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

Refer to the section below entitled "Special Notes Regarding Forward-Looking Statements" for a discussion of factors that could cause our actual results to differ from the forward-looking statements contained below and throughout this quarterly report.

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we refer to measures used by management to evaluate performance, including a number of financial measures that are not defined under accounting principles generally accepted in the United States of America ("GAAP"). Please see "Non-GAAP Disclosures" at the end of this Item 2 for further detail on these financial measures. We believe these measures provide investors with important information that is useful in understanding our business results and trends. Reconciliations within this MD&A provide more details on the use and derivation of these measures.

OVERVIEW

Dover is a diversified global manufacturer and solutions provider delivering innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services through five operating segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies. The Company's entrepreneurial business model encourages, promotes and fosters deep customer engagement and collaboration, which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Unless the context indicates otherwise, references herein to "Dover," "the Company," and words such as "we," "us," or "our" include Dover Corporation and its consolidated subsidiaries.

Dover's five operating segments are as follows:

• Our Engineered Products segment provides a wide range of equipment, components, software, solutions and services to the vehicle aftermarket, waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing end-markets.

• Our Clean Energy & Fueling segment provides components, equipment, software, solutions and services enabling safe and reliable storage, transport and dispensing of traditional and clean fuels (including liquefied natural gas, hydrogen, and electric vehicle charging), cryogenic gases, and other hazardous substances along the supply chain, and safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments.

• Our Imaging & Identification segment supplies precision marking and coding, product traceability, brand protection and digital textile printing equipment, as well as related consumables, software and services to the global packaged and consumer goods, pharmaceutical, industrial manufacturing, textile and other end-markets.

• Our Pumps & Process Solutions segment manufactures specialty pumps and flow meters, highly engineered precision components for rotating and reciprocating machines, fluid connecting solutions and plastics and polymer processing equipment, serving single-use biopharmaceutical production, diversified industrial manufacturing, chemical production, plastics and polymer processing, midstream and downstream oil and gas, thermal management applications and other end-markets.

• Our Climate & Sustainability Technologies segment is a provider of innovative and energy-efficient equipment, components and parts for the commercial refrigeration, heating and cooling and beverage can-making equipment markets.

In the second quarter of 2023, revenue was $2.1 billion, which decreased $58.6 million, or 2.7%, as compared to the second quarter of 2022. This was driven by organic revenue decline of 3.0% and an unfavorable impact from foreign currency translation of 0.6% partially offset by acquisition-related revenue growth of 0.9%. Pricing initiatives continued in the quarter to offset the impact of higher commodity costs, component parts inflation and higher energy, freight and logistics costs.

The 3.0% organic revenue decline for the second quarter of 2023 was driven by Clean Energy & Fueling and Engineered Products segments which had a decline of 9.3% and 7.7%, respectively. The decline was partially offset by Climate & Sustainability Technologies, Pumps & Process Solutions, and Imaging & Identification segments which had growth of 4.0%, 0.9%, and 0.3%, respectively. For further information, see "Segment Results of Operations" within this Item 2.

From a geographic perspective, organic revenue for the U.S., our largest market, decreased 8.6% in the second quarter of 2023, driven by lower expected retail fueling revenue and by transient manufacturing and shipment disruptions in our vehicle services group plant in North America caused by an ERP system upgrade. Organic revenue for Other Americas and Asia increased 13.9% and 1.9%, respectively, while Europe decreased 0.9%.

Bookings were $1.9 billion for the three months ended June 30, 2023, a decrease of $177.6 million, or 8.4% compared to the prior year comparable quarter. Included in this result was organic decline of 8.3% and an unfavorable impact from foreign currency translation of 0.8%, partially offset by acquisition-related growth of 0.7%. The organic bookings decline was driven primarily by lead time normalization across the portfolio as supply chains improve.

Backlog as of June 30, 2023 was $2.8 billion, a decrease from $3.3 billion in the prior year, but remains elevated on a relative historical basis. See definition of bookings and backlog within "Segment Results of Operations."

Restructuring and other costs for the three months ended June 30, 2023 were $18.1 million which included restructuring charges of $16.4 million and other costs of $1.7 million. Restructuring and other costs were primarily related to headcount reductions and exit costs in the Clean Energy & Fueling, Engineered Products and Pumps & Process Solutions segments. These programs were initiated in 2022 and 2023 and were undertaken in light of current market conditions. See Note 8 — Restructuring Activities in the condensed consolidated financial statements in Item 1 of this Form 10-Q for further details.

CONSOLIDATED RESULTS OF OPERATIONS

			Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands, except per share figures)			2023						2022						% / Point Change						2023						2022						% / Point Change
Revenue			$	2,100,086					$	2,158,715					(2.7)		%				$	4,179,109					$	4,210,616					(0.7)		%
Cost of goods and services			1,341,250						1,377,432						(2.6)		%				2,673,254						2,686,139						(0.5)		%
Gross profit			758,836						781,283						(2.9)		%				1,505,855						1,524,477						(1.2)		%
Gross profit margin			36.1		%				36.2		%				(0.1)						36.0		%				36.2		%				(0.2)
Selling, general and administrative expenses			434,340						424,433						2.3		%				866,754						868,276						(0.2)		%
Selling, general and administrative expenses as a percent of revenue			20.7		%				19.7		%				1.0						20.7		%				20.6		%				0.1
Operating earnings			324,496						356,850						(9.1)		%				639,101						656,201						(2.6)		%
Interest expense			33,804						26,989						25.3		%				68,018						53,541						27.0		%
Interest income			(2,653)						(949)						179.6		%				(4,744)						(1,724)						175.2		%
Other income, net			(6,678)						(4,546)						nm*						(10,486)						(6,675)						nm*
Earnings before provision for income taxes			300,023						335,356						(10.5)		%				586,313						611,059						(4.0)		%
Provision for income taxes			57,784						45,738						26.3		%				115,500						95,288						21.2		%
Effective tax rate			19.3		%				13.6		%				5.7						19.7		%				15.6		%				4.1
Net earnings			242,239						289,618						(16.4)		%				470,813						515,771						(8.7)		%
Net earnings per common share - diluted			$	1.72					$	2.00					(14.0)		%				$	3.35					$	3.56					(5.9)		%

• nm - not meaningful

Revenue

Revenue for the three months ended June 30, 2023 decreased $58.6 million, or 2.7%, from the prior year comparable quarter. Results included organic revenue decline of 3.0%, primarily led by our Clean Energy & Fueling and Engineered Products segments, and an unfavorable impact from foreign currency translation of 0.6%. This decline was partially offset by acquisition-related revenue growth of 0.9%, primarily driven by our Pumps & Process Solutions segment. Customer pricing favorably impacted revenue by approximately 4.5% in the second quarter of 2023 compared to 6.6% in the prior year comparable quarter.

Revenue for the six months ended June 30, 2023 decreased $31.5 million, or 0.7%, from the prior year comparable period. The decrease primarily reflects an unfavorable impact from foreign currency translation of 1.5% and organic revenue decline of 0.1%. This decline was partially offset by acquisition-related revenue growth was 0.9%, primarily led by our Pumps & Process Solutions segment. Customer pricing favorably impacted revenue by approximately 4.8% for the six months ended June 30, 2023 compared to 6.3% in the prior year comparable period.

Gross Profit

Gross profit for the three months ended June 30, 2023 decreased $22.4 million, or 2.9%, while gross profit margin decreased 10 basis points to 36.1%, from the prior year comparable quarter. Gross profit margin decreased due to product mix and lower volumes across the Company's businesses, partially offset by pricing initiatives.

Gross profit for the six months ended June 30, 2023 decreased $18.6 million, or 1.2%, while gross profit margin decreased by 20 basis points to 36.0%, from the prior year comparable period. Gross profit margin decreased due to lower volumes and product mix across the Company's businesses, partially offset by pricing initiatives.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2023 increased $9.9 million, or 2.3%, from the prior year comparable quarter, primarily due to increased restructuring costs and deferred compensation, partially offset by lower contract labor costs. As a percentage of revenue, selling, general and administrative expenses increased 100 basis points as compared to the prior year comparable quarter to 20.7% due to increased selling, general and administrative expenses and a decrease in revenue.

Selling, general and administrative expenses for the six months ended June 30, 2023 decreased $1.5 million, or 0.2%, from the prior year comparable period, primarily due to lower insurance claims and contract labor costs, partially offset by increased restructuring costs. Selling, general and administrative expenses as a percentage of revenue increased 10 basis points as compared to the prior year comparable period to 20.7% due to a decrease in the revenue base.

Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $39.3 million and $38.6 million for the three months ended June 30, 2023 and 2022, respectively, and $77.3 million and $79.3 million, for the six months ended June 30, 2023 and 2022, respectively. These costs as a percentage of revenue were 1.9% and 1.8% for the three months ended June 30, 2023 and 2022, respectively, and 1.9% and 1.9% for the six months ended June 30, 2023 and 2022, respectively.

Other Income, net

Other income, net includes non-service pension benefit, deferred compensation plan investments gain or loss, earnings or charges from equity method investments, foreign exchange gain or loss, and various other items. Other income, net for the three and six months ended June 30, 2023 increased $2.1 million and $3.8 million, respectively, from the prior year comparable periods due to various immaterial items.

Income Taxes

The effective tax rates for the three months ended June 30, 2023 and 2022 were 19.3% and 13.6%, respectively. The increase in the effective tax rate for the three months ended June 30, 2023 relative to the prior year comparable quarter was primarily driven by favorable audit resolutions in 2022, including $22.6 million related to the Tax Cuts and Jobs Act.

The effective tax rates for the six months ended June 30, 2023 and 2022 were 19.7% and 15.6%, respectively. The increase in the effective tax rate for the six months ended June 30, 2023 relative to the prior year comparable period was primarily driven by favorable audit resolutions in 2022, including $22.6 million related to the Tax Cuts and Jobs Act.

Net earnings

Net earnings for the three months ended June 30, 2023 decreased 16.4% to $242.2 million, or $1.72 diluted earnings per share, from $289.6 million, or $2.00 diluted earnings per share, in the prior year comparable quarter. The decrease in net earnings is mainly attributable to decreased revenue and increased restructuring costs, partially offset by customer pricing and productivity actions.

Net earnings for the six months ended June 30, 2023 decreased 8.7% to $470.8 million, or $3.35 diluted earnings per share, from $515.8 million, or $3.56 diluted earnings per share, in the prior year comparable quarter. The decrease in net earnings is mainly attributable to decreased revenue and increased restructuring costs, partially offset by customer pricing and productivity actions.

SEGMENT RESULTS OF OPERATIONS

The summary that follows provides a discussion of the results of operations of each of our five reportable operating segments (Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies). Each of these segments is comprised of various product and service offerings that serve multiple markets. We evaluate our operating segment performance based on segment earnings as defined in Note 15 — Segment Information in the condensed consolidated financial statements in Item 1 of this Form 10-Q. For further information, see "Non-GAAP Disclosures" at the end of this Item 2.

Additionally, we use the following operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments:

• Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends.

• Organic bookings represent total orders received from customers in the current reporting period excluding the impact of foreign currency exchange rates and the impact of acquisitions and dispositions. This metric is an important measure of performance and an indicator of revenue order trends.

• Backlog represents an estimate of the total remaining bookings at a point in time for which performance obligations have not yet been satisfied. This metric is useful as it represents the aggregate amount we expect to recognize as revenue in the future.

• Book-to-bill is a ratio of the amount of bookings received from customers during a period divided by the amount of revenue recorded during that same period. This metric is a useful indicator of demand.

Engineered Products

Our Engineered Products segment provides a wide range of equipment, components, software, solutions and services to the vehicle aftermarket, waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing end-markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	473,687					$	514,436					(7.9)		%				$	971,236					$	1,002,083					(3.1)		%
Segment earnings						$	73,076					$	81,671					(10.5)		%				$	157,351					$	152,801					3.0		%
Segment margin						15.4 %						15.9 %												16.2%						15.2%
Operational metrics:
Bookings						$	489,131					$	452,668					8.1		%				$	1,025,603					$	993,703					3.2		%
Backlog																								$	771,888					$	759,589					1.6		%
Components of revenue decline:
Organic decline																		(7.7)		%																(2.3)		%
Foreign currency translation																		(0.2)		%																(0.8)		%
Total revenue decline																		(7.9)		%																(3.1)		%

Second Quarter 2023 Compared to the Second Quarter 2022

Engineered Products segment revenue for the second quarter of 2023 decreased $40.7 million, or 7.9%, as compared to the second quarter of 2022, comprised primarily of organic decline of 7.7% and an unfavorable impact from foreign currency translation of 0.2%. Customer pricing favorably impacted revenue in the second quarter of 2023 by approximately 2.1% compared to 10.3% in the prior year comparable quarter.

The organic revenue decline was primarily driven by transient manufacturing and shipment disruptions in our vehicle services group caused by an ERP system upgrade, partially offset by robust demand in our waste handling business as large national waste haulers and municipal governments invest to upgrade their refuse collection vehicle fleets and implement our leading digital technologies to improve waste collection process efficiencies. Our aerospace and defense businesses experienced modest organic declines primarily related to timing of programs with key defense customers. We expect to return to positive organic growth in the second half of the year, driven by a healthy backlog position and strong order demand trends in several of our key end markets, most notably waste handling and aerospace and defense, as well as sequential recovery of deferred shipments in our vehicle lift business.

Engineered Products segment earnings decreased $8.6 million, or 10.5%, compared to the second quarter of 2022. The decrease was primarily driven by lower volumes, disruptions associated with the ERP implementation in our vehicle services group, and an unfavorable impact from foreign currency translation, partially offset by customer pricing actions and improved plant productivity. As a result, segment margin decreased to 15.4% from 15.9% as compared to the prior year comparable quarter.

Bookings increased 8.1% for the segment, comprised of organic growth of 8.4% partially offset by an unfavorable impact from foreign currency translation of 0.3%. The organic bookings growth was driven by robust demand in our waste handling business, which is expected to continue in the second half of the year as large waste haulers upgrade their vehicle fleets, partially offset by disruptions associated with the ERP system implementation in our vehicle services group. Segment book-to-bill was 1.03, and backlog increased 1.6% compared to the prior year comparable period.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Engineered Products revenue for the six months ended June 30, 2023 decreased $30.8 million, or 3.1%, compared to the prior year comparable period. This was comprised of organic revenue decline of 2.3% and an unfavorable impact from foreign currency translation of 0.8%. The organic revenue decline was due to transient manufacturing and shipment disruptions in our vehicle services group caused by an ERP system upgrade, partially offset by customer pricing actions and strong growth in our waste handling business. Customer pricing favorably impacted revenue by approximately 3.0% compared to 10.5% in the prior year comparable period.

Segment earnings for the six months ended June 30, 2023 increased $4.6 million, or 3.0%, as compared to the 2022 comparable period. The growth was primarily driven by customer pricing actions, improved plant productivity and strong discretionary cost management, partially offset by lower volumes, as well as an unfavorable impact from foreign currency translation. Segment margin increased to 16.2% from 15.2% as compared to the prior year comparable period.

Clean Energy & Fueling

Our Clean Energy & Fueling segment provides components, equipment, software, solutions and services enabling safe and reliable storage, transport and dispensing of traditional and clean fuels (including liquefied natural gas, hydrogen, and electric vehicle charging), cryogenic gases, and other hazardous substances along the supply chain, and safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	441,166					$	494,075					(10.7)		%				$	871,895					$	952,470					(8.5)		%
Segment earnings						$	83,616					$	99,034					(15.6)		%				$	157,221					$	171,996					(8.6)		%
Segment margin						19.0 %						20.0 %												18.0%						18.1%
Operational metrics:
Bookings						$	440,137					$	487,861					(9.8)		%				$	894,663					$	989,352					(9.6)		%
Backlog																								$	339,322					$	411,350					(17.5)		%
Components of revenue decline:
Organic decline																		(9.3)		%																(6.1)		%
Foreign currency translation																		(1.4)		%																(2.4)		%
Total revenue decline																		(10.7)		%																(8.5)		%

Second Quarter 2023 Compared to the Second Quarter 2022

Clean Energy & Fueling segment revenue for the second quarter of 2023 decreased $52.9 million, or 10.7%, as compared to the second quarter of 2022, comprised of an organic decline of 9.3% and an unfavorable impact from foreign currency translation of 1.4%. Customer pricing favorably impacted revenue in the second quarter of 2023 by approximately 4.8% compared to 5.4% in the prior year comparable quarter.

The organic revenue decline was primarily driven by reduced year-over-year demand in above ground retail fueling equipment due to the expected roll-off of EMV-related demand and general destocking across our distribution channels as higher interest rates have resulted in higher carrying costs of inventory for distributors, and was partially offset by solid demand in fluid transfer solutions, along with pricing actions aimed at mitigating material and logistics cost inflation. We expect year-over-year organic growth rates to become positive in the second half of the year as the negative year-over-year impact from EMV-related demand normalizes and we see positive growth in our fluid transfer solutions, vehicle wash solutions and clean energy solutions businesses.

Clean Energy & Fueling segment earnings decreased $15.4 million, or 15.6%, over the prior year comparable quarter. The decrease was primarily driven by reduced volumes, partially offset by pricing actions, productivity initiatives and the benefits from ongoing restructuring actions taken in our retail fueling business. The benefits from these restructuring actions are significant and will carry into 2024. See "Restructuring and Other Costs (Benefits)" section within this Item 2 for further information. Segment margin decreased to 19.0% from 20.0% in the prior year comparable quarter driven by lower volumes.

Overall bookings decreased 9.8% as compared to the prior year comparable quarter, driven by an organic decline of 8.4% and an unfavorable impact from foreign currency translation of 1.4%. The organic bookings decline was primarily driven by reduced year over year demand in above ground retail fueling equipment. Segment book-to-bill was 1.00 and backlog decreased 17.5% as compared to the prior year comparable period.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Clean Energy & Fueling segment revenue decreased $80.6 million, or 8.5%, as compared to the six months ended June 30, 2022, attributable to an organic decline of 6.1% and an unfavorable impact from foreign currency translation of 2.4%. Organic revenue was lower in the first six months of the year compared with the prior year's comparable period, driven by reduced year-over-year demand in above ground retail fueling equipment due to the expected roll-off of EMV-related demand and general destocking across our distribution channels as higher interest rates have resulted in higher carrying costs of inventory for distributors, and was partially offset by solid demand in fluid transfer solutions, along with pricing actions aimed at mitigating material and logistics cost inflation. Customer pricing favorably impacted revenue by approximately 4.7% compared to 4.2% in the prior year comparable period.

Clean Energy & Fueling segment earnings decreased $14.8 million, or 8.6%, for the six months ended June 30, 2023. The decrease in earnings was driven by reduced organic volumes and unfavorable impact from foreign currency translation, partially offset by pricing actions, productivity initiatives and the benefits from ongoing restructuring actions in our retail fueling business. Segment margin decreased to 18.0% from 18.1% in the prior year comparable period.

Imaging & Identification

Our Imaging & Identification segment supplies precision marking and coding, product traceability, brand protection and digital textile printing equipment, as well as related consumables, software and services to the global packaged and consumer goods, pharmaceutical, industrial manufacturing, textile and other end-markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	271,932					$	275,951					(1.5)		%				$	555,023					$	548,206					1.2		%
Segment earnings						$	61,336					$	61,392					(0.1)		%				$	129,651					$	119,990					8.1		%
Segment margin						22.6 %						22.2 %												23.4%						21.9%
Operational metrics:
Bookings						$	262,092					$	292,136					(10.3)		%				$	552,804					$	599,240					(7.7)		%
Backlog																								$	227,646					$	255,255					(10.8)		%
Components of revenue decline:
Organic growth																		0.3		%																4.2		%
Foreign currency translation																		(1.8)		%																(3.0)		%
Total revenue decline																		(1.5)		%																1.2		%

Second Quarter 2023 Compared to the Second Quarter 2022

Imaging & Identification segment revenue for the second quarter of 2023 decreased $4.0 million, or 1.5%, as compared to the second quarter of 2022, comprised of an unfavorable impact from foreign currency translation of 1.8%, which was partially offset by organic growth of 0.3%. Customer pricing favorably impacted revenue in the second quarter of 2023 by approximately 6.0% compared to 3.2% in the prior year comparable quarter.

The organic revenue growth was primarily driven by pricing initiatives, partially offset by reduced demand in our textile printing business which has continued to be impacted by high energy prices and macro uncertainty in textile producing regions. Marking and coding demand has remained solid in the Americas and in Europe, whereas slower macroeconomic conditions have reduced investments in new equipment by customers in Asia. We expect organic growth rates to moderate in the second half of the year as demand in marking and coding slows due to reduced customer investment, principally in China.

Imaging & Identification segment earnings decreased $0.1 million, or 0.1%, over the prior year comparable quarter. This decrease was primarily driven by reduced organic volumes in our digital textile printing business, material and labor cost inflation and an unfavorable impact from foreign currency translation, partially offset by pricing initiatives and productivity actions. Segment margin increased to 22.6% from 22.2% in the prior year comparable quarter.

Overall bookings decreased 10.3% as compared to the prior year comparable quarter, reflecting an organic decline of 8.5% and an unfavorable impact from foreign currency translation of 1.8%. The organic bookings decline was primarily driven by reduced order intake in our marking and coding and digital textile printing businesses, partially offset by increased bookings in our serialization software business. Segment book-to-bill was 0.96, and backlog decreased 10.8% as compared to the prior year comparable period.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Imaging & Identification segment revenue increased $6.8 million, or 1.2%, as compared to the six months ended June 30, 2022, attributable to organic growth of 4.2%, partially offset by an unfavorable impact from foreign currency translation of 3.0%. The organic revenue growth was primarily driven by pricing initiatives and solid activity in our marking and coding business, partially offset by weaker demand in our digital textile printing business. Customer pricing favorably impacted revenue by approximately 6.4% compared to 2.6% in the prior year comparable period.

Imaging & Identification segment earnings increased $9.7 million, or 8.1%, for the six months ended June 30, 2023 over the prior year comparable period. The increase was primarily driven by pricing initiatives and productivity actions, which more than offset negative impacts from material and labor cost inflation and foreign currency translation. Segment margin increased to 23.4% from 21.9% in the prior year comparable quarter.

Pumps & Process Solutions

Our Pumps & Process Solutions segment manufactures specialty pumps and flow meters, highly engineered precision components for rotating and reciprocating machines, fluid connecting solutions and plastics and polymer processing equipment, serving single-use biopharmaceutical production, diversified industrial manufacturing, chemical production, plastics and polymer processing, midstream and downstream oil and gas, thermal management applications and other end-markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	465,626					$	441,127					5.6		%				$	879,507					$	876,322					0.4		%
Segment earnings						$	129,337					$	138,048					(6.3)		%				$	244,581					$	284,665					(14.1)		%
Segment margin						27.8 %						31.3 %												27.8%						32.5%
Operational metrics:
Bookings						$	394,317					$	471,693					(16.4)		%				$	858,614					$	931,483					(7.8)		%
Backlog																								$	676,191					$	715,646					(5.5)		%
Components of revenue growth:
Organic growth/(decline)																		0.9		%																(3.1)		%
Acquisitions																		4.5		%																4.4		%
Foreign currency translation																		0.2		%																(0.9)		%
Total revenue growth																		5.6		%																0.4		%

Second Quarter 2023 Compared to the Second Quarter 2022

Pumps & Process Solutions segment revenue for the second quarter of 2023 increased $24.5 million, or 5.6%, as compared to the second quarter of 2022, driven by acquisition-related growth of 4.5%, organic growth of 0.9%, and a favorable impact from foreign currency translation of 0.2%. Acquisition-related growth was primarily driven by the acquisition of Malema Engineering Corporation in the third quarter of 2022 and Witte Pumps & Technology GmbH in the fourth quarter of 2022. Customer pricing favorably impacted revenue in the second quarter of 2023 by approximately 5.1% compared to 3.4% in the prior year comparable quarter.

The organic revenue growth was primarily driven by pricing initiatives, along with strength in thermal connectors, polymer processing equipment, bearings and compression components, and hygienic dosing businesses. This was partially offset by reduced shipments for components used in COVID-19 vaccine production and biopharmaceutical manufacturers repurposing inventory purchased for the COVID-19 vaccine production toward production of non-COVID-19 therapies. We expect continued strength in our thermal connectors, polymer processing equipment, bearings and compression components, and hygienic dosing systems businesses in the second half of the year.

Pumps & Process Solutions segment earnings decreased $8.7 million, or 6.3%, over the prior year comparable quarter. The decrease was primarily driven by the impact of reduced revenues relating to biopharmaceutical components. This was partially offset by pricing initiatives, conversion on increased revenues in thermal connectors, polymer processing equipment, bearings and compression components, and hygienic dosing systems, as well as productivity actions and restructuring benefits. Segment margin decreased to 27.8% from 31.3% from the prior year comparable quarter mainly due to business mix within the segment.

Overall bookings decreased 16.4% as compared to the prior year comparable quarter driven by an organic decline of 19.4%, and an unfavorable impact from foreign currency translation of 0.1% partially offset by acquisition-related growth of 3.1%. The organic bookings decline was driven by a decrease in orders for biopharmaceutical components and order timing in our polymer processing equipment business, partially offset by continued strong order intake in our bearings and compression components business. Segment book-to-bill was 0.85, and backlog decreased 5.5% compared to the prior year comparable period.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Pumps & Process Solutions segment revenue increased $3.2 million, or 0.4%, as compared to the six months ended June 30, 2022, attributable to acquisition-related growth of 4.4%, partially offset by organic decline of 3.1% and an unfavorable impact from foreign currency translation of 0.9%. The organic decline was primarily driven by reduced shipments for components used in COVID-19 vaccine production and biopharmaceutical manufacturers repurposing inventory purchased for the COVID-19 vaccine production toward production of non-COVID-19 therapies. This decline was partially offset by pricing initiatives, along with continued strength in industrial pumps, thermal connectors, plastics and polymer processing solutions and bearings and compression components. Customer pricing favorably impacted revenue by approximately 5.0% compared to 3.5% in the prior comparable period.

Pumps & Process Solutions segment earnings decreased $40.1 million, or 14.1%, for the six months ended June 30, 2023 over the prior year comparable period. The decrease was primarily driven by the impact of reduced revenues relating to biopharmaceutical components along with foreign currency translation headwinds. This was partially offset by pricing initiatives, conversion on increased revenues in industrial pumps, plastics and polymer processing solutions and bearings and compression components, productivity actions and restructuring benefits. Segment margin decreased to 27.8% from 32.5% from the prior year comparable period.

Climate & Sustainability Technologies

Our Climate & Sustainability Technologies segment is a provider of innovative and energy-efficient equipment, components and parts for the commercial refrigeration, heating and cooling and beverage can-making equipment markets.

						Three Months Ended June 30,																		Six Months Ended June 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	449,001					$	434,164					3.4		%				$	904,326					$	833,242					8.5		%
Segment earnings						$	76,074					$	64,181					18.5		%				$	149,852					$	117,790					27.2		%
Segment margin						16.9 %						14.8 %												16.6%						14.1%
Operational metrics:
Bookings						345,363						$	403,574					(14.4)		%				645,377						$	848,426					(23.9)		%
Backlog																								$	797,307					$	1,186,180					(32.8)		%
Components of revenue growth:
Organic growth																		4.0		%																9.9		%
Foreign currency translation																		(0.6)		%																(1.3)		%
Total revenue growth																		3.4		%																8.6		%

Second Quarter 2023 Compared to the Second Quarter 2022

Climate & Sustainability Technologies segment revenue increased $14.8 million, or 3.4%, as compared to the second quarter of 2022, reflecting organic revenue growth of 4.0%, partially offset by an unfavorable impact from foreign currency translation of 0.6%. Customer pricing favorably impacted revenue in the second quarter of 2023 by approximately 5.3% compared to 9.5% in the prior year comparable quarter.

The organic revenue growth was driven primarily by pricing actions as well as strong growth in heat exchangers and natural refrigerant systems, partially offset by modest volume reductions in beverage can-making equipment. Our heat exchanger business continues to experience strong growth as regulation-driven efforts to shift from fossil fuel to electric energy in Europe drive robust demand for heat pump applications, as well as strong global commercial HVAC and industrial markets. Retail refrigeration revenue also increased from the prior year, driven by customer pricing actions, large system refurbishment programs with a key supermarket customer and growing demand for natural refrigerant systems, partially offset by soft demand in the interest rate sensitive convenience store market. Beverage can-making business revenues declined from the prior year, primarily related to timing of projects and moderating demand with large beverage can-makers, who are absorbing recent large capacity expansions. We expect modest growth in the second half of the year, driven by strong demand for heat exchangers and refrigeration systems, partially offset by reductions in beverage can-making equipment projects as demand moderates from the robust levels experienced in the prior year.

Climate & Sustainability Technologies segment earnings increased $11.9 million, or 18.5%, as compared to the second quarter of 2022. The segment earnings increase was driven by customer pricing actions, increased volumes and benefits from productivity initiatives, partially offset by higher material and labor costs. Segment margin increased to 16.9% from 14.8% in the prior year comparable quarter.

Bookings in the second quarter of 2023 decreased 14.4% from the prior year comparable quarter, reflecting organic decline of 13.7% and an unfavorable impact from foreign currency translation of 0.7%. The organic bookings decline was principally driven by improving lead times in refrigeration and timing of large projects and moderating demand with key customers in beverage can-making equipment, partially offset by continued robust demand for heat exchangers. Segment book-to-bill for the second quarter of 2023 was 0.77. Backlog decreased 32.8% over the prior year comparable period, but remains at healthy levels reflecting constructive demand across several key end markets within the segment.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Climate & Sustainability Technologies segment revenue increased $71.1 million, or 8.5%, compared to the six months ended June 30, 2022, reflecting an organic revenue growth of 9.9%, partially offset by an unfavorable foreign currency translation of 1.3%. The organic revenue growth for the six months ended June 30, 2023 was driven by strong demand across many of our key end-markets. Retail refrigeration revenues increased from the prior year, driven by healthy remodel and system refurbishment programs with key supermarket customers and continued growing demand for our environmentally friendly natural refrigerant systems in Europe and North America. Our beverage equipment business experienced revenue growth, driven by continued favorable macro trends in the global beverage industry as producers shift from plastic and glass packaging to aluminum cans for environmental sustainability and merchandising benefits offered by modern aluminum cans. Our heat exchanger business experienced healthy growth across all regions, fueled by regulation-driven heat pump demand in Europe and strengthening commercial HVAC and industrial markets globally. Customer pricing favorably impacted revenue by approximately 5.6% compared to 9.4% in the prior comparable period.

Climate & Sustainability Technologies segment earnings increased $32.1 million, or 27.2%, for the six months ended June 30, 2023, as compared to the prior year comparable period. Segment margin increased to 16.6% from 14.1% in the prior year comparable period. The earnings increase was driven by increased volumes, productivity, favorable business mix and customer pricing actions, partially offset by increased material and logistics costs, most notably metals and freight.

Reconciliation of Segment Earnings to Net Earnings

			Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)			2023						2022						2023						2022
Net earnings:
Segment earnings:
Engineered Products			$	73,076					$	81,671					$	157,351					$	152,801
Clean Energy & Fueling			83,616						99,034						157,221						171,996
Imaging & Identification			61,336						61,392						129,651						119,990
Pumps & Process Solutions			129,337						138,048						244,581						284,665
Climate & Sustainability Technologies			76,074						64,181						149,852						117,790
Total segment earnings			423,439						444,326						838,656						847,242
Purchase accounting expenses (1)			40,200						47,019						82,879						100,305
Restructuring and other costs (2)			18,143						7,944						32,196						18,496
Loss on dispositions (3)			—						—						—						194
Corporate expense / other (4)			33,922						27,967						73,994						65,371
Interest expense			33,804						26,989						68,018						53,541
Interest income			(2,653)						(949)						(4,744)						(1,724)
Earnings before provision for income taxes			300,023						335,356						586,313						611,059
Provision for income taxes			57,784						45,738						115,500						95,288
Net earnings			$	242,239					$	289,618					$	470,813					$	515,771

(1) Purchase accounting expenses are primarily comprised of amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period.

(2) Restructuring and other costs relate to actions taken for employee reductions, facility consolidations and site closures, product line exits, and other asset charges.

(3) Loss on dispositions includes working capital adjustments related to dispositions.

(4) Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, shared business services and digital overhead costs, deal-related expenses and various administrative expenses relating to the corporate headquarters.

Restructuring and Other Costs (Benefits)

Restructuring and other costs are not presented in our segment earnings because these costs are excluded from the segment operating performance measure reviewed by management. Restructuring and other costs for the three and six months ended June 30, 2023 included restructuring charges of $16.4 million and $28.9 million, respectively and other costs, net of $1.7 million and $3.3 million, respectively. Restructuring charges for the three and six months ended June 30, 2023 were primarily related to headcount reductions and exit costs in the Clean Energy & Fueling, Engineered Products and Pumps & Process Solutions segments. These restructuring programs were initiated in 2022 and 2023 and were undertaken in light of current market conditions. Other costs, net of $2.0 million within the Clean Energy & Fueling segment for the six months ended June 30, 2023 were primarily due to product line rationalization. These restructuring and other charges were recorded in cost of goods and services and selling, general and administrative expenses in the condensed consolidated statement of earnings. Additional programs beyond the scope of the announced programs may be implemented during 2023 with related restructuring charges.

We recorded the following restructuring and other costs (benefits) for the three and six months ended June 30, 2023:

			Three Months Ended June 30, 2023
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	3,938					$	5,847					$	865					$	3,303					$	1,205					$	1,241					$	16,399
Other costs, net			9						891						143						44						531						126						1,744
Restructuring and other costs			$	3,947					$	6,738					$	1,008					$	3,347					$	1,736					$	1,367					$	18,143

			Six Months Ended June 30, 2023
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	4,477					$	15,991					$	1,204					$	4,629					$	1,447					$	1,127					$	28,875
Other costs (benefits), net			34						1,959						496						(3)						703						132						3,321
Restructuring and other costs			$	4,511					$	17,950					$	1,700					$	4,626					$	2,150					$	1,259					$	32,196

Restructuring and other costs of $7.9 million for the three months ended June 30, 2022 were primarily due to headcount reductions and facility consolidations resulting from restructuring programs initiated in 2021 and 2022, and asset write-downs. For the six months ended June 30, 2022, substantial liquidation and exit from certain Latin America countries in our Climate & Sustainability Technologies segment contributed to restructuring expenses of $12.5 million and other costs (benefits), net of $6.0 million, comprised primarily of foreign currency translation losses and asset write-downs. These restructuring and other charges were recorded in cost of goods and services and selling, general and administrative expenses in the condensed consolidated statement of earnings.

We recorded the following restructuring and other costs (benefits) for the three and six months ended June 30, 2022:

			Three Months Ended June 30, 2022
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	524					$	1,423					$	344					$	1,476					$	159					$	383					$	4,309
Other costs, net			2,377						5						963						1						107						182						3,635
Restructuring and other costs			$	2,901					$	1,428					$	1,307					$	1,477					$	266					$	565					$	7,944

			Six Months Ended June 30, 2022
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	981					$	1,619					$	1,535					$	2,161					$	5,875					$	295					$	12,466
Other costs (benefits), net			2,429						(1)						1,149						2						2,224						227						6,030
Restructuring and other costs			$	3,410					$	1,618					$	2,684					$	2,163					$	8,099					$	522					$	18,496

Purchase Accounting Expenses

Purchase accounting expenses primarily relate to amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period. These expenses are not presented in our segment earnings because they are excluded from the segment operating performance measure reviewed by management. These expenses reconcile to segment earnings as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)			2023						2022						2023						2022
Purchase accounting expenses
Engineered Products			$	4,991					$	5,593					$	10,795					$	10,408
Clean Energy & Fueling 1			19,540						26,895						39,107						58,225
Imaging & Identification			5,945						5,609						11,551						11,301
Pumps & Process Solutions			4,900						4,097						11,777						10,688
Climate & Sustainability Technologies			4,824						4,825						9,649						9,683
Total			$	40,200					$	47,019					$	82,879					$	100,305
1 Purchase accounting expenses in our Clean Energy and Fueling segment decreased by $7,355 and $19,118 for the three and six months ended June 30, 2023 from the prior year comparable periods, which include $6,898 and $18,995 of charges, respectively, related to fair value step-ups for inventory from the acquisition of RegO and Acme Cryogenics in Q4 2021.

FINANCIAL CONDITION

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Significant factors affecting liquidity are: cash flows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, repurchase of outstanding shares, adequacy of available commercial paper and bank lines of credit and the ability to attract long-term capital with satisfactory terms. We generate substantial cash from the operations of our businesses and remain in a strong financial position, with sufficient liquidity available for reinvestment in existing businesses and strategic acquisitions.

Cash Flow Summary

The following table is derived from our condensed consolidated statements of cash flows:

			Six Months Ended June 30,
Cash Flows from Operations (in thousands)			2023						2022
Net cash flows provided by (used in):
Operating activities			$	436,538					$	202,456
Investing activities			(86,010)						(115,853)
Financing activities			(444,489)						45,265

Operating Activities

Cash flow from operating activities for the six months ended June 30, 2023 increased by $234.1 million compared to June 30, 2022. This increase was primarily driven by improvements in the cash flows related to working capital. Additionally, estimated tax payments were higher in 2022 driven primarily by a $43.5 million income tax payment related to the gain on disposition of Unified Brands.

Adjusted Working Capital: We believe adjusted working capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) provides a meaningful measure of liquidity by showing changes caused by operational results. The following table provides a calculation of adjusted working capital:

Adjusted Working Capital (in thousands)						June 30, 2023						December 31, 2022
Accounts receivable						$	1,561,162					$	1,516,871
Inventories						1,396,260						1,366,608
Less: Accounts payable						1,028,928						1,068,144
Adjusted working capital						$	1,928,494					$	1,815,335

Adjusted working capital increased by $113.2 million, or 6.2%, in the six months ended June 30, 2023, which reflected an increase of $44.3 million in accounts receivable, an increase of $29.7 million in inventory and a decrease in accounts payable of $39.2 million. Inventories increased to support normal seasonality trends in advance of higher expected shipment volumes in the second half of the year. The change in accounts receivable and payable reflect the timing of payments and collections.

Investing Activities

Cash flow from investing activities is generally derived from cash outflows for capital expenditures and acquisitions, offset by proceeds from sales of business, property, plant and equipment. During the six months ended June 30, 2023, the majority of the activity in investing activities was comprised of capital spending. Our capital expenditures decreased $12.1 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

We anticipate that capital expenditures and any acquisitions we make through the remainder of 2023 will be funded from available cash and internally generated funds and, if necessary, through the issuance of commercial paper, borrowings from revolving credit facilities or by accessing the public debt or equity markets.

Financing Activities

Our cash flow from financing activities generally relates to the use of cash for repurchases of our common stock and payment of dividends, offset by borrowing activity. The majority of financing activity was attributed to the following:

• Repurchase of common stock: During the six months ended June 30, 2023, we repurchased no shares. During the six months ended June 30, 2022, we used $85.0 million to repurchase 641,428 shares.

*•*Commercial paper and other short-term borrowings, net: During the six months ended June 30, 2023, we used $289.6 million to pay off commercial paper borrowings. During the six months ended June 30, 2022, we received net proceeds of $288.0 million from commercial paper borrowings.

• Dividend payments: Total dividend payments to common shareholders were $141.5 million during the six months ended June 30, 2023, as compared to $144.1 million during the same period in 2022. Our dividends paid per common share increased 1.0% to $1.01 during the six months ended June 30, 2023 compared to $1.00 during the same period in 2022. The number of common shares outstanding decreased in the comparative periods due to share repurchase activity throughout 2022.

*•*Payments to settle employee tax obligations: Payments to settle tax obligations from the exercise of share-based awards declined $1.0 million compared to the prior year period.

Liquidity and Capital Resources

Free Cash Flow

In addition to measuring our cash flow generation and usage based upon the operating, investing and financing classifications included in the condensed consolidated statements of cash flows, we also measure free cash flow (a non-GAAP measure) which represents net cash provided by operating activities minus capital expenditures. We believe that free cash flow is an important measure of liquidity because it provides management and investors a measurement of cash generated from operations that may be available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.

The following table reconciles our free cash flow to cash flow provided by operating activities:

			Six Months Ended June 30,
Free Cash Flow (dollars in thousands)			2023						2022
Cash flow provided by operating activities			$	436,538					$	202,456
Less: Capital expenditures			(88,454)						(100,577)
Free cash flow			$	348,084					$	101,879
Cash flow from operating activities as a percentage of revenue			10.4		%				4.8		%
Cash flow from operating activities as a percentage of net earnings			92.7		%				39.3		%
Free cash flow as a percentage of revenue			8.3		%				2.4		%
Free cash flow as a percentage of net earnings			73.9		%				19.8		%

For the six months ended June 30, 2023, we generated free cash flow of $348.1 million, representing 8.3% of revenue and 73.9% of net earnings. Free cash flow for the six months ended June 30, 2023 increased $246.2 million, compared to June 30, 2022, due to higher operating cash flow, primarily as a result of improvements in working capital compared to the prior year.

Capitalization

We use commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase of our common stock. As of June 30, 2023, we maintained $1.0 billion five-year and $500.0 million 364-day unsecured revolving credit facilities ("Credit Agreements") with a syndicate of banks which expire April 6, 2028 and April 4, 2024, respectively. We may elect to extend the maturity date of any loans under the 364-day credit facility until April 4, 2025, subject to conditions specified therein. The Credit Agreements are designated as a liquidity back-stop for the Company's commercial paper program, which was upsized from $1.0 billion to $1.5 billion during the quarter, and also are available for general corporate purposes.

At the Company's election, loans under the Credit Agreements will bear interest at a base rate plus an applicable margin. The Credit Agreements require the Company to pay a facility fee and impose various restrictions on the Company such as, among other things, a requirement to maintain an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of not less than 3.0 to 1.0. The Company was in compliance with all covenants in the Credit Agreements and other long-term debt covenants at June 30, 2023 and had an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of 13.7 to 1. We are not aware of any potential impairment to our liquidity and expect to remain in compliance with all of our debt covenants. Additionally, our earliest long-term debt maturity is in 2025.

We also have a current shelf registration statement filed with the SEC that allows for the issuance of additional debt securities that may be utilized in one or more offerings on terms to be determined at the time of the offering. Net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, capital expenditures and acquisitions.

At June 30, 2023, our cash and cash equivalents totaled $285.8 million, of which approximately $259.5 million was held outside the United States. At December 31, 2022, our cash and cash equivalents totaled $380.9 million, of which approximately $261.4 million was held outside the United States. Cash and cash equivalents are held primarily in bank deposits with highly rated banks. We regularly hold cash in excess of near-term requirements in bank deposits or invest the funds in government money market instruments or short-term investments, which consist of investment grade time deposits with original maturity dates at the time of purchase of no greater than three months.

We utilize the net debt to net capitalization calculation (a non-GAAP measure) to assess our overall financial leverage and capacity and believe the calculation is useful to investors for the same reason. Net debt represents total debt minus cash and cash equivalents. Net capitalization represents net debt plus stockholders' equity. The following table provides a calculation of net debt to net capitalization from the most directly comparable GAAP measures:

Net Debt to Net Capitalization Ratio (dollars in thousands)						June 30, 2023						December 31, 2022
Commercial paper						$	445,500					$	734,936
Other						675						836
Total short-term borrowings						$	446,175					$	735,772
Long-term debt						2,976,573						2,942,513
Total debt						3,422,748						3,678,285
Less: Cash and cash equivalents						(285,777)						(380,868)
Net debt						3,136,971						3,297,417
Add: Stockholders' equity						4,662,105						4,286,366
Net capitalization						$	7,799,076					$	7,583,783
Net debt to net capitalization						40.2		%				43.5		%

Our net debt to net capitalization ratio decreased to 40.2% at June 30, 2023 compared to 43.5% at December 31, 2022. Net debt decreased $160.4 million during the period primarily due to a decrease in commercial paper borrowings, partially offset by lower cash and cash equivalents. Stockholders' equity increased for the period as a result of current earnings of $470.8 million and other comprehensive earnings of $38.7 million, primarily due to the favorable impact of foreign currency fluctuations, partially offset by $141.5 million of dividends paid.

Operating cash flow and access to capital markets are expected to satisfy our various cash flow requirements, including acquisitions, capital expenditures, purchase obligations, and lease obligations. Acquisition spending and/or share repurchases could potentially increase our debt.

We believe that existing sources of liquidity are adequate to meet anticipated funding needs at current risk-based interest rates for the foreseeable future.

Critical Accounting Estimates

Our condensed consolidated financial statements and related public financial information are based on the application of GAAP which requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our public disclosures, including information regarding contingencies, risk and our financial condition. We believe our use of estimates and underlying accounting assumptions conform to GAAP and are consistently applied. We review valuations based on estimates for reasonableness on a consistent basis.

Recent Accounting Standards

See Note 18 — Recent Accounting Pronouncements in the condensed consolidated financial statements in Item 1 of this Form 10-Q. The adoption of recent accounting standards as included in Note 18 — Recent Accounting Pronouncements in the condensed consolidated financial statements has not had, and is not expected to have, a significant impact on our revenue, earnings or liquidity.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, especially MD&A, contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements in this document other than statements of historical fact are statements that are, or could be deemed, "forward-looking" statements. Some of these statements may be indicated by words such as "may", "anticipate", "expect", "believe", "intend", "continue", "guidance", "estimates", "suggest", "will", "plan", "should", "would", "could", "forecast" and other words and terms that use the future tense or have a similar meaning. Forward-looking statements are based on current expectations and are subject to numerous important risks, uncertainties, and assumptions, including those described in our Annual Report on Form 10-K for the year ended December 31, 2022. Factors that could cause actual results to differ materially from current expectations include, among other things: general economic conditions and conditions in the particular markets in which we operate; supply chain constraints and labor shortages that could result in production stoppages, inflation in material input costs and freight logistics; the impacts of COVID-19 or other future pandemics on the global economy and on our customers, suppliers, employees, business and cash flows; changes in customer demand and capital spending; competitive factors and pricing pressures; our ability to develop and launch new products in a cost-effective manner; changes in law, including the effect of tax laws and developments with respect to trade policy and tariffs; our ability to identify and complete acquisitions and integrate and realize synergies from newly acquired businesses; the impact of interest rate and currency exchange rate fluctuations; capital allocation plans and changes in those plans, including with respect to dividends, share repurchases, investments in research and development, capital expenditures and acquisitions; our ability to derive expected benefits from restructurings, productivity initiatives and other cost reduction actions; the impact of legal compliance risks and litigation, including with respect to product quality and safety, cybersecurity and privacy; and our ability to capture and protect intellectual property rights, and various other factors that are described in our periodic reports filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

The Company may, from time to time, post financial or other information on its website, www.dovercorporation.com. The website is for informational purposes only and is not intended for use as a hyperlink. The Company is not incorporating any material on its website into this report.

Non-GAAP Disclosures

In an effort to provide investors with additional information regarding our results as determined by GAAP, we also disclose non-GAAP information, which we believe provides useful information to investors. Free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of net earnings, net debt, net capitalization, net debt to net capitalization ratio, adjusted working capital, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for cash flows from operating activities, debt or equity, working capital or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. We believe the net debt to net capitalization ratio and free cash flow are important measures of liquidity. Net debt to net capitalization is helpful in evaluating our capital structure and the amount of leverage we employ. Free cash flow and free cash flow ratios provide both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase our common stock. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Free cash flow as a percentage of net earnings equals free cash flow divided by net earnings. We believe that reporting adjusted working capital provides a meaningful measure of liquidity by showing changes caused by operational results. We believe that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and divestitures, provides a useful comparison of our revenue performance and trends between periods.

Reconciliations and comparisons to non-GAAP measures can be found above in this Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations.