Annual report [Section 13 and 15(d), not S-K Item 405]

Segment Reporting

v3.25.0.1
Segment Reporting
 12 Months Ended
Dec. 28, 2024
Segment Reporting [Abstract]  
SEGMENT REPORTING

16. SEGMENT REPORTING

The Company has two reportable segments: Hydraulics and Electronics. These segments are organized primarily based on the similar nature of products offered for sale, the types of customers served and the methods of distribution and are consistent with how the segments are managed, how resources are allocated and how information is used by the chief operating decision maker. Our Chief Executive Officer (CEO) serves as our Chief Operating Decision Maker (CODM) and is responsible for reviewing segment performance and making decisions regarding resource allocation. Our CODM evaluates each segment’s performance based on metrics such as net sales, segment gross profit and operating income, and other key financial indicators presented in the tables below in this section, as well as guides strategic decisions to align with company-wide goals. On a monthly basis, the CODM considers budget-to-actual variances for key measures when making decisions about allocating capital to the segments.

The Hydraulics segment designs and manufactures hydraulic components and systems used to transmit power and control force, speed and motion. There are two categories based on Hydraulic system architecture: MCT and FCT. MCT includes components used to control the flow and pressure of fluids in a system including valves, pumps, actuators, sensors, and filters. FCT includes components used to convey fluids and fluid power through a system and are designed to grant maximum flexibility of design and reliability. MCT includes manifold and cartridge valve technology and FCT includes quick release coupling solutions. CVT products provide functions important to a hydraulic system: to control rates and direction of fluid flow and to regulate and control pressures. QRC products allow users to connect and disconnect quickly from any hydraulic circuit without leakage and ensures high-performance under high temperature and pressure using one or multiple couplers. Engineered solutions that incorporate CVT and QRC technologies are also provided to machine users, manufacturers or designers to fulfill complete system design requirements including electro-hydraulic, remote control, electronic control and programmable logic controller systems.

The Electronics segment provides complete, fully-tailored display and control solutions for engines, engine-driven equipment, specialty vehicles, therapy baths and traditional and swim spas. This broad range of products is complemented by extensive application expertise and unparalleled depth of software, embedded programming, hardware and sustaining engineering teams. Product categories include traditional mechanical and electronic gauge instrumentation, plug and go CAN-based instruments, robust environmentally sealed controllers, pumps and jets, hydraulic controllers, engineered panels, process monitoring instrumentation, proprietary hardware and software, printed circuit board assemblies and wiring harnesses. Support services include design and manufacturing and after-market support through global distribution.

The Company evaluates performance and allocates resources based primarily on segment operating income. Certain costs were not allocated to the business segments as they are not used in evaluating the results of, or in allocating resources to the Company’s segments. These costs are presented in the Corporate and other line item. For the year ended December 28, 2024, these unallocated costs totaled $34.2 and include certain corporate costs not deemed to be allocable to either business segment of $2.0, amortization of acquisition-related intangible assets of $31.5 and other acquisition and integration related costs of $0.7. The accounting policies of the Company’s operating segments are the same as those used to prepare the accompanying Consolidated Financial Statements.

Net sales and operating profit of our business segments exclude intersegment sales, cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment.

Beginning in our 2024 annual reporting, we adopted ASU 2023-07 retrospectively. The following tables set forth our segment information of revenue, significant segment expenses, and operating income from operations for the last three years:

 

 

 

At and for the Year Ended December 28, 2024

 

 

 

Hydraulics

 

 

Electronics

 

 

Unallocated expenses

 

 

Total

 

Net sales from external customers

 

$

537.2

 

 

$

268.7

 

 

$

-

 

 

$

805.9

 

Reportable segment total cost of sales

 

 

371.4

 

 

 

182.2

 

 

 

-

 

 

 

553.6

 

Reportable segment gross profit

 

$

165.8

 

 

$

86.5

 

 

$

-

 

 

$

252.3

 

Selling, engineering and administrative expenses (a)

 

$

59.2

 

 

$

39.1

 

 

$

-

 

 

$

98.3

 

Research and development (b)

 

 

8.1

 

 

 

12.0

 

 

 

-

 

 

 

20.1

 

Indirect expenses (c)

 

 

12.1

 

 

 

5.8

 

 

 

2.7

 

 

 

20.6

 

Amortization of intangible assets (d)

 

 

-

 

 

 

-

 

 

 

31.5

 

 

 

31.5

 

Operating income

 

$

86.4

 

 

$

29.6

 

 

$

(34.2

)

 

$

81.8

 

(a) Selling, engineering, and administrative expenses primarily include selling, general, and administrative costs, information technology, professional services, and facility-related expenses directly incurred by the segments.

(b) Research and development primarily includes engineering-related costs to create new products and to make improvements to products currently in use.

(c) Indirect expenses represent corporate costs and shared expenses allocated to businesses.

(d) Amortization of intangible assets includes those resulting from the acquisition of new businesses.

 

 

 

At and for the Year Ended December 30, 2023

 

 

 

Hydraulics

 

 

Electronics

 

 

Unallocated expenses

 

 

Total

 

Net sales from external customers

 

$

565.8

 

 

$

269.8

 

 

$

-

 

 

$

835.6

 

Reportable segment total cost of sales

 

 

384.0

 

 

 

189.9

 

 

 

-

 

 

 

573.9

 

Reportable segment gross profit

 

$

181.8

 

 

$

79.9

 

 

$

-

 

 

$

261.7

 

Selling, engineering and administrative expenses (a)

 

$

63.5

 

 

$

36.4

 

 

$

-

 

 

$

99.9

 

Research and development (b)

 

 

8.7

 

 

 

10.3

 

 

 

-

 

 

 

19.0

 

Indirect expenses (c)

 

 

16.3

 

 

 

8.5

 

 

 

5.2

 

 

 

30.0

 

Amortization of intangible assets (d)

 

 

-

 

 

 

-

 

 

 

32.9

 

 

 

32.9

 

Operating income

 

$

93.3

 

 

$

24.7

 

 

$

(38.1

)

 

$

79.9

 

(a) Selling, engineering, and administrative expenses primarily include selling, general, and administrative costs, information technology, professional services, and facility-related expenses directly incurred by the segments.

(b) Research and development primarily includes engineering-related costs to create new products and to make improvements to products currently in use.

(c) Indirect expenses represent corporate costs and shared expenses allocated to businesses.

(d) Amortization of intangible assets includes those resulting from the acquisition of new businesses.

 

 

 

At and for the Year Ended December 31, 2022

 

 

 

Hydraulics

 

 

Electronics

 

 

Unallocated expenses

 

 

Total

 

Net sales from external customers

 

$

551.3

 

 

$

334.1

 

 

$

-

 

 

$

885.4

 

Reportable segment total cost of sales

 

 

355.8

 

 

 

231.1

 

 

 

-

 

 

 

586.9

 

Reportable segment gross profit

 

$

195.5

 

 

$

103.0

 

 

$

-

 

 

$

298.5

 

Selling, engineering and administrative expenses (a)

 

$

53.9

 

 

$

34.0

 

 

$

-

 

 

$

87.9

 

Research and development (b)

 

 

8.4

 

 

 

9.0

 

 

 

-

 

 

 

17.4

 

Indirect expenses (c)

 

 

10.5

 

 

 

7.5

 

 

 

9.8

 

 

 

27.8

 

Amortization of intangible assets (d)

 

 

-

 

 

 

-

 

 

 

28.1

 

 

 

28.1

 

Operating income

 

$

122.7

 

 

$

52.5

 

 

$

(37.9

)

 

$

137.3

 

(a) Selling, engineering, and administrative expenses primarily include selling, general, and administrative costs, information technology, professional services, and facility-related expenses directly incurred by the segments.

(b) Research and development primarily includes engineering-related costs to create new products and to make improvements to products currently in use.

(c) Indirect expenses represent corporate costs and shared expenses allocated to businesses.

(d) Amortization of intangible assets includes those resulting from the acquisition of new businesses.

 

 

 

For the year ended

 

 

 

December 28, 2024

 

 

December 30, 2023

 

 

December 31, 2022

 

Capital expenditures

 

 

 

 

 

 

 

 

 

Hydraulics

 

$

19.2

 

 

$

25.7

 

 

$

21.5

 

Electronics

 

 

7.8

 

 

 

8.6

 

 

 

10.4

 

Total

 

$

27.0

 

 

$

34.3

 

 

$

31.9

 

Goodwill

 

 

 

 

 

 

 

 

 

Hydraulics

 

$

287.1

 

 

$

302.1

 

 

$

282.5

 

Electronics

 

 

211.8

 

 

 

211.9

 

 

 

186.0

 

Total

 

$

498.9

 

 

$

514.0

 

 

$

468.5

 

Total assets

 

 

 

 

 

 

 

 

 

Hydraulics

 

$

926.6

 

 

$

976.6

 

 

$

874.8

 

Electronics

 

 

572.4

 

 

 

600.0

 

 

 

567.1

 

Corporate and Other

 

 

6.4

 

 

 

13.8

 

 

 

21.8

 

Total

 

$

1,505.4

 

 

$

1,590.4

 

 

$

1,463.7

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

Hydraulics

 

$

22.8

 

 

$

22.0

 

 

$

15.9

 

Electronics

 

 

9.1

 

 

 

8.6

 

 

 

7.4

 

Corporate and Other

 

 

31.9

 

 

 

33.2

 

 

 

28.3

 

Total

 

$

63.8

 

 

$

63.8

 

 

$

51.6

 

Geographic Region Information:

Net sales are measured based on the geographic destination of sales. In 2024, sales to the U.S. represented approximately 47% of total net sales. Other countries with net sales concentration included China, 9%, Australia, 8%, and Germany, 6%, approximately. All other countries individually represented less than 5% of total net sales. Tangible long-lived assets are shown based on the physical location of the assets and primarily include net property, plant and equipment and exclude ROU assets. The following table presents financial information by region:

 

 

2024

 

 

2023

 

 

2022

 

Net sales

 

 

 

 

 

 

 

 

 

Americas

 

$

435.0

 

 

$

460.9

 

 

$

470.4

 

EMEA

 

 

183.8

 

 

 

202.8

 

 

 

223.6

 

APAC

 

 

187.1

 

 

 

171.9

 

 

 

191.4

 

Total

 

$

805.9

 

 

$

835.6

 

 

$

885.4

 

 

 

 

 

 

 

 

 

 

 

Tangible long-lived assets

 

 

 

 

 

 

 

 

 

Americas

 

$

139.1

 

 

$

145.6

 

 

 

 

EMEA

 

 

36.5

 

 

 

37.1

 

 

 

 

APAC

 

 

17.9

 

 

 

19.4

 

 

 

 

Total

 

$

193.5

 

 

$

202.1