency exchange rates (Non-GAAP) (1.1) % (4.0) % 27 Table of Contents Total sales within our Mobility Technologies segment increased 10.6% during the year ended December 31, 2023, as compared to the prior year, driven by a 6.1% increase in core sales and a 5.6% increase from our recent acquisitions, partially offset by a 1.1% decrease due to the impact of currency translation.
Sales The components of our consolidated sales growth were as follows for the periods indicated: 2024 vs 2023 Total sales growth (GAAP) (3.8) % Core sales (Non-GAAP) 1.8 % Acquisitions and divestitures (Non-GAAP) (4.8) % Currency exchange rates (Non-GAAP) (0.8) % Sales for each of our segments were as follows for the periods indicated: Year Ended December 31, ($ in millions) 2024 2023 Mobility Technologies $ 1,014.5 $ 1,003.8 Repair Solutions 633.4 651.5 Environmental & Fueling Solutions 1,359.8 1,323.7 Other 1.3 118.8 Intersegment eliminations (30.0) (2.6) Total $ 2,979.0 $ 3,095.2 Mobility Technologies The components of sales growth for our Mobility Technologies segment were as follows for the periods indicated: 2024 vs 2023 Total sales growth (GAAP) 1.1 % Core sales (Non-GAAP) 2.1 % Acquisitions and divestitures (Non-GAAP) — % Currency exchange rates (Non-GAAP) (1.0) % Total sales within our Mobility Technologies segment increased 1.1% during the year ended December 31, 2024, as compared to the prior year, driven by a 2.1% increase in core sales, partially offset by a 1.0% decrease due to the impact of currency translation.
Capital Stock and Earnings per Share to the Consolidated Financial Statements for more information related to our share repurchases. 33 Table of Contents Overview of Cash Flows and Liquidity Following is an overview of our cash flows and liquidity: Year Ended December 31, ($ in millions) 2023 2022 Net cash provided by operating activities $ 455.0 $ 321.2 Proceeds from sale of business, net of cash provided $ 107.5 $ — Cash paid for acquisitions, net of cash received — (277.5) Payments for additions to property, plant and equipment (60.1) (60.0) Proceeds from sale of property 4.5 0.4 Cash paid for equity investments (3.0) (11.8) Proceeds from sale of equity securities 20.4 19.0 Net cash provided by (used in) investing activities $ 69.3 $ (329.9) Proceeds from issuance of long-term debt $ — $ 1,167.0 Repayment of long-term debt (300.0) (1,167.0) Net proceeds from short-term borrowings 1.9 0.4 Payments for debt issuance costs — (0.8) Payments of common stock cash dividend (15.5) (15.9) Purchases of treasury stock (74.7) (328.0) Proceeds from stock option exercises 10.4 2.5 Other financing activities (9.9) (6.1) Net cash used in financing activities $ (387.8) $ (347.9) Operating Activities Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments for income taxes, restructuring activities and other items impact reported cash flows.
Overview of Cash Flows and Liquidity Following is an overview of our cash flows and liquidity: Year Ended December 31, ($ in millions) 2024 2023 Net cash provided by operating activities $ 427.5 $ 455.0 Proceeds from sale of business, net of cash provided $ 68.4 $ 107.5 Payments for additions to property, plant and equipment (82.7) (60.1) Proceeds from sale of property, plant and equipment 5.6 4.5 Cash paid for equity investments (2.9) (3.0) Proceeds from sale of equity securities 0.2 20.4 Net cash (used in) provided by investing activities $ (11.4) $ 69.3 Repayment of long-term debt (150.0) (300.0) Net (repayments of) proceeds from short-term borrowings (4.5) 1.9 Payments of common stock cash dividend (15.2) (15.5) Purchases of treasury stock (224.7) (74.7) Proceeds from stock option exercises 17.0 10.4 Other financing activities (14.9) (9.9) Net cash used in financing activities $ (392.3) $ (387.8) 34 Table of Contents Operating Activities Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments for income taxes, restructuring activities and other items impact reported cash flows.
For a discussion of our outstanding indebtedness, refer to Note 11. Financing to the Consolidated Financial Statements. INCOME TAXES General Income tax expense and deferred tax assets and liabilities reflect management’s assessment of current and future taxes expected to be paid on items reflected in our financial statements.
Financing to the Consolidated Financial Statements. 31 Table of Contents INCOME TAXES General Income tax expense and deferred tax assets and liabilities reflect management’s assessment of current and future taxes expected to be paid on items reflected in our financial statements.
As of the filing date of this report, we do not believe they are material. 26 Table of Contents RESULTS OF OPERATIONS Comparison of Results of Operations Year Ended December 31, ($ in millions) 2023 % of Sales 2022 % of Sales 2021 % of Sales Sales $ 3,095.2 $ 3,184.4 $ 2,990.7 Operating costs and expenses: Cost of sales (a) (1,664.0) 53.8 % (1,756.1) 55.1 % (1,657.6) 55.4 % Selling, general and administrative expenses (“SG&A”) (643.1) 20.8 % (627.8) 19.7 % (579.2) 19.4 % Research and development expenses (“R&D”) (163.5) 5.3 % (144.6) 4.5 % (129.3) 4.3 % Amortization of acquisition-related intangible assets (81.2) 2.6 % (78.0) 2.4 % (42.4) 1.4 % Operating profit $ 543.4 17.6 % $ 577.9 18.1 % $ 582.2 19.5 % (a) Excluding amortization of acquisition-related intangible assets.
As of the filing date of this report, we do not believe they are material. 27 Table of Contents RESULTS OF OPERATIONS Comparison of Results of Operations Year Ended December 31, ($ in millions) 2024 % of Sales 2023 % of Sales Sales $ 2,979.0 $ 3,095.2 Operating costs and expenses: Cost of sales (a) (1,554.9) 52.2 % (1,664.0) 53.8 % Selling, general and administrative expenses (“SG&A”) (629.7) 21.1 % (643.1) 20.8 % Research and development expenses (“R&D”) (177.7) 6.0 % (163.5) 5.3 % Amortization of acquisition-related intangible assets (79.7) 2.7 % (81.2) 2.6 % Operating profit $ 537.0 18.0 % $ 543.4 17.6 % (a) Excluding amortization of acquisition-related intangible assets.
Environmental & Fueling Solutions Segment operating profit for our Environmental & Fueling Solutions segment decreased $37.0 million, or 9.1%, during the year ended December 31, 2023, as compared to the prior year, and segment operating profit margin increased 70 basis points during the same period.
Environmental & Fueling Solutions Segment operating profit for our Environmental & Fueling Solutions segment increased $25.4 million, or 6.9%, during the year ended December 31, 2024, as compared to the prior year, and segment operating profit margin increased 110 basis points during the same period.
Our long-term debt requires, among others, that we maintain certain financial covenants, and we were in compliance with all of these covenants as of December 31, 2023. 2023 Financing and Capital Transactions During the year ended December 31, 2023, we completed the following financing and capital transactions: • Voluntarily repaid $300.0 million of the Three-Year Term Loans Due 2024; • Repurchased 2.8 million shares for $74.7 million in the open market.
Our long-term debt requires, among others, that we maintain certain financial covenants, and we were in compliance with all of these covenants as of December 31, 2024. 2024 Financing and Capital Transactions During the year ended December 31, 2024, we completed the following financing and capital transactions: • Voluntarily repaid $150.0 million of the Three-Year Term Loans Due 2024 and the Three-Year Term Loans Due 2025; • Repurchased 3.0 million shares for $100.0 million through an accelerated share repurchase (“ASR”) agreement; • Repurchased 0.6 million shares for $25.0 million through a share repurchase agreement; and • Repurchased 2.7 million shares for $99.7 million in the open market.
We also continue to monitor the Russia-Ukraine and Israel-Hamas conflicts and the impact on our business and operations.
We also continue to monitor the Russia-Ukraine conflict and conflicts in the Middle East and the impact on our business and operations.
Our outlook is subject to various assumptions and risks, including but not limited to the resilience and durability of the economies of the United States and other critical regions, ongoing challenges with global logistics and supply chain including the availability of electronic components, the impact of international conflicts, including Russia-Ukraine and Israel-Hamas, market conditions in key end product segments, and the impact of energy disruption in Europe.
Our outlook is subject to various assumptions and risks, including but not limited to the resilience and durability of the economies of the United States and other critical regions, the condition of global supply chains, including the availability of electronic components, the impact of international conflicts, including Russia-Ukraine and conflicts in the Middle East, market conditions in key end product segments, no significant changes in governmental policies or regulations and the impact of energy disruption in Europe.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 2022 with the Securities and Exchange Commission on February 17, 2023, as supplemented by the discussion herein of our new segments’ sales and segment operating profit.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 2023 with the Securities and Exchange Commission on February 15, 2024.
With respect to our cash requirements, we generally intend to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions, we may also borrow under our credit facilities, enter into new credit facilities and borrow directly thereunder and/or access the capital markets.
As of December 31, 2024, we had purchase obligations of $241.9 million, with $235.6 million payable in the next 12 months. 36 Table of Contents With respect to our cash requirements, we generally intend to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions, we may also borrow under our credit facilities, enter into new credit facilities and borrow directly thereunder and/or access the capital markets.
Environmental & Fueling Solutions The components of sales growth for our Environmental & Fueling Solutions segment were as follows for the periods indicated: 2023 vs 2022 2022 vs 2021 Total sales growth (GAAP) (11.4) % 0.8 % Core sales (Non-GAAP) (10.6) % 4.0 % Acquisitions and divestitures (Non-GAAP) (0.2) % — % Currency exchange rates (Non-GAAP) (0.6) % (3.2) % Total sales within our Environmental & Fueling Solutions segment decreased 11.4% during the year ended December 31, 2023, as compared to the prior year, driven primarily by a 10.6% decrease in core sales and a 0.6% decrease due to the impact of currency translation.
Environmental & Fueling Solutions The components of sales growth for our Environmental & Fueling Solutions segment were as follows for the periods indicated: 2024 vs 2023 Total sales growth (GAAP) 2.7 % Core sales (Non-GAAP) 5.9 % Acquisitions and divestitures (Non-GAAP) (2.3) % Currency exchange rates (Non-GAAP) (0.9) % Total sales within our Environmental & Fueling Solutions segment increased 2.7% during the year ended December 31, 2024, as compared to the prior year, driven by a 5.9% increase in core sales, partially offset by a 2.3% decrease due to the impact of recently exited businesses and product lines and a 0.9% decrease due to the impact of currency translation.
Our effective tax rate for the year ended December 31, 2022 differs from the U.S. federal statutory rate of 21.0% primarily due to the effect of recurring items including state taxes, foreign derived intangible income and foreign taxable earnings at a rate different from the U.S. federal statutory rate. Additionally, there were favorable impacts related to non-taxable income.
Our effective tax rate for the year ended December 31, 2024 differs from the U.S. federal statutory rate of 21.0% primarily due to the effect of state taxes, foreign derived intangible income, and tax credits. Additionally, there were favorable impacts related to business reorganizations and divestitures and a decrease to uncertain tax positions.
The decrease in our effective tax rate during the year ended December 31, 2023, as compared to the prior year, was primarily due to favorable impacts related to tax credits, non-taxable income, and business reorganizations and divestitures which were offset by an increase to uncertain tax positions.
The decrease in our effective tax rate during the year ended December 31, 2024, as compared to the prior year, was primarily due to favorable impacts related to business reorganizations and divestitures and a decrease to uncertain tax positions.
The OECD agreed among over 130 countries on the Pillar Two proposals which establish a global minimum effective tax rate of 15% for multinational groups with annual global revenue exceeding €750 million.
Our operations in certain foreign jurisdictions remain subject to routine examinations for the tax years 2017 to 2023. The OECD agreed among over 130 countries on the Pillar Two proposals which establish a global minimum effective tax rate of 15% for multinational groups with annual global revenue exceeding €750 million.
R&D expenses increased $18.9 million, or 13.1%, during the year ended December 31, 2023, as compared to the prior year and as a percentage of sales, increased 80 basis points during the same period, primarily due to the impact of our recent acquisitions and continued growth investments in our Mobility Technologies segment.
R&D expenses increased $14.2 million, or 8.7%, during the year ended December 31, 2024, as compared to the prior year and as a percentage of sales, increased 70 basis points during the same period, due to continued growth investments in our Mobility Technologies segment.
In accordance with accounting standards related to business combinations, neither goodwill nor indefinite-lived intangible assets are amortized; however, certain definite-lived identifiable intangible assets, primarily customer relationships, acquired technology and trade names, are amortized over their estimated useful lives. Goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities.
In accordance with accounting standards related to business combinations, neither goodwill nor indefinite-lived intangible assets are amortized; however, definite-lived identifiable intangible assets, primarily customer relationships, acquired technology and trade names, are amortized over their estimated useful lives.
As part of the CODM’s assessment of the Repair Solutions segment, a capital charge based on the segment’s financing receivables portfolio is assessed by Corporate. Refer to Note 16. Segment Information to the Consolidated Financial Statements for additional information.
As part of the CODM’s assessment of the Repair Solutions segment, a capital charge calculated based on the segment’s average gross outstanding financing receivables portfolio during the period and an estimated weighted average cost of capital is assessed by Corporate (the “Repair Solutions Capital Charge”). Refer to Note 15. Segment Information to the Consolidated Financial Statements for additional information.
(c) Includes intercompany pretax income of $20.5 million. 35 Table of Contents Summarized Balance Sheet Data ($ in millions) December 31, 2023 Assets Current assets $ 383.1 Intercompany receivables 1,722.0 Noncurrent assets 641.6 Total assets $ 2,746.7 Liabilities Current liabilities $ 437.4 Intercompany payables 279.9 Noncurrent liabilities 2,242.7 Total liabilities $ 2,960.0 Cash and Cash Requirements As of December 31, 2023, we held approximately $340.9 million of cash and cash equivalents that were held in either operating accounts or invested in highly liquid investment-grade instruments with a maturity of 90 days or less with an annual effective rate generally around 5.0% as of December 31, 2023.
Summarized Balance Sheet Data ($ in millions) December 31, 2024 Assets Current assets $ 433.0 Intercompany receivables 2,090.2 Noncurrent assets 664.7 Total assets $ 3,187.9 Liabilities Current liabilities $ 895.6 Intercompany payables 256.7 Noncurrent liabilities 1,645.7 Total liabilities $ 2,798.0 Cash and Cash Requirements As of December 31, 2024, we held approximately $356.4 million of cash and cash equivalents that were held in either operating accounts or invested in highly liquid investment-grade instruments with a maturity of 90 days or less with an annual effective rate generally around 4.5% as of December 31, 2024.
We made capital expenditures of $60.1 million and $60.0 million during the years ended December 31, 2023 and 2022, respectively. 34 Table of Contents Financing Activities Net cash used in financing activities was $387.8 million during the year ended December 31, 2023, driven primarily by the voluntary repayment of $300.0 million of the Three-Year Term Loans due 2024 and repurchases of the Company’s common stock of $74.7 million.
Net cash used in financing activities was $387.8 million during the year ended December 31, 2023, driven primarily by the voluntary repayment of $300.0 million of the Three-Year Term Loans due 2024 and repurchases of the Company’s common stock of $74.7 million. Share Repurchase Program Refer to Note 19.
Segment operating profit, operating profit and related margins were as follows for the periods indicated: Year Ended December 31, ($ in millions) 2023 Margin 2022 Margin 2021 Margin Mobility Technologies $ 199.9 19.9 % $ 187.5 20.7 % $ 155.6 21.0 % Repair Solutions 170.0 26.1 169.7 27.8 168.4 28.3 Environmental & Fueling Solutions 369.5 27.9 406.5 27.2 410.3 27.7 Other 11.3 9.5 19.2 11.2 23.3 13.3 Segment operating profit 750.7 24.3 782.9 24.6 757.6 25.3 Corporate & other unallocated costs (a) (207.3) (6.7) (205.0) (6.5) (175.4) (5.8) Total operating profit $ 543.4 17.6 % $ 577.9 18.1 % $ 582.2 19.5 % (a) Margin for corporate & other unallocated costs is presented as a percentage of total sales.
Segment operating profit, operating profit and related margins were as follows for the periods indicated: Year Ended December 31, ($ in millions) 2024 Margin 2023 Margin Mobility Technologies $ 192.6 19.0 % $ 199.9 19.9 % Repair Solutions 140.7 22.2 170.0 26.1 Environmental & Fueling Solutions 394.9 29.0 369.5 27.9 Other (0.4) (30.8) 11.3 9.5 Corporate & other unallocated costs (a) (190.8) (6.4) (207.3) (6.7) Total operating profit $ 537.0 18.0 % $ 543.4 17.6 % (a) Margin for corporate & other unallocated costs is presented as a percentage of total sales.
Refer to Note 11. Financing to the Consolidated Financial Statements for more information related to our long-term indebtedness and Note 20.
Refer to Note 10. Financing to the Consolidated Financial Statements for more information related to our long-term indebtedness and Note 19. Capital Stock and Earnings per Share to the Consolidated Financial Statements for more information related to our share repurchases.
Customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs, are considered in determining the transaction price for the contract.
Customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs, are considered in determining the transaction price for the contract. Significant judgment is exercised in determining product returns, customer allowances and rebates, which are estimated based on historical experience and known trends.
Summarized Results of Operations Data ($ in millions) Year Ended December 31, 2023 Net sales (a) $ 1,499.9 Operating profit (b) 551.7 Net income (c) $ 379.4 (a) Includes intercompany sales of $31.1 million. (b) Includes intercompany operating profit of $23.6 million.
Summarized Results of Operations Data ($ in millions) Year Ended December 31, 2024 Net sales (a) $ 1,524.9 Operating profit (b) 521.0 Net income (c) $ 363.2 (a) Includes intercompany sales of $33.2 million. (b) Includes intercompany operating profit of $14.2 million. (c) Includes intercompany pretax income of $17.7 million.
Corporate & other unallocated costs includes amortization of acquisition-related intangible assets. 29 Table of Contents Mobility Technologies Segment operating profit for our Mobility Technologies segment increased $12.4 million, or 6.6%, during the year ended December 31, 2023, as compared to the prior year, and segment operating profit margin decreased 80 basis points during the same period.
Amortization of acquisition-related intangible assets decreased $1.5 million, or 1.8%, during the year ended December 31, 2024, as compared to the prior year and as a percentage of sales, increased 10 basis points during the same period. 29 Table of Contents Operating Profit Operating profit decreased $6.4 million, or 1.2%, during the year ended December 31, 2024, as compared to the prior year, and operating profit margin increased 40 basis points during the same period.
Cash flows from operating activities were $455.0 million during the year ended December 31, 2023, an increase of $133.8 million as compared to the prior year.
Cash flows from operating activities were $427.5 million during the year ended December 31, 2024, a decrease of $27.5 million as compared to the prior year.
Segment operating profit for our Mobility Technologies segment increased $31.9 million, or 20.5%, during the year ended December 31, 2022, as compared to the prior year, and segment operating profit margin decreased 30 basis points during the same period.
Refer to further discussion of Corporate & other unallocated costs below. Mobility Technologies Segment operating profit for our Mobility Technologies segment decreased $7.3 million, or 3.7%, during the year ended December 31, 2024, as compared to the prior year, and segment operating profit margin decreased 90 basis points during the same period.
Operating Costs and Other Expenses SG&A expenses increased $15.3 million, or 2.4%, during the year ended December 31, 2023, as compared to the prior year and as a percentage of sales, increased 110 basis points during the same period, primarily due to an increase in costs associated with restructuring activities, variable and stock-based compensation expense and SG&A expenses from our recent acquisitions, and the impact of reserve-related adjustments to the Repair Solutions receivables portfolio, partially offset by a decrease in transaction and deal-related costs.
Operating Costs and Other Expenses SG&A expenses decreased $13.4 million, or 2.1%, during the year ended December 31, 2024, as compared to the prior year and as a percentage of sales, increased 30 basis points during the same period, due to a $18.6 million decrease from the impact of recently divested and exited businesses and product lines, partially offset by a $10.1 million increase from the impact of reserve-related adjustments to the Repair Solutions receivables portfolio.
INTEREST COSTS Interest expense, net was $93.7 million during the year ended December 31, 2023 as compared to $69.6 million during the prior year, an increase of $24.1 million, driven primarily by the impact of increases in interest rates on our variable-rate debt obligations, partially offset by a decrease in our outstanding debt obligations between periods.
INTEREST COSTS Interest expense, net was $74.7 million during the year ended December 31, 2024 as compared to $93.7 million during the prior year, a decrease of $19.0 million, driven by a decrease in our outstanding debt obligations and an increase in interest income between periods. For a discussion of our outstanding indebtedness, refer to Note 10.
Net cash used in financing activities was $347.9 million during the year ended December 31, 2022, driven primarily by repurchases of the Company’s common stock of $328.0 million.
Financing Activities Net cash used in financing activities was $392.3 million during the year ended December 31, 2024, driven by the voluntary repayment of $150.0 million of the Three-Year Term Loans due 2024 and Three-Year Term Loans due 2025 and repurchases of the Company’s common stock of $224.7 million.
COMPREHENSIVE INCOME Comprehensive income increased by $50.0 million during the year ended December 31, 2023, as compared to the prior year. Comprehensive income for the year ended December 31, 2023 includes a gain on the sale of the Company’s Global Traffic Technologies business of $34.4 million.
Comprehensive income for the year ended December 31, 2023 includes a gain on the sale of the Company’s Global Traffic Technologies business of $34.4 million. Refer to Note 20. Divestitures to the Consolidated Financial Statements for additional information on the divestitures of our Coats and Global Traffic Technologies businesses.
Net cash used in investing activities was $329.9 million during the year ended December 31, 2022, driven primarily by the cash paid for the acquisitions that closed during the period and payments for additions to property, plant and equipment.
Investing Activities Net cash used in investing activities was $11.4 million during the year ended December 31, 2024, driven by payments for additions to property, plant and equipment, partially offset by proceeds from the sale of our Coats business.
Operating profit decreased $4.3 million, or 0.7%, during the year ended December 31, 2022, as compared to the prior year, and operating profit margins decreased 140 basis points during the same period. Segment operating profit is used as a performance metric by the chief operating decision maker (“CODM”) in determining how to allocate resources and assess performance.
Segment operating profit is used as a performance metric by the chief operating decision maker (“CODM”) in determining how to allocate resources and assess performance.
If the exchange rates in effect as of December 31, 2023 were to prevail throughout the year ended December 31, 2024, currency exchange rates would not have a material impact on our estimated sales for the year ended December 31, 2024 as compared to the year ended December 31, 2023. 32 Table of Contents In general, weakening of the U.S. dollar against other major currencies would positively impact our sales and results of operations on an overall basis and strengthening of the U.S. dollar against other major currencies would adversely impact our sales and results of operations.
In general, weakening of the U.S. dollar against other major currencies would positively impact our sales and results of operations on an overall basis and strengthening of the U.S. dollar against other major currencies would adversely impact our sales and results of operations.
We regularly perform detailed reviews of our accounts receivable and financing receivables portfolios to determine if changes in the aforementioned qualitative and quantitative factors have impacted the adequacy of the allowances.
We regularly perform detailed reviews of our accounts receivable and financing receivables portfolios to determine if changes in the aforementioned qualitative and quantitative factors have impacted the adequacy of the allowances. 37 Table of Contents Inventories We record inventory at the lower of cost or net realizable value, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.
Repair Solutions The components of sales growth for our Repair Solutions segment were as follows for the periods indicated: 2023 vs 2022 2022 vs 2021 Total sales growth (GAAP) 6.5 % 2.9 % Core sales (Non-GAAP) 6.7 % 3.0 % Acquisitions and divestitures (Non-GAAP) — % — % Currency exchange rates (Non-GAAP) (0.2) % (0.1) % Total sales and core sales within our Repair Solutions segment increased 6.5% and 6.7%, respectively, during the year ended December 31, 2023, as compared to the prior year, primarily due to strong demand in the tool storage, hardline and powered tools product categories.
The increase in core sales was due to solid demand for our convenience store payment and enterprise productivity solutions, partially offset by lower demand for our cash wash solutions. 28 Table of Contents Repair Solutions The components of sales growth for our Repair Solutions segment were as follows for the periods indicated: 2024 vs 2023 Total sales growth (GAAP) (2.8) % Core sales (Non-GAAP) (2.8) % Acquisitions and divestitures (Non-GAAP) — % Currency exchange rates (Non-GAAP) — % Total sales and core sales within our Repair Solutions segment decreased 2.8% during the year ended December 31, 2024, as compared to the prior year, due to a decrease in the hardline, tool storage and specialty tools product categories driven by macroeconomic impacts on service technicians’ discretionary spending, partially offset by an increase in the power tools product category.
Basis of Presentation and Summary of Significant Accounting Policies and Note 15. Income Taxes to the Consolidated Financial Statements. 31 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 Our effective tax rate for the years ended December 31, 2023 and 2022 was 22.0% and 23.9%, respectively.
Comparison of the Years Ended December 31, 2024 and 2023 Our effective tax rate for the years ended December 31, 2024 and 2023 was 15.2% and 22.0%, respectively.
Amortization of acquisition-related intangible assets increased $3.2 million, or 4.1%, during the year ended December 31, 2023, as compared to the prior year and as a percentage of sales, increased 20 basis points during the same period, primarily due to the amortization of intangible assets acquired in our recent acquisitions.
Cost of Sales Cost of sales, excluding amortization of acquisition-related intangible assets, decreased $109.1 million, or 6.6%, during the year ended December 31, 2024, as compared to the prior year and as a percentage of sales, decreased 160 basis points during the same period, due to a $115.0 million decrease from the impact of recently divested and exited businesses and product lines.
The Company remains subject to tax audits for its separate company tax returns in various U.S. states for the tax years 2011 to 2022. Our operations in certain foreign jurisdictions remain subject to routine examinations for the tax years 2014 to 2022.
The Company is subject to tax audits for its combined/consolidated state income tax returns for post-Separation 2020 through 2023. The Company remains subject to tax audits for its separate company tax returns in various U.S. states for the tax years 2020 to 2023.
The Company’s Global Traffic Technologies and Coats businesses, which were divested during April 2023 and January 2024, respectively, are presented in Other for periods prior to the divestitures. Refer to Note 21. Divestitures and Assets and Liabilities Held for Sale to the Consolidated Financial Statements for further discussion of the Company’s Global Traffic Technologies and Coats businesses.
Our Global Traffic Technologies and Coats businesses, which were divested during April 2023 and January 2024, respectively, are presented in Other for periods prior to the divestitures. Outlook We expect core sales to increase on a year-over-year basis in 2025 due to increasing demand across our portfolio.
The Company allocates the contract transaction price to each performance obligation using the observable price that the good or service sells for separately in similar circumstances and to similar customers, and/or a residual approach when the observable selling price of a good or service is not known and is either highly variable or uncertain.
Certain customer arrangements, including our SaaS product offerings, include multiple performance obligations, typically hardware, installation, training, consulting, services and/or post-contract customer support (“PCS”). The Company allocates the contract transaction price to each performance obligation using the observable price that the good or service sells for separately in similar circumstances and to similar customers.
At this point, no material issues or adjustments have been identified. The Company remains subject to U.S. Federal income tax audit for 2021 and 2022. The Company is subject to tax audits for its state income tax returns for post-Separation 2020 as well as 2021 and 2022.
No material adjustments were identified, as such the Company has released all uncertain tax positions associated with the U.S. federal income tax return for the post-Separation period in 2020. The Company remains subject to U.S. Federal income tax audit for 2021 through 2023.
Removed
Segments In the first quarter of 2023, we realigned our internal organization to align with our strategy, resulting in changes to our operating segments. Historically, we operated through one reportable segment comprised of two operating segments: (i) Mobility Technologies and (ii) Diagnostics and Repair Technologies.
Added
The increase in core sales was driven by higher demand for aftermarket products, dispenser systems and environmental solutions.

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