Segments, Concentrations and Geographic Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segments, Concentrations and Geographic Information

15. Segments, Concentrations and Geographic Information

Segments

The internal reporting structure used by our Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for our reportable operating segments. Our CODM is our Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of income from operations. Our operations are organized in two reporting segments that are aligned with key product types and end markets served, Power Transmission Technologies (“PTT”) and Automation & Specialty (“A&S”):

•Power Transmission Technologies - PTT. This segment included the following key product offerings as of September 30, 2022:

oCouplings, Clutches & Brakes. Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Clutches in this segment are devices that use mechanical, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery. Products in this segment are generally used in heavy industrial applications and energy markets.

oElectromagnetic Clutches & Brakes. Products in this segment include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections. Products in this segment are used in industrial and commercial markets including agricultural machinery, material handling, motion control, and turf & garden.

oGearing. Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. Gears produced by the Company are primarily utilized in industrial applications.

•Automation & Specialty – A&S. This segment included the following key brands as of September 30, 2022:

oKollmorgen: Provides rotary precision motion solutions, including servo motors, stepper motors, high performance electronic drives and motion controllers and related software, and precision linear actuators. These products are used in advanced material handling, aerospace and defense, factory automation, medical, packaging, printing, semiconductor, robotic and other applications.

oPortescap: Provides high-efficiency miniature motors and motion control products, including brush and brushless DC motors, can stack motors and disc magnet motors. These products are used in medical, industrial power tool and general industrial equipment applications.

oThomson: Provides systems that enable and support the transition of rotary motion to linear motion. Products include linear bearings, guides, glides, lead and ball screws, industrial linear actuators, clutch brakes, precision gears, resolvers and inductors. These products are used in factory automation, medical, mobile off-highway, material handling, food processing and other niche applications.

Segment financial information and a reconciliation of segment results to unaudited condensed consolidated results are as follows:

	Quarter Ended						Year to Date Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net Sales:
Power Transmission Technologies	$	239.3		$	232.5		$	745.5		$	691.1
Automation & Specialty		228.6			237.8			735.1			741.9
Inter-segment eliminations		(1.6	)		(1.0	)		(4.5	)		(3.0	)
Net sales	$	466.3		$	469.3		$	1,476.1		$	1,430.0
Income from operations:
Segment earnings:
Power Transmission Technologies (1)	$	34.3		$	36.5		$	104.1		$	97.9
Automation & Specialty (2)		33.5			30.6			101.2			109.4
Corporate expenses (3)		(5.4	)		(4.6	)		(10.7	)		(12.5	)
Restructuring costs		(3.9	)		(0.7	)		(4.8	)		(2.4	)
Income from operations	$	58.5		$	61.8		$	189.8		$	192.4
Other non-operating expense:
Net interest expense		13.7			16.1			36.8			49.5
Other non-operating (income) expense, net		(0.7	)		0.1			(2.7	)		(3.1	)
Total non-operating expense	$	13.0		$	16.2		$	34.1		$	46.4
Income before income taxes		45.5			45.6			155.7			146.0
Provision for income taxes		11.9			10.2			51.0			30.6
Net income	$	33.6		$	35.4		$	104.7		$	115.4

(1)The Company recorded a non-cash impairment charge of $3.0 million related to a building expected to be sold upon the closing of its facility in Dessau, Germany during the quarter ended September 30, 2022. The asset held for sale is part of “Prepaid expenses and Other current assets” in the consolidated balance sheet.

(2)The Company recorded a non-cash impairment charge of $8.3 million at the JVS reporting unit during the year to date period ended September 30, 2022 related to the held for sale classification.

(3)Certain expenses are maintained at the corporate level and are not allocated to the segments. These include various administrative expenses related to the corporate headquarters, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

Selected information by segment (continued):

	Quarter Ended				Year to Date Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Depreciation and amortization:
Power Transmission Technologies	$	6.8	$	7.8	$	21.3	$	23.8
Automation & Specialty		15.7		22.2		47.9		66.5
Corporate		0.6		0.6		1.8		2.0
Total depreciation and amortization	$	23.1	$	30.6	$	71.0	$	92.3
	September 30, 2022		September 30, 2021
Total assets:
Power Transmission Technologies	$	1,039.2	$	1,064.3
Automation & Specialty		2,462.7		2,962.8
Corporate (4)		116.0		134.1
Total assets	$	3,617.9	$	4,161.2

(4)Corporate assets are primarily cash and cash equivalents, tax related asset accounts, certain capitalized software costs, property, plant and equipment and deferred financing costs.

Net sales to third parties by geographic region are as follows:

	Net Sales
	Quarter Ended				Year to Date Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
North America (primarily U.S.)	$	277.7	$	256.1	$	849.8	$	758.6
Europe excluding Germany		75.4		83.9		262.0		259.1
Germany		51.0		50.0		162.5		151.5
China		33.0		48.8		114.2		176.9
Asia and other excluding China		29.2		30.5		87.6		83.9
Total	$	466.3	$	469.3	$	1,476.1	$	1,430.0

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates. Amounts attributed to the geographic regions for property, plant and equipment are based on the location of the entity, which holds such assets.