Donaldson(DCI) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of earnings, comprehensive income, balance sheets, cash flows, and changes in stockholders' equity, along with detailed notes on accounting policies, acquisitions, revenue, and other financial components Condensed Consolidated Statements of Earnings Presents the company's financial performance, detailing net sales, gross profit, operating income, and net earnings for the reported periods Three Months Ended April 30 (Millions $): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Net Sales | 853.2 | 765.0 | | Gross Profit | 269.0 | 258.0 | | Operating Income | 111.0 | 109.4 | | Net Earnings | 83.0 | 84.4 | | Net Earnings per Share – diluted | 0.67 | 0.66 | Nine Months Ended April 30 (Millions $): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Net Sales | 2,416.6 | 2,080.8 | | Gross Profit | 775.8 | 706.0 | | Operating Income | 314.2 | 272.7 | | Net Earnings | 231.8 | 202.6 | | Net Earnings per Share – diluted | 1.85 | 1.58 | Condensed Consolidated Statements of Comprehensive Income Details the components of comprehensive income, including net earnings and other comprehensive income/loss items like foreign currency translation and pension adjustments Three Months Ended April 30 (Millions $): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Net Earnings | 83.0 | 84.4 | | Foreign currency translation (loss) income | (42.8) | (0.2) | | Pension liability adjustment, net | (1.8) | 18.5 | | Total derivatives | 2.4 | 1.1 | | Net other comprehensive (loss) income | (42.2) | 19.4 | | Comprehensive income | 40.8 | 103.8 | Nine Months Ended April 30 (Millions $): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Net Earnings | 231.8 | 202.6 | | Foreign currency translation (loss) income | (70.4) | 36.3 | | Pension liability adjustment, net | 2.2 | 24.6 | | Total derivatives | 4.1 | (0.5) | | Net other comprehensive (loss) income | (64.1) | 60.4 | | Comprehensive income | 167.7 | 263.0 | Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and stockholders' equity at specific points in time As of (Millions $): | Metric | April 30, 2022 | July 31, 2021 | | :----- | :------------- | :------------ | | Total current assets | 1,367.3 | 1,244.0 | | Total assets | 2,519.2 | 2,400.2 | | Total current liabilities | 606.5 | 606.6 | | Long-term debt | 607.2 | 461.0 | | Total liabilities | 1,395.6 | 1,263.1 | | Total stockholders' equity | 1,123.6 | 1,137.1 | Condensed Consolidated Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities for the reported periods Nine Months Ended April 30 (Millions $): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Net cash provided by operating activities | 143.9 | 305.6 | | Net cash used in investing activities | (105.8) | (40.2) | | Net cash used in financing activities | (82.8) | (295.5) | | Decrease in cash and cash equivalents | (54.1) | (21.3) | | Cash and cash equivalents, end of period | 168.7 | 215.3 | - Acquisitions, net of cash acquired, totaled $49.0 million for the nine months ended April 30, 2022[13] - Proceeds from long-term debt were $249.3 million for the nine months ended April 30, 2022, significantly higher than $0 in the prior year[13] - Purchase of treasury stock increased to $153.7 million in 2022 from $78.7 million in 2021[13] Condensed Consolidated Statements of Changes in Stockholders' Equity Outlines the changes in the company's equity accounts, including net earnings, other comprehensive income, and share repurchases Three Months Ended April 30 (Millions $): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Balance January 31 | 1,116.8 | 1,074.4 | | Net earnings | 83.0 | 84.4 | | Other comprehensive (loss) income | (42.2) | 19.4 | | Treasury stock acquired | (38.1) | (32.4) | | Balance April 30 | 1,123.6 | 1,153.4 | Nine Months Ended April 30 (Millions $): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Balance July 31 | 1,137.1 | 992.9 | | Net earnings | 231.8 | 202.6 | | Other comprehensive (loss) income | (64.1) | 60.4 | | Treasury stock acquired | (153.7) | (78.7) | | Dividends declared | (54.2) | (52.9) | | Balance April 30 | 1,123.6 | 1,153.4 | Notes to Condensed Consolidated Financial Statements (Unaudited) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Summary of Significant Accounting Policies Outlines the basis of presentation, principles of consolidation, use of estimates, and key operating environment factors affecting the company's financial statements, along with new accounting standards Basis of Presentation Explains the basis of financial statement preparation, consolidation principles, and the use of management estimates - Financial statements are unaudited and prepared under GAAP, Form 10-Q, and Rule 10-01 of Regulation S-X[19] - Management believes all necessary adjustments for a fair statement are included and are of a normal recurring nature[19] Principles of Consolidation Describes the company's consolidation practices for subsidiaries and accounting methods for joint ventures - Consolidated financial statements include the Company and all majority-owned subsidiaries; intercompany transactions are eliminated[20] - Joint ventures are accounted for under the equity method[20] Use of Estimates Highlights that financial statements rely on management estimates, which may differ from actual results - Financial statements require management estimates and assumptions, which may lead to actual results differing from those estimates[21] Operating Environment Details the impact of global events, supply chain disruptions, and inflation on the company's operations and financial performance - Ceased direct product shipments into Russia and Belarus due to sanctions; revenues from these areas are less than 2% of net sales[22] - Asset exposure (accounts receivables and inventories) related to Russia/Belarus is approximately $6.8 million as of April 30, 2022[22] - Continues to experience supply chain disruptions (logistics, labor, raw material constraints) leading to significantly increased input costs and extended lead times[23] - Mitigating supply chain and inflation impacts through price increases, evaluating alternative supply chain options, qualifying additional suppliers, and strategic raw material purchases[23][24] - Inflationary pressures on raw materials and operating expenses (freight, labor, energy) have adversely impacted profit margins, expected to continue into fiscal 2023[24] New Accounting Standards Not Yet Adopted Discusses new accounting standards under evaluation and their potential impact on future financial reporting - Evaluating ASU 2021-08, effective for fiscal years beginning after December 15, 2022 (Company's fiscal 2024), regarding accounting for contract assets and liabilities in business combinations[27] Note 2. Acquisitions The company acquired Solaris Biotechnology Srl for $45.7 million and Pearson Arnold Industrial Services (PAIS) for $3.3 million in November 2021. These acquisitions, reported in the Industrial Products segment, were immaterial to net sales for the reported periods, and their purchase price allocations are preliminary - Acquired Solaris Biotechnology Srl for approximately $45.7 million (net of cash) on November 22, 2021, adding bioprocessing equipment to the Industrial Filtration Solutions business[28] - Acquired Pearson Arnold Industrial Services (PAIS) for approximately $3.3 million (net of cash) on November 1, 2021, expanding industrial dust, mist, and fume collection services within the Industrial Products segment[29] - Both acquisitions were immaterial to net sales for the three and nine months ended April 30, 2022[28][29] - Preliminary goodwill of $27.2 million and intangible assets of $20.8 million were recognized for Solaris; $0.4 million goodwill and $3.0 million intangible assets for PAIS[28][29] Note 3. Revenue The company recognizes revenue from filtration solutions, primarily manufactured systems and replacement parts, disaggregated by customer location. Contract assets and liabilities increased as of April 30, 2022, reflecting timing differences between billing and revenue recognition Revenue Disaggregation Details the company's net sales disaggregated by geographic region for the reported periods Net Sales by Geography (Three Months Ended April 30, Millions $): | Region | 2022 | 2021 | YoY Change (%) | | :----- | :--- | :--- | :------------- | | U.S. and Canada | 348.8 | 294.6 | 18.4% | | EMEA | 250.9 | 232.7 | 7.8% | | Asia Pacific | 161.6 | 169.0 | -4.4% | | Latin America | 91.9 | 68.7 | 33.7% | | Total Net Sales | 853.2 | 765.0 | 11.5% | Net Sales by Geography (Nine Months Ended April 30, Millions $): | Region | 2022 | 2021 | YoY Change (%) | | :----- | :--- | :--- | :------------- | | U.S. and Canada | 963.6 | 801.8 | 20.2% | | EMEA | 717.2 | 621.7 | 15.4% | | Asia Pacific | 495.6 | 474.5 | 4.5% | | Latin America | 240.2 | 182.8 | 31.4% | | Total Net Sales | 2,416.6 | 2,080.8 | 16.1% | Contract Assets and Liabilities Reports the balances of contract assets and liabilities, reflecting timing differences in revenue recognition As of (Millions $): | Metric | April 30, 2022 | July 31, 2021 | | :----- | :------------- | :------------ | | Contract assets | 18.7 | 14.9 | | Contract liabilities | 23.3 | 12.2 | Note 4. Inventories, Net Total inventories, net, increased to $510.7 million as of April 30, 2022, from $384.5 million as of July 31, 2021, driven by increases across raw materials, work in process, and finished products Components of Inventories, Net (Millions $): | Component | April 30, 2022 | July 31, 2021 | | :-------- | :------------- | :------------ | | Raw materials | 201.3 | 148.1 | | Work in process | 57.1 | 43.2 | | Finished products | 252.3 | 193.2 | | Total inventories, net | 510.7 | 384.5 | Note 5. Property, Plant and Equipment, Net Property, plant and equipment, net, decreased slightly to $591.1 million as of April 30, 2022, from $617.8 million as of July 31, 2021, primarily due to increased accumulated depreciation, despite an increase in construction in progress Components of Property, Plant and Equipment, Net (Millions $): | Component | April 30, 2022 | July 31, 2021 | | :-------- | :------------- | :------------ | | Land | 26.1 | 27.1 | | Buildings | 401.1 | 410.8 | | Machinery and equipment | 959.9 | 972.0 | | Computer software | 143.4 | 144.3 | | Construction in progress | 56.2 | 40.6 | | Less accumulated depreciation | (995.6) | (977.0) | | Total property, plant and equipment, net | 591.1 | 617.8 | Note 6. Goodwill and Intangible Assets Goodwill increased to $336.6 million as of April 30, 2022, primarily due to acquisitions in the Industrial Products segment, while intangible assets, net, also increased to $73.8 million, reflecting new technology and customer relationships from acquisitions Goodwill Details the changes in goodwill by reportable segment, including acquisitions and foreign currency translation adjustments Goodwill by Reportable Segment (Millions $): | Segment | July 31, 2021 | Goodwill Acquired | Foreign Currency Translation | April 30, 2022 | | :------ | :------------ | :---------------- | :--------------------------- | :------------- | | Engine Products Segment | 84.7 | — | (0.8) | 83.9 | | Industrial Products Segment | 237.8 | 29.4 | (14.5) | 252.7 | | Total | 322.5 | 29.4 | (15.3) | 336.6 | Intangible Assets Provides a breakdown of intangible assets, including those acquired, amortization expense, and foreign currency translation impacts - Preliminary intangible assets from Solaris acquisition totaled $20.8 million, including $17.3 million for technology (15-year useful life) and $3.3 million for trademarks/tradenames (10-year useful life)[38] - Preliminary intangible assets from PAIS acquisition totaled $3.0 million, all for customer relationships (20-year useful life)[38] Intangible Assets (Millions $): | Class | July 31, 2021 Net Value | Acquired | Amortization Expense | Foreign Currency Translation | April 30, 2022 Net Value | | :---- | :---------------------- | :------- | :------------------- | :--------------------------- | :----------------------- | | Customer Relationships | 51.1 | 3.2 | (4.7) | (3.0) | 46.6 | | Patents, Trademarks and Technology | 10.5 | 20.6 | (2.2) | (1.7) | 27.2 | | Total Net Value | 61.6 | 23.8 | (6.9) | (4.7) | 73.8 | Note 7. Long-Term Debt The company's long-term debt increased, with $407.5 million available on its revolving credit facility and the issuance of $150.0 million in unsecured senior notes in fiscal 2022. The company remains in compliance with all debt covenants - $407.5 million available on the $500.0 million unsecured revolving credit facility as of April 30, 2022[40] - Issued two tranches of unsecured senior notes totaling $150.0 million in fiscal 2022: $100.0 million (10-year, 2.50% fixed) and $50.0 million (7-year, 2.12% fixed)[40] - The Company was in compliance with all financial covenants as of April 30, 2022[40] Note 8. Income Taxes Gross unrecognized tax benefits were $19.6 million as of April 30, 2022, with accrued interest and penalties of $2.1 million. The company estimates a potential decrease of up to $5.3 million in uncertain tax positions within 12 months due to statute of limitations lapses Unrecognized Tax Benefits (Millions $): | Metric | April 30, 2022 | | :----- | :------------- | | Gross unrecognized tax benefits | 19.6 | | Accrued interest and penalties | 2.1 | - Estimates a potential decrease of up to $5.3 million in uncertain tax positions within the next 12 months due to lapses in statutes of limitation[41] Note 9. Earnings Per Share Basic and diluted net earnings per share calculations are provided, showing diluted EPS of $0.67 for the three months and $1.85 for the nine months ended April 30, 2022 EPS (Three Months Ended April 30): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Net earnings (Millions $) | 83.0 | 84.4 | | Weighted average common shares – basic (Millions) | 123.4 | 126.4 | | Weighted average common shares – diluted (Millions) | 124.6 | 128.3 | | Net earnings per share – basic ($) | 0.67 | 0.67 | | Net earnings per share – diluted ($) | 0.67 | 0.66 | EPS (Nine Months Ended April 30): | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Net earnings (Millions $) | 231.8 | 202.6 | | Weighted average common shares – basic (Millions) | 123.9 | 126.6 | | Weighted average common shares – diluted (Millions) | 125.6 | 128.2 | | Net earnings per share – basic ($) | 1.87 | 1.60 | | Net earnings per share – diluted ($) | 1.85 | 1.58 | Note 10. Stockholders' Equity The company repurchased 2.5 million shares for $153.7 million during the nine months ended April 30, 2022, with 5.8 million shares remaining authorized. Dividends paid increased to 66.0 cents per share for the nine months ended April 30, 2022 Share Repurchases Details the company's share repurchase activities, including the number of shares bought back and remaining authorization - Repurchased 2.5 million shares for $153.7 million during the nine months ended April 30, 2022[44] - As of April 30, 2022, 5.8 million shares remained authorized for repurchase under the plan[44] Dividends Paid and Declared Reports the dividends paid and declared per common share for the reported periods Dividends Paid (Cents per share): | Period | 2022 | 2021 | | :----- | :--- | :--- | | Three months ended April 30 | 22.0 | 21.0 | | Nine months ended April 30 | 66.0 | 63.0 | - A cash dividend of 23.0 cents per common share was declared on May 25, 2022, payable June 24, 2022[45] Note 11. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss increased significantly to $(182.3) million as of April 30, 2022, from $(118.2) million as of July 31, 2021, primarily due to foreign currency translation losses and pension benefit adjustments Accumulated Other Comprehensive Loss (Three Months Ended April 30, Millions $): | Component | Jan 31, 2022 | Other Comprehensive (Loss) Income | Reclassifications | April 30, 2022 | | :-------- | :----------- | :-------------------------------- | :---------------- | :------------- | | Foreign Currency Translation Adjustment | (71.6) | (42.8) | — | (114.4) | | Pension Benefits | (70.7) | (5.6) | 3.8 | (72.5) | | Derivative Financial Instruments | 2.2 | 2.6 | (0.2) | 4.6 | | Total | (140.1) | (45.8) | 3.6 | (182.3) | Accumulated Other Comprehensive Loss (Nine Months Ended April 30, Millions $): | Component | July 31, 2021 | Other Comprehensive (Loss) Income | Reclassifications | April 30, 2022 | | :-------- | :------------ | :-------------------------------- | :---------------- | :------------- | | Foreign Currency Translation Adjustment | (44.0) | (70.4) | — | (114.4) | | Pension Benefits | (74.7) | (6.9) | 9.1 | (72.5) | | Derivative Financial Instruments | 0.5 | 4.3 | (0.2) | 4.6 | | Total | (118.2) | (73.0) | 8.9 | (182.3) | - Pension settlement accounting triggered in fiscal 2022 and 2021, resulting in adjustments to accumulated other comprehensive loss[47][49] Note 12. Stock-Based Compensation The company recognizes compensation expense for stock-based awards, including stock options and performance-based awards. Pretax stock option expense increased for the nine months ended April 30, 2022, while performance-based awards expense also increased Stock Options Details the pretax stock-based compensation expense for stock options and related activity for the reported periods Pretax Stock-Based Compensation Expense (Options, Millions $): | Period | 2022 | 2021 | | :----- | :--- | :--- | | Three months ended April 30 | 1.4 | 1.8 | | Nine months ended April 30 | 10.2 | 9.3 | - Weighted average fair value for options granted increased to $14.24 per share for the nine months ended April 30, 2022, from $10.23 in the prior year[53] Option Activity (Nine Months Ended April 30, 2022): | Activity | Options | Weighted Average Exercise Price ($) | | :------- | :------ | :-------------------------------- | | Balance outstanding as of July 31, 2021 | 6,444,743 | 44.05 | | Granted | 898,726 | 59.18 | | Exercised | (308,945) | 37.50 | | Canceled/forfeited | (43,560) | 53.07 | | Balance outstanding as of April 30, 2022 | 6,990,964 | 46.23 | Performance-Based Awards Reports the pretax compensation expense for performance-based awards and their activity for the reported periods Pretax Performance-Based Awards Expense (Millions $): | Period | 2022 | 2021 | | :----- | :--- | :--- | | Three months ended April 30 | 1.8 | (0.8) (reduction) | | Nine months ended April 30 | 5.6 | 1.2 | Performance-Based Awards (Nine Months Ended April 30, 2022): | Activity | Performance Shares | Weighted Average Grant Date Fair Value ($) | | :------- | :----------------- | :--------------------------------------- | | Balance outstanding as of July 31, 2021 | 200,567 | 48.76 | | Granted | 88,400 | 59.40 | | Canceled | (3,580) | 53.23 | | Balance outstanding as of April 30, 2022 | 285,387 | 52.00 | Note 13. Employee Benefit Plans Net periodic pension costs decreased to $2.0 million for the nine months ended April 30, 2022, from $4.4 million in the prior year. Pension settlement charges were recorded in fiscal 2022 and 2021, leading to adjustments in other comprehensive loss Net Periodic Pension Costs (Nine Months Ended April 30, Millions $): | Component | 2022 | 2021 | | :-------- | :--- | :--- | | Service cost | 5.4 | 6.1 | | Interest cost | 7.4 | 7.4 | | Expected return on assets | (18.7) | (17.6) | | Prior service cost amortization | 0.2 | 0.4 | | Actuarial loss amortization | 5.4 | 6.2 | | Settlement charge | 2.3 | 1.1 | | Curtailment charge | — | 0.8 | | Net periodic pension costs | 2.0 | 4.4 | - Pension settlement charges of $1.2 million and $1.1 million were recorded in the second and third quarters of fiscal 2022, respectively, due to lump sum distributions[59] - Remeasurements of pension obligations resulted in a decrease in net pension assets and a corresponding adjustment to other comprehensive loss of $1.7 million and $7.6 million in Q2 and Q3 fiscal 2022, respectively[59] Note 14. Fair Value Measurements The company uses fair value measurements for financial instruments, primarily Level 1 for short-term instruments and Level 2 for long-term debt and derivatives. Derivative instruments, including forward foreign currency exchange contracts and net investment hedges, are used to manage foreign currency risk Short-Term Financial Instruments Identifies short-term financial instruments and their classification within the fair value hierarchy - Cash and cash equivalents, accounts receivable, short-term borrowings, and accounts payable are classified as Level 1 fair value measurements due to their short-term nature[61] Long-Term Debt Details the fair value and carrying value of long-term debt, including fixed and variable interest rate components Long-Term Debt Fair Value (Millions $): | Metric | April 30, 2022 | July 31, 2021 | | :----- | :------------- | :------------ | | Estimated fair value of fixed interest rate long-term debt | 395.4 | 297.4 | | Carrying value of fixed interest rate long-term debt | 425.0 | 275.0 | | Carrying value of total variable interest rate long-term debt | 184.7 | 188.3 | - Long-term debt is classified as Level 2 in the fair value hierarchy[62] Equity Method Investments Reports the aggregate carrying amount of equity method investments and their classification within the fair value hierarchy - Aggregate carrying amount of equity method investments was $25.6 million as of April 30, 2022[63] - Equity method investments would fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs[63] Derivative Fair Value Measurements Explains the company's use of derivative instruments to manage foreign currency risk and their fair value classification - Uses derivative instruments (forward foreign currency exchange contracts, net investment hedges) to manage foreign currency risk, not for trading or speculative purposes[64][108] - Derivative fair values are based on observable market parameters (foreign currency exchange rates, interest rates) and are classified as Level 2 in the fair value hierarchy[67] Fair Value of Derivatives Contracts (Notional Amounts, Millions $): | Type | April 30, 2022 | July 31, 2021 | | :--- | :------------- | :------------ | | Designated as hedging instruments - Forward foreign currency exchange contracts | 33.8 | 117.2 | | Designated as hedging instruments - Net investment hedges | 88.8 | 55.8 | | Not designated as hedging instruments - Forward foreign currency exchange contracts | 171.9 | 154.2 | | Total | 294.5 | 327.2 | Note 15. Guarantees The company has $7.5 million in standby letters of credit and guarantees half of Advanced Filtration Systems Inc.'s (AFSI) debt, which was $61.1 million as of April 30, 2022. Earnings from AFSI increased for the three and nine months ended April 30, 2022 Letters of Credit Details the company's contingent liabilities related to standby letters of credit Standby Letters of Credit (Millions $): | Metric | April 30, 2022 | July 31, 2021 | | :----- | :------------- | :------------ | | Contingent liability for standby letters of credit | 7.5 | 7.7 | Advanced Filtration Systems Inc. (AFSI) Reports on the company's guarantee of AFSI's debt and the earnings derived from this equity method investment - Guarantees half of AFSI's outstanding debt, which was $61.1 million as of April 30, 2022 (up from $37.8 million in July 2021)[71] Earnings from AFSI (Millions $): | Period | April 30, 2022 | April 30, 2021 | | :----- | :------------- | :------------- | | Three months ended April 30 | 3.2 | 2.6 | | Nine months ended April 30 | 6.6 | 6.4 | Note 16. Commitments and Contingencies The company records provisions for probable and estimable liabilities related to claims and litigation, which were not material to its financial position, results of operations, or liquidity - Provisions for claims and litigation are recorded when probable and estimable, and were not material to the company's financial position, results of operations, or liquidity[72] - It is considered remote that the settlement of identified claims or litigation will materially exceed accrued amounts[72] Note 17. Segment Reporting The company operates in two reportable segments: Engine Products and Industrial Products. Both segments showed increased net sales and earnings before income taxes for the three and nine months ended April 30, 2022, with Aftermarket and Industrial Filtration Solutions being key drivers Net Sales by Segment (Three Months Ended April 30, Millions $): | Segment | 2022 | 2021 | YoY Change (%) | | :------ | :--- | :--- | :------------- | | Engine Products | 601.0 | 531.0 | 13.2% | | Industrial Products | 252.2 | 234.0 | 7.8% | | Total Company | 853.2 | 765.0 | 11.5% | Net Sales by Segment (Nine Months Ended April 30, Millions $): | Segment | 2022 | 2021 | YoY Change (%) | | :------ | :--- | :--- | :------------- | | Engine Products | 1,682.3 | 1,429.6 | 17.7% | | Industrial Products | 734.3 | 651.2 | 12.8% | | Total Company | 2,416.6 | 2,080.8 | 16.1% | Earnings Before Income Taxes by Segment (Three Months Ended April 30, Millions $): | Segment | 2022 | 2021 | YoY Change (%) | | :------ | :--- | :--- | :------------- | | Engine Products | 89.2 | 84.4 | 5.7% | | Industrial Products | 38.8 | 37.6 | 3.2% | | Corporate and unallocated | (16.7) | (11.1) | -50.5% | | Total Company | 111.3 | 110.9 | 0.4% | Earnings Before Income Taxes by Segment (Nine Months Ended April 30, Millions $): | Segment | 2022 | 2021 | YoY Change (%) | | :------ | :--- | :--- | :------------- | | Engine Products | 226.5 | 206.1 | 9.9% | | Industrial Products | 114.6 | 90.9 | 26.1% | | Corporate and unallocated | (31.3) | (30.0) | -4.3% | | Total Company | 309.8 | 267.0 | 16.0% | - No single customer accounted for over 10% of net sales or gross accounts receivable[75] Note 18. Restructuring The company's fiscal 2021 restructuring activities, primarily in EMEA, are substantially completed, resulting in $14.8 million in expenses (severance) and expected annualized savings of approximately $8 million - Fiscal 2021 restructuring activities, primarily in EMEA, are substantially completed[76] - Resulted in $14.8 million in restructuring expenses (severance) in fiscal 2021, with $5.8 million in cost of sales and $9.0 million in operating expenses[76] - Expected annualized savings from these activities are approximately $8 million[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition, discussing consolidated results, segment performance, liquidity, capital resources, and the impact of the operating environment, including global conflicts, supply chain disruptions, and inflation Overview Provides a high-level description of the company's business, its global operations, and key product segments - The Company is a global manufacturer of filtration systems and replacement parts, leveraging leading technology, strong customer relationships, and global presence[78] - Operates in two segments: Engine Products (filters, systems for construction, mining, agriculture, aerospace, defense, transportation) and Industrial Products (dust, fume, mist collectors, air purification, gas/liquid filtration, specialized systems)[78] Operating Environment Discusses the impact of geopolitical events, supply chain disruptions, and inflationary pressures on the company's operations - Ceased direct product shipments into Russia and Belarus due to sanctions; related revenues are less than 2% of net sales, with $6.8 million in asset exposure[78] - Supply chain disruptions (logistics, labor, raw material constraints) have significantly increased input costs and extended lead times, impacting Q3 fiscal 2022 results and expected to continue into fiscal 2023[78] - Inflationary pressures on raw materials and operating expenses have adversely impacted profit margins, with the company negotiating price increases and working with suppliers to mitigate costs[78] Consolidated Results of Operations Analyzes the company's overall financial performance, highlighting changes in net sales, gross margin, operating expenses, and net earnings for the reported periods Three months ended April 30, 2022 compared with three months ended April 30, 2021 Net sales increased by 11.5% to $853.2 million, primarily due to pricing, despite a 2.2 percentage point decrease in gross margin to 31.5% driven by higher input costs. Net earnings slightly decreased by 1.8% to $83.0 million Net Sales Details the drivers of net sales growth, including pricing, volume, and the impact of foreign currency translation Net Sales (Three Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | Change (%) | | :----- | :--- | :--- | :------------------ | :--------- | | Net Sales | 853.2 | 765.0 | 88.2 | 11.5% | - Foreign currency translation decreased sales by $22.0 million[80] - Sales growth was primarily due to pricing, with Latin America up 33.7%, U.S. and Canada up 18.4%, EMEA up 7.8%, and Asia Pacific down 4.4%[80] Cost of Sales and Gross Margin Examines the factors influencing cost of sales and gross margin, such as input costs and pricing strategies Cost of Sales and Gross Margin (Three Months Ended April 30, Millions $): | Metric | 2022 | 2022 (% of net sales) | 2021 | 2021 (% of net sales) | | :----- | :--- | :-------------------- | :--- | :-------------------- | | Cost of sales | 584.2 | 68.5% | 507.0 | 66.3% | | Gross profit | 269.0 | 31.5% | 258.0 | 33.7% | - Gross margin decreased primarily due to increased raw material, freight, energy, and labor costs, partially offset by higher sales driven by pricing[80] Operating Expenses Analyzes trends in operating expenses, including their relationship to net sales and the impact of expense management Operating Expenses (Three Months Ended April 30, Millions $): | Metric | 2022 | 2022 (% of net sales) | 2021 | 2021 (% of net sales) | | :----- | :--- | :-------------------- | :--- | :-------------------- | | Operating expenses | 158.0 | 18.5% | 148.6 | 19.4% | - Decrease in operating expenses as a percentage of net sales reflects greater leverage from higher sales and expense management[80] Non-Operating Items Reviews changes in non-operating items like interest expense and other income, net, and their underlying causes Non-Operating Items (Three Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | Change (%) | | :----- | :--- | :--- | :------------------ | :--------- | | Interest expense | 3.8 | 3.2 | 0.6 | 19.4% | | Other income, net | (4.1) | (4.7) | 0.6 | -12.8% | - Increase in interest expense reflects a higher debt level[80] - Decrease in other income, net, was primarily driven by higher foreign exchange losses[80] Income Taxes Discusses the company's income tax expense and effective tax rate, including the impact of discrete tax benefits Income Taxes (Three Months Ended April 30, Millions $): | Metric | 2022 | 2022 (Effective Tax Rate) | 2021 | 2021 (Effective Tax Rate) | | :----- | :--- | :------------------------ | :--- | :------------------------ | | Income taxes | 28.3 | 25.4% | 26.5 | 23.9% | - Increase in effective tax rate primarily due to a reduction in net discrete tax benefits[80] Net Earnings Summarizes the company's net earnings and the percentage change compared to prior periods Net Earnings (Three Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | Change (%) | | :----- | :--- | :--- | :------------------ | :--------- | | Net earnings | 83.0 | 84.4 | (1.4) | -1.8% | Nine months ended April 30, 2022 compared with nine months ended April 30, 2021 Net sales increased by 16.1% to $2,416.6 million, and net earnings increased by 14.4% to $231.8 million. Gross margin decreased to 32.1% due to higher input costs, but operating expenses as a percentage of sales improved Net Sales Details the drivers of net sales growth, including pricing, volume, and the impact of foreign currency translation Net Sales (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | Change (%) | | :----- | :--- | :--- | :------------------ | :--------- | | Net Sales | 2,416.6 | 2,080.8 | 335.8 | 16.1% | - Foreign currency translation decreased sales by $37.0 million[82] - Sales growth from both higher volume and pricing, with Latin America up 31.4%, U.S. and Canada up 20.2%, EMEA up 15.4%, and Asia Pacific up 4.5%[82] Cost of Sales and Gross Margin Examines the factors influencing cost of sales and gross margin, such as input costs and pricing strategies Cost of Sales and Gross Margin (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2022 (% of net sales) | 2021 | 2021 (% of net sales) | | :----- | :--- | :-------------------- | :--- | :-------------------- | | Cost of sales | 1,640.8 | 67.9% | 1,374.8 | 66.1% | | Gross profit | 775.8 | 32.1% | 706.0 | 33.9% | - Gross margin decrease primarily driven by increased raw material, freight, and labor costs, partially offset by pricing and volume leverage[83] - Prior fiscal year gross margin was negatively impacted by $5.8 million in restructuring charges that did not repeat[83] Operating Expenses Analyzes trends in operating expenses, including their relationship to net sales and the impact of expense management Operating Expenses (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2022 (% of net sales) | 2021 | 2021 (% of net sales) | | :----- | :--- | :-------------------- | :--- | :-------------------- | | Operating expenses | 461.6 | 19.1% | 433.3 | 20.8% | - Decrease in operating expenses as a percentage of net sales reflects greater leverage from higher sales, expense management, and the non-recurrence of $9.0 million in prior fiscal year restructuring charges[84] Non-Operating Items Reviews changes in non-operating items like interest expense and other income, net, and their underlying causes Non-Operating Items (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | Change (%) | | :----- | :--- | :--- | :------------------ | :--------- | | Interest expense | 10.8 | 9.9 | 0.9 | 9.1% | | Other income, net | (6.4) | (4.2) | 2.2 | 52.4% | - Increase in interest expense reflects a higher debt level[85] - Increase in other income, net, was driven by lower charitable contributions[85] Income Taxes Discusses the company's income tax expense and effective tax rate, including the impact of discrete tax benefits Income Taxes (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2022 (Effective Tax Rate) | 2021 | 2021 (Effective Tax Rate) | | :----- | :--- | :------------------------ | :--- | :------------------------ | | Income taxes | 78.0 | 25.2% | 64.4 | 24.1% | - Increase in effective tax rate primarily due to a reduction in net discrete tax benefits[86] Net Earnings Summarizes the company's net earnings and the percentage change compared to prior periods Net Earnings (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | Change (%) | | :----- | :--- | :--- | :------------------ | :--------- | | Net earnings | 231.8 | 202.6 | 29.2 | 14.4% | Restructuring Summarizes the company's restructuring activities, including expenses incurred and expected annualized savings - Fiscal 2021 restructuring activities, primarily in EMEA, are substantially completed[88] - Resulted in $14.8 million in expenses (severance), with $5.8 million in cost of sales and $9.0 million in operating expenses in fiscal 2021[88] - Expected annualized savings from these activities are approximately $8 million[88] Segment Results of Operations Analyzes the financial performance of the company's Engine Products and Industrial Products segments, detailing sales and earnings drivers Engine Products Segment Net sales for the Engine Products segment increased by 13.2% (3 months) and 17.7% (9 months), driven by Aftermarket and Off-Road growth and increased pricing, despite higher input costs impacting earnings before income taxes as a percentage of sales Three months ended April 30, 2022 compared with three months ended April 30, 2021 Compares the Engine Products segment's net sales and earnings before income taxes for the three-month periods, highlighting key business unit performance Engine Products Net Sales (Three Months Ended April 30, Millions $): | Business Unit | 2022 | 2021 | Change (Millions $) | Change (%) | | :------------ | :--- | :--- | :------------------ | :--------- | | Off-Road | 108.2 | 95.7 | 12.5 | 13.1% | | On-Road | 36.1 | 39.7 | (3.6) | -9.1% | | Aftermarket | 425.4 | 371.4 | 54.0 | 14.5% | | Aerospace and Defense | 31.3 | 24.2 | 7.1 | 29.3% | | Total Engine Products segment | 601.0 | 531.0 | 70.0 | 13.2% | - Excluding foreign currency translation, net sales increased 15.8%[90] - All business units benefited from increased pricing[90] - Earnings before income taxes were $89.2 million (14.8% of net sales), down from 15.9% in prior year, driven by higher raw material, freight, energy, and labor costs, partially offset by pricing[90] Nine months ended April 30, 2022 compared with nine months ended April 30, 2021 Compares the Engine Products segment's net sales and earnings before income taxes for the nine-month periods, detailing growth drivers and cost impacts Engine Products Net Sales (Nine Months Ended April 30, Millions $): | Business Unit | 2022 | 2021 | Change (Millions $) | Change (%) | | :------------ | :--- | :--- | :------------------ | :--------- | | Off-Road | 297.6 | 238.4 | 59.2 | 24.8% | | On-Road | 100.7 | 105.0 | (4.3) | -4.1% | | Aftermarket | 1,198.1 | 1,018.7 | 179.4 | 17.6% | | Aerospace and Defense | 85.9 | 67.5 | 18.4 | 27.3% | | Total Engine Products segment | 1,682.3 | 1,429.6 | 252.7 | 17.7% | - Excluding foreign currency translation, net sales increased 19.3%[91] - Earnings before income taxes were $226.5 million (13.5% of net sales), down from 14.4% in prior year, driven by higher raw material, freight, energy, and labor costs, partially offset by pricing and higher volume[93] - Prior fiscal year earnings were negatively impacted by $2.5 million in restructuring charges that did not repeat[93] Industrial Products Segment Net sales for the Industrial Products segment increased by 7.8% (3 months) and 12.8% (9 months), primarily driven by Industrial Filtration Solutions (IFS) due to improved end-market conditions and pricing. Earnings before income taxes as a percentage of sales were impacted by input costs and sales mix Three months ended April 30, 2022 compared with three months ended April 30, 2021 Compares the Industrial Products segment's net sales and earnings before income taxes for the three-month periods, focusing on business unit performance and cost factors Industrial Products Net Sales (Three Months Ended April 30, Millions $): | Business Unit | 2022 | 2021 | Change (Millions $) | Change (%) | | :------------ | :--- | :--- | :------------------ | :--------- | | Industrial Filtration Solutions (IFS) | 178.5 | 163.7 | 14.8 | 9.0% | | Gas Turbine Systems | 30.5 | 25.5 | 5.0 | 19.6% | | Special Applications | 43.2 | 44.8 | (1.6) | -3.6% | | Total Industrial Products segment | 252.2 | 234.0 | 18.2 | 7.8% | - Excluding foreign currency translation, net sales increased 11.2%[93] - IFS growth was strong across most end-markets, particularly in the U.S. (dust collection) and Process Filtration (food and beverage), partially offset by China COVID-19 shutdowns[93] - Earnings before income taxes were $38.8 million (15.4% of net sales), down from 16.1% in prior year, driven by increased raw material, freight, and labor costs, and unfavorable sales mix, partially offset by pricing[93] Nine months ended April 30, 2022 compared with nine months ended April 30, 2021 Compares the Industrial Products segment's net sales and earnings before income taxes for the nine-month periods, detailing growth drivers and profitability impacts Industrial Products Net Sales (Nine Months Ended April 30, Millions $): | Business Unit | 2022 | 2021 | Change (Millions $) | Change (%) | | :------------ | :--- | :--- | :------------------ | :--------- | | Industrial Filtration Solutions (IFS) | 515.2 | 449.3 | 65.9 | 14.7% | | Gas Turbine Systems | 76.7 | 71.9 | 4.8 | 6.7% | | Special Applications | 142.4 | 130.0 | 12.4 | 9.5% | | Total Industrial Products segment | 734.3 | 651.2 | 83.1 | 12.8% | - Excluding foreign currency translation, net sales increased 14.9%[93] - IFS growth primarily in the U.S. (Industrial Air Filtration) and EMEA (IAF and Process Filtration)[93] - Earnings before income taxes were $114.6 million (15.6% of net sales), up from 14.0% in prior year, driven by pricing and higher volume, partially offset by increased raw material, freight, and labor costs[93] - Prior fiscal year earnings were negatively impacted by $6.5 million in restructuring charges that did not repeat[93] Liquidity, Capital Resources and Financial Condition Assesses the company's ability to generate and manage cash, including operating, investing, and financing activities, and its overall financial health Liquidity Discusses the company's primary sources of liquidity and its assessment of future cash requirements - Primary source of liquidity is cash flow from operating activities, supplemented by available credit facilities[95] - Believes available liquidity will be sufficient to meet cash requirements for the next 12 months[99] Operating Activities Analyzes cash flows from operating activities, highlighting factors influencing changes in net cash provided Cash Provided by Operating Activities (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | | :----- | :--- | :--- | :------------------ | | Net cash provided by operating activities | 143.9 | 305.6 | (161.7) | - Decrease driven by increased inventory (mitigating supply chain disruptions) and higher incentive compensation paid, partially offset by higher earnings[96] Investing Activities Examines cash flows from investing activities, including acquisitions and capital expenditures Cash Used in Investing Activities (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | | :----- | :--- | :--- | :------------------ | | Net cash used in investing activities | (105.8) | (40.2) | (65.6) | - Increase due to $49.0 million for Solaris and PAIS acquisitions and higher capital investments for capacity expansion, new programs, and cost reduction[97] Financing Activities Reviews cash flows from financing activities, such as debt issuance, repayments, share repurchases, and dividends Cash Used in Financing Activities (Nine Months Ended April 30, Millions $): | Metric | 2022 | 2021 | Change (Millions $) | | :----- | :--- | :--- | :------------------ | | Net cash used in financing activities | (82.8) | (295.5) | 212.7 | - Decrease in cash usage driven by $249.3 million proceeds from new debt issuance, partially offset by lower debt payments and higher share repurchases ($153.7 million in 2022 vs. $78.7 million in 2021)[98] - Dividends paid were $81.8 million in 2022 and $79.5 million in 2021[98] Capital Resources and Financial Condition Presents key financial position metrics, including cash, receivables, inventories, debt, and capitalization ratios Key Financial Position Metrics (Millions $): | Metric | April 30, 2022 | July 31, 2021 | Change (Millions $) | | :----- | :------------- | :------------ | :------------------ | | Cash and cash equivalents | 168.7 | 222.8 | (54.1) | | Accounts receivable, net | 585.5 | 552.7 | 32.8 | | Inventories, net | 510.7 | 384.5 | 126.2 | | Accounts payable | 335.8 | 293.9 | 41.9 | | Long-term debt outstanding | 607.2 | 461.0 | 146.2 | - Days sales outstanding decreased to 59 days (from 65 days), while inventory turns decreased to 4.8 times (from 5.4 times)[99] - Days payable outstanding remained consistent at 50 days[99] - Total debt (including short-term borrowings) represented 36.2% of total capitalization as of April 30, 2022, up from 30.9% as of July 31, 2021[101] - The company has $637.0 million available for borrowing under existing credit facilities, including $407.5 million on its revolving credit facility[99] New Accounting Standards Not Yet Adopted Refers to the relevant note for details on new accounting standards under evaluation - Refer to Note 1 for details on new accounting standards not yet adopted[102] Critical Accounting Policies States that there have been no material changes to the company's critical accounting policies - No material changes to critical accounting policies since the fiscal year ended July 31, 2021, Annual Report on Form 10-K[103] Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Provides a cautionary statement regarding forward-looking information and outlines key risk factors - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical results or anticipated outcomes[104] - Key risk factors include global operations challenges, impacts of economic/political conditions (e.g., Russia-Ukraine conflict), supply chain disruptions, inflation, inability to attract/retain personnel, competitive markets, and foreign currency fluctuations[104] - The company undertakes no obligation to publicly update or revise forward-looking statements unless required by law[104] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency exchange rates, interest rates, and commodity prices, which it manages through various strategies including derivative instruments and supply arrangements Foreign Currency Exchange Rates Explains the company's exposure to foreign currency risk and the impact of exchange rate fluctuations on financial results - Significant assets and operations outside the U.S. expose the company to foreign currency gains and losses[105] - A stronger U.S. dollar negatively impacted international net sales by $37.0 million and net earnings by $4.8 million for the nine months ended April 30, 2022[107] Derivative Fair Value Measurements Describes the company's use of derivative instruments for managing foreign currency risk, not for speculative purposes - Uses derivative instruments (forward foreign currency exchange contracts, net investment hedges) to manage foreign currency risk, not for trading or speculative purposes[108] Forward Foreign Currency Exchange Contracts Details the use of forward currency exchange contracts to mitigate volatility from foreign-denominated transactions - Uses forward currency exchange contracts to manage volatility from foreign-denominated purchases and sales, with contracts generally maturing in 12 months or less[109] Net Investment Hedges Explains the company's use of cross-currency swap agreements to hedge foreign currency exposure for European operations - Uses fixed-to-fixed cross-currency swap agreements to hedge foreign currency exposure for European operations[110] - Total notional amount of net investment hedges was €80 million ($88.8 million) as of April 30, 2022[110] - A hypothetical 10% appreciation of the U.S. dollar against the Euro would result in an $8.0 million net gain in the fair value of these contracts[110] Interest Rates Outlines the company's exposure to interest rate risk from variable-rate debt and the potential impact of rate changes - Exposure to market risk for changes in interest rates primarily relates to variable-rate debt obligations[111] - As of April 30, 2022, variable-rate debt included $85.0 million on revolving credit facility, €80.0 million ($84.4 million) term loan, and ¥2.0 billion ($15.4 million) senior notes, plus $31.3 million in short-term borrowings[111] - A hypothetical 0.5 percentage point increase in short-term interest rates would increase interest expense by approximately $0.8 million for the nine months ended April 30, 2022[111] Commodity Prices Addresses the market risk associated with fluctuating commodity raw material prices and the company's mitigation strategies - Exposed to market risk from fluctuating prices of commodity raw materials, including steel, filter media, and petrochemical-based products[112] - Mitigates risk through selective supply arrangements, price increases to customers, and cost reduction initiatives (material substitution, process improvement, product redesigns)[112] Chinese Notes Reports on the acceptance of bankers' acceptance notes by Chinese subsidiaries and their associated financial details - Chinese subsidiaries accept bankers' acceptance notes from customers, with maturity dates no more than 180 days[114] Chinese Bankers' Acceptance Notes (Millions $): | Metric | April 30, 2022 | July 31, 2021 | | :----- | :------------- | :------------ | | Bankers' acceptance notes | 6.4 | 14.1 | Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of April 30, 2022, and there were no material changes to internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures States management's conclusion on the effectiveness of disclosure controls and procedures - CEO and CFO concluded that disclosure controls and procedures were effective as of April 30, 2022[115] - Controls are designed to ensure information required for SEC reports is recorded, processed, summarized, and reported timely[115] Changes in Internal Control Over Financial Reporting Confirms that no material changes occurred in internal control over financial reporting during the quarter - No material changes to internal control over financial reporting occurred during the fiscal quarter ended April 30, 2022[116] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company records provisions for probable and estimable liabilities related to claims and litigation, which were not material to its financial position, results of operations, or liquidity - Provisions for claims and litigation are recorded when probable and estimable, and were not material to the company's financial position, results of operations, or liquidity[118] - It is considered remote that the settlement of identified claims or litigation will materially exceed accrued amounts[118] Item 1A. Risk Factors The company's global operations involve inherent risks and uncertainties that could adversely affect its performance or financial condition, as detailed in its Annual Report on Form 10-K for fiscal year ended July 31, 2021 - Inherent risks and uncertainties in global operations could adversely affect operating performance or financial condition[119] - Refer to the "Risk Factors" section in the Annual Report on Form 10-K for the fiscal year ended July 31, 2021, for a detailed outline of material risks[119] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities during the quarter, showing the number of shares bought back and the remaining authorization under its plan Repurchases of Equity Securities Details the company's share repurchase activities, including the number of shares bought back and remaining authorization Repurchases of Equity Securities (Three Months Ended April 30, 2022): | Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | Maximum Number of Shares that May Still Be Purchased Under the Plans or Programs | | :----- | :------------------------------- | :------------------------------- | :------------------------------------------------------------------------------- | | February 1 - February 28, 2022 | 218,994 | 52.52 | 6,274,264 | | March 1 - March 31, 2022 | 517,448 | 51.29 | 5,756,816 | | April 1 - April 30, 2022 | — | — | 5,756,816 | | Total | 736,442 | 51.65 | 5,756,816 | - As of April 30, 2022, the company had remaining authorization to repurchase 5.8 million shares[121] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - This item is not applicable to the company[121] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company[121] Item 5. Other Information This item is not applicable to the company - This item is not applicable to the company[121] Item 6. Exhibits Lists the exhibits filed with the Form 10-Q, including the restated certificate of incorporation, amended bylaws, certifications of officers, and XBRL financial data - Includes certifications of CEO and CFO (31-A, 31-B, 32), and financial statements formatted in iXBRL (101, 104)[122] SIGNATURES Certifies the submission of the report by the company's principal executive and financial officers SIGNATURES The report is signed by the Chairman, President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, and Corporate Controller, certifying its submission on June 6, 2022 - Report signed by Tod E. Carpenter (Chairman, President and CEO), Scott J. Robinson (SVP and CFO), and Andrew J. Cebulla (Corporate Controller) on June 6, 2022[126][127]