Ingersoll Rand Inc.

Previous wording

These attributes, along with over 160 years of engineering heritage, generate strong brand loyalty for our products and foster long-standing customer relationships, which we believe have resulted in leading market positions within each of our operating segments. We have sales in all major geographic markets and our diverse customer base utilizes our products across a wide array of end-markets that have favorable near- and long-term growth prospects, including industrial manufacturing, clean energy, transportation, medical and laboratory sciences, food and beverage packaging and chemical processing.

Current wording

These attributes, along with over 165 years of engineering heritage, generate strong brand loyalty for our products and foster long-standing customer relationships, which we believe have resulted in leading market positions within each of our operating segments. We have sales in all major geographic markets and our diverse customer base utilizes our products across a wide array of end-markets that have favorable near- and long-term growth prospects, including industrial manufacturing, clean energy, transportation, medical and laboratory sciences, food and beverage packaging and chemical processing.

Previous wording

Our products and services are critical to the processes and systems in which they are utilized, which are often complex and function in harsh conditions where the cost of failure or downtime is high. However, our products and services typically represent only a small portion of the costs of the overall systems or functions that they support. As a result, our customers place a high value on our application expertise, product reliability and the responsiveness of our service. To support our customers and market presence, we maintain significant global scale with over 60 key manufacturing facilities, and over 40 complementary service and repair centers across six continents and over 21,000 employees worldwide as of December 31, 2024.

Current wording

Our products and services are critical to the processes and systems in which they are utilized, which are often complex and function in harsh conditions where the cost of failure or downtime is high. However, our products and services typically represent only a small portion of the costs of the overall systems or functions that they support. As a result, our customers place a high value on our application expertise, product reliability and the responsiveness of our service. To support our customers and market presence, we maintain significant global scale with over 60 key manufacturing facilities, and over 50 complementary service and repair centers across six continents and over 21,000 employees worldwide as of December 31, 2025.

Previous wording

The process-critical nature of our product applications, coupled with the standard wear and tear replacement cycles associated with the usage of our products, generates opportunities to support customers with our broad portfolio of aftermarket parts, consumables and services. Customers place a high value on minimizing any time their operations are offline. As a result, the availability of replacement parts, consumables and our repair and support services are key components of our value proposition. Our large installed base of products provides a recurring revenue stream through our aftermarket parts, consumables and services offerings. As a result, our aftermarket revenue is significant, representing 36.4% of total Company revenue in 2024.

Current wording

The process-critical nature of our product applications, coupled with the standard wear and tear replacement cycles associated with the usage of our products, generates opportunities to support customers with our broad portfolio of aftermarket parts, consumables and services. Customers place a high value on minimizing any time their operations are offline. As a result, the availability of replacement parts, consumables and our repair and support services are key components of our value proposition. Our large installed base of products provides a recurring revenue stream through our aftermarket parts, consumables and services offerings. As a result, our aftermarket revenue is significant, representing 36.5% of total Company revenue in 2025.

Previous wording

The provision or benefit for income taxes includes U.S. federal, state and local income taxes and all non-U.S. income taxes. We are subject to income tax in 48 jurisdictions outside of the United States. Because we conduct operations on a global basis, our effective tax rate depends, and will continue to depend, on the geographic distribution of our pre-tax earnings among several different taxing jurisdictions. Our effective tax rate can also vary based on changes in the tax rates of the different jurisdictions, the availability of tax credits and non-deductible items.

Current wording

The provision or benefit for income taxes includes U.S. federal, state and local income taxes and all non-U.S. income taxes. We are subject to income tax in 49 jurisdictions outside of the United States. Because we conduct operations on a global basis, our effective tax rate depends, and will continue to depend, on the geographic distribution of our pre-tax earnings among several different taxing jurisdictions. Our effective tax rate can also vary based on changes in the tax rates of the different jurisdictions, the availability of tax credits and non-deductible items.

Previous wording

A significant portion of our revenues, 55% for the year ended December 31, 2024, was denominated in currencies other than the U.S. dollar. Because much of our manufacturing facilities and labor force costs are outside of the United States, a significant portion of our costs are also denominated in currencies other than the U.S. dollar. Changes in foreign exchange rates can therefore impact our results of operations and are quantified when significant to our discussion.

Current wording

A significant portion of our revenues, 54% for the year ended December 31, 2025, was denominated in currencies other than the U.S. dollar. Because much of our manufacturing facilities and labor force costs are outside of the United States, a significant portion of our costs are also denominated in currencies other than the U.S. dollar. Changes in foreign exchange rates can therefore impact our results of operations and are quantified when significant to our discussion.

Previous wording

This section discusses our results of continuing operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023. For a discussion and analysis of the year ended December 31, 2023, compared to the same in 2022, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 23, 2024.

Current wording

This section discusses our results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024. For a discussion and analysis of the year ended December 31, 2024, compared to the same in 2023, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 19, 2025.

Previous wording

Revenues for 2024 were $7,235.0 million, an increase of $358.9 million, or 5.2%, compared to $6,876.1 million in 2023. The increase in revenues was primarily due to acquisitions of $471.2 million and higher pricing of $153.3 million, partially offset by lower organic volumes of $241.9 million and unfavorable impact of foreign currencies of $23.7 million. The percentage of consolidated revenues derived from aftermarket parts and services was 36.4% in 2024 compared to 35.8% in 2023.

Current wording

Revenues for 2025 were $7,650.9 million, an increase of $415.9 million, or 5.7%, compared to $7,235.0 million in 2024. The increase in revenues was primarily due to acquisitions of $419.9 million and the favorable impact of foreign currencies of $92.0 million, partially offset by lower organic revenues of $96.0 million. The percentage of consolidated revenues derived from aftermarket parts and services was 36.5% in 2025 compared to 36.4% in 2024.

Previous wording

Gross profit in 2024 was $3,170.0 million, an increase of $287.8 million, or 10.0%, compared to $2,882.2 million in 2023, and as a percentage of revenues was 43.8% in 2024 and 41.9% in 2023. The increase in gross profit is primarily due to higher pricing and acquisitions discussed above. The increase in gross profit as a percentage of revenues is primarily due to increased price and input cost productivity improvements.

Current wording

Gross profit in 2025 was $3,336.3 million, an increase of $166.3 million, or 5.2%, compared to $3,170.0 million in 2024, and as a percentage of revenues was 43.6% in 2025 and 43.8% in 2024. The increase in gross profit is primarily due to acquisitions discussed above. The decrease in gross profit as a percentage of revenues is primarily due to unfavorable cost leverage on lower organic volumes and tariff related pricing targeted to offset tariff cost increases one for one.

Previous wording

Selling and administrative expenses were $1,344.4 million in 2024, an increase of $71.7 million, or 5.6%, compared to $1,272.7 million in 2023. The increase in selling and administrative expenses was mainly from businesses acquired in the second half of 2023 and in 2024, partially offset by lower incentive compensation expense. Selling and administrative expenses as a percentage of revenues was 18.6% in 2024 and 18.5% in 2023.

Current wording

Selling and administrative expenses were $1,439.3 million in 2025, an increase of $94.9 million, or 7.1%, compared to $1,344.4 million in 2024. The increase in selling and administrative expenses was mainly from businesses acquired throughout 2024 and in 2025, partially offset by lower incentive compensation expense. Selling and administrative expenses as a percentage of revenues was 18.8% in 2025 and 18.6% in 2024.

Previous wording

Amortization of intangible assets was $373.0 million in 2024, an increase of $5.5 million compared to $367.5 million in 2023. The increase was primarily attributable to amortization of intangible assets recognized for acquisitions completed in the second half of 2023 and in 2024, partially offset by certain intangible assets becoming fully amortized during the period.

Current wording

Amortization of intangible assets was $387.5 million in 2025, an increase of $14.5 million compared to $373.0 million in 2024. The increase was primarily attributable to amortization of intangible assets recognized for acquisitions completed throughout 2024 and 2025 and amortization related to certain tradenames that were determined to no longer have indefinite lives during the period, partially offset by certain intangible assets becoming fully amortized during the period. See Note 8 “Goodwill and Other Intangible Assets” to our audited consolidated financial statements included elsewhere in this Form 10-K for further details.

Previous wording

Other operating expense, net was $138.6 million in 2024, an increase of $60.9 million compared to $77.7 million in 2023. The increase was primarily due to the loss on asbestos sale of $58.8 million and higher restructuring charges of $11.3 million, partially offset by lower acquisition and other transaction related expenses of $5.1 million and lower foreign currency transaction losses, net of $1.9 million.

Current wording

Other operating expense, net was $91.5 million in 2025, a decrease of $47.1 million compared to $138.6 million in 2024. The decrease was primarily due to the loss on asbestos sale of $58.8 million in the 2024 period and lower acquisition and other transaction related expenses of $25.1 million, partially offset by higher restructuring charges of $20.2 million and higher foreign currency transaction losses, net of $15.4 million.

Previous wording

Interest expense was $213.2 million in 2024, an increase of $56.5 million, compared to $156.7 million in 2023. The increase was primarily due to an increase in long term debt, partially offset by the interest rate derivative contracts discussed in Note 20 “Hedging Activities, Derivative Instruments and Credit Risk” to our audited consolidated financial statements included elsewhere in this Form 10-K. The weighted average interest rate, including the impact of the interest rate derivative contracts, was approximately 5.2% in 2024 and 5.3% in 2023.

Current wording

Interest expense was $253.9 million in 2025, an increase of $40.7 million, compared to $213.2 million in 2024. The increase was primarily due to an increase in long term debt, partially offset by the interest rate derivative contracts discussed in Note 19 “Hedging Activities, Derivative Instruments and Credit Risk” to our audited consolidated financial statements included elsewhere in this Form 10-K. The weighted average interest rate, including the impact of the interest rate derivative contracts, was approximately 5.0% in 2025 and 5.3% in 2024.

Previous wording

Loss on extinguishment of debt was $3.0 million in 2024, which was related to the payoff of the Dollar Term Loan B and Dollar Term Loan. Loss on extinguishment of debt was $13.5 million in 2023, which was primarily related to the partial payoff of the Dollar Term Loan B. See Note 12 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K for further details.

Current wording

Loss on extinguishment of debt was $3.0 million in 2024, which was related to the payoff of the Dollar Term Loan B and Dollar Term Loan. See Note 11 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K for further details.

Previous wording

Other income, net, was $48.9 million in 2024, an increase of $11.9 million compared to $37.0 million in 2023. The increase was primarily due to an increase in interest income from holdings of cash and cash equivalents.

Current wording

Other income, net, was $44.6 million in 2025, a decrease of $4.3 million compared to $48.9 million in 2024. The decrease was primarily due to a decrease in interest income from holdings of cash and cash equivalents.

Previous wording

The provision for income taxes was $262.5 million resulting in a 23.2% effective tax rate in 2024 compared to a provision for income taxes of $240.0 million resulting in a 23.3% effective tax provision rate in 2023. The increase in the tax provision is primarily due to an increase in pre-tax book income. The effective tax rate in 2024 is consistent with the effective tax rate in 2023.

Current wording

The provision for income taxes was $219.4 million resulting in a 23.5% effective tax rate in 2025 compared to a provision for income taxes of $262.5 million resulting in a 23.2% effective tax provision rate in 2024. The decrease in the provision for income taxes and increase in the effective income tax provision rate in 2025 when compared to 2024 is primarily due to nondeductible impairment of goodwill, tradenames, and equity investment and a lower benefit from a windfall tax deduction in the 2025 period compared to the 2024 period.

Previous wording

Adjusted EBITDA increased $231.3 million to $2,018.1 million in 2024 compared to $1,786.8 million in 2023. Adjusted EBITDA as a percentage of revenues increased 190 basis points to 27.9% in 2024 from 26.0% in 2023. The increase in Adjusted EBITDA was primarily due to higher pricing of $153.3 million, acquisitions of $105.6 million, favorable cost productivity and product mix of $60.4 million, and lower selling and administrative costs of $22.5 million, partially offset by lower organic sales volume of $104.5 million and the unfavorable impact of foreign currencies of $5.2 million. The increase in Adjusted EBITDA as a percentage of revenues is primarily attributable to higher pricing, input cost productivity improvements, and product mix.

Current wording

Adjusted EBITDA increased $75.7 million to $2,093.8 million in 2025 compared to $2,018.1 million in 2024. Adjusted EBITDA as a percentage of revenues decreased 50 basis points to 27.4% in 2025 from 27.9% in 2024. The increase in Adjusted EBITDA was primarily due to acquisitions of $92.5 million and the favorable impact of foreign currencies of $25.6 million, partially offset by lower organic gross profit of $35.1 million and higher selling and administrative costs of $3.6 million. The decrease in Adjusted EBITDA as a percentage of revenues is primarily attributable to input cost inflation and product mix.

Previous wording

Adjusted Net Income increased $133.5 million to $1,349.3 million in 2024 compared to $1,215.8 million in 2023. The increase was primarily due to increased Adjusted EBITDA, partially offset by higher interest expense and higher income tax provision, as adjusted.

Current wording

Adjusted Net Income decreased $1.2 million to $1,348.1 million in 2025 compared to $1,349.3 million in 2024. The decrease was primarily due to increased Adjusted EBITDA, partially offset by higher interest expense, lower interest income on cash and cash equivalents, and higher income tax provision, as adjusted.

Previous wording

The segment measurements provided to, and evaluated by, the Chief Operating Decision Maker (“CODM”) are described in Note 24 “Segment Information” to our audited consolidated financial statements included elsewhere in this Form 10-K.

Current wording

The segment measurements provided to, and evaluated by, the Chief Operating Decision Maker (“CODM”) are described in Note 23 “Segment Reporting” to our audited consolidated financial statements included elsewhere in this Form 10-K.

Previous wording

Segment Orders for 2024 were $1,398.9 million, an increase of $195.4 million, or 16.2%, compared to $1,203.5 million in 2023. The increase in Segment Orders was primarily due to acquisitions of $190.5 million or 15.8% and higher organic orders of $5.5 million or 0.5%, partially offset by the unfavorable impact of foreign currencies of $0.6 million or 0.0%.

Current wording

Segment Orders for 2025 were $1,596.3 million, an increase of $197.4 million, or 14.1%, compared to $1,398.9 million in 2024. The increase in Segment Orders was primarily due to acquisitions of $148.7 million or 10.6%, higher organic orders of $25.7 million or 1.8%, and the favorable impact of foreign currencies of $23.0 million or 1.6%.

Previous wording

Segment Adjusted EBITDA in 2024 was $418.8 million, an increase of $46.0 million, or 12.3%, from $372.8 million in 2023. Segment Adjusted EBITDA Margin decreased 40 bps to 29.6% from 30.0% in 2023. The increase in Segment Adjusted EBITDA was due primarily to acquisitions of $52.0 million or 13.9%, higher pricing of $28.0 million or 7.5%, and favorable cost productivity and product mix of $1.8 million or 0.5%, partially offset by lower organic sales volumes of $33.5 million or 9.0%, and higher selling and administrative expenses of $7.5 million or 2.0%.

Current wording

Segment Adjusted EBITDA in 2025 was $478.0 million, an increase of $59.2 million, or 14.1%, from $418.8 million in 2024. Segment Adjusted EBITDA Margin increased 40 bps to 30.0% from 29.6% in 2024. The increase in Segment Adjusted EBITDA was due primarily to acquisitions of $37.9 million or 9.0%, higher organic gross profit of $11.1 million or 2.7%, the favorable impact of foreign currencies of $7.4 million or 1.8%, and lower selling and administrative expenses of $4.9 million or 1.2%.

Previous wording

(a)Depreciation expense excludes $4.0 million and $3.7 million of depreciation of rental equipment for the years ended December 31, 2024 and 2023, respectively.

Current wording

(a)Depreciation expense excludes $4.5 million and $4.0 million of depreciation of rental equipment for the years ended December 31, 2025 and 2024, respectively.

Previous wording

(b)Represents $364.3 million and $357.5 million of amortization of intangible assets arising from acquisitions (customer relationships, technology, tradenames and backlog) and $8.7 million and $10.0 million of amortization of non-acquisition related intangible assets, in each case for the years ended December 31, 2024 and 2023, respectively.

Current wording

(b)Represents $377.4 million and $364.3 million of amortization of intangible assets arising from acquisitions (customer relationships, technology, tradenames and backlog) and $10.1 million and $8.7 million of amortization of non-acquisition related intangible assets, in each case for the years ended December 31, 2025 and 2024, respectively.

Previous wording

(e)Represents non-recoverable costs associated with a cybersecurity event.

Current wording

(e)Represents expected non-recoverable costs associated with a cybersecurity event, net of insurance recoveries.

Previous wording

Our investment resources include cash on hand, cash generated from operations and borrowings under our New Revolving Credit Facility and Commercial Paper Program. We also have the ability to seek additional borrowings, subject to credit agreement restrictions.

Current wording

Our investment resources include cash on hand, cash generated from operations and borrowings under our Revolving Credit Facility and Commercial Paper Program. We also have the ability to seek additional borrowings, subject to credit agreement restrictions.

Previous wording

As of December 31, 2024, we had $2,600.0 million of unused availability under both the New Revolving Credit Facility and Commercial Paper Program.

Current wording

As of December 31, 2025, we had $2,600.0 million of unused availability under both the Revolving Credit Facility and Commercial Paper Program.

Previous wording

We can increase the borrowing availability under the New Revolving Credit Facility by up to $1,000.0 million in the form of additional commitments on the terms set forth in the New Revolving Credit Facility. Our liquidity requirements are significant primarily due to debt service requirements. See Note 12 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K for further details.

Current wording

We can increase the borrowing availability under the Revolving Credit Facility by up to $1,000.0 million in the form of additional commitments on the terms set forth in the Revolving Credit Facility. Our liquidity requirements are significant primarily due to debt service requirements. See Note 11 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K for further details.

Previous wording

Our principal sources of liquidity have been existing cash and cash equivalents, cash generated from operations and borrowings under the Senior Notes and former Senior Secured Credit Facilities. Our principal uses of cash will be to provide working capital; finance strategic plans, including possible acquisitions; meet debt service requirements; fund capital expenditures; and return capital to shareholders, through share repurchases and dividend payments. We may also seek to finance capital expenditures under capital leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. In the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings. As market conditions warrant, we may from time to time, seek to repay loans that we have borrowed, including the borrowings under the Senior Notes. Based on our current level of operations and available cash, we believe our cash flow from operations, together with availability under the New Revolving Credit Facility and Commercial Paper Program, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending requirements for the foreseeable future. Our business may not generate sufficient cash flows from operations or future borrowings may not be available to us under our Revolving Credit Facility or Commercial Paper Program in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the Senior Notes, on commercially reasonable terms or at all. Any future acquisitions, joint ventures, or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms or at all.

Current wording

Our principal sources of liquidity have been existing cash and cash equivalents, cash generated from operations and borrowings under the Senior Notes and former Senior Secured Credit Facilities. Our principal uses of cash will be to provide working capital; finance strategic plans, including possible acquisitions; meet debt service requirements; fund capital expenditures; and return capital to shareholders, through share repurchases and dividend payments. We may also seek to finance capital expenditures under capital leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. In the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings. As market conditions warrant, we may from time to time, seek to repay loans that we have borrowed, including the borrowings under the Senior Notes. Based on our current level of operations and available cash, we believe our cash flow from operations, together with availability under the Revolving Credit Facility and Commercial Paper Program, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending requirements for the foreseeable future. Our business may not generate sufficient cash flows from operations or future borrowings may not be available to us under our Revolving Credit Facility or Commercial Paper Program in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the Senior Notes, on commercially reasonable terms or at all. Any future acquisitions, joint ventures, or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms or at all.

Previous wording

We may from time to time repurchase shares of our common stock in the open market at prevailing market prices (including through Rule 10b5-1 plans), in privately negotiated transactions, a combination thereof or through other transactions. The actual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of our stock, general market and economic conditions, our liquidity requirements, applicable legal requirement and other business considerations.

Current wording

We may from time to time repurchase shares of our common stock in the open market at prevailing market prices (including through Rule 10b5-1 plans), in privately negotiated transactions, a combination thereof or through other transactions. The actual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of our stock, general market and economic conditions, our liquidity requirements, applicable legal requirements and other business considerations.

Previous wording

A substantial portion of our cash is in jurisdictions outside the United States. We do not assert ASC 740-30 (formerly APB 23) indefinite reinvestment of our historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. Our deferred income tax liability as of December 31, 2024 is $41.8 million which consists mainly of withholding taxes.

Current wording

A substantial portion of our cash is in jurisdictions outside the United States. We do not assert ASC 740-30 (formerly APB 23) indefinite reinvestment of our historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. Our deferred income tax liability as of December 31, 2025 is $50.4 million which consists mainly of withholding taxes.

Previous wording

Net working capital increased $121.5 million to $2,344.6 million as of December 31, 2024 from $2,223.1 million as of December 31, 2023. Operating working capital increased $157.6 million to $1,418.6 million as of December 31, 2024 from $1,261.0 million as of December 31, 2023. Operating working capital as of December 31, 2024 was 19.6% of 2024 revenues as compared to 18.3% as of December 31, 2023 as a percentage of 2023 revenues. The increase in operating working capital was primarily due to higher accounts receivable, higher inventories, higher contract assets, and lower contract liabilities, partially offset by higher accounts payable. The increase in accounts receivable was primarily due to the timing of revenues in the quarter and seasonal changes in collection timing and to acquisitions completed in 2024. The increase in contract assets was primarily due to the timing of revenue recognition on percentage of complete jobs in relation to contractual billing milestones and to acquisitions completed in 2024. The increase in inventory was primarily attributable to acquisitions completed in 2024. The increase in accounts payable was primarily due to the timing of vendor cash disbursements and acquisitions completed in 2024. The decrease in contract liabilities was primarily due to the timing of customer milestone payments for in-process engineered to order contracts, partially offset by acquisitions completed in 2024.

Current wording

Net working capital decreased $162.9 million to $2,181.7 million as of December 31, 2025 from $2,344.6 million as of December 31, 2024. Operating working capital increased $189.9 million to $1,608.5 million as of December 31, 2025 from $1,418.6 million as of December 31, 2024. Operating working capital as of December 31, 2025 was 21.0% of 2025 revenues as compared to 19.6% as of December 31, 2024 as a percentage of 2024 revenues. The increase in operating working capital was primarily due to higher accounts receivable, higher inventories, and higher contract assets, partially offset by higher accounts payable and higher contract liabilities. The increase in accounts receivable was primarily due to the timing of revenues in the quarter and seasonal changes in collection timing. The increase in contract assets was primarily due to the timing of revenue recognition and billing on our overtime contracts. The increase in inventories was primarily due to additions to support channel access, foreign currency translation, and acquisitions. The increase in accounts payable was primarily due to the timing of vendor cash disbursements. The increase in contract liabilities was primarily due to the timing of customer milestone payments for in-process engineered to order contracts.

Previous wording

Cash provided by operating activities increased $19.3 million to $1,396.7 million in 2024 from $1,377.4 million in 2023. This increase is primarily attributable to higher net income and a decrease in income tax payments in 2024 compared to 2023, partially offset by an increase in interest payments in 2024 for our Senior Notes, an increase in incentive compensation paid in 2024 and cash used in operating working capital in 2024, compared to cash generated in operating working capital in 2023.

Current wording

Cash provided by operating activities decreased $41.0 million to $1,355.7 million in 2025 from $1,396.7 million in 2024. This decrease is primarily attributable to an increase in cash used in operating working capital in 2025, compared to 2024, an increase in interest payments for our Senior Notes in 2025 and an increase in pension contributions in 2025, partially offset by an increase in net income excluding non-cash adjustments and lower incentive compensation.

Previous wording

Operating working capital used cash of $23.5 million in 2024 compared to generating cash of $40.4 million in 2023. Changes in account receivables used cash of $45.1 million in 2024 compared to using cash of $48.6 million in 2023. Changes in contract assets used cash of $4.8 million in 2024 compared to using cash of $7.8 million in 2023. Changes in inventory generated cash of $39.8 million in 2024 compared to generating cash of $117.3 million in 2023. Changes in accounts payable generated cash of $13.3 million in 2024 compared to using cash of $23.9 million in 2023. Changes in contract liabilities used cash of $26.7 million in 2024 compared to generating cash of $3.4 million in 2023.

Current wording

Operating working capital used cash of $73.4 million in 2025 compared to using cash of $23.5 million in 2024. Changes in account receivables used cash of $59.1 million in 2025 compared to using cash of $45.1 million in 2024. Changes in contract assets used cash of $43.7 million in 2025 compared to using cash of $4.8 million in 2024. Changes in inventory used cash of $26.1 million in 2025 compared to generating cash of $39.8 million in 2024. Changes in accounts payable generated cash of $78.7 million in 2025 compared to generating cash of $13.3 million in 2024. Changes in contract liabilities used cash of $23.2 million in 2025 compared to using cash of $26.7 million in 2024.

Previous wording

Cash flows used in investing activities included capital expenditures of $149.1 million (2.1% of consolidated revenues) and $105.4 million (1.5% of consolidated revenues) in 2024 and 2023, respectively. We expect capital expenditures will be approximately 2% of consolidated revenues in 2025. Net cash paid in acquisitions was $2,958.7 million and $963.0 million in 2024 and 2023, respectively. Net proceeds from the disposal of property, plant and equipment were $6.1 million and $7.6 million in 2024 and 2023, respectively.

Current wording

Cash flows used in investing activities included capital expenditures of $135.6 million (1.8% of consolidated revenues) and $149.1 million (2.1% of consolidated revenues) in 2025 and 2024, respectively. We expect capital expenditures will be approximately 2% of consolidated revenues in 2026. Net cash paid in acquisitions was $525.0 million and $2,958.7 million in 2025 and 2024, respectively. Net proceeds from the disposal of property, plant and equipment were $6.1 million in 2024.

Previous wording

Cash used in financing activities of $337.5 million in 2023 is primarily due to purchases of treasury stock of $263.0 million, cash dividends on common stock of $32.4 million, net repayments of long-term debt of $27.6 million, payments of debt issuance costs of $18.5 million, and payments of deferred and contingent acquisition consideration of $17.5 million, partially offset by proceeds from stock option exercises of $30.3 million.

Current wording

Cash used in financing activities of $1,053.8 million in 2025 is primarily due to purchases of treasury stock of $1,018.0 million, cash dividends on common stock of $31.8 million, and payments of deferred and contingent acquisition consideration of $8.0 million, partially offset by proceeds from stock option exercises of $15.3 million.

Previous wording

Cash provided by financing activities of $1,707.5 million in 2024 is primarily due to net borrowings of long-term debt of $2,054.2 million and proceeds from stock option exercises of $32.2 million, partially offset by purchases of treasury stock of $260.7 million, cash dividends on common stock of $32.3 million, payments of debt issuance costs of $32.3 million, and payments of deferred, contingent acquisition consideration of $23.4 million and payments to settle cross-currency swaps of $19.9 million.

Current wording

Cash provided by financing activities of $1,707.5 million in 2024 is primarily due to net proceeds from long-term debt of $2,054.2 million and proceeds from stock option exercises of $32.2 million, partially offset by purchases of treasury stock of $260.7 million, cash dividends on common stock of $32.3 million, payments of debt issuance costs of $32.3 million, payments of deferred and contingent acquisition consideration of $23.4 million, and payments to settle cross-currency swaps of $19.9 million.

Previous wording

Free cash flow decreased $24.4 million to $1,247.6 million in 2024 from $1,272.0 million in 2023 primarily due to the increase in cash provided by operating activities of $19.3 million discussed above, being more than offset by the increase in capital expenditures of $43.7 million.

Current wording

Free cash flow decreased $27.5 million to $1,220.1 million in 2025 from $1,247.6 million in 2024 primarily due to the decrease in cash provided by operating activities of $41.0 million discussed above, partially offset by the decrease in capital expenditures of $13.5 million.

Previous wording

Purchase obligations consist primarily of agreements to purchase inventory or services made in the normal course of business to meet operational requirements. As of December 31, 2024, the Company had purchase obligations of $802.8 million, with $733.4 million payable in the next 12 months. The purchase obligation amounts do not represent the entire anticipated purchases in the future, but represent only those items for which we are contractually obligated as of December 31, 2024. For this reason, these amounts will not provide a complete and reliable indicator of our expected future cash outflows.

Current wording

Purchase obligations consist primarily of agreements to purchase inventory or services made in the normal course of business to meet operational requirements. As of December 31, 2025, the Company had purchase obligations of $830.9 million, with $756.4 million payable in the next 12 months. The purchase obligation amounts do not represent the entire anticipated purchases in the future, but represent only those items for which we are contractually obligated as of December 31, 2025. For this reason, these amounts will not provide a complete and reliable indicator of our expected future cash outflows.

Previous wording

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business. Actual results may differ from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and analyzing published rates for industries relevant to our reporting units to estimate the cost of equity financing. We use discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in our internally developed forecasts. Discount rates used in our 2024 reporting unit valuations ranged from 7.5% to 14.5% and terminal growth rates ranged from 2.5% to 3.5%.

Current wording

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business. Actual results may differ from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and analyzing published rates for industries relevant to our reporting units to estimate the cost of equity financing. We use discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in our internally developed forecasts. Discount rates used in our 2025 reporting unit valuations ranged from 8.0% to 10.0% and terminal growth rates ranged from 2.5% to 3.5%.

Previous wording

No goodwill impairments were recorded in 2024 and the cushion of all reporting units was at least 60%, with the exception of two reporting units in our Precision and Science Technologies segment. These two reporting units have goodwill totaling approximately $1.1 billion and limited cushions ranging from 5% to 16%. The limited cushions are due to the fair values assigned from the recent ILC Dover acquisition. Changes in forecast estimates or the application of alternative assumptions could produce significantly different results. The discount rates (9.0% to 14.5%), terminal growth rates (2.5% to 3.0%), and EBITDA multiples are the most sensitive assumptions. A material non-cash impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of these reporting units or changes to customer spending priorities.

Current wording

We performed our annual impairment test during the fourth quarter and no additional goodwill impairments were recorded. The Life Sciences reporting unit, which was created by the second quarter organizational changes discussed above and includes the historical Biopharma and Aerospace & Defense reporting units, had a cushion of 30%. The cushion of all other reporting units was at least 85%. Changes in forecast estimates or the application of alternative assumptions could produce significantly different results. The discount rates (8.0% to 10.0%), terminal growth rates (2.5% to 3.5%), and EBITDA multiples are the most sensitive assumptions. A material non-cash impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of these reporting units or changes to customer spending priorities.

Previous wording

We test intangible assets with indefinite lives for impairment annually utilizing a discounted cash flow valuation referred to as the relief from royalty method. We estimated forecasted revenues for a period of five years with discount rates ranging from 8.0% to 10.5%, terminal growth rates of 2.5% to 3.5%, and royalty rates ranging from 0.5% to 4.0%. There were no impairments identified or recognized during the year ended December 31, 2024. An indefinite lived intangible held in the Precision and Science Technologies segment and recently acquired in the ILC Dover acquisition, with a carrying value of approximately $208 million had a cushion of approximately 6%. Changes in forecasted revenues or any of the other assumptions mentioned above could result in a material non-cash impairment charge in a future period.

Current wording

We test intangible assets with indefinite lives for impairment annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable, utilizing a discounted cash flow valuation referred to as the relief from royalty method. We estimated forecasted revenues for a period of five years with discount rates ranging from 8.5% to 10.5%, terminal growth rates of 2.5% to 3.5%, and royalty rates ranging from 0.5% to 4.0%.