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What changed in Sensata Technologies Holding plc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sensata Technologies Holding plc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+409 added−434 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in Sensata Technologies Holding plc's 2024 10-K

409 paragraphs added · 434 removed · 321 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

90 edited+14 added−46 removed45 unchanged
Biggest changeProduct Categories The following table presents the significant product categories offered by Sensing Solutions and the corresponding key products, solutions, applications, systems, and end markets: Key Products/Solutions Key Applications/Systems Key End Markets Product category: Electrical protection Bimetal electromechanical controls Circuit breakers High-voltage contactors/fuses Battery management systems Energy storage systems Switches and relays Motors, compressors, pumps Home appliances Lighting Commercial and military aircraft Industrial Data and telecom equipment Medical equipment Recreational vehicles Aerospace and defense Industrial Appliance and HVAC Medical Energy/solar Product category: Sensors Position sensors Pressure sensors Temperature sensors Gas leak detection sensors Motors, compressors, pumps Hydraulic machinery Motion control systems Commercial and military aircraft Motor/platform controllers Operator controls Aerospace and defense Industrial automation Appliance and HVAC Energy Product category: Other Inverters Brushless DC motors Current sensors Rectifiers and frequency converters Power conversion systems Recreational vehicles Grid harmonics and power delivery Mobile power Renewable power generation Energy storage Aerospace and defense The table below sets forth the amount of net revenue generated by our sensors and electrical protection product categories in Sensing Solutions, reconciled to total segment net revenue, for the years ended December 31, 2023, 2022, and 2021: For the year ended December 31, (In thousands) 2023 2022 2021 Net revenue: Electrical protection $ 557,313 $ 625,316 $ 593,259 Sensors (1) 308,333 315,638 277,046 Other 185,709 167,915 149,275 Sensing Solutions net revenue (1) $ 1,051,355 $ 1,108,869 $ 1,019,580 _________________________ (1) In the year ended December 31, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting.
Biggest changeChina remains a priority for us in light of the rapid growth and pace of innovation in that end market. 9 Table of Contents Product Categories The following table presents the significant product categories offered by Sensing Solutions and the corresponding key products, solutions, applications, systems, and end markets: Key Products/Solutions Key Applications/Systems Key End Markets Product category: Electrical protection Bimetal electromechanical controls Circuit breakers High-voltage contactors/fuses Battery management systems Energy storage systems Switches and relays Motors, compressors, pumps Home appliances Lighting Commercial and military aircraft Industrial Data and telecom equipment Medical equipment Recreational vehicles Aerospace and defense Industrial HVAC Medical Energy/solar Product category: Sensors Position sensors Pressure sensors Temperature sensors Gas leak detection sensors Motors, compressors, pumps Hydraulic machinery Motion control systems Commercial and military aircraft Motor/platform controllers Radar solutions Operator controls Aerospace and defense Industrial automation HVAC Energy HVOR Aftermarket Product category: Other Power conversion systems Rectifiers and frequency converters Brushless DC motors Current sensors Grid harmonics and power delivery Renewable power generation Energy storage Aerospace and defense Competitors Within each of the principal product categories in Sensing Solutions, we compete with divisions of large multinational industrial corporations and companies with smaller market share that compete primarily in specific markets, applications, systems, or products.
We are a leading provider of high-voltage electrical protection on EVs and charging infrastructure and we also seek to be the partner of choice for HVOR, industrial, and aerospace OEMs transitioning to electrified solutions. We are directly enabling direct current ("DC") fast charging through high-voltage components.
We are a leading provider of high-voltage electrical protection components on EVs and charging infrastructure and we also seek to be the partner of choice for HVOR, industrial, and aerospace OEMs transitioning to electrified solutions. We are directly enabling direct current ("DC") fast charging through high-voltage components.
As electrified transportation platforms continue to evolve and grow, we expect OEM and Tier 1 suppliers to continue to require sensing partners that can continue to meet their increasing needs for mission-critical sensors and solutions, enabling their global vehicle strategies.
As electrified transportation platforms continue to evolve and grow, we expect OEM and Tier 1 suppliers to continue to require sensing partners that can meet their increasing needs for mission-critical sensors and solutions, enabling their global vehicle strategies.
We continually develop our technologies to meet an evolving set of customer requirements and new product introductions. We conduct such activities in areas we believe will increase our long-term revenue growth. Our development expense is typically associated with engineering core technology platforms to specific applications and engineering major upgrades that improve functionality or reduce the cost of existing products.
We continually develop our technologies to meet an evolving set of customer requirements and new product introductions. We conduct such activities in areas we believe will increase our long-term revenue growth. Our development expense is typically associated with engineering core technology platforms for specific applications and engineering major upgrades that improve functionality or reduce the cost of existing products.
This has allowed us to build trust through various market cycles and through periods of significant change and disruption. We believe large OEMs and other multinational companies are increasingly demanding a global presence to supply sensors and electrical protection components for their key platforms worldwide.
This has allowed us to build trust through various market cycles and through periods of significant change and disruption. We believe large OEMs and other multinational companies are increasingly demanding a global presence to supply sensors and electrical protection components for their key platforms.
Our products and solutions are being used by our customers in applications to address the Safe & Efficient demands, including those that help transportation customers to meet the standards of emissions and pollution-control legislation and industrial customers to introduce new energy-efficient and environmentally friendly motors, compressors, and HVAC systems.
Our products and solutions are being used by our customers in applications to address the Safe, Clean, & Efficient demands, including those that help transportation customers to meet the standards of emissions and pollution-control legislation and industrial customers to introduce new energy-efficient and environmentally friendly motors, compressors, and HVAC systems.
On an annual basis, we conduct a leadership review process with our chief executive officer, chief administrative officer, and business and functional leaders to identify key talent for additional development opportunities. This helps ensure optimal use of the talent for the benefit of both the employee and Sensata.
On an annual basis, we conduct a leadership review process with our chief executive officer, chief administrative officer, and business and functional leaders to identify key talent for additional development opportunities and programs. This helps ensure optimal use of the talent for the benefit of both the employee and Sensata.
Within the combustion and electrified propulsion architecture, we provide various sensor solutions (e.g., electric motor position, gasoline direct injection, oil pressure monitoring, fuel delivery, and various others) that enable superior functionality, efficiency, and optimized performance while reducing environmental impact.
Within the combustion and electrified propulsion architecture, we provide various sensor solutions (e.g., electric motor position, gasoline direct injection, oil pressure monitoring, and fuel delivery) that enable superior functionality, efficiency, and optimized performance while reducing environmental impact.
On September 26, 2023, our Board of Directors authorized a new $500.0 million ordinary share repurchase program (the “September 2023 Program”), which replaced the $500.0 million ordinary share repurchase program authorized in January 2022 (the "January 2022 Program"), effective on October 1, 2023.
In September 2023, our Board of Directors authorized a new $500.0 million ordinary share repurchase program (the “September 2023 Program”), which replaced the $500.0 million ordinary share repurchase program authorized in January 2022 (the "January 2022 Program"), effective on October 1, 2023.
Within the Sensing Solutions reportable segment, our customers include a wide range of industrial and commercial manufacturers and suppliers across multiple end markets, primarily OEMs in the climate control, appliance, medical, energy and charging infrastructure, data/telecom, aerospace and defense industries, as well as systems integrators and aerospace and motor and compressor distributors.
Within the Sensing Solutions reportable segment, our customers include a wide range of industrial and commercial manufacturers and suppliers across multiple end markets, primarily OEMs in the climate control, appliance, medical, energy and charging infrastructure, data/telecom, aerospace and defense industries, various aftermarket distributors, as well as systems integrators and aerospace, motor and compressor distributors.
Throughout this Report, we use the term “electric vehicles” or "EVs" holistically to reference plug-in hybrid and battery-electric vehicles of all kinds, unless otherwise specified. Because of the prevalence of ICE vehicles today, applications in these vehicles make up most of our current transportation addressable markets (automotive and HVOR).
Throughout this Report, we use the term “electric vehicles” or "EVs" holistically to reference plug-in hybrid and battery-electric vehicles of all kinds, unless otherwise specified. Due to the prevalence of ICE vehicles today, applications in these vehicles make up most of our current transportation addressable markets (automotive and HVOR).
Our average U.S. dollar content in an electric vehicle is expected to expand over the next several years to approximately two times the content that we currently realize on average for ICE vehicles, resulting from the broad array of sensors and other components designed into EVs.
Our average U.S. dollar content in an electric vehicle is expected to expand over the next several years to approximately two times the content that we currently realize on average for ICE vehicles, resulting from the broad array of electrical components and sensors designed into EVs.
Compliance with environmental and governmental regulations and meeting customer requirements have increased our cost of doing business in various ways and may continue to do so in the future. We do not currently anticipate material capital expenditures during fiscal year 2024 for environmental control facilities.
Compliance with environmental and governmental regulations and meeting customer requirements have increased our cost of doing business in various ways and may continue to do so in the future. We do not currently anticipate material capital expenditures during fiscal year 2025 for environmental control facilities.
Our electrical protection portfolio (which includes both components and systems) is comprised of various switches, fuses, battery management systems, inverters, energy storage systems, high-voltage distribution units, controllers, and software, and includes high-voltage contactors and other products embedded within systems to maximize their efficiency and performance and ensure safety.
Our electrical protection portfolio (which includes both components and systems) is composed of various switches, fuses, battery management systems, inverters, energy storage systems, high-voltage distribution units, controllers, and software, and includes high-voltage contactors and other products embedded within systems to maximize their efficiency and performance and ensure safety.
We benefit from many development opportunities at an early stage for several reasons: (1) we are the incumbent in many systems for our key customers; (2) we have robust design and service capability; and (3) our global engineering teams are located close to key customers in regional business centers.
We benefit from many development opportunities at an early stage for several reasons: (1) we are the incumbent in many systems for our key customers; (2) we have robust design and service capabilities; and (3) our global engineering teams are located close to key customers in regional business centers.
Many of our patents protect specific functionality in our products, and others consist of processes or techniques that result in reduced manufacturing costs. The following table presents information on our patents and patent applications as of December 31, 2023: U.S. Non-U.S.
Many of our patents protect specific functionality in our products, and others consist of processes or techniques that result in reduced manufacturing costs. The following table presents information on our patents and patent applications as of December 31, 2024: U.S. Non-U.S.
We provide all our customers with worldwide technical and manufacturing presence and service support, which helps ensure supply continuity and avoid risks associated with potential supply chain disruptions. Moreover, we have a strong knowledge of their quality and delivery requirements.
We provide all our customers with worldwide technical and manufacturing presence and service support, which helps ensure supply continuity and avoid risks associated with potential supply chain disruptions. Moreover, we have a strong knowledge of our customers' quality and delivery requirements.
We enable innovation by providing higher levels of safety through our high-voltage solutions and isolation monitoring devices. Safety is critical given the level of power being transmitted and handled by the end consumer who is actually charging their vehicle.
We enable innovation by providing higher levels of safety through our high-voltage solutions and isolation monitoring devices. Safety is critical given the level of power being transmitted and handled by the end consumer charging their vehicle.
Accordingly, we regularly review our benefit offerings with external advisers with deep industry expertise in risk insurance, health insurance, and other employee benefits for 14 Table of Contents advice and market expertise. We are committed to providing comprehensive and competitive benefits packages that attract, retain, and enhance the well-being of our employees by supporting their physical, financial, and emotional wellness.
Accordingly, we regularly review our benefit offerings with external advisers with deep industry expertise in risk insurance, health insurance, and other employee benefits for advice and market expertise. We are committed to providing comprehensive and competitive benefits packages that attract, retain, and enhance the well-being of our employees by supporting their physical, financial, and emotional wellness.
Technology and Intellectual Property We pride ourselves as a world leader and early innovator in mission-critical, hard-to-do sensor solutions. We develop products that address increasingly complex engineering and operating performance requirements to help our customers solve their most difficult engineering challenges in the automotive, HVOR, fleet management, industrial, clean energy, and aerospace industries.
Technology and Intellectual Property We pride ourselves as a world leader and early innovator in mission-critical, hard-to-develop sensor solutions. We develop products that address increasingly complex engineering and operating performance requirements to help our customers solve their most difficult engineering challenges in the automotive, HVOR, industrial, clean energy, and aerospace industries.
We also see the growing importance of new ‘startup’ OEMs as market disruptors, and Sensata’s flexibility, speed, expertise, and global footprint provide these new entrants with a supplier/partner capable of meeting their demanding requirements. We have had relationships with our top ten customers for an average of 32 years.
We also see the growing importance of new ‘startup’ OEMs as potential market disruptors, and Sensata’s flexibility, speed, expertise, and global footprint provide these new entrants with a supplier/partner capable of meeting their demanding requirements. We have had relationships with our top ten customers for an average of 33 years.
One of our key areas of prioritization is to empower our workforce through promotion of a culture that values inclusion and diversity and prioritizes employee well-being and safety. A summary of additional content in the Sustainability Report can be found under the heading Environmental, Social, and Governance included elsewhere in this Item 1: Business .
One of our key areas of prioritization is to empower our workforce through promotion of a culture that values inclusion and diversity and prioritizes employee well-being and safety. A summary of additional content in the Sustainability Report can be found under the heading Sustainability included elsewhere in this Item 1: Business .
For example, responding to tightening legislation requirements and proliferating content, we enable vehicle OEMs to improve combustion, reduce tailpipe emissions, and increase fuel economy in both traditional and hybrid vehicles with a combination of sensors, such as pressure, high-temperature, and speed, in next-generation powertrains.
For example, responding to tightening legislation requirements and proliferating content, we enable vehicle OEMs to improve combustion, reduce tailpipe emissions, and increase fuel economy in both traditional internal combustion engines ("ICE") and hybrid vehicles with a combination of sensors, such as pressure, high-temperature, and speed, in next-generation powertrains.
We also have templates for giving feedback anytime to employees, typically tied to performance as part of their role, projects, and deliverables which helps foster transparency and delivery of real-time feedback.
We also have templates for giving feedback anytime to employees, typically tied to performance as part of their role, projects, and deliverables which help foster transparency and delivery of real-time feedback.
We believe that our relations with our employees are good. The following table presents a summary of our employee population as of December 31, 2023: (in thousands) Total U.S.
We believe that our relations with our employees are good. The following table presents a summary of our employee population as of December 31, 2024: (in thousands) Total U.S.
Dynapower is a leader in power conversion systems, including inverters, converters, and rectifiers for renewable energy generation, green hydrogen production, electric vehicle charging stations, and microgrid applications, as well as industrial and defense applications. Dynapower also provides aftermarket sales and service to maintain its equipment in the field.
Dynapower is a leader in power conversion systems, including inverters, converters, and rectifiers for renewable energy generation, electric vehicle charging stations, and microgrid applications, as well as industrial and defense applications. Dynapower also provides aftermarket sales and service to maintain its equipment in the field.
Human Capital Resources Our employees, whom we refer to as Team Sensata, are responsible for upholding our purpose – to help our customers and partners deliver a safer, cleaner, more efficient, more electrified, and increasingly more connected world – and they embody our values in all aspects of daily work.
Human Capital Resources Our employees, whom we refer to as Team Sensata, are responsible for upholding our purpose – to help our customers and partners deliver a safer, cleaner, and more efficient world – and they embody our values in all aspects of daily work.
Our benefits include an array of quality health and income protection benefits. Some benefits are provided automatically at no cost to employees, while the cost of other benefits is shared between the employee and Sensata. Our employees' health, safety, and well-being are a high priority and integral to our values.
Our benefits include an array of quality health and income protection benefits. Some benefits are provided automatically at no cost to employees, while the cost of other benefits is shared between the employee and Sensata. 12 Table of Contents Our employees' health, safety, and well-being are a high priority and integral to our values.
Ethics We have adopted a Code of Business Conduct and Ethics governing the conduct of our personnel, including our principal executive officer, principal financial officer, principal accounting officer, and controller, and persons performing similar functions.
Ethics We have adopted a Code of Business Conduct and Ethics governing the conduct of our personnel, including our principal executive officer, principal financial officer, principal accounting officer, and senior accounting personnel, and persons performing similar functions.
We work closely with our customers to deliver solutions that meet their needs today and in the future. As a result of development lead times and the embedded nature of our products, we collaborate closely with our customers throughout the design and development phase of their products.
We work closely with our customers to deliver solutions that meet their needs today and in the future. As a result of development lead times and the embedded nature of our products, we 10 Table of Contents collaborate closely with our customers throughout the design and development phase of their products.
The contents on, or accessible through, this website or our website are not incorporated into this filing. Further, our references to the URLs for the SEC's website and our website are intended to be inactive textual references only.
The contents on, or accessible through, this website or our website are not incorporated into this filing. Further, our references to the URLs for the SEC's website and our website are intended to be inactive textual references only. 14 Table of Contents
We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership. Our chief executive officer and business leaders average approximately 25 years of industry experience. They are supported by an experienced and talented management team dedicated to maintaining and expanding our position as a global leader in the industry.
We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership. Our chief executive officer and business leaders average more than 20 years of industry experience. They are supported by an experienced and talented management team dedicated to maintaining and expanding our position as a global leader in the industry.
The most recent Integrity Week, in fiscal year 2023, focused on “Integrity in Action.” By sharing best practices and stories from their professional journeys, various executives and site leaders at Sensata illustrated how integrity is not just about doing the right thing but how it is intrinsic to delivering value and sustainability for our company, environment, and communities.
The most recent Integrity Week, in fiscal year 2024, focused on “Integrity in a Changing World.” By sharing best practices and stories from their professional journeys, various executives and site leaders at Sensata illustrated how integrity is not just about doing the right thing but how it is intrinsic to delivering value and sustainability for our company, environment, and communities.
Our products perform many functions, including prevention of damage from excess heat or electrical current, optimization of system performance, low-power circuit control, renewable energy generation, and power conversion from DC power to alternating current power. Our electrical protection devices are critical for the safe operation of, for example, small appliances that are used in every day life.
Our products perform many functions, including prevention of damage from excess heat, gas leak detection sensing, or electrical current, optimization of system performance, low-power circuit control, renewable energy generation, and power conversion from DC power to alternating current power. Our electrical protection devices are critical for the safe operation of appliances that are used in every day life.
For a discussion of the risks relating to the attraction and retention of management and executive management employees, see Item 1A: Risk Factors included elsewhere in this Report. Environmental, Social, and Governance Environmental, social, and governance (“ESG”) objectives are central to Sensata’s business strategy, values, and culture.
For a discussion of the risks relating to the attraction and retention of management and executive management employees, see Item 1A: Risk Factors included elsewhere in this Report. Sustainability Sustainability objectives are central to Sensata’s business strategy, values, and culture.
No license may be terminated under the agreement, even in the event of a material breach. 12 Table of Contents Raw Materials We use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in both our Performance Sensing and Sensing Solutions segments, including those containing certain commodities (e.g., semiconductors, resins, and metals), which may experience significant volatility in their price and availability due to, among other things: new laws or regulations, including labor laws and the impact of tariffs; trade barriers and disputes; global economic or political events, including government actions and labor strikes; suppliers' allocations to other purchasers; interruptions in production by suppliers; increased logistics costs; changes in foreign currency exchange rates; and prevailing price levels.
Raw Materials We use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in both our Performance Sensing and Sensing Solutions segments, including those containing certain commodities (e.g., semiconductors, resins, and metals), which may experience significant volatility in their price and availability due to, among other things: new laws or regulations, including labor laws and the impact of tariffs; trade barriers and disputes; global economic or political events, including government actions and labor strikes; suppliers' allocations to other purchasers; interruptions in production by suppliers; increased logistics costs; changes in foreign currency exchange rates; and prevailing price levels.
Invest in the Business While we may continue to consider strategic partnerships and acquisitions to accelerate the growth and transformation of our product portfolio and to obtain access to new technologies, expertise, processes, and solutions, we are focusing on leveraging the core business, which continues to have meaningful growth and cash flows.
Invest in the Business While we may continue to consider strategic partnerships and acquisitions to accelerate the growth and transformation of our product portfolio and to obtain access to new technologies, expertise, processes, and solutions, our primary focus is leveraging the core business, which continues to have meaningful growth and cash flows.
We also 15 Table of Contents recognize that a changing climate may impact significant aspects of our business and the operation of our facilities.
We also recognize that a changing climate may impact significant aspects of our business and the operation of our facilities.
We survey our employees bi-annually to understand where we can initiate improvements in these areas. We focus our employee communications on continual engagement, providing updates on our business, technology, and workforce, including learning opportunities.
We survey our employees semi-annually to understand where we are succeeding and how we can initiate improvements in these areas. We focus our employee communications on continual engagement, providing updates on our business, technology, and workforce, including learning opportunities.
Customers Our customers in the Performance Sensing reportable segment include leading global automotive, on-road truck, construction, and agriculture original equipment manufacturers ("OEMs"), the companies that supply parts directly to these OEMs, known as Tier 1 suppliers, various aftermarket distributors, fleet transportation, and logistics customers.
Customers Our customers in the Performance Sensing reportable segment include leading global automotive, on-road truck, construction, and agriculture original equipment manufacturers ("OEMs") and the companies that supply parts directly to these OEMs, known as Tier 1 suppliers.
Since then, we have continued to innovate our contactor portfolio. Our GIGAVAC-branded high-voltage electrical protection products augment our electrical protection portfolio to address many of the needs in EVs as the voltage of these systems continue to increase.
Since then, we have continued to innovate our contactor portfolio. Our GIGAVAC-branded high-voltage electrical protection products augment our electrical protection portfolio to address many of the needs in EVs as these systems transition to higher voltage architecture.
These addressable markets are large today and growing, with expectations that they will continue to grow over the next ten years. However, the automotive market is rapidly changing with the transformation into electrification. Most of our customers have made significant commitments regarding the transition from ICEs to electrified platforms.
These addressable markets are large today and growing, with expectations that they will continue to grow over the next ten years. However, the automotive market is rapidly changing with the transformation into electrification. Certain of our customers have made commitments regarding the transition from ICE to electrified platforms; these commitments vary by region.
We offer our employees an online global learning management system ("Sensata Learning") that enables them to access live virtual and on-demand training. In fiscal year 2023, we delivered approximately 97,000 hours of training spanning various required learning and professional development topics, including a range of courses on diversity, inclusion, and ethics.
We offer our employees an online global learning management system ("Sensata Learning") that enables them to access live virtual and on-demand training. In fiscal year 2024, employees completed over 96,000 hours of training spanning various required learning and professional development topics, including a range of courses on diversity, inclusion, and ethics.
For example, government regulation of emissions, including fuel economy standards such as the National Highway Traffic Safety Administration’s Corporate Average Fuel Economy requirements in the U.S. and emissions requirements such as "Euro 6d" in Europe, "China National 6" in China, and "Bharat Stage VI" in India, require advanced sensors to achieve these performance metrics.
For example, government regulation of emissions, including fuel economy standards such as the National Highway Traffic Safety Administration’s Corporate Average Fuel Economy requirements in the U.S. and emissions requirements such as "Euro 07" in Europe, "China National 6" in China, and "EPA 27" in the U.S. require advanced sensors to achieve these performance metrics.
Our future success builds upon our deep expertise in customizing the base technologies developed over the years, improving them meaningfully over time, and leveraging new technologies and capabilities that have been recently acquired. We have increased research and development ("R&D") costs over the last five years in order to invest in differentiated capabilities and product innovation.
Our future success builds upon our deep 6 Table of Contents expertise in customizing the base technologies developed over the years, improving them meaningfully over time, and leveraging new technologies and capabilities that have been acquired. We incur research and development ("R&D") costs in order to invest in differentiated capabilities and product innovation.
Based Female Covered by Collective Bargaining Employees 19.4 1.5 10.8 0.2 Contractors (1) 2.5 0.1 1.3 — __________________________ (1) We engage contract workers in multiple locations, primarily to cost-effectively manage variations in manufacturing volume, but also to perform engineering and other general services. Includes approximately 2,200 direct labor contract workers worldwide.
Based Female Covered by Collective Bargaining Employees 19.0 1.4 10.6 0.2 Contractors (1) 2.7 0.1 1.3 — __________________________ (1) We engage contract workers in multiple locations, primarily to cost-effectively manage variations in manufacturing 11 Table of Contents volume, but also to perform engineering and other general services. Includes approximately 2,300 direct labor contract workers worldwide.
Our chassis (e.g., tire management solutions), thermal management (e.g., pressure plus temperature sensing), and safety (e.g., braking and electronic stability control) sensor/product solutions all play critical roles in enabling the safety, improved performance, and increased efficiency and range of both electrified vehicles and ICE powertrains.
Our cabin thermal management (e.g., pressure plus temperature sensing) and safety (e.g., braking, electronic stability control, and tire management solutions) sensor/product solutions all play critical roles in enabling the safety, improved performance, and increased efficiency and range across ICE, plug-in hybrid, and electrified powertrains.
We also use our decades of manufacturing expertise to drive efficient, high-quality processes. We leverage next-generation automation to lower labor costs and to drive towards zero defects. We are building resilient supply chains with a balanced approach in ensuring the continuity of supply while aggressively focusing on innovative ways to drive material cost down.
We leverage next-generation automation to lower labor costs and to drive towards zero defects. We are building resilient supply chains with a balanced approach in ensuring the continuity of supply while aggressively focusing on innovative ways to drive material cost down.
We believe that our ability to design and produce customized solutions globally, breadth and scale of product offerings, technical expertise and development capability, product service and responsiveness, and a commercially competitive offering position us well to succeed in these markets. We are experts in the applications we serve, enabling us to provide industry-leading solutions to our customers.
We believe that our ability to design and produce customized solutions globally, breadth and scale of product offerings, technical expertise and development capability, product service and responsiveness, and a commercially competitive offering position us well to succeed in these markets.
Transportation industries provide some of the largest markets for sensors, giving participants with a presence in these markets significant scale advantages over those participating only in smaller, more niche industrial and medical markets.
Markets The markets we serve are seeking to provide cleaner, safer, and connected solutions. Transportation industries provide some of the largest markets for sensors, giving participants with a presence in these markets significant scale advantages over those participating only in smaller, more niche industrial and medical markets.
In 2006, we entered into a perpetual, royalty-free cross-license agreement with our former owner, Texas Instruments Incorporated, which permits each party to use specified technology owned by the other party in its business.
We use licensing arrangements with respect to certain technology provided in our sensor and electrical protection products. In 2006, we entered into a perpetual, royalty-free cross-license agreement with our former owner, Texas Instruments Incorporated, which permits each party to use specified technology owned by the other party in its business.
Other products and services we provide include vehicle area networks and data collection devices and software, battery storage systems, and power conversion systems, the latter of which include inverters, converters, and rectifiers for renewable energy generation, green hydrogen production, electric vehicle charging stations, and microgrid applications, as well as industrial and defense applications.
Other products and services we provide include power conversion systems, which include inverters, converters, and rectifiers for renewable energy generation, green hydrogen production, electric vehicle charging stations, and microgrid applications, as well as industrial and defense applications.
Clean Energy Solutions includes products and solutions such as high-voltage contactors, inverters, rectifiers, energy storage systems, electrical sensing products, and battery management systems, that serve the industrial, stationary, and commercial energy conversion and storage end markets. Our fiscal year 2022 acquisition of Dynapower was a foundational addition to our Clean Energy Solutions strategy.
Our clean energy products and solutions include high-voltage contactors, rectifiers, energy storage systems, and electrical sensing products, that serve the industrial, transportation, stationary, and commercial energy conversion and storage end markets. Applications include those in battery-energy storage, microgrids, and renewable energy generation and storage. Our fiscal year 2022 acquisition of Dynapower was a foundational addition to our clean energy strategy.
We believe this trend will drive growth in our business for the foreseeable future, particularly in the area of Electrification. Moreover, we believe our broad customer base, global diversification, and evolving portfolio provide the foundation that will allow us to grow with these trends across a diverse set of markets.
Moreover, we believe our broad customer base, global diversification, and evolving portfolio provide the foundation that will allow us to grow with these trends across a diverse set of markets.
Our ESG efforts focus on four key areas of prioritization against which we measure progress: • Empowering our workforce : We nurture a culture that promotes diversity and inclusion and prioritizes employee health, safety, and well-being while supporting our communities and suppliers; • Innovating for Sustainability : We develop products and technology solutions that help create a safer, cleaner, more efficient, electrified, and connected world; • Protecting Our Environment : We focus on building products that reduce environmental impact and improve technological efficiencies while optimizing and reducing our operational footprint through energy, water, and waste reduction; • Operating Responsibly : We consider transparency and accountability fundamental in everything we do, guiding our approach to governance, risk management, and ESG management.
Our sustainability efforts focus on four key areas of prioritization against which we measure progress: • Empowering our workforce : We nurture a culture that promotes diversity and inclusion and prioritizes employee health, 13 Table of Contents safety, and well-being while supporting our communities and suppliers; • Innovating for Sustainability : We develop products and technology solutions that help create a safer, cleaner, more efficient, electrified, and connected world; • Protecting Our Environment : We focus on building products that reduce environmental impact and improve technological efficiencies while optimizing and reducing our operational footprint through energy, water, and waste reduction; and • Operating Responsibly : We operate with integrity and high standards of business ethics to help us grow our business and solve the need to safely deliver a cleaner, more efficient, electrified and connected world.
We believe that the key competitive factors in the markets served by this segment are product performance in mission-critical operating environments, quality, service, reliability, manufacturing footprint, and commercial competitiveness.
These competitors range from local to large players, depending on the end market. We believe that the key competitive factors in the markets served by this segment are product performance in mission-critical operating environments, quality, service, reliability, manufacturing footprint, and commercial competitiveness.
We sponsor various employee resource groups (“ERGs”), groups of employees that come together to work strategically, both internally and externally, to benefit and advance their group members by fostering awareness, respect, and inclusion within the workplace.
An inclusive culture is fundamental to innovation and problem-solving, improving our ability to innovate, and is vital to our business. We sponsor various employee resource groups (“ERGs”), groups of employees that come together to work strategically, both internally and externally, to benefit and advance their group members by fostering awareness, respect, and inclusion within the workplace.
As electrification proliferates, the ability to protect the vehicle systems/sub-systems from high-voltage power sources becomes critical, a need that our electrical protection portfolio (e.g., high-voltage contactors, fuses, high-voltage junction boxes) addresses.
As more transportation platforms leverage a plug-in hybrid or fully electrified powertrain, the ability to protect the vehicle systems/sub-systems from high-voltage power sources becomes critical, a need that our electrical protection portfolio (e.g., high-voltage contactors, fuses, high-voltage junction boxes) addresses.
Sensing Solutions Sensing Solutions, which accounted for approximately 26% of our net revenue in fiscal year 2023, primarily serves the industrial and aerospace industries through the development and manufacture of a broad portfolio of application-specific sensor and electrical protection products used in a diverse range of industrial markets, including the appliance, HVAC, water management, operator controls, charging infrastructure, renewable energy generation, green hydrogen production, and microgrid applications and markets, as well as the aerospace market, including commercial aircraft, defense, and aftermarket markets.
We are experts in the applications we serve, enabling us to provide industry-leading solutions to our customers. 8 Table of Contents Sensing Solutions Sensing Solutions, which accounted for approximately 27% of our net revenue in fiscal year 2024, primarily serves the industrial and aerospace industries through the development and manufacture of a broad portfolio of application-specific sensor and electrical protection products used in a diverse range of industrial markets, including the appliance, HVAC, material handling, operator controls, charging infrastructure, renewable energy generation, and microgrid applications and markets, as well as the aerospace market, including commercial aircraft, defense, and aftermarket markets.
We are also delivering higher power through a broad array and range of DC switching and current braking products and the opportunity to move faster by collaborating with our OEMs on integrated products.
We are also delivering higher power solutions through a broad array and range of DC switching and current braking products, and we see meaningful growth opportunities through collaborating with our OEMs on integrated products.
These laws and regulations are subject to change, and any such change may limit or exclude existing or future business opportunities, require us to change technology, or incur expenditures to comply with such laws and regulations.
Any failure to maintain compliance with such regulations could limit our ability to import or export raw materials and finished goods. These laws and regulations are subject to change, and any such change may limit or exclude existing or future business opportunities, require us to change technology, or incur expenditures to comply with such laws and regulations.
Licensing decisions are made based on the type of product, its destination, end use, end user, the parties involved in the transaction, national security, and foreign policy. As a result, export license approvals are not guaranteed.
Licensing decisions are made based on the type of product, its destination, end use, end user, the parties involved in the transaction, national security, and foreign policy. As a result, export license approvals are not guaranteed. We have a trade compliance team and other systems in place to apply for licenses and otherwise comply with import and export regulations.
We believe that net revenue growth from the automotive and HVOR sensor markets served by Performance Sensing has historically been driven by three principal trends, including (1) growth in the number of vehicles produced globally, (2) expansion in the number and type of sensors per vehicle, and (3) efforts toward commercializing higher value sensors.
We believe that growth in the automotive and HVOR end markets has historically been driven by three principal trends, including growth in the number of vehicles produced globally and expansion in the number and type of sensors per vehicle.
Our tire pressure sensors are used by automotive and HVOR OEMs and fleets to reduce downtime and operating costs, improve fuel efficiency, and create safer driving conditions. Also, HVAC variable systems are the preferred method to meet stringent energy efficiency and environmental regulations.
Our tire pressure sensors are used by automotive and HVOR OEMs to reduce downtime and operating costs, improve fuel efficiency, and create safer driving conditions.
Some of the products and solutions the segment sells include pressure, temperature, and position sensors, motor and compressor protectors, high-voltage contactors, solid state relays, bimetal electromechanical controls, power inverters, charge controllers, battery management systems, operator controls, and power conversion systems.
Sensing Solutions offerings include pressure, temperature, and position sensors, motor and compressor protectors, high-voltage contactors, solid state relays, bimetal electromechanical controls, charge controllers, material handling, and power conversion systems.
We believe that we are the industry leader in the residential and commercial heating and cooling equipment markets, such as switches and sensors that manage the refrigerant loop of an air conditioner. We leverage the expertise from the automotive business, and we customize the products to our market requirements.
We believe that we are the industry leader in the residential and commercial heating and cooling equipment markets for switches and sensors that manage the refrigerant loop of an air conditioner.
Capital Allocation We expect to drive our net leverage down to less than 2.0x by the end of 2026. We repaid our $400.0 million aggregate principal amount of 5.625% senior notes due 2024 (the "5.625% Senior Notes") in December 2023 with cash on hand.
We repaid our $400.0 million aggregate principal amount of 5.625% senior notes due 2024 (the "5.625% Senior Notes") in December 2023 with cash on hand.
Many of our customers are shifting their designs for vehicles, industrial equipment, aircraft, and other systems to meet these evolving requirements, a trend which we refer to as “Safe & Efficient." This trend impacts most of our business today and is resulting in an addressable market ($13.3 billion in 2023) that is expected to grow at a compound annual growth rate ("CAGR") of 4% over the next five years.
Many of our customers are shifting their designs for vehicles, industrial equipment, aircraft, and other systems to meet these evolving requirements, a trend which we refer to as “Safe, Clean, & Efficient." This trend impacts most of our business today and represents an addressable market of $15.6 billion in 2024.
We believe our competitive advantage lies in our ability to leverage innovation from the automotive side of the business, ensuring scalability and reliability. We also differentiate ourselves with our global support and footprint. We provide local support, local service and local technical engineering development for our customers globally.
We believe that the key competitive factors in these markets are product performance, quality, and reliability. We believe our competitive advantage lies in our ability to leverage innovation from the automotive side of the business, ensuring scalability and reliability. We also differentiate ourselves with our global support and footprint.
Each of these policies can be found on our website at www.sensata.com . Our human rights expectations apply to all our personnel, business partners, and other parties involved directly in our operations, products, or services.
Our human rights expectations apply to all our personnel, business partners, and other parties involved directly in our operations, products, or services.
Through interaction with these groups, senior leadership can identify emerging and high-potential talent, acquire cultural knowledge, hear directly from employees who face challenges inherent in underrepresented groups, and strengthen diversity management skills. Our ERGs contribute to our market success by actively contributing to our broader DEI strategy.
Our ERGs provide our employees meaningful community and global engagement, networking and mentoring opportunities, and an inclusive workplace culture. Through interaction with these groups, senior leadership can identify emerging and high-potential talent, acquire cultural knowledge, hear directly from employees who face challenges inherent in underrepresented groups, and strengthen diversity management skills.
Diversity, Equity, and Inclusion ("DEI") We believe in treating all people with respect and dignity.
Belonging at Sensata We believe in treating all people with respect and dignity.
Accordingly, NBOs are an indicator of future revenue potential. 5 Table of Contents Manufacturing From a manufacturing perspective, we have achieved our current cost position through development of manufacturing scale and efficiencies, a continual process of migration and transformation to best-cost manufacturing locations, global best-cost sourcing, product design improvements, and ongoing productivity-enhancing initiatives.
Manufacturing We have achieved our current cost position through development of manufacturing scale and efficiencies, a continual process of migration and transformation to best-cost manufacturing locations, global best-cost sourcing, product design improvements, and ongoing productivity-enhancing initiatives. We also use our decades of manufacturing expertise to drive efficient, high-quality processes.
It is only loosely correlated to normal unit demand fluctuations in the markets we serve. 6 Table of Contents Electrification Our objective with the Electrification initiative is to become a leading and foundational player in electrification components and sub-systems across broad industrial, transportation, aerospace, recharging infrastructure, and renewable energy generation and storage end markets.
We believe this metric approximates the increase in the value or quantities of the products that we are providing into those end markets. Our objective with the Electrification initiative is to become a leading and foundational player in electrification components and sub-systems across broad industrial, transportation, aerospace, recharging infrastructure, and renewable energy generation and storage end markets.
This is despite the expected transition within the automotive end market from internal combustion engines ("ICEs") to electrified platforms during that period of time. We design and manufacture products and solutions for mission-critical, hard-to-do applications that enable our customers to protect the environment and improve quality of life.
We design and manufacture products and solutions for mission-critical, hard-to-do applications that enable our customers to protect the environment and improve quality of life.
Because we are a long-cycle business, these investments have pressured near-term margins. However, as a result of these investments, our addressable market is large and expanding. We believe these are the right strategic decisions for our long-term health and prosperity. This focus and investment are driving a dramatic increase in our new business wins ("NBOs") over the past several years.
As a result of these investments, our addressable market is large and expanding. We believe these are the right strategic decisions for our long-term health and prosperity.
In addition, the need for electrification is evident in all aspects of daily life, not just in transportation applications. Manufacturers of material handling equipment, aircraft, and industrial systems are also addressing ever-tightening greenhouse gas ("GHG") emissions regulations and taking advantage of falling battery costs and increasing energy capacities of lithium-ion battery cells to provide electrified solutions to their customers.
Manufacturers of material handling equipment, aircraft, and industrial systems are also addressing greenhouse gas ("GHG") emissions regulations and taking advantage of falling battery costs and increasing energy capacities of battery cells to provide electrified solutions to their customers. Addressing the increasing demand for electrified solutions, and reducing GHG emissions, requires a broad-based transition to clean electricity that encompasses distribution infrastructure.
OEMs and Tier 1 suppliers seek to partner with suppliers with a proven record of quality, on-time delivery, and performance, as well as the engineering and manufacturing scale/resources to meet their needs over the multi-year lifecycle of these highly engineered vehicles and systems. Markets The markets we serve are seeking to provide cleaner, safer, more electrified, and connected solutions.
We believe this is one of the reasons that sensors are rarely changed during a platform life cycle, which in the case of the automotive industry typically lasts five to seven years. 7 Table of Contents OEMs and Tier 1 suppliers seek to partner with suppliers with a proven record of quality, on-time delivery, and performance, as well as the engineering and manufacturing scale/resources to meet their needs over the multi-year lifecycle of these highly engineered vehicles and systems.
We strive to create and foster a supportive and understanding environment in which ideas are shared freely, helping all individuals realize their maximum potential within Sensata, regardless of their differences. An inclusive culture is fundamental to innovation and problem-solving, improving our ability to innovate, and is vital to our business.
It is our policy and practice to hire and employ qualified individuals without regard to these characteristics. We strive to create and foster a supportive and understanding environment in which ideas are shared freely, helping all individuals realize their maximum potential within Sensata.
As system voltages increase, the burden 7 Table of Contents on the systems and subsystems to properly control and protect the vehicle from electrical failure becomes mission-critical and is where our solutions play a critical role.
In high voltage applications, the burden on the systems and subsystems to properly control and protect the vehicle from electrical failure becomes mission-critical and is where our solutions play a critical role. Our electrical protection solutions safeguard the expensive electronics used to power the vehicle and allow for an increase in power levels to improve charging times.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSuch risks may result from instability in economic or political conditions, inflation, recession, and/or actual or anticipated military or political conflicts, and include, without limitation: trade regulations, including customs, import, export, and sourcing restrictions, tariffs, trade barriers, trade disputes, and economic sanctions; changes in local employment costs, laws, regulations, and conditions; difficulties with, and costs for, protecting our intellectual property; challenges in collecting accounts receivable; tax laws and regulatory changes, including examinations by taxing authorities, variations in tax laws from country to country, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of earnings generated or held in a number of jurisdictions; natural disasters; and the impact of each of the foregoing on our business operations, manufacturing, and supply chain.
Biggest changeSuch risks may result from instability in economic or political conditions, inflation, recession, and/or actual or anticipated military or political conflicts, and include, without limitation: trade regulations, including customs, import, export, and sourcing restrictions, tariffs, trade barriers, trade disputes, and economic sanctions; changes in local employment costs, laws, regulations, and conditions; difficulties with, and costs for, protecting our intellectual property; challenges in collecting accounts receivable; tax laws and regulatory changes, including examinations by taxing authorities, variations in tax laws from country to country, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of earnings generated or held in a number of jurisdictions; natural disasters; and the impact of each of the foregoing on our business operations, manufacturing, and supply chain. 19 Table of Contents Other risks are inherent in our non-U.S. operations, including: the potential for changes in socio-economic conditions and/or monetary and fiscal policies; intellectual property protection difficulties and disputes; the settlement of legal disputes through certain foreign legal systems; the collection of receivables; exposure to possible expropriation or other government actions; unsettled political conditions; and possible terrorist attacks.
If we complete additional acquisitions, our debt service requirements could also increase. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity investments, or reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances, any of which could have a material adverse effect on our operations.
If we complete additional acquisitions, our debt service requirements could also increase. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity financing, or reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances, any of which could have a material adverse effect on our operations.
If we experience an event of default under any of our debt instruments that is not cured or waived, the holders of the defaulted debt could cause all amounts outstanding with respect to the debt to become due and payable immediately, which, in turn, would result in cross-defaults under our other debt instruments.
If we experience an event of default under any of our debt instruments that is not cured or waived, the holders of the defaulted debt could cause all amounts outstanding with respect to the debt to become due and payable immediately, which, in turn, could result in cross-defaults under our other debt instruments.
We may raise our prices on products subject to such tariffs to share the cost with our customers, which could harm our operating performance or cause our customers to seek alternative suppliers. In addition, we may seek to shift some of our China manufacturing to other countries, which could result in additional costs and disruption to our operations.
We may raise our prices on products subject to such tariffs to share the cost with our customers, which could harm our operating performance or cause our customers to seek alternative suppliers. In addition, we may seek to shift some of our manufacturing to other countries, which could result in additional costs and disruption to our operations.
If, when required, we are unable to repay, refinance, or restructure our indebtedness under, or amend the covenants contained in, the Credit Agreement, or if a default otherwise occurs, the lenders under the Senior Secured Credit Facilities could: elect to terminate their commitments thereunder; cease making further loans; declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable; institute foreclosure proceedings against those assets that secure the borrowings under the Senior Secured Credit Facilities; and prevent 24 Table of Contents us from making payments on the Senior Notes.
If, when required, we are unable to repay, refinance, or restructure our indebtedness under, or amend the covenants contained in, the Credit Agreement, or if a default otherwise occurs, the lenders under the Senior Secured Credit Facilities could: elect to terminate their commitments thereunder; cease making further loans; declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable; institute foreclosure proceedings against those assets that secure the borrowings under the Senior Secured Credit Facilities; and prevent 21 Table of Contents us from making payments on the Senior Notes.
In addition, where possible, we have been working to adjust our long-term supply agreements, strengthen our relationships with our suppliers, increase inventory on hand, increase visibility into long-term supply and demand, and accelerate the use of alternate materials to increase supply chain visibility.
In addition, where possible, we have been working to adjust our long-term supply agreements, strengthen our relationships with our suppliers, manage inventory on hand, increase visibility into long-term supply and demand, and accelerate the use of alternate materials to increase supply chain visibility.
We use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in both our Performance Sensing and Sensing Solutions segments, including those containing certain commodities (e.g., semiconductors, resins, and metals), which may experience significant volatility in their price and availability due to, among 19 Table of Contents other things, new laws or regulations, including the impact of tariffs, trade barriers, trade disputes, export or sourcing restrictions, economic sanctions, and global economic or political events including government actions, labor strikes, suppliers' allocations to other purchasers, interruptions in production by suppliers, changes in foreign currency exchange rates, and prevailing price levels.
We use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in both our Performance Sensing and Sensing Solutions segments, including those containing certain commodities (e.g., semiconductors, resins, and metals), which may experience significant volatility in their price and availability due to, among other things, new laws or regulations, including the impact of tariffs, trade barriers, trade disputes, export or sourcing restrictions, economic sanctions, and global economic or political events including government actions, labor strikes, suppliers' allocations to other purchasers, interruptions in production by suppliers, changes in foreign currency exchange rates, and prevailing price levels.
We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Insights and Dynapower reporting units, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.
We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Dynapower reporting unit, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.
Business and Operational Risks We are subject to risks associated with climate change, including increased regulation of GHG emissions, changing consumer preferences and other risks related to our transition to Electrification, and the potential increased impacts of severe weather events on our operations and infrastructure.
We are subject to risks associated with climate change, including increased regulation of GHG emissions, changing consumer preferences and other risks related to our transition to Electrification, and the potential increased impacts of severe weather events on our operations and infrastructure.
Our costs associated with product liability, warranty, and recall claims could be material. We are dependent on market acceptance of our new product introductions and product innovations for future revenue, and we may not realize all of the revenue or achieve anticipated gross margins from products subject to existing awards or for which we are currently engaged in development.
Our costs associated with product liability, warranty, and recall claims could be material. 15 Table of Contents We are dependent on market acceptance of our new product introductions and product innovations for future revenue, and we may not realize all of the revenue or achieve anticipated gross margins from products subject to existing awards or for which we are currently engaged in development.
Refer to Note 11: Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information related to our goodwill and other identifiable intangible assets and the Insights impairment charge. Refer to Critical Accounting Policies and Estimates , in
Refer to Note 11: Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information related to our goodwill and other identifiable intangible assets and the Dynapower impairment charge. Refer to Critical Accounting Policies and Estimates , in
Divestitures could involve additional risks, including difficulties in the 20 Table of Contents separation of operations, services, products, and personnel; the diversion of management's attention from other business concerns; the disruption of our business; and the potential loss of key employees. There can be no assurance that we will be successful in addressing these or any other significant risks encountered.
Divestitures could involve additional risks, including difficulties in the separation of operations, services, products, and personnel; the diversion of management's attention from other business concerns; the disruption of our business; and the potential loss of key employees. There can be no assurance that we will be successful in addressing these or any other significant risks encountered.
In the ordinary course of business, we rely on IT networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities. 21 Table of Contents We are at risk of attack by a growing list of adversaries through increasingly sophisticated methods.
In the ordinary course of business, we rely on IT networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities. We are at risk of attack by a growing list of adversaries through increasingly sophisticated methods.
Our business, including our employees, customers, and suppliers, is located throughout the world. We employ approximately 92% of our workforce outside of the U.S. We have many manufacturing, administrative, and sales facilities outside of the U.S.
Our business, including our employees, customers, and suppliers, is located throughout the world. We employ approximately 93% of our workforce outside of the U.S. We have many manufacturing, administrative, and sales facilities outside of the U.S.
As a result, we may find it difficult to enter into agreements with such customers on terms that are commercially reasonable to us. Security incidents and other disruptions to our information technology ("IT") infrastructure could interfere with our operations, compromise confidential information, and expose us to liability, which could have a material adverse impact our business and reputation.
As a result, we may find it difficult to enter into agreements with such customers on terms that are commercially reasonable to us. 17 Table of Contents Security incidents and other disruptions to our information technology ("IT") infrastructure could interfere with our operations, compromise confidential information, and expose us to liability, which could have a material adverse impact our business and reputation.
Climate change could also disrupt our operations by impacting the availability and cost of materials within our supply chain, and could also increase insurance and other operating costs. These factors may impact our decisions to construct 17 Table of Contents new facilities.
Climate change could also disrupt our operations by impacting the availability and cost of materials within our supply chain, and could also increase insurance and other operating costs. These factors may impact our decisions to construct new facilities.
Our failure to adhere to processes in response to changing regulatory requirements could result in legal liability, significant regulator penalties and fines, or impair our reputation in the marketplace. In addition, laws and regulations for smart vehicles are expected to continue to evolve in numerous jurisdictions globally, which could affect our product portfolio and operations.
Our failure to adhere to processes in response to changing regulatory requirements could result in legal liability, significant regulator penalties and fines, or impair our reputation in the marketplace. 18 Table of Contents In addition, laws and regulations for smart vehicles are expected to continue to evolve in numerous jurisdictions globally, which could affect our product portfolio and operations.
Further, managing and securing personal and customer data that our products, as well as our partners’ products, gather is a new and evolving risk for us. 22 Table of Contents Our future success depends in part on our ability to attract and retain key senior management and qualified technical, sales, and other personnel.
Further, managing and securing personal and customer data that our products, as well as our partners’ products, gather is a new and evolving risk for us. Our future success depends in part on our ability to attract and retain key senior management and qualified technical, sales, and other personnel.
Our subsidiaries located outside of the U.S. generated approximately 59% of our net revenue in fiscal year 2023 (including approximately 18% in China) and we expect sales from non-U.S. markets to continue to represent a significant portion of our total net revenue.
Our subsidiaries located outside of the U.S. generated approximately 60% of our net revenue in fiscal year 2024 (including approximately 18% in China) and we expect sales from non-U.S. markets to continue to represent a significant portion of our total net revenue.
Effective October 1, 2023, as a result of significant changes in economic facts and circumstances in the operations of our China foreign entities, the functional currency of our wholly-owned subsidiaries in China changed to the Chinese Renminbi ("CNY").
In fiscal year 2023, as a result of significant changes in economic facts and circumstances in the operations of our China foreign entities, the functional currency of our wholly-owned subsidiaries in China changed to the Chinese Renminbi ("CNY").
Based on the results of this analysis, we do not consider any of our reporting units outside of Insights, which was already fully impaired, to be at risk of failing the goodwill impairment test. 25 Table of Contents The amount of any quantified impairment must be expensed immediately as a charge that is included in operating income, which may impact our ability to raise capital.
Based on the results of this analysis, we do not consider any of our other reporting units to be at risk of failing the goodwill impairment test. 22 Table of Contents The amount of any quantified impairment must be expensed immediately as a charge that is included in operating income, which may impact our ability to raise capital.
Goodwill and other intangible assets, net totaled approximately $4.4 billion as of December 31, 2023, or 58% of our total assets. Goodwill, which represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized, was approximately $3.5 billion as of December 31, 2023, or 46% of our total assets.
Goodwill and other intangible assets, net totaled approximately $3.9 billion as of December 31, 2024, or 54% of our total assets. Goodwill, which represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized, was approximately $3.4 billion as of December 31, 2024, or 47% of our total assets.
This program provides for reduced tariffs and eased import regulations; we could be adversely affected by changes in such program, or by our failure to comply with its requirements.
This program provides for reduced tariffs and eased import regulations; we could be adversely affected by changes in such program, or by our failure to comply with its requirements. Further tariffs may be imposed on other imports of our products.
We have entered into hedge arrangements for certain metals used in our products in an attempt to minimize commodity pricing volatility and may continue to do so from time to time in the future. Such hedges might not be economically successful. In addition, these hedges do not qualify as accounting hedges in accordance with U.S. generally accepted accounting principles.
We have entered into hedge arrangements for certain metals used in our products in an attempt to minimize commodity pricing volatility and may continue to do so from time to time in the future. Such hedges might not be economically successful.
In pursuing our corporate strategy, we have in the past, and may in the future, acquire other businesses. The success of this strategy is dependent upon our ability to identify appropriate acquisition targets, negotiate transactions on favorable terms, complete transactions, and successfully integrate them into our existing businesses.
The success of this strategy is dependent upon our ability to identify appropriate acquisition targets, negotiate transactions on favorable terms, complete transactions, and successfully integrate them into our existing businesses.
If we are unable to attract and retain key personnel, our business, financial condition, and results of operations could be adversely affected. We are subject to various risks related to public health crises, including the COVID-19 pandemic, which have had, and may in the future have, material and adverse impacts on our business, financial condition, liquidity, and results of operations.
We are subject to various risks related to public health crises, which have had, and may in the future have, material and adverse impacts on our business, financial condition, liquidity, and results of operations.
In addition, work stoppages occur relatively frequently in the industries in which many of our customers operate, such as the transportation industry. If one or more of our larger customers were to experience a material work stoppage for any reason, that customer may halt or limit the purchase of our products.
If one or more of our larger customers were to experience a material work stoppage for any reason, that customer may halt or limit the purchase of our products.
If the pace of customer adoption of EVs slows, and this demand is not replaced by demand of more traditional vehicles served by our core ICE business, our results of operations, financial condition, and cash flows could be materially adversely affected. 18 Table of Contents We may incur material losses and costs as a result of product liability, warranty, and recall claims that may be brought against us.
If the pace of customer adoption of EVs slows, and this demand is not replaced by demand of more traditional vehicles served by our core ICE business, our results of operations, financial condition, and cash flows could be materially adversely affected.
Our reporting currency is the U.S. dollar ("USD"). We derive a significant portion of our net revenue from markets outside the U.S. For financial reporting purposes, the functional currency of all of our subsidiaries has historically been the USD because of the significant influence of the USD on our operations.
For financial reporting purposes, the functional currency of all of our subsidiaries has historically been the USD because of the significant influence of the USD on our operations.
In fiscal year 2023, we repaid the remaining balance on the Term Loan. As of December 31, 2023, we had $3,425.2 million of gross outstanding indebtedness, including various tranches of senior unsecured notes (the “Senior Notes”). Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our outstanding indebtedness.
In fiscal year 2023, we repaid the remaining balance on the Term Loan. Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our outstanding indebtedness. Our substantial indebtedness could have important consequences.
In addition, certain of our competitors in the transportation sensor market are influenced or controlled by major OEMs or suppliers, thereby limiting our access to these customers. Many of our customers also rely on us as their sole source of supply for many of the products that we have historically sold to them.
In addition, certain of our competitors in the transportation sensor market are influenced or controlled by major OEMs or suppliers, thereby limiting our access to these customers.
Further tariffs may be imposed on other imports of our products, or our business may be further impacted by retaliatory trade measures taken by China or other countries in response to existing or future U.S. tariffs or other measures (e.g., subsidies).
We cannot predict what additional actions may ultimately be taken by the U.S. or other governments with respect to tariffs or trade relations and our business may be further impacted by retaliatory trade measures taken by other countries in response to existing or future U.S. tariffs or other measures (e.g., subsidies).
Periodic downturns in our customers’ industries could significantly reduce demand for certain of our products, which could have a material adverse effect on our results of operations, financial condition, and cash flows. Much of our business depends on, and is directly affected by, the global automobile industry.
We are dependent on market dynamics to sell our products, and our operating results could be adversely affected by cyclical and reduced demand in these markets. Periodic downturns in our customers’ industries could significantly reduce demand for certain of our products, which could have a material adverse effect on our results of operations, financial condition, and cash flows.
In such case, the trading price of our common stock and debt securities could decline and investors may lose all or part of their investment.
In such case, the trading price of our common stock and debt securities could decline and investors may lose all or part of their investment. Business and Operational Risks Adverse conditions in the industries upon which we are dependent, including the automotive industry, have had, and may in the future have, adverse effects on our business.
Labor disruptions or increased labor costs have had, and may in the future have, adverse impacts on our business. A material labor disruption or work stoppage at one or more of our manufacturing or business facilities could have a material adverse effect on our business.
A material labor disruption or work stoppage at one or more of our manufacturing or business facilities could have a material adverse effect on our business. In addition, work stoppages occur relatively frequently in the industries in which many of our customers operate, such as the transportation industry.
Goodwill and other identifiable intangible assets were recognized at fair value as of the corresponding acquisition date. We evaluated our goodwill for impairment as of October 1, 2023.
Goodwill and other identifiable intangible assets were recognized at fair value as of the corresponding acquisition date. In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair values. Accordingly, we evaluated the Dynapower reporting unit for impairment and determined that our Dynapower reporting unit was impaired.
Sales in our automotive end markets accounted for approximately 54% of our total net revenue in fiscal year 2023.
Much of our business depends on, and is directly affected by, the global automobile industry. Sales in our automotive end markets accounted for approximately 56% of our total net revenue in fiscal year 2024.
Accordingly, the change in fair value of these hedges is recognized in earnings immediately, which could cause volatility in our results of operations from quarter to quarter. In connection with the implementation of our corporate strategies, we face risks associated with the acquisition of businesses, the integration of acquired businesses, and the growth and development of these businesses.
In connection with the implementation of our corporate strategies, we face risks associated with the acquisition of businesses, the integration of acquired businesses, and the growth and development of these businesses. In pursuing our corporate strategy, we have in the past, and may in the future, acquire other businesses.
In addition, any significant restructuring of our business will require significant managerial attention, which may be diverted from our other operations. In the year ended December 31, 2023, we exited the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”).
In addition, any significant restructuring of our business will require significant managerial attention, which may be diverted from our other operations. Labor disruptions or increased labor costs have had, and may in the future have, adverse impacts on our business.
Removed
Other risks are inherent in our non-U.S. operations, including: the potential for changes in socio-economic conditions and/or monetary and fiscal policies; intellectual property protection difficulties and disputes; the settlement of legal disputes through certain foreign legal systems; the collection of receivables; exposure to possible expropriation or other government actions; unsettled political conditions; and possible terrorist attacks.
Added
We may incur material losses and costs as a result of product liability, warranty, and recall claims that may be brought against us.
Removed
Adverse conditions in the industries upon which we are dependent, including the automotive industry, have had, and may in the future have, adverse effects on our business. We are dependent on market dynamics to sell our products, and our operating results could be adversely affected by cyclical and reduced demand in these markets.
Added
In addition, these hedges do not qualify as accounting hedges in accordance with U.S. generally accepted accounting principles. 16 Table of Contents Accordingly, the change in fair value of these hedges is recognized in earnings immediately, which could cause volatility in our results of operations from quarter to quarter.
Removed
In the year ended December 31, 2022, we sold various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business"). Refer to Note 21: Acquisitions and Divestitures of our audited consolidated financial statements and accompanying notes thereto (the "Financial Statements") included elsewhere in this Report for additional information.
Added
If we are unable to attract and retain key personnel, our business, financial condition, and results of operations could be adversely affected.
Removed
In addition, we committed to a plan to reorganize our business (the “Q3 2023 Plan”), which consisted of voluntary and involuntary reductions-in-force, site closures, and other cost-savings initiatives. Refer to Note 5: Restructuring and Other Charges, Net of our Financial Statements included elsewhere in this Report for additional information on these activities.
Added
Financial Risks 20 Table of Contents We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows. Our reporting currency is the U.S. dollar ("USD"). We derive a significant portion of our net revenue from and incur expenses in markets outside the U.S.
Removed
Financial Risks We have identified material weaknesses in our internal control over financial reporting. These material weaknesses could in the future adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Added
As of December 31, 2024, we had $3,223.4 million of gross outstanding indebtedness, including various tranches of senior unsecured notes (the “Senior Notes”).
Removed
We have identified material weaknesses in our internal control over financial reporting and those weaknesses have led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2023. We did not specify objectives with sufficient clarity to enable an appropriate level of risk assessment and monitoring.
Added
For example, effective February 4, 2025, the U.S. announced additional tariffs for goods imported into the U.S. from Mexico, Canada, and China beginning in Q1 2025.
Removed
Additionally, our control activities did not adequately establish policies, procedures, information protocols and communications to design and operate effective control, due in part, to a lack of appropriate accounting personnel, impacting areas such as inventory and account reconciliation processes in our Americas Accounting and Shared Services teams located in Mexico.
Added
In the third quarter of 2024, we recorded a $150.1 million non-cash impairment charge. This impairment was primarily driven by a lower long-range financial forecast resulting from specific discrete events that changed the timing of our forecasted performance.
Removed
Our management is taking action to remediate the deficiencies in its internal controls over financial reporting by developing a remediation plan, which could include the engagement of third-party consultants to evaluate and help formalize internal controls design and framework; the completion of a risk assessment to determine areas within the internal control structure to strengthen, document and execute; and the augmentation, reorganization or replacement of personnel where necessary to ensure appropriate levels of knowledge and execution to support internal control structure assessment, design, and execution.
Added
If Dynapower does not achieve the forecasted future cash flows, there is a possibility that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.
Removed
If actions to remediate these material weaknesses are not completed on a timely basis, or if other remediation efforts are not successful, we may, in the future, identify additional internal control deficiencies that could rise to the level of a material weakness or uncover other errors in financial reporting.
Removed
Failure to have effective internal control over financial reporting and disclosure controls and procedures could impair our ability to produce accurate financial statements on a timely basis, or provide reliable financial statements needed for business decision processes, and our business and results of operations could be harmed.
Removed
Additionally, investors could lose confidence in our reported financial information and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected.
Removed
Also, failure to maintain effective internal control over financial reporting could result in sanctions by regulatory authorities, and our independent registered public accounting firm may not be able to attest that such internal controls are effective when they are required to do so. 23 Table of Contents We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
Removed
Based on this analysis, we determined that as of October 1, 2023, goodwill related to our Insights reporting unit was impaired, and in the fourth quarter of 2023, we recorded a $321.7 million non-cash impairment charge, representing the entire goodwill balance allocated to Insights.
Removed
This impairment was primarily driven by a lower long-range financial forecast resulting from the impact of restructuring actions taken in the third and fourth quarters of 2023 and consequent business decisions regarding our level of investment in Insights in future years, considering our focus on electrification.
Removed
Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+1 added−1 removed20 unchanged
Biggest changeOur Director of Cybersecurity has served in various roles in IT and information security for over 18 years, including in the military and the healthcare and retail industries. 31 Table of Contents Cybersecurity Incidents In the event of a cybersecurity incident, our response and mitigation efforts are guided by the IRP, which provides guidance on how to respond to, and recover from, a significant cyber incident requiring an organized response.
Biggest changeCybersecurity Incidents In the event of a cybersecurity incident, our response and mitigation efforts are guided by the IRP, which provides guidance on how to respond to, and recover from, a significant cyber incident requiring an organized response. We continue to conduct tabletop exercises testing the principles and procedures set forth in our IRP based on lessons learned.
We regularly update our comprehensive training program, which covers a wide variety of topics, from protecting work machines and personal information to social innovation and how employees can protect their digital lives at home. • Supplier Engagement : We require our suppliers to comply with our standard information security terms and conditions, in addition to any requirements from our customers, as a condition of doing business with us, and require them to complete information security questionnaires to review and assess any potential cyber-related risks depending on the nature of the services being provided. • Risk Assessment : At least annually, we conduct a cybersecurity risk assessment that takes into account information from internal stakeholders, our risk register, and information from external sources (e.g., reported security incidents that have impacted other companies, industry trends, and evaluations by third parties and consultants).
We regularly update our comprehensive training program, which covers a wide variety of topics, from protecting work machines and personal information to social innovation and how employees can protect their digital lives at home. 28 Table of Contents • Supplier Engagement : We require our suppliers to comply with our standard information security terms and conditions, in addition to any requirements from our customers, as a condition of doing business with us, and require them to complete information security questionnaires to review and assess any potential cyber-related risks depending on the nature of the services being provided. • Risk Assessment : At least annually, we conduct a cybersecurity risk assessment that takes into account information from internal stakeholders, our risk register, and information from external sources (e.g., reported security incidents that have impacted other companies, industry trends, and evaluations by third parties and consultants).
The IRP is designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made by management and the Board in a timely manner. 30 Table of Contents • Defense and Monitoring : We work to protect our computing environments and products from cybersecurity threats through multi-layered defenses and apply lessons learned from our defense and monitoring efforts to help prevent future attacks.
The IRP is designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made by management and the Board in a timely manner. • Defense and Monitoring : We work to protect our computing environments and products from cybersecurity threats through multi-layered defenses and apply lessons learned from our defense and monitoring efforts to help prevent future attacks.
Our cybersecurity and global IT strategy is regularly aligned with business leaders across Sensata through our IT Excellence Committee meetings, conducted 10 times a year, to ensure cyber, IT, and business priorities are communicated and understood throughout the organization.
Our cybersecurity and global IT strategy is regularly aligned with business leaders across Sensata through our IT Excellence Committee meetings, conducted 8 times a year, to ensure cyber, IT, and business priorities are communicated and understood throughout the organization.
We continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain. For more information about cybersecurity risks relating to our business, refer to Item 1A: Risk Factors included elsewhere in this Report.
We continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain. For more information about cybersecurity risks relating to our business, refer to Item 1A: Risk Factors included elsewhere in this Report. 29 Table of Contents
These reports also include updates on cybersecurity risk resulting from risk assessments, progress of risk reduction initiatives, external auditor feedback, control maturity assessments, and relevant internal and industry cybersecurity incidents. Our CIDO has served in various roles in IT and information security for over 20. She holds an undergraduate degree in information management and technology.
These reports also include updates on cybersecurity risk resulting from risk assessments, progress of risk reduction initiatives, external auditor feedback, control maturity assessments, and relevant internal and industry cybersecurity incidents. Our CIDO has served in various roles in IT and information security for more than 20 years. She holds an undergraduate degree in information management and technology.
The Nominating and Governance committee receives an update on the Company’s risk management process at least annually, including interaction of cybersecurity with our overall risks. The Board of Directors oversees risks from cybersecurity threats through report out from the Audit Committee, which monitors cybersecurity incidents and management's response to such incidents. Our Audit Committee directly oversees our cybersecurity program.
The Nominating and Governance committee receives an update on the Company’s risk management process quarterly, including interaction of cybersecurity with our overall risks. The Board of Directors oversees risks from cybersecurity threats through report out from the Audit Committee, which monitors cybersecurity incidents and management's response to such incidents. Our Audit Committee directly oversees our cybersecurity program.
We continue to conduct tabletop exercises testing the principles and procedures set forth in our IRP based on lessons learned. While we have experienced cybersecurity incidents in the past, to date none have materially affected the Company or our financial position, results of operations and/or cash flows.
While we have experienced cybersecurity incidents in the past, to date none have materially affected the Company or our financial position, results of operations and/or cash flows.
We have devoted significant financial and personnel resources to implement and maintain security programs to meet regulatory requirements and customer expectations, and we intend to continue to make significant investments to maintain the security of our data and infrastructure.
We have devoted significant financial and personnel resources to implement and maintain security programs to meet regulatory requirements and customer expectations, and we intend to continue to make significant investments to maintain the security of our data and infrastructure. 27 Table of Contents However, there can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective.
Removed
However, there can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective.
Added
Our Director of Cybersecurity has served in various roles in IT and information security for more than 18 years, including in the military and the healthcare and retail industries.

Item 2. Properties

Properties — owned and leased real estate

4 edited+2 added−1 removed3 unchanged
Biggest changeRefer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to the Senior Secured Credit Facilities. ITEM 3. LEGAL PROCEEDINGS We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business.
Biggest changeA significant portion of our owned properties and equipment is or may become subject to a lien under the Senior Secured Credit Facilities. Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to the Senior Secured Credit Facilities. ITEM 3.
Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial condition, or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.
Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial condition, or cash flows. ITEM 4.
PROPERTIES As of December 31, 2023, we occupied principal manufacturing facilities and business centers in the following locations: Reportable Segment Approximate Square Footage (in thousands) Performance Sensing Sensing Solutions Country Location Owned Leased Bulgaria Botevgrad X 184 — Bulgaria Plovdiv X 125 — Bulgaria Sofia X — 121 China Baoying (1) X X 301 385 China Changzhou X X 618 — India Pune X X — 32 Malaysia Subang Jaya X 138 — Mexico Aguascalientes X X 566 — Mexico Mexicali X X 41 116 Mexico Tijuana X X — 258 The Netherlands Hengelo X X — 94 United Kingdom Antrim X — 112 United Kingdom Swindon (2) X — 34 United States Attleboro, MA (3) X X — 435 United States Carpinteria, CA X X — 51 United States Grandview, MO X — 47 United States Thousand Oaks, CA X X — 115 United States Burlington, VT X — 133 1,973 1,933 __________________________ (1) The owned portion of the properties in this location serves the Sensing Solutions segment only.
PROPERTIES As of December 31, 2024, we occupied principal manufacturing facilities and business centers in the following locations: Reportable Segment Approximate Square Footage (in thousands) Performance Sensing Sensing Solutions Country Location Owned Leased Bulgaria Botevgrad X 184 — Bulgaria Plovdiv X 125 — Bulgaria Sofia X — 121 China Baoying (1) X X 301 385 China Changzhou X X 618 — India Pune X X — 47 Malaysia Subang Jaya X 138 — Mexico Aguascalientes X X 613 — Mexico Mexicali X X — 116 Mexico Tijuana X X — 258 The Netherlands Hengelo X X — 94 United Kingdom Antrim X — 112 United Kingdom Swindon (2) X X — 34 United States Attleboro, MA (3) X X — 435 United States Carpinteria, CA X X — 40 United States Thousand Oaks, CA X X — 115 United States Burlington, VT X — 133 1,979 1,890 __________________________ (1) The owned portion of the properties in this location serves the Sensing Solutions segment only.
Leases covering our currently occupied principal leased facilities expire at varying dates within the next 13 years.
Leases covering our currently occupied principal leased facilities expire at varying dates within the next 12 years. We do not anticipate difficulty in retaining occupancy through lease renewals, month-to-month occupancy, or by replacing the leased facilities with equivalent facilities.
Removed
We do not anticipate difficulty in retaining occupancy through lease renewals, month-to-month occupancy, or by replacing the leased facilities with equivalent facilities. 32 Table of Contents A significant portion of our owned properties and equipment is subject to a lien under the Senior Secured Credit Facilities.
Added
LEGAL PROCEEDINGS We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business.
Added
MINE SAFETY DISCLOSURES Not applicable. 30 Table of Contents PART II

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

19 edited+9 added−10 removed6 unchanged
Biggest changeFor the year ended December 31, 2023 2022 2021 Amount Percent of Net Revenue Amount Percent of Net Revenue Amount Percent of Net Revenue Operating costs and expenses: Cost of revenue $ 2,792.8 68.9 % $ 2,712.0 67.3 % $ 2,542.4 66.5 % Research and development 178.9 4.4 189.3 4.7 159.1 4.2 Selling, general and administrative 350.7 8.6 370.6 9.2 337.0 8.8 Amortization of intangible assets 173.9 4.3 153.8 3.8 134.1 3.5 Goodwill impairment charge 321.7 7.9 — — — — Restructuring and other charges, net 54.5 1.3 (66.7) (1.7) 14.9 0.4 Total operating costs and expenses $ 3,872.4 95.5 % $ 3,359.1 83.4 % $ 3,187.6 83.4 % Cost of revenue Cost of revenue as a percentage of net revenue increased in the year ended December 31, 2023, primarily due to (1) unfavorable product mix, (2) the unfavorable effect of changes in foreign currency exchange rates, (3) the impact of certain actions taken in relation to the Q3 2023 Plan, (4) the net unfavorable impacts of acquisitions and divestitures on gross margin, and (5) the $10.5 million write-down of inventory as a result of our decision to exit the Spear Marine Business, partially offset by (1) the net impacts of pricing recoveries from customers, inflation on material and logistics costs, and volume leverage, and (2) cost savings as a result of repositioning actions taken in fiscal year 2022.
Biggest changeFor the year ended December 31, 2024 2023 2022 Amount Percent of Net Revenue Amount Percent of Net Revenue Amount Percent of Net Revenue Operating costs and expenses: Cost of revenue $ 2,776.9 70.6 % $ 2,792.8 68.9 % $ 2,712.0 67.3 % Research and development 169.3 4.3 178.9 4.4 189.3 4.7 Selling, general and administrative 392.2 10.0 350.7 8.6 370.6 9.2 Amortization of intangible assets 145.7 3.7 173.9 4.3 153.8 3.8 Goodwill impairment charge 150.1 3.8 321.7 7.9 — — Restructuring and other charges, net 149.2 3.8 54.5 1.3 (66.7) (1.7) Total operating costs and expenses $ 3,783.5 96.2 % $ 3,872.4 95.5 % $ 3,359.1 83.4 % Cost of revenue In the year ended December 31, 2024, cost of revenue as a percentage of net revenue increased versus the prior year period, due to (1) higher depreciation expense, (2) lower net revenues, and (3) the net impacts of customer pricing and manufacturing efficiencies.
Refer to Note 21: Acquisitions and Divestitures of our Financial Statements included elsewhere in this Report for additional information related to our acquisitions and divestitures.
Refer to Note 21: Divestitures of our Financial Statements included elsewhere in this Report for additional information related to our acquisitions and divestitures.
The preparation of the Financial Statements requires us to make estimates and judgments that affect the amounts reported therein. We base our estimates on historical experience and assumptions believed to be reasonable under the circumstances, and we re-evaluate such estimates on an ongoing basis. Actual results could differ from our estimates under different assumptions or conditions.
The preparation of the Financial Statements requires us to make estimates and judgments that affect the amounts reported therein. We base our estimates on historical experience and assumptions believed to be reasonable under the circumstances, and we re-evaluate such estimates on an ongoing basis. Actual results may materially differ from our estimates under different assumptions or conditions.
For a discussion of our fiscal year 2022 operating results compared to fiscal year 2021, refer to Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 13, 2023.
For a discussion of our fiscal year 2023 operating results compared to fiscal year 2022, refer to Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 29, 2024.
Other, net Other, net for the years ended December 31, 2023, 2022, and 2021 consisted of the following (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the year ended December 31, (In millions) 2023 2022 2021 Currency remeasurement (loss)/gain on net monetary assets (1) $ (20.2) $ (18.2) $ 3.4 Gain/(loss) on foreign currency forward contracts (2) 4.2 4.3 (7.6) Loss on commodity forward contracts (2) (2.8) (3.4) (3.0) Loss on debt financing (3) (5.4) (5.5) (30.1) Loss on equity investments, net (4) (0.7) (75.6) — Net periodic benefit cost, excluding service cost (3.9) (5.1) (7.5) Other 15.8 8.7 4.6 Other, net $ (13.0) $ (94.6) $ (40.0) __________________________ (1) Relates to the remeasurement of non-USD denominated monetary assets and liabilities into USD.
Other, net Other, net for the years ended December 31, 2024, 2023, and 2022 consisted of the following (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the year ended December 31, (In millions) 2024 2023 2022 Currency remeasurement gain/(loss) on net monetary assets (1) $ 4.0 $ (20.2) $ (18.2) (Loss)/gain on foreign currency forward contracts (2) (2.6) 4.2 4.3 Gain/(loss) on commodity forward contracts (2) 3.5 (2.8) (3.4) Loss on debt financing (3) (9.8) (5.4) (5.5) Loss on equity investments, net (4) (14.0) (0.7) (75.6) Net periodic benefit cost, excluding service cost (3.0) (3.9) (5.1) Other 0.4 15.8 8.7 Other, net $ (21.5) $ (13.0) $ (94.6) __________________________ (1) Relates to the remeasurement of foreign denominated monetary assets and liabilities into the functional currency.
Refer to Note 5: Restructuring and Other Charges, Net and Note 11: Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information regarding the charges related to the exit of the Spear Marine Business and amortization on our intangible assets, respectively.
Refer to Note 5: Restructuring and Other Charges, Net and Note 11: Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information regarding the charges related to the exit of the Spear businesses and amortization of our intangible assets, respectively.
The below discussion provides information on the material factors impacting fiscal year 2023 compared to fiscal year 2022. Net revenue Net revenue for the year ended December 31, 2023 increased 0.6% compared to the prior year.
The below discussion provides information on the material factors impacting fiscal year 2024 compared to fiscal year 2023. Net revenue Net revenue for the year ended December 31, 2024 decreased 3.0% compared to the prior year.
Automotive net revenue for the year ended December 31, 2023 increased 3.3% compared to the prior year. Excluding a decrease of 1.8% attributed to changes in foreign currency exchange rates, automotive net revenue increased 5.1% on an organic basis. This organic revenue growth was primarily due to market growth, partially offset by unfavorable revenue mix.
Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rates, automotive end market net revenue increased 1.5% on an organic basis. This organic revenue growth was primarily due to content growth, partially offset by unfavorable market conditions. HVOR end market net revenue for the year ended December 31, 2024 decreased 2.7% compared to the prior year.
Net revenue increased 1.5% on an organic basis, which excludes a decrease of 1.4% attributed to changes in foreign currency exchange rates and an increase of 0.5% due to the net effect of acquisitions and divestitures. 43 Table of Contents Performance Sensing Performance Sensing net revenue for the year ended December 31, 2023 increased 2.8% compared to the prior year.
Net revenue decreased 1.5% on an organic basis, which excludes a decrease of 0.7% attributed to changes in foreign currency exchange rates and a decrease of 0.8% due to the effect of a divestiture. Performance Sensing Performance Sensing net revenue for the year ended December 31, 2024 decreased 0.2% compared to the prior year.
We expect amortization expense to be approximately $147.4 million in fiscal year 2024.
We expect amortization expense to be approximately $80.1 million in fiscal year 2025.
The amounts previously reported in the tables below for the years ended December 31, 2022 and 2021 have been retrospectively recast to reflect this change. Amounts and percentages in the table below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
Amounts and percentages in the table below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
For the year ended December 31, 2023 2022 2021 Amount Percent of Net Revenue Amount Percent of Net Revenue Amount Percent of Net Revenue Net revenue: Performance Sensing $ 3,002.7 74.1 % $ 2,920.4 72.5 % $ 2,801.2 73.3 % Sensing Solutions 1,051.4 25.9 1,108.9 27.5 1,019.6 26.7 Total net revenue 4,054.1 100.0 % 4,029.3 100.0 % 3,820.8 100.0 % Operating costs and expenses 3,872.4 95.5 3,359.1 83.4 3,187.6 83.4 Operating income 181.7 4.5 670.1 16.6 633.2 16.6 Interest expense (182.2) (4.5) (195.6) (4.9) (182.6) (4.8) Interest income 31.3 0.8 16.7 0.4 3.3 0.1 Other, net (13.0) (0.3) (94.6) (2.3) (40.0) (1.0) Income before taxes 17.8 0.4 396.7 9.8 413.9 10.8 Provision for income taxes 21.8 0.5 86.0 2.1 50.3 1.3 Net (loss)/income $ (3.9) (0.1) % $ 310.7 7.7 % $ 363.6 9.5 % The discussion that follows compares operating results for fiscal year 2023 to fiscal year 2022.
For the year ended December 31, 2024 2023 2022 Amount Percent of Net Revenue Amount Percent of Net Revenue Amount Percent of Net Revenue Net revenue: Performance Sensing $ 2,743.6 69.8 % $ 2,749.9 67.8 % $ 2,645.2 65.7 % Sensing Solutions 1,061.3 27.0 1,156.7 28.5 1,210.7 30.0 Other 127.9 3.3 147.5 3.6 173.3 4.3 Total net revenue 3,932.8 100.0 % 4,054.1 100.0 % 4,029.3 100.0 % Operating costs and expenses 3,783.5 96.2 3,872.4 95.5 3,359.1 83.4 Operating income 149.3 3.8 181.7 4.5 670.1 16.6 Interest expense (155.8) (4.0) (182.2) (4.5) (195.6) (4.9) Interest income 16.2 0.4 31.3 0.8 16.7 0.4 Other, net (21.5) (0.5) (13.0) (0.3) (94.6) (2.3) (Loss)/income before taxes (11.8) (0.3) 17.8 0.4 396.7 9.8 (Benefit from)/provision for income taxes (140.3) (3.6) 21.8 0.5 86.0 2.1 Net income/(loss) $ 128.5 3.3 % $ (3.9) (0.1) % $ 310.7 7.7 % The discussion that follows compares operating results for fiscal year 2024 to fiscal year 2023.
Interest expense In the year ended December 31, 2023, interest expense decreased $13.4 million from the prior period, primarily due to the early payment on the Term Loan in the first half of 2023. 45 Table of Contents Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information regarding the early payment on the Term Loan.
Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information regarding the early payment on the Term Loan. Interest income In the year ended December 31, 2024, interest income decreased $15.1 million compared to the prior period, primarily due to lower cash balances, as we used cash on hand to pay down debt.
Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rates and an increase of 1.7% due to the net effect of acquisitions and divestitures, Sensing Solutions net revenue decreased 6.0% on an organic basis, which primarily reflects weakness in our industrial markets and inventory destocking, partially offset by market and content growth in the aerospace business and pricing.
Excluding a decrease of 0.3% attributed to changes in foreign currency exchange rates, Sensing Solutions net revenue decreased 7.9% on an organic basis, which primarily reflects weakness in our industrial content and inventory destocking, partially offset by market and content growth in the aerospace business. 41 Table of Contents Operating costs and expenses Operating costs and expenses for the years ended December 31, 2024, 2023, and 2022 are presented, in millions of dollars and as a percentage of revenue, in the following table.
HVOR net revenue for the year ended December 31, 2023 increased 1.8% compared to the prior year. Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rates and an increase of 0.3% due to the effect of acquisitions, HVOR net revenue increased 2.4% on an organic basis.
Excluding a decrease of 0.6% attributed to changes in foreign currency exchange rates, HVOR end market net revenue decreased 2.1% on an organic basis. This organic revenue decline was primarily due to market decline, partially offset by content growth. Sensing Solutions Sensing Solutions net revenue for the year ended December 31, 2024 decreased 8.2% compared to the prior year.
Refer to Note 5: Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional details regarding our exit of the Spear Marine Business and actions taken as part of the Q3 2023 Plan.
Refer to Note 5: Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional details regarding our exit of the Spear businesses. Research and development expense R&D expense in the year ended December 31, 2024 did not fluctuate materially from the prior year period.
Excluding a decrease of 1.6% attributed to changes in foreign currency exchange rates and an increase of 0.1% due to the effect of acquisitions, Performance Sensing net revenue increased 4.3% on an organic basis. Both the Automotive and HVOR operating segments contributed to these results as discussed below.
Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rate, Performance Sensing net revenue increased 0.7% on an organic basis. Automotive end market net revenue for the year ended December 31, 2024 increased 0.6% compared to the prior year.
Operating income In the year ended December 31, 2023, operating income decreased $488.4 million or 72.9%, to $181.7 million (4.5% of net revenue) compared to $670.1 million (16.6% of net revenue) in the prior year, primarily due to (1) the $321.7 million goodwill impairment charge related to the Insights reporting unit, (2) the non-recurrence of the $119.5 million gain on the sale of the Qinex Business in fiscal year 2022, net of the related transaction costs, (3) $38.5 million of charges incurred as a result of our exit from the Spear Marine Business, (4) the unfavorable effect of changes in foreign currency exchange rates, (5) charges incurred related to the Q3 2023 Plan, (6) unfavorable product mix, and (7) increased amortization of intangible assets as a result of new acquisitions, partially offset by (1) cost savings as a result of repositioning actions taken in fiscal year 2022, (2) the net impacts of pricing recoveries from customers, inflation on material and logistics costs, and volume leverage, and (3) lower expense for acquisition-related compensation arrangements.
Operating income In the year ended December 31, 2024, operating income decreased $32.4 million, or 17.8%, to $149.3 million (3.8% of net revenue) compared to $181.7 million (4.5% of net revenue) in the prior year, primarily due to (1) a $150.1 million goodwill impairment charge related to the Dynapower business, (2) a $98.8 million loss on the sale of the Insights Business, (3) higher SG&A expense, (4) the impact of organic revenue declines together with the net impact of customer pricing and manufacturing efficiencies, and (5) the unfavorable impact of foreign exchange rates, partially offset by (1) a $321.7 million goodwill impairment charge related to the Insights reporting unit in the prior year and (2) a $28.1 million decrease in amortization of intangibles.
Amortization of intangible assets Amortization expense increased in the year ended December 31, 2023, primarily due to (1) increased amortization due to newly acquired intangible assets and (2) a charge of $13.5 million in the second quarter of 2023 for accelerated amortization of intangible assets due to our exit from the Spear Marine Business, partially offset by the effect of amortization of intangible assets in accordance with their expected economic benefit.
Amortization of intangible assets Amortization expense decreased in the year ended December 31, 2024, primarily due to the divestiture of the Insights Business resulting in approximately $12.0 million lower amortization expense during fiscal year 2024 and the effect of amortization of intangible assets in accordance with their expected economic benefit, which generally results in acceleration of amortization expense in the early years of the life of an intangible asset.
Removed
We have derived these results of operations from our Financial Statements. Effective April 1, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting.
Added
We have derived these results of operations from our Financial Statements. In the three months ended March 31, 2024, we realigned our business as a result of organizational changes that better allocate our resources to support changes to our business strategy.
Removed
This organic revenue growth was primarily due to market and content growth, partially offset by channel inventory de-stocking. Sensing Solutions Sensing Solutions net revenue for the year ended December 31, 2023 decreased 5.2% compared to the prior year.
Added
The most significant changes include combining our Automotive and HVOR businesses (with the combined business remaining in Performance Sensing) and moving the Insights Business out of Performance Sensing to a new operating segment, which is not aggregated within either of our reportable segments. We combined the Automotive and HVOR businesses to better leverage our core capabilities and prioritize product focus.
Removed
Operating costs and expenses Operating costs and expenses for the years ended December 31, 2023, 2022, and 2021 are presented, in millions of dollars and as a percentage of revenue, in the following table.
Added
We also moved certain shorter-cycle businesses from Performance Sensing to Sensing Solutions, which will benefit from organizing our predominantly shorter-cycle businesses together, by allowing us to scale core capabilities and better serve our customers. Prior year amounts in this Report have been recast to reflect this 40 Table of Contents realignment.
Removed
Research and development expense R&D expense decreased in the year ended December 31, 2023, primarily as a result of lower costs as a result of certain repositioning actions taken in fiscal year 2022 that were not part of a larger restructuring plan. 44 Table of Contents Selling, general and administrative expense SG&A expense decreased in the year ended December 31, 2023, primarily as a result of (1) cost savings as a result of repositioning actions taken in fiscal year 2022, (2) lower selling expenses, (3) lower compensation expense, and (4) lower transaction costs as a result of reduced mergers and acquisitions activity, partially offset by increased SG&A expense from our acquisitions (net of divestitures).
Added
Selling, general and administrative expense SG&A expense increased in the year ended December 31, 2024 due primarily to (1) $20.3 million of accelerated amortization recorded on right-of-use lease assets that the Company intends to cease using in the near term, (2) higher share-based compensation expense, and (3) additional costs incurred to remediate the material weaknesses identified in our internal controls over financial reporting for the year ended December 31, 2023.
Removed
Goodwill impairment charge In the year ended December 31, 2023, we recorded a $321.7 million non-cash goodwill impairment charge in the fourth quarter of 2023, representing the entire goodwill balance allocated to Insights. This impairment was primarily driven by reprioritization of our investments into electrification in accordance with our business strategy.
Added
Goodwill impairment charge In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair value. Accordingly, we evaluated the Dynapower reporting unit for impairment and determined that it was impaired. In the third quarter of 2024, we recorded a $150.1 million non-cash impairment charge.
Removed
With electrification as the clear future of our company and the best area of focus for management, we narrowed our investment in Insights. These decisions resulted in significant cost restructuring and a lower long-range financial forecast for the reporting unit, impacting the valuation of the business with respect to the goodwill impairment analysis.
Added
This impairment was primarily driven by a lower long-range financial forecast resulting from specific discrete events that changed the timing of our 42 Table of Contents forecasted performance.
Removed
Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.
Added
If Dynapower does not achieve the forecasted future cash flows, or if there were a change in the discount rate or other valuation inputs, there is a possibility that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.
Removed
Restructuring and other charges, net We recorded a net charge of $54.5 million in restructuring and other charges, net in the year ended December 31, 2023, an unfavorable change in earnings compared to a net gain of $66.7 million in the prior year.
Added
Restructuring and other charges, net Restructuring and other charges, net increased in the year ended December 31, 2024 versus the prior year period, due to a $98.8 million loss recognized on the sale of the Insights Business partially offset by a decrease in net severance charges recognized.,..
Removed
This change was primarily driven by (1) the non-recurrence of the $135.1 million gain on the sale of the Qinex Business in fiscal year 2022, (2) charges incurred as a result of the entry into the Q3 2023 Plan, and (3) charges incurred as a result of our exit from the Spear Marine Business, partially offset by (1) a reduction in expense for acquisition-related compensation arrangements, and (2) the non-recurrence of $15.6 million of transaction-related charges to sell the Qinex Business in fiscal year 2022.
Added
Interest expense In the year ended December 31, 2024, interest expense decreased $26.4 million from the prior period, primarily due to lower interest expense on (1) the 5.0% Senior Notes, which were redeemed in July 2024, (2) the 5.625% Senior Notes, which were redeemed in the fourth quarter of 2023, and (3) the Term Loan, which was paid in full in the second quarter of 2023, partially offset by higher interest expense related to the 6.625% Senior Notes, which were issued in June 2024.
Removed
Interest income In the year ended December 31, 2023, interest income increased $14.6 million compared to the prior period, primarily due to higher interest rates, partially offset by lower cash balances.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

50 edited+13 added−17 removed47 unchanged
Biggest changeThe following table presents net revenue by segment for the identified periods: For the year ended December 31, 2023 2022 2021 ($ in millions) Amount Percent of Total Amount Percent of Total Amount Percent of Total Net revenue: Performance Sensing $ 3,002.7 74.1 % $ 2,920.4 72.5 % $ 2,801.2 73.3 % Sensing Solutions 1,051.4 25.9 1,108.9 27.5 1,019.6 26.7 Total net revenue $ 4,054.1 100.0 % $ 4,029.3 100.0 % $ 3,820.8 100.0 % The following table presents segment operating income in U.S. dollars ("USD") and as a percentage of segment net revenue for the identified periods: For the year ended December 31, 2023 2022 2021 ($ in millions) Amount Percent of Segment Net Revenue Amount Percent of Segment Net Revenue Amount Percent of Segment Net Revenue Segment operating income: Performance Sensing $ 744.2 24.8 % $ 728.3 24.9 % $ 758.1 27.1 % Sensing Solutions 299.0 28.4 % 323.3 29.2 % 312.3 30.6 % Total segment operating income $ 1,043.3 $ 1,051.7 $ 1,070.4 For a reconciliation of total segment operating income to consolidated operating income, refer to Note 20: Segment Reporting of our Financial Statements included elsewhere in this Report. 37 Table of Contents Effective February 1, 2024, we combined our Automotive and HVOR businesses to better leverage core capabilities and prioritize product focus into one business, Vehicles, under the Performance Sensing reportable segment.
Biggest changeThe following table presents net revenue by segment and non-segment for the identified periods: 34 Table of Contents For the year ended December 31, 2024 2023 2022 ($ in millions) Amount Percent of Total Amount Percent of Total Amount Percent of Total Net revenue: Performance Sensing $ 2,743.6 69.8 % $ 2,749.9 67.8 % $ 2,645.2 65.7 % Sensing Solutions 1,061.3 27.0 1,156.7 28.5 1,210.7 30.0 Other 127.9 3.3 147.5 3.6 173.3 4.3 Total net revenue $ 3,932.8 100.0 % $ 4,054.1 100.0 % $ 4,029.3 100.0 % The following table presents segment operating income in U.S. dollars ("USD") and as a percentage of segment and non-segment net revenue for the identified periods: For the year ended December 31, 2024 2023 2022 ($ in millions) Amount Percent of Segment Net Revenue Amount Percent of Segment Net Revenue Amount Percent of Segment Net Revenue Segment operating income: Performance Sensing $ 676.1 24.6 % $ 697.6 25.4 % $ 683.8 25.9 % Sensing Solutions 312.6 29.5 % 338.2 29.2 % 356.7 29.5 % Other 28.1 21.9 % 7.5 5.1 % 11.1 6.4 % Total segment and other operating income $ 1,016.8 $ 1,043.3 $ 1,051.7 For a reconciliation of total segment and non-segment operating income to consolidated operating income, refer to Note 20: Segment Reporting of our Financial Statements included elsewhere in this Report.
Shareholders should consult their tax advisors regarding their particular tax situation and the income tax consequences on any potential dividend income received from us. Share Repurchase Programs From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by the Board at any time.
Shareholders should consult their tax advisors regarding their particular tax situation and the income tax consequences on any potential dividend income received from us. Share Repurchase Programs From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by the Board of Directors at any time.
A large portion of our R&D activities is directed towards technologies and market trends that we believe have the potential for significant future growth, but that relate to products that are not currently within our core business or include new features and capabilities for existing products.
A large portion of our R&D activities is directed towards technologies and market trends that we believe have the potential for significant future growth, but that relate to products that are not currently within our core business or include new features and capabilities relative to existing products.
The exit of the Spear Marine Business was the result of a change in strategy with respect to the business and involved ceasing sales, marketing, and business operations. It resulted in the elimination of certain positions, primarily in the U.S. and the closure of operations in Belgium. The Spear Marine Business had been included in the Sensing Solutions reportable segment.
The exit of Spear was the result of a change in strategy with respect to the business and involved ceasing sales, marketing, and business operations. It resulted in the elimination of certain positions, primarily in the U.S., and the closure of operations in Belgium. Spear had been included in the Sensing Solutions reportable segment.
Changes in SG&A expense as a percentage of net revenue have historically been impacted by a number of factors, including: • changes in sales volume, as higher volumes enable us to spread the fixed portion of our selling, marketing, and administrative expense over higher revenue (e.g., expenses relating to our sales and marketing personnel can fluctuate due to prolonged trends in sales volume, while expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume); • changes in customer prices and surcharges; • changes in the mix of products we sell, as some products may require more customer support and sales effort than others; • new product launches in existing and new markets, as these launches typically involve a more intense sales and marketing activity before they are integrated into customer applications and systems; • changes in our customer base, as new customers may require different levels of sales and marketing attention; 40 Table of Contents • fluctuations in foreign currency exchange rates; and • acquisitions and divestitures - acquired and divested businesses may require different levels of SG&A expense as a percentage of net revenue than our core business.
Changes in SG&A expense as a percentage of net revenue have historically been impacted by a number of factors, including: • changes in sales volume, as higher volumes enable us to spread the fixed portion of our selling, marketing, and administrative expense over higher revenue (e.g., expenses relating to our sales and marketing personnel can fluctuate due to prolonged trends in sales volume, while expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume); • changes in customer prices and surcharges; • changes in the mix of products we sell, as some products may require more customer support and sales effort than others; • new product launches in existing and new markets, as these launches typically involve a more intense sales and marketing activity before they are integrated into customer applications and systems; • changes in our customer base, as new customers may require different levels of sales and marketing attention; • fluctuations in foreign currency exchange rates; and • acquisitions and divestitures - acquired and divested businesses may require different levels of SG&A expense as a percentage of net revenue than our core business.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares trade on the New York Stock Exchange under the symbol "ST." Performance Graph The following graph compares the total shareholder return of our ordinary shares since December 31, 2018 to the total shareholder return since that date of the Standard & Poor’s ("S&P") 500 Stock Index and the S&P 500 Industrial Index.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares trade on the New York Stock Exchange under the symbol "ST." Performance Graph The following graph compares the total shareholder return of our ordinary shares since December 31, 2019 to the total shareholder return since that date of the Standard & Poor’s ("S&P") 500 Stock Index and the S&P 500 Industrial Index.
Because we are a holding company, our ability to continue to pay cash dividends on our ordinary shares may be limited by restrictions on our ability to obtain sufficient funds through dividends from our subsidiaries, including restrictions under the terms of the agreements governing our indebtedness. In that regard, our indirect, wholly-owned subsidiary, Sensata Technologies B.V.
Because we are a holding company, our ability to continue to pay cash dividends on our ordinary shares may be limited by restrictions on our ability to obtain sufficient funds through dividends from our subsidiaries, including restrictions under the terms of the agreements governing our indebtedness. In that regard, our indirect, wholly-owned subsidiary, Sensata 31 Table of Contents Technologies B.V.
Selling, general and administrative expense Selling, general and administrative ("SG&A") expense consists of all expenditures incurred in connection with the sale and marketing of our products, as well as administrative overhead costs, including: salary and benefit costs for sales and marketing personnel and administrative staff; share-based incentive compensation expense; charges related to the use and maintenance of administrative offices, including depreciation expense; other administrative costs, including expenses relating to information systems, human resources, and legal, finance, and accounting services; other selling and marketing related costs, such as expenses incurred in connection with travel and communications; and transaction costs associated with acquisitions.
Selling, general and administrative expense SG&A expense consists of all expenditures incurred in connection with the sale and marketing of our products, as well as administrative overhead costs, including: salary and benefit costs for sales and marketing personnel and administrative staff; share-based compensation expense; charges related to the use and maintenance of administrative offices, including depreciation expense; other administrative costs, including expenses relating to information systems, human resources, and legal, finance, 37 Table of Contents and accounting services; other selling and marketing related costs, such as expenses incurred in connection with travel and communications; and transaction costs associated with acquisitions.
Our overall net revenue is impacted by various factors, which we characterize as "organic" or "inorganic." Inorganic factors include fluctuations in foreign currency exchange rates and the net effect of acquisitions and divestitures. 38 Table of Contents Organic factors include fluctuations in overall economic activity within the industries, end markets, and geographic regions in which we operate, which we term market growth.
Our overall net revenue is impacted by various factors, which we characterize as "organic" or "inorganic." Inorganic factors include fluctuations in foreign currency exchange rates and the net effect of acquisitions and divestitures. Organic factors include fluctuations in overall economic activity within the industries, end markets, and geographic regions in which we operate, which we term market growth.
The provision for (or benefit from) income taxes consists of: current tax expense, which relates primarily to our profitable operations in jurisdictions outside the U.S. and U.K. and withholding taxes related to interest, royalties, and repatriation of foreign earnings; and deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to the step-up in fair value of fixed and intangible assets, including goodwill, acquired in connection with business combination transactions, the utilization of net operating losses, changes in tax rates, and changes in our assessment of the realizability of our deferred tax assets.
The provision for (or benefit from) income taxes consists of: current tax expense, which relates primarily to our profitable operations in jurisdictions outside the U.S. and U.K. and withholding taxes related to interest, royalties, and repatriation of foreign earnings; and deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to the intangible assets, including goodwill, acquired in connection with business combination transactions, the utilization of net operating losses, changes in tax rates, and changes in our assessment of the realizability of our deferred tax assets.
The total shareholder return shown on the graph represents past performance and should not be considered an indication of future price performance. Stockholders As of February 7, 2024, there were three holders of record of our ordinary shares, primarily Cede & Co. (which acts as nominee shareholder for the Depository Trust Company).
The total shareholder return shown on the graph represents past performance and should not be considered an indication of future price performance. Stockholders As of February 7, 2025, there were three holders of record of our ordinary shares, which included Cede & Co. (which acts as nominee shareholder for the Depository Trust Company).
Amounts recognized in restructuring and other charges, net will vary according to the extent of our restructuring programs and other income or expense items not presented elsewhere in operating income. Interest expense As of December 31, 2023 and 2022, we had gross outstanding indebtedness of $3,425.2 million and $4,273.4 million, respectively.
Amounts recognized in restructuring and other charges, net will vary according to the extent of our restructuring programs and other income or expense items not presented elsewhere in operating income. Interest expense As of December 31, 2024 and 2023, we had gross outstanding indebtedness of $3,223.4 million and $3,425.2 million, respectively.
The factors include, but are not limited to, the following: • establishing or releasing a portion of the valuation allowance related to our gross deferred tax assets; • foreign tax rate differential - we operate in multiple jurisdictions including but not limited to Bulgaria, China, Malaysia, Malta, the Netherlands, South Korea, the U.S., and the U.K.
The factors include, but are not limited to, the following: • establishing or releasing a portion of the valuation allowance related to our gross deferred tax assets; • foreign tax rate differential - we operate in multiple jurisdictions including but not limited to Bulgaria, China, Malaysia, Malta, Mexico, the Netherlands, Switzerland, the U.S., and the U.K.
The graph assumes that the value of the investment in our ordinary shares and each index was $100.00 on December 31, 2018.
The graph assumes that the value of the investment in our ordinary shares and each index was $100.00 on December 31, 2019.
Dividends In fiscal year 2023, we made payments of quarterly dividends of $0.11 per share in February 2023 and $0.12 per share in May, August, and November 2023. We expect that comparable cash dividends will continue to be paid in the foreseeable future.
Dividends In fiscal year 2024, we made payments of quarterly dividends of $0.12 per share in February, May, August, and November. We expect that comparable cash dividends will continue to be paid in the foreseeable future.
The following table presents (as a percentage of total) PP&E and net revenue by geographic region for the identified periods: PP&E, net as of December 31, Net revenue for the year ended December 31, 2023 2022 2023 2022 2021 Americas 35.9 % 33.7 % 45.0 % 42.3 % 38.0 % Europe 17.9 % 20.0 % 26.3 % 25.9 % 26.2 % Asia and rest of world 46.2 % 46.3 % 28.7 % 31.8 % 35.8 % Refer to Note 20: Segment Reporting of our Financial Statements included elsewhere in this Report for additional information related to our PP&E, net balances by selected geographic area as of December 31, 2023 and 2022 and net revenue by selected geographic area for the years ended December 31, 2023, 2022, and 2021.
The following table presents (as a percentage of total) PP&E and net revenue by geographic region for the identified periods: PP&E, net as of December 31, Net revenue for the year ended December 31, 2024 2023 2024 2023 2022 Americas 36.7 % 35.9 % 43.3 % 45.0 % 42.3 % Europe 17.2 % 17.9 % 27.0 % 26.3 % 25.9 % Asia and rest of world 46.0 % 46.2 % 29.7 % 28.7 % 31.8 % Refer to Note 20: Segment Reporting of our Financial Statements included elsewhere in this Report for additional information related to our PP&E, net balances by selected geographic area as of December 31, 2024 and 2023 and net revenue by selected geographic area for the years ended December 31, 2024, 2023, and 2022.
This foreign tax rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates, tax holidays, and favorable tax regimes available to certain of our foreign subsidiaries; • changes in tax laws and rates, including the potential or actual impact of activities by the Organization for Economic Co-operation and Development ("OECD") related to the European Union's ("EU's") Pillar Two directive and the European Commission ("EC") challenges to sovereign EU member states; • losses incurred in certain jurisdictions, which cannot be currently benefited, if it is not more likely than not that the associated deferred tax asset will be realized in the foreseeable future; • foreign currency exchange gains and losses; • as a result of income tax audit settlements, final assessments, or lapse of applicable statutes of limitation, we may recognize an income tax expense or benefit including adjustment of previously accrued interest and penalties; and • in certain jurisdictions, we recognize withholding and other taxes on intercompany payments, including dividends, and such taxes are deducted if they cannot be credited against the recipient's tax liability in its country of residence.
This foreign tax rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates, tax holidays, and favorable tax regimes available to certain of our foreign subsidiaries; • changes in tax laws and rates, including the potential or actual impact of activities by the Organization for Economic Co-operation and Development ("OECD") initiatives such as Pillar Two, the European Commission ("EC") challenges to 39 Table of Contents sovereign EU member states, and uncertainty surrounding potential changes to United States tax laws and regulations under the new administration; • losses incurred in certain jurisdictions, which cannot be currently benefited, if it is not more likely than not that the associated deferred tax asset will be realized in the foreseeable future; • foreign currency exchange gains and losses; • income tax audit settlements, final assessments, or lapse of applicable statutes of limitation, which may result in recognizing an income tax expense or benefit including adjustment of previously accrued interest and penalties; and • in certain jurisdictions, we recognize withholding and other taxes on intercompany payments, including dividends, and such taxes are deducted if they cannot be credited against the recipient's tax liability in its country of residence.
Research and development expense We develop products that address increasingly complex engineering and operating performance requirements to help our customers solve their most difficult challenges in the automotive, HVOR, fleet management, industrial, clean energy, and aerospace industries.
Research and development expense We develop products that address increasingly complex engineering and operating performance requirements to help our customers solve their most difficult challenges in the automotive, HVOR, industrial, clean energy, and aerospace end markets.
("STBV"), may be limited in its ability to pay dividends or otherwise make distributions to its immediate parent company and, ultimately, to us. Refer to Note 14: Debt of our audited consolidated financial statements and accompanying notes thereto (the "Financial Statements") included elsewhere in this Report for additional information related to our dividend restrictions.
("STBV"), may be limited in its ability to pay dividends or otherwise make distributions to its immediate parent company and, ultimately, to us. Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our dividend restrictions.
In fiscal year 2024, we will continue to execute our capital allocation strategy that is currently designed to reduce our leverage and return capital to shareholders through our dividend and opportunistic share repurchases. This strategy reduces risk in our capital structure, lowers interest expense, and improves net income and earnings per share.
In fiscal year 2025, we will continue to execute our capital allocation strategy that is currently designed to reduce our leverage and return capital to shareholders through our 33 Table of Contents dividend and opportunistic share repurchases. This strategy reduces risk in our capital structure, lowers interest expense, and improves net income and earnings per share.
Seasonality Refer to Item 1: Business included elsewhere in this Report for discussion of our assessment of seasonality related to our business. 42 Table of Contents Legal Proceedings Refer to
Seasonality Refer to Item 1: Business included elsewhere in this Report for discussion of our assessment of seasonality related to our business. Legal Proceedings Refer to
The Senior Notes accrue interest at fixed rates. However, the Term Loan and the Revolving Credit Facility accrue interest at variable interest rates, which could drive some of the variability in interest expense. As of December 31, 2023, we had no amounts outstanding on the Term Loan or Revolving Credit Facility.
However, the Term Loan and the Revolving Credit Facility accrue interest at variable interest rates, which could drive some of the variability in interest expense. As of December 31, 2024, we had no amounts outstanding on the Term Loan or Revolving Credit Facility.
Changes in cost of revenue as a percentage of net revenue have historically been impacted by several factors, including: • changes in the price of raw materials, including the impact of changes in costs to import such raw materials, such as tariffs; • changes in customer prices and surcharges; • implementation of cost improvement measures aimed at increasing productivity, including reduction of fixed production costs, refinements in inventory management, design and process driven changes, and the coordination of procurement within each subsidiary and at the business level; • product lifecycles, as we typically incur higher costs associated with new product development (related to excess manufacturing capacity and higher production costs during the initial stages of product launches) and during the phase-out of discontinued products; • changes in production volumes, as a portion of production costs are fixed; 39 Table of Contents • transfer of production to our lower-cost manufacturing facilities; • changes in depreciation expense, including those arising from the adjustment of PP&E to fair value associated with acquisitions; • fluctuations in foreign currency exchange rates; • changes in product mix; • changes in logistics costs; • acquisitions and divestitures – acquired and divested businesses may generate higher or lower cost of revenue as a percentage of net revenue than our core business; and • the increase in the carrying value of inventory adjusted to fair value upon the application of purchase accounting associated with acquisitions.
Changes in cost of revenue as a percentage of net revenue have historically been impacted by several factors, including: • changes in the price of raw materials, including the impact of changes in costs to import such raw materials, such as tariffs; • changes in customer prices and surcharges; • implementation of cost improvement measures aimed at increasing productivity, including reduction of fixed production costs, refinements in inventory management, design and process driven changes, and the coordination of procurement within each subsidiary and at the business level; • product lifecycles, as we typically incur higher costs associated with new product development (related to excess manufacturing capacity and higher production costs during the initial stages of product launches) and during the phase-out of discontinued products; • changes in production volumes, as a portion of production costs are fixed; • transfer of production to our lower-cost manufacturing facilities; • changes in depreciation expense; • fluctuations in foreign currency exchange rates; • changes in product mix; • changes in logistics costs; and • acquisitions and divestitures – acquired and divested businesses may generate higher or lower cost of revenue as a percentage of net revenue than our core business.
(2) All purchases during the three months ended December 31, 2023 were conducted pursuant to the September 2023 Program. The September 2023 Program does not have an established expiration date. ITEM 6. RESERVED ITEM 7.
(2) All purchases during the three months ended December 31, 2024 were conducted pursuant to the September 2023 Program. The September 2023 Program does not have an established expiration date. ITEM 6. RESERVED 32 Table of Contents ITEM 7.
These repayments brought our gross outstanding indebtedness at December 31, 2023 to $3.4 billion, representing a net leverage ratio of 3.2x, compared to gross indebtedness of $4.3 billion as of December 31, 2022 (representing a net leverage ratio of 3.4x).
These repayments brought our gross outstanding indebtedness at December 31, 2024 to $3.2 billion, representing a net leverage ratio of 3.0x, compared to gross indebtedness of $3.4 billion as of December 31, 2023 (representing a net leverage ratio of 3.2x).
The credit agreement governing our secured credit facility (as amended, supplemented, waived, or otherwise modified, the "Credit Agreement") provides for senior secured credit facilities (the "Senior Secured Credit Facilities"), consisting of the Term Loan, the $750.0 million revolving credit facility (the "Revolving Credit Facility"), and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances.
The credit agreement governing our secured credit facility (as amended, supplemented, waived, or otherwise modified, the "Credit Agreement") provides for senior secured credit facilities (the "Senior Secured Credit Facilities"), consisting of the Term Loan, the $750.0 million revolving credit facility (the "Revolving Credit Facility"), and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances. 38 Table of Contents The Senior Notes accrue interest at fixed rates.
Other, net Other, net primarily includes gains and losses associated with the remeasurement of non-USD denominated monetary assets and liabilities into USD, changes in the fair value of derivative financial instruments not designated as cash flow hedges, mark-to-market gains and losses on investments, losses on debt financing transactions, and net periodic benefit cost, excluding 41 Table of Contents service cost.
Other, net Other, net primarily includes gains and losses associated with the remeasurement of monetary assets and liabilities denominated in a currency that is not the functional currency, changes in the fair value of derivative financial instruments not designated as cash flow hedges, mark-to-market gains and losses on investments, losses on debt financing transactions, and net periodic benefit cost, excluding service cost.
Net Revenue by End Market Our net revenue for the years ended December 31, 2023, 2022, and 2021 was derived from the following end markets: For the year ended December 31, (Percentage of total) 2023 2022 2021 Automotive 53.7 % 52.3 % 54.0 % HVOR 21.3 % 21.1 % 20.5 % Industrial 14.7 % 14.4 % 12.0 % Appliance and HVAC (1) 4.6 % 5.4 % 6.4 % Aerospace 4.7 % 3.8 % 3.5 % Other 1.0 % 3.0 % 3.6 % __________________________ (1) Heating, ventilation, and air conditioning We are a significant supplier to multiple OEMs within many of these end markets, thereby reducing customer concentration risk.
Net Revenue by End Market Our net revenue for the years ended December 31, 2024, 2023, and 2022 was derived from the following end markets: For the year ended December 31, (Percentage of total) 2024 2023 2022 Automotive 56.2 % 53.7 % 52.3 % HVOR 17.6 % 17.7 % 16.8 % Industrial 14.2 % 16.3 % 18.1 % HVAC (1) 4.0 % 4.1 % 4.7 % Aerospace 4.8 % 4.6 % 3.8 % Other 3.3 % 3.6 % 4.3 % __________________________ (1) Heating, ventilation, and air conditioning 35 Table of Contents We are a significant supplier to multiple OEMs within many of these end markets, thereby reducing customer concentration risk.
Fiscal year 2023 financial summary Our consolidated revenue increased 0.6% in fiscal year 2023 from the prior year. Excluding a decrease of 1.4% attributed to changes in foreign currency exchange rates and an increase of 0.5% due to the net effect of acquisitions and divestitures, net revenue increased 1.5% on an organic basis.
Fiscal year 2024 financial summary Our consolidated revenue decreased 3.0% in fiscal year 2024 from the prior year. Excluding a decrease of 0.7% attributed to changes in foreign currency exchange rates and a decrease of 0.8% due to the effect of divestitures, net revenue decreased 1.5% on an organic basis.
We believe regulatory requirements for safer vehicles, higher fuel efficiency, and lower emissions, as well as customer demand for operator productivity and convenience, drive the need for advancements in powertrain management, efficiency, safety, and operator controls.
Refer to Item 1: Business included in this Report for additional discussion on our business. We believe regulatory requirements for safer vehicles, higher fuel efficiency, and lower emissions, as well as customer demand for operator productivity and convenience, drive the need for advancements in powertrain management, efficiency, safety, and operator controls.
These withholdings took place outside of a publicly announced repurchase plan. There were 4,035, 216, and 1,596 ordinary shares withheld in October 2023, November 2023, and December 2023, respectively, representing a total aggregate fair value of $0.2 million based on the closing price of our ordinary shares on the date of withholdings.
These withholdings took place outside of a publicly announced repurchase plan. There were 39,275, 7,677, and 10,240 ordinary shares withheld in October 2024, November 2024, and December 2024, respectively, representing a total aggregate fair value of $1.9 million based on the closing price of our ordinary shares on the date of withholdings.
Exiting the Spear Marine Business resulted in charges in the year ended December 31, 2023 of approximately $38.5 million, consisting of accelerated amortization, inventory and property, plant and equipment ("PP&E") write-downs, severance charges, and other charges, including contract termination costs.
Exiting Spear resulted in charges in the year ended December 31, 2024 of approximately $22.2 million, consisting of accelerated amortization of intangible assets, disposal of inventory and property, plant and equipment ("PP&E"), severance charges, and other charges, including contract termination costs.
A substantial portion of these costs can fluctuate on an aggregate basis in direct correlation with changes in production volumes. These costs may decline as a percentage of net revenue due to economies of scale associated with higher production volumes, and conversely, may increase with lower production volumes. These costs also fluctuate based on local labor market conditions.
These costs may decline as a percentage of net revenue due to economies of scale associated with higher production volumes, and conversely, may increase with lower production volumes. These costs also fluctuate based on local labor market conditions. We rely on contract workers for direct labor in certain geographies.
In fiscal year 2023, we used $848.9 million of cash to pay debt, including prepaying the entire remaining outstanding principal on our variable-rate term loan facility ("Term Loan") balance in the first half of 2023 and the early redemption of the full $400.0 million aggregate principal amount outstanding on our 5.625% senior notes due 2024 (the "5.625% Senior Notes") in accordance with the terms of the indenture under which the 5.625% Senior Notes were issued.
Fiscal year 2024 highlights In fiscal year 2024, we used $701.9 million of cash to pay debt, including the early redemption of the full $700.0 million aggregate principal amount outstanding on our 5.0% Senior Notes in accordance with the terms of the indenture under which the 5.0% Senior Notes were issued.
Amounts and percentages in the tables below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
The amounts previously reported in the tables below for the years ended December 31, 2023 and 2022 have been retrospectively recast to reflect this change. Amounts and percentages in the tables below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
Modifications of existing products for use by new and existing customers in familiar applications are included in cost of revenue, as are costs related to improvements in our manufacturing processes. • Other.
As of December 31, 2024, we had approximately 2,300 direct labor contract workers worldwide. • Sustaining Engineering Activity Costs. Modifications of existing products for use by new and existing customers in familiar applications are included in cost of revenue, as are costs related to improvements in our manufacturing processes. 36 Table of Contents • Other.
Our current tax expense is favorably impacted by the amortization of definite-lived intangible assets and other tax benefits derived from our operating and capital structure, including tax incentives in both the U.K. and China as well as favorable tax status in Mexico.
Our current tax expense is favorably impacted by the amortization of definite-lived intangible assets and other tax benefits derived from our operating and capital structure, including tax incentives in both the U.K. and China. In addition, our tax structure takes advantage of participation exemption regimes that permit the receipt of intercompany dividends without incurring taxable income in those jurisdictions.
A portion of our production materials contains certain commodities, resins, and metals, the cost of which may vary with underlying pricing and foreign currency exchange rates. We use forward contracts to economically hedge a portion of our exposure to the potential change in prices associated with certain of these commodities, including the impact of exchange rate fluctuations.
A portion of our production materials contains certain commodities, resins, and metals, the cost of which may vary with underlying pricing and foreign currency exchange rates.
In fiscal year 2023, according to third party data, global production of light vehicles increased approximately 9% and global production in the heavy vehicle and off-road ("HVOR") markets we serve increased approximately 1% to 2%, each from the prior year. 35 Table of Contents Fiscal year 2023 highlights In the fourth quarter of 2023, we determined that, as of October 1, 2023, our Insights reporting unit was impaired.
In fiscal year 2024, according to third party data, global production of light vehicles decreased approximately 1% and global production in the heavy vehicle and off-road ("HVOR") markets we serve decreased approximately 7%, each from the prior year.
Refer to Note 5: Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional information on the Q3 2023 Plan and our exit from the Spear Marine Business.
Refer to Note 5: Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional information on our exit from Spear. Selected Segment Information We present financial information for two reportable segments, Performance Sensing and Sensing Solutions. Set forth below is selected information for each of these segments for the periods presented.
Organic revenue growth was primarily driven by an increase in demand in markets we serve in the Automotive, HVOR, and Aerospace businesses, content 36 Table of Contents growth, and the impact of pricing recoveries, partially offset by revenue mix, market declines, and inventory destocking in our Industrial business.
Organic revenue decline was primarily driven by revenue mix, market declines, and inventory destocking in our Industrial business, partially offset by content growth in the Automotive, HVOR, and Aerospace businesses and the impact of pricing recoveries, Operating income for fiscal year 2024 decreased $32.4 million, or 17.8%, to $149.3 million (3.8% of net revenue) compared to $181.7 million (4.5% of net revenue) in the prior year.
We expect that the actions taken in the Q3 2023 Plan will result in annualized savings of approximately $40 million to $50 million. On June 6, 2023, we announced that we had made the decision to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”).
See Note 21: Disposals of the Financial Statements included elsewhere in this Report for additional information. On June 6, 2023, we announced that we had made the decision to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”).
Refer to Note 6: Other, Net of our Financial Statements included elsewhere in this Report for additional information. • Employee Costs. Wages and benefits, including variable incentive compensation, for employees involved in our manufacturing operations and certain customer service and engineering activities is reflected in cost of revenue.
Gains and losses recognized on these derivatives are recorded in other, net and are not included in cost of revenue. Refer to Note 6: Other, Net of our Financial Statements included elsewhere in this Report for additional information. • Employee Costs.
The process or criteria used to determine the amount of repurchases is an ongoing and frequent review of our capacity of available cash and our overall capital allocation priorities. 34 Table of Contents Issuer purchase of Equity Securities Period Total Number of Shares Purchased (in shares) (1) Weighted-Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs (in shares)(2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs (in millions) (2) October 1 through October 31, 2023 215,560 $ 37.78 211,525 $ 492.0 November 1 through November 30, 2023 318,268 $ 31.61 318,052 $ 482.0 December 1 through December 31, 2023 302,639 $ 33.40 301,043 $ 471.9 Quarter total 836,467 $ 33.85 830,620 $ 471.9 __________________________ (1) The number of ordinary shares presented includes ordinary shares that were withheld to cover payment of employee withholding tax upon the vesting of restricted securities.
Issuer purchase of Equity Securities Period Total Number of Shares Purchased (in shares) (1) Weighted-Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs (in shares)(2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs (in millions) (2) October 1 through October 31, 2024 606,341 $ 35.44 567,066 $ 403.0 November 1 through November 30, 2024 7,677 $ 32.43 — $ 403.0 December 1 through December 31, 2024 10,240 $ 27.70 — $ 403.0 Quarter total 624,258 $ 35.27 567,066 $ 403.0 __________________________ (1) The number of ordinary shares presented includes ordinary shares that were withheld to cover payment of employee withholding tax upon the vesting of restricted securities.
In fiscal year 2023, in addition to paying $848.9 million on debt as discussed elsewhere, we used cash of approximately $88.4 million for share repurchases and $71.5 million for payment of cash dividends.
We generated $551.5 million of operating cash flows in fiscal year 2024, ending the year with $593.7 million in cash. In addition to the aforementioned $701.9 million of cash used to pay debt, in fiscal year 2024, we used cash of approximately $68.9 million for share repurchases and $72.2 million for payment of dividends.
Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our earnings results for the year ended December 31, 2023. We generated $456.7 million of operating cash flows in fiscal year 2023, ending the year with $508.1 million in cash.
These decreases were partially offset by a $171.6 million reduction in the goodwill impairment charge taken in 2024 and lower intangible asset charges in the current year. Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our operating earnings results for the year ended December 31, 2024.
The Sensing Solutions reportable segment will benefit from organizing our predominantly shorter-cycle businesses together, by allowing us to scale core capabilities and better serve our customers. We are still evaluating what impact this reorganization will have on our reportable segments, operating segments, and reporting units in the first quarter of 2024.
We combined the Automotive and HVOR businesses to better leverage our core capabilities and prioritize product focus. We also moved certain shorter-cycle businesses from Performance Sensing to Sensing Solutions, which will benefit from organizing these businesses together, by allowing us to scale core capabilities and better serve our customers.
We expect improving free cash flow (cash from operations less capital expenditures) will naturally allow net leverage to decline and returns on invested capital to improve over time. Selected Segment Information We present financial information for two reportable segments, Performance Sensing and Sensing Solutions. Set forth below is selected information for each of these segments for the periods presented.
We expect improving free cash flow (net cash provided by operating activities less capital expenditures) to further reduce our net leverage ratio, and over time, we believe higher profitability will naturally allow net leverage to decline and returns on invested capital to improve.
The terms of these forward contracts fix the price of these commodities at a future date for various notional amounts. Gains and losses recognized on these derivatives are recorded in other, net and are not included in cost of revenue.
We use forward contracts to economically hedge a portion of our exposure to the potential change in prices associated with certain of these commodities, and we use forward contracts to economically hedge our exposure to foreign exchange rate fluctuations. The terms of these forward contracts fix the price of these commodities at a future date for various notional amounts.
Total Shareholder Return of $100.00 Investment from December 31, 2018 As of December 31, 2018 2019 2020 2021 2022 2023 Sensata $ 100.00 $ 120.14 $ 117.62 $ 137.58 $ 90.75 $ 85.43 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P 500 Industrial $ 100.00 $ 126.83 $ 138.25 $ 165.07 $ 153.35 $ 177.94 The information in the graph and table above is not "soliciting material," is not deemed "filed" with the United States (the "U.S.") Securities and Exchange Commission, and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date 33 Table of Contents of this Annual Report on Form 10-K (this "Report"), except to the extent that we specifically incorporate such information by reference.
Securities and Exchange Commission, and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, except to the extent that we specifically incorporate such information by reference.
Removed
Refer to Item 1: Business included elsewhere in this Report for additional discussion on our growth drivers. We anticipate significant change in the markets that we serve over the next 10 years, as our customers transform their businesses and product portfolios to adjust to decarbonization trends.
Added
Total Shareholder Return of $100.00 Investment from December 31, 2019 As of December 31, 2019 2020 2021 2022 2023 2024 Sensata $ 100.00 $ 97.90 $ 114.52 $ 75.53 $ 71.11 $ 52.57 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P 500 Industrial $ 100.00 $ 109.01 $ 130.16 $ 120.91 $ 140.30 $ 162.25 The information in the graph and table above is not "soliciting material," is not deemed "filed" with the U.S.
Removed
Many equipment categories are electrifying, and significant investment is being made in global infrastructure to support this trend. During fiscal year 2023, we recognized Electrification revenue of approximately $673 million. New business wins ("NBOs") were approximately $657 million in fiscal year 2023, of which more than half were in Electrification.
Added
The process or criteria used to determine the amount of repurchases is an ongoing and frequent review of our capacity of available cash and our overall capital allocation priorities.
Removed
We define NBOs as incremental revenue to our current base of business that is expected to be recognized on average in the fifth year after entry into the agreement, when programs typically reach their normal volume. Accordingly, NBOs are an indicator of future revenue potential.
Added
This decrease was primarily driven by a decrease in revenue, an increase of $94.7 million in restructuring and other charges, net, driven by the loss on the sale of the Insights business, and a $41.5 million increase in selling, general and administrative ("SG&A") costs.
Removed
As a result, we recorded a $321.7 million non-cash impairment charge, representing the entire goodwill balance allocated to Insights. This impairment was primarily driven by reprioritization of our investments into electrification. This reprioritization evolved from an assessment of our business strategy, beginning in the second half of 2023.
Added
Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of free cash flow. In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair value.
Removed
With electrification as the clear future of our company and the best area of focus for management, in the fourth quarter of 2023, we decided to narrow our investment in Insights. Our assessment of the potential of the business has not changed, but our focus has moved from growth of the business to profitability.
Added
The primary indicators of impairment were revised projections of future cash flows and actual performance that was lower than previous projections for this reporting unit. We evaluated the goodwill of the Dynapower reporting unit for impairment using a combination of a market-based valuation method and an income-based approach which discounts forecasted cash flows.
Removed
These decisions resulted in significant cost restructuring and a lower long-range financial forecast for the reporting unit, impacting the valuation of the business with respect to the goodwill impairment analysis. Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.
Added
As these assumptions were largely unobservable, the estimated fair values fall within Level 3 of the fair value hierarchy. A change in our cash flow forecast or the discount rate used would result in an increase or decrease in our calculated fair value.
Removed
We are considering strategic alternatives for this business as we continue to focus our investment priorities in line with our strategy. In the year ended December 31, 2023, we committed to a plan to reorganize our business (the “Q3 2023 Plan”).
Added
We determined that our Dynapower reporting unit was impaired, and in the third quarter of 2024, we recorded a $150.1 million non-cash goodwill impairment charge. If Dynapower does not achieve the forecasted future cash flows, there is a possibility that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.
Removed
The Q3 2023 Plan, consisting of voluntary and involuntary reductions-in-force, site closures, and other cost-savings initiatives, was commenced to adjust our cost structure and business activities to better align with weaker market demand we have been experiencing due to continued economic uncertainty in many of our end markets and to take active measures to accelerate margin recovery.
Added
In August 2024, we executed a purchase agreement whereby we agreed to sell the Insights Business to a third party. The total stated purchase price of the Insights Business was $165.0 million, subject to normal post-closing adjustments.
Removed
Our business strategy remains the same with increasing focus and effort in penetrating the fast-growing electrification trend where we are having great success with significant NBOs. The reductions-in-force, which are subject to the laws and regulations of the countries in which the actions are planned, are expected to impact 466 positions.
Added
In the year ended December 31, 2024, we recognized a loss on sale of approximately $98.8 million, presented in restructuring and other charges, net in our consolidated statements of operations, and approximately $11.2 million of transaction-related expenses, which were presented in SG&A costs in our consolidated statements of operations.
Removed
Over the life of the Q3 2023 Plan, we expect to incur restructuring charges of between $20.5 million and $25.5 million, primarily related to reductions-in-force. The majority of the actions under the Q3 2023 Plan are expected to be completed on or before June 30, 2024.
Added
In September 2024, we made the decision to exit the Spear aerospace and defense business and entered into an asset purchase agreement that closed in October 2024, wherein a third party assumed control of a majority of the remaining Spear assets.
Removed
In the year ended December 31, 2023, we recognized approximately $23.5 million of charges related to the Q3 2023 Plan. As of December 31, 2023, our severance liability related to the Q3 2023 Plan was $6.0 million. Refer to Note 5: Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional information.
Added
In the three months ended March 31, 2024, we realigned our business as a result of organizational changes that better allocate our resources to support changes to our business strategy.
Removed
Operating income for fiscal year 2023 decreased $488.5 million, or 72.9%, to $181.7 million (4.5% of net revenue) compared to $670.1 million (16.6% of net revenue) in the prior year. This decrease was primarily due to the $321.7 million impairment of the Insights reporting unit in the fourth quarter.
Added
The most significant changes include combining our Automotive and HVOR businesses (with the combined business remaining in Performance Sensing) and moving the various assets and liabilities comprising our Insights Business out of Performance Sensing to a new operating segment, which is not aggregated within either of our reportable segments.
Removed
In addition, operating income in the prior year included $135.1 million of gain on sale of various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business"), for which there was no comparable amount in fiscal year 2023.
Added
Wages and benefits, including variable incentive compensation, for employees involved in our manufacturing operations and certain customer service and engineering activities is reflected in cost of revenue. A substantial portion of these costs can fluctuate on an aggregate basis in direct correlation with changes in production volumes.
Removed
Other charges during the year, such as those related to our exit from the Spear Marine Business and the entry into the Q3 2023 Plan, and the unfavorable effect of changes in foreign currency exchange rates, were partially offset by the net impacts of pricing recoveries from customers with inflation on material and logistics costs, volume leverage, and cost savings during the year resulting from repositioning actions taken in fiscal year 2022.
Removed
Effective April 1, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting. The amounts previously reported in the tables below for the years ended December 31, 2022 and 2021 have been retrospectively recast to reflect this change.
Removed
We rely on contract workers for direct labor in certain geographies. As of December 31, 2023, we had approximately 2,200 direct labor contract workers worldwide. • Sustaining Engineering Activity Costs.
Removed
In addition, our tax structure takes advantage of participation exemption regimes that permit the receipt of intercompany dividends without incurring taxable income in those jurisdictions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

15 edited+10 added−0 removed51 unchanged
Biggest changeWe continue to evaluate the potential impact on future periods due to the Pillar Two framework, as such changes could result in complexity and uncertainty in countries where we do business and could increase our effective tax rate.
Biggest changeThe dynamic nature of the legislative landscape, with outgoing changes and updates to the rules, creates uncertainty and potential for retroactive tax liabilities. We continue to evaluate the guidance and regulations of the Pillar Two framework. Any further developments could result in complexity and uncertainty in countries where we do business and could increase our effective tax rate.
The following criteria must be satisfied for the English court to enforce the debt created by the U.S. judgment: (1) the U.S. court having had jurisdiction over the original proceedings according to English conflicts of laws principles and rules of English private international law at the time when proceedings were initiated; (2) the U.S. proceedings not having been brought in breach of a jurisdiction or arbitration clause except with the agreement of the defendant or the defendant’s subsequent submission to the jurisdiction of the court; (3) the U.S. judgment being final and conclusive on the merits in the sense of being final and unalterable in the court which pronounced it and being for a definite sum of money; (4) the recognition or enforcement, as the case may be, of the U.S. judgment not contravening English public policy in a sufficiently significant way or contravening the Human Rights Act 1998 (or any subordinate legislation made thereunder, to the extent applicable); (5) the U.S. judgment not being for a sum payable in respect of taxes, or other charges of a like nature, or in respect of a penalty or fine, or otherwise based on a U.S. law that an English court considers to be a penal or revenue law; (6) the U.S. judgment not having been arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damages sustained, and not otherwise being a judgment contrary to section 5 of the Protection of Trading Interests Act 1980 or is a judgment based on measures designated by the Secretary of State under Section 1 of that Act; (7) the U.S. judgment not having been obtained by fraud or in breach of English principles of natural justice; (8) the U.S. judgment not being a judgment on a matter previously determined by an English court, or another court whose judgment is entitled to recognition (or enforcement as the case may be) in England, in proceedings involving the same parties that conflicts with an earlier judgment of such court; (9) the party seeking enforcement (being a party who is not ordinarily resident in some part of the U.K. or resident in an EU Member State) providing security for costs, if ordered to do so by the English courts; and (10) the English enforcement proceedings being commenced within the relevant limitation period. 29 Table of Contents If an English court gives judgment for the sum payable under a U.S. judgment, the English judgment will be enforceable by methods generally available for this purpose.
The following criteria must be satisfied for the English court to enforce the debt created by the U.S. judgment: (1) the U.S. court having had jurisdiction over the original proceedings according to English conflicts of laws principles and rules of English private international law at the time when proceedings were initiated; (2) the U.S. proceedings not having been brought in breach of a jurisdiction or arbitration clause except with the agreement of the defendant or the defendant’s subsequent submission to the jurisdiction of the court; (3) the U.S. judgment being final and conclusive on the merits in the sense of being final and unalterable in the court which pronounced it and being for a definite sum of money; (4) the recognition or enforcement, as the case may be, of the U.S. judgment not contravening English public policy in a sufficiently significant way or contravening the Human Rights Act 1998 (or any subordinate legislation made thereunder, to the extent applicable); (5) the U.S. judgment not being for a sum payable in respect of taxes, or other charges of a like nature, or in respect of a penalty or fine, or otherwise based on a U.S. law that an English court considers to be a penal or revenue law; (6) the U.S. judgment not having been arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damages sustained, and not otherwise being a judgment contrary to section 5 of the Protection of Trading Interests Act 1980 or is a judgment based on measures designated by the Secretary of State under Section 1 of that Act; (7) the U.S. judgment not having been obtained by fraud or in breach of English principles of natural justice; (8) the U.S. judgment not being a judgment on a matter previously determined by an English court, or another court whose judgment is entitled to recognition (or enforcement as the case may be) in England, in proceedings involving the same parties that conflicts with an earlier judgment of such court; (9) the party seeking enforcement (being a party who is not ordinarily resident in some part of the U.K. or resident in an EU Member State) providing security for costs, if ordered to do so by the English courts; and (10) the English enforcement proceedings being commenced within the relevant limitation period.
No assurance can be given that there will not be further changes in law, regulatory actions, or other circumstances that could restrict the ability of our subsidiaries to pay dividends or otherwise make payments to 26 Table of Contents us.
No assurance can be given that there will not be further changes in law, regulatory actions, or other circumstances that could restrict the ability of our subsidiaries to pay dividends or otherwise make payments to us.
Certain of our subsidiaries are subject to regulatory requirements of the jurisdictions in which they operate or other restrictions that may limit the amounts that subsidiaries can pay in dividends or other payments to us.
Certain of our subsidiaries are subject to regulatory requirements of the jurisdictions in which they operate or other restrictions that may limit the amounts that subsidiaries can pay 23 Table of Contents in dividends or other payments to us.
Consequently, any repurchase of our shares is currently considered an "off-market purchase." Our current authorization expires on May 28, 2025, and we intend to renew this authorization periodically. As a public limited company incorporated under the laws of England and Wales, the enforcement of civil liabilities against us may be more difficult.
Consequently, any repurchase of our shares is currently considered an "off-market purchase." Our current authorization expires on June 10, 2029, and we intend to renew this authorization periodically. 26 Table of Contents As a public limited company incorporated under the laws of England and Wales, the enforcement of civil liabilities against us may be more difficult.
In addition, we may be required to pay damage awards or settlements, or become subject to injunctions or other equitable remedies, that could cause a material adverse effect on our results of operations, financial condition, and/or cash flows. 28 Table of Contents U.K.
In addition, we may be required to pay damage awards or settlements, or become subject to 25 Table of Contents injunctions or other equitable remedies, that could cause a material adverse effect on our results of operations, financial condition, and/or cash flows. We have identified material weaknesses in our internal control over financial reporting.
We may not have been, or we may not always be, in compliance with all environmental and health and safety laws and regulations. If we violate these laws, we could be fined, criminally charged, or otherwise sanctioned by regulators.
We may not have been, or we may not always be, in compliance with all environmental and health and safety laws and regulations. If we violate these laws, we could be fined, criminally charged, or otherwise sanctioned by regulators. In addition, environmental and health and safety laws are becoming more stringent, resulting in increased costs and compliance burdens.
Changes in existing environmental or safety laws, regulations, and programs could reduce demand for our products, which could cause our revenue to decline. A significant amount of our business is generated either directly or indirectly as a result of existing laws, regulations, and programs related to environmental protection, fuel economy, energy efficiency, and safety regulation.
A significant amount of our business is generated either directly or indirectly as a result of existing laws, regulations, and programs related to environmental protection, fuel economy, energy efficiency, and safety regulation.
These methods generally permit the English court discretion to prescribe the manner of enforcement. In addition, in any enforcement proceedings, the judgment debtor may raise any counterclaim that could have been brought if the action had been originally brought in England unless the subject of the counterclaim was in issue and denied in the U.S. proceedings. ITEM 1B.
In addition, in any enforcement proceedings, the judgment debtor may raise any counterclaim that could have been brought if the action had been originally brought in England unless the subject of the counterclaim was in issue and denied in the U.S. proceedings. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
These laws prohibit the use of certain substances in the manufacture of our products and directly and indirectly impose a variety of requirements for modification of manufacturing processes, registration, chemical testing, labeling, and other matters. These laws continue to proliferate and expand in these and other jurisdictions to address other materials and aspects of our product manufacturing and sale.
These laws prohibit the use of certain substances in the manufacture of our products and directly and indirectly impose a variety of requirements for modification of manufacturing processes, registration, chemical testing, labeling, and other 24 Table of Contents matters.
In addition, environmental and health and safety laws are becoming more stringent, resulting in increased costs and compliance burdens. 27 Table of Contents Certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, removal, and remediation of hazardous substances or materials at their properties or properties at which they have disposed of hazardous substances.
Certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, removal, and remediation of hazardous substances or materials at their properties or properties at which they have disposed of hazardous substances.
The electronics industry is characterized by litigation regarding patent and other intellectual property rights. Within this industry, companies have become more aggressive in asserting and defending patent claims against competitors.
Our ability to compete effectively depends, in part, on our ability to maintain the proprietary nature of our products and technology. The electronics industry is characterized by litigation regarding patent and other intellectual property rights. Within this industry, companies have become more aggressive in asserting and defending patent claims against competitors.
These laws could make the manufacture or sale of our products more expensive or impossible, could limit our ability to sell our products in certain jurisdictions, and could result in liability for product recalls, penalties, or other claims. Our ability to compete effectively depends, in part, on our ability to maintain the proprietary nature of our products and technology.
These laws could make the manufacture or sale of our products more expensive or impossible, could limit our ability to sell our products in certain jurisdictions, and could result in liability for product recalls, penalties, or other claims. Export of our products is subject to various export control regulations and may require a license for export.
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, financial condition, and/or cash flows. Export of our products is subject to various export control regulations and may require a license for export.
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, financial condition, and/or cash flows. Changes in existing environmental or safety laws, regulations, and programs could reduce demand for our products, which could cause our revenue to decline.
Furthermore, on December 15, 2022, the EU Member States formally adopted the EU's Pillar Two Directive, which generally provides for a minimum jurisdictional effective tax rate of 15%. The legislation is effective for our fiscal year beginning January 1, 2024.
Furthermore, most OECD members, including EU member states, have implemented the Pillar Two framework, which establishes a global minimum jurisdictional effective tax rate of 15% for large multinational enterprises. The legislation is effective for our fiscal year beginning January 1, 2024.
Added
These laws continue to proliferate and expand in these and other jurisdictions to address other materials and aspects of our product manufacturing and sale.
Added
These material weaknesses could in the future adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Added
We have identified material weaknesses in our internal control over financial reporting and those weaknesses have led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2024 or 2023. We did not specify objectives with sufficient clarity to enable an appropriate level of risk assessment and monitoring.
Added
Additionally, our control activities did not adequately establish policies, procedures, information protocols and communications to design and operate effective control, due in part, to a lack of appropriate accounting personnel, impacting areas such as inventory and account reconciliation processes in our Americas Accounting and Shared Services teams located in Mexico.
Added
Our management is taking action to remediate the deficiencies in its internal controls over financial reporting by developing a remediation plan, which could include the engagement of third-party consultants to evaluate and help formalize internal controls design and framework; the completion of a risk assessment to determine areas within the internal control structure to strengthen, document and execute; and the augmentation, reorganization or replacement of personnel where necessary to ensure appropriate levels of knowledge and execution to support internal control structure assessment, design, and execution.
Added
If actions to remediate these material weaknesses are not completed on a timely basis, or if other remediation efforts are not successful, we may, in the future, identify additional internal control deficiencies that could rise to the level of a material weakness, or uncover errors in financial reporting.
Added
Failure to have effective internal control over financial reporting and disclosure controls and procedures could impair our ability to produce accurate financial statements on a timely basis, or provide reliable financial statements needed for business decision processes, and our business and results of operations could be harmed.
Added
Additionally, investors could lose confidence in our reported financial information and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected.
Added
Also, failure to maintain effective internal control over financial reporting could result in sanctions by regulatory authorities, and our independent registered public accounting firm may not be able to attest that such internal controls are effective when they are required to do so. U.K.
Added
If an English court gives judgment for the sum payable under a U.S. judgment, the English judgment will be enforceable by methods generally available for this purpose. These methods generally permit the English court discretion to prescribe the manner of enforcement.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

95 edited+31 added−23 removed65 unchanged
Biggest changeFor the year ended December 31, 2023 ($ in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net (Loss)/ Income Diluted EPS Reported (GAAP) $ 181.7 4.5 % $ 21.8 $ (3.9) $ (0.03) Non-GAAP adjustments: Restructuring related and other (a) 411.5 10.2 (3.7) 407.8 2.67 Financing and other transaction costs 16.3 0.4 2.7 24.2 0.16 Step-up depreciation and amortization (b) 168.6 4.2 — 168.6 1.11 Deferred gain on derivative instruments (4.1) (0.1) 0.3 (1.7) (0.01) Amortization of debt issuance costs — — — 6.8 0.04 Deferred taxes and other tax related — — (50.4) (50.4) (0.33) Total adjustments 592.3 14.6 (51.1) 555.3 3.64 Adjusted (non-GAAP) $ 774.0 19.1 % $ 72.8 $ 551.4 $ 3.61 For the year ended December 31, 2022 ($ in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS Reported (GAAP) $ 670.1 16.6 % $ 86.0 $ 310.7 $ 1.99 Non-GAAP adjustments: Restructuring related and other (a) 36.5 0.9 (3.5) 34.5 0.22 Financing and other transaction costs (c) (75.6) (1.9) 2.8 10.7 0.07 Step-up depreciation and amortization 148.3 3.7 — 148.3 0.95 Deferred (gain)/loss on derivative instruments (1.5) 0.0 (0.4) 1.5 0.01 Amortization of debt issuance costs — — — 7.0 0.04 Deferred taxes and other tax related (d) — — 17.8 17.8 0.11 Total adjustments 107.7 2.7 16.7 219.8 1.41 Adjusted (non-GAAP) $ 777.9 19.3 % $ 69.3 $ 530.5 $ 3.40 50 Table of Contents For the year ended December 31, 2021 ($ in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS Reported (GAAP) $ 663.2 16.6 % $ 50.3 $ 363.6 $ 2.28 Non-GAAP adjustments: Restructuring related and other (a) 23.6 0.6 (3.5) 21.4 0.13 Financing and other transaction costs (e) 13.2 0.3 (0.1) 41.0 0.26 Step-up depreciation and amortization 127.6 3.3 — 127.6 0.80 Deferred loss on derivative instruments 8.3 0.2 — 11.3 0.07 Amortization of debt issuance costs — — — 6.9 0.04 Deferred taxes and other tax related (d) — — (4.9) (4.9) (0.03) Total adjustments 172.8 4.5 (8.4) 203.3 1.28 Adjusted (non-GAAP) $ 806.0 21.1 % $ 58.8 $ 566.8 $ 3.56 __________________________ (a) The following table presents the components of our restructuring related and other non-GAAP adjustment to net income for fiscal years 2023, 2022, and 2021 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the year ended December 31, (In millions) 2023 2022 2021 Business and corporate repositioning (i) $ 77.6 $ 27.2 $ 10.7 Supply chain repositioning and transition (ii) 13.4 4.5 8.2 Pre-acquisition legal matters (iii) (1.5) 6.4 6.0 Other (iv) 322.0 — — Income tax effect (v) (3.7) (3.5) (3.5) Total non-GAAP restructuring related and other (vi) $ 407.8 $ 34.5 $ 21.4 __________________________ i.
Biggest changeFor the year ended December 31, 2024 ($ in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS Reported (GAAP) $ 149.3 3.8 % $ (140.3) $ 128.5 $ 0.85 Non-GAAP adjustments: Restructuring related and other (a) 321.4 8.2 (5.1) 316.4 2.10 Financing and other transaction costs (b) 133.1 3.4 (1.4) 155.4 1.03 Amortization of intangible assets (c) 142.1 3.6 — 142.1 0.94 Deferred loss/(gain) on derivative instruments 2.6 0.1 0.5 (0.4) — Amortization of debt issuance costs — — — 5.7 0.04 Deferred taxes and other tax related (d) — — (228.7) (228.7) (1.52) Total adjustments 599.2 15.2 (234.6) 390.6 2.59 Adjusted (non-GAAP) $ 748.5 19.0 % $ 94.3 $ 519.1 $ 3.44 For the year ended December 31, 2023 ($ in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net (Loss)/ Income Diluted EPS Reported (GAAP) $ 181.7 4.5 % $ 21.8 $ (3.9) $ (0.03) Non-GAAP adjustments: Restructuring related and other (a) 411.5 10.2 (3.7) 407.8 2.67 Financing and other transaction costs (b) 16.3 0.4 2.7 24.2 0.16 Amortization of intangible assets (c) 168.6 4.2 — 168.6 1.11 Deferred gain on derivative instruments (4.1) (0.1) 0.3 (1.7) (0.01) Amortization of debt issuance costs — — — 6.8 0.04 Deferred taxes and other tax related (d) — — (50.4) (50.4) (0.33) Total adjustments 592.3 14.6 (51.1) 555.3 3.64 Adjusted (non-GAAP) $ 774.0 19.1 % $ 72.8 $ 551.4 $ 3.61 47 Table of Contents For the year ended December 31, 2022 ($ in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS Reported (GAAP) $ 670.1 16.6 % $ 86.0 $ 310.7 $ 1.99 Non-GAAP adjustments: Restructuring related and other (a) 36.5 0.9 (3.5) 34.5 0.22 Financing and other transaction costs (b) (75.6) (1.9) 2.8 10.7 0.07 Amortization of intangible assets (c) 148.3 3.7 — 148.3 0.95 Deferred (gain)/loss on derivative instruments (1.5) 0.0 (0.4) 1.5 0.01 Amortization of debt issuance costs — — — 7.0 0.04 Deferred taxes and other tax related (d) — — 17.8 17.8 0.11 Total adjustments 107.7 2.7 16.7 219.8 1.41 Adjusted (non-GAAP) $ 777.9 19.3 % $ 69.3 $ 530.5 $ 3.40 __________________________ (a) The following table presents the components of our restructuring related and other non-GAAP adjustment to net income for fiscal years 2024, 2023, and 2022 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the year ended December 31, (In millions) 2024 2023 2022 Business and corporate repositioning (i) $ 171.3 $ 77.6 $ 27.2 Other (ii) 150.1 333.8 10.8 Income tax effect (iii) (5.1) (3.7) (3.5) Total non-GAAP restructuring related and other (iv) $ 316.4 $ 407.8 $ 34.5 __________________________ i.
(4) The year ended December 31, 2022 primarily relates to mark-to-market losses on our investment in Quanergy Systems, Inc.
(4) The year ended December 31, 2022 primarily relates to mark-to-market losses on our investment in Quanergy Systems, Inc. ("Quanergy").
Goodwill Our judgments regarding the existence of indicators of goodwill impairment are based on several factors, including the performance of the end markets served by our customers, as well as the actual financial performance of our reporting units and their respective financial forecasts over the long-term.
Our judgments regarding the existence of indicators of goodwill impairment are based on several factors, including the performance of the end markets served by our customers, as well as the actual financial performance of our reporting units and their respective financial forecasts over the long-term.
Dollar 10% Weakening of the Value of the Foreign Currency Relative to the U.S.
Dollar 10% Weakening of the Value of the Foreign Currency Relative to the U.S.
Based on this evaluation, we determined that goodwill in our Insights reporting unit was impaired, driven primarily by a lower long-range financial forecast resulting from the impact of restructuring actions taken in the third and fourth quarters of 2023 and consequent business decisions regarding our level of investment in Insights in future years considering Sensata’s focus on electrification.
Based on our 2023 evaluation, we determined that goodwill in our Insights reporting unit was impaired, driven primarily by a lower long-range financial forecast resulting from the impact of restructuring actions taken in the third and fourth quarters of 2023 and consequent business decisions regarding our level of investment in Insights in future years considering Sensata’s focus on electrification.
While many of the agreements with our customers specify certain terms and conditions that apply to any transaction between the parties, many of which are in effect for a defined term, the vast majority of these agreements do not result in contracts (as defined in FASB ASC Topic 606) because they do not create enforceable rights and obligations on the parties.
While many of the agreements with our customers specify certain terms and conditions that apply to any transaction between the parties, many of which are in effect for a defined term, the majority of these agreements do not result in contracts (as defined in FASB ASC Topic 606) because they do not create enforceable rights and obligations on the parties.
GAAP, excluding interest expense, net, provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable: (1) restructuring related and other, (2) financing and other transaction costs, and (3) deferred loss or gain on derivative instruments. Refer to Non-GAAP adjustments below for additional discussion of these adjustments.
GAAP, excluding interest expense, interest income, and provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable: (1) restructuring related and other, (2) financing and other transaction costs, and (3) deferred loss or gain on derivative instruments. Refer to Non-GAAP adjustments below for additional discussion of these adjustments.
We do not believe that there are any known trends related to the reconciling items noted above that are reasonably likely to result in our liquidity increasing or decreasing in any material way. 47 Table of Contents Non-GAAP Financial Measures This section provides additional information regarding certain non-GAAP financial measures, including organic revenue growth (or decline), adjusted operating income, adjusted operating margin, adjusted net income, adjusted earnings per share ("EPS"), free cash flow, adjusted corporate and other expenses, net debt, gross and net leverage ratio, and adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA"), which are used by our management, Board of Directors, and investors.
We do not believe that there are any known trends related to the reconciling items noted above that are reasonably likely to result in our liquidity increasing or decreasing in any material way. 44 Table of Contents Non-GAAP Financial Measures This section provides additional information regarding certain non-GAAP financial measures, including organic revenue growth (or decline), adjusted operating income, adjusted operating margin, adjusted net income, adjusted earnings per share ("EPS"), free cash flow, adjusted corporate and other expenses, net debt, gross and net leverage ratio, and adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA"), which are used by our management, Board of Directors, and investors.
Critical Accounting Policies and Estimates As discussed in Note 2: Significant Accounting Policies of our Financial Statements included elsewhere in this Report, which more fully describes our significant accounting policies, the preparation of consolidated financial statements in accordance with U.S. GAAP requires us to exercise judgment in the process of applying our accounting policies.
Critical Accounting Estimates As discussed in Note 2: Significant Accounting Policies of our Financial Statements included elsewhere in this Report, which more fully describes our significant accounting policies, the preparation of consolidated financial statements in accordance with U.S. GAAP requires us to exercise judgment in the process of applying our accounting policies.
For this reason, the vast majority of our contracts (as defined in FASB ASC Topic 606) are customer purchase orders. If this assessment were to change, it could result in a material change to the amount of net revenue recognized in a period.
For this reason, the majority of our contracts (as defined in FASB ASC Topic 606) are customer purchase orders. If this assessment were to change, it could result in a material change to the amount of net revenue recognized in a period.
Our weighted market growth is calculated using our regional and platform sales mix, as applicable, in the corresponding prior period. Market outgrowth is used to describe the impact of an increasing quantity and value of our products used in customer systems and applications above market growth.
Our weighted market growth is calculated using our regional and platform sales mix, as applicable, in the corresponding period. Market outgrowth is used to describe the impact of an increasing quantity and value of our products used in customer systems and applications above market growth.
The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and upon the incurrence of certain indebtedness (excluding any permitted indebtedness). These provisions were not triggered during the year ended December 31, 2023.
The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and upon the incurrence of certain indebtedness (excluding any permitted indebtedness). These provisions were not triggered during the year ended December 31, 2024.
In the year ended December 31, 2023, we prepaid the entire outstanding balance on the Term Loan, which was our only variable-rate debt. Borrowings under the Revolving Credit Facility continue to be subject to interest based on a variable rate, but we had no outstanding balance on the Revolving Credit Facility at December 31, 2023 or 2022.
In the year ended December 31, 2023, we prepaid the entire outstanding balance on the Term Loan, which was our only variable-rate debt. Borrowings under the Revolving Credit Facility continue to be subject to interest based on a variable rate, but we had no outstanding balance on the Revolving Credit Facility at December 31, 2024 or 2023.
We have derived this summarized statement of cash flows from our Financial Statements included elsewhere in this Report. Amounts in the table below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
We have derived this summarized statement of cash flows from our Financial Statements included elsewhere in this Report. 51 Table of Contents Amounts in the table below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment. Accordingly, we recorded a $321.7 million non-cash impairment charge in the fourth quarter of 2023, representing the entire goodwill balance allocated to Insights.
Other valuation assumptions for the Insights reporting unit valuation that were impacted by macroeconomic factors also contributed to the impairment. Accordingly, we recorded a $321.7 million non-cash impairment charge in the fourth quarter of 2023, representing the entire goodwill balance allocated to Insights.
Primarily includes charges related to repositioning our business and corporate functions to more effectively respond to the challenges that face the business.
Primarily includes charges related to repositioning our business and corporate functions to more effectively respond to the challenges that face the business. 1.
We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Insights and Dynapower reporting units, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.
We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Dynapower reporting unit, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.
We attempt to minimize this risk by entering transactions with major financial institutions of investment grade credit rating.
We attempt to minimize this risk by entering into transactions with major financial institutions of investment grade credit rating.
Changes in these foreign currency exchange rates and commodity prices may have an impact on future cash flows and earnings. We monitor our exposure to these risks and may employ derivative financial instruments to limit the volatility to earnings and cash flows generated by these exposures.
Changes in foreign currency exchange rates and commodity prices may have an impact on future cash flows and earnings. We monitor our exposure to these risks and may or may not employ derivative financial instruments ("derivative instruments") to limit the volatility to earnings and cash flows generated by these exposures.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to changes in foreign currency exchange rates because we transact in a variety of foreign currencies. We are also exposed to changes in the prices of certain commodities (primarily metals) that we use in production.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to changes in foreign currency exchange rates because we transact our business in a variety of foreign currencies. We are also exposed to changes in the prices of certain commodities (primarily metals) that we use in production.
Refer to Note 19: Derivative Instruments and Hedging Activities of our Financial Statements included elsewhere in this Report for additional information related to the commodity forward contracts outstanding as of December 31, 2023.
Refer to Note 19: Derivative Instruments and Hedging Activities of our Financial Statements included elsewhere in this Report for additional information related to the commodity forward contracts outstanding as of December 31, 2024.
We believe investors and securities analysts also use these non-GAAP financial measures in their evaluation of our performance and the performance of other similar companies. These non-GAAP financial measures are not measures of liquidity. 48 Table of Contents Free cash flow Free cash flow is defined as net cash provided by operating activities less additions to PP&E and capitalized software.
We believe investors and securities analysts also use these non-GAAP financial measures in their evaluation of our performance and the performance of other similar companies. These non-GAAP financial measures are not measures of liquidity. Free cash flow Free cash flow is defined as net cash provided by operating activities less additions to PP&E and capitalized software.
Changes to these assumptions could affect the estimated fair value of one or more of our reporting units and could result in a goodwill impairment charge in a future period. Types of events that could result in an additional goodwill impairment.
Changes to these assumptions could affect the estimated fair value of one or more of our reporting units and could result in a goodwill impairment charge in a future period. Types of events that could result in a goodwill impairment.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this Report for an analysis of the sensitivity of other, net to changes in foreign currency exchange rates and commodity prices. (3) Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our debt financing transactions.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this Report for an analysis of the sensitivity of other, net to changes in foreign currency exchange rates and commodity prices. 43 Table of Contents (3) Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our debt financing transactions.
There have been no subsequent changes to our reporting units as of December 31, 2023. These reporting units have been identified based on the definitions and guidance provided in FASB ASC Topic 350.
There have been no subsequent changes to our reporting units as of December 31, 2024. These reporting units have been identified based on the definitions and guidance provided in FASB ASC Topic 350.
Other tax related items include certain adjustments to unrecognized tax benefits and withholding tax on repatriation of foreign earnings. • Amortization of debt issuance costs: represents interest expense related to the amortization of deferred financing costs and debt discounts, net of premiums. • Where applicable, the current income tax effect of non-GAAP adjustments.
Other tax related items include certain adjustments to unrecognized tax benefits and withholding tax on 46 Table of Contents repatriation of foreign earnings. • Amortization of debt issuance costs: represents interest expense related to the amortization of deferred financing costs and debt discounts, net of premiums. • Where applicable, the current income tax effect of non-GAAP adjustments.
(2) We operate in multiple jurisdictions, including but not limited to Bulgaria, China, Malaysia, Malta, Mexico, the Netherlands, South Korea, the U.S., and the U.K. This can result in a foreign tax rate differential that may reflect a tax benefit or detriment.
(2) We operate in multiple jurisdictions, including but not limited to Bulgaria, China, Malaysia, Malta, Mexico, the Netherlands, Switzerland, the U.S., and the U.K. This can result in a foreign tax rate differential that may reflect a tax benefit or detriment.
Foreign Currency Risk Consistent with our risk management objective and strategy to reduce exposure to variability in cash flows, and for non-trading purposes, we enter into foreign currency exchange rate derivatives that qualify as cash flow hedges, and that are intended to offset the effect of exchange rate fluctuations on forecasted sales and certain manufacturing costs.
Foreign Currency Risk Consistent with our risk management objectives and strategy to reduce exposure to variability in cash flows, and for non-trading purposes, we may enter into foreign currency exchange rate derivatives that qualify as cash flow hedges, and that are intended to offset the effect of exchange rate fluctuations on forecasted sales and certain forecasted costs.
We offset a portion of this exposure by entering forward contracts that fix the price at a future date for various notional amounts associated with these commodities. These forward contracts are not designated as accounting hedges.
We may mitigate a portion of this exposure by entering forward contracts that fix the price at a future date for various notional amounts associated with these commodities. These forward contracts are not designated as accounting hedges.
As of January 26, 2024, Moody’s Investors Service’s corporate credit rating for STBV was Ba2 with a positive outlook, and S&P's corporate credit rating for STBV was BB+ with a stable outlook. Any future downgrades to STBV's credit ratings may increase our future borrowing costs but will not reduce availability under the Credit Agreement.
As of January 28, 2025, Moody’s Investors Service’s corporate credit rating for STBV was Ba2 with a positive outlook, and S&P's corporate credit rating for STBV was BB+ with a stable outlook. Any future downgrades to STBV's credit ratings may increase our future borrowing costs but will not reduce availability under the Credit Agreement.
Interest Rate Risk As discussed further in Note 14: Debt of our Financial Statements included elsewhere in this Report, the Credit Agreement provides for the Senior Secured Credit Facilities consisting of the Term Loan, the Revolving Credit Facility, and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances.
Interest Rate Risk As discussed further in Note 14: Debt of our Financial Statements included elsewhere in this Report, the Credit Agreement provides for the Senior Secured Credit Facilities including the Revolving Credit Facility, and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances.
Recently Issued Accounting Standards In November 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures , to improve disclosures about a public entity's reportable segments.
Recently issued accounting standards adopted in the current period In November 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures , to improve disclosures about a public entity's reportable segments.
These restrictions and covenants, which are subject to important exceptions and qualifications set forth in the Credit Agreement and Senior Notes Indentures, were taken into consideration when we established our share repurchase programs and will be evaluated periodically with respect to future potential funding of those programs. These restrictions and covenants were not materially modified in the Thirteenth Amendment.
These restrictions and covenants, which are subject to important exceptions and qualifications set forth in the Credit Agreement and Senior Notes Indentures, were taken into consideration when we established our share repurchase programs and will be evaluated periodically with respect to future potential funding of those programs.
Variable consideration may be specified in the customer purchase order, in another agreement that identifies terms and conditions of the transaction, or based on our customary practices.
Variable consideration may be specified in the customer purchase order, in another agreement that identifies terms and conditions of the transaction, or based on our 55 Table of Contents customary practices.
However, we cannot make assurances that our business will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. Further, our highly-leveraged nature may limit our ability to procure additional financing in the future.
However, we cannot make assurances that our business will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. Further, the amount of our debt may limit our ability to procure additional financing in the future.
We employ derivative contracts that may or may not be designated for hedge accounting treatment under FASB ASC Topic 815, Derivatives and Hedging , which can result in volatility to earnings depending upon fluctuations in the underlying markets. By using derivative instruments, we are subject to credit and market risk.
Any derivative instrument we employ may or may not be designated for hedge accounting treatment under FASB ASC Topic 815, Derivatives and Hedging , which may result in volatility to earnings depending upon fluctuations in the underlying markets. By using derivative instruments, we are subject to credit and market risk.
Fiscal year 2023 includes (1) $28.8 million of charges related to the exit the Spear Marine Business, $14.4 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue, (2) $23.5 million of charges incurred as part of the Q3 2023 Plan, recorded in restructuring and other charges, net, and (3) $18.8 million of charges arising as an indirect result of actions taken in the Q3 2023 Plan, of which approximately $2.1 million was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue. ii.
Fiscal year 2023 primarily included (1) $28.8 million of charges related to the exit the Spear Marine Business, $14.5 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue, (2) $23.5 million of charges incurred as part of the Q3 2023 Plan, recorded in restructuring and other charges, net, and (3) $18.8 million of charges arising as a result of actions taken in the Q3 2023 Plan, of which approximately $2.1 million was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue. ii.
We believe adjusted corporate and other expenses is useful to management and investors in understanding the impact of non-GAAP adjustments on operating expenses not allocated to our segments. Adjusted EBITDA Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S.
GAAP, excluding the portion of non-GAAP adjustments described below that relate to corporate and other expenses. We believe adjusted corporate and other expenses is useful to management and investors in understanding the impact of non-GAAP adjustments on operating expenses not allocated to our segments. Adjusted EBITDA Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S.
The guidance also requires that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting , in interim periods, and that a public entity provide the title and position of the chief operating decision-maker. Other requirements of the guidance are not expected to be material.
The guidance also requires that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting , in interim periods, and that a public entity provide the title and position of the chief operating decision maker.
For the year ended December 31, (In millions) 2023 2022 2021 Corporate and other expenses (GAAP) $ (633.2) $ (294.4) $ (288.1) Non-GAAP adjustments Restructuring related and other 366.5 11.9 9.9 Financing and other transaction costs 6.8 15.7 11.9 Step-up depreciation and amortization 0.9 1.2 1.7 Deferred (gain)/loss on derivative instruments (4.1) (1.5) 8.3 Total adjustments 370.1 27.3 31.8 Adjusted corporate and other expenses (non-GAAP) $ (263.1) $ (267.1) $ (256.3) The following table presents a reconciliation of net (loss)/income calculated in accordance with U.S.
For the year ended December 31, (In millions) 2024 2023 2022 Corporate and other expenses (GAAP) $ (572.5) $ (633.2) $ (294.4) Non-GAAP adjustments Restructuring related and other 284.4 366.5 11.9 Financing and other transaction costs 20.8 6.8 15.7 Amortization of intangible assets and other 0.8 0.9 1.2 Deferred loss/(gain) on derivative instruments 2.6 (4.1) (1.5) Total adjustments 308.6 370.1 27.3 Adjusted corporate and other expenses (non-GAAP) $ (263.9) $ (263.1) $ (267.1) The following table presents a reconciliation of net income/(loss) calculated in accordance with U.S.
For the year ended December 31, (In millions) 2023 2022 2021 Net cash provided by/(used in): Operating activities: Net (loss)/income adjusted for non-cash items $ 639.6 $ 609.9 $ 693.8 Changes in operating assets and liabilities, net (160.3) (125.8) (124.0) Cash operating activities (22.6) (23.5) (15.6) Operating activities 456.7 460.6 554.2 Investing activities (165.0) (590.6) (882.1) Financing activities (1,016.6) (353.5) 174.9 Effects of exchange rate differences 7.5 — — Net change in cash and cash equivalents $ (717.4) $ (483.4) $ (153.0) Operating Activities Refer to Results of Operations included elsewhere in this MD&A for discussion of the drivers of changes in net (loss)/income in fiscal years 2023 and 2022.
For the year ended December 31, (In millions) 2024 2023 2022 Net cash provided by/(used in): Operating activities: Net income/(loss) adjusted for non-cash items $ 611.2 $ 639.6 $ 609.9 Changes in operating assets and liabilities, net (54.5) (160.3) (125.8) Cash operating activities (5.2) (22.6) (23.5) Operating activities 551.5 456.7 460.6 Investing activities (19.2) (165.0) (590.6) Financing activities (442.8) (1,016.6) (353.5) Effects of exchange rate differences (4.0) 7.5 — Net change in cash and cash equivalents $ 85.6 $ (717.4) $ (483.4) Operating Activities Refer to Results of Operations included elsewhere in this MD&A for discussion of the drivers of changes in net income/(loss) in fiscal years 2024 and 2023.
In the year ended December 31, 2023, we received cash proceeds of $19.0 million from the sale of a business, compared to $198.8 million in the year ended December 31, 2022. In fiscal year 2024, we anticipate additions to PP&E and capitalized software of approximately $175.0 million, which we expect to be funded with cash flows from operations.
In the year ended December 31, 2024, we received cash proceeds of $135.7 million from the sale of a business, compared to $19.0 million in the year ended December 31, 2023. In fiscal year 2025, we anticipate additions to PP&E and capitalized software of approximately $150.0 million, which we expect to be funded with cash flows from operations.
The following table presents the remaining mandatory principal repayments of long-term debt, in millions, excluding finance lease payments and discretionary repurchases of debt, in each of the years ended December 31, 2024 through 2028 and thereafter.
The following table presents the remaining mandatory principal repayments of long-term debt, in millions, excluding finance lease payments and discretionary repurchases of debt, in each of the years ended December 31, 2025 through 2029 and 53 Table of Contents thereafter.
We evaluate goodwill for impairment in the fourth quarter of each fiscal year, unless events occur which trigger the need for an earlier impairment review. Identification of reporting units. As of October 1, 2023, we had seven reporting units, Automotive, HVOR, Insights, Industrial Solutions, Aerospace, Clean Energy Solutions, and Dynapower.
We evaluate goodwill for impairment in the fourth quarter of each fiscal year, unless events occur which trigger the need for an earlier impairment review. Identification of reporting units. As of September 30, 2024, we had seven reporting units, Automotive, HVOR, Industrial Solutions, Aerospace, Clean Energy Solutions, Aftermarket and Dynapower.
For the year ended December 31, ($ in millions) 2023 2022 2021 Current portion of long-term debt and finance lease obligations $ 2.3 $ 256.5 $ 6.8 Finance lease obligations, less current portion 22.9 24.7 26.6 Long-term debt, net 3,374.0 3,958.9 4,214.9 Total debt and finance lease obligations 3,399.2 4,240.1 4,248.3 Less: debt discount, net of premium (1.6) (3.4) (5.2) Less: deferred financing costs (24.4) (29.9) (26.7) Total gross indebtedness $ 3,425.2 $ 4,273.4 $ 4,280.2 Adjusted EBITDA (LTM) $ 906.6 $ 903.9 $ 928.3 Gross leverage ratio 3.8 4.7 4.6 Total gross indebtedness $ 3,425.2 $ 4,273.4 $ 4,280.2 Less: cash and cash equivalents 508.1 1,225.5 1,709.0 Net debt $ 2,917.1 $ 3,047.9 $ 2,571.3 Adjusted EBITDA (LTM) $ 906.6 $ 903.9 $ 928.3 Net leverage ratio 3.2 3.4 2.8 Liquidity and Capital Resources As of December 31, 2023 and 2022, we held cash and cash equivalents in the following regions (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): As of December 31, (In millions) 2023 2022 United Kingdom $ 12.6 $ 15.7 United States 12.9 16.1 The Netherlands 158.2 861.3 China 250.8 210.0 Other 73.6 122.4 Total cash and cash equivalents $ 508.1 $ 1,225.5 The amount of cash and cash equivalents held in these geographic regions fluctuates throughout the year due to a variety of factors, such as our use of intercompany loans and dividends and the timing of cash receipts and disbursements in the normal course of business.
As of and for the year ended December 31, ($ in millions) 2024 2023 2022 Current portion of long-term debt and finance lease obligations $ 2.4 $ 2.3 $ 256.5 Finance lease obligations, less current portion 21.0 22.9 24.7 Long-term debt, net 3,176.1 3,374.0 3,958.9 Total debt and finance lease obligations 3,199.5 3,399.2 4,240.1 Less: debt premium/(discount), net 1.0 (1.6) (3.4) Less: deferred financing costs (24.9) (24.4) (29.9) Total gross indebtedness $ 3,223.4 $ 3,425.2 $ 4,273.4 Adjusted EBITDA (LTM) $ 881.6 $ 906.6 $ 903.9 Gross leverage ratio 3.7 3.8 4.7 Total gross indebtedness $ 3,223.4 $ 3,425.2 $ 4,273.4 Less: cash and cash equivalents 593.7 508.1 1,225.5 Net debt $ 2,629.7 $ 2,917.1 $ 3,047.9 Adjusted EBITDA (LTM) $ 881.6 $ 906.6 $ 903.9 Net leverage ratio 3.0 3.2 3.4 50 Table of Contents Liquidity and Capital Resources As of December 31, 2024 and 2023, we held cash and cash equivalents in the following regions (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): As of December 31, (In millions) 2024 2023 United Kingdom $ 4.4 $ 12.6 United States 6.9 12.9 The Netherlands 256.3 158.2 China 272.2 250.8 Other 53.9 73.6 Total cash and cash equivalents $ 593.7 $ 508.1 The amount of cash and cash equivalents held in these geographic regions fluctuates throughout the year due to a variety of factors, such as our use of intercompany loans and dividends and the timing of cash receipts and disbursements in the normal course of business.
Debt Instruments As of December 31, 2023, our debt instruments included $700.0 million aggregate principal amount of 5.0% senior notes due 2025 (the "5.0% Senior Notes"), $450.0 million aggregate principal amount of 4.375% senior notes due 2030 (the "4.375% Senior Notes"), $750 million aggregate principal amount of 3.75% senior notes due 2031 (the "3.75% Senior Notes"), $1.0 billion aggregate principal amount of 4.0% senior notes due 2029 (the "4.0% Senior Notes"), and $500.0 million aggregate principal amount of 5.875% senior notes due 2030 (the "5.875% Senior Notes").
Debt Instruments As of December 31, 2024, our debt instruments included $450.0 million aggregate principal amount of 4.375% senior notes due 2030 (the "4.375% Senior Notes"), $750 million aggregate principal amount of 3.75% senior notes due 2031 (the "3.75% Senior Notes"), $1.0 billion aggregate principal amount of 4.0% senior notes due 2029 (the "4.0% Senior Notes"), $500.0 million aggregate principal amount of 5.875% senior notes due 2030 (the "5.875% Senior Notes"), and $500 million aggregate principal amount of 6.625% senior notes due 2032 (the "6.625% Senior Notes").
The increase in our effective tax rate for the year ended December 31, 2022 is due to the tax accounting impacts of the divestiture of the Qinex Business, partially offset by separate intangible property transfers.
Additionally, the increase in our effective tax rate for the year ended December 31, 2022, was due to the tax accounting impacts of the divestiture of the Qinex Business, partially offset by separate intangible prop erty transfers.
Based on the results of this analysis, we do not consider any of our reporting units outside of Insights, which was already fully impaired, to be at risk of failing the goodwill impairment test.
Based on the results of this analysis, we do not consider any of our reporting units outside of Dynapower, which was impaired during 2024, to be at risk of failing the goodwill impairment test.
We believe that certain factors, such as a future recession, any material adverse conditions in the automotive industry and other industries in which we operate, and other factors identified 59 Table of Contents in Item 1A: Risk Factors included elsewhere in this Report could cause us to revise our long-term projections.
We believe that certain factors, such as a future recession, any material adverse conditions in the automotive industry and other industries in which we operate, and other factors identified in Item 1A: Risk Factors included elsewhere in this Report could cause us to revise our long-term projections. Such revisions could result in a goodwill impairment charge in the future.
For the year ended December 31, (In millions) 2023 2022 2021 Net cash provided by operating activities $ 456.7 $ 460.6 $ 554.2 Additions to property, plant and equipment and capitalized software (184.6) (150.1) (144.4) Free cash flow $ 272.1 $ 310.5 $ 409.7 The following table presents a reconciliation of corporate and other expenses calculated in accordance with U.S.
For the year ended December 31, (In millions) 2024 2023 2022 Net cash provided by operating activities $ 551.5 $ 456.7 $ 460.6 Additions to property, plant and equipment and capitalized software (158.6) (184.6) (150.1) Free cash flow $ 393.0 $ 272.1 $ 310.5 49 Table of Contents The following table presents a reconciliation of corporate and other expenses calculated in accordance with U.S.
Dollar Euro $ 10.7 $ (43.3) $ 43.3 Chinese Renminbi $ 0.0 $ (5.8) $ 5.8 Japanese Yen $ 0.0 $ 0.5 $ (0.5) Korean Won $ 0.4 $ (1.5) $ 1.5 Malaysian Ringgit $ 0.0 $ 0.5 $ (0.5) Mexican Peso $ 13.2 $ 17.2 $ (17.2) British Pound Sterling $ (3.1) $ 6.4 $ (6.4) Commodity Risk We are exposed to the potential change in prices associated with certain commodities used in the manufacturing of our products.
Dollar Euro $ (7.4) $ (48.4) $ 48.4 Chinese Renminbi $ (0.2) $ 11.4 $ (11.4) Japanese Yen $ 0.0 $ 0.1 $ (0.1) Korean Won $ (0.0) $ (2.3) $ 2.3 Malaysian Ringgit $ 0.0 $ 0.5 $ (0.5) Mexican Peso $ 25.0 $ 26.3 $ (26.3) British Pound Sterling $ 2.4 $ 7.9 $ (7.9) Commodity Risk We are exposed to the potential change in prices associated with certain commodities used in the manufacturing of our products.
("Quanergy"), as disclosed in Note 18: Fair Value Measures of our Financial Statements included elsewhere in this Report. 46 Table of Contents Provision for income taxes The components of provision for income taxes for the years ended December 31, 2023, 2022, and 2021 are described in more detail in the table below, reconciled to the U.S. statutory rate for each year (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the year ended December 31, (In millions) 2023 2022 2021 Tax computed at U.S. statutory rate of 21% (1) $ 3.7 $ 83.3 $ 86.9 Dispositions and capital restructurings (6) (286.4) 4.5 — Valuation allowances (4) 278.5 15.7 20.5 Goodwill impairment (3) 41.2 — — Foreign tax rate differential (2) (17.3) (44.3) (30.5) Withholding taxes not creditable 14.1 12.3 13.3 Research and development incentives (5) (9.0) (10.8) (11.1) Unrealized foreign currency exchange losses/(gains), net 1.5 9.3 (6.1) Reserve for tax exposure 1.1 1.3 (16.3) Changes in tax laws or rates (0.3) 2.6 (7.1) Other (7) (5.2) 12.1 0.7 Provision for income taxes $ 21.8 $ 86.0 $ 50.3 __________________________ (1) Represents the product of the applicable statutory tax rate and income before taxes, as reported in the consolidated statements of operations.
(Benefit from)/provision for income taxes The components of (benefit from)/provision for income taxes for the years ended December 31, 2024, 2023, and 2022 are described in more detail in the table below, reconciled to the U.S. statutory rate for each year (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the year ended December 31, (In millions) 2024 2023 2022 Tax computed at U.S. statutory rate of 21% (1) $ (2.5) $ 3.7 $ 83.3 Capital restructurings and dispositions (6) 40.6 (286.4) 4.5 Valuation allowances (4) (180.0) 278.5 15.7 Goodwill impairment (3) 31.5 41.2 — Foreign tax rate differential (2) (13.6) (17.3) (44.3) Withholding taxes not creditable 6.1 14.1 12.3 Research and development incentives (5) (10.4) (9.0) (10.8) Unrealized foreign currency exchange losses 2.3 1.5 9.3 Reserve for tax exposure (0.9) 1.1 1.3 Changes in tax laws or rates (2) (2.6) (0.3) 2.6 Other (7) (10.9) (5.2) 12.1 (Benefit from)/provision for income taxes $ (140.3) $ 21.8 $ 86.0 __________________________ (1) Represents the product of the applicable statutory tax rate and income before taxes, as reported in the consolidated statements of operations.
As of December 31, 2023, availability under the Accordion was approximately $2.0 billion. 56 Table of Contents We believe, based on our current level of operations for the year ended December 31, 2023, and taking into consideration the restrictions and covenants included in the Credit Agreement and Senior Notes Indentures discussed below and in Note 14: Debt of our Financial Statements included elsewhere in this Report, that the sources of liquidity described above will be sufficient to fund our operations, capital expenditures, dividend payments, ordinary share repurchases, and debt service for the short and long term.
We believe, based on our current level of operations for the year ended December 31, 2024, and taking into consideration the restrictions and covenants included in the Credit Agreement, Revolving Credit Facility, and Senior Notes Indentures discussed below and in Note 14: Debt of our Financial Statements included elsewhere in this Report, that the sources of liquidity described above will be sufficient to fund our operations, capital expenditures, dividend payments, ordinary share repurchases, and debt service for the short and long term.
If the carrying value of a reporting unit exceeds its estimated fair value, we recognize an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB ASC Topic 350. We evaluated the goodwill of each reporting unit for impairment as of October 1, 2023, using a quantitative method.
If the carrying value of a reporting unit exceeds its estimated fair value, we recognize an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB ASC Topic 350.
We believe free cash flow is useful to management and investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to, among other things, fund acquisitions, repurchase ordinary shares, and (or) accelerate the repayment of debt obligations.
We believe free cash flow is useful to management and investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to, among other things, fund acquisitions, repurchase ordinary shares, and (or) accelerate the repayment of debt obligations. 45 Table of Contents Adjusted corporate and other expenses Adjusted corporate and other expenses is defined as corporate and other expenses calculated in accordance with U.S.
For the year ended December 31, (In millions) 2023 2022 2021 Net (loss)/income $ (3.9) $ 310.7 $ 363.6 Interest expense, net 150.9 178.8 179.3 Provision for income taxes 21.8 86.0 50.3 Depreciation expense 133.1 127.2 125.0 Amortization of intangible assets 173.9 153.8 134.1 EBITDA 475.7 856.5 852.3 Non-GAAP adjustments Restructuring related and other 411.5 38.0 23.6 Financing and other transaction costs 21.5 7.5 41.0 Deferred (gain)/loss on derivative instruments (2.0) 1.9 11.3 Adjusted EBITDA $ 906.6 $ 903.9 $ 928.3 52 Table of Contents The following table presents a reconciliation of total debt and finance lease obligations calculated in accordance with U.S.
For the year ended December 31, (In millions) 2024 2023 2022 Net income/(loss) $ 128.5 $ (3.9) $ 310.7 Interest expense, net 139.6 150.9 178.8 (Benefit from)/provision for income taxes (140.3) 21.8 86.0 Depreciation expense 167.1 133.1 127.2 Amortization of intangible assets 145.7 173.9 153.8 EBITDA 440.7 475.7 856.5 Non-GAAP adjustments Restructuring related and other 285.0 411.5 38.0 Financing and other transaction costs 156.8 21.5 7.5 Deferred (gain)/loss on derivative instruments (0.9) (2.0) 1.9 Adjusted EBITDA $ 881.6 $ 906.6 $ 903.9 The following table presents a reconciliation of total debt and finance lease obligations calculated in accordance with U.S.
During the year ended December 31, 2023, we repurchased approximately 2.3 million ordinary shares at a weighted average price per share of $38.31. These purchases were made under the January 2022 Program and the September 2023 Program. As of December 31, 2023, approximately $471.9 million remained available under the September 2023 Program.
These purchases were made under the January 2022 Program and the September 2023 Program. During the year ended December 31, 2024, we repurchased approximately 1.9 million ordinary shares at a weighted average price per share of $36.19. These purchases were made under the September 2023 Program.
During the year ended December 31, 2021, we repurchased approximately 0.8 million ordinary shares under the July 2019 Program, at a weighted-average price per share of $59.28. During the year ended December 31, 2022, we purchased approximately 6.3 million ordinary shares under the January 2022 Program, at a weighted average price per share of $46.08.
During the year ended December 31, 2022, we purchased approximately 6.3 million ordinary shares under the January 2022 Program, at a weighted average price per share of $46.08. During the year ended December 31, 2023, we repurchased approximately 2.3 million ordinary shares at a weighted average price per share of $38.31.
Management judgment is required in determining various elements of our provision for (or benefit from) income taxes, including the amount of tax benefits on uncertain tax positions, and deferred tax assets that should be recognized. In accordance with FASB ASC Topic 740, Income Taxes , we record uncertain tax positions on the basis of a two-step process.
Management judgment is required in determining various elements of our provision for (or benefit from) income taxes, including the amount of tax benefits on uncertain tax positions, and deferred tax assets that should be recognized.
Sensitivity Analysis The tables below present our commodity forward contracts as of December 31, 2023 and 2022 and the estimated impact to pre-tax earnings associated with a 10% increase/(decrease) in the related forward price for each commodity: Net Asset Balance as of December 31, 2023 Average Forward Price Per Unit as of December 31, 2023 Increase/(Decrease) to Pre-tax Earnings Due to (In millions, except per unit amounts) 10% Increase in the Forward Price 10% Decrease in the Forward Price Silver $ 0.5 $ 24.61 $ 1.7 $ (1.7) Copper $ 0.2 $ 3.90 $ 2.5 $ (2.5) Net Asset/(Liability) Balance as of December 31, 2022 Average Forward Price Per Unit as of December 31, 2022 Increase/(Decrease) to Pre-tax Earnings Due to (In millions, except per unit amounts) 10% Increase in the Forward Price 10% Decrease in the Forward Price Silver $ 1.1 $ 24.33 $ 2.3 $ (2.3) Gold $ 0.1 $ 1,877.27 $ 1.5 $ (1.5) Nickel $ 0.7 $ 13.76 $ 0.3 $ (0.3) Aluminum $ (0.5) $ 1.11 $ 0.5 $ (0.5) Copper $ (2.2) $ 3.80 $ 3.1 $ (3.1) Platinum $ 0.9 $ 1,070.21 $ 1.2 $ (1.2) Palladium $ (0.5) $ 1,803.34 $ 0.2 $ (0.2) 62 Table of Contents
Sensitivity Analysis The tables below present our commodity forward contracts as of December 31, 2024 and 2023 and the estimated impact to pre-tax earnings associated with a 10% increase/(decrease) in the related forward price for each commodity: Net Asset/(Liability) Balance as of December 31, 2024 Average Forward Price Per Unit as of December 31, 2024 Increase/(Decrease) to Pre-tax Earnings Due to (In millions, except per unit amounts) 10% Increase in the Forward Price 10% Decrease in the Forward Price Silver $ 0.9 $ 29.67 $ 1.9 $ (1.9) Copper $ (0.7) $ 4.04 $ 2.1 $ (2.1) Net Asset Balance as of December 31, 2023 Average Forward Price Per Unit as of December 31, 2023 Increase/(Decrease) to Pre-tax Earnings Due to (In millions, except per unit amounts) 10% Increase in the Forward Price 10% Decrease in the Forward Price Silver $ 0.5 $ 24.61 $ 1.7 $ (1.7) Copper $ 0.2 $ 3.90 $ 2.5 $ (2.5) 60 Table of Contents
There is no change to the guidance for identification or aggregation of operating or reportable segments. FASB ASU No. 2023-07 will be effective for 60 Table of Contents annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The guidance must be applied retrospectively to all prior periods presented.
Other requirements of the guidance are not expected to be material. There is no change to the guidance for identification or aggregation of operating or reportable segments. FASB ASU No. 2023-07 will be effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.
Such amounts are excluded from internal financial statements and analyses that management uses in connection with financial planning and in its review and assessment of our operating and financial performance, including the performance of our segments. • Financing and other transaction costs : includes losses or gains related to debt financing transactions, losses or gains related to the divestiture of a business, costs incurred, including for legal, accounting, and other professional services, that are directly related to an acquisition, divestiture, or equity financing transaction, mark-to-market losses or gains on our equity investments, expenses related to compensation arrangements entered into concurrent with the closing of an acquisition, and gains related to changes in the fair value of acquisition-related contingent consideration amounts. • Deferred loss or gain on derivative instruments : includes unrealized losses or gains on derivative instruments that do not qualify for hedge accounting as well as the impact of commodity prices on our raw material costs relative to the strike price on our commodity forward contracts. 49 Table of Contents • Step-up depreciation and amortization : includes depreciation expense associated with the step-up in fair value of assets acquired in connection with a business combination (e.g., PP&E and inventories) and amortization of intangible assets. • Deferred taxes and other tax related : includes adjustments for book-to-tax basis differences due primarily to the step-up in fair value of fixed and intangible assets and goodwill, the utilization of net operating losses, and adjustments to our valuation allowance in connection with certain acquisitions and tax law changes.
Such amounts are excluded from internal financial statements and analyses that management uses in connection with financial planning and in its review and assessment of our operating and financial performance, including the performance of our segments. • Financing and other transaction costs : includes losses or gains related to debt financing transactions, losses or gains related to the divestiture of a business, costs incurred, including for legal, accounting, and other professional services, that are directly related to an acquisition, divestiture, or equity financing transaction, mark-to-market losses or gains on our equity investments, expenses related to compensation arrangements entered into concurrent with the closing of an acquisition, and adjustments related to changes in the fair value of acquisition-related contingent consideration amounts. • Deferred loss or gain on derivative instruments : includes unrealized losses or gains on derivative instruments that do not qualify for hedge accounting as well as the impact of commodity prices on our raw material costs relative to the strike price on our commodity forward contracts. • Amortization of intangible assets : Beginning with the three months ended December 31, 2024, we started adjusting operating income and net income to exclude the amortization of all our intangible assets, and we discontinued the use of adjustments to exclude step-up depreciation in our non-GAAP measures.
Dollar Euro $ (7.4) $ (48.4) $ 48.4 Chinese Renminbi $ (0.2) $ 11.4 $ (11.4) Japanese Yen $ 0.0 $ 0.1 $ (0.1) Korean Won $ (0.0) $ (2.3) $ 2.3 Malaysian Ringgit $ 0.0 $ 0.5 $ (0.5) Mexican Peso $ 25.0 $ 26.3 $ (26.3) British Pound Sterling $ 2.4 $ 7.9 $ (7.9) (Decrease)/Increase to Future Pre-tax Earnings Due to: (In millions) Net Asset/(Liability) Balance as of December 31, 2022 10% Strengthening of the Value of the Foreign Currency Relative to the U.S.
Dollar Euro $ 18.7 $ (48.7) $ 48.7 Chinese Renminbi $ (6.2) $ 5.9 $ (5.9) Mexican Peso $ (20.4) $ 19.8 $ (19.8) British Pound Sterling $ (0.7) $ 6.2 $ (6.2) 59 Table of Contents (Decrease)/Increase to Future Pre-Tax Earnings Due to: (In millions) Net (Liability)/Asset Balance as of December 31, 2023 10% Strengthening of the Value of the Foreign Currency Relative to the U.S.
Represents charges incurred related to legal matters associated with acquired businesses, for which new information is brought to light after the measurement period for the business combination is closed, but for which the liability relates to events or activities that occurred prior to our acquisition of the business. iv.
Also includes costs related to optimization of our manufacturing processes to increase productivity and rationalize our manufacturing footprint and supply chain workforce rationalization and charges incurred related to legal matters associated with acquired businesses, for which new information is brought to light after the measurement period for the business combination is closed, but for which the liability relates to events or activities that occurred prior to our acquisition of the business. iii.
(2) On December 18, 2023, we redeemed in full the $400.0 million aggregate principal amount outstanding on our 5.625% Senior Notes. (3) Relates to interest costs capitalized as PP&E in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 835-20, Capitalization of Interest. (4) Primarily relates to fees on the unused balance on our Revolving Credit Facility.
(2) Relates to interest costs capitalized as PP&E in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 835-20, Capitalization of Interest. (3) Primarily relates to fees on the unused balance on our Revolving Credit Facility.
Refer to Note 19: Derivative Instruments and Hedging Activities of our Financial Statements included elsewhere in this Report for additional information related to the foreign currency forward contracts outstanding as of December 31, 2023. 61 Table of Contents Sensitivity Analysis The tables below present our foreign currency forward contracts as of December 31, 2023 and 2022 and the estimated impact to future pre-tax earnings as a result of a 10% strengthening/weakening in the foreign currency exchange rate: (Decrease)/Increase to Future Pre-tax Earnings Due to: (In millions) Net (Liability)/Asset Balance as of December 31, 2023 10% Strengthening of the Value of the Foreign Currency Relative to the U.S.
Sensitivity Analysis The tables below present our foreign currency forward contracts as of December 31, 2024 and 2023 and the estimated impact to future pre-tax earnings as a result of a 10% strengthening/weakening in the foreign currency exchange rate: (Decrease)/Increase to Future Pre-Tax Earnings Due to: (In millions) Net Asset/(Liability) Balance as of December 31, 2024 10% Strengthening of the Value of the Foreign Currency Relative to the U.S.
Indebtedness and Liquidity The following table details our gross outstanding indebtedness as of December 31, 2023 and the associated interest expense for the year then ended (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): (In millions) Balance as of December 31, 2023 Interest Expense for the year ended December 31, 2023 Term Loan (1) $ — $ 5.4 5.625% Senior Notes (2) — 21.7 5.0% Senior Notes 700.0 35.0 4.375% Senior Notes 450.0 19.7 3.75% Senior Notes 750.0 28.1 4.0% Senior Notes 1,000.0 40.0 5.875% Senior Notes 500.0 29.4 Finance lease obligations 25.2 2.2 Total gross outstanding indebtedness $ 3,425.2 Amortization of debt issuance costs 6.8 Capitalized interest costs (3) (8.0) Other interest expense (4) 2.0 Interest expense $ 182.2 __________________________ (1) On May 3, 2023, we prepaid the remaining balance on our outstanding variable rate Term Loan.
Refer to Note 14: Debt and Note 16: Shareholders' Equity of our Financial Statements included elsewhere in this Report for additional information. 52 Table of Contents Indebtedness and Liquidity The following table details our gross outstanding indebtedness as of December 31, 2024 and the associated interest expense for the year then ended (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): (In millions) Balance as of December 31, 2024 Interest Expense for the year ended December 31, 2024 5.0% Senior Notes (1) — 18.9 4.375% Senior Notes 450.0 19.7 3.75% Senior Notes 750.0 28.1 4.0% Senior Notes 1,000.0 40.0 5.875% Senior Notes 500.0 29.4 6.625% Senior Notes 500.0 18.8 Finance lease obligations 23.4 2.1 Total gross outstanding indebtedness $ 3,223.4 Amortization of debt issuance costs 5.7 Capitalized interest costs (2) (7.9) Other interest expense (3) 1.1 Interest expense $ 155.8 __________________________ (1) In July 2024, we redeemed in full the $700.0 million aggregate principal amount outstanding on our 5.0% Senior Notes.
The decision to repatriate these earnings was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.
The decision to repatriate these earnings was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital. The following table presents a reconciliation of net cash provided by operating activities calculated in accordance with U.S.
(3) During the year ended December 31, 2023, we incurred a non-cash impairment charge for goodwill that is nondeductible for tax purposes. (4) During the years ended December 31, 2023, 2022, and 2021, we established an additional valuation allowance and recognized a deferred tax expense.
(3) During the years ended December 31, 2024 and 2023, we incurred a non-cash impairment charge for goodwill that is nondeductible for tax purposes.
For the discounted cash flow method, we prepared detailed annual projections of future net cash flows for the reporting unit for the subsequent ten fiscal years (the "Discrete Projection Period"). We estimated the value of the net cash flows beyond the tenth fiscal year (the "Terminal Year") by using either the Gordon Growth Model or the H-Model.
For the discounted cash flow method, we prepared detailed annual projections of future net cash flows for the reporting unit for the subsequent ten fiscal years (the "Discrete Projection Period").
We believe that our procedures for estimating discounted future net cash flows, including the Terminal Year valuation, were reasonable and consistent with accepted valuation practices.
The estimated WACC was derived, in part, from comparable companies appropriate to each reporting unit. We believe that our procedures for estimating discounted future net cash flows, including the Terminal Year valuation, were reasonable and consistent with accepted valuation practices.
Organic revenue growth (or decline) and market outgrowth Organic revenue growth (or decline) is defined as the reported percentage change in net revenue, calculated in accordance with U.S. GAAP, excluding the period-over-period impact of foreign currency exchange rate differences as well as the net impact of material acquisitions and divestitures for the 12-month period following the respective transaction date(s).
GAAP, excluding the period-over-period impact of foreign currency exchange rate differences (or "constant currency") as well as the net impact of material acquisitions and divestitures for the 12-month period following the respective transaction date(s).
The transfer of cash from these jurisdictions could result in loss of incentives or higher cash tax expense, but those impacts are not expected to be material. 53 Table of Contents Our cash and cash equivalent balances as of December 31, 2023 and 2022 were held in the following significant currencies: As of December 31, 2023 (In millions) USD EUR GBP CNY Other United Kingdom $ 0.4 € 0.0 £ 11.9 ¥ — United States 12.9 0.0 — — The Netherlands 143.9 12.2 0.3 — China 155.2 — — 679.4 Other 58.3 2.5 — — Total $ 370.7 € 14.7 £ 12.2 ¥ 679.4 USD Equivalent $ 16.2 $ 15.6 $ 95.6 $ 10.0 As of December 31, 2022 (In millions) USD EUR GBP CNY Other United Kingdom $ 2.7 € 0.0 £ 10.7 ¥ — United States 16.1 — — — The Netherlands 848.6 10.9 0.2 — China 95.0 — — 794.4 Other 99.9 2.3 — — Total $ 1,062.3 € 13.2 £ 10.9 ¥ 794.4 USD Equivalent $ 14.0 $ 13.2 $ 115.2 $ 20.8 Cash Flows The table below summarizes our primary sources and uses of cash for the years ended December 31, 2023, 2022, and 2021.
Our cash and cash equivalent balances as of December 31, 2024 and 2023 were held in the following significant currencies: As of December 31, 2024 (In millions) USD EUR GBP CNY Other United Kingdom $ 0.1 € 0.0 £ 3.1 ¥ — United States 6.9 0.0 0.0 — The Netherlands 247.8 7.4 0.5 — China 73.1 — — 1,453.6 Other 41.3 2.3 — — Total $ 369.2 € 9.7 £ 3.6 ¥ 1,453.6 USD Equivalent $ 10.1 $ 4.5 $ 199.2 $ 10.7 As of December 31, 2023 (In millions) USD EUR GBP CNY Other United Kingdom $ 0.4 € 0.0 £ 11.9 ¥ — United States 12.9 0.0 — — The Netherlands 143.9 12.2 0.3 — China 155.2 — — 679.4 Other 58.3 2.5 — — Total $ 370.7 € 14.7 £ 12.2 ¥ 679.4 USD Equivalent $ 16.2 $ 15.6 $ 95.6 $ 10.0 Cash Flows The table below summarizes our primary sources and uses of cash for the years ended December 31, 2024, 2023, and 2022.
GAAP, excluding certain non-GAAP adjustments which are described under the heading Non-GAAP adjustments below. Adjusted EPS is calculated by dividing adjusted net income by the number of diluted weighted-average ordinary shares outstanding in the period. We may also refer to certain of these measures, or changes in these measures, on a constant currency basis.
GAAP, excluding certain non-GAAP adjustments which are described under the heading Non-GAAP adjustments below. Adjusted EPS is calculated by dividing adjusted net income by the number of diluted weighted-average ordinary shares outstanding in the period as determined in accordance with U.S. GAAP.
Loans made pursuant to the Revolving Credit Facility must be repaid in full at its maturity date and can be repaid prior to then at par. All letters of credit issued thereunder will terminate at the final maturity of the Revolving Credit Facility unless cash collateralized prior to such time.
All letters of credit issued thereunder will terminate at the final maturity of the Revolving Credit Facility unless cash collateralized prior to such time.
We do not believe that these restrictions and covenants will prevent us from funding share repurchases under our share repurchase programs with available cash and cash flows from operations. As of December 31, 2023, we believe that we were in compliance with all the covenants and default provisions under the Credit Agreement and the Senior Notes Indentures.
We do not believe that these restrictions and covenants will prevent us from funding share repurchases under our share repurchase programs or maintaining our dividend with available cash and cash flows from operations.
First, we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position.
In accordance with FASB ASC Topic 740, Income Taxes , we record uncertain tax positions on the basis of a two-step process. 57 Table of Contents First, we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position.
The net cash flows from the Discrete Projection Period and the Terminal Year were discounted at an estimated weighted-average cost of capital ("WACC") appropriate for each reporting unit. The estimated WACC was derived, in part, from comparable companies appropriate to each reporting unit.
We estimated the value of the net cash flows beyond the tenth fiscal year (the "Terminal Year") 56 Table of Contents by using either the Gordon Growth Model or the H-Model. The net cash flows from the Discrete Projection Period and the Terminal Year were discounted at an estimated weighted-average cost of capital ("WACC") appropriate for each reporting unit.
Dividends In the second quarter of 2022, we began paying quarterly cash dividends of $0.11 per share to our shareholders. In the second quarter of 2023, we increased the dividends to $0.12 per share. In the years ended December 31, 2023 and 2022, we paid 57 Table of Contents aggregate cash dividends of $71.5 million and $51.1 million, respectively.
As of December 31, 2024, approximately $403.0 million remained available under the September 2023 Program. Dividends In the second quarter of 2022, we began paying quarterly cash dividends of $0.11 per share to our shareholders. In the second quarter of 2023, we increased the quarterly dividends to $0.12 per share.
Also includes $75.6 million of mark-to-market losses on our equity investments, primarily our investment in Quanergy, which are presented in other, net in our consolidated statements of operations. 51 Table of Contents (d) Deferred taxes and other tax related adjustments for the years ended December 31, 2022 and 2021 include current tax expense of $14.7 million and $10.9 million, respectively, related to the repatriation of earnings from certain Asian subsidiaries to their parent companies in the Netherlands.
(d) Deferred taxes and other tax related adjustments for the year ended December 31, 2022 includes current tax expense of $14.7 million related to the repatriation of earnings from certain Asian subsidiaries to their parent companies in the Netherlands.

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