Government Assistance

12 Months Ended

Dec. 31, 2024

Government Assistance [Abstract]

Government Assistance

Note 24 - Government Assistance

From time to time, the Company receives government assistance in the form of grants and other incentives from various governments to support capital projects and other business development. The amounts received are typically based on the amount of qualifying capital expenditures or business development costs in the countries providing the government assistance. The Company typically has to meet certain requirements, such as adding or maintaining a specified number of qualifying positions, to retain the government assistance or the funds can be clawed back by the government. Once the Company determines that it will meet the requirements of the government assistance, the funds are recognized over the life of the related assets or as the costs are incurred. For amounts that are expected to be paid back, the Company recognizes applicable interest expense.

As of December 31, 2024 and December 31, 2023, the Company has recorded $1.5 million and $1.6 million, respectively, of government assistance in other current liabilities and $42.2 million and $36.0 million, respectively, in other non-current liabilities. In addition, as of December 31, 2024, the Company has cumulatively recorded $7.9 million of government assistance as a reduction to cost of products sold and $0.2 million as a reduction to SG&A. The Company has also cumulatively recognized interest expense of $2.1 million related to the expected shortfall of incentive obligations. The following paragraphs discuss the Company's most significant government assistance programs.

In December 2023, the Company reached a definitized technology investment agreement with the United States Government for the purposes of enhancing and expanding the industrial base for high performance, precision ball bearings. Title to assets purchased under this agreement vest with the Government throughout the agreement. The Government may elect to transfer all, or some, of the assets purchased to the Company at the end of the agreement, provided the Company's performance is satisfactory and in compliance with the terms of the agreement. As of December 31, 2024, the company is accounting for $7.2 million of awards received as other non-current liabilities. The awards will be amortized over the useful life of the assets purchased as a reduction to cost of products sold. As of December 31, 2024, amortization is less than $0.1 million.

In 2022, the Company acquired Spinea, s.r.o. ("Spinea"). Prior to the acquisition, Spinea received incentives totaling $18.0 million from the Slovakian government to invest in a new production facility and related machinery and equipment. As a result, Spinea was required to create 450 new jobs. If Spinea is unable to meet these commitments, all or a portion of the incentive could be recaptured with interest by October 2027. The Company is currently accounting for a potential shortfall of $16.6 million, including interest. The remaining amount is being amortized over the period the costs are being incurred. Cumulatively as of December 31, 2024, the Company recorded amortization expense of $3.3 million as a reduction to cost of products sold. In addition, the Company recorded total interest expense of $1.2 million due to the possibility of having to pay a portion of the incentive back.

In 2017 and 2018, the Company received grants from the Romanian Government for the reimbursement of capital investments for its new production facility, totaling $16.5 million. While the original grants were based on capital investments, the Company needs to pay various taxes, including corporate income tax, payroll taxes and building tax, totaling $16.6 million between 2019 and 2024. If the total tax obligation is not met, any shortfall could result in a recapture of the grant with interest as early as December 2024. The Company is currently accounting for a potential shortfall of $8.4 million, including interest. The incentive is being amortized over the useful life of the assets. Cumulatively as of December 31, 2024, the Company recorded amortization expense of $2.0 million as a reduction to cost of products sold. In addition, the Company recorded total interest expense of $0.9 million due to the expectation of having to pay a portion of the grant back.

The Company may have received other government assistance that is not described above; however, the total amount of the government assistance is immaterial to the Company’s Consolidated Financial Statements.