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Sensata Technologies Holding plc

Sensata Technologies Holding plcSTEarnings & Financial Report

NYSE · Industrials · Industrial Instruments For Measurement, Display, and Control

Sensata Technologies Holding plc is a global industrial technology company that designs, manufactures and sells a broad portfolio of sensing, electrical protection and control solutions. Its products serve automotive, industrial, aerospace, HVAC, telecommunications and heavy vehicle end markets, catering to manufacturing and enterprise clients across the world.

What changed in Sensata Technologies Holding plc's 10-K — 2024 vs 2025

Top changes in Sensata Technologies Holding plc's 2025 10-K

329 paragraphs added · 540 removed · 99 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

3 edited+190 added−146 removed0 unchanged
Refer to Note 20: Segment Reporting of our audited consolidated financial statements and accompanying notes thereto (the "Financial Statements") included elsewhere in this Report for additional information.
Refer to Note 14: Debt and Note 16: Shareholders' Equity of our Financial Statements included elsewhere in this Report for additional information.
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.
In September 2023, our Board of Directors authorized the September 2023 Program, which replaced the previous program, effective October 1, 2023. During the year ended December 31, 2023, we purchased 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.
Capital Allocation We repaid our $700.0 million aggregate principal amount of 5.0% senior notes due 2025 (the "5.0% Senior Notes") in July 2024 with a combination of cash on hand and the issuance of our $500.0 million aggregate principal amount of 6.625% senior notes due 2032 (the "6.625% Senior Notes").
Debt Instruments As of December 31, 2025, our debt instruments included $646.0 million of 4.0% Senior Notes, $450.0 million aggregate principal amount of 4.375% senior notes due 2030 (the "4.375% Senior Notes"), $500.0 million aggregate principal amount of 5.875% senior notes due 2030 (the "5.875% Senior Notes"), $750.0 million aggregate principal amount of 3.75% senior notes due 2031 (the "3.75% Senior Notes"), and $500.0 million aggregate principal amount of 6.625% senior notes due 2032 (the "6.625% Senior Notes").
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BUSINESS The Company The reporting company is Sensata Technologies Holding plc, a public limited company incorporated under the laws of England and Wales, and its consolidated subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," and "us." We are a global industrial technology company that strives to help our customers and partners safely deliver a cleaner, more efficient, electrified, and connected world.
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Item 1: Business included elsewhere in this Report for more detailed discussion of our reportable segments, including discussion of major products and market drivers. Refer to discussion under the heading Factors Affecting Our Operating Results included elsewhere in this MD&A for a detailed discussion of the various factors that may drive changes in our operating results.
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For more than 100 years, we have been developing and innovating a wide range of customized solutions that address increasingly complex engineering and operating performance requirements for our customers' mission-critical applications. We present financial information for two reportable segments, Performance Sensing and Sensing Solutions.
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The below discussion provides information on the material factors impacting fiscal year 2025 compared to fiscal year 2024. Net revenue Net revenue for the year ended December 31, 2025 decreased 5.8% compared to the prior year.
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We develop, manufacture, and sell sensors and sensor-rich solutions, electrical protection components and systems, and other products. Our sensors are used by our customers to translate a physical parameter, such as pressure, temperature, position, or location of an object, into electronic signals that our customers’ products and solutions can act upon.
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Net revenue increased 0.1% on an organic basis, which excludes an increase of 0.6% attributed to changes in foreign currency exchange rates and a decrease of 6.5% primarily to the effects of divestitures. Refer to Note 21: Divestitures of our Financial Statements included elsewhere in this Report for additional information related to our divestitures.
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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.
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Automotive Automotive net revenue for the year ended December 31, 2025 decreased 3.8% compared to the prior year.
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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.
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Excluding an increase of 0.7% attributed to changes in foreign currency exchange rates and a decrease of 3.3% due to the effects of a divestiture, Automotive net revenue decreased 1.2% on an organic basis, which was primarily due to product mix in the markets we serve.
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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.
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Industrials Industrials net revenue for the year ended December 31, 2025 increased 5.1% compared to the prior year.
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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.
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Excluding an increase of 0.3% attributed to changes in foreign currency exchange rates and a decrease of 3.4% due to the effects of product lifecycle management actions, Industrials net revenue increased 8.2% on an organic basis, which primarily reflects content growth in our Industrials business segment.
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We have a history of helping our customers with their mission-critical, hard-to-do engineering challenges. We identify future regulatory impacts and trends in our markets early and then work with our customers to help them adapt to these changes while creating innovative solutions.
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Aerospace, Defense, and Commercial Equipment Aerospace, Defense, and Commercial Equipment net revenue for the year ended December 31, 2025 decreased 6.4% compared to the prior year.
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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.
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Excluding an increase of 0.6% attributed to changes in foreign currency exchange rates and a decrease of 3.2% due to the effects of a divestiture, Aerospace, Defense, and Commercial Equipment net revenue decreased 3.8% on an organic basis. This organic revenue decline was primarily due to declines in the commercial equipment end market.
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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.
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Operating costs and expenses Operating costs and expenses for the years ended December 31, 2025, 2024, and 2023 are presented, in millions of dollars and as a percentage of revenue, in the following table.
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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.
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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.
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No customer exceeded 10% of our net revenue in any of the years ended December 31, 2024, 2023, or 2022. 4 Table of Contents End Markets The table below sets forth the amount of net revenue by end market, reconciled to total net revenue, for the years ended December 31, 2024, 2023, and 2022: For the year ended December 31, (In thousands) 2024 2023 2022 Net revenue: Automotive $ 2,208,416 $ 2,177,189 $ 2,107,651 HVOR (1) 693,939 715,961 675,238 Industrial, HVAC (2) , and other 712,160 825,293 920,217 Aerospace 190,360 188,179 152,880 All other 127,889 147,461 173,276 Total net revenue $ 3,932,764 $ 4,054,083 $ 4,029,262 __________________________ (1) Heavy vehicle and off-road (2) Heating, ventilation, and air conditioning 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.
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For the year ended December 31, 2025 2024 2023 Amount Percent of Net Revenue Amount Percent of Net Revenue Amount Percent of Net Revenue Operating costs and expenses: Cost of revenue $ 2,620.2 70.7 % $ 2,776.9 70.6 % $ 2,792.8 68.9 % Research and development 133.8 3.6 169.3 4.3 178.9 4.4 Selling, general and administrative 356.2 9.6 392.2 10.0 350.7 8.6 Amortization of intangible assets 80.2 2.2 145.7 3.7 173.9 4.3 Goodwill impairment charge 225.7 6.1 150.1 3.8 321.7 7.9 Restructuring and other charges, net 50.8 1.4 149.2 3.8 54.5 1.3 Total operating costs and expenses $ 3,467.0 93.6 % $ 3,783.5 96.2 % $ 3,872.4 95.5 % 33 Table of Contents Cost of revenue In the year ended December 31, 2025, cost of revenue as a percentage of net revenue increased versus the prior year period, due to the net impacts of inflation on material and logistics costs and the unfavorable effects of changes in foreign currency rates, partially offset by the favorable effects of divestitures.
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The changes included moving the various assets and liabilities comprising our vehicle area network and data collection businesses (the "Insights Business") out of Performance Sensing to a new operating segment, which is not aggregated within either of our reportable segments. Prior year amounts in this Report have been recast to reflect this realignment.
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Research and development expense R&D expense decreased in the year ended December 31, 2025 primarily as a result of the divestiture of the Insights Business in the third quarter of 2024 and cost reductions attributable to previously announced restructuring actions.
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Business Strategy Anticipating and Leveraging Change in our End Markets Over the next ten years we expect our end markets to undergo more pronounced changes than they have experienced during the last fifty years.
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Selling, general and administrative expense SG&A expense decreased in the year ended December 31, 2025 primarily due to the absence of charges related to the Insights Business in the current year. Refer to Note 21: Divestitures of our Financial Statements included elsewhere in this Report for additional information related to our divestitures.
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These changes present unprecedented growth opportunities, and by leveraging our core capabilities and global footprint we are uniquely positioned to capitalize on these safe, clean, and efficient growth drivers. Safe, Clean, & Efficient Due to a combination of global regulation and shifting consumer preference, our customers are facing increasing demand to make their products safer, cleaner, and more efficient.
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Amortization of intangible assets Amortization expense decreased in the year ended December 31, 2025, primarily due to (1) $9.6 million of accelerated amortization related to our decision to exit the Spear aerospace and defense business in the third quarter of 2024, (2) the divestiture of the Insights Business resulting in approximately $26.2 million of lower amortization expense during fiscal year 2025, and (3) 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.
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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.
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We expect amortization expense to be approximately $62.5 million in fiscal year 2026.
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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.
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Refer to Note 5: Restructuring and Other Charges, Net and Note 11: Goodwill and Other Intangible Assets, Net, 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.
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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.
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Goodwill impairment charge In the third quarter of 2025, 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 2025, we recorded a $225.7 million non-cash impairment charge.
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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.
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This impairment was primarily driven by a lower outlook within certain markets that the reporting unit operates in following recent tax legislation being enacted and a strategic shift to focus on other markets. This revised outlook led to downward revisions of forecasted future cash flows.
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In addition, tightening HVOR emissions regulations in the U.S., Europe, and China have resulted in increased sensor content in engines and exhaust after-treatment. Our differentiated operator controls and systems improve operator productivity and enable simplified, improved, and safer operation, even in harsh conditions.
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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 $4.1 million of goodwill may be recognized in the future.
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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.
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Restructuring and other charges, net Restructuring and other charges, net decreased in the year ended December 31, 2025 versus the prior year period, due to (1) the loss on the sale of the Insights Business in the third quarter of 2024, and (2) charges related to our decision to exit the Spear aerospace and defense business in the third quarter of 2024, partially offset by (1) the loss on the sale of the Magnetic Speed and Positioning Business ("MSP Business") in the first quarter of 2025, and (2) an increase in charges related to our restructuring plans.
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Also, variable HVAC systems are the preferred method to meet stringent energy efficiency and environmental regulations, and our pressure and temperature sensors are critical to optimize these systems and enable them to achieve higher levels of efficiency.
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Refer to Note 5: Restructuring and Other Charges, Net of our Financial Statements included elsewhere in this Report for additional information on the components of restructuring and other charges, net.
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We consider these capabilities to be core to our historical success and will continue to be significant drivers of market outgrowth in the future. We use the term "market outgrowth" to describe the difference between our organic revenue growth 5 Table of Contents and the underlying growth rates in the markets we serve.
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Operating income In the year ended December 31, 2025, operating income increased $88.2 million, or 59.1%, to $237.5 million (6.4% of net revenue) compared to $149.3 million (3.8% of net revenue) in the prior year, primarily due to (1) a decrease in product line and product lifecycle management charges, (2) a decrease in amortization of intangibles, and (3) cost savings as a result of actions taken as part of our restructuring plans, partially offset by a larger goodwill impairment charge taken in the current year than the prior year. 34 Table of Contents Interest expense In the year ended December 31, 2025, interest expense did not fluctuate materially from the prior period.
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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.
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Interest income In the year ended December 31, 2025, interest income did not fluctuate materially from the prior period.
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These components and solutions will support a future that is more environmentally sustainable and efficient and include (1) components for electric vehicles ("EVs"), charging stations, and chargers and (2) mission-critical high-voltage components and subsystems combined into high-value energy management or energy storage solutions.
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Provision for/(benefit from) income taxes The provision for (or benefit from) income taxes and our effective tax rate can vary significantly from period to period due to changes in our pre-tax income, geographic mix of earnings, discrete tax items, and other factors discussed below.
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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).
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For the year ended December 31, 2025, our effective tax rate was 74.6%, compared to 1,185.4% in 2024 and 121.9% in 2023.
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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.
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The unusually high and volatile effective tax rates primarily reflect the impact of non-deductible goodwill impairment charges, the 2024 capital restructuring to secure future IP deductibility, and other non-recurring items including unbenefited losses on asset sales and restructuring costs.
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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.
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Because many of these items are either non-deductible or only partially deductible, they had a disproportionate impact relative to the level of pre-tax income in each period. As a U.K. tax-resident company, our statutory corporate tax rate is 25%.
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These demands have been met with more choices, better performance, and improved safety, all combining to advance electrification at a rapid pace.
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Our effective tax rate differs from this. statutory rate due to: • earnings generated in jurisdictions with tax rates different from the U.K. rate, • non-deductible expenses, • tax incentives and credits available in certain jurisdictions, and • discrete tax items recognized in each period.
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Many of the components and subsystems we have historically developed and produced, such as those used in braking, tires, and environmental control in traditional ICE vehicles, will play a significant role in this expansion, as we can convert much of this technology for use in electric vehicle applications.
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These factors may fluctuate from period to period and may not be indicative of our expected effective tax rate in future periods. Discrete tax items, including non-deductible goodwill impairment charges, restructuring costs, acquisition and disposition related expenses, and changes in valuation allowances, also affected our income tax provision.
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Specific to EVs, we also provide and are developing several components that enable the safe and efficient operation of electrified platforms, such as high-voltage electrical protection, advanced temperature and thermal management sensing, highly sensitive electric motor position, and next-generation current sensing.
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In periods where pre-tax income is low or losses are incurred, these discrete items may result in an effective tax rate that is not meaningful or is not comparable to other periods.
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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.
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For additional details related to the reconciliation between the U.K. statutory tax rate and the Company’s effective tax rate for these years, refer to Note 7: Income Taxes of our Financial Statements included elsewhere in this Report.
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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.
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Deferred taxes and valuation allowances As of December 31, 2025, we maintained valuation allowances against certain foreign deferred tax assets, primarily related to interest carryforwards and net operating loss carryforwards in jurisdictions where we do not expect to generate sufficient taxable income to realize these benefits.
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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.
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Changes in valuation allowances are evaluated periodically based on updated forecasts of future taxable income and other relevant factors. Cash taxes Cash taxes paid during 2025 were $114.9 million as compared to $92.6 million of total income tax provision reported in our consolidated statements of operations.
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Today, our high-voltage contactors are a critical component of our electrification portfolio, and we have continued to build upon that organically and through acquisitions including current sensing and battery management. We meaningfully started our journey in high-voltage electrification with the 2018 acquisition of GIGAVAC, an industrial contactor-infused business serving the North American market.
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Cash taxes paid during the year exceeded our total income tax provision primarily due to the settlement of income taxes related to prior years in certain jurisdictions, and the prepayment of income taxes in other jurisdictions in the current year.
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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.
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These payments reflect the timing of tax settlements and advance payments and do not necessarily correspond to income tax expense recognized in the current period. As a result, cash taxes paid may differ from the income tax provision reported in our consolidated statements of operations in a given period.
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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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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.
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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.
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We use these non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance, and as a factor in determining compensation for certain employees. 35 Table of Contents The use of our non-GAAP financial measures has limitations.
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We continue to invest in innovative technologies, competencies, and solutions to enable our customers' success in electrification.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

34 edited+7 added−4 removed108 unchanged
Declines in demand such as experienced as a result of the COVID-19 pandemic and other adverse developments like those we have seen in past years in the automotive industry, including but not limited to customer bankruptcies and increased demands on us for lower prices, could have adverse effects on our results of operations and could impact our liquidity and our ability to meet restrictive debt covenants.
Declines in demand such as those experienced as a result of the COVID-19 pandemic and other adverse developments like those we have seen in past years in the automotive industry, including but not limited to customer bankruptcies and increased demands on us for lower prices, could have adverse effects on our results of operations and could impact our liquidity and our ability to meet restrictive debt covenants.
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
Refer to Note 11: Goodwill and Other Intangible Assets, Net, 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
For example, it could make it more difficult for us to satisfy our debt obligations; restrict us from making strategic acquisitions; limit our ability to repurchase shares; limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities, thereby placing us at a competitive disadvantage if our competitors are not as highly-leveraged; increase our vulnerability to general adverse economic and market conditions; or require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness if we do not maintain specified financial ratios or are not able to refinance our indebtedness as it comes due, thereby reducing the availability of our cash flows for other purposes.
For example, it could make it more difficult for us to satisfy our debt obligations; restrict us from making strategic acquisitions; limit our ability to repurchase shares; limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities, thereby placing us at a competitive disadvantage if our competitors are not as highly-leveraged; increase our vulnerability to general adverse economic and market conditions; or require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness if 18 Table of Contents we do not maintain specified financial ratios or are not able to refinance our indebtedness as it comes due, thereby reducing the availability of our cash flows for other purposes.
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.
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 us from making payments on the Senior Notes.
Finally, given the worldwide scope of our supply chain and operations, we and our suppliers face a risk of disruption or operating inefficiencies that may increase costs due to the adverse physical effects of climate change, which are predicted to increase the frequency and severity of weather and other natural events, e.g., tropical cyclones, extended droughts, and extreme temperatures.
Finally, given the worldwide scope of our supply chain and operations, we and our suppliers face a risk of disruption or operating inefficiencies that may increase costs due to the adverse physical effects of climate change, which are predicted to increase the frequency and severity of weather and other natural events, e.g., tropical cyclones, extended droughts, and extreme 16 Table of Contents temperatures.
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 use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in all of our 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.
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.
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. 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.
Further, to the extent that any disruption or security incident results in a loss of, or damage to, our data, or an inappropriate disclosure of confidential information, it could cause significant damage to our reputation, affect our relationships with our customers, lead to claims against us, and ultimately harm our business, financial condition, and/or results of operations.
Further, to the extent that any disruption or security incident results in a loss of, or damage to, our data, or an inappropriate disclosure of confidential information, it could cause significant 15 Table of Contents damage to our reputation, affect our relationships with our customers, lead to claims against us, and ultimately harm our business, financial condition, and/or results of operations.
In addition, these same conditions could adversely impact certain of our vendors’ financial solvency, resulting in potential liabilities or additional costs to us to ensure uninterrupted supply to our customers. Because of the prevalence of ICE vehicles today, applications in these vehicles make up most of our current transportation addressable markets (automotive and HVOR).
In addition, these same conditions could adversely impact certain of our vendors’ financial solvency, resulting in potential liabilities or additional costs to us to ensure uninterrupted supply to our customers. Because of the prevalence of ICE vehicles today, applications in these vehicles make up most of our current transportation addressable markets (automotive and commercial equipment).
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.
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.
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.
Financial Risks 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.
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.
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.
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.
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.
We may not be able to successfully integrate and streamline overlapping functions from future acquisitions, and integration may be more costly to accomplish than we expect. There is also no guarantee that the acquired businesses will perform according to the business case used in justifying the acquisition.
We may not be able to successfully integrate 17 Table of Contents and streamline overlapping functions from future acquisitions, and integration may be more costly to accomplish than we expect. There is also no guarantee that the acquired businesses will perform according to the business case used in justifying the acquisition.
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 a term loan facility (the "Term Loan"), a $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 a $650.0 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.
A significant element of our competitive strategy is to design and manufacture high-quality products that meet the needs of our customers at a commercially competitive price, particularly in markets where low-cost, country-based suppliers, primarily in China with respect to the Sensing Solutions segment, have entered the markets or increased their per-unit sales in these markets by delivering products at low cost to local OEMs.
A significant element of our competitive strategy is to design and manufacture high- 14 Table of Contents quality products that meet the needs of our customers at a commercially competitive price, particularly in markets where low-cost, country-based suppliers, primarily in China with respect to the Industrials segment, have entered the markets or increased their per-unit sales in these markets by delivering products at low cost to local OEMs.
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.
Much of our business depends on, and is directly affected by, the global automobile industry. Sales in our automotive end markets accounted for approximately 57% of our total net revenue in fiscal year 2025.
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.
If Dynapower does not achieve the forecasted future cash flows, there is a possibility that additional impairments of the remaining $4.1 million of goodwill may be recognized in the future.
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.
Our subsidiaries located outside of the U.S. generated approximately 61% of our net revenue in fiscal year 2025 (including approximately 20% in China), and we expect sales from non-U.S. markets to continue to represent a significant portion of our total net revenue.
Disruptions could include: partial shutdowns of our facilities as mandated by government decree; government actions limiting our ability to adjust certain costs; significant travel restrictions; “work-from-home” orders; limited availability of our workforce; supplier constraints; supply chain interruptions; logistics challenges and limitations; and reduced demand from certain customers.
Disruptions could include: partial shutdowns of our facilities as mandated by government decree; government actions limiting our ability to adjust certain costs; significant travel restrictions; “work-from-home” orders; limited availability of our workforce; supplier constraints; supply chain interruptions; logistics challenges and limitations; and reduced demand from certain customers. The COVID-19 pandemic has had these effects on the economy and our business.
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.
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.
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.
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.
Such 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.
Such 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.
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.
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.
The COVID-19 pandemic has had, and could continue to have, these effects on the economy and our business. Additionally, the impacts described above and other impacts of a global pandemic, including responses to it, could substantially increase the risk to us from the other risks described in this Item 1A: Risk Factors .
Additionally, the impacts described above and other impacts of a global pandemic, including responses to it, could substantially increase the risk to us from the other risks described in this Item 1A: Risk Factors .
If we are unable to efficiently and effectively maintain and upgrade our system safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access.
Refer to Note 15: Commitments and Contingencies , for a discussion of our April 2025 cybersecurity incident. If we are unable to efficiently and effectively maintain and upgrade our system safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access.
Changes in consumer preferences due to transitioning to a greener economy may result in increased costs, reduced demand for our ICE products, and reduced profits.
Changes in consumer preferences and government regulations may result in increased costs, reduced demand for our ICE products, and reduced profits.
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”).
As of December 31, 2025, we had $2.9 billion of gross outstanding indebtedness, including various tranches of senior unsecured notes (the “Senior Notes”).
The success of this strategy is dependent upon our ability to identify appropriate disposition targets, negotiate transactions on favorable terms, and complete transactions. Any divestitures may result in significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial condition.
Any divestitures may result in significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial condition.
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.
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. 12 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.
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.
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 $3.2 billion as of December 31, 2025, or 47% of our total assets. 19 Table of Contents In the third quarter of 2025, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair value.
If actual production volumes were significantly lower than estimated, our anticipated revenue and gross margin from those new products would be adversely affected. We cannot predict the ultimate demand for our customers’ products, nor can we predict the extent to which we would be able to pass through unanticipated per-unit cost increases to our customers.
If actual production volumes were significantly lower than estimated, our anticipated revenue and gross margin from those new products would be adversely affected.
Restructuring our business or divesting some of our businesses or product lines in the future may have a material adverse effect on our results of operations, financial condition, and cash flows. In pursuing our corporate strategy, we continue to evaluate the strategic fit of specific businesses and products and occasionally dispose of or exit businesses and products.
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. Restructuring our business or divesting some of our businesses or product lines in the future may have a material adverse effect on our results of operations, financial condition, and cash flows.
Increasing costs for, or limitations on the supply of or access to, manufactured components and raw materials may adversely affect our business and results of operations.
We cannot predict the ultimate demand for our customers’ products, nor can we predict the extent to which we would be able to pass through unanticipated per-unit cost increases to our customers. 13 Table of Contents Increasing costs for, or limitations on the supply of or access to, manufactured components and raw materials may adversely affect our business and results of operations.
Removed
We may incur material losses and costs as a result of product liability, warranty, and recall claims that may be brought against us.
Added
Our costs associated with product liability, warranty, and recall claims could be material. The insurance coverages that the Company maintains may not apply to all types of claims and proceedings, and, where insurance exists, the amount of insurance coverage may not be adequate to cover the total claims and liabilities.
Removed
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.
Added
In pursuing our corporate strategy, we continue to evaluate the strategic fit of specific businesses and products and occasionally dispose of or exit businesses and products. The success of this strategy is dependent upon our ability to identify appropriate disposition targets, negotiate transactions on favorable terms, and complete transactions.
Removed
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.
Added
Many of our customers are adopting specific environmental requirements, including renewable‑energy commitments, emissions‑reduction targets, and circularity or waste‑reduction goals. Meeting these expectations may increase our costs, and failure to do so could negatively impact customer relationships or future business awards.
Removed
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.
Added
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
Goodwill and other intangible assets, net totaled approximately $3.6 billion as of December 31, 2025, or 53% of our total assets.
Added
Accordingly, we evaluated the Dynapower reporting unit for impairment and determined that it was impaired. In the third quarter of 2025, we recorded a $225.7 million non-cash impairment charge.
Added
This impairment was primarily driven by a lower outlook within certain markets that the reporting unit operates in following recent tax legislation being enacted and a strategic shift to focus on other markets. This revised outlook led to downward revisions of forecasted future cash flows.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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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).
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. 25 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 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).
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.
Our data protection, 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 data protection, cyber, IT, and business priorities are communicated and understood throughout the organization.
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.
Our Director of Cybersecurity has served in various roles in IT and information security for more than 20 years, including in the military and the healthcare and retail industries.
Our approach to data privacy and cybersecurity is defined by our commitment to preserving the trust our employees and customers place in us and focuses on driving continuous improvement as the threat landscape evolves. Our Audit Committee and our management are actively involved in the oversight of our risk management program, of which cybersecurity represents an important component.
Our approach to data privacy and cybersecurity is defined by our commitment to preserving the trust our employees and customers place in us and focuses on driving continuous improvement as the threat landscape evolves. Our Audit Committee and our management are actively involved in the oversight of our cybersecurity program.
Our program evaluates potential risks consistent with industry practices, customer requirements, and applicable law, including privacy and other considerations. • Third Party Risk Assessments : We conduct information security assessments before sharing or allowing the hosting of sensitive data in computing environments managed by third parties, and our standard terms and conditions contain contractual provisions requiring certain security protections. • Training and Awareness : We have robust cybersecurity training programs with frequent touch points for all employees to empower them to act responsibly and keep cybersecurity top of mind.
Our program evaluates potential risks consistent with industry practices, customer requirements, and applicable law, including privacy and other considerations. • Third Party Risk Assessments : We conduct information security assessments before sharing or allowing the hosting of sensitive data in computing environments managed by third parties, and our standard terms and conditions contain contractual provisions requiring certain security protections. • Training and Awareness : We maintain cybersecurity training programs with frequent touch points for all employees to promote responsible practices and reinforce cybersecurity awareness.
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
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.
We can provide no assurance that there will not be incidents in the future or that they will not materially affect us, including our business strategy, results of operations, or financial condition.
We can provide no assurance that there will not be incidents in the future or that they will not materially affect us, including our business strategy, results of operations, or financial condition. Risk Management Strategy We are guided by our Written Information Security Program ("WISP"), which includes our focus areas, and defines procedures that govern our cybersecurity practices.
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.
We have devoted meaningful financial and personnel resources to implement and 24 Table of Contents maintain security programs to meet regulatory requirements and customer expectations, and we intend to continue to make meaningful investments to maintain the security of our data and infrastructure.
Removed
Risk Management Strategy We are guided by our Cybersecurity Charter, which includes our philosophy of information security, identifies the motivation for security, describes information security principles and terms, and defines the scope of information security policies and responsibilities for various functions.
Added
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
For more information about cybersecurity risks relating to our business and for information about our April 2025 cybersecurity incident, refer to Item 1A: Risk Factors and Note 15: Commitments and Contingencies of our Financial Statements, respectively, included elsewhere in this Report.

Item 2. Properties

Properties — owned and leased real estate

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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.
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.
A 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.
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. LEGAL PROCEEDINGS We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business.
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.
We do not anticipate difficulty in retaining occupancy through lease renewals, month-to-month occupancy, or by replacing the leased facilities with equivalent facilities. A significant portion of our owned properties and equipment is or may become subject to a lien under the Senior Secured Credit Facilities.
(2) Our U.K. headquarters is located in this facility. (3) Our U.S. headquarters is located in this facility. These facilities are primarily devoted to research, development, engineering, manufacturing, and assembly. In addition to these principal facilities, we occupy other manufacturing, engineering, warehousing, administrative, and sales facilities worldwide, which are primarily leased.
In addition to these principal facilities, we occupy other manufacturing, engineering, warehousing, administrative, and sales facilities worldwide, which are primarily leased. 26 Table of Contents We consider our manufacturing facilities sufficient to meet our current operational requirements. Leases covering our currently occupied principal leased facilities expire at varying dates within the next 15 years.
Removed
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.
Added
ITEM 2. PROPERTIES Our U.S headquarters is located at a leased site in Attleboro, Massachusetts. Our U.K. headquarters is located at a leased site in Swindon, United Kingdom. In addition to our headquarters locations, we own and lease additional manufacturing facilities and business centers, with significant sites in Bulgaria, China, India, Malaysia, Mexico, the Netherlands, the U.K., and the U.S.
Removed
We consider our manufacturing facilities sufficient to meet our current operational requirements. An increase in demand for our products may require us to expand our production capacity, which could require us to identify and acquire or lease additional manufacturing facilities.
Added
As of December 31, 2025, these locations occupied 1,979 thousand square feet of owned space and 1,768 thousand square feet of leased space. These facilities are primarily devoted to research, development, engineering, manufacturing, and assembly.
Removed
We believe that suitable additional or substitute facilities will be available as required; however, if we are unable to acquire, integrate, and move into production the facilities, equipment, and personnel necessary to meet such an increase in demand, our customer relationships, results of operations, and/or financial condition may suffer materially.
Removed
LEGAL PROCEEDINGS We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business.
Removed
MINE SAFETY DISCLOSURES Not applicable. 30 Table of Contents PART II

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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.
For a discussion of our fiscal year 2024 operating results compared to fiscal year 2023, 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, 2024, filed on February 28, 2025. Refer to
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.
For the year ended December 31, 2025 2024 2023 Amount Percent of Net Revenue Amount Percent of Net Revenue Amount Percent of Net Revenue Net revenue: Automotive $ 2,111.7 57.0 % $ 2,195.5 55.8 % $ 2,167.4 53.5 % Industrials 787.8 21.3 749.2 19.0 863.2 21.3 Aerospace, Defense, and Commercial Equipment 805.0 21.7 860.2 21.9 876.1 21.6 Other — — 127.9 3.3 147.5 3.6 Total net revenue 3,704.5 100.0 % 3,932.8 100.0 % 4,054.1 100.0 % Operating costs and expenses 3,467.0 93.6 3,783.5 96.2 3,872.4 95.5 Operating income 237.5 6.4 149.3 3.8 181.7 4.5 Interest expense (149.1) (4.0) (155.8) (4.0) (182.2) (4.5) Interest income 19.1 0.5 16.2 0.4 31.3 0.8 Other, net 15.8 0.4 (21.5) (0.5) (13.0) (0.3) Income/(loss) before taxes 123.3 3.3 (11.8) (0.3) 17.8 0.4 Provision for/(benefit from) income taxes 92.0 2.5 (140.3) (3.6) 21.8 0.5 Net income/(loss) $ 31.3 0.8 % $ 128.5 3.3 % $ (3.9) (0.1) % 32 Table of Contents The discussion that follows compares operating results for fiscal year 2025 to fiscal year 2024.
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.
In the three months ended December 31, 2025, we realigned our business as a result of organizational changes that better allocate our resources to support changes to our business strategy. These changes resulted in the dissolution of our prior segments, Performance Sensing and Sensing Solutions, and the creation of three new segments.
Removed
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.
Added
We have derived these results of operations from our Financial Statements. Our business strategy involves leveraging new and emerging technologies, which complement our existing product offerings, and we refer to these trends collectively as "megatrends". Our operating segments' performance is primarily evaluated based on segment operating income.
Removed
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.
Added
In the three months ended March 31, 2025, we realigned the definition of segment operating income to include megatrend costs, which were previously excluded from segment operating income and included in corporate and other costs.
Removed
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.
Added
Our Automotive segment includes our Automotive and Aftermarket businesses. The Industrials segment includes our Industrial and Dynapower businesses. The Aerospace, Defense, and Commercial Equipment segment includes our Aerospace and Commercial Equipment businesses.
Removed
Refer to Item 1: Business included elsewhere in this Report for more detailed discussion of our reportable segments, including discussion of major products and market drivers. Refer to discussion under the heading Factors Affecting Our Operating Results included elsewhere in this MD&A for a detailed discussion of the various factors that may drive changes in our operating results.
Added
Results of the Insights Business, which was sold during the third quarter of 2024, are presented in the Other non-operating segment, which is not aggregated within any of our reportable segments. Our new operating structure allows us to more effectively allocate capital and investment dollars based on different end market and growth dynamics in each of these segments.
Removed
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.
Added
Prior year amounts in this Report have been recast to reflect this realignment. Refer to Note 20: Segment Reporting for additional information.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
For 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.
Removed
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.
Removed
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
Refer to Note 21: Divestitures of our Financial Statements included elsewhere in this Report for additional information related to our acquisitions and divestitures.
Removed
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 expect amortization expense to be approximately $80.1 million in fiscal year 2025.
Removed
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.
Removed
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
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
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 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
Refer to Note 5: Restructuring and Other Charges, Net of our Financial Statements included elsewhere in this Report for additional information on the components of restructuring and other charges, net.
Removed
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.
Removed
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
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.
Removed
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.
Removed
(2) Relates to changes in the fair value of derivative financial instruments that are not designated as hedges. Refer to Note 19: Derivative Instruments and Hedging Activities of our Financial Statements included elsewhere in this Report for additional information related to gains and losses on our commodity and foreign currency forward contracts. Refer to

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

29 edited+9 added−59 removed22 unchanged
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.
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, net (gains) or losses on debt financing transactions, and net periodic benefit cost, excluding service cost.
Restructuring and other charges, net also includes the gain, net of transaction costs, from the sale of businesses, expense incurred from acquisition-related compensation arrangements, and other operating income or expense that is not presented elsewhere in operating income.
Restructuring and other charges, net also includes the gain or loss, net of transaction costs, from the sale of businesses, expense incurred from acquisition-related compensation arrangements, and other operating income or expense that is not presented elsewhere in operating income.
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.
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, 2020 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.
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.
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 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.
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.
Dividends In fiscal year 2025, 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 graph assumes that the value of the investment in our ordinary shares and each index was $100.00 on December 31, 2019.
The graph assumes that the value of the investment in our ordinary shares and each index was $100.00 on December 31, 2020.
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 January 2022 Program and became effective on October 1, 2023. The form of the September 2023 Program was approved by shareholders on May 25, 2023. The September 2023 Program does not have an established expiration date.
On September 26, 2023, our Board of Directors authorized a $500.0 million ordinary share repurchase program (the "September 2023 Program"), which replaced the previous program and became effective on October 1, 2023. The form of the September 2023 Program was approved by shareholders on May 25, 2023. The September 2023 Program does not have an established expiration date.
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.
We expect improving free cash flow (net cash provided by operating activities less capital 29 Table of Contents 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, and liquidity and capital resources.
RESERVED ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, and liquidity and capital resources.
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).
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 January 29, 2026, there were three holders of record of our ordinary shares, which included Cede & Co. (which acts as nominee shareholder for the Depository Trust Company).
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.
In fiscal year 2026, 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.
Depreciation expense Depreciation expense includes depreciation of PP&E, which includes assets held under finance lease and amortization of leasehold improvements. Depreciation expense is included in either cost of revenue or SG&A expense depending on the use of the asset as a manufacturing or administrative asset.
Depreciation expense Depreciation expense includes depreciation of property, plant and equipment, which includes assets held under finance lease and amortization of leasehold improvements. Depreciation expense is included in either cost of revenue or SG&A expense depending on the use of the asset as a manufacturing or administrative asset.
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.
Fiscal year 2025 financial summary Our consolidated revenue decreased 5.8% in fiscal year 2025 from the prior year. Excluding an increase of 0.6% attributed to changes in foreign currency exchange rates and a decrease of 6.5% due to the effect of divestitures, net revenue increased 0.1% on an organic basis.
Organic revenue growth (or decline), discussed throughout this MD&A, is a financial measure not presented in accordance with U.S. GAAP. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of organic revenue growth (or decline).
Organic revenue growth (or decline), discussed throughout this MD&A, is a financial measure not presented in accordance with U.S. GAAP. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of organic revenue growth (or decline). Organic revenue growth was primarily driven by content growth in our Industrials business segment.
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).
These repayments brought our gross outstanding indebtedness at December 31, 2025 to $2.9 billion, representing a net leverage ratio of 2.7x, compared to gross indebtedness of $3.2 billion as of December 31, 2024 (representing a net leverage ratio of 3.0x).
Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our debt financing transactions. Provision for (or benefit from) income taxes We are subject to income tax in the various jurisdictions in which we operate.
Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our debt financing transactions. Provision for (or benefit from) income taxes The provision for (or benefit from) income taxes reflects taxes on our earnings in the various jurisdictions in which we operate and can vary significantly from period to period.
Our remaining cost of revenue primarily consists of: gains and losses on certain foreign currency forward contracts that are designated as cash flow hedges; material yields; costs to import raw materials, such as tariffs; depreciation of fixed assets used in the manufacturing process; freight costs; warehousing expenses; maintenance and repair expenses; costs of quality assurance; operating supplies; and other general manufacturing expenses, such as expenses for energy consumption and operating lease expense.
Our remaining cost of revenue primarily consists of: gains and losses on certain foreign currency forward contracts that are designated as cash flow hedges; costs to import raw materials, such as tariffs; depreciation of fixed assets used in the manufacturing process; and other general manufacturing expenses.
These advancements lead to sensor growth rates that we expect to exceed underlying production growth in many of our key end markets, which we expect will continue to offer us significant growth opportunities.
These advancements lead to sensor growth rates that we expect to exceed underlying production growth in many of our key end markets, which we expect will continue to offer us significant growth opportunities. Fiscal year 2025 highlights In fiscal year 2025, we reduced our total gross debt by $354.0 million.
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.
These withholdings took place outside of a publicly announced repurchase plan. There were 26,969, 1,666, and 10,597 ordinary shares withheld in October 2025, November 2025, and 28 Table of Contents December 2025, respectively, representing a total aggregate fair value of $1.3 million based on the closing price of our ordinary shares on the date of withholdings. ITEM 6.
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.
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) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs (in millions) October 1 through October 31, 2025 26,969 $ 32.56 — $ 282.4 November 1 through November 30, 2025 1,666 $ 31.83 — $ 282.4 December 1 through December 31, 2025 10,597 $ 33.25 — $ 282.4 Quarter total 39,232 $ 32.72 — $ 282.4 __________________________ (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.
Acquisition-related definite-lived intangible assets are amortized on an economic-benefit basis, according to the useful lives of the assets, or on a straight-line basis if a pattern of economic benefits cannot be reliably determined.
Amortization expense Acquisition-related definite-lived intangible assets are amortized on an economic-benefit basis, according to the useful lives of the assets, or on a straight-line basis if a pattern of economic benefits cannot be reliably determined. 30 Table of Contents Restructuring and other charges, net Restructuring charges consist of severance, outplacement, other separation benefits, and facility and other exit costs.
While the factors described above may impact net revenue in each of our reportable segments, the magnitude of that impact can differ. For more information about revenue risks relating to our business, refer to Item 1A: Risk Factors included elsewhere in this Report. Cost of revenue We manufacture most of our products, subcontracting only a limited number to third parties.
For more information about revenue risks relating to our business, refer to Item 1A: Risk Factors included elsewhere in this Report. Cost of revenue We manufacture most of our products, subcontracting only a limited number to third parties. As such, our cost of revenue consists principally of production materials costs and employee costs.
Our development expense is typically associated with engineering core technology platforms to specific applications and engineering major upgrades that improve the functionality or reduce the cost of existing products. In addition, we continually consider new technologies where we may have expertise for potential investment or acquisition.
Research and development expense Research and development ("R&D") expense consists of costs related to product design and development. Our development expense is typically associated with engineering core technology platforms to specific applications and engineering major upgrades that improve the functionality or reduce the cost of existing products.
Factors Affecting Our Operating Results The following discussion describes components of the consolidated statements of operations as well as factors that impact those components.
Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of free cash flow. Factors Affecting Our Operating Results The following discussion describes components of the consolidated statements of operations as well as factors that impact those components.
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.
In addition to $352.2 million of cash used to pay debt, in fiscal year 2025, we used cash of approximately $120.6 million for share repurchases and $70.4 million for payment of dividends.
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.
Total Shareholder Return of $100.00 Investment from December 31, 2020 As of December 31, 2020 2021 2022 2023 2024 2025 Sensata $ 100.00 $ 116.97 $ 77.15 $ 72.63 $ 53.69 $ 66.28 S&P 500 $ 100.00 $ 128.71 $ 105.40 $ 133.10 $ 166.40 $ 196.16 S&P 500 Industrial $ 100.00 $ 119.40 $ 110.92 $ 128.71 $ 148.84 $ 175.19 27 Table of Contents The information in the graph and table above is not "soliciting material," is not deemed "filed" with the U.S.
Refer to Item 7A: Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this Report for more information regarding our exposure to potential changes in variable interest rates. Interest income Interest income relates to interest earned on our cash and cash equivalent balances, and varies according to the balances in, and the interest rates provided by, these investments.
Interest expense Interest expense relates to interest owed on our gross outstanding indebtedness, and varies according to the balances of, and the interest rates assigned to, this indebtedness. Interest income Interest income relates to interest earned on our cash and cash equivalent accounts, and varies according to the balances in, and the interest rates provided by, these accounts.
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.
This increase was primarily driven by $98.5 million of lower net restructuring and other charges, and a $65.5 million decrease in intangible asset amortization charges, partially offset by lower revenue and a $75.6 million increase in goodwill impairment charges in the current period.
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.
Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our operating results for the year ended December 31, 2025. We generated $621.5 million of operating cash flows in fiscal year 2025, ending the year with $573.0 million in cash.
Removed
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.
Added
Operating income for fiscal year 2025 increased $88.2 million, or 59.1%, to $237.5 million (6.4% of net revenue) compared to $149.3 million (3.8% of net revenue) in the prior year.
Removed
("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.
Added
Our income tax provision (or benefit) consists of current tax expense (or benefit), which represents taxes payable based on taxable income for the period, and deferred tax expense (or benefit), which results from changes in deferred tax assets and liabilities arising from temporary differences between the financial reporting and tax bases of our assets and liabilities.
Removed
Additionally, certain of our subsidiaries may be limited in their ability to pay dividends or make other distributions to the extent that the shareholders' equity of such subsidiary exceeds the reserves required to be maintained by law or under its articles of association.
Added
Our effective tax rate is influenced by a number of factors, including the geographic mix of our earnings and losses, changes in tax laws and statutory tax rates, the availability and utilization of tax attributes such as net operating losses and tax credits, valuation allowance assessments, and the tax effects of acquisitions, dispositions, restructurings, and other strategic transactions.
Removed
On January 20, 2022, our Board of Directors authorized a $500.0 million ordinary share repurchase program (the “January 2022 Program”), which replaced the previous $500.0 million program approved in July 2019.
Added
As these factors fluctuate from period to period, our effective tax rate may differ materially from the statutory tax rate applicable in any single jurisdiction and from our expectations.
Removed
(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.
Added
The determination of our income tax provision requires significant judgment, including estimates related to future taxable income in different jurisdictions, the realizability of deferred tax assets, and the measurement of uncertain tax positions.
Removed
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.
Added
Changes in these estimates, including as a result of new information, audit outcomes, or changes in facts and circumstances, may result in adjustments to our tax provision in future periods.
Removed
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.
Added
In addition, our effective tax rate may be impacted by discrete items, including non‑deductible expenses, changes in valuation allowances, audit settlements, the expiration of statutes of limitation, and the tax effects of unusual or infrequently occurring transactions.
Removed
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.
Added
These items may cause significant variability in our effective tax rate from year to year and may not be indicative of our ongoing tax profile. We continue to monitor global tax developments, including changes in domestic and international tax rules.
Removed
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.
Added
While certain recent tax law changes, including global minimum tax regimes, were not significant to our overall income tax provision for the year ended December 31, 2025, future changes in tax laws, interpretations, enforcement practices, or our business and 31 Table of Contents geographic mix of earnings could increase our effective tax rate, cash tax obligations, and compliance costs in future periods.
Removed
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
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 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
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
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
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”).
Removed
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
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.
Removed
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.
Removed
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.
Removed
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
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
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.
Removed
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.
Removed
The 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.
Removed
Selected Geographic Information We are a global business with significant operations around the world and a diverse revenue mix by geography, customer, and end market.
Removed
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.
Removed
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.
Removed
Other organic factors combine to reflect what we refer to as market outgrowth.
Removed
Such factors include (but are not limited to): (a) the number of our products used within existing applications, or the development of new applications requiring these products, due to regulations or other factors; (b) the "mix" of products sold, including the proportion of new or upgraded products and their pricing relative to existing products; (c) changes in product sales prices (including quantity discounts, rebates, and cash discounts for prompt payment); (d) changes in the level of competition faced by our products, including the launch of new products by competitors; (e) our ability to successfully develop, launch, and sell new products and applications; and (f) the evolution of the markets we serve to safer, cleaner, and more efficient, electrified, and connected technologies.
Removed
As such, our cost of revenue consists principally of the following: • Production Materials Costs. We source production materials globally to ensure a highly effective and efficient supply chain. However, we are still impacted by local market conditions, including fluctuations in foreign currency exchange rates.
Removed
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.
Removed
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.
Removed
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.
Removed
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
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.
Removed
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.
Removed
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.
Removed
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.
Removed
We believe that continued focused investment in research and development ("R&D") is critical to our future growth and maintaining our leadership positions in the markets we serve. Our R&D efforts are directly related to timely development of new and enhanced products that are central to our business strategy.
Removed
We continually develop our technologies to meet an evolving set of customer requirements and new product introductions. We conduct such activities in areas that we believe will increase our long-term revenue growth.
Removed
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.
Removed
Expenses related to these activities are less likely to result in increased near-term revenue than our more mainstream development activities. R&D expense consists of costs related to product design, development, and process engineering.

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Item 7. Management's Discussion & Analysis

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

13 edited+14 added−20 removed43 unchanged
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.
Consequently, any repurchase of our 23 Table of Contents shares is currently considered an "off-market purchase." Our current authorization expires on June 10, 2030, 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.
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.
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.
Any failure by us to comply with applicable laws and regulations could result in governmental enforcement actions, fines, penalties, criminal and/or civil proceedings, or other remedies, any of which could have a material adverse effect on our business, results of operations, and/or financial condition.
Any failure by us to comply with applicable laws and regulations could result in governmental enforcement actions, fines, penalties, criminal and/or civil proceedings, or other remedies, any of which could have a material adverse effect on our business, results of operations, and/or financial condition. 22 Table of Contents Our ability to compete effectively depends, in part, on our ability to maintain the proprietary nature of our products and technology.
These laws and regulations govern, among other things, the generation, storage, use, and transportation of hazardous materials; emissions or discharges of substances into the environment; investigation and remediation of hazardous substances or materials at various sites; GHG emissions; product hazardous material content; and the health and safety of our employees.
These laws and regulations govern, among other things, the generation, storage, use, and transportation of hazardous materials; emissions or discharges of substances into the environment; investigation and remediation of hazardous substances or materials at various sites; GHG emissions; product hazardous material content; and the health and safety of our employees. 21 Table of Contents We may not have been, or we may not always be, in compliance with all environmental and health and safety laws and regulations.
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.
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.
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.
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.
Such an exclusion of preemptive rights may be for a maximum period of up to five years as specified in the articles of association or relevant shareholder resolution. We currently only have authorization to issue shares under our equity plan excluding preemptive rights until our next annual general meeting.
Such an exclusion of preemptive rights may be for a maximum period of up to five years as specified in the articles of association or relevant shareholder resolution.
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.
The defense of these lawsuits may divert our management's attention, and we may incur significant expenses in defending these lawsuits. 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. U.K.
Furthermore, no assurance can be given that our subsidiaries may be able to make timely payments to us in order for us to meet our obligations. Legal and Regulatory Risks We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act (the "U.S. FCPA"), the U.K.'s Bribery Act, and similar worldwide anti-bribery laws. The U.S.
Legal and Regulatory Risks We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act (the "U.S. FCPA"), the U.K.'s Bribery Act, and similar worldwide anti-bribery laws. The U.S.
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.
No assurance can be given that future changes in law, regulatory actions, or other circumstances will not further restrict, delay, or otherwise affect our ability to receive funds from these subsidiaries. Furthermore, no assurance can be given that our subsidiaries may be able to make timely payments to us in order for us to meet our obligations.
This authorization and exclusion needs to be renewed by our shareholders periodically and we intend to renew the authorization and exclusion at each annual general meeting. English law also requires us to have available "distributable reserves" to make share repurchases or pay dividends to shareholders.
Both the general allotment authority and the equity‑plan allotment authority—along with the associated exclusions of pre‑emptive rights—require periodic renewal, and we plan to seek shareholder approval for each authority at each annual general meeting. English law also requires us to have available "distributable reserves" to make share repurchases or pay dividends to shareholders.
Our inability to mitigate the negative consequences of any changes in the law, audits, and other matters could cause our global tax rate to increase, our use of cash to increase, and our financial condition and results of operations to suffer.
Our global effective tax rate ("ETR") may be volatile and could increase due to changes in our geographic mix of earnings, tax laws and rates, and the outcome of tax audits, which could adversely affect our results of operations, cash flows, and financial condition.
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.
Many jurisdictions in which we operate have enacted or proposed significant tax changes, including the OECD’s Pillar Two framework, which establishes a global minimum jurisdictional ETR for large multinational enterprises and became effective for fiscal years beginning on or after December 31, 2024.
Removed
Our global effective tax rate is subject to a variety of different factors that could create volatility in that tax rate, expose us to greater than anticipated tax liabilities, or cause us to adjust previously recognized tax assets and liabilities. We are subject to income taxes in the United Kingdom (the "U.K."), China, Mexico, the U.S., and many other jurisdictions.
Added
We are subject to income taxes in the United Kingdom, the United States, China, the Netherlands, Mexico, and numerous other jurisdictions.
Removed
As a result, our global effective tax rate from period to period can be affected by many factors, including changes in tax legislation, changes in tax rates and tax laws, our jurisdictional mix of earnings, the use of global funding structures, the tax characteristics of our income, the effects on our revenues and costs of complying with transfer pricing requirements under differing laws of various countries, consequences of acquisitions and dispositions of businesses and business segments, the generation of sufficient future taxable income to realize our deferred tax assets, and the taxation of subsidiary income in the jurisdiction of its parent company regardless of whether or not distributed.
Added
Our ETR can vary materially from period to period due to factors outside our control, including changes in tax laws and rates, differences between statutory and effective rates across jurisdictions, the utilization and expiration of tax attributes (such as net operating losses and tax credits), valuation allowance assessments, and the tax effects of acquisitions, dispositions, restructurings, and other strategic transactions.
Removed
Significant judgment is required in determining our worldwide provision for (or benefit from) income taxes, and our determination of the amount of our tax liability is always subject to review by applicable tax authorities. Refer to Note 7: Income Taxes of our Financial Statements included elsewhere in this Report for additional information related to our accounting for income taxes.
Added
The determination of our provision for (or benefit from) income taxes requires significant judgment and is inherently uncertain. Changes in facts and circumstances, audit outcomes, or interpretations of tax laws could result in our actual tax liabilities differing from amounts previously recognized, which could require us to record additional tax expense, interest, or penalties in future periods.
Removed
We cannot provide any assurances as to what our tax rate will be in any period because of, among other things, uncertainty regarding the nature and extent of our business activities in any particular jurisdiction in the future and the tax laws of such jurisdictions, as well as changes in U.S. and other tax laws, treaties, and regulations, in particular related to proposed tax laws by the U.S. or other governments, which could increase our tax liabilities.
Added
Global tax reforms—including the OECD Pillar Two global minimum tax and related local implementations—may increase our tax compliance costs and ETR and create additional uncertainty in our financial results.
Removed
Our actual global tax rate may vary from our expectation and that variance may be material. We continually monitor all global regulatory developments and consider alternatives to limit their detrimental impacts. However, not all unfavorable developments can be moderated, and we may consequently experience adverse effects on our effective tax rate and cash flows.
Added
Based on our current operating structure and geographic mix of earnings, taxes arising under the Pillar Two framework were not significant to our overall income tax provision for the year ended December 31, 2025. However, the Pillar Two rules are complex and continue to evolve through legislative amendments, administrative guidance, and differing local interpretations.
Removed
For example, the European Commission (the "EC") has been conducting investigations of state aid and have focused on whether EU sovereign country laws or rulings provide favorable treatment to taxpayers conflicting with its interpretation of EU law. EC findings may have retroactive effect and can cause increases in tax liabilities where we considered ourselves in full compliance with local legislation.
Added
As additional jurisdictions implement the rules, or as guidance and enforcement practices develop, the impact of Pillar Two on our tax profile may increase. Changes in our business activities, acquisitions, or geographic mix of earnings could also result in higher exposure to minimum taxes, incremental cash tax obligations, and increased compliance and administrative costs.
Removed
The 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.
Added
In addition, the European Commission has conducted, and may continue to conduct, investigations into whether certain tax rulings or regimes in European Union member states constitute impermissible state aid.
Removed
We could be subject to future audits conducted by both foreign and domestic tax authorities, and the resolution of such audits could impact our tax rate in future periods, as would any reclassification or other changes (such as those in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements.
Added
Adverse findings in these investigations may have retroactive effect and could result in additional tax liabilities, even where we believe we have complied with applicable local tax laws. 20 Table of Contents Changes in U.S. federal tax laws and regulations—including modifications to international tax rules—could increase our tax liabilities, compliance costs, and earnings volatility and adversely affect our financial results.
Removed
There can be no assurance that we would be successful in attempting to mitigate the adverse impacts resulting from any changes in law, audits, and other matters.
Added
U.S. federal income tax laws and regulations are subject to ongoing change through legislation, administrative guidance, and judicial interpretation. Such changes may affect, among other things, the taxation of foreign subsidiaries, limitations on the deductibility of interest and other expenses, the treatment of cross-border payments, and the availability and utilization of foreign tax credits.
Removed
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.
Added
New or amended U.S. tax rules may be effective retroactively or include transition provisions that require us to reassess deferred tax assets and liabilities, valuation allowances, and prior-year tax positions. In addition, interactions between U.S. tax rules and foreign tax regimes, including global minimum tax frameworks, may increase complexity and reduce the expected benefits of our current tax structure.
Removed
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
Our ability to anticipate and effectively respond to changes in U.S. tax laws may be limited, particularly where guidance continues to evolve.
Removed
The defense of these lawsuits may divert our management's attention, and we may incur significant expenses in defending these lawsuits.
Added
For a more detailed discussion of our income tax provision, effective tax rate, deferred taxes, valuation allowances, uncertain tax positions, cash taxes, and the impact of recent tax law developments, see Note 7: Income Taxes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Removed
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
While our subsidiaries generally may remit funds to us, certain foreign subsidiaries are subject to foreign‑exchange verification and other regulatory processes that can create compliance complexity and timing delays in making dividend or other payments.
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, 2024 or 2023. We did not specify objectives with sufficient clarity to enable an appropriate level of risk assessment and monitoring.
Added
Our shareholders have already approved a general authority for the directors to allot equity securities and a specific authority to issue shares under our equity plan excluding preemptive rights, together with the related disapplication of pre‑emptive rights and subject to the limits set forth in those resolutions, until our next annual general meeting.
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.
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.
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 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. U.K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−178 removed8 unchanged
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.
Sensitivity Analysis The tables below present our foreign currency forward contracts as of December 31, 2025 and 2024 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, 2025 10% Strengthening of the Value of the Foreign Currency Relative to the U.S.
We may also enter into foreign currency forward contracts that are not designated for hedge accounting purposes. 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, 2024.
We may also enter into foreign currency forward contracts that are not designated for hedge accounting purposes. 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, 2025.
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.
ITEM 7A. 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.
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.
Dollar Euro $ (15.1) $ (47.2) $ 47.2 Mexican Peso $ 15.5 $ 20.5 $ (20.5) British Pound Sterling $ 2.3 $ 9.1 $ (9.1) (Decrease)/Increase to Future Pre-Tax Earnings Due to: (In millions) Net (Liability)/Asset Balance as of December 31, 2024 10% Strengthening of the Value of the Foreign Currency Relative to the U.S.
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.
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, 2025 and 2024.
Removed
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.
Added
Dollar 10% Weakening 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) 49 Table of Contents
Removed
(4) The year ended December 31, 2022 primarily relates to mark-to-market losses on our investment in Quanergy Systems, Inc. ("Quanergy").
Removed
(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.
Removed
(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.
Removed
This differential can vary annually based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates. Additionally, one of our subsidiaries was eligible for a reduced tax rate in China through December 31, 2024.
Removed
The impact on current tax expense of this reduced corporate income tax rate is included in the foreign tax rate differential, and the impact of the deferred tax remeasurement is included in the change in tax laws or rates.
Removed
(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.
Removed
(4) During the year ended December 31, 2024, we implemented a strategy to secure the future tax deductibility of certain intellectual property, leading to a $257.7 million reduction in the valuation allowance against this deferred tax asset, initially established in the year ended December 31, 2023.
Removed
This reduction was counterbalanced by an increase in the valuation allowance due to losses from the sale of the Insights Business. (5) In China, we benefit from the R&D super deduction regime. In the U.K., certain of our subsidiaries are eligible for lower tax rates under the "patent box" regime. In the U.S., we benefit from the federal R&D credit.
Removed
(6) The increase in our effective tax rate for the year ended December 31, 2024, is primarily due to the strategy executed to secure the future deductibility of certain intellectual property rights. This unfavorable impact was partially offset by losses from the sale of the Insights business.
Removed
For the year ended December 31, 2023, the transfer of these intellectual property rights led to the recording of a deferred tax asset with a full valuation allowance.
Removed
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.
Removed
(7) Refer to Note 7: Income Taxes of our Financial Statements included elsewhere in this Report for additional information related to other components of our rate reconciliation.
Removed
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.
Removed
We use these non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance, and as a factor in determining compensation for certain employees. The use of our non-GAAP financial measures has limitations.
Removed
They should be considered as supplemental in nature and are not intended to be considered in isolation from, or as an alternative to, reported net revenue growth (or decline), operating income, operating margin, net income, diluted EPS, net cash provided by operating activities, corporate and other expenses, or total debt and finance lease obligations, calculated in accordance with U.S. GAAP.
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In addition, our measures of organic revenue growth (or decline), adjusted operating income, adjusted operating margin, adjusted net income, adjusted EPS, free cash flow, adjusted corporate and other expenses, gross and net leverage ratio, and adjusted EBITDA may not be the same as, or comparable to, similar non-GAAP financial measures presented by other companies.
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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.
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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).
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We believe that organic revenue growth (or decline) provides investors with helpful information with respect to our operating performance, and we use organic revenue growth (or decline) to evaluate our ongoing operations as well as for internal planning and forecasting purposes.
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We believe that organic revenue growth (or decline) provides useful information in evaluating the results of our business because it excludes items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior year period. Market outgrowth is calculated as organic revenue growth less our weighted market growth.
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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.
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We believe this provides a more meaningful comparison of our revenue growth relative to the markets we serve. Adjusted operating income, adjusted operating margin, adjusted net income, and adjusted EPS We define adjusted operating income as operating income (or loss), determined in accordance with U.S.
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GAAP, adjusted to exclude certain non-GAAP adjustments which are described under the heading Non-GAAP adjustments below. Adjusted operating margin is calculated by dividing adjusted operating income (or loss) by net revenue determined in accordance with U.S. GAAP. We define adjusted net income as follows: net income (or loss) determined in accordance with U.S.
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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.
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Management uses adjusted operating income, adjusted operating margin, adjusted net income, and adjusted EPS (and the constant currency equivalent of each) as measures of operating performance, for planning purposes (including the preparation of our annual operating budget), to allocate resources to enhance the financial performance of our business, to evaluate the effectiveness of our business strategies, in communications with our Board of Directors and investors concerning our financial performance, and as factors in determining compensation for certain employees.
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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.
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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.
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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.
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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.
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Gross leverage ratio Gross leverage ratio represents gross debt (total debt and finance lease obligations) divided by last twelve months ("LTM") adjusted EBITDA. We believe that gross leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.
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Net leverage ratio Net leverage ratio represents net debt (total debt and finance lease obligations less cash and cash equivalents) divided by LTM adjusted EBITDA. We believe that the net leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.
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Non-GAAP adjustments Many of our non-GAAP adjustments relate to a series of strategic initiatives developed by our management aimed at better positioning us for future revenue growth and an improved cost structure. These initiatives have been modified from time to time to reflect changes in overall market conditions and the competitive environment facing our business.
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These initiatives include, among other items, acquisitions, divestitures, restructurings of certain business, supply chain or corporate activities, and various financing transactions.
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We describe these adjustments in more detail below, each of which is net of current tax impacts, as applicable. • Restructuring related and other : includes net charges related to certain restructuring and other exit activities as well as other costs (or income) that we believe are either unique or unusual to the identified reporting period, and that we believe impact comparisons to prior period operating results.
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Such costs include charges related to optimization of our manufacturing processes to increase productivity. This type of activity occurs periodically, however each action is unique, discrete, and driven by various facts and circumstances.
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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.
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Prior periods have not been recast. • Deferred taxes and other tax related : includes adjustments for deferred taxes and other timing differences including, but not limited to, book-to-tax basis differences on the fair value of intangible assets and goodwill, the utilization of net operating losses, and adjustments to our valuation allowance in connection with certain transactions and tax law changes.
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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.
Removed
Our definition of adjusted net income excludes the deferred provision for (or benefit from) income taxes and other tax related items described above. As we treat deferred income taxes as an adjustment to compute adjusted net income, the deferred income tax effect associated with the reconciling items presented below would not change adjusted net income for any period presented.
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Non-GAAP reconciliations The following tables present reconciliations of certain financial measures calculated in accordance with U.S. GAAP to the related non-GAAP financial measures for the periods presented. Refer to the discussion under the heading Non-GAAP adjustments above for additional information related to these adjustments.
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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.
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For 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.
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Primarily includes charges related to repositioning our business and corporate functions to more effectively respond to the challenges that face the business. 1.
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Fiscal year 2024 included (1) certain actions related to restructuring of our IT operations and product lifecycle management including product line discontinuations within the Sensing Solutions segment, resulting in total costs of $46.7 million, including severance, contract termination costs, and charges related to asset write-downs, (2) approximately $105.8 million, of other various restructuring-related charges, including those related to our 2H 2024 Plan, (3) approximately $12.6 million of costs associated with exiting Spear, primarily recorded in restructuring and other charges, net, and (4) a $6.2 million pension settlement charge, recorded in restructuring and other charges, net. 2.
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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.
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Fiscal year 2024 primarily relates to a $150.1 million non-cash goodwill impairment charge related to the Dynapower reporting unit. Fiscal year 2023 primarily relates to a $321.7 million non-cash goodwill impairment charge related to the Insights reporting unit.
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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.
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We treat deferred taxes as a non-GAAP adjustment. Accordingly, the income tax effect of the restructuring related and other non-GAAP adjustment refers only to the current income tax effect. iv. Total presented is the non-GAAP adjustment to net income. Certain portions of these adjustments are non-operating and are excluded from the non-GAAP adjustments to operating income.
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(b) The following table presents the components of our financing and other transaction costs 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): 48 Table of Contents For the year ended December 31, (In millions) 2024 2023 2022 Transaction loss/(gain), net (i) $ 121.9 $ (1.2) $ (115.4) Merger and acquisition compensation arrangements (ii) 11.1 17.4 42.3 Loss on debt financing (iii) 9.8 5.4 5.5 Loss/(gain) on investments (iv) 14.0 (0.2) 75.6 Income tax effect (v) (1.4) 2.7 2.8 Total financing and other transaction costs (vi) $ 155.4 $ 24.2 $ 10.7 __________________________ i.
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Primarily includes 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 other transaction. 1. Fiscal year 2024 includes a loss of $98.8 million on the sale of the Insights Business. 2.
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Fiscal year 2022 includes gains of $135.1 million on the sale of the various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business"). ii. Primarily relates to earnout compensation arrangements entered into concurrent with the closing of an acquisition and compensation in connection with the closing of a transaction. iii.
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Fiscal year 2024 amounts relate to the redemption of the 5.0% Senior Notes. Fiscal year 2023 amounts relate to the redemption of the 5.625% Senior Notes and the prepayment on the Term Loan. Fiscal year 2022 amounts relate to the redemption of the 4.875% Senior Notes. Refer to Note 14: Deb t for additional information on financing transactions. iv.
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Represents mark-to-market losses or gains on our investments. In fiscal year 2022, this represents losses on our investment in Quanergy, which are presented in other, net in our consolidated statements of operations. v. We treat deferred taxes as a non-GAAP adjustment.
Removed
Accordingly, the income tax effect of financing and transaction related and other non-GAAP adjustment refers only to the current income tax effect. vi. Total presented is the non-GAAP adjustment to net income. Certain portions of these adjustments are non-operating and are excluded from the non-GAAP adjustments to operating income.
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(c) In the three months ended December 31, 2024, we discontinued the use of adjustments to exclude step-up depreciation and amortization in our non-GAAP measures and we adjusted operating income and net income to exclude the amortization of all our intangible assets. The years ended December 31, 2023 and 2022 have not been recast.
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If we had recast these non-GAAP measures for the years ended December 31, 2024, 2023, and 2022, adjusted operating income and adjusted net income would have increased by an additional $3.6 million, $5.3 million and $5.5 million, respectively.
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(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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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.
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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.
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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.
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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.
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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.
Removed
Our earnings are not considered to be permanently reinvested in certain jurisdictions in which they were earned. We recognize a deferred tax liability on these unremitted earnings to the extent the remittance of such earnings cannot be recovered in a tax-free manner.
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In certain jurisdictions, our cash balances are subject to withholding taxes immediately upon withdrawal of funds to a different jurisdiction. In addition, in order to take advantage of incentive programs offered by various jurisdictions, including tax incentives, we are required to maintain minimum cash balances in these jurisdictions.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
Net cash provided by operating activities for the year ended December 31, 2024 increased from the prior year primarily due to favorable changes in working capital, partially offset by decreased cash provided by earnings.
Removed
Investing Activities Investing activities primarily include cash exchanged for the acquisition or divestiture of a business or group of assets, cash paid for additions to PP&E and capitalized software, and the acquisition or sale of certain debt and equity securities.
Removed
Net cash used in investing activities for the year ended December 31, 2024 decreased compared to the corresponding period of the prior year, primarily due to cash received for the divestiture of the Insights Business in the year ended December 31, 2024, and a decrease in cash paid for capital expenditures.
Removed
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.
Removed
Financing Activities Net cash used in financing activities for the year ended December 31, 2024 decreased primarily due to $500.0 million of cash received from the issuance of the 6.625% Senior Notes in the second quarter of 2024 and lower payments on debt of approximately $147.0 million, partially offset by the payment of $79.4 million to purchase the remaining equity interest in a former joint venture in the current year.

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