DCI 10-K & 10-Q changes, risk factors and insider trading

We periodically communicate our strategies, commitments and targets related to sustainability matters, including greenhouse gas (GHG) emissions through the issuance of our Sustainability report. Although we intend to meet these strategies, commitments and targets, we may be unable to achieve them due to impacts on resources, operational costs and technological advancements. In addition, standards and processes for measuring and reporting GHG emissions and other sustainability metrics may change over time, resulting in inconsistent data or significant revisions to our strategies, commitments and targets, or our ability to achieve them. Our failure to achieve related strategies, commitments and targets or failure to meet sustainability requirements could negatively impact our reputation as well as the demand for our products and adversely affect our business, results of operations, financial condition and cash flow.flows.

Cybersecurity Risks - vulnerability of our information and operational technology systems and security.

We have many information technology and operational technology systems, including systems supporting our manufacturing operations, that are important to the operation of our business, some of which are managed by third parties. These systems are used to process, transmit and store electronic information and to manage or support a variety of business processes and activities, which are critical to our operations. We could encounter difficulties in developing new systems, maintaining and upgrading our existing systems, managing access to these systems, managing the evolving use of artificial intelligence and preventing information security breaches. Additionally, we collect and store sensitive data, including intellectual property and proprietary business information, in data centers and on information technology networks.

Our data is subject to a variety of U.S. and international laws and regulations that pertain to the collection and handling of personal information. The laws require us to notify governmental authorities and affected individuals of data breaches involving certain personal information. These laws include the European GDPRGDPR, Chinese PIPL, CSL, DSL and the CCPA. Regulatory litigation or actions that could impose significant penalties may be brought against us in the event of a breach of data or alleged non-compliance with such laws and regulations.

The Industrial Solutions segment is organized based on product type and consists of Industrial Air Filtration, Industrial Gases, Industrial Hydraulics, Power Generation and Aerospace and Defense products. These products are further organized by the Industrial Filtration Solutions and Aerospace and Defense business units. Within our industrial 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 Air Filtration, Industrial Gases and Industrial Hydraulics products consist of dust, fume and mist collectors, compressed air and industrial gases 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, lubricationlubrication, hydraulic and hydraulicwater filtration for fixed-wing and rotorcraft aerospace applicationsplatforms, andmissile systems, ground defense vehiclevehicles 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 and consists of the Food and Beverage, Disk Drive, VehicleAdvanced ElectrificationMembrane and Medical Device,Solutions, Microelectronics and Bioprocessing EquipmentUpstream and ConsumablesDownstream Bioprocessing markets. Within these markets, products consist of micro-environment gas and liquid filtration for food and beveragebeverage, data center cooling and industrial processes, bioprocessing equipment, including bioreactors and fermenters, bioprocessing consumables including chromatography devices, reagents and filters, polytetrafluoroethylene membrane-based products, as well as specialized air and gas filtration systems for applications including hard disk drives, semiconductor manufacturing, sensors, battery systems and powertrain components. Life Sciences primarily sells to large OEMs and directly to various end users requiring cell growth, separation, purification, high purity filtration and device protection.

The U.S. imposed tariffs on a wide range of imports, with the potential for further tariff actions, which resulted in retaliatory tariffs. These trade measures, along with updates to export controls and sanctions regimes, pose ongoing risks to global supply chains, potentially increasing the cost of goods, straining procurement cycles and impacting customer demand. On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act (IEEPA) does not provide authority for the President to impose tariffs. Certain tariffs that affected us were imposed under this statute pursuant to the presidential executive order. On March 4, 2026, the Court of International Trade ordered U.S. Customs and Border Protection to begin the refund process for all importers who were subject to IEEPA duties. The Company isperformed closelyan monitoringevaluation under the evolvingloss traderecovery landscape,method as well as its abilitypursuant to mitigateASC 410-30 and determined in the impactfourth quarter of tariffsfiscal and2026 itsthat analysisit is probable a portion of the potentialIEEPA impact.tariffs Whilepreviously paid will be recovered. The expected net recoveries as of July 31, 2026 are not material to the ultimatefinancial impact of tariffs remains uncertain, the Company continues to expect annual costs related to recently implemented or increased tariffs of approximately $35 million, which represents less than 1% of the Company’s total sales and is expected to be largely offset by pricing increases.statements.

The situation continues to evolve, and further legislative, regulatory, or judicial developments may affect the ultimate outcome and the availability or timing of any refunds. We are closely monitoring the evolving trade landscape, as well as our ability to mitigate the impact of tariffs and our analysis of the potential impact. We will continue to utilize our global manufacturing footprint and supply chain to mitigate the cost impact of tariffs. Any additional tariffs in the U.S. or retaliatory tariffs imposed by other governments could exacerbate the impact. Any new, substantial tariff increases on imports to the U.S. from Mexico, China and the EU,European Union should they be implemented and sustained for an extended period of time, could have a significant adverse effect on the Companyus and itsour supply chain.

For additional information regarding the impact and potential impact of trade policy and tariffs on the Company, refer to Part I, Item 1A, “Risk Factors” of this Annual Report, which outlines the risks and uncertainties the Company believes are the most material to its business.

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

Net sales for the year ended July 31, 20252026 increased $104.6$194.7 million, or 2.9%5.3% from fiscal 2024,2025, reflecting higher sales in the Mobile Solutions segment of $40.2$128.7 million, or 1.8%,5.6%, the Life Sciences segment of $37.7 million, or 12.8%, and the Industrial Solutions segment of $37.9$28.3 million, or 3.6%, and the Life Sciences segment of $26.5 million, or 9.8%.2.6%. Foreign currency translation increased net sales by $8.3$67.6 million, reflecting increases in the Mobile Solutions, Industrial Solutions and Life Sciences segments of $4.7$42.0 million, $15.5 million and $5.2$10.1 million, respectively, and a decrease in the Mobile Solutions segment of $1.6 million.respectively. In fiscal 2025,2026, the Company’s net sales increased primarily from higherfavorable salesforeign volumecurrency asimpacts welland asnet pricing actions.benefits.

Cost of sales for the year ended July 31, 20252026 was $2,404.7$2,539.7 million, compared with $2,311.9$2,404.7 million for the year ended July 31, 2024,2025, an increase of $92.8$135.0 million, or 4.0%.5.6%. Gross margin as a percentage of net sales for the year ended July 31, 20252026 was 34.8%34.6% compared with 35.5%34.8% for the year ended July 31, 2024,2025, a decrease of 0.7%.0.2%. The decrease in gross margin as a percentage of net sales was driven primarily by higheroperational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support customer-specific requirements in Industrial Solutions and costs associated with footprint optimization initiativesefforts, partially offset by favorable mix, favorable net pricing and tariffvolume related inflation on the Company’s LIFO inventory valuation.leverage.

Selling, general and administrative expenses for the year ended July 31, 20252026 were $641.0$679.2 million, or 17.4%17.5% of net sales, compared with $636.7$642.2 million, or 17.8%17.4% of net sales, for the year ended July 31, 2024,2025, an increase of $4.3$37.0 million, or 0.7%.5.8%. The decreaseincrease in selling, general and administrative expenses as a percentage of net sales was primarily due to ongoingan disciplined$8.9 million increase in amortization expense managementfrom andthe Facet acquisition, as well as a $4.0 million benefit from the reduction of the Purilogics’ contingent consideration liability,liability which representsin the fairprior valuefiscal basedyear onthat did not repeat in the probabilitycurrent fiscal year and the effects of achievingnormal certain milestones,inflation, partially offset by restructuring,ongoing businessdisciplined developmentexpense and other non-recurring expenses.management.

LossThere was no loss on impairment of intangible assets for the year ended July 31, 20252026, wascompared to $62.0 million, or 1.6% of net sales, compared with no expense for the year ended July 31, 2024.2025. The fiscal 2025 impairment expense included $46.6 million related to Univercells Technologies, reflecting lower-than-anticipated bioprocessing capital spending, particularly for early-stage assets, while drug development timelines are longer than previously anticipated. The remaining $15.4 million of impairment expense was related to Solaris as market demand for industrial bioreactors had significantly declined.

Interest expense for the year ended July 31, 20252026 was $24.2$36.0 million, compared with $21.4$24.2 million for the year ended July 31, 2024,2025, an increase of $2.8$11.8 million, or 13.5%.48.8%. The increase primarily reflects a higher averageoverall level of indebtednessdebt duringdriven fiscal 2025 compared toby the priorFacet year.acquisition.

Other income, net for the year ended July 31, 20252026 was $21.0$21.9 million, compared with $12.6$21.0 million for the year ended July 31, 2024,2025, an increase of $8.4$0.9 million, or 66.8%,4.3%, driven primarily by lowerhigher income from equity investments and joint ventures, partially offset by higher pension related expenses in the current year.expense.

The effective tax rates were 25.4%22.5% and 22.7%25.4% for the years ended July 31, 20252026 and 2024,2025, respectively. The higherlower effective tax rate was primarily due to the fiscal 2025 third quarter loss on impairment of intangible assets, as the discrete tax benefitimpact onresulting from the loss on impairment of intangible assets wasin reducedthe byyear ended July 31, 2025, as well as an increase in valuationexcess allowance.tax Excluding the impact of the lossbenefits on impairmentstock-based of intangible assets, the effective tax rate is higher due to a decrease in discrete tax benefits.compensation.

Net earnings for the year ended July 31, 20252026 were $367.0$453.8 million, compared with $414.0$367.0 million for the year ended July 31, 2024,2025, aan decreaseincrease of $47.0$86.8 million, or 11.3%.23.7%. Diluted EPS were $3.85 for the year ended July 31, 2026, compared with $3.05 for the year ended July 31, 2025, compared with $3.38 for the year ended July 31, 2024.2025.

During fiscal 2025,2026, the Company continued its global footprint and cost optimization actions associated with certain plant closures and other related activities to further improve the operating and manufacturing cost structure, which began in fiscal 2024. These activities resulted in restructuring expenses, primarily related to severance,expenses of $18.3 million, $16.8 million and $6.4 million for the years ended July 31, 2026, 2025 and 2024, respectively. Charges of $17.6 million, $6.5 million and $3.8 million were included in cost of sales in the Consolidated Statements of Earnings for the years ended July 31, 2026, 2025 and 2024, respectively. Charges of $0.7 million, $10.3 million and $2.6 million were included in operating expenses in the Consolidated Statements of Earnings for the years ended July 31, 2026, 2025 and 2024, respectively. As of July 31, 20252026 and July 31, 2024,2025, $7.1$3.6 million and $6.4$7.1 million of accrued expenses were included in accrued employee compensation and related taxes in the Consolidated Balance Sheets, respectively. The estimated range of future costs associated with actionsactivities related to thisthe restructuringglobal throughfootprint fiscalaction 2026are islargely $5.0complete millionand we do not expect to $10.0incur million.a material amount of charges in future periods.

Net sales for the Mobile Solutions segment for the year ended July 31, 20252026 were $2,291.0$2,419.7 million, compared with $2,250.8$2,291.0 million for the year ended July 31, 2024,2025, an increase of $40.2$128.7 million, or 1.8%,5.6%, driven by a $14.7$46.8 million volume increase and a $27.1$39.9 million increase from pricing benefits. TheForeign impactcurrency fromtranslation positively impacted net sales for the Mobile Solutions segment by 1.8%. All business units were positively impacted by foreign currency translation for the year ended July 31, 2025 was not material.translation.

Earnings before income taxes for the Mobile Solutions segment for the year ended July 31, 20252026 were $417.6$467.5 million, or 18.2%19.3% of net sales, an increase from 18.0%18.2% of net sales for the year ended July 31, 2024.2025. The increase was driven by timingleverage offrom inventoryhigher costvolume, adjustmentsfavorable mix and leveragestrong onoperational higher sales.performance.

Net sales for the Industrial Solutions segment for the year ended July 31, 20252026 were $1,104.4$1,132.7 million, compared with $1,066.5$1,104.4 million for the year ended July 31, 2024,2025, an increase of $37.9$28.3 million, or 3.6%,2.6%, driven by a $22.4$30.3 million volumeincrease increasefrom the acquisition of Facet and a $10.8$28.8 million increase from pricing benefits.benefits, partially offset by a $46.3 million decrease in sales volume. Foreign currency translation positively impacted net sales for the Industrial Solutions segment by 0.5%.1.4%. Both IFSbusiness and Aerospace and Defenseunits were positively impacted by foreign currency translation.

Net sales of IFS increased $13.1$18.4 million, driven by newnet equipmentpricing andbenefits, replacementas partwell salesas strengthFirst Fit project timing in severalPower key businesses.Generation. Net sales of Aerospace and Defense increased by $24.8$9.9 millionmillion, dueprimarily todriven ongoingby strengththe inrecent theseacquisition endof markets.Facet, partially offset by project timing within the legacy Aerospace and Defense business.

Earnings before income taxes for the Industrial Solutions segment for the year ended July 31, 20252026 were $197.7$155.6 million, or 17.9%13.7% of net sales, a decrease from 18.6%17.9% of net sales for the year ended July 31, 2024.2025. The decrease was driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support customer-specific requirements and footprint optimization efforts, as well as unfavorable mix.mix in business unit sales.

Net sales for the Life Sciences segment for the year ended July 31, 20252026 were $295.5$333.2 million, compared with $269.0$295.5 million for the year ended July 31, 2024,2025, an increase of $26.5$37.7 million, or 9.8%,12.8%, driven by a $22.9$29.0 million volume increase, partially offset by a $1.6$1.4 million decrease from pricing. The net sales increase was primarily driven by strong market demand in Disk Drive and strong market demand and market share gains in Food and Beverage. Foreign currency translation positively impacted net sales for the Life Sciences segment by 1.9%.3.5%. The increase in net sales was driven by strong global sales in Food and Beverage and Disk Drive.

Earnings before income taxes for the Life Sciences segment for the year ended July 31, 20252026 were $4.4$32.3 million, or 1.5%9.7% of net sales, an increase from losses of $10.4 million, or 3.9%1.5% of net sales, for the year ended July 31, 2024.2025. The increase in net earningsimprovement was driven by higher volume, benefitsleverage from restructuringhigher activities,volume and afavorable $4.0product million benefit from the reduction of the Purilogics’ contingent consideration liability, which represents the fair value based on the probability of achieving certain milestones.mix.

Cash provided by operating activities for the year ended July 31, 20252026 was $418.8$493.7 million, compared with $492.5$418.8 million for the year ended July 31, 2024,2025, aan decreaseincrease of $73.7$74.9 million. The decreaseincrease in cash provided by operating activities was primarily driven by higher earnings and improved working capital requirementsmanagement, andincluding lower cash usage related to inventory, partially offset by an increase in accounts receivable driven by strong sales growth in the timingfourth of income tax related payments.quarter.

Cash used in investing activities for the year ended July 31, 20252026 was $150.4$879.5 million, compared with $86.9$150.4 million for the year ended July 31, 2024,2025, an increase in cash used of $63.5$729.1 million. The increase in cash used was primarily due to the equity method investment in Medicaacquisition of $71.2Facet for $822.6 million.

Cash usedprovided inby financing activities generally relates to the use of cash for payment of dividends and repurchases of the Company’s common stock, net of borrowing activity and proceeds from the exercise of stock options. Cash usedprovided inby financing activities for the year ended July 31, 20252026 was $321.7$451.6 million, compared with $355.9cash used in financing activities of $321.7 million for the year ended July 31, 2024,2025. aCash decreaseprovided ofin $34.2the million.current The decreaseyear was primarily driven by net proceeds from long-term debt of $123.1$642.7 million in the current year to fund the Facet acquisition compared to a net repaymentproceeds of long-term debt of $109.1$123.1 million in the prior year, partially offset by an increase in the repurchases of the Company’s common stock of $168.8$111.2 million and loweran proceedsincrease fromin thedividends exercise of stock options.paid.

The Company’s cash requirements within the next 12 months include short-term borrowings, accounts payable, accrued expenses, income taxes payable, dividends payable, purchase commitments and other current liabilities. Additionally, in fiscal 2026,2027, the Company expects its cash paid for capital expenditures to be between $65$70 million and $85$90 million, primarilybalanced associatedbetween withinvestments capacity expansion,in new products and technologies and products across all segments, and making ongoing investments in maintaining and improving the efficiency of the Company’s existingoperational assets.

Long-term debt outstanding as of July 31, 20252026 was $637.1$1,280.0 million compared with $508.4$637.1 million as of July 31, 2024,2025, an increase of $128.7$642.9 million. In fiscal 2025,2026, the increase in debt was driven primarily by financing needs for the equityacquisition methodof investment in Medica.Facet.

The Company estimates the fair value of acquired customer relationships using the multi-period excess earnings method. This approach is typically applied when cash flows are not directly generated by the asset, but rather, by an operating group which includes the particular asset. Fair value is estimated as the present value of the benefits anticipated from ownership of the asset, in excess of the economic returns required on the investment in contributory assets which are necessary to realize those benefits. The intangible asset’s estimated earnings are determined as the residual earnings after quantifying estimated economic returns from contributory assets. Assumptions used in these calculations include same-customer revenue growth rates, discount rate, estimated earnings and customer attrition rates.rate.

These forward-looking statements speak only as of the date such statements are made and are subject to risks and uncertainties that 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, challenges in global operations; changes in international trade policy; impacts of global economic, industrial and political conditions on product demand; impacts from unexpected events; effects of unavailable raw materials, significant demand fluctuations or material cost changes; inability to attract and retain qualified personnel; inability to meet customer demand; inability to maintain competitive advantages; threats from disruptive technologies; effects of highly competitive markets with pricing pressure; exposure to customer concentration in certain cyclical industries; inability to manage productivity improvements; inability to achieve commitments related to sustainability; results of execution of any acquisition, divestiture and other strategic transactions; risks relating to the Facet acquisition; inability to achieve the intended outcomes of AI technologies development; vulnerabilities associated with information technology systems and security; inability to protect and enforce intellectual property rights; costs associated with governmental laws and regulations; impacts of foreign currency fluctuations; and effects of changes in capital and credit markets. These and other factors are described in Part I, Item 1A, “Risk Factors” of this Annual Report. 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.

The U.S. imposed tariffs on a wide range of imports, with the potential for further tariff actions, which resulted in retaliatory tariffs. These trade measures, along with updates to export controls and sanctions regimes, pose ongoing risks to global supply chains, potentially increasing the cost of goods, straining procurement cycles and impacting customer demand. On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers ActIEEPA does not provide authority for the President to impose tariffs. Certain tariffs that affected us were imposed under this statute pursuant to presidential executive order. On March 4, 2026, the Court of International Trade (CIT) ordered U.S. Customs and Border Protection (CBP) to begin the refund process for all importers who were subject to IEEPA duties. The extentsituation continues to evolve, and further legislative, regulatory, or judicial developments may affect the ultimate outcome and the availability or timing of any potentialrefunds. recoveriesAs of tariffsApril previously30, paid2026, remainwe subjectdid not record an asset related to furtherthe legalpotential interpretation and administrative processes.refund. We will continue to monitorevaluate new developments and willwould evaluaterecord a potential refund under a loss recovery model pursuant to ASC 410-30 if the effectrequirements ofare themet. rulingWe on future reporting periods as additional information becomes available. The Company isare closely monitoring the evolving trade landscape, as well as itsour ability to mitigate the impact of tariffs and itsour analysis of the potential impact. The CompanyWe will continue to utilize itsour global manufacturing footprint and supply chain to mitigate the cost impact of tariffs.

Any additional tariffs in the U.S. or retaliatory tariffs imposed by other governments could exacerbate the impact. Any new, substantial tariff increases on imports to the U.S. from Mexico, China and the European Union (EU) should they be implemented and sustained for an extended period of time, could have a significant adverse effect on the Companyus and itsour supply chain.

Net Sales (1) The impact of foreign currency translation was calculated by translating the secondthird quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the secondthird quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.

Net sales for the three months ended JanuaryApril 31,30, 2026 increased $26.3$55.0 million, or 3.0%,5.8%, from the three months ended JanuaryApril 31,30, 2025, reflecting higher sales in the Mobile Solutions segment of $9.1$47.3 million, or 1.6% growth, the Industrial Solutions segment of $6.0 million, or 2.4%8.1% growth, and the Life Sciences segment of $11.2$9.3 million, or 16.2%12.7% growth.growth, partially offset by lower sales in the Industrial Solutions segment of $1.6 million, or a 0.6% decline. Foreign currency translation increased net sales by $27.9$25.4 million compared to the three months ended JanuaryApril 31,30, 2025, reflecting an increase in the Mobile Solutions segment of $16.6$16.2 million, an increase in the Industrial Solutions segment of $6.9$5.7 million, and an increase in the Life Sciences segment of $4.4$3.5 million. During the three months ended JanuaryApril 31,30, 2026, the Company’s net sales increase was driven by favorable foreign currency impactsimpacts, net pricing benefits and pricing benefits, partially offset by volume decline.growth.

Gross margin as a percentage of net sales for the three months ended JanuaryApril 31,30, 2026 was 33.5% compared with 35.2%34.2% for the three months ended JanuaryApril 31,30, 2025. The decrease in gross margin as a percentage of net sales was driven primarily by $9.1 million of costs associated with footprint optimization efforts and operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support highercustomer-specific customer demandrequirements in Industrial Solutions and costs associated with footprint optimization efforts,Solutions, partially offset by benefits fromnet pricing actions.increases and favorable mix.

Selling, general and administrative expenses for the three months ended JanuaryApril 31,30, 2026 were $162.5$158.9 million, or 18.1%16.0% of net sales, compared with $159.2$152.3 million, or 18.3%16.2% of net sales, for the three months ended JanuaryApril 31,30, 2025, an increase of $3.3$6.6 million, or 2.1%.4.3%. The decrease in selling, general and administrative expenses as a percentage of net sales was primarily due to ongoingleverage on higher sales and continued disciplined expense management,management. partiallyAdditionally, offsetthe bythree restructuringmonths andended otherApril charges.30, 2025 included a $6.2 million benefit from the reduction of the Purilogics’ contingent consideration liability, which represents the fair value based on the probability of achieving certain milestones, which did not repeat in the three months ended April 30, 2026.

Research and development expenses for the three months ended JanuaryApril 31,30, 2026 were $18.6$19.2 million, or 2.2%2.0% of net sales, compared with $21.2$21.4 million, or 2.4%2.3% of net sales, for the three months ended JanuaryApril 31,30, 2025, a decrease of $2.6$2.2 million, or 11.7%,10.2%, driven by focused project prioritization.

Interest expense for the three months ended JanuaryApril 31,30, 2026 was $7.7$6.5 million, compared with $5.9$5.7 million for the three months ended JanuaryApril 31,30, 2025, an increase of $1.8$0.8 million, or 29.0%.13.3%. The increase reflected a combination of higher proportion of variable interest rate debt and higher overallaverage level of debt.debt for the three months ended April 30, 2026 compared to the prior year.

Other income, net for the three months ended JanuaryApril 31,30, 2026 was $5.6$6.0 million, compared with other income, net of $5.4$5.3 million for the three months ended JanuaryApril 31,30, 2025, an increase of $0.2$0.7 million, whichdriven wasby relativelyhigher consistentearnings withfrom theequity prior year.investments.

The effective tax rate was 20.7%23.7% and 23.2%33.6% for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively. The lower effective tax rate was primarily due to anthe increasetax impact resulting from the loss on impairment of intangible assets in excessthe three months ended April 30, 2025. Excluding the prior year impact of the loss on impairment of intangible assets, the effective tax benefitsrate onis stock-basedhigher compensation.due to a decrease in discrete tax benefits.

Net earnings for the three months ended JanuaryApril 31,30, 2026 were $92.5$118.1 million, compared with $95.9$57.8 million for the three months ended JanuaryApril 31,30, 2025, aan decreaseincrease of $3.4$60.3 million, or 3.6%.104.4%. Diluted EPS were $0.78$1.00 for the three months ended JanuaryApril 31,30, 2026, compared with $0.79$0.48 for the three months ended JanuaryApril 31,30, 2025, aan decreaseincrease of $0.01,$0.52, or 0.7%.108.2%.

Net sales for the sixnine months ended JanuaryApril 31,30, 2026 increased $61.6$116.6 million, or 3.5%,4.3%, from the sixnine months ended JanuaryApril 31,30, 2025, reflecting higher sales in the Mobile Solutions segment of $35.0$82.2 million, or 3.1%4.8% growth, the Life Sciences segment of $29.8 million, or 14.0% growth, and the Industrial Solutions segment of $6.2$4.6 million, or 1.2% growth, and the Life Sciences segment of $20.4 million, or 14.6%0.6% growth. Foreign currency translation increased net sales by $39.8$65.2 million compared to the sixnine months ended JanuaryApril 31,30, 2025, reflecting an increase in the Mobile Solutions segment of $23.3$39.5 million, an increase in the Industrial Solutions segment of $9.9$15.6 million, and an increase in the Life Sciences segment of $6.6$10.1 million. During the sixnine months ended JanuaryApril 31,30, 2026, the Company’s net sales primarily increased due to favorable foreign currency impacts and net pricing benefits, partially offset by volume decline.benefits.

Gross margin as a percentage of net sales for the sixnine months ended JanuaryApril 31,30, 2026 was 34.3%34.0% compared with 35.3%35.0% for the sixnine months ended JanuaryApril 31,30, 2025. The decrease in gross margin as a percentage of net sales was driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support highercustomer-specific customer demandrequirements in Industrial Solutions and costs associated with footprint optimization efforts, partially offset by benefitsfavorable fromnet pricing actions.pricing.

Selling, general and administrative expenses for the sixnine months ended JanuaryApril 31,30, 2026 were $332.1$491.0 million, or 18.1%17.4% of net sales, compared with $325.3$477.6 million, or 18.4%17.6% of net sales, for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $6.8$13.4 million, or 2.1%.2.8%. The decrease in selling, general and administrative expenses as a percentage of net sales was primarily due to ongoing disciplined expense management and leverage on higher sales. Additionally, the nine months ended April 30, 2025 included a $6.2 million benefit from the reduction of the Purilogics’ contingent consideration liability, which represents the fair value based on the probability of achieving certain milestones, which did not repeat in the nine months ended April 30, 2026.

Gain on sale of fixed assets for the sixnine months ended JanuaryApril 31,30, 2026 was $9.3 million, or 0.5%0.3% of net sales, compared to no$1.2 gainmillion, onor sale0.1% of fixednet assetssales, for the sixnine months ended JanuaryApril 31,30, 2025. The increase in gain on sale of fixed assets was driven by the sale of land and a building associated with footprint optimization initiatives.

Research and development expenses for the sixnine months ended JanuaryApril 31,30, 2026 were $37.8$57.0 million, or 2.1%2.0% of net sales, compared with $43.9$65.3 million, or 2.5%2.4% of net sales, for the sixnine months ended JanuaryApril 31,30, 2025, a decrease of $6.1$8.3 million, or 13.7%,12.6%, driven by focused project prioritization.

Interest expense for the sixnine months ended JanuaryApril 31,30, 2026 was $14.8$21.3 million, compared with $11.4$17.1 million for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $3.4$4.2 million, or 30.4%.24.6%. The increase reflected a combination of a higher proportion of variable interest rate debt and a higher overall level of debt.

Other income, net for the sixnine months ended JanuaryApril 31,30, 2026 was $10.9$16.9 million, compared with other income, net of $10.6$15.9 million for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $0.3$1.0 million, whichdriven wasby relativelyhigher consistentearnings withfrom theequity prior year.investments.

The effective tax rate was 21.8%22.5% and 23.7%26.2% for the sixnine months ended JanuaryApril 31,30, 2026 and 2025, respectively. The lower effective tax rate was primarily due to the tax impact resulting from the loss on impairment of intangible assets in the nine months ended April 30, 2025. Excluding the prior year impact of the loss on impairment of intangible assets, the effective tax rate is lower primarily due to an increase in excess tax benefits on stock-based compensation.

Net earnings for the sixnine months ended JanuaryApril 31,30, 2026 were $206.4$324.5 million, compared with $194.9$252.7 million for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $11.5$71.8 million, or 5.9%.28.4%. Diluted EPS were $1.75$2.75 for the sixnine months ended JanuaryApril 31,30, 2026, compared with $1.60$2.09 for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $0.15,$0.66, or 9.3%.31.9%.

(1) The impact of foreign currency translation was calculated by translating the secondthird quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the secondthird quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.

Net sales for the Mobile Solutions segment for the three months ended JanuaryApril 31,30, 2026 were $556.6$629.9 million, compared with $547.5$582.6 million for the three months ended JanuaryApril 31,30, 2025, an increase of $9.1$47.3 million, or 1.6%.8.1%. Foreign currency translation favorably impacted net sales for the Mobile Solutions segment by 3.0%.2.8%. All business units were positively impacted by foreign currency translation.

Net sales of Aftermarket increased $5.1$37.5 millionmillion, primarily driven by higher vehicle utilization rates in EMEAall and APAC.regions. Net sales of Off-Road increased $6.3$8.4 million,million reflecting aimproved modestmarket reboundconditions, particularly in construction, following declines in the prior year. Net sales of On-Road decreasedincreased $2.3$1.4 million from higher truck production, primarily due to a continuing decline in global truck production.EMEA.

Earnings before income taxes for the Mobile Solutions segment for the three months ended JanuaryApril 31,30, 2026 were $93.7$127.0 million, or 16.8%20.2% of net sales, aan decreaseincrease from 17.4%18.1% of net sales for the three months ended JanuaryApril 31,30, 2025. The decreaseincrease was driven primarily by higher operational costsleverage from footprinthigher optimization effortsvolume and deleveragefavorable from lower volume.mix.

Net sales for the Mobile Solutions segment for the sixnine months ended JanuaryApril 31,30, 2026 were $1,154.9$1,784.8 million, compared with $1,119.9$1,702.6 million for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $35.0$82.2 million, or 3.1%.4.8%. Foreign currency translation favorably impacted net sales for the Mobile Solutions segment by 2.1%.2.3%. All business units were positively impacted by foreign currency translation.

Net sales of Aftermarket increased $34.2$71.6 million due to market share gains and higher vehicle utilization rates, primarilyrates in EMEAall and APAC.regions. Net sales of Off-Road increased $11.8$20.2 million, reflecting a modest rebound following declines in the prior year. Net sales of On-Road decreased $11.0$9.6 million primarily due to a continuing decline in global truck production.

Earnings before income taxes for the Mobile Solutions segment for the sixnine months ended JanuaryApril 31,30, 2026 were $205.0$332.0 million, or 17.8%18.6% of net sales, consistentan withincrease from 17.9% of net sales for the sixnine months ended JanuaryApril 31,30, 2025. The increase was driven primarily by leverage from higher volume and favorable mix.

(1) The impact of foreign currency translation was calculated by translating the secondthird quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the secondthird quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.

Net sales for the Industrial Solutions segment for the three months ended JanuaryApril 31,30, 2026 were $259.7$281.7 million, compared with $253.7$283.3 million for the three months ended JanuaryApril 31,30, 2025, ana increasedecrease of $6.0$1.6 million, or 2.4%.0.6%. Foreign currency translation favorably impacted net sales for the Industrial Solutions segment by 2.2%.2.0%. Both business units were positively impacted by foreign currency translation.

Net sales of IFS increased $15.1$5.3 million, driven by Firstnet Fitpricing project timingbenefits and strong Aftermarket demand in Power Generation,Generation asnew wellequipment assales, strongpartially globaloffset demandby volume declines in Industrial Gases.Gases and dust collection. Net sales of Aerospace and Defense decreased by $9.1$6.9 million primarily due to ongoing supply chain constraints and project timing.

Earnings before income taxes for the Industrial Solutions segment for the three months ended JanuaryApril 31,30, 2026 were $31.0$37.7 million, or 11.9%13.4% of net sales, a decrease from 16.1%18.1% of net sales for the three months ended JanuaryApril 31,30, 2025. The decrease was driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support highercustomer-specific customer demand and costs associated with footprint optimization efforts,requirements, as well as unfavorable mix in business unit sales.

Net sales for the Industrial Solutions segment for the sixnine months ended JanuaryApril 31,30, 2026 were $517.5$799.2 million, compared with $511.3$794.6 million for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $6.2$4.6 million, or 1.2%.0.6%. Foreign currency translation favorably impacted net sales for the Industrial Solutions segment by 1.6%.2.0%. Both business units were positively impacted by foreign currency translation.

Net sales of IFS increased $18.4$23.6 million, driven by net pricing benefits, as well as First Fit project timing and strong Aftermarket demand in Power Generation, as well as strong global demand in Industrial Gases.Generation. Net sales of Aerospace and Defense decreased by $12.2$19.0 million primarily due to project timing.

Earnings before income taxes for the Industrial Solutions segment for the sixnine months ended JanuaryApril 31,30, 2026 were $63.2$100.9 million, or 12.2%12.6% of net sales, a decrease from 16.0%16.8% of net sales for the sixnine months ended JanuaryApril 31,30, 20252025. The decrease was driven primarily by operational inefficiencies related to shifting Power Generation equipment production to a new point of manufacturing to support highercustomer-specific customer demand, costs associated with footprint optimization effortsrequirements and unfavorable mix in business unit sales.

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

(1) The impact of foreign currency translation was calculated by translating the secondthird quarter of fiscal 2026 foreign currency net sales into U.S. dollars using the average foreign currency exchange rates for the secondthird quarter of the prior fiscal year. The impact of currency translation does not change the underlying drivers of revenue shown in this chart.

Net sales for the Life Sciences segment for the three months ended JanuaryApril 31,30, 2026 were $80.0$83.5 million, compared with $68.8$74.2 million for the three months ended JanuaryApril 31,30, 2025, an increase of $11.2$9.3 million, or 16.2%.12.7%. Foreign currency translation favorably impacted net sales for the Life Sciences segment by 6.4%.4.8%. The increase in net sales was driven by strong global sales in Food and Beverage and Disk Drive.

Earnings before income taxes for the Life Sciences segment for the three months ended JanuaryApril 31,30, 2026 were $7.4$6.8 million, or 9.3%8.1% of net sales, an increase from lossesearnings before income taxes of $0.5$5.8 million, or 0.7%7.8% of net sales, for the three months ended JanuaryApril 31,30, 2025. The improvement was driven by leverage from higher volume and disciplinedfavorable expenseproduct management.mix. Additionally, the three months ended April 30, 2025 included a $6.2 million benefit, an impact of 8.3% on fiscal 2025 quarter-to-date profitability, from the reduction of the Purilogics’ contingent consideration liability, which represents the fair value based on the probability of achieving certain milestones.

Net sales for the Life Sciences segment for the sixnine months ended JanuaryApril 31,30, 2026 were $159.3$242.8 million, compared with $138.9$213.0 million for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $20.4$29.8 million, or 14.6%.14.0%. Foreign currency translation favorably impacted net sales for the Life Sciences segment by 4.8%. The increase in net sales was driven by strong global sales in Food and Beverage and Disk Drive.

Earnings before income taxes for the Life Sciences segment for the sixnine months ended JanuaryApril 31,30, 2026 were $14.7$21.5 million, or 9.2%8.9% of net sales, an improvement from no earnings or losses before income taxes of $5.8 million, or 4.2% of net sales, for the sixnine months ended JanuaryApril 31,30, 2025. The improvement was driven by leverage onfrom higher volume and benefitsfavorable fromproduct restructuring activities that occurred during fiscal 2025.mix.

Cash provided by operating activities for the sixnine months ended JanuaryApril 31,30, 2026 was $158.4$293.8 million, compared with $163.3$251.0 million for the sixnine months ended JanuaryApril 31,30, 2025, aan decreaseincrease of $4.9$42.8 million. The decreaseincrease in cash provided by operating activities was primarily driven by higher incomeearnings taxesand paidworking incapital themanagement current fiscal year, partially offset by higher earnings.improvement.

Cash used in investing activities for the sixnine months ended JanuaryApril 31,30, 2026 was $18.4$42.2 million, compared with $115.1$129.8 million for the sixnine months ended JanuaryApril 31,30, 2025, a decrease of $96.7$87.6 million. The decrease in cash used in investing activities was primarily due to the $71.2 million equity method investment in Medica during the sixnine months ended JanuaryApril 31,30, 2025, as well as $10.8 million received from the sale of property, plant and equipment in the first six months ended January 31, 2026.2025.

Cash used in financing activities generally relates to the use of cash for payment of dividends and repurchases of the Company’s common stock, net of borrowing activity and proceeds from the exercise of stock options. Cash used in financing activities for the sixnine months ended JanuaryApril 31,30, 2026 was $131.5$232.3 million, compared with cash used in financing activities of $88.5$175.4 million for the sixnine months ended JanuaryApril 31,30, 2025, an increase of $43.0$56.9 million. The increase in cash used in financing activities was primarily driven by a decreasenet $61.9 million reduction of debt in short-termthe borrowingsnine ofmonths $41.8ended April 30, 2026 compared to a $179.1 million and annet increase in debt in the nine months ended April 30, 2025. This was partially offset by lower repurchases of the Company’s common stock of $29.6$161.0 million, partiallyas offsetwell byas an increase of $26.3$28.5 million inmore proceeds from the exercise of stock options.

To determine the level of dividend and share repurchases, the Company considers recent and projected performance across key financial metrics, including earnings, cash flow from operations and total debt. Dividends paid for the sixnine months ended JanuaryApril 31,30, 2026 and 2025 were $69.3$104.0 million and $64.6$96.9 million, respectively. Share repurchases for the sixnine months ended JanuaryApril 31,30, 2026 and 2025 were $111.2 million and $81.6$272.2 million, respectively.

Additional sources of liquidity are existing cash and available credit facilities. Cash and cash equivalents as of JanuaryApril 31,30, 2026 was $194.4$204.1 million, compared with $180.4 million as of July 31, 2025. The Company has capacity of $755.3$1,222.1 million available for further borrowing under existing credit facilities as of JanuaryApril 31,30, 2026.

As of JanuaryApril 31,30, 2026, total debt, including short-term borrowings and long-term debt, represented 30.2%26.4% of total capitalization, defined as total debt plus total stockholders’ equity, compared with 31.5% as of July 31, 2025. As of JanuaryApril 31,30, 2026, the Company was in compliance with its financial covenants.

Long-term debt outstanding was $680.8$598.0 million as of JanuaryApril 31,30, 2026, compared with $637.1 million as of July 31, 2025, ana increasedecrease of $43.7$39.1 million, primarily due to limited share repurchases in preparation for the funding of the acquisition of Facet during the sixnine months ended JanuaryApril 31,30, 2026. As of JanuaryApril 31,30, 2026, there was $491.6$571.6 million available and $100.0$20.0 million outstanding on the Company’s $600.0 million unsecured revolving credit facility that expires on June 12, 2030. We expect to finance the Facet acquisition with a combination of cash on hand and proceeds from new debt.