Ingersoll Rand(IR) - 2024 Q2 - Quarterly Report

General Information FORM 10-Q Filing Details This section details the administrative specifics of Ingersoll Rand Inc.'s Form 10-Q filing for Q2 2024, including its filer status and outstanding common shares - The filing is a Quarterly Report on Form 10-Q for the period ended June 30, 2024[2] - Ingersoll Rand Inc. is a Delaware corporation with Commission File Number 001-38095[2] - The registrant is classified as a 'Large accelerated filer'[2] Outstanding Common Stock | As of Date | Shares Outstanding | | :----------- | :----------------- | | July 26, 2024 | 403,484,175 | Special Note Regarding Forward-Looking Statements This section outlines that forward-looking statements are subject to material risks and uncertainties, including global economic instability and operational challenges - The report contains forward-looking statements based on current expectations, beliefs, estimates, and projections, which are inherently uncertain[5] - Actual results may vary materially due to numerous risks, uncertainties, and other important factors, many beyond the company's control[5] - Exposure to global economic and financial market instability[5] - Information systems failure or disruption due to cyber terrorism[5] - Risks associated with international operations (over half of sales/operations are non-U.S.)[5] - Large or rapid increases in raw material costs or decreases in availability[5] - Competition in served markets[5] - Risks related to acquisitions and dispositions, including integration challenges[5] - Exchange rate and other currency risks impacting operating results and cash flows[7] - Inability to develop new products and technologies[7] - Employee work stoppages or labor difficulties[7] - Changes in tax or other laws/regulations[7] - Dependence on attracting, retaining, and developing key personnel[7] - Non-compliance with U.S. and foreign laws[7] - Intellectual property infringement risks[7] - Disruption in the distribution network[7] - Ineffectiveness of restructuring plans and cost savings initiatives[7] - Cost overruns, delays, penalties on fixed-price contracts[7] - Loss or reduction of business with key customers[7] - Credit and counterparty risks[7] - Product liability and warranty claims[7] - Impairment of goodwill and other intangible assets[7] - Environmental compliance costs and liabilities[7] - Pension and other postretirement benefit obligations[7] - Adverse consequences of indebtedness and ability to service debt[7] - Interest rate risk from swap contracts[7] - Risks related to counterparty creditworthiness of derivative instruments[7] - Risk of financial institutions failing to extend credit under the New Revolving Credit Facility[7] PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Ingersoll Rand Inc.'s unaudited condensed consolidated financial statements for Q2 2024 and 2023, along with explanatory notes Condensed Consolidated Statements of Operations (Unaudited) Condensed Consolidated Statements of Operations (Unaudited; in millions, except per share amounts) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $1,805.3 | $1,686.5 | $3,475.4 | $3,315.8 |\n| Cost of sales | 1,012.0 | 989.0 | 1,935.8 | 1,954.1 |\n| Gross Profit | 793.3 | 697.5 | 1,539.6 | 1,361.7 |\n| Selling and administrative expenses | 342.1 | 315.6 | 678.4 | 626.7 |\n| Amortization of intangible assets | 91.2 | 89.7 | 182.8 | 182.1 |\n| Other operating expense, net | 88.2 | 19.8 | 113.4 | 40.2 |\n| Operating Income | 271.8 | 272.4 | 565.0 | 512.7 |\n| Interest expense | 50.8 | 40.8 | 87.6 | 79.7 |\n| Loss on extinguishment of debt | 3.0 | 0.9 | 3.0 | 0.9 |\n| Other income, net | (18.1) | (8.2) | (31.3) | (17.8) |\n| Income Before Income Taxes | 236.1 | 238.9 | 505.7 | 449.9 |\n| Provision for income taxes | 46.1 | 60.5 | 100.5 | 108.6 |\n| Income (loss) on equity method investments| (3.5) | 2.4 | (14.2) | 2.7 |\n| Net Income | 186.5 | 180.8 | 391.0 | 344.0 |\n| Less: Net income attributable to noncontrolling interests | 1.5 | 1.3 | 3.8 | 3.4 |\n| Net Income Attributable to Ingersoll Rand Inc. | $185.0 | $179.5 | $387.2 | $340.6 |\n| Basic earnings per share | 0.46 | 0.44 | 0.96 | 0.84 |\n| Diluted earnings per share | 0.45 | 0.44 | 0.95 | 0.83 | Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited; in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to Ingersoll Rand Inc. | $185.0 | $179.5 | $387.2 | $340.6 |\n| Other comprehensive loss, net of tax: | | | | |\n| Foreign currency translation adjustments, net | (34.0) | (46.6) | (107.5) | (15.8) |\n| Unrecognized gain (loss) on cash flow hedges | (2.1) | 10.9 | (2.2) | 5.6 |\n| Pension and other postretirement prior service cost and gain (loss), net | (1.4) | (1.1) | (2.8) | (1.3) |\n| Total other comprehensive loss, net of tax | (37.5) | (36.8) | (112.5) | (11.5) |\n| Comprehensive income attributable to Ingersoll Rand Inc. | $147.5 | $142.7 | $274.7 | $329.1 |\n| Comprehensive Income Attributable to Noncontrolling Interests | | | | |\n| Net income attributable to noncontrolling interests | $1.5 | $1.3 | $3.8 | $3.4 |\n| Other comprehensive income (loss), net of tax: | | | | |\n| Foreign currency translation adjustments, net | 0.1 | (0.1) | (0.7) | 0.8 |\n| Total other comprehensive income (loss), net of tax | 0.1 | (0.1) | (0.7) | 0.8 |\n| Comprehensive income attributable to noncontrolling interests | 1.6 | 1.2 | 3.1 | 4.2 |\n| Total Comprehensive Income | $149.1 | $143.9 | $277.8 | $333.3 | Condensed Consolidated Balance Sheets (Unaudited) Condensed Consolidated Balance Sheets (Unaudited; in millions, except share amounts) | Asset/Liability/Equity | June 30, 2024 | December 31, 2023 | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | :------------ | :---------------- | | Assets | | |\n| Cash and cash equivalents | $1,062.5 | $1,595.5 |\n| Accounts receivable, net | 1,301.4 | 1,234.2 |\n| Inventories | 1,160.0 | 1,001.1 |\n| Other current assets | 319.3 | 219.6 |\n| Total current assets | 3,843.2 | 4,050.4 |\n| Property, plant and equipment, net | 830.0 | 711.4 |\n| Goodwill | 8,217.1 | 6,609.7 |\n| Other intangible assets, net | 4,478.2 | 3,611.1 |\n| Deferred tax assets | 29.6 | 31.5 |\n| Other assets | 440.4 | 549.4 |\n| Total assets | $17,838.5 | $15,563.5 |\n| Liabilities and Stockholders' Equity | | |\n| Short-term borrowings and current maturities of long-term debt | $4.5 | $30.6 |\n| Accounts payable | 748.5 | 801.2 |\n| Accrued liabilities | 1,011.6 | 995.5 |\n| Total current liabilities | 1,764.6 | 1,827.3 |\n| Long-term debt, less current maturities | 4,750.9 | 2,693.0 |\n| Pensions and other postretirement benefits | 150.9 | 150.0 |\n| Deferred income tax liabilities | 838.2 | 612.6 |\n| Other liabilities | 309.7 | 433.9 |\n| Total liabilities | $7,814.3 | $5,716.8 |\n| Stockholders' equity | | |\n| Common stock, $0.01 par value; 1,000,000,000 shares authorized; 430,371,281 and 428,589,061 shares issued as of June 30, 2024 and December 31, 2023, respectively | 4.3 | 4.3 |\n| Capital in excess of par value | 9,595.3 | 9,550.8 |\n| Retained earnings | 2,068.3 | 1,697.2 |\n| Accumulated other comprehensive loss | (340.1) | (227.6) |\n| Treasury stock at cost; 26,595,683 and 25,241,667 shares as of June 30, 2024 and December 31, 2023, respectively | (1,369.6) | (1,240.9) |\n| Total Ingersoll Rand Inc. stockholders' equity | $9,958.2 | $9,783.8 |\n| Noncontrolling interests | 66.0 | 62.9 |\n| Total stockholders' equity | $10,024.2 | $9,846.7 |\n| Total liabilities and stockholders' equity | $17,838.5 | $15,563.5 | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) Condensed Consolidated Statements of Stockholders' Equity (Unaudited; in millions) - Six Month Period Ended June 30, 2024 | Metric | Common Stock Shares Issued | Par | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Ingersoll Rand Inc. Stockholders' Equity | Noncontrolling Interests | Total Equity | | :-------------------------------------------- | :------------------------- | :---- | :----------------------------- | :---------------- | :----------------------------------- | :------------- | :---------------------------------------------- | :----------------------- | :----------- | | Balance at beginning of period | 428.6 | $4.3 | $9,550.8 | $1,697.2 | (227.6) | $(1,240.9) | 9,783.8 | $62.9 | $9,846.7 |\n| Net income | — | — | — | 387.2 | — | — | 387.2 | 3.8 | 391.0 |\n| Dividends declared | — | — | — | (16.1) | — | — | (16.1) | — | (16.1) |\n| Issuance of common stock for stock-based compensation plans | 1.8 | — | 21.3 | — | — | — | 21.3 | — | 21.3 |\n| Purchases of treasury stock | — | — | — | — | — | (135.5) | (135.5) | — | (135.5) |\n| Issuance of treasury stock for stock-based compensation plans | — | — | (5.4) | — | — | 6.8 | 1.4 | — | 1.4 |\n| Stock-based compensation | — | — | 28.6 | — | — | — | 28.6 | — | 28.6 |\n| Other comprehensive loss, net of tax | — | — | — | — | (112.5) | — | (112.5) | (0.7) | (113.2) |\n| Balance at end of period | 430.4 | $4.3 | $9,595.3 | $2,068.3 | (340.1) | $(1,369.6) | 9,958.2 | $66.0 | $10,024.2 | Condensed Consolidated Statements of Stockholders' Equity (Unaudited; in millions) - Six Month Period Ended June 30, 2023 | Metric | Common Stock Shares Issued | Par | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Ingersoll Rand Inc. Stockholders' Equity | Noncontrolling Interests | Total Equity | | :-------------------------------------------- | :------------------------- | :---- | :----------------------------- | :---------------- | :----------------------------------- | :------------- | :---------------------------------------------- | :----------------------- | :----------- | | Balance at beginning of period | 426.3 | $4.3 | $9,476.8 | $950.9 | (251.7) | $(984.5) | $9,195.8 | $61.4 | $9,257.2 |\n| Net income | — | — | — | 340.6 | — | — | 340.6 | 3.4 | 344.0 |\n| Dividends declared | — | — | — | (16.2) | — | — | (16.2) | — | (16.2) |\n| Issuance of common stock for stock-based compensation plans | 1.5 | — | 13.7 | — | — | — | 13.7 | — | 13.7 |\n| Purchases of treasury stock | — | — | — | — | — | (133.2) | (133.2) | — | (133.2) |\n| Issuance of treasury stock for stock-based compensation plans | — | — | (3.6) | — | — | 5.8 | 2.2 | — | 2.2 |\n| Stock-based compensation | — | — | 23.4 | — | — | — | 23.4 | — | 23.4 |\n| Other comprehensive income (loss), net of tax | — | — | — | — | (11.5) | — | (11.5) | 0.8 | (10.7) |\n| Balance at end of period | 427.8 | $4.3 | $9,510.3 | $1,275.3 | (263.2) | $(1,111.9) | $9,414.8 | $65.6 | $9,480.4 | Condensed Consolidated Statements of Cash Flows (Unaudited) Condensed Consolidated Statements of Cash Flows (Unaudited; in millions) | Cash Flow Category | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------ | :----------------------------- | :----------------------------- | | Cash Flows From Operating Activities: | | |\n| Net income | $391.0 | $344.0 |\n| Amortization of intangible assets | 182.8 | 182.1 |\n| Depreciation | 51.3 | 43.7 |\n| Stock-based compensation expense | 28.6 | 24.0 |\n| Loss (income) on equity method investments | 14.2 | (2.7) |\n| Loss on extinguishment of debt | 3.0 | 0.9 |\n| Loss on sale of asbestos-related assets and liabilities | 33.7 | — |\n| Changes in assets and liabilities (net) | (245.7) | (214.4) |\n| Net cash provided by operating activities | $466.5 | $398.7 |\n| Cash Flows Used In Investing Activities: | | |\n| Capital expenditures | (84.1) | (47.2) |\n| Net cash paid in acquisitions | (2,744.0) | (615.8) |\n| Net cash used in investing activities | $(2,834.1) | $(655.4) |\n| Cash Flows From (Used In) Financing Activities: | | |\n| Principal payments on long-term debt | (1,240.7) | (20.6) |\n| Proceeds from long-term debt | 3,296.9 | — |\n| Purchases of treasury stock | (135.5) | (132.8) |\n| Cash dividends on common shares | (16.1) | (16.2) |\n| Proceeds from stock option exercises | 22.7 | 15.6 |\n| Payments to settle cross-currency swaps | (19.9) | — |\n| Payments of debt issuance costs | (32.3) | (5.3) |\n| Net cash provided by (used in) financing activities | $1,862.0 | $(165.7) |\n| Effect of exchange rate changes on cash and cash equivalents | (27.4) | (12.5) |\n| Net decrease in cash and cash equivalents | (533.0) | (434.9) |\n| Cash and cash equivalents, beginning of period | 1,595.5 | 1,613.0 |\n| Cash and cash equivalents, end of period | $1,062.5 | $1,178.1 |\n| Cash paid for income taxes, net of refunds | $128.9 | $100.3 | Notes to Condensed Consolidated Financial Statements Note 1. Basis of Presentation and Recent Accounting Pronouncements This note clarifies that the unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim reporting and SEC Regulation S-X, and should be read with the 2023 Annual Report. It also details the divestiture of asbestos liabilities and certain assets, resulting in a pre-tax loss of $58.8 million, and discusses recently issued accounting pronouncements (ASU 2023-07 and ASU 2023-09) which are expected to modify disclosures but not materially affect financial statements - Ingersoll Rand Inc. is a global provider of mission-critical flow creation products and life science and industrial solutions[32] - The Company divested three wholly-owned subsidiaries holding asbestos liabilities and certain assets on June 10, 2024, resulting in a pre-tax loss of $58.8 million[34] - ASU 2023-07 (Segment Reporting) is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024[35] - It will modify disclosures but is not expected to materially affect consolidated financial statements[35] - ASU 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024[36] - It will modify disclosures but is not expected to materially affect consolidated financial statements[36] Note 2. Acquisitions Ingersoll Rand completed several acquisitions in 2024 and 2023 to expand its product portfolio, market share, and service capabilities across its Industrial Technologies and Services and Precision and Science Technologies segments. Notable 2024 acquisitions include ILC Dover ($2,360.2 million), Friulair ($142.2 million), and Controlled Fluidics ($49.9 million), contributing significantly to goodwill and intangible assets. 2023 acquisitions included SPX FLOW's Air Treatment business ($519.0 million) and Howden Roots LLC ($290.0 million) - 2024 Acquisitions[37] - Friulair S.r.l. (Feb 1, 2024): $142.2 million cash, up to $11.0 million contingent[37] - Manufacturer of dryers, filters, aftercoolers, and chillers[37] - Reported in Industrial Technologies and Services segment[37] - Goodwill primarily from revenue/cost synergies and growth[37] - Controlled Fluidics, LLC (Apr 1, 2024): $49.9 million cash, up to $2.0 million contingent[38] - Specializes in plastic bonding and assembly for life sciences, medical, aerospace, industrial[38] - Reported in Precision and Science Technologies segment[38] - Ethafilter s.r.l. (Apr 2, 2024): $15.6 million cash[39] - Produces filters and filter elements for compressed air[39] - Reported in Industrial Technologies and Services segment[39] - Air Systems, LLC (May 1, 2024): $35.2 million cash[40] - Provider of compressed air services[40] - Reported in Industrial Technologies and Services segment[40] - Complete Air and Power Solutions (CAPS) (May 31, 2024): $96.7 million cash[41] - Provider of compressed air and power generation services[41] - Reported in Industrial Technologies and Services segment[41] - Fruvac Ltd. (Fruitland Manufacturing) (May 31, 2024): $28.3 million cash[42] - Manufacturer of mobile and truck mounted vacuum pumps[42] - Reported in Industrial Technologies and Services segment[42] - Del PD Pumps & Gear Pvt Ltd. (Del Pumps) (Jun 1, 2024): $25.2 million cash[43] - Manufacturer of rotary, twin, and triple gear pumps[43] - Reported in Precision and Science Technologies segment[43] - Astronaut Topco, LP and Astronaut Topco GP, LLC (ILC Dover) (Jun 3, 2024): $2,360.2 million initial cash, up to $75.0 million contingent[44] - Solutions for biopharmaceutical, pharmaceutical, medical device, and space industries[44] - Reported in Precision and Science Technologies segment[44] - Goodwill primarily from revenue/cost synergies and growth[44] Allocation of Consideration for 2024 Acquisitions (in millions) | Asset/Liability | ILC Dover | Friulair | All Others | Total | | :-------------------------- | :-------- | :------- | :--------- | :------ | | Accounts receivable | $41.7 | $14.2 | $22.3 | $78.2 |\n| Inventories | 86.1 | 13.2 | 25.6 | 124.9 |\n| Other current assets | 48.8 | 0.5 | 2.8 | 52.1 |\n| Property, plant and equipment | 78.3 | 7.2 | 13.7 | 99.2 |\n| Goodwill | 1,417.0 | 67.1 | 179.9 | 1,664.0 |\n| Other intangible assets | 947.7 | 84.5 | 32.2 | 1,064.4 |\n| Other assets | 16.3 | — | 5.7 | 22.0 |\n| Total current liabilities | (32.8) | (11.0) | (22.9) | (66.7) |\n| Deferred tax liabilities | (174.4) | (24.2) | (1.5) | (200.1) |\n| Other noncurrent liabilities| (18.5) | (2.8) | (5.3) | (26.6) |\n| Total consideration | $2,410.2 | $148.7 | $252.5 | $2,811.4| - 2023 Acquisitions[46] - SPX FLOW's Air Treatment business (Jan 3, 2023): $519.0 million cash[46] - Manufacturer of dryers, filtration systems, purifiers[46] - Reported in Industrial Technologies and Services segment[46] - Goodwill primarily from revenue/cost synergies and growth[46] - Paragon Tank Truck Equipment (Feb 1, 2023): $42.2 million cash[47] - Provider of solutions for loading/unloading dry bulk and liquid tanks[47] - Reported in Industrial Technologies and Services segment[47] - EcoPlant Technological Innovation Ltd. (Apr 1, 2023): $29.5 million initial cash, up to $17.0 million contingent[48] - Software-as-a-service platform for optimizing compressed air systems[48] - Reported in Industrial Technologies and Services segment[48] - Howden Roots LLC (Aug 18, 2023): $290.0 million cash[49] - Manufacturer of engineered rotary and centrifugal blowers[49] - Reported in Industrial Technologies and Services segment[49] - Goodwill primarily from revenue/cost synergies and growth[49] Aggregate Revenue and Operating Income from 2024 Acquisitions (in millions) | Period | Revenue | Operating Income | | :----------------------------------- | :------ | :--------------- | | Three months ended June 30, 2024 | $64.5 | $6.1 |\n| Six months ended June 30, 2024 | $75.8 | $6.6 | Aggregate Revenue and Operating Income from 2023 Acquisitions (in millions) | Period | Revenue | Operating Income | | :----------------------------------- | :------ | :--------------- | | Three months ended June 30, 2024 | $110.5 | $16.7 |\n| Three months ended June 30, 2023 | $60.6 | $3.7 |\n| Six months ended June 30, 2024 | $206.1 | $28.2 |\n| Six months ended June 30, 2023 | $109.0 | $6.9 | Note 3. Restructuring The Company continues restructuring actions to optimize its cost structure, incurring charges for workforce restructuring, facility consolidation, and other exit/disposal costs. Total restructuring charges for the six months ended June 30, 2024, were $13.6 million, an increase from $8.1 million in the prior year period - Restructuring actions are ongoing to optimize the Company's cost structure, including workforce restructuring and facility consolidation[51] Restructuring Charges, Net (in millions) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Industrial Technologies and Services | $3.1 | $3.8 | $8.2 | $6.9 |\n| Precision and Science Technologies | 0.6 | 1.4 | 5.0 | 1.0 |\n| Corporate | 0.2 | — | 0.4 | 0.2 |\n| Total Restructuring charges, net | $3.9 | $5.2 | $13.6 | $8.1 | Restructuring Liabilities (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Balance at beginning of period | $15.5 | $14.9 |\n| Charged to expense - termination benefits | 12.7 | 3.3 |\n| Charged to expense - other | 0.9 | 2.9 |\n| Payments | (13.2) | (10.8) |\n| Currency translation adjustment and other | (0.3) | 0.2 |\n| Balance at end of period | $15.6 | $10.5 | Note 4. Allowance for Credit Losses The allowance for credit losses increased to $56.9 million as of June 30, 2024, from $53.8 million at the beginning of the six-month period, primarily due to a provision charged to expense of $4.3 million Allowance for Credit Losses (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of the period | $53.8 | $47.2 |\n| Provision charged to expense | 4.3 | 6.2 |\n| Write-offs, net of recoveries | (0.9) | (1.7) |\n| Foreign currency translation and other | (0.3) | (0.5) |\n| Balance at end of the period | $56.9 | $51.2 | Note 5. Inventories Total inventories increased to $1,160.0 million as of June 30, 2024, from $1,001.1 million at December 31, 2023, driven by increases in raw materials and finished goods, partially offset by a decrease in work-in-process Inventories (in millions) | Category | June 30, 2024 | December 31, 2023 | | :----------------------------------------- | :------------ | :---------------- | | Raw materials, including parts and subassemblies | $714.7 | $590.7 |\n| Work-in-process | 129.9 | 145.1 |\n| Finished goods | 395.1 | 337.8 |\n| Total before LIFO reserve | 1,239.7 | 1,073.6 |\n| LIFO reserve | (79.7) | (72.5) |\n| Inventories | $1,160.0 | $1,001.1 | Note 6. Goodwill and Other Intangible Assets Goodwill increased significantly to $8,217.1 million as of June 30, 2024, from $6,609.7 million at the beginning of the period, primarily due to acquisitions. Other intangible assets also increased to $4,478.2 million, mainly from customer lists and relationships, and tradenames, with no impairment indications Goodwill by Segment (in millions) | Segment | Balance at beginning of period | Acquisitions | Foreign currency translation and other | Balance at end of period | | :------------------------------------ | :----------------------------- | :----------- | :------------------------------------- | :----------------------- | | Industrial Technologies and Services | $4,753.5 | $178.3 | $(36.4) | $4,895.4 |\n| Precision and Science Technologies | 1,856.2 | 1,485.7 | (20.2) | 3,321.7 |\n| Total | $6,609.7 | $1,664.0 | $(56.6) | $8,217.1 | Other Intangible Assets, Net (in millions) | Category | Gross Carrying Amount (June 30, 2024) | Accumulated Amortization (June 30, 2024) | Net Carrying Amount (June 30, 2024) | Gross Carrying Amount (Dec 31, 2023) | Accumulated Amortization (Dec 31, 2023) | Net Carrying Amount (Dec 31, 2023) | | :----------------------------- | :------------------------------------ | :--------------------------------------- | :---------------------------------- | :----------------------------------- | :-------------------------------------- | :--------------------------------- | | Customer lists and relationships | $4,006.0 | $(1,709.8) | $2,296.2 | $3,279.3 | $(1,585.4) | $1,693.9 |\n| Technology | 527.5 | (210.0) | 317.5 | 413.8 | (178.9) | 234.9 |\n| Tradenames (amortized) | 59.8 | (30.0) | 29.8 | 52.2 | (27.9) | 24.3 |\n| Backlog | 4.4 | (3.0) | 1.4 | 3.0 | (1.3) | 1.7 |\n| Other | 127.5 | (108.2) | 19.3 | 117.1 | (104.1) | 13.0 |\n| Tradenames (unamortized) | 1,814.0 | — | 1,814.0 | 1,643.3 | — | 1,643.3 |\n| Total other intangible assets | $6,539.2 | $(2,061.0) | $4,478.2 | $5,508.7 | $(1,897.6) | $3,611.1 | - No indications of impairment for goodwill and other intangible assets were identified as of June 30, 2024[63] Note 7. Supply Chain Finance Program The Company utilizes a supply chain finance program (SCF Program) where suppliers can sell their receivables to financial institutions. As of June 30, 2024, $26.1 million of outstanding payment obligations were sold to financial institutions by participating suppliers, recorded within 'Accounts payable' - The Company has a supply chain finance program allowing suppliers to sell receivables to financial institutions[64] - Outstanding payment obligations sold to financial institutions by participating suppliers were $26.1 million as of June 30, 2024, and $24.3 million as of December 31, 2023[64] Note 8. Accrued Liabilities Total accrued liabilities increased to $1,011.6 million as of June 30, 2024, from $995.5 million at December 31, 2023, primarily due to increases in accrued interest and other liabilities, partially offset by decreases in salaries, wages, and taxes Accrued Liabilities (in millions) | Category | June 30, 2024 | December 31, 2023 | | :-------------------------------------- | :------------ | :---------------- | | Salaries, wages and related fringe benefits | $199.8 | $262.4 |\n| Contract liabilities | 324.0 | 331.2 |\n| Product warranty | 72.3 | 61.9 |\n| Operating lease liabilities | 47.1 | 41.6 |\n| Restructuring | 15.6 | 15.5 |\n| Taxes | 58.0 | 78.4 |\n| Accrued interest | 55.8 | 33.1 |\n| Other | 239.0 | 171.4 |\n| Total accrued liabilities | $1,011.6 | $995.5 | Product Warranty Accruals (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $61.9 | $46.2 |\n| Product warranty accruals | 26.3 | 24.7 |\n| Acquired warranty | 0.7 | 1.4 |\n| Settlements | (15.8) | (14.9) |\n| Foreign currency translation and other | (0.8) | — |\n| Balance at end of period | $72.3 | $57.4 | Note 9. Benefit Plans The net periodic benefit cost for pension and other postretirement plans for the six months ended June 30, 2024, was $1.1 million, a decrease from $1.4 million in the prior year period. This includes service cost, interest cost, expected return on plan assets, and recognition of unrecognized actuarial losses Net Periodic Benefit Cost (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Service cost (Non-U.S. Plans) | $1.4 | $1.2 |\n| Interest cost (U.S. Plans) | 7.0 | 7.9 |\n| Interest cost (Non-U.S. Plans) | 5.3 | 5.5 |\n| Interest cost (Other Postretirement Benefits) | 0.4 | 0.5 |\n| Expected return on plan assets (U.S. Plans) | (6.6) | (6.7) |\n| Expected return on plan assets (Non-U.S. Plans) | (5.5) | (5.4) |\n| Recognition of: Unrecognized net actuarial loss (U.S. Plans) | 0.1 | 0.1 |\n| Recognition of: Unrecognized net actuarial loss (Non-U.S. Plans) | (0.7) | (0.9) |\n| Recognition of: Unrecognized net actuarial loss (Other Postretirement Benefits) | (0.4) | (0.3) |\n| Total Net Periodic Benefit Cost | $1.1 | $1.4 | - Components of net periodic benefit cost, other than service cost, are included in 'Other income, net' in the Condensed Consolidated Statements of Operations[69] Note 10. Debt Total debt significantly increased to $4,755.4 million as of June 30, 2024, from $2,723.6 million at December 31, 2023, primarily due to the issuance of $3,300.0 million in new senior unsecured notes in May 2024. These new notes were used to repay existing debt and partially fund the ILC Dover acquisition. The Company also established a new $2,600 million unsecured revolving credit facility, with no outstanding borrowings as of June 30, 2024 Debt Summary (in millions) | Debt Category | June 30, 2024 | December 31, 2023 | | :-------------------------------------------------- | :------------ | :---------------- | | Short-term borrowings | $3.1 | $1.0 |\n| Long-term debt, net, including current maturities | 4,752.3 | 2,722.6 |\n| Current maturities of long-term debt | 1.4 | 29.6 |\n| Total long-term debt, net | $4,750.9 | $2,693.0 |\n| Total Debt (Short-term + Long-term) | $4,755.4 | $2,723.6 | - On May 10, 2024, the Company issued $3,300.0 million in aggregate principal amount of new senior unsecured notes across various maturities (2027, 2029, 2031, 2034, 2054)[73] - Proceeds from the 2034 and 2054 Notes were used to repay former Senior Secured Credit Facilities[74] - Remaining proceeds from 2027, 2029, and 2031 Notes partially funded the ILC Dover acquisition[76] - The New Notes are senior unsecured obligations, ranking equally with other senior unsecured indebtedness[77] - The Company repaid the remaining portion of the Dollar Term B and Dollar Term Loan in May 2024, resulting in a $3.0 million loss on extinguishment of debt[79] - A new $2,600 million senior unsecured revolving credit facility was entered into on May 10, 2024, maturing May 10, 2029[81] - As of June 30, 2024, there were no outstanding borrowings or letters of credit under this facility, with $2,600.0 million unused availability[82] - The New Revolving Credit Facility includes a financial covenant requiring a ratio of adjusted consolidated total net debt to consolidated adjusted EBITDA of not more than 3.50 to 1.00, with an option to increase to 4.00 to 1.00 following a qualified acquisition[83] - The fair value of the Company's debt instruments was $4.9 billion as of June 30, 2024[83] Note 11. Stock-Based Compensation Plans Stock-based compensation expense for the six months ended June 30, 2024, was $28.6 million, an increase from $24.0 million in the prior year. The Company grants stock options, restricted stock units (RSUs), and performance share units (PSUs) to employees and non-employee directors, with various vesting schedules and performance targets - Stock-based compensation expense was $14.5 million for the three months ended June 30, 2024 (vs. $11.9 million in 2023) and $28.6 million for the six months ended June 30, 2024 (vs. $24.0 million in 2023)[85] - As of June 30, 2024, total unrecognized compensation expense related to outstanding awards was $131.5 million[86] Stock Option Activity (underlying shares in thousands) | Metric | Shares | Weighted-Average Exercise Price (per share) | | :-------------------------------------- | :----- | :------------------------------------------ | | Stock options outstanding as of Dec 31, 2023 | 5,282 | $31.09 |\n| Granted | 525 | 90.35 |\n| Exercised or settled | (1,287)| 17.62 |\n| Forfeited | (40) | 58.96 |\n| Expired | (2) | 31.29 |\n| Stock options outstanding as of Jun 30, 2024 | 4,478 | $41.66 | Restricted Stock Unit Activity (underlying shares in thousands) | Metric | Shares | Weighted-Average Grant-Date Fair Value | | :-------------------------------------- | :----- | :------------------------------------- | | Non-vested as of December 31, 2023 | 957 | $52.18 |\n| Granted | 321 | 89.86 |\n| Vested | (397) | 47.64 |\n| Forfeited | (43) | 62.10 |\n| Non-vested as of June 30, 2024 | 838 | $68.24 | Performance Share Unit Activity (underlying shares in thousands) | Metric | Shares | Weighted-Average Grant-Date Fair Value | | :-------------------------------------- | :----- | :------------------------------------- | | Non-vested as of December 31, 2023 | 1,380 | $49.53 |\n| Granted | 87 | 132.98 |\n| Change in units based on performance | 122 | 55.84 |\n| Vested | (244) | 55.84 |\n| Forfeited | (6) | 71.81 |\n| Non-vested as of June 30, 2024 | 1,339 | $54.28 | Note 12. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss (AOCI) increased to $(340.1) million as of June 30, 2024, from $(227.6) million at December 31, 2023. This change was primarily driven by foreign currency translation adjustments and reclassifications from cash flow hedges and net investment hedges into income - AOCI consists of foreign currency translation adjustments, unrealized gains/losses on cash flow hedges, and pension/postretirement prior service cost and actuarial gains/losses[98] Changes in Accumulated Other Comprehensive Loss by Component (Net of Tax, in millions) - Six Months Ended June 30, 2024 | Metric | Foreign Currency Translation Adjustments, Net | Cash Flow Hedges | Pension Benefit and Other Postretirement Plans | Total | | :-------------------------------------------- | :-------------------------------------------- | :--------------- | :--------------------------------------------- | :------ | | Balance as of December 31, 2023 | $(248.0) | $12.2 | $8.2 | $(227.6)|\n| Other comprehensive income (loss) before reclassifications | (101.1) | 4.4 | (2.1) | (98.8) |\n| Amounts reclassified from accumulated other comprehensive loss | (6.4) | (6.6) | (0.7) | (13.7) |\n| Other comprehensive loss | (107.5) | (2.2) | (2.8) | (112.5) |\n| Balance as of June 30, 2024 | $(355.5) | $10.0 | $5.4 | $(340.1)| Reclassifications out of Accumulated Other Comprehensive Loss (Net of Tax, in millions) - Six Months Ended June 30, 2024 | Details about Accumulated Other Comprehensive Loss Components | Amount Reclassified from Accumulated Other Comprehensive Loss (2024) | Affected Line(s) in the Statement Where Net Income is Presented | | :------------------------------------------------------------ | :------------------------------------------------------------------- | :-------------------------------------------------------------- | | Cash flow hedges (interest rate swaps and caps), net of tax | $(6.6) | Interest expense, Provision for income taxes |\n| Net investment hedges, net of tax | $(6.4) | Interest expense, Provision for income taxes |\n| Amortization of defined benefit pension and other postretirement benefit items, net of tax | $(0.7) | Cost of sales and Selling and administrative expenses, Provision for income taxes |\n| Total reclassifications for the period, net of tax | $(13.7) | | Note 13. Hedging Activities and Derivative Instruments The Company uses derivative financial instruments, including interest rate swaps and cross-currency interest rate swaps, to manage exposure to interest rate and foreign currency risks. As of June 30, 2024, the Company had $750.0 million notional in fair value interest rate swaps and $1,074.3 million notional in net investment cross-currency interest rate swaps. Several cash flow and net investment hedges were terminated in May 2024, with unrecognized gains/losses to be reclassified into earnings over time - The Company uses derivatives (cross-currency interest rate swaps, foreign currency forward contracts, interest rate swap and cap contracts) to manage interest rate and foreign currency exchange rate risks, not for trading[103] Derivative Instruments Summary (June 30, 2024, in millions) | Derivative Classification | Instrument Type | Notional Amount | Fair Value Other Current Assets | Fair Value Other Assets | Fair Value Accrued Liabilities | Fair Value Other Liabilities | | :------------------------ | :-------------------------------- | :-------------- | :------------------------------ | :---------------------- | :----------------------------- | :--------------------------- | | Fair Value | Interest rate swap contracts | $750.0 | — | $7.0 | $7.0 | — |\n| Net investment | Cross-currency interest rate swap contracts | 1,074.3 | 10.6 | 0.6 | — | 3.3 |\n| Fair value | Foreign currency forwards | 60.0 | — | — | —