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 third quarter of 2023, revenue was $2.2 billion, which decreased $5.0 million, or 0.2%, as compared to the third quarter of 2022. This was due to organic revenue decline of 2.4% partially offset by a favorable impact from foreign currency translation of 1.2% and by acquisition-related revenue growth of 1.0%. Pricing and productivity initiatives continued in the quarter to offset the impact of lower volumes across some of the Company's businesses.

The 2.4% organic revenue decline for the third quarter of 2023 was a result of our Pumps & Process Solutions, Imaging & Identification and Engineered Products segments which had a decline of 7.3%, 3.6% and 3.0%, respectively. The decline was partially offset by the Climate & Sustainability Technologies segment which had growth of 1.8%. The Clean Energy & Fueling segment was approximately flat. 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 7.3% in the third quarter of 2023 compared to the prior year comparable quarter, driven primarily by reduced year-over-year shipments in liquefied petroleum gas components, vehicle wash solutions and below ground retail fueling equipment in the Clean Energy & Fueling segment and reduced shipments for components used in biopharma production in the Pumps & Process Solutions segment. Organic revenue for Other Americas increased 13.1%, while Europe and Asia decreased 5.2% and 3.4%, respectively.

Bookings were $2.0 billion for the three months ended September 30, 2023, a decrease of $56.9 million, or 2.8% compared to the prior year comparable quarter. Included in this result was an organic decline of 4.1%, partially offset by a favorable impact from foreign currency translation of 1.0% and acquisition-related growth of 0.3%. The organic bookings decline was primarily due to our customers reducing on-hand inventory as our lead times normalize across the portfolio.

Backlog as of September 30, 2023 was $2.6 billion, a decrease from $3.2 billion in the prior year, but remains elevated on a relative historical basis. See definition of bookings and backlog in "Segment Results of Operations" within this Item 2.

Restructuring and other costs for the three months ended September 30, 2023 were $12.3 million which included restructuring charges of $4.9 million and other costs of $7.4 million. Restructuring and other costs were primarily related to headcount reductions and exit costs in the Pumps & Process Solutions, Engineered Products and Climate & Sustainability Technologies segments, as well as an asset impairment in our Climate & Sustainability Technologies segment and footprint reduction in our Clean Energy & Fueling segment. The restructuring programs were initiated in 2022 and 2023 and were undertaken in light of current market conditions. See Note 9 — Restructuring Activities in the condensed consolidated financial statements in Item 1 of this Form 10-Q for further details.

On September 29, 2023, the Company entered into a definitive agreement to acquire the business of FW Murphy Production Controls, LLC ("FW Murphy"), for approximately $530,000, subject to customary post-closing adjustments. This acquisition is expected to close in the fourth quarter of 2023 and adds complementary offerings within the Pumps & Process Solutions segment.

On October 11, 2023, the Company entered into a definitive agreement to sell De-Sta-Co, an operating company within the Engineered Products segment, for approximately $680,000 enterprise value, net of estimated selling costs and subject to customary post-closing adjustments. As of September 30, 2023, De-Sta-Co met the criteria to be classified as held for sale. We classified De-Sta-Co assets and liabilities separately in the condensed consolidated balance sheets as of September 30, 2023.

CONSOLIDATED RESULTS OF OPERATIONS

			Three Months Ended September 30,																		Nine Months Ended September 30,
(dollars in thousands, except per share figures)			2023						2022						% / Point Change						2023						2022						% / Point Change
Revenue			$	2,153,268					$	2,158,291					(0.2)		%				$	6,332,377					$	6,368,907					(0.6)		%
Cost of goods and services			1,360,253						1,385,541						(1.8)		%				4,033,507						4,071,680						(0.9)		%
Gross profit			793,015						772,750						2.6		%				2,298,870						2,297,227						0.1		%
Gross profit margin			36.8		%				35.8		%				1.0						36.3		%				36.1		%				0.2
Selling, general and administrative expenses			420,245						402,339						4.5		%				1,286,999						1,270,615						1.3		%
Selling, general and administrative expenses as a percent of revenue			19.5		%				18.6		%				0.9						20.3		%				20.0		%				0.3
Operating earnings			372,770						370,411						0.6		%				1,011,871						1,026,612						(1.4)		%
Interest expense			32,389						29,789						8.7		%				100,407						83,330						20.5		%
Interest income			(3,808)						(1,244)						206.1		%				(8,552)						(2,968)						188.1		%
Other income, net			(10,273)						(11,167)						nm*						(20,759)						(17,842)						nm*
Earnings before provision for income taxes			354,462						353,033						0.4		%				940,775						964,092						(2.4)		%
Provision for income taxes			64,709						67,007						(3.4)		%				180,209						162,295						11.0		%
Effective tax rate			18.3		%				19.0		%				(0.7)						19.2		%				16.8		%				2.4
Net earnings			289,753						286,026						1.3		%				760,566						801,797						(5.1)		%
Net earnings per common share - diluted			$	2.06					$	2.00					3.0		%				$	5.41					$	5.55					(2.5)		%

• nm - not meaningful

Revenue

Revenue for the three months ended September 30, 2023 decreased $5.0 million, or 0.2%, from the prior year comparable quarter. Organic revenue declined 2.4%, primarily due to lower revenue in our Pumps & Process Solutions, Imaging & Identification and Engineered Products segments. This decline was partially offset by a favorable impact from foreign currency translation of 1.2% and by acquisition-related revenue growth of 1.0%. Customer pricing favorably impacted revenue by approximately 3.4% in the third quarter of 2023 and by 7.6% in the prior year comparable quarter.

Revenue for the nine months ended September 30, 2023 decreased $36.5 million, or 0.6%, from the prior year comparable period. The decrease primarily reflects an organic revenue decline of 0.9% and an unfavorable impact from foreign currency translation of 0.6%. This decline was partially offset by acquisition-related revenue growth of 0.9%. Customer pricing favorably impacted revenue by approximately 4.3% for the nine months ended September 30, 2023, and by 6.7% in the prior year comparable period.

Gross Profit

Gross profit for the three months ended September 30, 2023 increased $20.3 million, or 2.6%, and gross profit margin increased 100 basis points to 36.8%, versus the prior year comparable quarter. Gross profit margin increased driven by benefits from pricing and productivity actions, partially offset by lower volumes across some of the Company's businesses.

Gross profit for the nine months ended September 30, 2023 increased $1.6 million, or 0.1%, and gross profit margin increased by 20 basis points to 36.3%, from the prior year comparable period. Gross profit margin increased driven by benefits from pricing, productivity and restructuring actions, partially offset by lower volumes across some of the Company's businesses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2023 increased $17.9 million, or 4.5%, from the prior year comparable quarter, primarily driven by increased employee compensation and benefits, transaction and integration costs and insurance costs, partially offset by lower contract labor costs. As a percentage of revenue, selling, general and administrative expenses increased 90 basis points as compared to the prior year comparable quarter to 19.5% driven by increased selling, general and administrative expenses and a decrease in revenue.

Selling, general and administrative expenses for the nine months ended September 30, 2023 increased $16.4 million, or 1.3%, from the prior year comparable period, primarily driven by increased restructuring, transaction and integration costs and deferred compensation, partially offset by lower contract labor costs. Selling, general and administrative expenses as a percentage of revenue increased 30 basis points as compared to the prior year comparable period to 20.3% driven by increased selling, general and administrative expenses and a decrease in revenue.

Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $38.2 million and $44.0 million for the three months ended September 30, 2023 and 2022, respectively, and $115.5 million and $123.3 million, for the nine months ended September 30, 2023 and 2022, respectively. These costs as a percentage of revenue were 1.8% and 2.0% for the three months ended September 30, 2023 and 2022, respectively, and 1.8% and 1.9% for the nine months ended September 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 nine months ended September 30, 2023 decreased $0.9 million and increased $2.9 million, respectively, from the prior year comparable periods driven by various immaterial items.

Income Taxes

The effective tax rates for the three months ended September 30, 2023 and 2022 were 18.3% and 19.0%, respectively. The decrease in the effective tax rate for the three months ended September 30, 2023 relative to the prior year comparable quarter was primarily due to favorable audit resolutions.

The effective tax rates for the nine months ended September 30, 2023 and 2022 were 19.2% and 16.8%, respectively. The increase in the effective tax rate for the nine months ended September 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.

The Company is monitoring the potential changes in tax laws resulting from the Organization for Economic Cooperation and Development’s multi-jurisdictional plan of action to address base erosion and profit shifting, which could impact our effective tax rate.

Net earnings

Net earnings for the three months ended September 30, 2023 increased 1.3% to $289.8 million, or $2.06 diluted earnings per share, from $286.0 million, or $2.00 diluted earnings per share, in the prior year comparable quarter. The increase in net earnings is mainly attributable to pricing and productivity actions and lower provision for income taxes, partially offset by an increase in selling, general and administrative expenses.

Net earnings for the nine months ended September 30, 2023 decreased 5.1% to $760.6 million, or $5.41 diluted earnings per share, from $801.8 million, or $5.55 diluted earnings per share, in the prior year comparable period. The decrease in net earnings is mainly attributable to higher income tax expense due to favorable audit resolutions in 2022, increased selling, general and administrative expenses and interest expense, driven by higher average interest rates compared to the prior year comparable period.

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 16 — 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 September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	504,271					$	516,501					(2.4)		%				$	1,475,507					$	1,518,584					(2.8)		%
Segment earnings						$	101,610					$	90,145					12.7		%				$	258,961					$	242,946					6.6		%
Segment margin						20.1 %						17.5 %												17.6%						16.0%
Operational metrics:
Bookings						$	576,641					$	512,374					12.5		%				$	1,602,244					$	1,506,077					6.4		%
Backlog																								$	841,722					$	742,766					13.3		%
Components of revenue decline:
Organic decline																		(3.0)		%																(2.5)		%
Foreign currency translation																		0.6		%																(0.3)		%
Total revenue decline																		(2.4)		%																(2.8)		%

Third Quarter 2023 Compared to the Third Quarter 2022

Engineered Products segment revenue for the third quarter of 2023 decreased $12.2 million, or 2.4%, as compared to the third quarter of 2022, comprised primarily of organic decline of 3.0% and a favorable impact from foreign currency translation of 0.6%. Customer pricing favorably impacted revenue in the third quarter of 2023 by approximately 2.6% and by 10.6% in the prior year comparable quarter.

The organic revenue decline was primarily due to soft market conditions in Asia and Europe and in our vehicle services businesses, where transient disruptions from a second quarter ERP upgrade reduced volumes but improved sequentially, partially offset by pricing initiatives, 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, and increased demand from key defense customers in our aerospace and defense business. We expect positive organic growth in the fourth quarter driven by our backlog position and strong order demand trends in several of our key end markets, most notably waste handling. Our expected growth in waste handling is dependent to a large extent on truck chassis availability from major third-party manufacturers and timing of receipt.

Engineered Products segment earnings increased $11.5 million, or 12.7%, compared to the third quarter of 2022. The increase was primarily driven by customer pricing actions, improved productivity, favorable business mix and a favorable impact from foreign currency translation, partially offset by lower volumes and higher labor costs. As a result, segment margin increased to 20.1% from 17.5% as compared to the prior year comparable quarter.

Bookings increased 12.5% for the segment, comprised of organic growth of 11.6% and a favorable impact from foreign currency translation of 0.9%. The organic bookings growth was driven by robust demand in our waste handling business as large waste haulers upgrade their vehicle fleets. Segment book-to-bill was 1.14, and backlog increased 13.3% compared to the prior year comparable period.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Engineered Products revenue for the nine months ended September 30, 2023 decreased $43.1 million, or 2.8%, compared to the prior year comparable period. This was comprised of organic revenue decline of 2.5% and an unfavorable impact from foreign currency translation of 0.3%. The organic revenue decline was due to soft market conditions and transient manufacturing and shipment disruptions in our vehicle services business caused by an ERP system upgrade, partially offset by strong growth in our waste handling business and customer pricing actions. Customer pricing favorably impacted revenue by approximately 2.9% in the nine months ended September 30, 2023, and by 10.6% in the prior year comparable period.

Segment earnings for the nine months ended September 30, 2023 increased $16.0 million, or 6.6%, as compared to the 2022 comparable period. The growth was primarily driven by customer pricing actions, improved plant productivity, strong discretionary cost management and a favorable impact from foreign currency translation, partially offset by lower volumes. Segment margin increased to 17.6% from 16.0% 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 September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	466,959					$	464,022					0.6		%				$	1,338,854					$	1,416,492					(5.5)		%
Segment earnings						$	92,483					$	90,208					2.5		%				$	249,704					$	262,204					(4.8)		%
Segment margin						19.8 %						19.4 %												18.7 %						18.5 %
Operational metrics:
Bookings						$	449,663					$	432,259					4.0		%				$	1,344,326					$	1,421,611					(5.4)		%
Backlog																								$	317,719					$	368,050					(13.7)		%
Components of revenue growth (decline):
Organic decline																		(0.2)		%																(4.1)		%
Foreign currency translation																		0.8		%																(1.4)		%
Total revenue growth (decline)																		0.6		%																(5.5)		%

Third Quarter 2023 Compared to the Third Quarter 2022

Clean Energy & Fueling segment revenue for the third quarter of 2023 increased $2.9 million, or 0.6%, as compared to the third quarter of 2022, comprised of a favorable impact from foreign currency translation of 0.8% and a modest organic decline of 0.2%. Customer pricing favorably impacted revenue in the third quarter of 2023 by approximately 4.0% and by 7.2% in the prior year comparable quarter.

The organic revenue decline was primarily due to reduced year-over-year demand in liquefied petroleum gas components, vehicle wash solutions and below ground retail fueling equipment as higher interest rates have impacted certain customers' ability to finance equipment purchases, and have also led to general reduction in our customer's inventory across our distribution channels. This headwind was mostly offset by increased demand in clean fuels (hydrogen and liquefied natural gas), recovery in above ground retail fueling equipment and in our fluid transfer solutions business, along with pricing actions aimed at mitigating material and logistics cost inflation. We expect the organic growth rate in the fourth quarter to remain consistent with the third quarter as we see positive growth in our fluid transfer solutions and above ground retail fueling equipment businesses, which we expect to generally offset continued headwinds in clean energy solutions, vehicle wash solutions and below ground retail fueling equipment.

Clean Energy & Fueling segment earnings increased $2.3 million, or 2.5%, over the prior year comparable quarter. The increase was primarily driven by pricing actions, productivity initiatives and the benefits from ongoing restructuring actions taken in our retail fueling business, partially offset by reduced volumes. 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 increased to 19.8% from 19.4% in the prior year comparable quarter driven by pricing actions, productivity initiatives and the benefits from ongoing restructuring actions.

Overall bookings increased 4.0% as compared to the prior year comparable quarter, driven by an organic growth of 3.5% and a favorable impact from foreign currency translation of 0.5%. The organic bookings growth was primarily driven by increased year over year demand in above ground retail fueling equipment. Segment book-to-bill was 0.96 and backlog decreased 13.7% as compared to the prior year comparable period.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Clean Energy & Fueling segment revenue decreased $77.6 million, or 5.5%, as compared to the nine months ended September 30, 2022, attributable to an organic decline of 4.1% and an unfavorable impact from foreign currency translation of 1.4%. Organic revenue was lower in the first nine months of the year compared with the prior year's comparable period, due to reduced year-over-year demand in above ground retail fueling equipment due to the expected roll-off of EMV-related demand impacting the first half of the year and general reduction in our customer's inventory across our distribution channels. This was partially offset by solid demand in clean fuels (hydrogen and liquefied natural gas) and fluid transfer solutions, along with pricing actions aimed at mitigating material and logistics cost inflation. Customer pricing favorably impacted revenue by approximately 4.4% in the nine months ended September 30, 2023, and by 5.2% in the prior year comparable period.

Clean Energy & Fueling segment earnings decreased $12.5 million, or 4.8%, for the nine months ended September 30, 2023. The decrease in earnings was due to reduced organic volumes and unfavorable impacts 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 increased to 18.7% from 18.5% 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 September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	276,179					$	282,371					(2.2)		%				$	831,202					$	830,577					0.1		%
Segment earnings						$	70,316					$	74,477					(5.6)		%				$	199,967					$	194,467					2.8		%
Segment margin						25.5 %						26.4 %												24.1 %						23.4 %
Operational metrics:
Bookings						$	271,113					$	281,789					(3.8)		%				$	823,917					$	881,029					(6.5)		%
Backlog																								$	217,824					$	241,896					(10.0)		%
Components of revenue (decline) growth:
Organic (decline) growth																		(3.6)		%																1.5		%
Foreign currency translation																		1.4		%																(1.4)		%
Total revenue (decline) growth																		(2.2)		%																0.1		%

Third Quarter 2023 Compared to the Third Quarter 2022

Imaging & Identification segment revenue for the third quarter of 2023 decreased $6.2 million, or 2.2%, as compared to the third quarter of 2022, comprised of an organic decline of 3.6%, partially offset by a favorable impact from foreign currency translation of 1.4%. Customer pricing favorably impacted revenue in the third quarter of 2023 by approximately 5.3% and by 4.4% in the prior year comparable quarter.

The organic revenue decline was primarily due to reduced demand in China, lower textile printer shipments caused by high energy prices and macro uncertainty in textile producing regions, and a comparable period in 2022 being favorably impacted by marking and coding equipment shipment timing. These headwinds were partially offset by growth in serialization software and marking and coding consumables and services. We expect organic growth rates to continue to be negatively impacted by market headwinds in the fourth quarter of the year.

Imaging & Identification segment earnings decreased $4.2 million, or 5.6%, over the prior year comparable quarter. This decrease was primarily due to reduced organic volumes, material and labor cost inflation, partially offset by pricing initiatives, productivity actions and a favorable impact from foreign currency translation. Segment margin decreased to 25.5% from 26.4% in the prior year comparable quarter.

Overall bookings decreased 3.8% as compared to the prior year comparable quarter, reflecting an organic decline of 5.4% and a favorable impact from foreign currency translation of 1.6%. The organic bookings decline was primarily due to reduced order intake in our marking and coding and digital textile printing businesses. Segment book-to-bill was 0.98, and backlog decreased 10.0% as compared to the prior year comparable period.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Imaging & Identification segment revenue increased $0.6 million, as compared to the nine months ended September 30, 2022, attributable to organic growth of 1.5%, offset by an unfavorable impact from foreign currency translation of 1.4%. The organic revenue growth was primarily pricing initiatives, partially offset by weaker demand in our digital textile printing business. Customer pricing favorably impacted revenue by approximately 6.0% in the nine months ended September 30, 2023, and by 3.2% in the prior year comparable period.

Imaging & Identification segment earnings increased $5.5 million, or 2.8%, for the nine months ended September 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 24.1% from 23.4% 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 September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	431,373					$	433,558					(0.5)		%				$	1,310,880					$	1,309,880					0.1		%
Segment earnings						$	117,907					$	128,573					(8.3)		%				$	362,488					$	413,238					(12.3)		%
Segment margin						27.3 %						29.7 %												27.7 %						31.5 %
Operational metrics:
Bookings						$	363,111					$	415,253					(12.6)		%				$	1,221,725					$	1,346,736					(9.3)		%
Backlog																								$	597,745					$	679,955					(12.1)		%
Components of revenue (decline) growth:
Organic decline																		(7.3)		%																(4.5)		%
Acquisitions																		4.7		%																4.5		%
Foreign currency translation																		2.1		%																0.1		%
Total revenue (decline) growth																		(0.5)		%																0.1		%

Third Quarter 2023 Compared to the Third Quarter 2022

Pumps & Process Solutions segment revenue for the third quarter of 2023 decreased $2.2 million, or 0.5%, as compared to the third quarter of 2022, due to organic decline of 7.3%, partially offset by acquisition-related growth of 4.7%,` and a favorable impact from foreign currency translation of 2.1%. Acquisition-related growth was driven by the acquisition of Witte Pumps & Technology GmbH in the fourth quarter of 2022. Customer pricing favorably impacted revenue in the third quarter of 2023 by approximately 3.6% and by 4.4% in the prior year comparable quarter.

The organic revenue decline was primarily due to reduced shipments for components used in COVID-19 vaccine production and biopharmaceutical manufacturers repurposing inventory toward production of non COVID-19 therapies, as well as project timing in polymer processing and customer inventory reductions in several markets. This was partially offset by continued demand strength in our bearings and compression and hygienic dosing businesses. We expect continued organic growth headwinds in the fourth quarter as conversion of strong backlogs in polymer processing equipment and continued solid demand in bearings and compression components are more than offset by significant demand headwinds in biopharmaceutical components and continued reduction in our customer's inventory in several markets.

Pumps & Process Solutions segment earnings decreased $10.7 million, or 8.3%, over the prior year comparable quarter. The decrease was primarily due to the impact of organic volume reductions, partially offset by pricing initiatives, productivity actions and restructuring benefits. Segment margin decreased to 27.3% from 29.7% from the prior year comparable quarter mainly due to impact of reduced volumes on fixed cost manufacturing base in biopharma. We are managing production at our operating plants to match demand.

Overall bookings decreased 12.6% as compared to the prior year comparable quarter due to an organic decline of 15.6%, partially offset by a favorable impact from foreign currency translation of 1.8%, as well as acquisition-related growth of 1.2%. The organic bookings decline was primarily due to order timing in our polymer processing equipment business, as well as reduced orders for biopharmaceutical components and core connectors. Segment book-to-bill was 0.84, and backlog decreased 12.1% compared to the prior year comparable period.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Pumps & Process Solutions segment revenue increased $1.0 million, as compared to the nine months ended September 30, 2022, attributable to acquisition-related growth of 4.5%, and a favorable impact from foreign currency translation of 0.1%, offset by organic decline of 4.5%. The organic decline was primarily due to 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, hygienic dosing systems, plastics and polymer processing solutions, and bearings and compression components. Customer pricing favorably impacted revenue by approximately 4.6% in the nine months ended September 30, 2023, and by 3.8% in the prior comparable period.

Pumps & Process Solutions segment earnings decreased $50.8 million, or 12.3%, for the nine months ended September 30, 2023 over the prior year comparable period. The decrease was primarily 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 27.7% from 31.5% 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 September 30,																		Nine Months Ended September 30,
(dollars in thousands)						2023						2022						% Change						2023						2022						% Change
Revenue						$	475,911					$	462,671					2.9		%				$	1,380,237					$	1,295,913					6.5		%
Segment earnings						$	84,060					$	75,190					11.8		%				$	233,912					$	192,980					21.2		%
Segment margin						17.7 %						16.3 %												16.9 %						14.9 %
Operational metrics:
Bookings						347,466						$	422,820					(17.8)		%				992,843						$	1,271,246					(21.9)		%
Backlog																								$	674,578					$	1,139,737					(40.8)		%
Components of revenue growth:
Organic growth																		1.8		%																7.0		%
Acquisitions																		0.1		%																—		%
Foreign currency translation																		1.0		%																(0.5)		%
Total revenue growth																		2.9		%																6.5		%

Third Quarter 2023 Compared to the Third Quarter 2022

Climate & Sustainability Technologies segment revenue increased $13.2 million, or 2.9%, as compared to the third quarter of 2022, reflecting organic revenue growth of 1.8%, a favorable impact from foreign currency translation of 1.0%, and acquisition-related growth of 0.1%. Customer pricing favorably impacted revenue in the third quarter of 2023 by approximately 2.4% and by 10.3% in the prior year comparable quarter.

The organic revenue growth was driven primarily by pricing initiatives and strong demand in certain key end markets, partially offset by impacts from economic slowdowns in China. Our heat exchanger business continues to experience growth as regulation-driven efforts to shift from fossil fuel to electric energy in Europe drive demand for heat pump applications, as well as strong U.S. commercial HVAC and industrial markets, partially offset by reduced demand in China. 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 increased from the prior year, primarily related to growth in integrated can-line installation projects. We expect organic revenue to decline in the fourth quarter due to moderating growth in heat exchangers and refrigerated door cases as well as project timing and reduced demand for beverage can-making equipment as large can-maker customers focus on optimizing recent large capacity expansions.

Climate & Sustainability Technologies segment earnings increased $8.9 million, or 11.8%, as compared to the third quarter of 2022. The segment earnings increase was driven by customer pricing actions and benefits from productivity initiatives, partially offset by higher labor costs. Segment margin increased to 17.7% from 16.3% in the prior year comparable quarter.

Bookings in the third quarter of 2023 decreased 17.8% from the prior year comparable quarter, reflecting organic decline of 18.9% partially offset by a favorable impact from foreign currency translation of 0.8% and acquisition-related growth of 0.3%. The organic bookings decline was principally due to moderating demand with key customers in beverage can-making equipment, normalization of lead times for heat exchangers and customer order timing returning to historical seasonal patterns in refrigeration. Segment book-to-bill for the third quarter of 2023 was 0.73. Backlog decreased 40.8% over the prior year comparable period, driven in large part by timing of projects and reduced demand from large customers in beverage can-making equipment.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Climate & Sustainability Technologies segment revenue increased $84.3 million, or 6.5%, compared to the nine months ended September 30, 2022, reflecting an organic revenue growth of 7.0%, partially offset by an unfavorable foreign currency translation of 0.5%. The organic revenue growth for the nine months ended September 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 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, fueled by regulation-driven heat pump demand in Europe and strengthening commercial HVAC and industrial markets in the U.S. Customer pricing favorably impacted revenue by approximately 4.4% in the nine months ended September 30, 2023, and by 9.7% in the prior comparable period.

Climate & Sustainability Technologies segment earnings increased $40.9 million, or 21.2%, for the nine months ended September 30, 2023, as compared to the prior year comparable period. Segment margin increased to 16.9% from 14.9% in the prior year comparable period. The earnings increase was driven by increased volumes, improved productivity, favorable business mix and customer pricing actions, partially offset by increased material costs.

Reconciliation of Segment Earnings to Net Earnings

			Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)			2023						2022						2023						2022
Net earnings:
Segment earnings:
Engineered Products			$	101,610					$	90,145					$	258,961					$	242,946
Clean Energy & Fueling			92,483						90,208						249,704						262,204
Imaging & Identification			70,316						74,477						199,967						194,467
Pumps & Process Solutions			117,907						128,573						362,488						413,238
Climate & Sustainability Technologies			84,060						75,190						233,912						192,980
Total segment earnings			466,376						458,593						1,305,032						1,305,835
Purchase accounting expenses (1)			40,320						40,526						123,199						140,831
Restructuring and other costs (2)			12,327						8,613						44,523						27,109
Loss on dispositions (3)			—						—						—						194
Corporate expense / other (4)			30,686						27,876						104,680						93,247
Interest expense			32,389						29,789						100,407						83,330
Interest income			(3,808)						(1,244)						(8,552)						(2,968)
Earnings before provision for income taxes			354,462						353,033						940,775						964,092
Provision for income taxes			64,709						67,007						180,209						162,295
Net earnings			$	289,753					$	286,026					$	760,566					$	801,797

(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 headcount 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 nine months ended September 30, 2023 included restructuring charges of $4.9 million and $33.8 million, respectively and other costs, net of $7.4 million and $10.7 million, respectively. Restructuring charges for the three months ended September 30, 2023 primarily related to headcount reductions and exit costs in the Pumps & Process Solutions, Engineered Products and Climate & Sustainability Technologies segments. Restructuring charges for the nine months ended September 30, 2023 primarily related to headcount reductions and exit costs in the Clean Energy & Fueling, Pumps & Process Solutions, Engineered Products and Climate & Sustainability Technologies segments. These restructuring programs were initiated in 2022 and 2023 and were undertaken in light of current market conditions. Other costs, net of $7.4 million and $10.7 million for the three and nine months ended September 30, 2023, were primarily due to an asset impairment in our Climate & Sustainability Technologies segment and product line rationalization and footprint reduction in our Clean Energy & Fueling segment. 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 for the three and nine months ended September 30, 2023:

			Three Months Ended September 30, 2023
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	1,472					$	(37)					$	233					$	1,637					$	1,138					$	476					$	4,919
Other costs, net			249						1,182						328						113						3,939						1,597						7,408
Restructuring and other costs			$	1,721					$	1,145					$	561					$	1,750					$	5,077					$	2,073					$	12,327

			Nine Months Ended September 30, 2023
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	5,949					$	15,954					$	1,437					$	6,266					$	2,585					$	1,603					$	33,794
Other costs, net			283						3,141						824						110						4,642						1,729						10,729
Restructuring and other costs			$	6,232					$	19,095					$	2,261					$	6,376					$	7,227					$	3,332					$	44,523

Restructuring and other costs of $8.6 million and $27.1 million for the three and nine months ended September 30, 2022 were primarily due to headcount reductions and facility consolidations resulting from restructuring programs initiated in 2021 and 2022. Additionally, restructuring and other costs for the nine months ended September 30, 2022 includes non-cash foreign currency translation losses and asset write-downs due to the substantial liquidation and exit from certain Latin America countries in our Climate & Sustainability Technologies segment. 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 for the three and nine months ended September 30, 2022:

			Three Months Ended September 30, 2022
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	2,027					$	3,063					$	516					$	552					$	(85)					$	1,242					$	7,315
Other costs (benefits), net			536						36						347						16						373						(10)						1,298
Restructuring and other costs			$	2,563					$	3,099					$	863					$	568					$	288					$	1,232					$	8,613

			Nine Months Ended September 30, 2022
(dollars in thousands)			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Corporate						Total
Restructuring			$	3,008					$	4,682					$	2,051					$	2,713					$	5,790					$	1,537					$	19,781
Other costs, net			2,965						35						1,496						18						2,597						217						7,328
Restructuring and other costs			$	5,973					$	4,717					$	3,547					$	2,731					$	8,387					$	1,754					$	27,109

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 September 30,												Nine Months Ended September 30,
(dollars in thousands)			2023						2022						2023						2022
Purchase accounting expenses
Engineered Products			$	4,805					$	5,101					$	15,600					$	15,509
Clean Energy & Fueling 1			19,775						19,416						58,882						77,641
Imaging & Identification			5,803						5,429						17,354						16,730
Pumps & Process Solutions			5,111						5,762						16,888						16,450
Climate & Sustainability Technologies			4,826						4,818						14,475						14,501
Total			$	40,320					$	40,526					$	123,199					$	140,831
1 Purchase accounting expenses in our Clean Energy & Fueling segment decreased by $18,759 for the nine months ended September 30, 2023 from the prior year comparable period, which included $18,995 of charges related to fair value step-ups for inventory from the Q4 2021 acquisition of RegO and Acme Cryogenics.

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:

			Nine Months Ended September 30,
Cash Flows from Operations (in thousands)			2023						2022
Net cash flows provided by (used in):
Operating activities			$	819,995					$	467,081
Investing activities			(136,253)						(402,061)
Financing activities			(757,205)						(133,579)

Operating Activities

Cash flow from operating activities for the nine months ended September 30, 2023 increased by $352.9 million compared to September 30, 2022. This increase was primarily driven by improvements in the cash flows related to working capital.

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)						September 30, 2023						December 31, 2022
Accounts receivable						$	1,548,675					$	1,516,871
Inventories						1,279,781						1,366,608
Less: Accounts payable						970,671						1,068,144
Adjusted working capital						$	1,857,785					$	1,815,335

Adjusted working capital increased by $42.5 million, or 2.3%, in the nine months ended September 30, 2023, which reflected an increase of $31.8 million in accounts receivable, a decrease of $86.8 million in inventory and a decrease in accounts payable of $97.5 million. The decrease in inventories is due to reduced purchasing of inventories as supply chains have normalized. 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. For the nine months ended September 30, 2023 and 2022, we used cash in investing activities of $136.3 million and $402.1 million, respectively, primarily driven by the following factors:

• Acquisitions: During the nine months ended September 30, 2023, we deployed approximately $7.2 million, net, to acquire Arc Pacific group within the Climate & Sustainability Technologies segment. In comparison, during the nine months ended September 30, 2022, we acquired AMN and Malema within the Pumps & Process Solutions segment for an aggregate of $229.3 million, net.

• Capital spending: Our capital expenditures decreased $34.5 million during the nine months ended September 30, 2023 compared to the nine months ended September 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, including prepayment under an accelerated share repurchase program: During the nine months ended September 30, 2023, we repurchased no shares. During the nine months ended September 30, 2022, we used $85.0 million to repurchase 641,428 shares and $500.0 million to repurchase a variable number of shares through an accelerated share repurchase transaction.

*•*Commercial paper and other short-term borrowings, net: During the nine months ended September 30, 2023, we used $528.8 million to pay off commercial paper borrowings. During the nine months ended September 30, 2022, we received net proceeds of $682.9 million from commercial paper and other short-term borrowings, primarily used to fund our accelerated share repurchase transaction and acquisition of Malema.

• Dividend payments: Total dividend payments to common shareholders were $212.9 million during the nine months ended September 30, 2023, as compared to $216.6 million during the same period in 2022. Our dividends paid per common share increased 1.0% to $1.52 during the nine months ended September 30, 2023 compared to $1.505 during the same period in 2022.

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:

			Nine Months Ended September 30,
Free Cash Flow (dollars in thousands)			2023						2022
Cash flow provided by operating activities			$	819,995					$	467,081
Less: Capital expenditures			(131,582)						(166,039)
Free cash flow			$	688,413					$	301,042
Cash flow from operating activities as a percentage of revenue			12.9		%				7.3		%
Cash flow from operating activities as a percentage of net earnings			107.8		%				58.3		%
Free cash flow as a percentage of revenue			10.9		%				4.7		%
Free cash flow as a percentage of net earnings			90.5		%				37.5		%

For the nine months ended September 30, 2023, we generated free cash flow of $688.4 million, representing 10.9% of revenue and 90.5% of net earnings. Free cash flow for the nine months ended September 30, 2023 increased $387.4 million, compared to September 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 September 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 second quarter of 2023, 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 September 30, 2023 and had an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of 13.8 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 September 30, 2023, our cash and cash equivalents totaled $283.8 million, of which approximately $255.7 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.

On September 29, 2023, the Company entered into a definitive agreement to acquire the business of FW Murphy for approximately $530.0 million, subject to customary post-closing adjustments. This transaction is expected to close in the fourth quarter of 2023. See Note 3 — Acquisitions in the condensed consolidated financial statements in Item 1 of this Form 10-Q for further details.

On October 11, 2023, the Company entered into a definitive agreement to sell De-Sta-Co business for approximately $680.0 million enterprise value, net of estimated selling costs and subject to customary post-closing adjustments. This transaction is expected to close in the first half of 2024. See Note 4 — Dispositions in the condensed consolidated financial statements in Item 1 of this Form 10-Q for further details.

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, including cash held for sale. 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)						September 30, 2023						December 31, 2022
Commercial paper						$	206,300					$	734,936
Other						656						836
Total short-term borrowings						$	206,956					$	735,772
Long-term debt						2,944,747						2,942,513
Total debt						3,151,703						3,678,285
Less: Cash and cash equivalents, including cash held for sale						(301,098)						(380,868)
Net debt						2,850,605						3,297,417
Add: Stockholders' equity						4,832,500						4,286,366
Net capitalization						$	7,683,105					$	7,583,783
Net debt to net capitalization						37.1		%				43.5		%

Our net debt to net capitalization ratio decreased to 37.1% at September 30, 2023 compared to 43.5% at December 31, 2022. Net debt decreased $446.8 million during the period primarily due to a decrease in commercial paper borrowings, partially offset by lower cash and cash equivalents, including cash held for sale. Stockholders' equity increased for the period as a result of current earnings of $760.6 million, partially offset by $212.9 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 19 — 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 19 — 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.