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

Most of our business is derived from companies in developed countries. Economic uncertainty and challenging market conditions in many parts of the world, including the impact of high inflationary environments and governmental monetary policies and related interest rates to combat inflation, the war in Ukraine, continuing conflicts in the Middle East, international trade disputes, tariffs, inflation, governmental monetary policies, interest rates, armed conflicts, and sovereign debt levels in the European Union and the United States, are situations that we monitor closely. If developed countries werecontinue to experience slow growth or experience a recession, we could see the following effects:

We are subject to certain risks associated with our international operations, including our significant concentration of business in China and ongoing developments related to Russia, Ukraine, and the Middle East.China.

We conduct business in many countries, including emerging markets in Asia, Latin America, and Eastern Europe, and these operations represent a significant portion of our sales and earnings. In addition to the currency risks discussed below, our international operations pose other potential substantial risks and problems for us, including the following:

•other uncertain local economic, political, and social conditions, including inflation, hyper-inflation, and other decreases in purchasing power, or periods of low or no productivity growthgrowth, or effects of natural disasters or pandemics and epidemics;

We are required to comply with various import, export control, and economic sanctions laws, which may affect our transactions with certain customers, business partners, and other persons, including in certain cases dealings with or between our employees and subsidiaries. We address below the topic of economic sanctions laws related to Russia's invasion of Ukraine, which commenced in February 2022. In certain circumstances, export control and economic sanctions regulations may prohibit the export of certain products, services, and technologies, and in other circumstances, we may be required to obtain an export license before exporting a controlled item. Failure to comply with any regulations and sanctions could result in civil and criminal actions, monetary and non-monetary penalties, disruptions to our business, limitations on our ability to import and export products and services, and damage to our reputation.

The EU Council has been working to expand renewable energy use, reduce consumption, and diversify energy sources due to reduced Russian energy supplies.supplies as a result of the war between Ukraine and Russia. This may impact energy availability and costs in Europe and could impact our European manufacturing operations and demand for our products in Europe.

We do not manufacture in the Middle East and sales in the region account for less than 1% of total revenue. Ongoing conflicts may impact demand locally and globally while disrupting supply chains, increasing costs, and reducing shipping capacity, all of which could affect our financial results and customer demand. Escalating global conflicts, including in Ukraine and the Middle East, have heightened economic and geopolitical uncertainty.

Estimating the impact of ongoing global conflicts on supply chain disruptions and energy shortages is challenging. However, theThe Ukraine invasion and Middle East conflict could negatively affect our financial results and pose risks to our business. Additionally, uncertainties surrounding these conflicts persist, and their effects on the global economy and market conditions can change rapidly.

While we attempt to mitigate cybersecurity risks by employing a number of proactive measures, including mandatory quarterly ongoing employee training and awareness, technical security controls, enhanced data protection, and maintenance of backup and protective systems, our systems remain potentially vulnerable to cybersecurity threats, any of which could have a material adverse effect on our business. We believe ourOur mitigation measures reduce, but cannot eliminate, the risk of a cybersecurity incident.incident, Despiteand anyour precautionssystems weremain maypotentially take,vulnerable ato cybersecurity threats. A cybersecurity incident couldwould harm our reputation and financial condition and cause us to incur legal liability and increased costs to respond to such events. Our cyber liability insurance may not be sufficient to compensate us for losses that may result from interruptions in our services or asset or data loss as a result of cybersecurity incidents.

In addition, regulatory or legislative action related to cybersecurity, privacy, and data protection worldwide, such as the European General Data Protection RegulationRegulation, which went into effect in May 2018, may increaseincreases the costs to develop, implement, or secure our products or services. We expect cybersecurity regulations to continue to evolve and be costly to implement. If we violate or fail to comply with such regulatory or legislative requirements, we could be fined or otherwise sanctioned, and such fines or penalties could have a material adverse effect on our business and operations.

We rely on our technology infrastructure to interact with suppliers, sell our products and services, support our customers, fulfill orders, and bill, collect, and make payments. Our systems are vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, malicious employees or employee negligence, computer viruses, and other events. When we upgrade or change systems, we may suffer interruptions in service, loss of data, or reduced functionality. A significant number of our systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality. Any interaction with third-party systems increases cyber-attackcyber attack risks. DespiteSystem any precautions we may take, such problemsfailures could result incause interruptions in our services, fraudulent or negligent loss of assets, or unauthorized disclosure of confidential information, which could harm our reputation and financial condition. Our business interruption insurance may not be sufficient to compensate us for losses that may result from interruptions in our services or data loss as a result of system failures.

Customers may use our products and/or software to generate or manage confidential information. Though we take steps to ensure our products and/or software are secure, it is possible customers could lose confidential information stored on our products. If a customer alleges system failures in our products and/or software cause or contribute to a loss,loss of such confidential information, whether or not caused by us, we could face harm to our reputation and our financial condition and legal liability.

We have also been implementing our Blue Ocean program to globalize our business processes and information technology systems that includes the implementation of a Company-wide enterprise resource planning system. This has been proceeding on a staggered basis over a multi-year period. We have implemented the program in our operations in the U.S., China, most of Asia Pacific, and most of Europe. We estimate that we have more than 90%95% of our users on the program and will continue to implement additional locations and functionality over the coming years. If our implementation is flawed, we could suffer interruptions in operations and customer-facing activities that could harm our reputationcompetitive position, reputation, and financial condition or cause us to lose data, experience reduced functionality, or have delays in reporting financial information. In addition, the program has increased our reliance on a single information technology system, which would have greater consequences should we experience a system disruption.

We have key manufacturing facilities located in China, Europe, and the United States. Many of our products are developed and manufactured at single locations, with limited alternate facilities. In addition, a large portion of our products and spare parts are distributed through regional logistics centers, in which certain logistics activities are outsourced to third parties. If we experience any significant disruption in these facilities for any reason, such as global supply chain and production issues, changes in third-party service providers, pandemics, strikes or other labor unrest, labor shortages, power interruptions, cybersecurity attacks, fire, earthquakes, hurricanes, floods, rising water levels, other weather events or natural disasters (including the potential impacts of climate change), or other events beyond our control, we may be unable to satisfy customer demand for our products or services resulting in lost sales. It may be expensive to resolve these issues, even thoughand some of these risks are not covered by insurance policies. More importantly, customers may switch to competitors and may not return to us even if we resolve the interruption.

In addition, as we develop new products and services, we could be required to comply with additional regulations. If we fail to comply with the new regulations, it could affect the launch of the new product andor service,software, in particular, and our company, as a whole. For instance, it is expected that laws and regulations around the use of artificial intelligence (AI) and machine learning tools will increase over the next few years, but it is unknown at this time what these laws and regulations will address and how and whether they will be adopted globally. As we introduce AI and machine learning into our technology platform (as well as those of our customers through provision of our services), we could become subject to these new regulations, which may be difficult to comply with. Some of our competitors may not be required to comply,comply with similar regulations, which would put us at a competitive disadvantage. In addition, challenges with properly managing the use of AI could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations. Further, if we fail to adopt these new technologies, we may face price pressure from competitors using lower-cost AI systems.

As a result, weWe may not be successful in developing new products and software, and we may never realize the benefits of our research and development activities.activities, resulting in reduced sales, increased expenses, and a weakened competitive position.

We sell some products through third parties, including distributors and value-added resellers. This exposes us to various risks, including competitive pressure, concentration of sales volumes, credit risks, and compliance risks. WeWith mayrespect to certain products, we rely on one or a few key distributors for a product or market, and the loss of these distributors could reduce our revenue and net earnings. Distributors may also face financial difficulties, especially during times of economic volatility, slow growth or recession, including bankruptcy, which could harm our collection of accounts receivables. Violations of the FCPA or similar anti-bribery laws by distributors or other third-party intermediaries could materially impact our business. In addition to financial risk, the actions of some of our distributors could cause reputational harm, especially if our products are involved. Risks related to our use of distributors may reduce sales, increase expenses, and weaken our competitive position.

Our products are used extensively in the pharma/biopharmaceutical, food manufacturing, and chemical industries. We recently experienced reduced demand in these segments, which negatively impacted our net sales inover 2023the andpast 2024.few years. Market demand in pharma/biopharmaceutical was particularly impacted in 2023 after significant growth during the COVID-19 pandemic. Consolidation in these industries also hurt our sales in the past. A prolonged global economic downturn, a downturn affecting one or more of these industries, or consolidation in any of these industries could adversely affect our operating results. In addition, the capital spending policies of our customers in these and other industries are based on a variety of factors we cannot control, including the resources available for purchasing equipment, the spending priorities among various types of equipment, and policies regarding capital expenditures. Any decrease or delay in capital spending by our customers would cause our revenues to decline and could harm our profitability. Changes in governmental regulationsregulations, such as policies reducing drug pricing like Most Favored Nation pricing, or a decline in government funding of research or education could reduce some customers’ ability to purchase our products. For example, recent cuts in U.S. governmental funding related to medical and scientific research has economically impacted government agencies and academic institutions who were the recipients of this funding in the past.

Our markets are highly competitive. Many are fragmented both geographically and by application, particularly the industrial and food retailing markets. As a result, we facehave numerous regional or specialized competitors, many of which are well established in their markets. In addition, some of our competitors are divisions of larger companies with potentially greater financial and other resources than our own. There has also been an increase in the consolidation of precision instrument companies in recent years. Any consolidationConsolidation within our market could result in certain competitors becoming larger and having greater financial and other resources than our own. Some of our competitors are domiciled or operate in emerging markets and may have a lower cost structure than ours. We are confronted with new competitors in emerging markets which, although relatively small in size today, could become larger companies in their home markets. Given the sometimes significant growth rates of these emerging markets, and in light of their cost advantage over developed markets, emerging market competitors could become more significant global competitors. Taken together, the competitive forces present in our markets could harm our operating margins.

We also expect our competitors to continue to improve the design and performance of their products and to introduce new products with competitive prices. IfPrices have been affected by recently imposed tariffs areand, implemented andif we cannot continue to pass on the increased costs of tariffs to our customers, our margins could be impacted as we work to remain competitive. In addition, our competitors are expected to continue to improve their technology infrastructure, as well as the technology services offered to their customers, including the use of artificial intelligenceAI and machine learning solutions, to interact with suppliers, sell their products and services, and support and grow their customer base. Our ability to innovate our own technology infrastructure and appropriately address user experience could affect our ability to compete. Although we believe that our products and services have advantages over our competitors, we may not be able to realize and maintain these advantages.

We may face risks associated with future acquisitions.

We have pursued in the past, and may in the future pursue acquisitions of complementary product lines, technologies, or businesses, but these involve risks such as integration challenges, management distractions, and potential loss of key employees. Future acquisitions may also lead to stock issuances that dilute current shareholders, increased debt and liabilities, and higher amortization expenses for intangible assets. Any of these risks could materially impact our profitability.

Larger companies are increasingly targeting life sciences and instruments, potentially altering marketcompetition competition.for potential targets. Additionally, we may face challenges in identifying, completing, or integrating future acquisitions, and even successful acquisitions may not positively impact our business or results. We must also estimate the fair value of acquired assets and assumed liabilities, relying on valuation models with inherent uncertainties and our judgment regarding certain assumptions.

Inflation affects the costs of goods and services that we use, including raw materials to manufacture our products, as well as transportation and logistical costs and other external costs and services. Inflation also affects labor costs, which are a significant element of our overall cost structure. If these costs cannot be passed on to customers, our margins could be reduced. Recent rates of inflation also led to increased interest rates as country monetary policies combat inflation, which resulted in reduced economic growth and recessionary conditions, as well as higher borrowing costs. Even though inflation has generally moderated, it continues to be elevated in certain jurisdictions and could prove to be persistent as a result of new tariffs imposed by the U.S. and other countries.

Historically, we also have experienced higher inflation in China, Eastern Europe, India, and Brazil. To date, these inflationary conditions have not had a material effect on our operating results. However, given our presence in China, Eastern Europe, India, and Brazil, conditions in these inflationary conditionsregions could have a greater impact on our operating results.

We conduct business in many countries that use the euro as their currency (the Eurozone). InThere the past, there have beenare concerns regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations.obligations, as a result of rising interest rates, fiscal pressures from defense spending, and slow growth. In addition, concerns in the past have existed regarding the overall stability of the euro and the suitability of the euro as a single currency given the diverse economic and political circumstances in individual Eurozone countries.

These concerns and issues could lead to the re-introduction of individual currencies in one or more Eurozone countries or, in more extreme circumstances, the possible dissolution of the euro currency entirely. Should the euro dissolve entirely, the legal and contractual consequences for holders of euro-denominated obligations would be determined by laws in effect at such time. These potential developments, or market perceptions concerning these and related issues, could adversely affect the value of our euro-denominated assets and obligations. In addition, concerns over the effect of this type of financial crisis on financial institutions in Europe and globally could have an adverse effect on the global capital markets and, more specifically, on the ability of our Company, our customers, suppliers, and lenders to finance their respective businesses and to access liquidity at acceptable financing costs, if at all, on the availability of supplies and materials, and on the demand for our products. For information on the impact of the United Kingdom's withdrawal from the European Union, see "Risk Factors — Changes in foreign laws and legal systems could adversely impact our results of operations."

Governments are facing greater pressure on public finances, which could lead to their more aggressivelyaggressive applyingapplication of existing tax laws and regulations. Governments also periodically change tax laws and regulations.

The Organization for Economic Co-Operation and Development (OECD) has proposedadopted changes to the current transfer pricing arm’s length standard for allocating profit as well as a 15% minimum tax by jurisdiction. While the provision to alter the way profit is allocated by jurisdiction is not expected to impact the Company, the 15% minimum tax by jurisdiction may adversely impact the Company'sour global tax provision.

We may be adversely affected by tariffs and other trade restrictions and by failure to comply with regulations of governmental agencies or by the adoption of new regulations.

Our products are subject to regulationother regulations by governmental agencies.agencies, as well. These other regulations govern a wide variety of activities relating to our products, including design and development, product safety, labeling, manufacturing, promotion, sales, and distribution. We also operate a global business and are subject to various laws and regulations in the many markets where we do business, including those relating to competition, employment and labor practices, international trade, and corruption. If we fail to comply with these regulations, or if new regulations are adopted that substantially change existing practices or impose new burdens, we may have to recall products and cease their manufacture and distribution. In addition, we could be subject to investigationgovernment investigation, which could materially increase our costs, reputationalaffect harm,our fines,reputation, subject us to fines and criminal prosecution, and other damages that could impact our profitability.

The various trade policy and regulatory actions described above may restrict our access to lower-cost countries in certain circumstances orand otherwisehave createcreated uncertainty, negatively impactimpacting global markets, and makehas made it more difficult orand costly for us to import our products into certain countries. The adoption and expansion of trade restrictions or other governmental action related to tariffs or trade agreements or policies could also lead to an economic downturn, increased inflation, and/or could create unfavorable fluctuations in currency exchange rates (see above description "Currency fluctuations affect our operating profits."). In times of uncertainty, some customers delay investments or defer normal replacement cycles, which could havehas an adverse impact on our sales. The adoption and expansion of trade restrictions or other governmental action related to tariffs, trade agreements, or policies have the potential to further adversely impact our business and financial performance.

Our success depends on our ability to obtain, maintain, and enforce patents on our technology, maintain our trademarks, and protect our trade secrets. Our patents maydo not provide complete protection orand mayexpire expire,from time to time, and competitors mayhave developdeveloped similar products that aremay not be covered by our patents. Our patents mayhave also bebeen challenged by third parties and invalidated or narrowed. We may experience a decline in sales and/or profitability ifas anya result of these things occur.occurrences. Competitors sometimes seek to take advantage of our trademarks or brands in ways that may create customer confusion or weaken our brand. Improper use or disclosure of our trade secrets maycould stillalso occur.

We mayhave bealso been sued in the past for infringingalleged infringement on the intellectual property rights of others. The cost of any litigation couldcan affect our profitability regardless of the outcome, and management attention couldcan be diverted. If we are unsuccessful in such litigation, we may have to pay damages, stop the infringing activity, and/or obtain a license. If we fail to obtain a required license, we may be unable to sell some of our products, which could result in a decline in our revenues.

We may be adversely affected by environmental lawsand climate change laws, regulations, and regulations.expectations.

We are subject to various environmental laws and regulations and incur expenditures in complying with environmental laws and regulations. For instance, federal, international, state, and local regulatory and legislative bodies are increasingly focused on combating and/or limiting the effects of climate change through a variety of means, including regulating greenhouse gas (GHG) emissions, implementing policies mandating or promoting the use of renewable or zero-carbon energy and sustainability initiatives, and additional taxes on fuel and energy. We have corporate programs in place to manage compliance and stakeholder expectations related to environmental matters, but increasingIncreasing public interest in climate change topics may result in the enactment of additional disjointed governmental laws and regulations related to this subject area. Such increased compliance burdens and costs could disrupt the sourcing, manufacturing, and distribution of our products and adversely affect our business, and financial condition, or results in operations. WeIn areaddition, currentlyevolving involvedand in,sometimes orconflicting havestakeholder potential liabilityexpectations with respect to,to theclimate-change-related remediationCompany ofpolicies, past contamination in various facilities. In addition, some of our facilities areactions, or havegoals, beencould inexpose operationus forto many decadeslegal and mayreputational have used substances or generated and disposed of wastes that are hazardous or may be considered hazardous in the future. These sites and disposal sites owned by others to which we sent waste may in the future be identified as contaminated and require remediation. Accordingly, it is possible that we could become subject to additional environmental liabilities in the future that may harm our results of operations or financial condition.risks.

Climate change risks and evolving stakeholder expectations could negatively impact our business. Climate-related changes may increase the frequency and severity of natural disasters, such as extreme weather events, wildfires, rising temperatures, and shifting precipitation patterns. These disruptions could affect our suppliers' ability to fulfill contracts due to workforce and infrastructure challenges, impacting material availability and costs. Additionally, rising insurance and operating expenses from climate-related disruptions could adversely affect our financial performance.

Future laws, regulations, or customers may make additional demands on our supply chain, including more transparency into the activities of our suppliers with regard to human rights and sustainable sourcing. We have significant protections in place to ensure we partner with responsible suppliers, but increasedIncreased demands may cause us to incur increased supply chain costs. If we cannot satisfy customers’ demands, we may lose business, and if we cannot meet new regulatory requirements, we may have to alter our sourcing at increased expense.

Our ability to make payments on our debt and to fund our share repurchase program, planned capital expenditures, and research and development effortsefforts, and acquisitions depends on our ability to generate and repatriate cash in the future.cash. This is subject to factors beyond our control, including general economic, financial, competitive, legislative, regulatory, governmental, and other factors described in this section.

We cannot ensure that our business will generate sufficient cash flows from operations or that future borrowings will be available to us under our credit facilityfacility, or otherwise, in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot ensure that we will be able to refinance any of our debt, including our credit facility and the senior notes, on commercially reasonable terms or at all.

We have debt and we may incur substantially more debt, which could affect our abilityfinancial to meet our debt obligationsposition and may otherwise restrict our activities.

The existence and magnitude of our debt could have important consequences. For example, it could make it more difficult for us to satisfy our obligations under our debt instruments; and require us to dedicate a substantial portion of our cash flow to payments on our indebtedness, which would reduce the amount of cash flow available to fund working capital, capital expenditures, product development, and other corporate requirements; increase our vulnerability to general adverse economic and industry conditions, including changes in raw material costs; limit our ability to respond to business opportunities; limit our ability to borrow additional funds, which may be necessary; and subject us to financial and other restrictive covenants, which,as ifmore wefully faildescribed to comply with these covenants and our failure is not waived or cured, could result in an event of default under our debt instruments.below.

InWe additionfaced a difficult environment in 2025 due to softglobal markettrade demanddisputes/tariffs, duringgovernmental 2024,policies weand alsogeopolitics continuedthat to experienceincreased uncertainty in theour economicend environment,markets includingand the riskglobal ofeconomy, recessionwhile inhaving manya countries,negative impact on customer behavior and unfavorableour foreignimport currency.costs. Our team’steam's resilience and agility, and our pricing, supply chain, productivity and cost savings initiatives, were critical to our ability to mitigate these challenges. We also continue to benefit from our strong global leadership positions, diversified customer base, innovative product offering, investment in emerging markets, significant installed base, and the impact of our sophisticated global sales and marketing programs. Over the past few years, we also accelerated our abilitydigital to use advanced analyticscapabilities to identify and pursue growth opportunities, while increasing the effectiveness of our digital tools to support our global sales organization. We also have continued to increase engagement with our customers with our Go-to-Market and digital approaches. Our market-leading solutions and ability to leverage our innovative portfolio have also allowed us to quickly capitalize on our customers' demand for automation and digitalization solutions and faster growing segments. We are well positioned,positioned and have continued to make investments to further strengthen our portfolio and capture future growth opportunities. Our service business also delivered very strong results in 20242025 as we have been able to support our customers’ ability to maintain uptime, improve productivity, and comply with regulatory requirements.

As we enter 2025,2026, we expect to continue to benefit from market trends toward automation and digitalization,digitalization. asWe wellalso asanticipate future opportunities with customer replacement cycles and investments in on/near-shoring activities. However, timing remains unclear and many of our end-markets, including pharma/biopharmaceutical, food, and chemical, remain challenged after significant growth during the COVID-19 pandemic. In addition, market conditions and challenges remain uncertain relatingcontinue to theface macro environment and global economy, including the impacts of the ongoing wars in Ukraine and the Middle East and increasing geopolitical tensions. Market conditions also may change quickly.uncertainty.

Our laboratory sales grew in 2024 despite a decreasemodestly in China2025 asincluding theimproved sharpbioprocessing market declineconditions, inwhile 2023biotech continuedresearch duringand 2024.academia market conditions were softer. We believe we will benefit from favorable pharma/biopharma market trends in the future. We also believe we will continue to benefit from increased customer demand for automation, digitalization, and safety; new facility investments; and continued focus on regulatory compliance including data integrity requirements. Overall, we believe we are well positioned to continue to capture growth and gain market share in our laboratory business.

Our industrial sales grewhad modestlygood growth in 20242025 despitewith challengingincreases marketin conditionsboth forproduct inspection and core industrial in China.industrial. We continue to benefit from our strong product offering and focus on the more attractive, faster-growing segments of the market and strong execution of our growth initiatives in each region. We also continue to benefit from market trends in automation and digitalization and also expect to benefit from customer on/near-shoring activities in the future. Our core industrial-related products are also especially sensitive to changes in economic growth. China and emerging market economies have historically been an important source of growth based upon the expansion of their domestic economies, and we expect this to also be a source of long-term growth. Product inspection experienced solidstrong growth in 2024,2025, and we expect our product inspection end-market to continue to benefit from our customers’ focus on brand protection, food safety, and productivity.

Our food retailing sales decreased significantlyimproved during 20242025 primarily due to strongincreased project activity in 2023,activity, especially in the Americas. Traditionally, the spending levels in this sector have experienced more volatility than our other end-markets due to the timing of customer project activity and new regulations.

Gaining Market Share. Innovation is essential to gaining market share and is fundamental in all aspects of our business including sales and marketing and technology leadership. Our global sales and marketing initiative, Spinnaker, continues to be an important growth strategy. We aim to gain market share by implementing sophisticated sales and marketing programs, leveraging our extensive customer databases, product offering, and installed base. While this initiative is broad-based, efforts to improve these processes include the use of digitalization and advanced data analytics to identify, prioritize, and pursue growth opportunities; the implementation of more effective pricing related to value-based selling strategies and processes; improved sales force guidance, training, and effectiveness; cross-selling; increased segment marketing; and leads generation and nurturing activities. We also have added resources to pursue under-penetrated market opportunities and continue to adapt our Go-to-Market approaches with additional inside and telesales resources, while also increasing digital customer interaction. We continue to benefit from digitalization tools to gain efficiencies and increase the effectiveness of our field sales force.

Faster-Growing Markets. Emerging markets, comprising Asia (excluding Japan), Eastern Europe, Latin America, the Middle East, and Africa, account for approximately 34%33% of our total net sales of which 16% relates to China. We have a two-pronged strategy in emerging markets: first, to capitalize on long-term growth opportunities in these markets, and second, to leverage our low-cost manufacturing operations in China.China which was recently designated a Lighthouse site by the World Economic Forum's Global Lighthouse Network. We have more than a 35-yearnearly 40-year track record in China, and our sales in Asia have grown more than 10% on a compound annual growth basis in local currencies since 1999.2000. Over the years, we also have broadened our product offering to the Asian markets. India has also been a source of emerging market sales growth in past years due to increased life science research activities. Overall, versus the prior year, we experienced a 1%3% decreaseincrease in emerging market local currency sales by destination during 2024,2025, which included an 11% local currency sales decline in China and a 10% local currency sales increase of 1% in China and 5% in other emerging markets.markets, Following particularly strong growth in 2022 and 2021, market conditions in China declined significantly during the second half of 2023, and challenging market conditions persisted in 2024.respectively. Going forward, we continue to redeploy resources and sales and marketing efforts to pharma,pharma/biopharmaceutical, food manufacturing, chemical, and new energy. We believe the long-term growth of these segments will be favorably impacted by the Chinese government’s emphasis on science, high-value industries, product quality, and food safety. We expect both our laboratory and product inspectionindustrial businesses will particularlyto benefit from our focus on these segments. We also continue to pursue growth in under-penetrated emerging markets. However, emerging market sales can be volatile as we experienced in China over the past several years. China has historically been volatile, and market conditions may change unfavorably due to various factors. In addition to China and emerging markets, we also pursue other faster-growth vertical markets. While rather small, these markets present outsized growth potential. Segments include semiconductors, advanced materials, and new energy. The components of these faster-growing segments will change as various markets develop, and we will continue to leverage the breadth and scope of our product offering as new opportunities emerge.

Extending Our Technology Lead. We continue to focus on product innovation. In the last three years, we spent approximatelya 5%total of net$574 salesmillion on research and development, reflecting aapproximately total5% of $551net million.sales. We seek to improve our product offerings and their capabilities with additional integrated technologies and software, which we believe supports our pricing differentiation and accelerates product replacement cycles. In addition, we aim to create value for our customers by having thorough knowledge of their processes via our significant installed product base.

Expanding Our Margins. We continue to strive to improve our margins by enhancing our value proposition via innovation, more effectively pricing our products and services, optimizing our cost structure, and improving our mix in higher-margin businesses such as service. For example, sophisticated data analyticdigital tools to provide us new insights to further refine our price strategies and processes. We have also implemented productivity and cost savings initiatives over the past tworecent years to mitigate our reduced volume, while also focusing on reallocating resources to better align our cost structure to support our investments in market penetration initiatives, higher-growth/profitable areas, and opportunities for margin improvement.

We also have implemented global procurement and supply chain management programs over the last several years aimed at lowering costs and have increased our focus on these programs with our SternDrive initiative. SternDrive is our global operational excellence program for continuous improvement efforts within our supply chain, manufacturing, and back-office operations. Blue Ocean is also an important enabler of our various margin expansion initiatives. Our move to standardized business processes, systems, and data structures throughout our global organization provides greater data transparency and faster access to real-time data.data while enabling our various digital strategies. Our cost leadership and productivity initiatives are also focused on continuously improving our invested capital efficiency, such as reducing our working capital levels, improving our order to cash cycle, and ensuring appropriate returns on our expenditures.

Pursuing Strategic Acquisitions. We seek to pursue "bolt-on" acquisitions that may leverage our global sales and service network, respected brand, extensive distribution channels, and technological leadership. We have identified life sciences and processdistribution analyticschannels as key areas for acquisitions. For example, in 2021,2025, we acquired allseveral theNorth membershipAmerican interestsdistributors that increased our direct market access while expanding our service business, as well as an extension of Mayfair Technology, LLC (PendoTECH), a manufacturer and distributor of single-use sensors, transmitters, control systems, and software for measuring, monitoring, and data collection primarily in bioprocess applications. PendoTECH serves biopharmaceutical manufacturers andour life science laboratoriesequipment offering and isother located in the United States. In 2021, we also acquired Scale-up Systems Inc., a leading software provider for scale-up and reaction modeling serving the biopharma and chemical markets.acquisitions.

Net sales were $3.9$4.0 billion for the year ended December 31, 2024,2025, compared to $3.9 billion in 2024 and $3.8 billion in 2023 and $3.9 billion in 2022.2023. This represents an increaseincreases of 4% in 2025 and 2% in 2024 and a decrease of 3% in 2023 in U.S. dollars and an increaseincreases of 3% in 2024both 2025 and a decrease of 3% in 20232024 in local currencies. Net sales in 2023 were negatively impacted by approximately $58 million from our previously disclosed shipping delays related to a new external European logistics service provider, which were largely recovered in the first quarter of 2024. We estimate local currency net sales increased 4% in 2025 and were flat in 2024 and decreased approximately 1% in 2023 excluding the impact of the previously disclosed delayed shipments.shipments in 2023 and acquisitions. In 2024,2025, we experienced soft market demand, particularlydemand in China.our end markets. We continue to benefit from the execution of our global sales and marketing programs, our innovative product portfolio, and investments in our field organization, particularly surrounding digital tools and techniques. However, there continues to be uncertainty in our end-markets,end-markets and the economic environment related to global trade/tariffs, governmental policies, the geopolitical environment, the conflict in Ukraine, and geopolitics,continuing instability in the Middle East and market conditions may change quickly.

In 2024,2025, our net sales by geographic destination increased in U.S. dollars compared to 20232024 by 8% in Europe, 2%5% in the Americas, 6% in Europe, and decreased by 3%2% in Asia/Rest of World. In local currencies, our net sales by geographic destination increased in 20242025 by 8% in Europe, 3%5% in the Americas, 1% in Europe and decreased by 1%2% in Asia/Rest of World, with an1% 11%in declineChina. Excluding the impact of the previously disclosed delayed shipments in 2023 and acquisitions, we estimate local currency net sales in 2025 increased by 4% in the Americas, 3% in Europe and 3% in Asia/Rest of World, with 1% in China. A discussion of sales by operating segment is included below.

Net sales of products increased 3% in U.S. dollars and 1% in local currencies during 2025 and 1% in both U.S. dollars and local currencies during 2024 and decreased 7% in U.S. dollars and 6% in local currencies in 2023.2024. Service revenue (including spare parts) increased 8% in U.S. dollars and 7% in local currencies in 2025, and increased 7% in both U.S. dollars and local currencies in 20242024. andService increasedrevenue 10%benefited approximately 1% from acquisitions in both U.S. dollars and local currencies in 2023.2025.

Net sales of our laboratory products and services, which represented approximately 56% of our total net sales in 2024,2025, increased 6%3% in both U.S. dollars and 1% in local currencies during 2024.2025.We Laboratoryestimate laboratory local currency net sales inincreased 2024 benefited approximately 4% and were reduced by 2%3% in 20232025 fromexcluding the impact of the previously disclosed shippingdelayed delays.shipments in 2023. The local currency increase in net sales of our laboratory-related products during 20242025 includes an increasegrowth in most product categories, especially analyticalprocess instruments. Laboratory results were also negatively impacted by a decline in China.analytics.

Net sales of our industrial products and services, which represented approximately 39% of our total net sales in 2024,2025, wereincreased flat6% in U.S. dollars and increased 1%5% in local currencies during 2024.2025. IndustrialWe estimate industrial local currency net sales inincreased 2024 benefited approximately 1% and were reduced by 1%5% in 20232025 fromexcluding the impact of the previously disclosed shippingdelayed delays.shipments in 2023 and acquisitions. The local currency increase in net sales of our industrial-related products during 20242025 includes solidstrong growth in product inspection, offsetand modest growth in part by a decline in core-industrial products, especially in China.core-industrial.

Net sales of our food retailing products and services, which represented approximately 5% of our total net sales in 2024,2025, decreasedincreased 14%5% in both U.S. dollars and 3% in local currencies during 2024.2025.We Retailestimate food retailing local currency net sales inincreased 2024 benefited approximately 3% and were reduced by 2%5% in 20232025 fromexcluding the impact of the previously disclosed shippingdelayed delays.shipments in 2023. The local currency decreaseincrease in net sales of our food retailing products during 20242025 relatedincludes to particularly strongincreased project activity in 2023, especially in the Americas.

Gross profit as a percentage of net sales for products was 62.1%61.1% for 2024,2025, compared to 62.1% for 2024 and 60.6% for both 2023 and 2022.2023. Gross profit as a percentage of net sales for services (including spare parts) was 53.7%54.4% for 2024,2025, compared to 53.7% for 2024 and 54.3% for 2023 and 52.0% for 2022.2023.

Research and development expenses as a percentage of net sales were 4.9%5.0% for 2024,2025, compared to 4.9% for 2023,both 2024 and 4.5% for 2022.2023. Research and development expenses in U.S. dollars increased 6% in 2025 and 2% in 2024 and 5% in 2023,2024, and in local currencies increased 2% in 2024both 2025 and 3% in 2023.2024.

Selling, general, and administrative expenses as a percentage of net sales were 24.2%24.8% for 2024,2025, compared to 24.2% for 2024 and 23.9% for both 2023 and 2022.2023. Selling, general, and administrative expenses increased 7% in U.S. dollars and 5% in local currencies in 2025 and increased 4% in both U.S. dollars and local currencies in 2024 and decreased 4% in both U.S. dollars and local currencies in 2023.2024. The increase during 20242025 primarily includes highersales variableand compensation,marketing investments, offset in part by benefitssavings from our cost savings initiatives.

Amortization expense was $72.9$74.5 million in 2024,2025, compared to $72.2$72.9 million and $66.2$72.2 million in 20232024 and 2022,2023, respectively. The increase in amortization expense during 2024 relates to our investments in information technology, primarily from our Blue Ocean program.

Other charges (income), net consisted of net income of $4.6$16.8 million, $4.1$4.6 million, and $9.3$4.1 million in 2025, 2024, 2023, and 2022,2023, respectively. Other charges (income), net includes non-service pension costs (benefits), net (gains) losses from foreign currency transactions and hedging activities, interest income, and other items. Non-service pension benefits were $7.7$13.6 million, $7.6$7.7 million, and $16.9$7.6 million in 2025, 2024, 2023, and 2022,2023, respectively. Other charges (income), net also includes acquisition costs,transaction forcosts whichof there$2.2 weremillion in 2025 and $0.3 million in 20242024. andFor $0.9the year ended December 31, 2025, it also includes a net benefit of $4.4 million inrelated 2022.to contingent consideration associated with previous acquisitions.

Interest expense was $68.5 million in 2025, compared to $74.6 million in 2024,2024 compared toand $77.4 million in 2023 and $55.4 million in 2022.2023. The decrease in interest expense is primarily related to lower debtinterest levelsrates throughout the year.

Our reported tax rate was 16.8%17% in 2024,2025, compared to 19.0%17% and 18.5%19% in 20232024 and 2022,2023, respectively. The reported tax rate in 2025 and 2024 includes a non-cash discrete current tax benefit of $23$13.7 million and $23.0 million, respectively, resulting from the reduction of uncertain tax position liabilities related to the settlement of a tax audit. The reported rate in 2025 also includes a non-cash discrete deferred tax benefit of $5.8 million resulting from the reduction of a valuation allowance related to the settlement of a tax audit.

TotalSegment net sales increased 4% in 2025 and 3% in 2024 and decreased 4% in 2023 and net sales to external customers increased 5% in 2025 and 2% in 2024 and decreased 3% in 2023.2024. Net sales to external customers and segment net sales benefited approximately1% 2%from acquisitions in 20242025. andThe weregrowth in net sales to external customers during 2025 was reduced by approximately 1% in 2023 from the previously disclosed shipping delays.delays, which benefited 2024 net sales to external customers by approximately 2%. Net sales to external customers for 20242025 reflectsincludes particularly strong growth in mostprocess analytics, food retail and product categories, especially laboratory products, offset by a significant decline in food retailing related to strong project activity in the prior year.inspection.

Segment profit increaseddecreased $28.0$17.7 million in our U.S. Operations segment during 2024,2025, compared to an increase of $7.3$28.0 million during 2023.2024. The segment profit increasedecline in 20242025 isincludes primarilyhigher duetariff costs and lower sales volume related to improvedthe businesspreviously mix,disclosed andshipping benefitsdelay fromrecovery ourin marginthe expansionprior andyear, costoffset savingin initiatives.part by pricing.

TotalSegment net sales in U.S. dollars increased 7%3% in 20242025 and decreased 7% in 2023,2024, and in local currencies decreased 3% in 2025 and increased 5% in 2024 and decreased 12% in 2023.2024. Net sales to external customers in U.S. dollars decreased 4% in 2025 and increased 16% in 2024 and 7% in 2023,2024, and in local currencies decreased 7% in 2025 and increased 14% in 20242024. andThe increased 3%decrease in 2023. Netnet sales to external customers benefitedincludes approximatelya 7%decline in 2024 and were reduced byof approximately 3% induring 20232025 from the previously disclosed shipping delays.delays, which benefited net sales to external customers by approximately 7% in 2024. Local currency net sales to external customers during 20242025 includes strong growthdeclines in most product categories, offset in part by a significant decline in food retailing related to strong project activity in the prior year.categories.

Segment profit decreasedincreased $0.8$3.1 million in our Swiss Operations segment during 2024,2025, compared to a decrease of $28.4$0.8 million during 2023.2024. The segmentSegment profit decreaseincreased in 20242025 includesprimarily unfavorabledue foreignto currencyhigher translationnet andsales inter-segmentto pricing,other segments, offset in part by higherunfavorable salesforeign volume,currency favorable business mix, as well as benefits from our margin expansion and cost savings initiatives.translation.

TotalSegment net sales in U.S. dollars increased 5% in 2025 and 6% in 2024 and decreased 2% in 2023,2024, and in local currencies increased 1% in 2025 and 6% in 2024 and decreased 3% in 2023.2024. Net sales to external customers in U.S. dollars increased 4% in 2025 and 8% in 2024 and decreased 1% in 2023,2024, and in local currencies were flat in 2025 and increased 8% in 20242024. andThe decreased 3%growth in 2023. Netnet sales to external customers benefitedduring 2025 was reduced approximately 5% in 2024 and were reduced by approximately 3% in 20232% from the previously disclosed shipping delaysdelays, inwhich 2023.benefited 2024 net sales to external customers by approximately 5%. Local currency net sales to external customers during 20242025 reflectsincludes strong growth in mostcore productindustrial categories,and especially laboratoryretail products.

Segment profit increased $27.6$20.4 million in our Western European Operations segment during 2024,2025, compared to an increase of $4.3$27.6 million in 2023.2024. The segment profit increase in 2024 is primarily due toreflects increased net sales volume and benefits from our margin expansion andinitiatives, costas savingswell initiatives.as favorable foreign currency translation.

TotalSegment net sales in U.S. dollars increased 2% in 2025 and decreased 5% in 2024 and 13% in 2023,2024, and in local currencies increased 2% in 2025 and decreased 3% in 2024 and 9% in 2023.2024. Net sales by origin to external customers in U.S. dollars increased 1% in 2025 and decreased 13% in 2024 and 15% in 2023,2024, and in local currencies increased 1% in 2025 and decreased 11% in both2024. 2024The andgrowth 2023.in Netnet sales to external customers benefitedduring 2025 was reduced approximately 1% in 2024 and were reduced by approximately 1% in 2023 from the previously disclosed shipping delaysdelays, inwhich 2023.benefited 2024 net sales to external customers by approximately 1%. The decreaseincrease in local currency net sales to external customers during 20242025 reflects amodest significant declinegrowth in marketboth demand for most product categories. Uncertainties continue to existlaboratory and marketindustrial conditions may change quickly.products.

Segment profit decreased $21.3$0.9 million in our Chinese Operations segment during 2024,2025, compared to a decrease of $57.1$21.3 million in 2023.2024. The decrease in segment profit during 20242025 primarily reflects lowerincreased salestariff volume and unfavorable foreign currency translation, partiallycosts, offset in part by benefits from increased sales and our margin expansion and cost savings initiatives.

Other Operations includes reporting units in Southeast Asia, Latin America, Eastern Europe, and other countries. TotalSegment net sales in U.S. dollars increased 9% in 2025 and 8% in 2024 and 6% in 2023,2024, and in local currencies increased 9% in 2025 and 10% in 2024 and 7% in 2023.2024. Net sales to external customers in U.S. dollars increased 7% in 2025 and 8% in 2024 and 4% in 2023,2024, and in local currencies increased 7% in 2025 and 10% in 20242024. andOther 5%Operations in 2023. Netnet sales to external customers benefitedand approximatelysegment 4%net sales in 20242025 and were reduced bybenefited approximately 2% from acquisitions. The growth in 2023net sales to external customers during 2025 was reduced approximately 2% from the previously disclosed shipping delaysdelays, inwhich 2023.benefited 2024 net sales by approximately 4%. The increase in local currency growth in net sales to external customers during 20242025 includes strong growth in most product categories.categories, particularly process analytics.

Segment profit increased $17.9$17.5 million in our Other Operations segment during 2024,2025, compared to an increase of $15.9$17.9 million during 2023.2024. The increase in segment profit during 20242025 primarily relatesrelated to increased segment net sales volumeand andbenefits from our margin expansion initiatives, offset in part by unfavorable foreign currency translation.initiatives.

Cash provided by operating activities totaled $955.8 million in 2025, compared to $968.3 million in 2024,2024 compared toand $965.9 million in 20232023. andThe $859.1 milliondecrease in 2022.2025 Theincludes increase in 2024 is primarily related to favorable working capital, including lowerhigher cash incentive payments of $35approximately million.$36 million related to prior year performance, offset in part by lower tax payments.

Capital expenditures are made primarily for investments in information systems and technology, machinery, equipment, and the purchase and expansion of facilities. Our capital expenditures totaled $107.1 million in 2025, $103.9 million in 2024, and $105.3 million in 2023, and $121.2 million in 2022.2023. Capital expenditures in 20252026 are expected to beapproximate relatively$130 consistent with previous yearsmillion subject to business and economic conditions.conditions and foreign currency fluctuations.

We continue to explore potential acquisitions. In connection with any acquisition, we may incur additional indebtedness. InDuring 2024,2025, 2023,we made several acquisitions related to our North America distribution, an extension of our life science equipment offering, and 2022,other acquisitions. The cumulative initial cash payments were $93.8 million and we may be required to pay additional consideration of up to $35.5 million. Goodwill recorded in connection with the acquisitions totaled $56.0 million. We also recorded $38.9 million of identified intangibles primarily pertaining to customer relationships in connection with the acquisitions, which will be amortized on a straight-line basis over 5 to 10 years. For additional information related to these acquisitions, refer to Note 4 to the consolidated financial statements. In 2024 and 2023, we incurred acquisition payments totalingof $10.1 million, $5.8 million,million and $38.0$5.8 million, respectively. In addition, we made the Companyfinal paidcontingent consideration payment of $10.0 million for contingent consideration relating to the PendoTECH acquisition in both 2023 and 2022. In 2022, $7.9 million is included in financing activities and $2.1 million is included in operating activities for the amount not accrued at the acquisition date on the Consolidated Statement of Cash Flows. In 2023, the final contingent consideration payment was made of which $5.6 million is included in financing activities for the amount accrued at the acquisition date and $4.4 million is included in operating activities for the amount not accrued at the acquisition date on the Consolidated Statement of Cash Flows in accordance with U.S. GAAP.

Cash flows used in financing activities during 20242025 primarily comprised share repurchases. In accordance with our share repurchase program, we spent $850.0$800 million in 2025 and $850 million and $900 million in 2024 and $900.0 million and $1.1 billion in 2023 and 2022,2023, respectively, on the repurchase of 645,139646,608 shares, 691,913645,139 shares, and 838,010691,913 shares, respectively. Our share repurchase program does not obligate us to acquire any specific number of shares; however, in 2025,2026, we intend to spend approximatelyin the range of $825 million to $875 million on the repurchase of shares, subject to business and economic conditions.

As of December 31, 2024,2025, approximately $615.3$536.3 million of additional borrowings were available under our Credit Agreement and we maintained $59.4$66.9 million of cash and cash equivalents. At December 31, 2024,2025, the interest payments associated with 73%71% of the Company’sour debt are fixed obligations. We expect to make interest payments of approximately $72.0$71.0 million during 20252026 associated with our debt outstanding as of December 31, 2024.2025.

TheIn CompanyNovember has2025, $1.7the Company’s Board of Directors authorized an additional $2.75 billion to the share repurchase program, which had $3.7 billion of remaining availability under its share repurchase program as of December 31, 2024.2025. The share repurchases are expected to be funded from cash generated from operating activities, borrowings, and cash balances. Repurchases will be made through open market transactions, and the amount and timing of purchases will depend on business and market conditions, the stock price, trading restrictions, the level of acquisition activity, and other factors.

Global inflation continuedhas torecently moderate during 2024,moderated after rising sharply in 2022 and 2021 related to the COVID-19 economic recovery and associated disruptions in global demand, supply chains/logistics, and labor markets, as well as the war in Ukraine and related significant increase in energy costs and the conflict in the Middle East. Inflation can affect the costs of goods and services that we use, including raw materials to manufacture our products, as well as transportation and logistical costs and other external costs and services. Inflation can also affect labor costs which are a significant element of our overall cost structure. Inflation can also lead to increased interest rates as country monetary policies combat inflation. This can result in reduced economic growth and recessionary conditions, as well as higher borrowing costs. Inflation presents several risks to our business as further described on page 21 in the Risk Factors section of this Form 10-K, and these inflationary conditions could have a greater impact on our operating results in future years.

The net periodic pension cost for 20242025 and projected benefit obligation as of December 31, 20242025 were $3.0$1.6 million and $99.9$99.1 million, respectively, for our U.S. pension plan. The net periodic cost for 20242025 and projected benefit obligation as of December 31, 20242025 were $7.2$5.2 million and $924.9$1.0 million,billion, respectively, for our international pension plans. The expected post-retirement benefit obligation as of December 31, 20242025 for our U.S. post-retirement medical benefit plan was $0.5$0.1 million.

For the three and six months ended MarchJune 31,30, 2026 there were no material changes from risk factors disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Our interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Operating results for the three and six months ended MarchJune 31,30, 2026 are not necessarily indicative of the results to be expected for the full year ending December 31, 2026.

The following tables set forth certain items from our interim consolidated statements of operations and comprehensive income for the three and six month periods ended MarchJune 31,30, 2026 and 2025 (amounts in thousands).

Following the U.S. Supreme Court’s decision,decision in February 2026, the U.S. government effectively replaced IEEPA tariffs with a temporary Section 122 tariff that included a 10% tariff on imports from most countries andthat indicatedexpired certain tariff rates could increase innear the future.end of July 2026. In April 2026, the U.S. government also issued an update to the definition of Section 232 tariffs, which is not expected to have a significant effect on our ongoing tariff obligations. Any changes to tariff rates in the future could adversely impact our financial results.

The continued volatility related to globalGlobal trade disputes/tariffs has increasedcreate economic uncertainty in our end markets and the overall global economic environment, including increasing the risk of recession in many countries,environment and market conditions may change quickly.

WeMarket conditions have improved, and we continue to benefit from the execution of our global sales and marketing programs, our innovative product portfolio, and investments in our field organization, particularly surrounding digital tools and techniques. However, the recentongoing developments in Iran and the Middle East, as well as global trade disputes/tariffstariffs, have increasedcreate uncertainty in our end markets and the global economic environment, including increasing the risk of recession in many countries,environment and market conditions may change quickly. The ongoing developments related to global trade disputes/tariffs, Ukraine, and the conflicts in Iran and the Middle East also present several risks to our business as further described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025. These topics could adversely impact our financial results in future periods.

Net sales by geographic destination for the three months ended MarchJune 31,30, 2026 in U.S. dollars increaseddecreased 3% in the Americas, 12%and increased 7% in Europe,Europe and 8% in12% Asia/Rest of World. In local currencies, our net sales by geographic destination increaseddecreased 2%3% in the Americas,Americas 1%and increased 4% in Europe,Europe and 5%10% in Asia/Rest of World. NetLocal currency net sales by geographic destination increased 3% in the Americas, 4% in Europe, and 10% in Asia/Rest of World before the effect of one-time tariff-related customer refunds. Organic local currency net sales by geographic destination increased 1% in the Americas, 4% in Europe, and 9% in Asia/Rest of World. Organic local currency net sales in Asia/Rest of World in local currencies includes an increase of 4%9% in China for the three months ended March 31, 2026 compared to the corresponding period in 2025. Excluding the impact of the acquisitions, local currency sales were flat in the Americas, and increased 1% in Europe and 3% in Asia/Rest of World, with a 4% increase in China, during the three months ended MarchJune 31,30, 2026. A discussion of sales by operating segment is included below.

As described in Note 18 to our consolidated financial statements for the year ended December 31, 2025, our net sales comprise product sales of precision instruments and related services. Service revenues are primarily derived from repair and other services, including regulatory compliance qualification, calibration, certification, preventative maintenancemaintenance, and spare parts.

Net sales of our industrial products and services, which represented approximately 40% of our total net salessales, increased 6% and 8% in U.S. dollars for the three and six months ended MarchJune 31,30, 2026, respectively. Local currency industrial net sales increased 10% in U.S. dollars6% and 5% in local currencies duringfor the three and six months ended MarchJune 31,30, 2026.2026, Netrespectively, salesbefore ofthe ourone-time industrialtariff-related productscustomer and services in local currencies increased 2% excluding acquisitions. The local currency net sales increase in our industrial-related products includes strong growth in product inspection.refunds.

Net sales inof our food retailing products and services, which represented approximately 5% of our total net sales for the three months ended March 31, 2026,sales, increased 13% in U.S. dollars andfor 7% in local currencies duringboth the three and six months ended MarchJune 31,30, 2026. Local currency food retailing net sales increased 11% and 9% for the three and six months ended June 30, 2026, respectively, before the one-time tariff-related customer refunds. The local currency net sales increase in food retailingretail productsnet reflectssales improvedfor the three and six months ended June 30, 2026 includes strong project activity in Europe,Europe and Asia/Rest of World, partially offset by a decline in the Americas.

TheExcluding decreasethe effect of the one-time tariff-related U.S. government and customer refunds, the increase in gross profit as a percentage of net sales for the three months ended MarchJune 31,30, 2026 primarily related to higher tariff costs, unfavorable foreign currency, and business mix, partially offset byreflects favorable price realizationrealization, lower tariff costs, and benefits from our SternDrive program.program, partially offset by unfavorable foreign currency and higher transportation costs.

Research and development and selling, generalgeneral, and administrative expenses

Research and development expenses as a percentage of net sales was 5.4%5.2% and 5.0% for the three months ended MarchJune 31,30, 2026 comparedand to2025, 5.2%respectively, inand was 5.3% and 5.1% for the correspondingsix periodmonths ofended 2025.June 30, 2026 and 2025, respectively. Research and development expenses increased 11%8% in U.S. dollars and 1%3% in local currencies,currencies duringfor the three months ended MarchJune 31,30, 20262026, and increased 9% in U.S. dollars and 2% in local currencies for the six months ended June 30, 2026, respectively, compared to the corresponding periodperiods in 2025.

Selling, generalgeneral, and administrative expenseexpenses as a percentage of net sales were 25.6% and 25.2% for the three months ended June 30, 2026 and 2025, respectively, and were 26.4% and 26.3% for the six months ended June 30, 2026 and 2025, respectively. Selling, general, and administrative expenses increased 6% in U.S. dollars and 1%4% in local currencies duringfor the three months ended MarchJune 31,30, 20262026, comparedand toincreased 6% in U.S. dollars and 2% in local currencies for the correspondingsix periodmonths inended 2025.June 30, 2026. The local currency increase for the three and six months ended June 30, 2026 includes sales and marketing investments, offset in part by our cost reductionsavings initiatives.

Amortization expense was $19.6$19.4 million and $17.6 million for the three months ended MarchJune 31,30, 2026 and $17.22025, respectively, and $39.0 million and $34.8 million for the correspondingsix periodmonths inended 2025.June 30, 2026 and 2025, respectively.

Restructuring charges were $7.3$5.5 million and $3.8$3.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $12.7 million and $7.3 million for the six months ended June 30, 2026 and 2025, respectively. Restructuring expenses are primarily comprised of employee-related costs.

Other charges (income), net includes non-service pension costs (benefits), net (gains) losses from foreign currency transactions and hedging activities, interest income and other items. Non-service pension benefits were $6.0 million and $3.4 million for the three months ended MarchJune 31,30, 2026 and 20252025, wererespectively, $6.0and $12.0 million and $3.1$6.5 million,million for the six months ended June 30, 2026 and 2025, respectively. Other charges also includes a net expense of $8.4 million related to additional contingent consideration associated with previous acquisitions for the three and six months ended June 30, 2026.

Our reported tax rate was 19.2%19.5% and 19.0%18.6% forduring the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 19.4% and 18.8% during the six months ended June 30, 2026 and 2025, respectively. The provision for taxes is based upon using our projected annual effective tax rate of 19.0% before non-recurring discrete tax items for the three month periods ended MarchJune 31,30, 2026 and 2025. The difference between our projected annual effective tax rate and the reported tax rate is related to the timing of excess tax benefits associated with stock option exercises.exercises, as well as the one-time tariff related U.S. government and customer refunds.

The following is a discussion of the financial results of our operating segments. We currently have five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations,Operations and Other Operations. A more detailed description of these segments is outlined in Note 18 to our consolidated financial statements for the year ended December 31, 2025.

Total net sales and net sales to external customers decreased 5% and 2% for the three and six months ended June 30, 2026, respectively, compared with the corresponding periods in 2025. Organic total net sales and Organic net sales to external customers increased 5% and 1% for the three and six months ended MarchJune 31,30, 20262026, comparedrespectively. withOrganic the corresponding period in 2025. Netnet sales to external customers declined 1% excluding acquisitions for the three and six months ended MarchJune 31,30, 2026. This decrease2026 includes astrong significant reductiongrowth in retailprocess projectanalytics, activityanalytical asinstruments, welland aslaboratory a decline in core-industrial,balances, offset in part by stronga growthsignificant decline in processfood analyticsretail andproject product inspection.activity.

Segment profit increased $3.5$36.9 million and $40.4 million for the three and six months ended MarchJune 31,30, 20262026, compared to the corresponding periodperiods in 2025. Segment profit during the three and six months ended MarchJune 31,30, 2026 includes favorablea pricingnet benefit of $24.6 million related to one-time tariff-related refunds. Excluding the net tariff refund benefit, segment profit during the three and six months ended June 30, 2026 includes benefits from our margin expansion initiatives,initiatives offsetand in part by higherlower tariff costs.rates.

Total net sales increased 8%7% in U.S. dollars and decreased 4%3% in local currency for the three months ended MarchJune 31,30, 20262026, compared to the corresponding period in 2025. Net sales to external customersand increased 7%8% in U.S. dollars and decreased 1% in local currency for the threesix months ended MarchJune 31,30, 20262026, respectively, compared to the corresponding periodperiods in 2025. The decrease in netNet sales to external customers increased 14% in U.S. dollars and 11% in local currency for the three months ended MarchJune 31,30, 2026 isand primarilyincreased related11% in U.S. dollars and 5% in local currency for the six months ended June 30, 2026, compared to athe modestcorresponding declineperiods in 2025. Net sales to external customers for the three and six months ended June 30, 2026 includes growth in most product categories, especially laboratory products.

Segment profit decreased $5.9$1.7 million and $7.6 million for the three monthand periodsix months ended MarchJune 31,30, 20262026, respectively, compared to the corresponding periodperiods in 2025. Segment profit during the three and six months ended MarchJune 31,30, 2026 was negatively impacted by unfavorable foreign currency translation and inter-segment pricing.sales mix.

Total net sales increased 13%5% in U.S. dollars and 3% in local currencies for the three months ended June 30, 2026 and increased 9% in U.S. dollars and 2% in local currencies duringfor the threesix months ended MarchJune 31,30, 20262026, compared to the corresponding periodperiods in 2025. Net sales to external customers increased 13%7% in U.S. dollars and 2%4% in local currencies during the three months ended March 31, 2026 compared to the corresponding period in 2025. The increase in net sales to external customers in local currency for the three months ended MarchJune 31,30, 2026, and increased 10% in U.S. dollars and 3% in local currencies for the six months ended June 30, 2026, compared to the corresponding periods in 2025. Net sales to external customers for the three and six months ended June 30, 2026 includes strong growth in food retailing, as well asmost product inspection,categories, offsetespecially infood part by modest declines in core-industrial and laboratory products.retailing.

Segment profit decreased $2.9 million and increased $5.9$2.9 million for the three and six month periodperiods ended MarchJune 31,30, 20262026, respectively, compared to the corresponding periodperiods in 2025. SegmentThe decrease in segment profit forduring the three month periodmonths ended MarchJune 31,30, 2026 includes favorableunfavorable foreigninter-segment currencysales translationmix and benefitshigher fromtransportation ourcosts, marginoffset expansionin initiatives.part by higher sales.

Total net sales increased 8%12% in U.S. dollars and 3%6% in local currency for the three months ended MarchJune 31,30, 2026 and increased 10% in U.S. dollars and 4% local currency for the six months ended June 30, 2026, compared to the corresponding periodperiods in 2025. Net sales to external customers increased 9%16% in U.S. dollars and 4%9% in local currency by origin for the three months ended MarchJune 31,30, 2026 and increased 12% in U.S. dollars and 7% in local currency during the six months ended June 30, 2026, compared to the corresponding periodperiods in 2025. The increase in netNet sales to external customers in local currency for the three and six months ended MarchJune 31,30, 2026 includes particularly strong growth in industrial products offset in part by a modest decline in laboratory products.

Segment profit increased $8.9$12.8 million and $21.6 million for the three and six month periodperiods ended MarchJune 31,30, 20262026, respectively, compared to the corresponding periodperiods in 2025. SegmentThe increase in segment profit forduring the three monthand periodsix months ended MarchJune 31,30, 2026 includes increasedhigher net sales and benefits from our margin expansion initiatives, as well as favorable foreign currency translation.

Other Operations (amounts in thousands)

Total net sales increased 13%9% in U.S. dollars and 10% in local currency for the three months ended June 30, 2026 and increased 11% in U.S. dollars and 10% in local currency for the six months ended June 30, 2026, compared to the corresponding periods in 2025. Net sales to external customers increased 9% in U.S. dollars and 10% in local currencies for the three months ended June 30, 2026 and increased 11% in U.S. dollars and 9% in local currencies duringfor the threesix months ended MarchJune 31,30, 20262026, compared to the corresponding periodperiods in 2025. Local currency net sales to external customers excluding acquisitions increased 5% and 4% for the three and six months ended June 30, 2026, respectively. Net sales to external customers increased 12% in U.S. dollars and 8% in local currency for the three monthsand ended March 31, 2026 compared to the corresponding period in 2025. Net sales to external customers in local currencies increased 3% excluding acquisitions for the threesix months ended MarchJune 31, 2026. The increase in net sales to external customers in local currency for the three months ended March 31,30, 2026 includes strong growth in mostprocess productanalytics, categories.laboratory balances and analytical instruments, as well as core industrial.

Segment profit increased $3.1$2.1 million and $5.1 million for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the corresponding periodperiods in 2025. SegmentThe increase in segment profit for the three monthand periodsix months ended MarchJune 31,30, 2026 includesis primarily related to increased net sales and favorablebenefits from our margin expansion initiatives, offset in part by unfavorable foreign currency translation.

Cash provided by operating activities totaled $139.8$450.2 million during the threesix months ended MarchJune 31,30, 2026, compared to $194.4$430.8 million in the corresponding period in 2025.2025 Theand includes a benefit of $42.9 million related to one-time tariff related U.S. government refunds. Excluding the one-time tariff related U.S. government refunds, the decrease for the threesix months ended MarchJune 31,30, 2026 compared to the prior year is primarily related to the timing of income tax payments.

Capital expenditures are made primarily for investments in information systems and technology, machinery, equipment and the purchase and expansion of facilities. Our capital expenditures totaled $17.4$45.2 million for the threesix months ended MarchJune 31,30, 2026 compared to $17.3$41.1 million in the corresponding period in 2025.

In December 2025, we entered into an agreement with the government of Xuhui, China to increase production automation and capacity and improve logistics. We will receive proceeds of approximately $31 million, of which approximately $18 million is expected to offset future purchases of property, plantplant, and equipment and approximately $13 million is expected to offset future operating expenses. We expect to receive proceeds and make payments related to the agreement through 2030. DuringWe have received cumulative proceeds of $12.4 million, including $6.2 million during the six months ended June 30, 2026. No proceeds were received during the three months ended MarchJune 31,30, 20262026. weWe receivedhave proceedscumulatively incurred $0.9 million, including $0.3 million of $6.2capital million.expenditures Asand $0.6 million of March 31, 2026, we have received total cumulative proceeds of $12.4 million and we have not purchased property, plant and equipment or incurred operating expensesexpense, related to the agreement.agreement during the three months ended June 30, 2026. Proceeds are recorded in accrued and other liabilities,liabilities and will be reduced as amounts related to the agreement are paid.

Cash flows used in financing activities are primarily comprised of share repurchases. In accordance with our share repurchase program, we spent $206.3$412.5 million and $218.7$437.5 million on the repurchase of 152,963325,348 shares and 170,957368,010 shares, during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Our debt consisted of the following at MarchJune 31,30, 2026:

As of MarchJune 31,30, 2026, approximatelywe $453.3had $562.7 million of additional borrowings was available under our Credit Agreement, and we maintained $60.6$51.4 million of cash and cash equivalents.

Changes in exchange rates between the currencies in which we generate cash flows and the currencies in which our borrowings are denominated affect our liquidity. In addition, because we borrow in a variety of currencies, our debt balances fluctuate due to changes in exchange rates. Further, we do not have any downgrade triggers relating to ratings from rating agencies that would accelerate the maturity dates of our debt. We were in compliance with our debt covenants as of MarchJune 31,30, 2026.

In January 2025, we entered into an agreement to issue and sell EUR 100 million 10 1/2-year Senior Notes with a fixed interest rate of 3.8% (3.8% Euro Senior Notes) in a private placement, which will mature in July 2035. The 3.8% Euro Senior Notes are unsecured obligations of the Company and the terms are consistent with the previous Notes as disclosed in Note 10 to our consolidated financial statements for the year ended December 31, 2025. We used the proceeds from the sale of the Notes to refinance existing indebtedness and for other general corporate purposes.

In April 2018, two of our non-U.S. pension plans issued loans totaling $39.6 million (Swiss franc 38 million) to a wholly owned subsidiary of the Company. The loans have the same terms and conditions which include an interest rate of SARON plus 87.5 basis points. The loans were renewed for one year in April 2026.