SECURITIES AND EXCHANGE COMMISSION

DONALDSON COMPANY, INC.

(Exact name of registrant as specified in its charter)


Delaware			41-0222640

~~Delaware~~	~~41-0222640~~
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)			Identification No.)

1400 West 94th Street

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x☒ Yes o☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). x☒ Yes o☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting ~~company”~~company,” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filerx

☒

Accelerated filero

☐

Non-accelerated filero

~~(Do not check if a smaller reporting company)~~

☐

Smaller reporting companyo

☐

Emerging growth companyo

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).☐ Yes ☒ No

PART I. FINANCIAL INFORMATION



Item 1.	Financial Statements

DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~(LOSS)~~ EARNINGS

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended January 31,						Six Months Ended January 31,
	2018			2017			2018		2017
	Three Months Ended January 31,												Three Months Ended January 31,			Six Months Ended January 31,
	2024											2024		2023	2024		2023
Net sales	$	664.7		$	550.6		$	1,309.5	$	1,103.6
Cost of sales	445.8			362.7			866.3		721.5
Gross profit	218.9			187.9			443.2		382.1
Selling, general and administrative
Research and development
Operating expenses	137.3			118.5			270.9		236.3
Operating income	81.6			69.4			172.3		145.8
Interest expense	5.1			4.8			10.3		9.6
Other expense (income), net	0.1			(1.7		)	0.9		(9.8		)
Other income, net
Earnings before income taxes	76.4			66.3			161.1		146.0
Income taxes	129.3			19.8			153.1		41.5
Net (loss) earnings	$	(52.9	)	$	46.5		$	8.0	$	104.5
Net earnings

Weighted average shares – basic	130.6			132.9			130.7		133.2
Weighted average shares – basic
Weighted average shares – basic
Weighted average shares – diluted	130.6			134.4			132.8		134.5
Net (loss) earnings per share – basic	$	(0.40	)	$	0.35		$	0.06	$	0.78
Net (loss) earnings per share – diluted	$	(0.40	)	$	0.35		$	0.06	$	0.78

Cash dividends paid per share	$	0.180		$	0.175		$	0.360	$	0.350
Net earnings per share – basic
Net earnings per share – basic
Net earnings per share – basic
Net earnings per share – diluted

See Notes to Condensed Consolidated Financial Statements.

DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

Three Months Ended
January 31, Six Months Ended
January 31,
2018
2017
2018
2017
Net (loss) earnings $ (52.9 ) $ 46.5
$ 8.0
$ 104.5
Other comprehensive income (loss):
Foreign currency translation income (loss) 55.5
(8.4 ) 50.4
(20.8 )
Pension liability adjustment, net of deferred taxes of $(0.4), $(0.8), $(0.9) and $(1.8), respectively 0.2
1.3
1.0
3.7
(Loss) gain on hedging derivatives, net of deferred taxes of $0.3, $0.1, $(0.9) and $(0.4), respectively (0.6 ) (0.3 ) 1.7
0.7
Comprehensive income $ 2.2
$ 39.1
$ 61.1
$ 88.1


	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Net earnings	$	98.7	$	86.0	$	190.8	$	173.2
Other comprehensive income:
Foreign currency translation gain (loss)	20.9		65.3		(16.7)		25.2
Pension liability adjustment, net of deferred taxes of $0.0, $0.3, $(0.2) and $(0.1), respectively	(0.2)		(0.7)		0.8		0.5
Derivatives:
(Loss) gain on hedging derivatives, net of deferred taxes of $0.1, $1.0, $0.0 and $(0.1), respectively	(0.8)		(3.1)		(0.7)		0.3
Reclassification of loss on hedging derivatives to net earnings, net of taxes of $0.3, $0.9, $0.1 and $0.3, respectively	(0.8)		(1.8)		(0.1)		(0.6)
Total derivatives	(1.6)		(4.9)		(0.8)		(0.3)

Net other comprehensive income (loss)	19.1		59.7		(16.7)		25.4
Comprehensive income	$	117.8	$	145.7	$	174.1	$	198.6

See Notes to Condensed Consolidated Financial Statements.

DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts)

(Unaudited)


	January 31, 2024		July 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	193.8	$	187.1

Accounts receivable, less allowances of $5.9 and $8.3, respectively	599.3		599.7
Inventories, net	433.4		418.1
Prepaid expenses and other current assets	90.7		81.1
Total current assets	1,317.2		1,286.0
Property, plant and equipment, net	647.0		652.9

Goodwill	475.9		481.1
Intangible assets, net	179.4		188.1

Other long-term assets	164.0		162.4
Total assets	$	2,783.5	$	2,770.5

Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings	$	50.4	$	34.1
Current maturities of long-term debt	211.7		125.0
Accounts payable	325.8		304.9
Accrued employee compensation and related taxes	110.3		119.4

Deferred revenue	29.7		25.3
Income taxes payable	37.1		32.3
Dividends payable	30.1		30.4
Other current liabilities	98.4		85.0
Total current liabilities	893.5		756.4
Long-term debt	352.0		496.6
Non-current income taxes payable	40.1		56.5
Deferred income taxes	21.9		32.3

Other long-term liabilities	100.2		108.0
Total liabilities	1,407.7		1,449.8




Stockholders’ equity:
Preferred stock, $1.00 par value, 1,000,000 shares authorized, none issued	—		—
Common stock, $5.00 par value, 240,000,000 shares authorized, 151,643,194 shares issued	758.2		758.2
Additional paid-in capital	24.0		24.8
Retained earnings	2,219.0		2,087.8

Accumulated other comprehensive loss	(189.2)		(172.5)
Treasury stock, 31,318,617 and 30,528,696 shares, respectively, at cost	(1,436.2)		(1,377.6)
Total stockholders’ equity	1,375.8		1,320.7
Total liabilities and stockholders’ equity	$	2,783.5	$	2,770.5

January 31,
2018
July 31,
2017
Assets

Current assets:

Cash and cash equivalents $ 362.2
$ 308.4
Accounts receivable, less allowance of $8.5 and $8.7, respectively 509.9
497.7
Inventories, net 344.9
293.5
Prepaid expenses and other current assets 62.9
51.4
Total current assets 1,279.9
1,151.0
Property, plant and equipment, net 507.7
484.6
Goodwill 242.0
238.1
Intangible assets, net 38.2
40.6
Deferred income taxes 24.9
30.3
Other long-term assets 38.6
35.1
Total assets $ 2,131.3
$ 1,979.7

Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $ 17.7
$ 23.3
Current maturities of long-term debt 0.4
50.6
Trade accounts payable 200.0
194.0
Other current liabilities 216.9
216.2
Total current liabilities 435.0
484.1
Long-term debt 667.7
537.3
Deferred income taxes 4.7
3.6
Other long-term liabilities 197.0
100.2
Total liabilities 1,304.4
1,125.2

Commitments and contingencies (Note 14)

Shareholders' Equity:
Preferred stock, $1.00 par value, 1,000,000 shares authorized, none issued —
—
Common stock, $5.00 par value, 240,000,000 shares authorized, 151,643,194 shares issued 758.2
758.2
Retained earnings 1,016.4
1,056.9
Non-controlling interests 4.6
4.4
Accumulated other comprehensive loss (103.9 ) (157.0 )
Treasury stock, 21,784,693 and 21,037,353 shares, respectively, at cost (848.4 ) (808.0 )
Total shareholders' equity 826.9
854.5
Total liabilities and shareholders' equity $ 2,131.3
$ 1,979.7

See Notes to Condensed Consolidated Financial Statements.

DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Six Months Ended January 31,
	2024		2023
Operating Activities
Net earnings	$	190.8	$	173.2
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	48.9		44.8

Deferred income taxes	(10.3)		(7.1)
Stock-based compensation expense	14.5		13.7
Other, net	1.4		2.9
Changes in operating assets and liabilities	(20.3)		(7.0)

Net cash provided by operating activities	225.0		220.5

Investing Activities
Purchases of property, plant and equipment	(44.5)		(57.6)



Net cash used in investing activities	(44.5)		(57.6)

Financing Activities


Proceeds from long-term debt	35.0		40.0
Repayments of long-term debt	(88.7)		(65.0)
Change in short-term borrowings	16.3		0.3

Purchase of treasury stock	(86.6)		(115.2)
Dividends paid	(60.3)		(56.2)
Exercise of stock options and other	12.6		19.3


Net cash used in financing activities	(171.7)		(176.8)
Effect of exchange rate changes on cash	(2.1)		—
Increase (decrease) in cash and cash equivalents	6.7		(13.9)
Cash and cash equivalents, beginning of period	187.1		193.3
Cash and cash equivalents, end of period	$	193.8	$	179.4

Supplemental Cash Flow Information

Income taxes paid	$	85.1	$	72.3
Interest paid	$	11.3	$	8.9
Supplemental Disclosure of Non-Cash Operating and Investing Transactions
Accrued property, plant and equipment additions	$	14.5	$	19.2

Leased assets obtained in exchange for new operating lease liabilities	$	8.2	$	10.3

Six Months Ended
January 31,
2018
2017
Operating Activities

Net earnings $ 8.0
$ 104.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 37.9
37.3
Deferred income taxes 7.0
(0.8 )
Stock-based compensation expense 9.6
5.8
Other, net 98.1
0.7
Changes in operating assets and liabilities, excluding effect of acquired businesses (50.8 ) 22.0
Net cash provided by operating activities 109.8
169.5

Investing Activities
Net expenditures on property, plant and equipment (45.8 ) (25.0 )
Acquisitions, net of cash acquired 0.8
(10.9 )
Net cash used in investing activities (45.0 ) (35.9 )

Financing Activities
Proceeds from long-term debt 140.0
—
Repayments of long-term debt (60.2 ) (0.5 )
Change in short-term borrowings (4.1 ) 12.0
Purchase of treasury stock (62.9 ) (51.8 )
Dividends paid (46.8 ) (46.3 )
Tax withholding for stock compensation transactions (2.2 ) (2.2 )
Exercise of stock options 13.6
12.1
Net cash used in financing activities (22.6 ) (76.7 )
Effect of exchange rate changes on cash 11.6
(3.8 )
Increase in cash and cash equivalents 53.8
53.1
Cash and cash equivalents, beginning of year 308.4
243.2
Cash and cash equivalents, end of period $ 362.2
$ 296.3

See Notes to Condensed Consolidated Financial Statements.

DONALDSON COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended January 31, 2024 and 2023
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total






Balance as of October 31, 2023	$	758.2	$	25.6	$	2,180.2	$	(208.3)	$	(1,419.6)	$	1,336.1
Net earnings					98.7						98.7
Other comprehensive income							19.1				19.1
Treasury stock acquired									(33.4)		(33.4)
Dividends declared ($0.50 per share)					(60.2)						(60.2)
Stock compensation and other activity			(1.6)		0.3				16.8		15.5
Balance as of January 31, 2024	$	758.2	$	24.0	$	2,219.0	$	(189.2)	$	(1,436.2)	$	1,375.8













Balance as of October 31, 2022	$	758.2	$	22.2	$	1,932.8	$	(239.9)	$	(1,318.5)	$	1,154.8
Net earnings					86.0						86.0
Other comprehensive income							59.7				59.7
Treasury stock acquired									(69.5)		(69.5)
Dividends declared ($0.46 per share)					(56.0)						(56.0)
Stock compensation and other activity			(2.0)		—				21.2		19.2
Balance as of January 31, 2023	$	758.2	$	20.2	$	1,962.8	$	(180.2)	$	(1,366.8)	$	1,194.2



	Six Months Ended January 31, 2024 and 2023
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
Balance as of July 31, 2023	$	758.2	$	24.8	$	2,087.8	$	(172.5)	$	(1,377.6)	$	1,320.7
Net earnings					190.8						190.8
Other comprehensive loss							(16.7)				(16.7)
Treasury stock acquired									(87.1)		(87.1)
Dividends declared ($0.50 per share)					(60.1)						(60.1)
Stock compensation and other activity			(0.8)		0.5				28.5		28.2
Balance as of January 31, 2024	$	758.2	$	24.0	$	2,219.0	$	(189.2)	$	(1,436.2)	$	1,375.8

Balance as of July 31, 2022	$	758.2	$	17.0	$	1,845.7	$	(205.6)	$	(1,282.1)	$	1,133.2
Net earnings					173.2						173.2
Other comprehensive income							25.4				25.4
Treasury stock acquired									(115.2)		(115.2)
Dividends declared ($0.46 per share)					(55.9)						(55.9)
Stock compensation and other activity			3.2		(0.2)				30.5		33.5
Balance as of January 31, 2023	$	758.2	$	20.2	$	1,962.8	$	(180.2)	$	(1,366.8)	$	1,194.2

See Notes to Condensed Consolidated Financial Statements.

DONALDSON COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements of Donaldson Company, Inc. and its subsidiaries (the Company) have been prepared in accordance with generally accepted accounting ~~principles~~principles (GAAP) in the United States ~~(GAAP)~~(U.S.) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of earnings, comprehensive income, financial position, ~~and~~ cash flows and changes in stockholders’ equity have been included and ~~are~~are of a normal recurring nature. Operating results for the three and six ~~month period~~months ended January 31, ~~2018~~2024 are not necessarily indicative of the results that may be expected for future periods. The year-end ~~condensed balance sheet~~Condensed Consolidated Balance Sheet information was derived from the ~~Company's audited financial statements~~Company’s Audited Consolidated Financial Statements but does not include all disclosures required by GAAP. For further information, refer to the Audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2023.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of the Company and all its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. The Company’s joint ventures are not majority-owned and are accounted for under the equity method.

Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets and liabilities and the disclosures regarding contingent assets and liabilities at period end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

New Significant Accounting Standard Recently Adopted

In October 2021, the Financial Accounting Standards ~~Recently Adopted~~ ~~In July 2015, the FASB~~Board (FASB) issued Accounting Standards Update (ASU) ~~2015-11,~~ ~~Inventory~~2021-08, Business Combinations (Topic ~~330): Simplifying~~805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) as if the entity had originated the contracts. The Company adopted ASU 2021-08 in the first quarter of fiscal 2024 and will apply this guidance to all future business combinations. The adoption did not have an impact on its Condensed Consolidated Financial Statements.

New Significant Accounting Standards Not Yet Adopted

The Company considers the applicability and impact of the FASB’s ASUs issued but not yet adopted.

In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 820), “Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company does not expect adoption of this standard will have a material impact on the related disclosures within its financial statements.

In November 2023, FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), “Improvements to Reportable Segment Disclosures,” which improves the segment disclosures to include reportable segment’s expenses. The guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect adoption of this standard will have a material impact on the related disclosures within its financial statements.

In October 2023, FASB issued ASU No. 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative," which modifies the disclosure or presentation requirements of various FASB topics in the Codification. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-K becomes effective, with early adoption prohibited. The Company does not expect adoption of this standard will have a material impact on its financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of ~~Inventory~~ ~~(ASU 2015-11),~~ Equity Securities Subject to Contractual Sale Restrictions, which ~~amended~~clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair values; it also requires additional disclosures, including the nature and remaining duration of such restrictions. The guidance requiring companies not using the last-in, first-out (LIFO) method to measure inventory at the lower of cost and net realizable value rather than the lower of cost or market. This accounting guidance wasis effective for fiscal years beginning after December 15, 2023, with early application permitted. This ASU is applicable to the ~~Company~~Company’s fiscal year beginning in the first quarter of fiscal ~~2018 and did not have an impact on its Consolidated Financial Statements.~~

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (ASU 2016-09). This update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 was effective for the Company beginning in the first quarter of fiscal 2018 and the guidance affecting the effective tax rate was adopted prospectively. The Condensed Consolidated Statements of Cash Flows is also presented retrospectively with the guidance of this new standard and, for the six months ended January 31, 2017, resulted in an increase of $5.2 million to net cash provided by operating activities and a corresponding $5.2 million increase to net cash used in financing activities.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230)~~ (ASU 2016-15). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for the Company beginning in the first quarter of fiscal 2019. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company adopted ASU 2016-15 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements.

~~In October 2016, the FASB issued ASU No. 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~ (ASU 2016-16), which is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This update removes the current exception in GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. ASU 2016-16 is effective for the Company beginning in the first quarter of fiscal 2019, and early adoption is permitted. The Company adopted ASU 2016-16 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718)~~ (ASU 2017-09). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for the Company beginning in the first quarter of fiscal 2019, and early adoption is permitted. The Company adopted ASU 2017-09 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements.

~~New Accounting Standards Not Yet Adopted~~ ~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (ASU 2014-09), which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract. In 2016, the FASB issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12 and ASU 2016-20 to clarify, among other things, the implementation guidance related to principal versus agent considerations, identifying performance obligations and accounting for licenses of intellectual property. This accounting guidance is effective for the Company beginning

in the first quarter of fiscal 2019, and early adoption is permitted. The amendments in this update are to be applied on a retrospective basis, either to each prior reporting period presented or by presenting the cumulative effect of applying the update recognized at the date of initial application. The Company is evaluating the impact of the adoption of the standard on its Consolidated Financial Statements. A project team has been established, has conducted surveys of the businesses and is performing revenue contract analyses to gather information and identify where potential differences could result in applying the requirements of the new standard. Based on the results of the surveys and contract analyses, the Company will assess the financial impact of the new standard on its Consolidated Financial Statements and determine the method of adoption.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~ (ASU 2016-02), which amends the guidance requiring companies to recognize assets and liabilities for leases with lease terms of more than twelve months. The new guidance will require companies to record both capital and operating leases on the balance sheet. This accounting guidance is effective for the Company beginning in the first quarter of fiscal 2020 on a modified retrospective basis, and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-02 on its Consolidated Financial Statements.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations: Clarifying the Definition of a Business~~ (ASU 2017-01). The new guidance provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments provide more consistency in applying the guidance, reduce the costs of application and make the definition of a business more operable. ASU 2017-01 is effective for the Company beginning in the first quarter of fiscal 2019.2025. The Company does not expect ~~the application~~adoption of ~~ASU 2017-01~~this standard will have a material impact on its ~~Consolidated Financial Statements.~~financial statements.

Note 2. Acquisitions

Univercells Technologies (UTEC)

In ~~March 2017,~~ the ~~FASB issued ASU 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715)~~ ~~(ASU 2017-07). The new guidance requires employers to disaggregate~~fourth quarter of fiscal 2023, the Company acquired UTEC, headquartered in Nivelles, Belgium, for cash consideration of €134.6 million, or $147.2 million, net of cash acquired. UTEC is a global producer of innovative biomanufacturing solutions for cell and ~~present separately the current service cost component from the other components of net benefit cost~~gene therapy research, development and commercial manufacturing. UTEC is reported within the ~~consolidated statement~~Company’s Life Sciences segment. The Company assigned the fair values to the net assets acquired resulting in $95.8 million for goodwill and $52.5 million for intangible assets, the amortization of ~~earnings. ASU 2017-07~~which is ~~effective~~not deductible for tax purposes. The valuation resulted in a deferred tax liability of $13.1 million and a deferred tax asset of $7.0 million. Net working capital was a net liability of $0.9 million, there were $6.6 million of other non-current assets and $0.7 million of other non-current liabilities. The purchase price allocation for this acquisition is preliminary pending the outcome of the final valuation of the net assets acquired. Net sales of UTEC were immaterial to the Consolidated Statements of Earnings for the three and six months ended January 31, 2024. Management expects to finalize the purchase accounting by the fourth quarter of fiscal 2024.

Isolere Bio, Inc. (Isolere)

In the third quarter of fiscal 2023, the Company ~~beginning~~acquired Isolere, headquartered in Durham, North Carolina, for cash consideration of $62.4 million, net of cash acquired. Isolere develops reagents and accompanying filtration processes used for the purification and streamlined manufacturing of biopharmaceuticals. Isolere is reported within the Company’s Life Sciences segment. The Company assigned the fair values to the net assets acquired resulting in $28.2 million for goodwill and $44.5 million for intangible assets, the amortization of which is not deductible for tax purposes, resulting in a deferred tax liability of $10.9 million. Net working capital was a net liability of $0.4 million, and there were $1.2 million of other non-current assets and $0.2 million other non-current liabilities. Purchase accounting was finalized in the first quarter of fiscal ~~2019, and early adoption is permitted. The Company is evaluating~~2024. Net sales of Isolere were immaterial to the ~~impact of the adoption of ASU 2017-07 on its~~Condensed Consolidated Statements of ~~Earnings.~~

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities~~ (ASU 2017-12), which improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance. The guidance expands the ability to hedge non-financial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. ASU 2017-12 is effectiveEarnings for the ~~Company beginning in the first quarter of fiscal 2020,~~three and ~~early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2017-12 on its Consolidated Financial Statements.~~six months ended January 31, 2024.

~~Note 2. Acquisitions~~

On May 1, 2017, the Company acquired 100% of the shares of Hy-Pro Corporation (Hy-Pro). Hy-Pro designs and manufactures filtration systems and replacement filters for stationary hydraulic and industrial lubrication applications. Hy-Pro has manufacturing locations in Anderson, Indiana and Vancouver, Washington. Total consideration for the transaction was $21.9 million after recording a working capital adjustment in accordance with the purchase agreement. The Company received cash of $0.8 million for this adjustment during the first quarter of fiscal 2018, which reduced the purchase price and goodwill by a corresponding amount.

On August 31, 2016, the Company acquired the net assets of Industrias Partmo S.A. (Partmo) in Colombia. Partmo is a leading manufacturer of replacement air, lube and fuel filters in Colombia for medium and heavy duty engines. Total consideration for the transaction was $12.1 million.

For the two acquisitions that occurred during the year ended July 31, 2017, the Company acquired $18.1 million of net tangible assets, $8.6 million of intangible assets that had estimated useful lives ranging from seven to twenty years at the time of acquisition and $7.3 million of goodwill. Pro forma financial information for these acquisitions have not been presented because they are not material to the Company's consolidated results of operations.

~~Note 3. Supplemental Balance Sheet Information~~Purchase Price Summary

The components of the above acquisitions, net ~~inventories are~~of cash acquired in fiscal 2023, as of each acquisition date were as follows (in millions):


	2023
Intangible assets:
Technology	$	84.9
Trademarks and tradenames	8.2

Customer relationships	1.2
Non-competition agreements	2.7

Intangible assets acquired	97.0
Tangible assets, net	10.4
Assets acquired, net	107.4
Goodwill	124.0
Aggregate purchase price	231.4
Add deferred tax asset	7.0
Less deferred tax liability	(24.0)

Less cash acquired	(4.8)
Acquisitions, net of cash acquired	$	209.6

There have been no acquisitions in fiscal 2024.

January 31,
2018
July 31,
2017
Raw materials $ 111.3
$ 96.3
Work in process 26.0
19.7
Finished products 207.6
177.5
Inventories, net $ 344.9
$ 293.5

Note 3. Revenue

The ~~components~~Company recognizes revenue on a wide range of ~~net property, plant~~filtration solutions sold to customers in many industries around the globe. Most of the Company’s performance obligations within customer sales contracts are for manufactured filtration systems and ~~equipment are~~replacement parts. The Company also performs limited services and installation. Customer contracts may include multiple performance obligations and the transaction price is allocated to each distinct performance obligation based on its relative standalone selling price.

Revenue Disaggregation

Net sales, generally disaggregated by location where the customer’s order was placed, were as follows (in millions):


	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
U.S. and Canada	$	376.9	$	346.4	$	758.4	$	721.7
Europe, Middle East and Africa (EMEA)	251.6		252.1		485.9		478.8
Asia Pacific (APAC)	151.0		142.4		291.1		293.0
Latin America (LATAM)	97.2		87.4		187.6		182.1
Total net sales	$	876.7	$	828.3	$	1,723.0	$	1,675.6

See Note 18 for net sales disaggregated by segment and business unit.

Contract Assets and Liabilities

The satisfaction of performance obligations and the resulting recognition of revenue typically correspond with billing of the customer. In limited circumstances, the customer may be billed at a time later than when revenue is recognized, resulting in contract assets, which are reported in other current assets on the Condensed Consolidated Balance Sheets. Contract assets were $11.2 million and $13.3 million as of January 31, 2024 and July 31, 2023, respectively. In other limited circumstances, the customer may make a payment at a time earlier than when revenue is recognized and prior to the satisfaction of performance obligations, resulting in contract liabilities, which are reported in deferred revenue on the Condensed Consolidated Balance Sheets. Contract liabilities were $29.7 million and $25.3 million as of January 31, 2024 and July 31, 2023, respectively.

The Company will recognize revenue in future periods related to remaining performance obligations for certain open contracts. Generally, these contracts have terms of one year or less. The amount of revenue related to unsatisfied performance obligations in which the original duration of the contract is greater than one year is not significant. None of the Company’s contracts contained a significant financing component.

Note 4. Inventories, Net

The components of inventories, net were as follows (in millions):


	January 31, 2024		July 31, 2023
Raw materials	$	160.9	$	155.1
Work in process	57.3		50.9
Finished products	215.2		212.1
Total inventories, net	$	433.4	$	418.1

Note 5. Property, Plant and Equipment, Net

The components of property, plant and equipment, net were as follows (in millions):


	January 31, 2024		July 31, 2023
Land	$	29.2	$	29.3
Buildings	444.8		430.8
Machinery and equipment	1,023.7		989.0
Computer software	142.7		142.0
Construction in progress	81.5		107.7
Less accumulated depreciation	(1,074.9)		(1,045.9)
Total property, plant and equipment, net	$	647.0	$	652.9

January 31,
2018
July 31,
2017
Land $ 21.3
$ 20.6
Buildings 305.6
292.5
Machinery and equipment 910.3
866.8
Construction in progress 65.6
48.9
Less: accumulated depreciation (795.1 ) (744.2 )
Property, plant and equipment, net $ 507.7
$ 484.6

Note 6. Goodwill and Intangible Assets

Goodwill

The Company allocates goodwill to reporting units within its Mobile Solutions, Industrial Solutions and Life Sciences segments. There were no dispositions or impairment charges recorded during the three and six months ended January 31, 2024 and 2023. Goodwill is assessed for impairment annually during the third quarter of the fiscal year, or more frequently if events or changes in circumstances indicate the asset may be impaired. The Company performed its annual impairment assessment during the third quarter of fiscal 2023 and did not record any impairment as a result of this assessment.

Goodwill by reportable segment was as follows (in millions):



	Mobile Solutions Segment		Industrial Solutions Segment		Life Sciences Segment		Total
Balance as of July 31, 2023	$	25.5	$	289.1	$	166.5	$	481.1
Purchase price adjustments	—		—		(1.1)		(1.1)

Foreign currency translation	(0.1)		(1.8)		(2.2)		(4.1)
Balance as of January 31, 2024	$	25.4	$	287.3	$	163.2	$	475.9

Intangible Assets

Intangible assets preliminarily recognized from the UTEC acquisition were $52.5 million, of which $43.2 million was technology with an 18 year useful life, $6.7 million was trademarks with a 10 year useful life, $1.4 million was non-competition agreements with a 2 year useful life and $1.2 million was customer relationships with a 10 year useful life.

There was a foreign currency translation gain of $1.5 million and loss of $1.7 million for the three and six months ended January 31, 2024, respectively, and gain of $3.8 million and a gain of $1.7 million for the three and six months ended January 31, 2023, respectively.

Intangible asset classes were as follows (in millions):


	January 31, 2024
	Weighted Amortizable Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	10.4	$	107.2	$	(67.7)	$	39.5
Patents	18.4	33.4		(7.0)		26.4
Trademarks	8.6	15.9		(4.6)		11.3
Technology	16.8	115.7		(16.1)		99.6
Non-compete agreements	2.8	3.9		(1.3)		2.6
Total intangible assets		$	276.1	$	(96.7)	$	179.4


	July 31, 2023
	Weighted Amortizable Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	10.8	$	107.8	$	(65.6)	$	42.2
Patents	18.9	33.4		(6.3)		27.1
Trademarks	9.0	15.9		(3.9)		12.0
Technology	17.2	116.3		(12.9)		103.4
Non-compete agreements	3.1	4.0		(0.6)		3.4
Total intangible assets		$	277.4	$	(89.3)	$	188.1

Intangible asset amortization expense was $3.8 million and $7.8 million for the three and six months ended January 31, 2024, respectively, and was $2.5 million and $5.1 million for the three and six months ended January 31, 2023, respectively. Amortization expense is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings.

Note 7. Long-Term Debt

As of January 31, 2024, there was $452.5 million available and $40.0 million outstanding on the Company’s $500.0 million unsecured revolving credit facility that expires on May 21, 2026.

Certain debt agreements contain financial covenants related to interest coverage and leverage ratios, as well as other non-financial covenants. As of January 31, 2024, the Company was in compliance with all such covenants.

Note 8. Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The U.S. Internal Revenue Service has completed examinations of the Company’s U.S. federal income tax returns through fiscal 2019. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before fiscal 2018.

As of January 31, 2024, gross unrecognized tax benefits were $15.8 million and accrued interest and penalties on these unrecognized tax benefits were $2.2 million. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income taxes in the Condensed Consolidated Statements of Earnings. The Company estimates within the next 12 months it is reasonably possible its uncertain tax positions could decrease by as much as $4.0 million due to lapses in statutes of limitation. The statutes of limitation periods for the Company’s various tax jurisdictions range from two years to 10 years.

The Company believes it is remote that any adjustment necessary to the reserve for income taxes over the next 12 months will be material. However, it is possible the ultimate resolution of audits or disputes may result in a material change to the reserve for income taxes, although the quantification of such potential adjustments cannot be made at this time.

Note 4.9. Earnings Per Share

~~The Company’s basic~~Basic net ~~(loss)~~ earnings per share (EPS) is computed by dividing net ~~(loss)~~ earnings by the weighted average number of outstanding common shares. ~~The Company’s diluted~~Diluted net ~~(loss) earnings per share~~EPS is computed by dividing net ~~(loss)~~ earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options and other stock incentive plans. ~~All common share equivalents were excluded from the~~

Basic and diluted net ~~(loss) earnings~~EPS calculations were as follows (in millions, except per share ~~calculation for~~amounts):


	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Net earnings	$	98.7	$	86.0	$	190.8	$	173.2

Weighted average common shares outstanding
Weighted average common shares – basic	120.5		121.7		120.7		122.2
Dilutive impact of stock-based awards	1.6		1.6		1.7		1.5
Weighted average common shares – diluted	122.1		123.3		122.4		123.7

Net EPS – basic	$	0.82	$	0.71	$	1.58	$	1.42
Net EPS – diluted	$	0.81	$	0.70	$	1.56	$	1.40
Impact of potentially anti-dilutive stock options excluded from net EPS calculation	—		—		—		1.6

Note 10. Stockholders’ Equity

Share Repurchases

In November 2023, the ~~three~~Board of Directors authorized the repurchase of up to 12.0 million shares of common stock under the Company’s stock repurchase plan, replacing the Company’s previous stock repurchase plan dated May 31, 2019. This repurchase authorization is effective until terminated by the Board of Directors. During the six months ended January 31, ~~2018 because~~2024, the Company ~~incurred a net loss~~repurchased 1.4 million shares for $87.1 million. During the ~~period. Certain outstanding options~~six months ended January 31, 2023, the Company repurchased 2.1 million shares for $115.2 million. As of January 31, 2024, the Company had remaining authorization to repurchase 11.8 million shares under the November 2023 stock repurchase plan.

Dividends

Dividends paid were ~~excluded from the diluted net (loss) earnings~~25.0 cents and 50.0 cents per ~~share calculations for the other periods because their exercise prices are greater than the average market price of the Company’s~~ common ~~stock during those periods. Options excluded from the diluted net (loss) earnings per~~ share ~~calculation were 2.2 million and 0.1 million~~ for the three and six months ended January 31, ~~2018, respectively. Options excluded from the diluted net (loss) earnings~~2024 and were 23.0 cents and 46.0 cents per common share ~~calculation were 1.6 million~~ for the three and six months ended January 31, ~~2017.~~

~~The following table presents the information necessary to calculate basic and diluted net earnings per share (in millions, except per share amounts):~~2023, respectively.

Three Months Ended
January 31, Six Months Ended
January 31,
2018
2017
2018
2017
Net (loss) earnings for basic and diluted earnings per share computation $ (52.9 ) $ 46.5
$ 8.0
$ 104.5

Weighted average common shares outstanding:
Weighted average common shares – basic 130.6
132.9
130.7
133.2
Dilutive impact of share based awards —
1.5
2.1
1.3
Weighted average common shares – diluted 130.6
134.4
132.8
134.5

Net (loss) earnings per share – basic $ (0.40 ) $ 0.35
$ 0.06
$ 0.78
Net (loss) earnings per share – diluted $ (0.40 ) $ 0.35
$ 0.06
$ 0.78

Note ~~5. Goodwill~~11. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the three months ended January 31, 2024 and ~~Other Intangible Assets~~2023 were as follows (in millions):

~~Goodwill is assessed for impairment annually or more frequently if an event occurs or circumstances change~~


	Foreign Currency Translation Adjustment		Pension Benefits			Derivative Financial Instruments			Total
Balance as of October 31, 2023, net of tax	$	(147.2)	$	(66.2)		$	5.1		$	(208.3)
Other comprehensive income (loss) before reclassifications and tax	20.9		—			(0.9)			20.0
Tax benefit	—		—			0.1			0.1
Other comprehensive income (loss) before reclassifications, net of tax	20.9		—			(0.8)			20.1

Reclassifications, before tax	—		(0.2)		(1)	(1.1)			(1.3)
Tax benefit	—		—			0.3			0.3
Reclassifications, net of tax	—		(0.2)			(0.8)		(2)	(1.0)
Other comprehensive income (loss), net of tax	20.9		(0.2)			(1.6)			19.1
Balance as of January 31, 2024, net of tax	$	(126.3)	$	(66.4)		$	3.5		$	(189.2)

Balance as of October 31, 2022, net of tax	$	(183.7)	$	(66.3)		$	10.1		$	(239.9)
Other comprehensive income (loss) before reclassifications and tax	65.3		—			(4.1)			61.2
Tax benefit	—		—			1.0			1.0
Other comprehensive income (loss) before reclassifications, net of tax	65.3		—			(3.1)			62.2

Reclassifications, before tax	—		(1.0)		(1)	(2.7)			(3.7)
Tax benefit	—		0.3			0.9			1.2
Reclassifications, net of tax	—		(0.7)			(1.8)		(2)	(2.5)
Other comprehensive income (loss), net of tax	65.3		(0.7)			(4.9)			59.7
Balance as of January 31, 2023, net of tax	$	(118.4)	$	(67.0)		$	5.2		$	(180.2)

(1)Amounts include foreign currency translation gain of $0.6 million and $1.5 million and net amortization of prior service costs and actuarial losses of $0.4 million and $0.5 million in fiscal 2024 and 2023, respectively, included in other income, net in the Condensed Consolidated Statements of Earnings, see Note 13.

(2)Relates to designated foreign currency forward contracts that ~~would indicate impairment. The Company performed its annual impairment assessment during~~were reclassified from accumulated other comprehensive loss on the ~~third quarter~~Condensed Consolidated Balance Sheets to net sales, cost of ~~fiscal 2017. The results~~sales and selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings, see Note 14.

~~of this assessment were that the estimated fair values of the reporting units to which goodwill is assigned continued to exceed the corresponding carrying values of the reporting units, resulting~~Changes in ~~no goodwill impairment.~~

~~The following is a reconciliation of goodwill by reportable segment~~accumulated other comprehensive loss for the six months ended January 31, ~~2018~~2024 and 2023 were as follows (in millions):


	Foreign Currency Translation Adjustment		Pension Benefits			Derivative Financial Instruments			Total
Balance as of July 31, 2023, net of tax	$	(109.6)	$	(67.2)		$	4.3		$	(172.5)
Other comprehensive loss before reclassifications and tax	(16.7)		—			(0.7)			(17.4)
Tax expense	—		—			—			—
Other comprehensive loss before reclassifications, net of tax	(16.7)		—			(0.7)			(17.4)

Reclassifications, before tax	—		1.0		(1)	(0.2)			0.8
Tax (expense) benefit	—		(0.2)			0.1			(0.1)
Reclassifications, net of tax	—		0.8			(0.1)		(2)	0.7
Other comprehensive (loss) income, net of tax	(16.7)		0.8			(0.8)			(16.7)
Balance at January 31, 2024, net of tax	$	(126.3)	$	(66.4)		$	3.5		$	(189.2)

Balance as of July 31, 2022, net of tax	$	(143.6)	$	(67.5)		$	5.5		$	(205.6)
Other comprehensive income before reclassifications and tax	25.2		—			0.4			25.6
Tax expense	—		—			(0.1)			(0.1)
Other comprehensive income before reclassifications, net of tax	25.2		—			0.3			25.5

Reclassifications, before tax	—		0.6		(1)	(0.9)			(0.3)
Tax (expense) benefit	—		(0.1)			0.3			0.2
Reclassifications, net of tax	—		0.5			(0.6)		(2)	(0.1)
Other comprehensive income (loss), net of tax	25.2		0.5			(0.3)			25.4
Balance at January 31, 2023, net of tax	$	(118.4)	$	(67.0)		$	5.2		$	(180.2)

Engine
Products

Industrial
Products

Total
Goodwill
Balance as of July 31, 2017 $ 84.3
$ 153.8
$ 238.1
Goodwill acquired 0.6
—
0.6
Foreign exchange translation 0.4
2.9
3.3
Balance as of January 31, 2018 $ 85.3
$ 156.7
$ 242.0

~~The following is a reconciliation~~(1)Amounts include foreign currency translation loss of $0.2 million and gain of $0.5 million and net ~~intangible assets for the six months ended January 31, 2018 (in millions):~~

Gross Carrying Amount Accumulated Amortization Net Intangible Assets
Balance as of July 31, 2017 $ 106.6
$ (66.0 ) $ 40.6
Amortization expense —
(2.8 ) (2.8 )
Foreign exchange translation (2.2 ) 2.6
0.4
Balance as of January 31, 2018 $ 104.4
$ (66.2 ) $ 38.2

~~Note 6. Warranty~~

~~The Company estimates warranty expense on certain products at the time~~amortization of ~~sale. The following is a reconciliation~~prior service costs and actuarial losses of ~~warranty reserves,~~$0.8 million and $1.1 million in fiscal 2024 and 2023, respectively, included in other ~~current liabilities and other long-term liabilities, for the six months ended January 31, 2018 and 2017 (in millions):~~

Six Months Ended
January 31,
2018
2017
Balance at beginning of period $ 14.6
$ 11.9
Accruals for warranties issued during the reporting period 1.5
1.5
Accruals related to pre-existing warranties (including changes in estimates) 1.1
3.8
Less: settlements made during the period (2.6 ) (2.5 )
Balance at end of period $ 14.6
$ 14.7

~~There were no material specific warranty matters accrued for or significant settlements made~~income, net in the ~~six months ended January 31, 2018 or 2017. The Company’s warranty matters are not expected~~Condensed Consolidated Statements of Earnings, see Note 13.

(2)Relates to ~~have a material impact~~designated foreign currency forward contracts that were reclassified from accumulated other comprehensive loss on the ~~Company's results~~Condensed Consolidated Balance Sheets to net sales, cost of ~~operations, liquidity or financial position.~~sales and selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings, see Note 14.

~~Note 7. Stock-Based Compensation~~

Stock-based compensation expense is recognized using the fair-value method for all awards. The Company determines the fair value of stock option awards using the Black-Scholes option pricing model. Options are granted whereby the option exercise price is equivalent to the market price of the Company's common stock at the date of grant. For the three and six months ended January 31, 2018, the Company recorded pretax stock-based compensation expense associated with stock options of $1.7 million and $5.5 million, respectively, and recorded $0.1 million and $1.3 million, respectively, of related tax benefits. For the three and six months ended January 31, 2017, the Company recorded pretax stock-based compensation expense associated with stock options of $3.8 million and $4.9 million, respectively, and recorded $1.3 million and $1.6 million, respectively, of related tax benefits. In addition, for the three and six months ended January 31, 2018, the Company recorded expense associated with performance-based awards of $1.0 million and $3.7 million, respectively. For the three and six months ended January 31, 2017, the Company recorded expense associated with performance-based awards of $0.3 million and $0.5 million, respectively.

~~The following table summarizes stock option activity during the six months ended January 31, 2018:~~

Options
Outstanding

Weighted
Average
Exercise Price
Outstanding as of July 31, 2017 6,685,551
$ 32.60
Granted 877,050
$ 45.69
Exercised (530,916 ) $ 26.32
Canceled (21,193 ) $ 37.60
Outstanding as of January 31, 2018 7,010,492
$ 34.70

The total intrinsic value of options exercised during the six months ended January 31, 2018 and 2017 was $11.8 million and $8.6 million, respectively. The weighted average fair value for options granted during the six months ended January 31, 2018 and 2017 was $9.29 and $10.09 per share, respectively.

~~The following table summarizes information concerning outstanding and exercisable options as of January 31, 2018:~~

Range of Exercise Prices Number Outstanding
Weighted
Average
Remaining
Contractual
Life (Years)

Weighted
Average
Exercise
Price of Outstanding Options

Number
Exercisable

Weighted
Average
Exercise
Price of Exercisable Options
$ 0.00 to $22.69 983,883
1.54 $ 19.68
983,883
$ 19.68
$22.70 to $28.69 861,049
7.86 $ 28.06
567,606
$ 28.05
$28.70 to $34.69 1,383,480
3.92 $ 31.64
1,366,082
$ 31.64
$34.70 to $40.69 1,380,549
5.64 $ 37.03
1,370,383
$ 37.03
$40.70 and above 2,401,531
8.34 $ 43.65
947,730
$ 42.39
7,010,492
5.92 $ 34.70
5,235,684
$ 32.36

~~As of January 31, 2018, the aggregate intrinsic value of options outstanding and exercisable was $111.9 million and $95.8 million, respectively.~~

As of January 31, 2018, there was $9.9 million of total unrecognized compensation expense related to non-vested stock options granted under the 2010 Master Stock Incentive Plan. This unvested expense is expected to be recognized during fiscal years 2018, 2019, 2020 and 2021.

Note 8.12. Stock-Based Compensation

The Company recognizes compensation expense for all stock-based awards based on the grant date fair value of the award. Stock-based awards consist primarily of non-qualified stock options, performance-based awards, restricted stock awards and restricted stock units. Grants related to restricted stock awards and restricted stock units are immaterial. The Company issues treasury shares for stock options and performance-based awards.

Stock Options

The exercise price of options granted is equal to the market price of the Company’s common stock at the date of the grant. Options are generally exercisable for up to 10 years from the date of grant and vest in equal increments over three years.

Pretax stock-based compensation expense associated with options was $2.0 million and $10.5 million for the three and six months ended January 31, 2024, respectively, and was $1.8 million and $9.3 million for the three and six months ended January 31, 2023, respectively.

Fair value is calculated using the Black-Scholes option pricing model. The weighted average fair value for options granted was $18.98 and $15.62 per share during the six months ended January 31, 2024 and 2023, respectively.

Option activity was as follows:


	Options	Weighted Average Exercise Price
Balance outstanding as of July 31, 2023	6,777,407	$	47.80
Granted	804,398	59.87
Exercised	(559,697)	42.15
Expired/forfeited	(29,565)	52.07
Balance outstanding as of January 31, 2024	6,992,543	$	49.62

Performance-Based Awards

Performance-based awards are payable in common stock and are based on a formula that measures Company performance over a three-year period. These awards are settled after three years with payouts ranging from 0% to 200% of the target award depending on achievement.

Pretax performance-based awards expense was $1.5 million and $3.1 million for the three and six months ended January 31, 2024, respectively, and was $1.7 million and $3.5 million for the three and six months ended January 31, 2023, respectively.

Performance-based awards for non-vested activity were as follows:


	Performance Shares	Weighted Average Grant Date Fair Value
Balance outstanding as of July 31, 2023	194,761	$	54.46
Granted	114,800	59.66
Vested	—	—
Forfeited	—	—
Balance outstanding as of January 31, 2024	309,561	$	56.39

Note 13. Employee Benefit Plans

The Company ~~and certain of its international subsidiaries have~~has defined benefit pension ~~plans. There are two types~~plans for certain hourly and salaried employees. They consist of U.S. plans. The first type of U.S. plan (Hourly Pension Plan) is a traditional defined benefit pension plan primarily for union employees. The second plan (Salaried Pension Plan) is for some salaried and non-union production employees that provides defined benefits pursuant to a cash balance feature whereby a participant accumulates a benefit comprised of a percentage of current salary that varies with years of service, interest credits and transition credits. The Company no longer allows entrants intoplans in the U.S. ~~Salaried Pension Plan~~, Belgium, Germany, Mexico and the employees in this plan no longer continue to accrue Company contribution credits under the plan. Employees are instead eligible for a 3% annual Company retirement contribution to their 401(k) in addition to the Company’s normal 401(k) match. The non-U.S.United Kingdom. These plans generally provide pension benefits based on years of service and compensation level.

Components of net periodic pension costs other than the service cost component are included in other income, net in the Condensed Consolidated Statements of Earnings.

Net periodic ~~benefit~~pension costs for the Company’s pension plans ~~include the following components~~were as follows (in millions):


													Three Months Ended January 31,		Six Months Ended January 31,
	Three Months Ended January 31,						Six Months Ended January 31,						2024	2023		2024	2023
	2018			2017			2018			2017
Net periodic benefit costs:
Service cost	$	2.1		$	2.0		$	4.1		$	4.1
Interest cost	3.7			3.4			7.4			6.7
Expected return on assets	(6.6		)	(6.6		)	(13.1		)	(13.2		)
Prior service cost amortization	0.2			0.2			0.3			0.4
Actuarial loss amortization	1.1			1.8			2.3			3.6
Net periodic benefit costs	$	0.5		$	0.8		$	1.0		$	1.6

Net periodic pension costs

Net periodic pension costs

Net periodic pension costs

The Company’s general funding policy ~~for its pension plans~~ is to make at least the minimum required contributions asunder applicable regulations, plus any additional amounts it determines to be appropriate. Future required ~~by applicable regulations. Additionally,~~pension plan contributions may change significantly depending on the actual rate of return on plan assets, discount rates and regulatory requirements.

Note 14. Derivative Instruments and Hedging

Derivative Fair Value Measurements

The Company enters into derivative instrument agreements, including foreign currency forward contracts and net investment hedges, to manage risk in connection with changes in foreign currency. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit. There is risk the counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors.

Contract provisions may ~~elect~~require the posting of collateral or settlement of the contracts for various reasons, including if the Company’s credit ratings are downgraded below its investment grade credit rating by any of the major credit agencies, or for cross default contractual provisions, if there is a failure under other financing arrangements related to ~~make additional contributions up to the maximum tax deductible contribution. For the six months ended~~payment terms or covenants. As of January 31, ~~2018,~~2024 and July 31, 2023, no collateral was posted.

The Company does not enter into derivative instrument agreements for trading or speculative purposes. For discussion on the ~~Company made contributions~~fair value of ~~$1.4 million to its U.S. pension plans and $0.7 million to its non-U.S. pension plans. The estimated minimum funding requirement for~~ the Company’s U.S. plans for the year ending July 31, 2018 is $3.7 million. In accordance with the Pension Protection Act of 2006, this contribution obligation may be met with existing credit balances that resulted from payments above the minimum obligation in prior years. derivatives, see Note 15.

Foreign Currency Forward Contracts - Cash Flow Hedges and Derivatives Not Designated as Hedging Instruments

The Company ~~has sufficient credit balances~~buys materials from foreign suppliers. Those transactions can be denominated in those suppliers’ local currency. The Company also sells to ~~meet the minimum obligation for fiscal 2018. Due to favorable provisions~~customers in foreign countries. Those transactions can be denominated in those customers’ local currency. Both of these transaction types can create volatility in the U.S. Tax Cuts and Jobs Act, the Company is considering making additional contributions to one or both of its U.S. pension plans during fiscal 2018. The Company estimates that it will contribute an additional $0.7 million to its non-U.S. pension plans during the remainder of fiscal 2018 based upon the local government prescribed funding requirements.

~~Note 9. Income Taxes~~

Changes in the ~~Company’s current fiscal year include lowering of the U.S. federal corporate income tax rate, the re-measurement~~fair value of the Company’s ~~net deferred tax assets to reflect their value at the reduced tax rate and the one-time transition tax~~designated hedges are reported in accumulated other comprehensive loss on the ~~deemed repatriation~~Condensed Consolidated Balance Sheets until the related transaction occurs, see Note 11. Designated hedges are recognized as a component of ~~certain foreign earnings. The Company’s U.S. federal statutory tax rate will be a blended rate~~either net sales, cost of ~~26.9 percent for fiscal 2018~~sales, selling, general and ~~21 percent for fiscal 2019. The Company recorded a discrete tax charge of $1.4 million during the three months ended January 31, 2018 for the re-measurement of its~~administrative expenses or other income, net deferred tax assets. The Company also recorded a discrete tax charge of $108.3 million during the period for the one-time transition tax on deemed repatriated earnings of its non-U.S. subsidiaries. This charge is inclusive of U.S. state income tax on the portion of the earnings expected to be repatriated. The one-time transition tax is based on the Company’s post-1986 earnings and profits not previously subjected to U.S. taxation. The tax is payable over an eight year period, and the portion not due within 12 months of $99.4 million is classified within other long-term liabilities in the Condensed Consolidated ~~Balance Sheet~~Statements of Earnings upon occurrence of the related hedged transaction.

Hedges and subsequent changes in the fair value of hedges that are not designated are recognized in other income, net in the Condensed Consolidated Statements of Earnings along with the related hedged transactions.

Amounts related to foreign currency forward contracts designated as hedges are expected to be reclassified into earnings during the next 12 months based upon the timing of inventory purchases and sales.

Net Investment Hedges

The Company uses fixed-to-fixed cross-currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe. The Company has elected the spot method for designating these contracts as net investment hedges.

The total notional amount of net investment hedges was €80 million, or $88.8 million, as of January 31, ~~2018. Although the Company made reasonable estimates~~2024 and July 31, 2023. The maturity dates range from 2027 to 2029.

Gains and losses resulting from a change in ~~accounting for the impacts~~fair value of the ~~TCJA, these tax charges~~net investment hedge are ~~provisional, as~~offset by gains and losses on the ~~Company is still analyzing certain aspects of~~underlying foreign currency exposure and are included in accumulated other comprehensive loss on the ~~legislation and refining calculations as information becomes available during~~Condensed Consolidated Balance Sheets. Amounts related to excluded components associated with the ~~measurement period as allowed by SAB 118.~~ ~~The accounting for the income tax effects of the TCJA is~~net investment hedge are expected to be ~~completed at fiscal year-end and any future adjustments will be recognized as discrete income tax~~reclassified into earnings in interest expense ~~or benefit~~ in the ~~period the adjustments~~Condensed Consolidated Statements of Earnings through their maturity.

Cash flows from derivative transactions are ~~determined.~~

its indefinite reinvestment assertions with regard to unremitted earnings for certain of its foreign subsidiaries. As part of this evaluation, the Company will consider estimated global working capital levels, capital investment requirements and the potential tax liabilities that would be incurred if the foreign subsidiaries distribute cash to the U.S. parent and make a determination in the SAB 118 measurement period as to whether earnings of these subsidiaries remain permanently invested or not. If the Company determines that a subsidiary should no longer remain subject to the indefinite reinvestment assertion, additional tax charges will be accrued, including but not limited to state income taxes, withholding taxes and other relevant foreign taxes in the period the conclusion is determined. As of January 31, 2018, the Company has determined that the earnings of certain subsidiaries are no longer subject to the indefinite reinvestment assertion and recorded an immaterial provisional estimate of the withholding taxes due on the repatriation of those earnings. The Company will continue to evaluate its global cash needs and opportunities to repatriate cash as part of an effort to more precisely compute this tax impact.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2008. The United States Internal Revenue Service (IRS) has completed examinations of the Company’s U.S. federal income tax returns through 2013. Currently, the Company is under examination by the IRS for fiscal years 2015 and 2016.

As of January 31, 2018, the gross unrecognized tax benefits were $19.8 million and accrued interest and penalties on these unrecognized tax benefits were $2.6 million. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. If the Company were to prevail on all unrecognized tax benefits recorded, substantially all of the unrecognized tax benefits would benefit the effective tax rate. With an average statute of limitations of approximately five years, up to $2.4 million of the unrecognized tax benefits could potentially expire in the next 12-month period, unless extended by an audit.

It is reasonably possible that matters associated with either current or future audits and disputes could cause adjustments to previously recorded reserves in the next 12-month period. Quantification of an estimated range and timing of future audit adjustments cannot be made at this time.

~~Note 10. Fair Value Measurements~~

As of January 31, 2018, the carrying values of cash and cash equivalents, accounts receivables, short-term borrowings and trade accounts payable approximate fair value because of the short-term nature of these instruments. As of January 31, 2018, the estimated fair value of long-term debt with fixed interest rates was $271.8 million compared to its carrying value of $275.0 million. The fair value is estimated by discounting the projected cash flows using the rate that similar amounts of debt could currently be borrowed. Long-term debt would be classified as Level 2 in the fair value hierarchy. The carrying values of long-term debt with variable interest rates approximate fair value.

~~Note 11. Shareholders' Equity~~

The Company’s Board of Directors authorized the repurchase of up to 14.0 million shares of common stock under the Company's stock repurchase plan. This repurchase authorization is effective until terminated by the Board of Directors. During the six months ended January 31, 2018, the Company repurchased 1.3 million shares for $62.9 million. As of January 31, 2018, the Company had remaining authorization to repurchase 5.8 million shares under this plan.

~~On January 26, 2018, the Company's Board of Directors declared a cash dividend in the amount of 18.0 cents per common share, payable March 6, 2018, to shareholders of record as of February 14, 2018.~~

Note ~~12. Accumulated Other Comprehensive Loss~~15. Fair Value Measurements

~~Changes~~Fair value measurements of financial instruments are reported in ~~accumulated~~one of three levels based on the lowest level of significant input used. For Level 1, inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities. For Level 2, inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other ~~comprehensive loss~~than quoted prices that are observable for the asset or liability, either directly or indirectly. For Level 3,inputs to the fair value measurement are unobservable inputs or are based on valuation techniques.

Short-Term Financial Instruments

As of January 31, 2024 and July 31, 2023, the carrying values of cash and cash equivalents, accounts receivable, short-term borrowings and accounts payable approximate fair value because of the short-term nature of these instruments. Short-term financial instruments are classified as Level 1 in the fair value hierarchy.

Long-Term Debt

As of January 31, 2024, the estimated fair values of fixed interest rate long-term debt were $388.0 million compared to the carrying values of $425.0 million, inclusive of a current portion with a fair value of $124.5 million and carrying value of $125.0 million. As of July 31, 2023, the estimated fair values of fixed interest rate long-term debt were $378.9 million compared to the carrying values of $425.0 million. The fair values are estimated by ~~component~~discounting the projected cash flows using the interest rates at which similar amounts of debt could currently be borrowed. The carrying values of total variable interest rate long-term debt were $140.2 million and $198.4 million as of January 31, 2024 and July 31, 2023, respectively and approximate their fair values. Long-term debt is classified as Level 2 in the fair value hierarchy.

Equity Method Investments

The Company holds equity method investments in its joint ventures, which are included in other long-term assets on the Condensed Consolidated Balance Sheets. The aggregate carrying amount of these investments was $24.3 million and $24.4 million as of January 31, 2024 and July 31, 2023, respectively. These equity method investments are measured at fair value on a non-recurring basis. The fair value of the Company’s equity method investments has not been adjusted for the three ~~months ended January 31, 2018 and 2017 are as follows (in millions):~~

Foreign
Currency
Translation
Adjustment Pension
Benefits Derivative
Financial
Instruments Total
Balance as of October 31, 2017, net of tax $ (63.9 ) $ (94.3 ) $ (0.8 ) $ (159.0 )
Other comprehensive income (loss) before reclassifications and tax 55.5
—
(0.4 ) 55.1
Tax benefit —
—
0.1
0.1
Other comprehensive income (loss) before reclassifications, net of tax 55.5
—
(0.3 ) 55.2
Reclassifications, before tax —
0.6
(0.5 ) 0.1
Tax (expense) benefit —
(0.4 ) 0.2
(0.2 )
Reclassifications, net of tax —
0.2
⁽¹⁾
(0.3 )
⁽²⁾
(0.1 )
Other comprehensive income (loss), net of tax 55.5
0.2
(0.6 ) 55.1
Balance as of January 31, 2018, net of tax $ (8.4 ) $ (94.1 ) $ (1.4 ) $ (103.9 )

Balance as of October 31, 2016, net of tax $ (101.7 ) $ (113.4 ) $ 0.5
$ (214.6 )
Other comprehensive (loss) income before reclassifications and tax (8.4 ) —
0.3
(8.1 )
Tax expense —
—
(0.1 ) (0.1 )
Other comprehensive (loss) income before reclassifications, net of tax (8.4 ) —
0.2
(8.2 )
Reclassifications, before tax —
2.1
(0.7 ) 1.4
Tax (expense) benefit —
(0.8 ) 0.2
(0.6 )
Reclassifications, net of tax —
1.3
⁽¹⁾
(0.5 )
⁽²⁾
0.8
Other comprehensive (loss) income, net of tax (8.4 ) 1.3
(0.3 ) (7.4 )
Balance as of January 31, 2017, net of tax $ (110.1 ) $ (112.1 ) $ 0.2
$ (222.0 )


~~(1)~~	Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 8) that were reclassified from accumulated other comprehensive loss to operating expenses or ~~cost of sales.~~


~~(2)~~	~~Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net.~~

~~Changes in accumulated other comprehensive loss by component for the~~ six months ended January 31, ~~2018~~2024 or 2023 as there have been no triggering events or changes in circumstance that would have had an adverse impact on the value of these investments. In the event these investments are required to be measured, they would fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value, as the investments are in privately-held entities.

Derivative Fair Value Measurements

The fair values of the Company’s foreign currency forward contracts and ~~2017~~net investment hedges reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price). The fair values are based on inputs other than quoted prices that are observable for the asset or liability and are determined by standard calculations and models that use readily observable market parameters. These inputs include foreign currency exchange rates. Industry standard data providers are the primary source for forward and spot rate information for foreign currency exchange rates. The fair values of the Company’s foreign currency forward contracts and net investment hedges are classified as Level 2 in the fair value hierarchy. For discussion of the Company’s derivatives and hedging, see Note 14.

Fair Value of Derivatives Contracts

The fair value of the Company’s derivative contracts, recorded on the Condensed Consolidated Balance Sheets, was as follows (in millions):


		Assets				Liabilities
	Balance Sheet Location	January 31, 2024		July 31, 2023		January 31, 2024		July 31, 2023
Designated as hedging instruments
Foreign currency forward contracts	Other current assets and other current liabilities	$	0.6	$	0.6	$	0.9	$	0.1
Net investment hedges	Other current assets and other long-term assets	3.6		3.6		—		—

Total designated		4.2		4.2		0.9		0.1

Not designated as hedging instruments
Foreign currency forward contracts	Other current assets and other current liabilities	0.6		0.7		0.3		1.4
Total not designated		0.6		0.7		0.3		1.4
Total		$	4.8	$	4.9	$	1.2	$	1.5

Foreign
Currency
Translation
Adjustment Pension
Benefits Derivative
Financial
Instruments Total
Balance as of July 31, 2017, net of tax $ (58.8 ) $ (95.1 ) $ (3.1 ) $ (157.0 )
Other comprehensive income before reclassifications and tax 50.4
—
2.0
52.4
Tax expense —
—
(0.7 ) (0.7 )
Other comprehensive income before reclassifications, net of tax 50.4
—
1.3
51.7
Reclassifications, before tax —
1.9
0.6
2.5
Tax expense —
(0.9 ) (0.2 ) (1.1 )
Reclassifications, net of tax —
1.0
⁽¹⁾
0.4
⁽²⁾
1.4
Other comprehensive income, net of tax 50.4
1.0
1.7
53.1
Balance as of January 31, 2018, net of tax $ (8.4 ) $ (94.1 ) $ (1.4 ) $ (103.9 )

Balance as of July 31, 2016, net of tax $ (89.3 ) $ (115.8 ) $ (0.5 ) $ (205.6 )
Other comprehensive (loss) income before reclassifications and tax (20.8 ) —
1.9
(18.9 )
Tax expense —
—
(0.6 ) (0.6 )
Other comprehensive (loss) income before reclassifications, net of tax (20.8 ) —
1.3
(19.5 )
Reclassifications, before tax —
5.5
(0.8 ) 4.7
Tax (expense) benefit —
(1.8 ) 0.2
(1.6 )
Reclassifications, net of tax —
3.7
⁽¹⁾
(0.6 )
⁽²⁾
3.1
Other comprehensive (loss) income, net of tax (20.8 ) 3.7
0.7
(16.4 )
Balance as of January 31, 2017, net of tax $ (110.1 ) $ (112.1 ) $ 0.2
$ (222.0 )
Amounts related to excluded components, such as forward points, are excluded from the assessment of hedge effectiveness of net investment hedges and are expected to be reclassified into earnings throughout their maturity dates. See Note 11 for additional information on accumulated other comprehensive loss.


~~(1)~~	Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 8) that were reclassified from accumulated other comprehensive loss to operating expenses or cost of sales.


~~(2)~~	~~Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net.~~

Fair Value of Contingent Consideration

The fair value of the contingent consideration liability is determined using a probability-weighted discounted cash flow method. This fair value measurement is based on unobservable inputs in the market and thus, represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreement (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due) and utilizes assumptions with regard to future financial and operational milestones, probabilities of achieving such milestones and a discount rate. Depending on the contractual terms of the purchase agreement, the probability of achieving such milestones generally represents the only significant unobservable input. The contingent consideration liability is measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.

The fair value of the Company’s contingent consideration liability that uses unobservable inputs was $26.0 million as of January 31, 2024 and $25.0 million as of July 31, 2023. The maximum potential payout of the contingent consideration as of January 31, 2024 and July 31, 2023 was $30.7 million, see Note 17.

Note ~~13.~~16. Guarantees

Letters of Credit

The Company and Caterpillar Inc. equally own the shares of Advanced Filtration Systems Inc. (AFSI), an unconsolidated joint venture, and guarantee certain debt of the joint venture. As of January 31, 2018, AFSI had $31.2 million of outstanding debt, of which the Company guarantees half. In addition, during the three months ended January 31, 2018 and 2017, the Company recorded earnings from this equity method investment of $0.4 million and $0.3 million, respectively. The Company recorded $0.5 million and $0.9 million of earnings from this equity method investment during the six months ended January 31, 2018 and 2017, respectively. During the three months ended January 31, 2018 and 2017, the Company recorded royalty income related to AFSI of $1.7 million and $1.4 million, respectively, in other expense (income), net. During the six months ended January 31, 2018 and 2017, the Company recorded royalty income related to AFSI of $3.6 million and $2.7 million, respectively, in other expense (income), net.

~~As of January 31, 2018 and July 31, 2017, the Company had a contingent liability for standby~~has letters of credit ~~totaling $8.4 million and $10.5 million, respectively, that have been issued and are outstanding. The letters of credit~~which guarantee payment to third parties in the event the Company is in breach of contract terms as detailed in each letter of credit. AsThe outstanding contingent liability for standby letters of credit was as follows (in millions):


	January 31, 2024		July 31, 2023
Contingent liability for standby letters of credit issued under the Company’s revolving credit facility	$	7.5	$	7.5
Amounts drawn for letters of credit under the Company’s revolving credit facility	$	—	$	—

Advanced Filtration Systems Inc. (AFSI)

The Company has an unconsolidated joint venture, AFSI, established by the Company and Caterpillar Inc. (Caterpillar) in 1986. AFSI designs and manufactures high-efficiency fluid filters used in Caterpillar’s machinery worldwide. The Company and Caterpillar equally own the shares of AFSI and both companies guarantee certain debt and banking services, including credit and debit cards, merchant processing and treasury management services, of the joint venture. The Company accounts for AFSI as an equity method investment.

The outstanding debt relating to AFSI, which the Company guarantees half, was $55.4 million and $59.6 million as of January 31, ~~2018~~2024 and July 31, ~~2017, there~~2023, respectively. AFSI has a $63.0 million revolving credit facility, which expires July 31, 2024, and an additional $17.0 million multi-currency revolving credit facility, which terminates upon notification by either AFSI or the financial institution.

Earnings from AFSI, which are recorded in other income, net in the Condensed Consolidated Statements of Earnings, were ~~no amounts drawn upon these letters of credit.~~

$2.5 million and $4.2 million for the three and six months ended January 31, 2024, respectively, and were $0.5 million and $1.8 million for the three and six months ended January 31, 2023, respectively.

Note ~~14.~~17. Commitments and Contingencies

The Company records provisions ~~with respect to identified claims or lawsuits~~ when it is probable ~~that~~ a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and ~~lawsuits~~litigation are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. The Company believes the ~~recorded~~ estimated liability in its Condensed Consolidated Financial Statements for claims or litigation is adequate ~~in light of~~and appropriate for the probable and estimable outcomes. ~~The~~Liabilities recorded ~~liabilities~~ were not material to the Company’s financial position, results of operations ~~liquidity~~ or ~~financial position and the~~liquidity. The Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued.

Contingent Compensation and Consideration

Acquisition Agreement - Purilogics

The Company's agreement with Purilogics includes deferred payment provisions representing potential milestone payments for Purilogics’ former owners. The provisions are made up of two general types of arrangements, contingent compensation and contingent consideration. The contingent compensation arrangement is contingent on the former owner’s future employment with the Company and the related amounts are recognized over the required employment period. The contingent consideration is not contingent on employment and was recorded as purchase consideration in both other current and other long-term liabilities on the Condensed Consolidated Balance Sheets at the time of the initial acquisition based on the fair value of the estimated liability. The amounts are paid over a two- to five-year period, contingent on the achievement of certain revenue and manufacturing milestones.

The total contingent compensation arrangement liability was $1.7 million and $1.1 million as of January 31, 2024 and July 31, 2023, respectively, which was included in other long-term liabilities on the Condensed Consolidated Balance Sheets. The maximum payout of the contingent compensation arrangement upon completion of the future performance periods was $3.0 million as of January 31, 2024 and July 31, 2023, inclusive of the $1.7 million and $1.1 million accrued, respectively.

The Company primarily determines the contingent consideration liability based on the forecasted probability of achieving the respective milestones. The contingent consideration liability is measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings. The total contingent consideration liability was $24.3 million and $23.2 million as of January 31, 2024 and July 31, 2023, respectively, and was included in other current and other long-term liabilities on the Condensed Consolidated Balance Sheets. The maximum payout of the contingent consideration was $29.0 million, inclusive of the $24.3 million and $23.2 million accrued as of January 31, 2024 and July 31, 2023, respectively.

Other Acquisition Agreements

For other acquisitions, there was no contingent compensation arrangement liability as of January 31, 2024, as the contingent compensation agreement was terminated. The total contingent compensation arrangement liability was $0.9 million as of July 31, 2023, which was included in other long-term liabilities on the Condensed Consolidated Balance Sheets.

The total contingent consideration liability was $1.7 million, which was included in other long-term liabilities on the Condensed Consolidated Balance Sheets, as of January 31, 2024 and July 31, 2023. The maximum payout of the contingent consideration was $1.7 million, which concludes three years from the acquisition date of November 22, 2021 and was fully accrued as of January 31, 2024 and July 31, 2023.

For additional discussion regarding the fair value of the Company’s contingent consideration liability, see Note 15.

Note ~~15.~~18. Segment Reporting

The ~~Company has identified two~~Company’s reportable ~~segments: Engine Products~~segments are: Mobile Solutions, Industrial Solutions and ~~Industrial Products. Segment determination is based on the internal organization~~Life Sciences. The organizational structure ~~management of operations and performance evaluation by management and the Company’s Board of Directors.~~also includes Corporate and Unallocated, which includes interest expense and certain corporate expenses determined to be non-allocable to the segments, such as ~~interest income~~restructuring charges and ~~interest expense.~~business development expenses. The Company determines its operating segments consistent with the manner in which it manages its operations and evaluates performance for internal review and decision-making. For the three and six months ended January 31, 2023, Corporate and Unallocated also included non-recurring charges of $9.3 million and $16.9 million, see Note 19.

The ~~Company has an internal measurement system to evaluate performance and allocate resources~~Mobile Solutions segment is organized based on ~~earnings before income taxes.~~ a combination of customers and products and consists of the Off-Road, On-Road and Aftermarket business units. Within these business units, products consist of replacement filters for both air and liquid filtration applications and filtration housings for new equipment production and systems related to exhaust and emissions. Applications include air filtration systems, fuel, lube and hydraulic systems, emissions systems and sensors, indicators and monitoring systems. Mobile Solutions sells to original equipment manufacturers (OEMs) in the construction, mining, agriculture and transportation end markets and to independent distributors and OEM dealer networks.

The ~~Company’s manufacturing facilities serve both reporting segments. Therefore,~~Industrial Solutions segment is organized based on product type and consists of the Industrial Air Filtration, Industrial Gasses, Industrial Hydraulics, Power Generation and Aerospace and Defense business units. Within our Industrial Solutions portfolio, the Company ~~uses an allocation methodology~~provides a wide product offering in the market to ~~assign costs~~industrial customers consisting of equipment, ancillary components, replacement parts, performance monitoring and ~~assets~~service globally, that cost-effectively enhances productivity and manufacturing efficiency. Industrial Air Filtration, Industrial Gasses and Industrial Hydraulics products consist of dust, fume and mist collectors, compressed air and industrial gasses purification systems, hydraulic and lubricated rotating filtration applications as well as gas and liquid filtration for industrial processes. Power Generation products consist of air inlet systems and filtration sold to gas compression, power generation and natural gas liquification industries. Aerospace and Defense products consist of air, fuel, lubrication and hydraulic filtration for fixed-wing and rotorcraft aerospace applications and ground defense vehicle and naval platforms. Industrial Solutions businesses sell through multiple channels which include OEMs, distributors and direct-to-consumer in some markets.

The Life Sciences segment is organized by end market, including the ~~segments. A certain amount of costs~~Bioprocessing, Food and ~~assets relate~~Beverage, Medical Device, Vehicle Electrification, Microelectronics and Disk Drive business units. Our products include gas and liquid filtration bioprocessing equipment (including bioreactors, fermenters and filtration skids), bioprocessing consumables (including membrane chromatography devices, reagents and filters) and specialized air and gas filtration systems for hard disk drive, semiconductor and electric vehicle applications. Life Sciences primarily sells to ~~general corporate purposes~~large OEMs and ~~are not assigned~~directly to ~~either segment.~~various end users requiring cell growth, separation, purification, high purity filtration and device protection.

The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report ~~the~~ earnings before income taxes and other financial information ~~shown~~as stated below.

Segment ~~detail is summarized~~details were as follows (in millions):


	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Net sales
Mobile Solutions	$	550.3	$	522.5	$	1,090.3	$	1,077.4
Industrial Solutions	263.4		246.4		509.6		476.0
Life Sciences	63.0		59.4		123.1		122.2
Total Company	$	876.7	$	828.3	$	1,723.0	$	1,675.6

Earnings (loss) before income taxes
Mobile Solutions	$	99.2	$	78.6	$	191.4	$	158.9
Industrial Solutions	47.4		46.3		90.7		83.9
Life Sciences	(5.8)		6.3		(10.0)		17.1
Corporate and unallocated	(11.8)		(17.9)		(20.2)		(30.1)
Total Company	$	129.0	$	113.3	$	251.9	$	229.8

Assets by segment were as follows (in millions):


	January 31, 2024		July 31, 2023
Mobile Solutions	$	1,276.8	$	1,243.8
Industrial Solutions	792.6		788.1
Life Sciences	513.5		513.8
Corporate and unallocated	200.6		224.8
Total assets	$	2,783.5	$	2,770.5

Three Months Ended
January 31, Six Months Ended
January 31,
2018
2017
2018
2017
Net sales
Engine Products segment $ 442.4
$ 361.9
$ 884.5
$ 715.7
Industrial Products segment 222.3
188.7
425.0
387.9
Total $ 664.7
$ 550.6
$ 1,309.5
$ 1,103.6

Earnings before income taxes
Engine Products segment $ 54.5
$ 48.7
$ 118.1
$ 94.1
Industrial Products segment 32.2
24.3
62.2
62.6
Corporate and Unallocated (10.3 ) (6.7 ) (19.2 ) (10.7 )
Total $ 76.4
$ 66.3
$ 161.1
$ 146.0
Net sales by business unit were as follows (in millions):



	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Mobile Solutions segment
Off-Road	$	91.9	$	106.2	$	186.6	$	209.8
On-Road	33.5		34.5		71.3		70.5
Aftermarket	424.9		381.8		832.4		797.1
Total Mobile Solutions segment	550.3		522.5		1,090.3		1,077.4

Industrial Solutions segment
Industrial Filtration Solutions	224.5		211.8		435.1		407.8
Aerospace and Defense	38.9		34.6		74.5		68.2
Total Industrial Solutions segment	263.4		246.4		509.6		476.0

Life Sciences segment
Total Life Sciences segment	63.0		59.4		123.1		122.2

Total Company	$	876.7	$	828.3	$	1,723.0	$	1,675.6

Concentrations

There were no customers that accounted for over 10% of net sales for the three orand six months ended January 31, ~~2018~~2024 or ~~2017.~~2023. There were no customers that accounted for over 10% of gross accounts receivable as of January 31, ~~2018~~2024 or July 31, ~~2017.~~2023.

Note 19. Restructuring and Other Charges

There were no material charges for restructuring or other related activities for the three and six months ended January 31, 2024.

During the first quarter of fiscal 2023, the Company announced a company-wide organizational redesign to further support the Company’s growth strategies and better serve its customers. In conjunction with the organizational redesign, the Company recorded $7.6 million of charges consisting of $4.2 million of severance charges and $3.4 million of other organizational redesign costs. These amounts were included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Earnings.

During the second quarter of fiscal 2023, the Company recorded additional charges of $9.3 million, consisting of $3.1 million of severance charges, $1.4 million of other organizational redesign costs and $4.8 million of costs mainly associated with the exiting of a lower-margin customer program. Of these amounts, $1.5 million were included in cost of sales and $7.8 million were included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Earnings.



~~Item 2.~~	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~The~~Founded in 1915, Donaldson Company, Inc. is a ~~worldwide~~global leader in technology-led filtration products and solutions, serving a broad range of industries and advanced markets. Donaldson’s diverse, skilled employees at over 150 locations, 75 of which are manufacturing and/or distribution centers, on six continents, partner with customers - from small business owners to the world’s largest original equipment manufacturer of(OEM) brands - to solve complex filtration ~~systems~~challenges. Customers choose Donaldson’s filtration solutions due to their stringent performance requirements and ~~replacement parts.~~ need for reliability.

The Company’s ~~core strengths~~operating segments are ~~leading filtration technology, strong customer relationships~~Mobile Solutions, Industrial Solutions and ~~its global presence. Products are manufactured at 44 plants around~~Life Sciences. The Mobile Solutions segment is organized based on a combination of customers and products and consists of the ~~world~~Off-Road, On-Road and ~~through three joint ventures.~~

The Industrial Solutions segment is organized based on product type and ~~large equipment fleets. Products~~consists of the Industrial Air Filtration, Industrial Gasses, Industrial Hydraulics, Power Generation and Aerospace and Defense business units. Within our Industrial Solutions portfolio, the Company provides a wide product offering in the market to industrial customers consisting of equipment, ancillary components, replacement parts, performance monitoring and service globally, that cost-effectively enhances productivity and manufacturing efficiency. Industrial ~~Products segment~~Air Filtration, Industrial Gasses and Industrial Hydraulics products consist of dust, fume and mist collectors, compressed air and industrial gasses purification systems, hydraulic and lubricated rotating filtration applications as well as gas and liquid filtration for industrial processes. Power Generation products consist of air inlet systems and filtration ~~systems~~sold to gas compression, power generation and natural gas liquification industries. Aerospace and Defense products consist of air, fuel, lubrication and hydraulic filtration for fixed-wing and rotorcraft aerospace applications and ground defense vehicle and naval platforms. Industrial Solutions businesses sell through multiple channels which include OEMs, distributors and direct-to-consumer in some markets.

The Life Sciences segment is organized by end market, including the Bioprocessing, Food and Beverage, Medical Device, Vehicle Electrification, Microelectronics and Disk Drive business units. Our products include gas ~~turbines, polytetrafluoroethylene (PTFE) membrane-based products~~and liquid filtration bioprocessing equipment (including bioreactors, fermenters and filtration skids), bioprocessing consumables (including membrane chromatography devices, reagents and filters) and specialized air and gas filtration systems for ~~applications~~

~~including~~ hard disk ~~drives~~drive, semiconductor and ~~semi-conductor manufacturing. The Industrial Products segment~~electric vehicle applications. Life Sciences primarily sells to ~~various dealers, distributors,~~large OEMs ~~of gas-fired turbines~~ and ~~OEMs and~~directly to various end users requiring ~~clean~~cell growth, separation, purification, high purity filtration ~~solutions~~and device protection.

The Company’s results of operations are affected by conditions in the global economic and geopolitical environment. Under most economic conditions, the Company’s diversification between its diesel engine end markets, its global end markets, its diversification through technology and its OEM and replacement ~~filters.~~parts customers has helped to limit the impact of weakness in any one product line, market or geography on the consolidated operating results of the Company.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's Condensed Consolidated Financial Statements and Notes included in Item 1 of this report.

Consolidated Results of Operations

Three months ended January 31, ~~2018~~2024 compared with three months ended January 31, ~~2017~~2023

Operating results ~~for~~were as follows (in millions, except per share amounts):


	Three Months Ended January 31,
	2024		% of net sales		2023		% of net sales
Net sales	$	876.7			$	828.3
Cost of sales	568.1		64.8	%	543.9		65.7	%
Gross profit	308.6		35.2		284.4		34.3
Selling, general and administrative	156.8		17.9		149.6		18.1
Research and development	22.1		2.5		18.5		2.2
Operating expenses	178.9		20.4		168.1		20.3
Operating income	129.7		14.8		116.3		14.0
Interest expense	5.6		0.6		4.6		0.6
Other income, net	(4.9)		(0.5)		(1.6)		(0.2)
Earnings before income taxes	129.0		14.7		113.3		13.7
Income taxes	30.3		3.5		27.3		3.3
Net earnings	$	98.7	11.3	%	$	86.0	10.4	%

Net earnings per share (EPS) - diluted	$	0.81			$	0.70

Geographic Net Sales by Origination

Net sales, generally disaggregated by location where the ~~three months ended January 31, 2018 and 2017 are~~customer’s order was received, were as follows (in millions):

Three Months Ended January 31,
2018
% of sales
2017
% of sales
Net sales $ 664.7
$ 550.6

Cost of sales 445.8
67.1 % 362.7
65.9 %
Gross profit 218.9
32.9 % 187.9
34.1 %
Operating expenses 137.3
20.6 % 118.5
21.5 %
Operating income 81.6
12.3 % 69.4
12.6 %
Interest expense 5.1
0.8 % 4.8
0.9 %
Other expense (income), net 0.1
— % (1.7 ) (0.3 )%
Earnings before income taxes 76.4
11.5 % 66.3
12.0 %
Income taxes 129.3
19.5 % 19.8
3.6 %
Net (loss) earnings $ (52.9 ) (8.0 )% $ 46.5
8.4 %


	Three Months Ended January 31,
	2024		% of net sales		2023		% of net sales
U.S. and Canada	$	376.9	43.0	%	$	346.4	41.8	%
Europe, Middle East and Africa (EMEA)	251.6		28.7		252.1		30.4
Asia Pacific (APAC)	151.0		17.2		142.4		17.2
Latin America (LATAM)	97.2		11.1		87.4		10.6
Total Company	$	876.7	100.0	%	$	828.3	100.0	%

Net loss for the three months ended January 31, 2018 was $52.9 million, compared with net earnings of $46.5 million for the three months ended January 31, 2017, a decrease of $99.4 million. Included in net loss for the current year quarter is provisional tax charges of $109.7 million related to TCJA, which was enacted into law during the quarter. As a result of the TCJA, during the three months ended January 31, 2018, the Company recorded a tax charge of $1.4 million for the re-measurement of its net deferred tax assets and a tax charge of $108.3 million for the one-time transition tax on deemed repatriated earnings of its non-U.S. subsidiaries. See Note 9 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report for additional information on the impact of TCJA.Sales

Net sales for the three months ended January 31, ~~2018~~2024 increased $48.4 million, or 5.8%, from the three months ended January 31, 2023, reflecting higher sales in the Mobile Solutions segment of $27.8 million, or 5.3% growth, the Industrial Solutions segment of $17.0 million, or 6.9%, growth and the Life Sciences segment of $3.6 million, or 6.0% growth. Foreign currency translation increased net sales by $4.8 million compared to the three months ended January 31, 2023, reflecting increases in the Mobile Solutions, Industrial Solutions and Life Sciences segments of $2.7 million, $1.6 million and $0.5 million, respectively. During the three months ended January 31, 2024, the Company’s net sales increase was driven primarily by volume increases and higher pricing.

Gross margin as a percentage of net sales for the three months ended January 31, 2024 was 35.2% compared with 34.3% for the three months ended January 31, 2023. The increase in gross margin as a percentage of net sales was primarily driven by higher pricing and lower freight and select material costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended January 31, 2024 were ~~$664.7~~$156.8 million, or 17.9% of net sales, compared with $149.6 million, or 18.1% of net sales, for the three months ended January 31, 2023, an increase of $7.2 million, or 4.9%. The decrease in selling, general and administrative expenses as a percentage of net sales was primarily due to a decrease in severance and other non-recurring costs, partially offset by increased headcount and incremental expenses associated with investments in acquired Life Sciences businesses.

Research and Development Expenses

Research and development expenses for the three months ended January 31, 2024 were $22.1 million, or 2.5% of net sales, compared with $18.5 million, or 2.2% of net sales, for the three months ended January 31, 2023, primarily due to increased headcount.

Interest expense for the three months ended January 31, 2024 was $5.6 million, compared with ~~$550.6~~$4.6 million for the three months ended January 31, ~~2017,~~2023, an increase of ~~$114.1~~$1.0 million, or ~~20.7%~~20.3%. Net sales increased $80.5 million, or 22.3%, in the Engine Products segment and increased $33.6 million, or 17.7%, in the Industrial Products segment compared with the same period in the prior fiscal year. Refer to the Segment Results of Operations section for further discussion on the Engine Products and Industrial Products segments. Net salesThe increase reflected rising variable interest rates.

Other income, net for the three months ended January 31, ~~2018 were positively impacted by foreign currency translation, which increased net sales by $25.6~~2024 was $4.9 million, compared with ~~the same period in the prior fiscal year.~~

The ~~decrease in gross margin resulted from selling an unfavorable mix of products~~effective tax rate was 23.5% and ~~higher supply chain and raw material costs.~~

Net earnings for the three months ended January 31, 2024 were ~~$137.3~~$98.7 million, compared with ~~$118.5~~$86.0 million for the three months ended January 31, ~~2017,~~2023, an increase of ~~$18.8~~$12.7 million, or ~~15.8%~~14.8%. ~~As a percent of net sales, operating expenses for the current year quarter~~Diluted EPS were 20.6%, compared with 21.5% during the same period in the prior fiscal year. The decrease in operating expenses as a percentage of sales was primarily driven by expense leverage gained on increasing sales, partially offset by higher incentive compensation expense.

The effective tax rate for the three months ended January 31, 2018 was 169.2%, compared with 29.8% for the three months ended January 31, 2017. Excluding the impact of the TCJA one-time adjustments, the effective tax rate for the three months ended

January 31, 2018 was 25.7%, compared with 29.8% for the three months ended January 31, 2017. The decrease was primarily due to $2.2 million of excess tax benefits on stock-based compensation expense resulting from the adoption of ASU 2016-09 (refer to Note 1 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report for further discussion of the new accounting standard), and the net impact of the TCJA enactment, which decreased the Company’s base effective tax rate by 1.1 percentage points. The net impact of the TCJA enactment reflects a benefit from the reduced U.S. corporate income tax rate that is partially offset by a negative impact from foreign withholding tax and other matters related to the TCJA.

Six months ended January 31, ~~2018~~2024 compared with six months ended January 31, ~~2017~~2023

Operating results ~~for~~were as follows (in millions, except per share amounts):


	Six Months Ended January 31,
	2024		% of net sales		2023		% of net sales
Net sales	$	1,723.0			$	1,675.6
Cost of sales	1,113.5		64.6	%	1,104.0		65.9	%
Gross profit	609.5		35.4		571.6		34.1
Selling, general and administrative	311.8		18.1		298.8		17.8
Research and development	43.4		2.5		37.2		2.2
Operating expenses	355.2		20.6		336.0		20.1
Operating income	254.3		14.8		235.6		14.1
Interest expense	11.1		0.6		9.2		0.5
Other income, net	(8.7)		(0.5)		(3.4)		(0.2)
Earnings before income taxes	251.9		14.6		229.8		13.7
Income taxes	61.1		3.5		56.6		3.4
Net earnings	$	190.8	11.1	%	$	173.2	10.3	%

Net EPS - diluted	$	1.56			$	1.40

Geographic Net Sales by Origination

Net sales, generally disaggregated by location where the ~~six months ended January 31, 2018 and 2017 are~~customer’s order was received, were as follows (in millions):

Six Months Ended January 31,
2018
% of sales
2017
% of sales
Net sales $ 1,309.5
$ 1,103.6

Cost of sales 866.3
66.2 % 721.5
65.4 %
Gross profit 443.2
33.8 % 382.1
34.6 %
Operating expenses 270.9
20.7 % 236.3
21.4 %
Operating income 172.3
13.2 % 145.8
13.2 %
Interest expense 10.3
0.8 % 9.6
0.9 %
Other expense (income), net 0.9
0.1 % (9.8 ) (0.9 )%
Earnings before income taxes 161.1
12.3 % 146.0
13.2 %
Income taxes 153.1
11.7 % 41.5
3.8 %
Net earnings $ 8.0
0.6 % $ 104.5
9.5 %


	Six Months Ended January 31,
	2024		% of net sales		2023		% of net sales
U.S. and Canada	$	758.4	44.0	%	$	721.7	43.1	%
EMEA	485.9		28.2		478.8		28.6
APAC	291.1		16.9		293.0		17.5
LATAM	187.6		10.9		182.1		10.8
Total Company	$	1,723.0	100.0	%	$	1,675.6	100.0	%

Net earnings for the six months ended January 31, 2018 was $8.0 million, compared with net earnings of $104.5 million for the six months ended January 31, 2017, a decrease of $96.5 million. Included in net loss for the current year period is provisional tax charges of $109.7 million related to TCJA, which was enacted into law during the period. As a result of the TCJA, during the six months ended January 31, 2018 the Company recorded a tax charge of $1.4 million for the re-measurement of its net deferred tax assets and a tax charge of $108.3 million for the one-time transition tax on deemed repatriated earnings of its non-U.S. subsidiaries. See Note 9 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report for additional information on the impact of TCJA.Sales

Net sales for the six months ended January 31, ~~2018~~2024 increased $47.4 million, or 2.8%, from the six months ended January 31, 2023, reflecting higher sales in the Industrial Solutions segment of $33.6 million, or 7.0% growth, the Mobile Solutions segment of $12.9 million, or 1.2% growth, and the Life Sciences segment of $0.9 million, or a 0.8% growth. Foreign currency translation increased net sales by $17.2 million compared to the six months ended January 31, 2023, reflecting increases in the Mobile Solutions, Industrial Solutions and Life Sciences segments of $9.7 million, $5.3 million and $2.2 million, respectively. During the six months ended January 31, 2024, the Company’s net sales increased primarily from higher pricing, volume growth and a positive impact from foreign currency translation.

Gross margin as a percentage of net sales for the six months ended January 31, 2024 was 35.4% compared with 34.1% for the six months ended January 31, 2023. The increase in gross margin as a percentage of net sales was primarily driven by pricing benefits and lower freight and certain material costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended January 31, 2024 were ~~$1,309.5~~$311.8 million, or 18.1% of net sales, compared with $298.8 million, or 17.8% of net sales, for the six months ended January 31, 2023, an increase of $13.0 million, or 4.4%. The increase in selling, general and administrative expenses as a percentage of net sales was primarily due to increased headcount and incremental expenses associated with investments in acquired Life Sciences businesses.

Research and Development Expenses

Research and development expenses for the six months ended January 31, 2024 were $43.4 million, or 2.5% of net sales, compared with $37.2 million, or 2.2% of net sales, for the six months ended January 31, 2023. The increase in research and development expenses as a percent of revenue was due to higher headcount.

Interest expense for the six months ended January 31, 2024 was $11.1 million, compared with ~~$1,103.6~~$9.2 million for the six months ended January 31, ~~2017,~~2023, an increase of ~~$205.9~~$1.9 million, or ~~18.7%~~20.5%. Net sales increased $168.8 million, or 23.6%, in the Engine Products segment and increased $37.1 million, or 9.6%, in the Industrial Products segment compared with the same period in the prior fiscal year. Refer to the Segment Results of Operations section for further discussion on the Engine Products and Industrial Products segments. Net salesThe increase reflected rising variable interest rates.

Other income, net for the six months ended January 31, ~~2018 were positively impacted by foreign currency translation, which increased net sales by $35.1~~2024 was $8.7 million, compared with ~~the same period in the prior fiscal year.~~

The ~~decrease in gross margin resulted from selling an unfavorable mix of products~~effective tax rate was 24.2% and ~~higher supply chain and raw material costs, partially offset by improved fixed cost absorption on higher sales than the prior year.~~

Net earnings for the six months ended January 31, 2024 were ~~$270.9~~$190.8 million, compared with ~~$236.3~~$173.2 million for the six months ended January 31, ~~2017,~~2023, an increase of ~~$34.6~~$17.6 million, or ~~14.6%~~10.2%. ~~As a percent of net sales, operating expenses for the current year quarter~~Diluted EPS were 20.7%, compared with 21.4% during the same period in the prior fiscal year. The decrease in operating expenses as a percentage of sales was primarily driven by expense leverage gained on increasing sales, partially offset by higher incentive compensation costs.

Segment Results of Operations

Net sales and earnings (loss) before income taxes ~~for the Engine Products and Industrial Products segments are summarized~~were as follows (in millions):


	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Net sales
Mobile Solutions	$	550.3	$	522.5	$	1,090.3	$	1,077.4
Industrial Solutions	263.4		246.4		509.6		476.0
Life Sciences	63.0		59.4		123.1		122.2
Total Company	$	876.7	$	828.3	$	1,723.0	$	1,675.6

Earnings (loss) before income taxes
Mobile Solutions	$	99.2	$	78.6	$	191.4	$	158.9
Industrial Solutions	47.4		46.3		90.7		83.9
Life Sciences	(5.8)		6.3		(10.0)		17.1
Corporate and unallocated(1)	(11.8)		(17.9)		(20.2)		(30.1)
Total Company	$	129.0	$	113.3	$	251.9	$	229.8

(1)Corporate and unallocated includes interest expense and certain corporate expenses determined to be non-allocable to the segments, such as restructuring charges and incentive compensation.

Three Months Ended
January 31, Six Months Ended
January 31,
2018
2017
2018 2017
Net sales:
Engine Products segment $ 442.4
$ 361.9
$ 884.5
$ 715.7
Industrial Products segment 222.3
188.7
425.0
387.9
Total $ 664.7
$ 550.6
$ 1,309.5
$ 1,103.6

Earnings before income taxes:
Engine Products segment $ 54.5
$ 48.7
$ 118.1
$ 94.1
Industrial Products segment 32.2
24.3
62.2
62.6
Corporate and Unallocated ⁽¹⁾
(10.3 ) (6.7 ) (19.2 ) (10.7 )
Total $ 76.4
$ 66.3
$ 161.1
$ 146.0

Mobile Solutions Segment

~~The following is a summary of net~~Net sales ~~by product group within the Company's Engine Products segment~~and earnings before income taxes were as follows (in millions):


	Three Months Ended January 31,						Six Months Ended January 31,
	2024			2023			2024			2023
Off-Road	$	91.9		$	106.2		$	186.6		$	209.8
On-Road	33.5			34.5			71.3			70.5
Aftermarket	424.9			381.8			832.4			797.1
Total Mobile Solutions segment	$	550.3		$	522.5		$	1,090.3		$	1,077.4

Mobile Solutions segment earnings before income taxes	$	99.2		$	78.6		$	191.4		$	158.9
Mobile Solutions segment earnings before income taxes % of net sales	18.0		%	15.0		%	17.6		%	14.7		%

Three Months Ended
January 31, Six Months Ended
January 31,
2018
2017
2018 2017
Engine Products segment:
Off-Road $ 78.9
$ 57.6
$ 153.9
$ 112.4
On-Road 35.2
23.3
68.5
49.9
Aftermarket 303.5
256.6
612.6
504.2
Aerospace and Defense 24.8
24.4
49.5
49.2
Total Engine Products segment $ 442.4
$ 361.9
$ 884.5
$ 715.7

Engine Products segment earnings before income taxes $ 54.5
$ 48.7
$ 118.1
$ 94.1
Three months ended January 31, 2024 compared with three months ended January 31, 2023

Net sales for the ~~Engine Products~~Mobile Solutions segment for the three months ended January 31, ~~2018~~2024 were ~~$442.4~~$550.3 million, compared with ~~$361.9~~$522.5 million for the three months ended January 31, ~~2017,~~2023, an increase of ~~$80.5~~$27.8 million, or ~~22.3%~~5.3%. ~~Of this~~Excluding a $2.7 million increase ~~$15.1 million is attributable to~~from foreign currency ~~translation.~~translation, net sales for the Mobile Solutions segment increased 4.8%.

Net sales of Aftermarket increased $43.1 million, driven by market share gains, strong end market demand and pricing benefits. Net sales of Off-Road decreased $14.3 million, primarily due to weak agriculture end market conditions.

Earnings before income taxes for the Mobile Solutions segment for the three months ended January 31, 2024 were $99.2 million, or 18.0% of net sales, an increase from 15.0% of net sales for the three months ended January 31, 2023. The increase ~~in Engine Products sales~~ was driven by ~~increases in Aftermarket of 18.3%, Off-Road of 37.0%, On-Road of 50.6%~~favorable product mix, pricing actions and Aerospace and Defense of 2.0%. Within Aftermarket, sales increased in all major regions as the Company benefited from improving market conditions and end-user demand and growth in innovative product categories, including both air and liquid filtration products. Additionally, Aftermarket sales included approximately $8.5 million of incremental sales from the Company's acquisition of Hy-Pro. The increase in Off-Road sales was driven by further strengthening of market conditions across all regions for heavy-duty off-road equipment production. The increase in On-Road sales reflects increasing production of heavy-duty trucks compared with depressed sales in the prior year, primarily in the U.S., combined with

~~benefits from new customer agreements. Sales within Aerospace and Defense were mixed, with an increase in sales of Aerospace products being~~lower freight costs, partially offset by ~~declining sales in Defense ground vehicles.~~higher labor and overhead costs.

Six months ended January 31, 2024 compared with six months ended January 31, 2023

Net sales for the ~~Engine Products~~Mobile Solutions segment for the six months ended January 31, ~~2018~~2024 were ~~$884.5~~$1,090.3 million, compared with ~~$715.7~~$1,077.4 million for the six months ended January 31, ~~2017,~~2023, an increase of ~~$168.8~~$12.9 million, or ~~23.6%~~1.2%. ~~Of this~~Excluding a $9.7 million increase ~~$21.3 million is attributable to~~from foreign currency ~~translation. The increase in Engine Products~~translation, net sales ~~was~~for the Mobile Solutions segment increased 0.3%. All business units were positively impacted by foreign currency translation.

Net sales of Aftermarket increased $35.3 million driven by increases in Aftermarket of 21.5%, Off-Road of 37.0%, On-Road of 37.3% and Aerospace and Defense of 0.8%. Within Aftermarket, sales increased in all major regions as the Company benefited from improving market ~~conditions and end-user~~share gains, strong end market demand and growth in innovative product categories, including both air and liquid filtration products. Additionally, Aftermarket sales included approximately $17.2 million of incremental sales from the Company's acquisitions of Partmo and Hy-Pro. The increase in Off-Road sales was driven by further strengthening of market conditions across all regions for heavy-duty off-road equipment production. The increase in On-Road sales reflects increasing production of heavy-duty trucks compared with depressed sales in the prior year, primarily in the U.S., combined with benefits from new customer agreements. Sales within Aerospace and Defense were mixed, with an increase inpricing benefits. Net sales of ~~Aerospace products being partially offset by declining sales in Defense ground vehicles.~~Off-Road decreased $23.2 million, primarily due to weaker agriculture end market conditions.

Earnings before income taxes for the ~~Engine Products~~Mobile Solutions segment for the six months ended January 31, 2024 were $191.4 million, or 17.6% of net sales, an increase from 14.7% of net sales for the six months ended January 31, 2023. The increase was driven by favorable product mix, pricing actions and lower input costs, partially offset by higher labor and overhead costs.

Industrial Solutions Segment

Net sales and earnings before income taxes were as follows (in millions):


	Three Months Ended January 31,						Six Months Ended January 31,
	2024			2023			2024			2023
Industrial Filtration Solutions (IFS)	$	224.5		$	211.8		$	435.1		$	407.8
Aerospace and Defense	38.9			34.6			74.5			68.2
Total Industrial Solutions segment	$	263.4		$	246.4		$	509.6		$	476.0

Industrial Solutions segment earnings before income taxes	$	47.4		$	46.3		$	90.7		$	83.9
Industrial Solutions segment earnings before income taxes % of net sales	18.0		%	18.8		%	17.8		%	17.6		%

Three months ended January 31, 2024 compared with three months ended January 31, 2023

Net sales for the Industrial Solutions segment for the three months ended January 31, ~~2018~~2024 were ~~$54.5~~$263.4 million, ~~or 12.3% of Engine Products' sales, a decrease from 13.5%~~compared with $246.4 million for the three months ended January 31, ~~2017. The decrease is primarily~~2023, an increase of $17.0 million, or 6.9%. Excluding a $1.6 million increase from foreign currency translation, net sales for the Industrial Solutions segment increased 6.2%. Both business units were positively impacted by foreign currency translation.

Net sales of IFS increased $12.7 million, reflecting higher sales volume in power generation and industrial dust collection. Net sales of Aerospace and Defense increased by $4.3 million due to ~~selling an unfavorable mix of products and higher supply chain and raw material costs, partially offset by operating expense leverage on higher sales than~~ongoing strength in the ~~prior year.~~defense end market.

~~Earnings~~Earnings before income taxes for the ~~Engine Products~~Industrial Solutions segment for the three months ended January 31, 2024 were $47.4 million, or 18.0% of net sales, a decrease from 18.8% of net sales for the three months ended January 31, 2023. The decrease was primarily due to unfavorable product mix, partially offset by the impact from leveraging operating expenses.

Six months ended January 31, 2024 compared with six months ended January 31, 2023

Net sales for the Industrial Solutions segment for the six months ended January 31, ~~2018~~2024 were ~~$118.1~~$509.6 million, ~~or 13.4% of Engine Products' sales, an increase from 13.1%~~compared with $476.0 million for the six months ended January 31, ~~2017. Improved cost absorption on~~2023, an increase of $33.6 million, or 7.0%. Excluding a $5.3 million increase from foreign currency translation, net sales for the Industrial Solutions segment increased 5.9%. Both business units were positively impacted by foreign currency translation.

Net sales of IFS increased $27.3 million, reflecting higher sales ~~than~~volume in power generation and industrial dust collection from strong demand in most geographies. Net sales of Aerospace and Defense increased by $6.3 million due to ongoing strength in the ~~prior year drove~~defense end market.

Earnings before income taxes for the ~~improvement, which~~Industrial Solutions segment for the six months ended January 31, 2024 were $90.7 million, or 17.8% of net sales, an increase from 17.6% of net sales for the six months ended January 31, 2023. The increase was primarily due to the impact from leveraging operating expenses, operational efficiencies and lower freight costs, partially offset by ~~higher raw material costs~~unfavorable product mix.

Life Sciences Segment

Net sales and ~~incremental costs related to meeting higher-than-expected demand.~~

~~Industrial Products Segment~~

~~The following is a summary of net sales by product group within the Company's Industrial Products segment~~(losses) earnings before income taxes were as follows (in millions):


	Three Months Ended January 31,						Six Months Ended January 31,
	2024			2023			2024			2023


Life Sciences segment net sales	$	63.0		$	59.4		$	123.1		$	122.2
Life Sciences segment (losses) earnings before income taxes	$	(5.8)		$	6.3		$	(10.0)		$	17.1
Life Sciences segment (losses) earnings before income taxes % of net sales	(9.2)		%	10.6		%	(8.1)		%	14.0		%

Three Months Ended
January 31, Six Months Ended
January 31,
2018
2017
2018 2017
Industrial Products segment:
Industrial Filtration Solutions $ 145.1
$ 127.8
$ 279.6
$ 254.2
Gas Turbine Systems 33.0
21.2
59.3
53.7
Special Applications 44.2
39.7
86.1
80.0
Total Industrial Products segment $ 222.3
$ 188.7
$ 425.0
$ 387.9

Industrial Products segment earnings before income taxes $ 32.2
$ 24.3
$ 62.2
$ 62.6
Three months ended January 31, 2024 compared with three months ended January 31, 2023

Net sales for the ~~Industrial Products~~Life Sciences segment for the three months ended January 31, ~~2018~~2024 were ~~$222.3~~$63.0 million, compared with ~~$188.7~~$59.4 million for the three months ended January 31, ~~2017,~~2023, an increase of ~~$33.6~~$3.6 million, or ~~17.7%~~6.0%. ~~Of this~~Excluding a $0.5 million increase ~~$10.5 million is attributable to~~from foreign currency ~~translation.~~translation, net sales for the Life Sciences segment increased 5.1%. The increase was primarily driven by a recovery in ~~Industrial Products~~market demand for products in the disk drive business.

Losses before income taxes for the Life Sciences segment for the three months ended January 31, 2024 were $5.8 million, or 9.2% of net sales, a decrease from earnings before income taxes of 10.6% of net sales for the three months ended January 31, 2023. The decrease was driven by increases in Industrial Filtration Solutions of 13.4%, Gas Turbine Systems of 55.7% and Special Applications of 11.3%. The increase in Industrial Filtration Solutions sales was driven by growth in sales of both new equipment and replacement parts, reflecting some stabilization in the ~~global markets combined with~~expected impact from investments made to scale up the Company’s efforts to proactively manage the replacement cycle for its large customer base and grow its business in under-penetrated existing and new markets. The increase in Special Applications sales was widespread. Sales of disk drive filters increased, reflecting temporary moderation in the secular declining hard disk drive market combinedrecently-acquired businesses.

Six months ended January 31, 2024 compared with share gains with certain customers, sales of Membrane products improved following a sharp decline in the prior year quarter, and sales of Integrated Venting Solutions are benefitting from the Company’s efforts to increase its product assortment and further penetrate new markets. The increase in Gas Turbine Systems sales was expected and reflects comparing against soft sales in the prior year quarter, particularly in first-fit, combined with continued strength in sales of replacement parts.six months ended January 31, 2023

Net sales for the ~~Industrial Products~~Life Sciences segment for the six months ended January 31, ~~2018~~2024 were ~~$425.0~~$123.1 million, compared with ~~$387.9~~$122.2 million for the six months ended January 31, ~~2017,~~2023, an increase of ~~$37.1~~$0.9 million, or ~~9.6%~~0.8%. ~~Of this~~Excluding a $2.2 million increase ~~$13.8 million is attributable to~~from foreign currency ~~translation. The increase in Industrial Products~~translation, net sales was driven by increases in Industrial Filtration Solutions of 10.0%, Special Applications of 7.6% and Gas Turbine Systems of 10.5%. The increase in Industrial Filtration Solutions sales was driven by growth in sales of both new equipment and replacement parts, reflecting some stabilization in the global markets combined with the Company’s efforts to proactively manage the replacement cycle for its large customer base and

grow its business in under-penetrated existing and new markets. The increase in Special Applications sales was widespread. Sales of disk drive filters increased, reflecting temporary moderation in the secular declining hard disk drive market combined with share gains with certain customers, sales of Membrane products improved following a decline in the prior year, and sales of Integrated Venting Solutions are benefitting from the Company’s efforts to increase its product assortment and further penetrate new markets. The increase in Gas Turbine Systems sales was expected and reflects comparing against soft sales in the prior year period combined with continued strength in sales of replacement parts. While sales increased for the three month period, the first-fit sales within Gas Turbine Systems continue to be impacted by the Company's strategic decision to be more selective in pursuing new large-turbine projects combined with lower demand for new project installations and customer delays at project sites.Life Sciences segment declined 1.0%.

~~Earnings~~Losses before income taxes for the Industrial Products segment for the three months ended January 31, 2018 were $32.2 million, or 14.5% of Industrial Products' sales, an increase from 12.9% for the three months ended January 31, 2017. The earnings before income taxes percentage increase was primarily driven by selling a more favorable mix of products and expense leverage on higher sales than the prior year, partially offset by higher raw material costs.

~~Earnings before income taxes for the Industrial Products~~Life Sciences segment for the six months ended January 31, ~~2018~~2024 were ~~$62.2~~$10.0 million, or ~~14.6%~~8.1% of ~~Industrial Products'~~net sales, a decrease from ~~16.1%~~earnings before income taxes of 14.0% of net sales for the six months ended January 31, ~~2017.~~2023. The ~~earnings before income taxes percentage~~ decrease was ~~primarily~~ driven by the ~~$6.8 million of income recognized in~~expected impact from investments made to scale up the prior year period that was related to a favorable settlement of claims associated with general representations and warranties in connection with the Company's acquisition of Northern Technical, partially offset by selling a more favorable mix of products and expense leverage on higher sales than the prior year.Company’s recently-acquired businesses.

Liquidity, ~~and~~ Capital Resources and Financial Condition

Liquidity is assessed in terms of the Company’s ability to generate cash to fund its operating, investing and financing activities. Significant factors affecting liquidity are cash flows generated from operating activities, capital expenditures, acquisitions, dividends, repurchases of outstanding shares, adequacy of available credit facilities and the ability to attract long-term capital with satisfactory terms. The Company generates substantial cash from the operation of its businesses as its primary source of liquidity, with sufficient liquidity available to fund growth through reinvestment in existing businesses and strategic acquisitions.

Cash flows were as follows (in millions):


	Six Months Ended January 31,
	2024		2023		$ Change
Net cash provided by (used in):
Operating activities	$	225.0	$	220.5	$	4.5
Investing activities	(44.5)		(57.6)		13.1
Financing activities	(171.7)		(176.8)		5.1
Effect of exchange rate changes on cash	(2.1)		—		(2.1)
Increase (decrease) in cash and cash equivalents	$	6.7	$	(13.9)	$	20.6

Operating Activities

Cash provided by operating activities for the six months ended January 31, ~~2018~~2024 was ~~$109.8~~$225.0 million, compared with ~~$169.5~~$220.5 million for the six months ended January 31, ~~2017, a decrease~~2023, an increase of $4.5 million. The increase in cash ~~generated from~~provided by operating activities ~~of $59.7 million. This decrease is~~was primarily ~~the result of changes in working capital associated with~~driven by higher ~~levels of sales and expected demand, as cash flows provided by accounts receivable decreased by $35.1 million and cash flows used in inventories increased by $11.7 million between the periods.~~earnings.

Investing Activities

Cash used in investing activities for the six months ended January 31, ~~2018~~2024 was ~~$45.0~~$44.5 million, compared with ~~$35.9~~$57.6 million for the six months ended January 31, ~~2017.~~2023, a decrease of $13.1 million. The ~~increase~~decrease in cash used was due to the timing of investments of capital in ~~investing~~various projects in the current year.

Financing Activities

Cash used in financing activities generally relates to the use of ~~$9.1 million resulted~~cash for payment of dividends and repurchases of the Company’s common stock, net of borrowing activity and proceeds from ~~an increase in capital expenditures~~the exercise of ~~$20.8 million to expand capacity and invest in technology, partially offset by a decrease in net cash used for acquisitions of $11.7 million.~~

To determine the level of dividend and share repurchases, the Company considers recent and projected performance across key financial metrics, including earnings, cash ~~provided by short-term borrowings of $16.1~~flow from operations and total debt. Dividends paid for the six months ended January 31, 2024 and 2023 were $60.3 million and ~~an increase in~~$56.2 million, respectively. Share repurchases for the six months ended January 31, 2024 and 2023 were $86.6 million and $115.2 million, respectively.

Additional sources of liquidity are existing cash ~~used to purchase treasury stock of $11.1 million.~~

The Company believes ~~that~~the liquidity available from the combination of expected cash generated by operating activities, existing cash and available credit under existing credit facilities ~~and the expected cash generated by operating activities~~ will be ~~adequate~~sufficient to meet its cash requirements for the next ~~twelve~~12 months and beyond, including working capital needs, debt ~~repayments and pension funding,~~service obligations, capital expenditures, payment of ~~anticipated~~ dividends, ~~possible~~ share repurchase activity and potential ~~acquisitions~~acquisitions.

Short-Term Borrowings and Long-Term Debt

As of January 31, 2024, total debt, including short-term borrowings and long-term debt, represented 30.9% of total capitalization, defined as total debt plus total stockholders’ equity, compared with 33.2% as of July 31, 2023. As of January 31, 2024, the Company was in compliance with its financial covenants.

Long-term debt outstanding was $563.7 million as of January 31, 2024, compared with $621.6 million as of July 31, 2023, a decrease of $57.9 million, primarily due to a repayment on the unsecured revolving credit facility during the six months ended January 31, 2024. As of January 31, 2024, there was $452.5 million available and $40.0 million outstanding on the Company’s $500.0 million unsecured revolving credit facility that expires on May 21, 2026.

In order to help measure and analyze the impact of working capital ~~expenditures.~~management, the Company reviews its cash conversion cycle. The Company calculates days sales outstanding as the average accounts receivable, net for the quarter, divided by net sales for the quarter multiplied by the number of days in the quarter. The Company calculates days inventory outstanding as the average inventories, net for the quarter, divided by cost of sales for the quarter multiplied by the number of days in the quarter and calculates inventory turns as the cost of sales for the quarter, annualized by the ratio of the number of days in the year to the number of days in the quarter, divided by the average inventories, net for the quarter. The Company calculates days payable outstanding as the average accounts payable for the quarter, divided by cost of sales for the quarter multiplied by the number of days in the quarter.

Accounts receivable, net as of January 31, ~~2018 were $509.9~~2024, was $599.3 million, compared with ~~$497.7~~$599.7 million as of July 31, ~~2017, an increase~~2023, a decrease of ~~$12.2~~$0.4 million. Days sales outstanding were 6962 days as of January 31, ~~2018 and 67~~2024, a decrease from 64 days as of July 31, 2017. Days sales outstanding is calculated using the count back method, which calculates the number of days of most recent revenue that is reflected in the net accounts receivable balance. These increases were driven by the impact of foreign exchange translation.2023.

Inventories, net as of January 31, ~~2018 were $344.9~~2024, was $433.4 million, compared with ~~$293.5~~$418.1 million as of July 31, ~~2017,~~2023, an increase of ~~$51.4~~$15.3 million. Days inventory on hand were 70 days as of January 31, 2024, an increase from 69 days as of July 31, 2023. Inventory turns were ~~5.4~~5.2 times and 5.3 times per year as of January 31, ~~2018, compared to 6.1 times per year as of~~2024 and July 31, 2017. Inventory turns are calculated by taking the annualized cost of sales based on the trailing three-month period divided by the average of the beginning and ending net inventory values of the three-month period. These changes were primarily driven by increases across the regions to meet current and expected customer demand given the sales momentum.2023, respectively.

~~Long-term debt outstanding was $667.7 million~~Accounts payable as of January 31, ~~2018,~~2024, was $325.8 million, compared with ~~$537.3~~$304.9 million as of July 31, ~~2017,~~2023, an increase of ~~$130.4~~$20.9 million. This increase is primarily to fund share repurchases and dividends and to support working capital needs associated with the higher levels of sales. In addition, during the period, $50.0 million of current maturities of long-term debt was refinanced into long-term debt. AsDays payable outstanding were 53 days as of January 31, ~~2018, long-term debt represented 44.7% of total long-term capital, defined as long-term debt plus total shareholders’ equity, compared with 38.6%~~2024, an increase from 49 days as of July 31, ~~2017.~~2023.

Off-Balance Sheet Arrangements

Critical Accounting Estimates

There have been no material changes to the Company’s critical accounting estimates as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2023.

New Accounting Standards Not Yet Adopted

For new accounting standards not yet adopted, refer to Note 1 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report.

~~Critical Accounting Policies~~

~~SAFE HARBOR STATEMENT UNDER THE SECURITIES REFORM ACT OF~~Private Securities Litigation Reform Act of 1995

The Company, through its management, may make forward-looking statements reflecting the Company’s current views with respect to future events and expectations, such as forecasts, plans, trends and projections relating to the Company’s business and financial performance. These forward-looking statements, which may be included in reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), in press releases and in other documents and materials as well as in written or oral statements made by or on behalf of the Company, are subject to certain risks and uncertainties, including those discussed in Part I, Item 1A, ~~"Risk Factors"~~“Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017,~~2023, which could cause actual results to differ materially from historical results or those anticipated. The words or phrases such as “will likely result,” “are expected to,” “will continue,” “will allow,” “estimate,” “project,” “believe,” “expect,” “anticipate,” ~~“forecast”~~“forecast,” “plan” and similar expressions are intended to identify forward-looking statements within the meaning of Section ~~21e~~21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended, as enacted by the Private Securities Litigation Reform Act of 1995 (PSLRA). In particular, the Company desires to take advantage of the protections of the PSLRA in connection with the forward-looking statements made in this Quarterly Report on Form 10-Q. All statements other than statements of historical fact are forward-looking statements. These statements do not guarantee future performance.

~~Readers are cautioned not to place undue reliance on these~~

These forward-looking statements ~~which~~ speak only as of the date such statements are ~~made. In addition, the Company wishes~~made and are subject to ~~advise readers~~risks and uncertainties that ~~the factors listed in Part I, Item 1A, "Risk Factors" of the Company’s Annual Report on Form 10-K for the year ended July 31, 2017, as well as other factors,~~ could affect the Company’s performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed. These factors include, but are not limited to, ~~world~~challenges in global operations; impacts of global economic, industrial and ~~industrial market conditions; the Company's ability~~political conditions on product demand, impacts from unexpected events, effects of unavailable raw materials, significant demand fluctuations or material cost inflation; inability to attract and retain qualified personnel; inability to meet customer demand; inability to maintain ~~certain~~ competitive ~~advantages over competitors;~~advantages; threats from disruptive technologies; effects of highly competitive markets with pricing ~~pressures; the Company's ability~~pressure; exposure to ~~protect and enforce its intellectual property rights; the Company's dependence on global operations;~~ customer concentration in certain cyclical industries; ~~commodity availability~~inability to manage productivity improvements; inability to achieve commitments related to ESG; results of execution of any acquisition, divestiture and ~~pricing; the Company's ability to develop new~~other strategic transactions; vulnerabilities associated with information technology systems and ~~maintain~~security; inability to protect and ~~upgrade existing systems; information security and data breaches; foreign currency fluctuations;~~enforce intellectual property rights; costs associated with governmental laws and regulations; ~~changes in tax laws, regulations~~impacts of foreign currency fluctuations; and ~~results~~effects of ~~examinations; the Company's ability to attract and retain key personnel;~~ changes in capital and credit markets; execution of the Company's acquisition strategy; the possibility of asset impairment; execution of restructuring plans; the Company's ability to maintain an effective system of internal control over financial reportingmarkets. These and other factors ~~included~~are described in Part I, Item 1A, ~~"Risk Factors"~~“Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017.~~2023. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~There have been no material~~The Company’s market risk includes the potential loss arising from adverse changes in foreign currency exchange rates, interest rates and commodity prices. To manage these risks, the ~~reported market risk~~Company employs certain strategies to mitigate the effect of these fluctuations. The Company does not enter into any of these strategies for trading or speculative purposes.

The Company maintains significant assets and operations outside the U.S., resulting in exposure to foreign currency gains and losses. A portion of the Company’s foreign currency exposure is naturally hedged by incurring liabilities, including bank debt, denominated in the local currency in which the Company’s foreign subsidiaries are located.

During the six months ended January 31, 2024, the U.S. dollar was generally weaker than in the six months ended January 31, 2023 compared with many of the currencies of the foreign countries in which the Company ~~since July~~operates. The overall weaker U.S. dollar had a positive impact on the Company’s international net sales and net earnings because the foreign denominated revenues translated into more U.S. dollars in many regions around the world. The estimated impact of foreign currency translation for the six months ended January 31, ~~2017.~~2024 resulted in an overall increase in reported net sales of $17.2 million and an increase in reported net earnings of $1.9 million.

Derivative Fair Value Measurements

The Company enters into derivative instrument agreements, including foreign currency forward contracts and net investment hedges, to manage risk in connection with changes in foreign currency. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit. See ~~further discussion~~Notes 11, 14 and 15 in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this report.

Foreign Currency Forward Contracts - Cash Flow Hedges and Derivatives Not Designated as Hedging Instruments

The Company buys materials from foreign suppliers. Those transactions can be denominated in those suppliers’ local currency. The Company also sells to customers in foreign countries. Those transactions can be denominated in those customers’ local currency. Both of these ~~market risks~~transaction types can create volatility in the Company’s ~~Annual Report on Form 10-K for~~financial statements. The Company uses foreign currency forward contracts to manage those exposures and fluctuations. These contracts generally mature in 12 months or less, which is consistent with the ~~year ended~~forecasts of the related purchases and sales. Certain contracts are designated as cash flow hedges, whereas the remaining contracts, most of which are related to certain intercompany transactions which offset balance sheet exposure, are not designated as hedging instruments. The total notional amount of the foreign currency forward contracts designated as hedges was $53.0 million and $84.9 million as of January 31, 2024 and July 31, ~~2017.~~2023, respectively. The total notional amount of the foreign currency forward contracts not designated as hedges was $148.0 million and $147.5 million as of January 31, 2024 and July 31, 2023, respectively.

Net Investment Hedges

The total notional amount of net investment hedges was €80 million, or $88.8 million, as of January 31, 2024 and July 31, 2023. The maturity dates range from 2027 to 2029.

Based on the net investment hedges outstanding as of January 31, 2024, a 10% appreciation of the U.S. dollar compared to the Euro would result in a net gain of $7.9 million in the fair value of these contracts.

The Company’s exposure to market risk for changes in interest rates primarily relates to debt obligations that are at variable rates, as well as the potential increase in the fair value of long-term debt resulting from a potential decrease in interest rates. As of January 31, 2024, the Company’s financial liabilities with exposure to changes in interest rates consisted mainly of $40.0 million outstanding on the Company’s unsecured revolving credit facility, €80.0 million, or $86.7 million, of a variable rate term loan and ¥2.0 billion, or $13.5 million, of variable rate senior notes. As of January 31, 2024, short-term borrowings outstanding consisted of $49.8 million. Assuming a hypothetical 0.5 percentage point increase in short-term interest rates, with all other variables remaining constant, interest expense would have increased approximately $0.5 million in the six months ended January 31, 2024. The Company has no interest rate hedging agreements. Interest rate changes would also affect the fair market value of fixed-rate debt. As of January 31, 2024, the estimated fair values of fixed interest rate long-term debt were $388.0 million compared to the carrying values of $425.0 million. The fair values are estimated by discounting the projected cash flows using the interest rates at which similar amounts of debt could currently be borrowed.

The interest on cash and cash equivalents will vary as short-term yields change. Assuming a hypothetical 0.5 percentage point increase in yields, with all other variables remaining constant, interest income would have increased approximately $0.5 million in the six months ended January 31, 2024.

The Company is exposed to market risk from fluctuating prices of purchased commodity raw materials, including steel, filter media and petrochemical-based products including plastics, rubber and adhesives. On an ongoing basis, the Company enters into selective supply arrangements that allow the Company to reduce volatility in its costs. The Company strives to recover or offset all material cost increases through price increases to its customers and the Company’s cost reduction initiatives, which include material substitution, process improvement and product redesigns. However, an increase in commodity prices could result in lower gross profit.

Bankers’ Acceptance Notes

Consistent with common business practice in APAC, the Company has subsidiaries which accept bankers’ acceptance notes from their customers in settlement of certain customer billed accounts receivable. Bankers’ acceptance notes represent a commitment by the issuing financial institution to pay a certain amount of money at a specified future maturity date to the legal owner of the bankers’ acceptance note as of the maturity date. The maturity dates of bankers’ acceptance notes vary, but it is the Company’s policy to only accept bankers’ acceptance notes with maturity dates no more than 180 days from the date of the Company’s receipt of such draft. As of January 31, 2024 and July 31, 2023, the Company owned $14.8 million and $13.2 million, respectively, of these bankers’ acceptance notes and includes them in accounts receivable on the Condensed Consolidated Balance Sheets.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management of the Company, with the participation of its Chief Executive Officer and ~~the~~its Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period. Based on their evaluation, as of the end of the period covered, the Company’s Chief Executive Officer and Chief Financial Officer concluded ~~that~~ the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended)~~Act) were effective. The Company’s disclosure controls and procedures are designed so ~~that~~ information required to be disclosed by the issuer in the reports ~~that~~ it files or submits under the ~~Securities~~ Exchange Act ~~of 1934, as amended,~~ is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (SEC) rules and

forms and ~~that~~ such information is accumulated and communicated to management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting (as defined inby Rule 13a-15(f) under the ~~Securities~~ Exchange ~~Act of 1934, as amended)~~Act) occurred during the fiscal quarter ended January 31, ~~2018,~~2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company believes the recorded estimated liability in its Condensed Consolidated Financial Statements for claims or litigation is adequate in light of the probable and estimable outcomes. Any recorded liabilities were not material to the Company’s financial position, results of operations or liquidity and the Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued. The Company records provisions when it is probable ~~that~~ a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and litigation are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. The Company believes the estimated liability in its Condensed Consolidated Financial Statements for claims or litigation is adequate and appropriate for the probable and estimable outcomes. Liabilities recorded were not material to the Company’s financial position, results of operations or liquidity. The Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued.

Item 1A. Risk Factors

There are inherent risks and uncertainties associated with the Company’s global operations that involve the manufacturing and sale of products for highly demanding customer applications throughout the world. These risks and uncertainties could adversely affect the Company’s ~~operating performances~~business, reputation, financial condition or ~~financial condition.~~results of operations. The “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2017~~2023 outlines the risks and uncertainties ~~that~~ the Company believes are the most material to its business.



~~Item 2.~~	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

~~The following table summarizes information~~Information in connection with purchases made by, or on behalf of, the Company or any affiliated purchaser of the Company, of shares of the Company’s common stock during the three months ended January 31, ~~2018:~~2024 was as follows:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
November 1 - November 30, 2023	400,000	$	59.21	400,000	11,940,000
December 1 - December 31, 2023	8,004	61.86		—	11,940,000
January 1 - January 31, 2024	195,497	64.23		150,000	11,790,000
Total	603,501	$	60.87	550,000	11,790,000

On November 17, 2023, the Board of Directors authorized the repurchase of up to 12.0 million shares of the Company’s common stock. This repurchase authorization is effective until terminated by the Board of Directors. The Company has remaining authorization to repurchase 11.8 million shares under this plan. There were no repurchases of common stock made outside of the Company’s current repurchase authorization during the three months ended January 31, 2024. The “Total Number of Shares Purchased” column of the table above includes 53,501 shares of previously owned shares tendered by option holders in payment of the exercise price of options during the three months ended January 31, 2024. While not considered repurchases of shares, the Company does at times withhold shares that would otherwise be issued under stock-based awards to cover the withholding of taxes due as a result of exercising stock options or payment of stock-based awards.

Period
Total Number
of Shares
Purchased (1)

Average Price
Paid per Share

Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs

Maximum
Number
of Shares
that May Yet
Be Purchased
Under the Plans
or Programs
November 1 - November 30, 2017 —
$ —
—
6,241,152
December 1 - December 31, 2017 —
—
—
6,241,152
January 1 - January 31, 2018 400,000
50.55
400,000
5,841,152
Total 400,000
$ 50.55
400,000
5,841,152

Item 3. Defaults Upon Senior Securities

Item 4. Mine Safety Disclosures

Item 5. Other Information

During the three months ended January 31, 2024, no director or officer of the Company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits



~~Item 5.~~	~~Other Information~~

3-A*

~~Not applicable.~~



~~Item 6.~~	~~Exhibits~~
	*3-A – Restated Certificate of Incorporation of Registrant, dated as ~~currently in effect~~of September 22, 2023 (Filed as Exhibit 3-A to Form 10-Q Report ~~for the second quarter ended January 31, 2012)~~filed on December 6, 2023)
3-B*		*3-B – Amended and Restated Bylaws of Registrant, dated as of July ~~29, 2016~~28, 2023 (Filed as Exhibit ~~3-C~~3-B to Form 8-K Report filed on July ~~29, 2016)~~28, 2023)
		1 04 –
	~~10-A – Compensation~~Donaldson Company, Inc. 2019 Master St ock Incentive Plan, ~~for Non-Employee Directors~~as amended and restated (filed as Appendix A to definiti ve proxy statement filed on Oct ober 3, 2023)
31-A		~~10-B – Form of Non-Employee Director Restricted Stock Unit Award Agreement under the 2010 Master Stock Incentive Plan~~
	~~10-C – Form of Non-Employee Director Non-Qualified Stock Option Award Agreement under the 2010 Master Stock Incentive Plan~~
	~~31-A –~~ Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31-B		~~31-B –~~ Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		~~32 –~~ Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		~~101 –~~ The following financial information from the Donaldson Company, Inc. Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2018, as filed with the Securities and Exchange Commission,~~2024, formatted in ~~Extensible~~inline eXtensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Condensed Consolidated Statements of ~~(Loss)~~ Earnings, (ii) ~~the Condensed Consolidated Balance Sheets, (iii)~~ the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Changes in Stockholders’ Equity and ~~(v)~~(vi) the Notes to Condensed Consolidated Financial ~~Statements.~~Statements
104		The cover page from the Donaldson Company Inc. Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2024, formatted in iXBRL (included as Exhibit 101)


*
*	Exhibit has previously been filed with the Securities and Exchange Commission and is incorporated herein by reference as an exhibit.
**		Denotes compensatory plan or management contract.



**	Pursuant to the provisions of Regulation S-K Item 601(b)(4)(iii)(A), copies of instruments defining the rights of holders of certain long-term debts of the Registrant and its subsidiaries are not filed and in lieu thereof the Registrant agrees to furnish a copy thereof to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





	DONALDSON COMPANY, INC.
			(Registrant)



Date: March ~~9, 2018~~4, 2024	By:			/s/ Tod E. Carpenter
					Tod E. Carpenter Chairman, President and Chief Executive Officer (~~duly authorized officer)~~Principal Executive Officer)


Date: March ~~9, 2018~~4, 2024			By:		/s/ Scott J. Robinson
					Scott J. Robinson ~~Senior Vice President and~~ Chief Financial Officer (~~principal financial officer)~~Principal Financial Officer)


Date: March 4, 2024			By:		/s/ Andrew J. Cebulla
~~Date: March 9, 2018~~			~~By:~~		~~/s/ Melissa A. Osland~~
		~~Melissa A. Osland~~Andrew J. Cebulla Vice President and Corporate Controller (~~principal accounting officer)~~Principal Accounting Officer)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $5.00 par value	DCI	New York Stock Exchange



x	~~QUARTERLY REPORT PURSUANT TO SECTION 13~~ OR ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2018 OR~~

o	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO _________________.~~



	January 31, 2018			July 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	362.2		$	308.4
Accounts receivable, less allowance of $8.5 and $8.7, respectively	509.9			497.7
Inventories, net	344.9			293.5
Prepaid expenses and other current assets	62.9			51.4
Total current assets	1,279.9			1,151.0
Property, plant and equipment, net	507.7			484.6
Goodwill	242.0			238.1
Intangible assets, net	38.2			40.6
Deferred income taxes	24.9			30.3
Other long-term assets	38.6			35.1
Total assets	$	2,131.3		$	1,979.7

Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings	$	17.7		$	23.3
Current maturities of long-term debt	0.4			50.6
Trade accounts payable	200.0			194.0
Other current liabilities	216.9			216.2
Total current liabilities	435.0			484.1
Long-term debt	667.7			537.3
Deferred income taxes	4.7			3.6
Other long-term liabilities	197.0			100.2
Total liabilities	1,304.4			1,125.2

Commitments and contingencies (Note 14)

Shareholders' Equity:
Preferred stock, $1.00 par value, 1,000,000 shares authorized, none issued	—			—
Common stock, $5.00 par value, 240,000,000 shares authorized, 151,643,194 shares issued	758.2			758.2
Retained earnings	1,016.4			1,056.9
Non-controlling interests	4.6			4.4
Accumulated other comprehensive loss	(103.9		)	(157.0		)
Treasury stock, 21,784,693 and 21,037,353 shares, respectively, at cost	(848.4		)	(808.0		)
Total shareholders' equity	826.9			854.5
Total liabilities and shareholders' equity	$	2,131.3		$	1,979.7



	Engine Products		Industrial Products		Total Goodwill
Balance as of July 31, 2017	$	84.3	$	153.8	$	238.1
Goodwill acquired	0.6		—		0.6
Foreign exchange translation	0.4		2.9		3.3
Balance as of January 31, 2018	$	85.3	$	156.7	$	242.0



	Gross Carrying Amount			Accumulated Amortization			Net Intangible Assets
Balance as of July 31, 2017	$	106.6		$	(66.0	)	$	40.6
Amortization expense	—			(2.8		)	(2.8		)
Foreign exchange translation	(2.2		)	2.6			0.4
Balance as of January 31, 2018	$	104.4		$	(66.2	)	$	38.2



	Options Outstanding		Weighted Average Exercise Price
Outstanding as of July 31, 2017	6,685,551		$	32.60
Granted	877,050		$	45.69
Exercised	(530,916	)	$	26.32
Canceled	(21,193	)	$	37.60
Outstanding as of January 31, 2018	7,010,492		$	34.70



Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price of Outstanding Options		Number Exercisable	Weighted Average Exercise Price of Exercisable Options
$ 0.00 to $22.69	983,883	1.54	$	19.68	983,883	$	19.68
$22.70 to $28.69	861,049	7.86	$	28.06	567,606	$	28.05
$28.70 to $34.69	1,383,480	3.92	$	31.64	1,366,082	$	31.64
$34.70 to $40.69	1,380,549	5.64	$	37.03	1,370,383	$	37.03
$40.70 and above	2,401,531	8.34	$	43.65	947,730	$	42.39
	7,010,492	5.92	$	34.70	5,235,684	$	32.36



	Three Months Ended January 31,
	2018			% of sales		2017			% of sales
Net sales	$	664.7				$	550.6
Cost of sales	445.8			67.1	%	362.7			65.9	%
Gross profit	218.9			32.9	%	187.9			34.1	%
Operating expenses	137.3			20.6	%	118.5			21.5	%
Operating income	81.6			12.3	%	69.4			12.6	%
Interest expense	5.1			0.8	%	4.8			0.9	%
Other expense (income), net	0.1			—	%	(1.7		)	(0.3	)%
Earnings before income taxes	76.4			11.5	%	66.3			12.0	%
Income taxes	129.3			19.5	%	19.8			3.6	%
Net (loss) earnings	$	(52.9	)	(8.0	)%	$	46.5		8.4	%


~~(1)~~	~~Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments, such as interest income and expense.~~



~~Item 3.~~	~~Quantitative and Qualitative Disclosures about~~ Item 3. Quantitative and Qualitative Disclosures About Market Risk



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
November 1 - November 30, 2017	—	$	—	—	6,241,152
December 1 - December 31, 2017	—	—		—	6,241,152
January 1 - January 31, 2018	400,000	50.55		400,000	5,841,152
Total	400,000	$	50.55	400,000	5,841,152