What changed in this filing

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Item 1. Financial Statements

2023-08-01 compared with 2023-05-02 · 206 added, 123 removed, 431 unchanged (43% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 857,312 $ 1,225,518

Accounts receivable, net of allowances of $ 23,675 and $ 24,246 as of March 31, 2023 and December 31, 2022, respectively

Accounts receivable, net of allowances of $ 32,409 and $ 24,246 as of June 30, 2023 and December 31, 2022, respectively

772,427 742,382

4 unchanged sentences

Goodwill 3,861,872 3,911,224

Other intangible assets, net of accumulated amortization of $ 2,393,587 and $ 2,352,813 as of March 31, 2023 and December 31, 2022, respectively

Other intangible assets, net of accumulated amortization of $ 2,444,191 and $ 2,352,813 as of June 30, 2023 and December 31, 2022, respectively

961,180 999,722

17 unchanged sentences

Shareholders’ equity:

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 175,298 and 175,207 shares issued as of March 31, 2023 and December 31, 2022, respectively

Treasury shares, at cost, 22,781 and 22,781 shares as of March 31, 2023 and December 31, 2022, respectively

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 175,793 and 175,207 shares issued as of June 30, 2023 and December 31, 2022, respectively

Treasury shares, at cost, 23,371 and 22,781 shares as of June 30, 2023 and December 31, 2022, respectively

( 1,149,838 ) ( 1,124,713 )

8 unchanged sentences

(In thousands, except per share amounts)

For the three months ended

March 31, 2023 March 31, 2022

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Net revenue $ 1,062,112 $ 1,020,548 $ 2,060,287 $ 1,996,318

18 unchanged sentences

(In thousands)

For the three months ended

March 31, 2023 March 31, 2022

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Net income $ 49,111 $ 34,841 $ 135,528 $ 57,282

8 unchanged sentences

(In thousands)

For the three months ended

March 31, 2023 March 31, 2022

For the six months ended

June 30, 2023 June 30, 2022

Cash flows from operating activities:

8 unchanged sentences

Deferred income taxes 13,449 ( 5,211 )

Acquisition-related compensation payments ( 3,000 ) ( 7,500 )

Mark-to-market loss on equity investments, net 302 71,100

Unrealized loss/(gain) on derivative instruments and other 3,107 ( 517 )

Unrealized loss on derivative instruments and other 14,674 20,669

Changes in operating assets and liabilities, net of the effects of acquisitions:

5 unchanged sentences

Other ( 3,615 ) 1,425

Acquisition-related compensation payments ( 8,380 ) ( 15,000 )

Net cash provided by operating activities 212,642 141,888

22 unchanged sentences

Number Amount Number Amount

Balance as of March 31, 2023 175,298 $ 2,243 ( 22,781 ) $ ( 1,124,713 ) $ 1,876,168 $ 2,452,858 $ ( 13,064 ) $ 3,193,492

Surrender of shares for tax withholding — — ( 231 ) ( 11,347 ) — — — ( 11,347 )

Stock options exercised 76 1 — — 2,665 — — 2,666

Vesting of restricted securities 650 7 — — — ( 7 ) — —

Cash dividends paid — — — — — ( 18,336 ) — ( 18,336 )

Repurchase of ordinary shares — — ( 590 ) ( 25,125 ) — — — ( 25,125 )

Retirement of ordinary shares ( 231 ) ( 2 ) 231 11,347 — ( 11,345 ) — —

Share-based compensation — — — — 10,401 — — 10,401

Net income — — — — — 49,111 — 49,111

Other comprehensive income — — — — — — 8,910 8,910

Balance as of June 30, 2023 175,793 $ 2,249 ( 23,371 ) $ ( 1,149,838 ) $ 1,889,234 $ 2,472,281 $ ( 4,154 ) $ 3,209,772

Balance as of December 31, 2022 175,207 $ 2,242 ( 22,781 ) $ ( 1,124,713 ) $ 1,866,201 $ 2,383,341 $ ( 16,264 ) $ 3,110,807

3 unchanged sentences

Cash dividends paid — — — — — ( 35,113 ) — ( 35,113 )

Repurchase of ordinary shares — — ( 590 ) ( 25,125 ) — — — ( 25,125 )

Retirement of ordinary shares ( 233 ) ( 2 ) 233 11,470 — ( 11,468 ) — —

2 unchanged sentences

Other comprehensive income — — — — — — 12,110 12,110

Balance as of March 31, 2023 175,298 $ 2,243 ( 22,781 ) $ ( 1,124,713 ) $ 1,876,168 $ 2,452,858 $ ( 13,064 ) $ 3,193,492

Balance as of June 30, 2023 175,793 $ 2,249 ( 23,371 ) $ ( 1,149,838 ) $ 1,889,234 $ 2,472,281 $ ( 4,154 ) $ 3,209,772

Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity

Number Amount Number Amount

Balance as of March 31, 2022 174,583 $ 2,236 ( 17,576 ) $ ( 899,697 ) $ 1,831,497 $ 2,154,563 $ ( 16,282 ) $ 3,072,317

Surrender of shares for tax withholding — — ( 148 ) ( 7,442 ) — — — ( 7,442 )

Stock options exercised 39 — — — 1,229 — — 1,229

Vesting of restricted securities 450 5 — — — ( 5 ) — —

Cash dividends paid — — — — — ( 17,225 ) — ( 17,225 )

Repurchase of ordinary shares — — ( 1,693 ) ( 78,898 ) — — — ( 78,898 )

Retirement of ordinary shares ( 148 ) ( 2 ) 148 7,442 — ( 7,440 ) — —

Share-based compensation — — — — 9,199 — — 9,199

Net income — — — — — 34,841 — 34,841

Other comprehensive income — — — — — — 9,563 9,563

Balance as of June 30, 2022 174,924 $ 2,239 ( 19,269 ) $ ( 978,595 ) $ 1,841,925 $ 2,164,734 $ ( 6,719 ) $ 3,023,584

Balance as of December 31, 2021 174,287 $ 2,232 ( 16,438 ) $ ( 832,439 ) $ 1,812,244 $ 2,132,257 $ ( 19,560 ) $ 3,094,734

2 unchanged sentences

Vesting of restricted securities 459 5 — — — ( 5 ) — —

Cash dividends paid — — — — — ( 17,225 ) — ( 17,225 )

Repurchase of ordinary shares — — ( 2,831 ) ( 146,156 ) — — — ( 146,156 )

3 unchanged sentences

Other comprehensive income — — — — — — 12,841 12,841

Balance as of March 31, 2022 174,583 $ 2,236 ( 17,576 ) $ ( 899,697 ) $ 1,831,497 $ 2,154,563 $ ( 16,282 ) $ 3,072,317

Balance as of June 30, 2022 174,924 $ 2,239 ( 19,269 ) $ ( 978,595 ) $ 1,841,925 $ 2,164,734 $ ( 6,719 ) $ 3,023,584

The accompanying notes are an integral part of these condensed consolidated financial statements.

8 unchanged sentences

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S.

Securities and Exchange Commission on February 13, 2023 (the "2022 Annual Report").

Securities and Exchange Commission (the "SEC") on February 13, 2023 (the "2022 Annual Report").

dollar ("USD") and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated.

2 unchanged sentences

Revenue Recognition

The following table presents net revenue disaggregated by segment and end market for the three months ended March 31, 2023 and 2022:

For the three months ended March 31, 2023 For the three months ended March 31, 2022

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

The following tables present net revenue disaggregated by segment and end market for the three and six months ended June 30, 2023 and 2022 for our two reportable segments, Performance Sensing ("PS") and Sensing Solutions ("SS"):

For the three months ended June 30, 2023 For the three months ended June 30, 2022 (3)

PS SS Total PS SS Total

Automotive $ 530,268 $ 9,550 $ 539,818 $ 506,232 $ 9,932 $ 516,164

6 unchanged sentences

Total $ 757,444 $ 304,668 $ 1,062,112 $ 731,645 $ 288,903 $ 1,020,548

For the six months ended June 30, 2023 (3)

For the six months ended June 30, 2022 (3)

PS SS Total PS SS Total

Automotive $ 1,047,152 $ 17,684 $ 1,064,836 $ 1,008,594 $ 19,217 $ 1,027,811

448,560 — 448,560 425,746 — 425,746

Industrial — 333,714 333,714 — 266,952 266,952

Appliance and HVAC (2)

— 98,426 98,426 — 116,500 116,500

Aerospace — 91,158 91,158 — 71,828 71,828

Other — 23,593 23,593 — 87,481 87,481

Total $ 1,495,712 $ 564,575 $ 2,060,287 $ 1,434,340 $ 561,978 $ 1,996,318

___________________________________

(1) Heavy vehicle and off-road

(2) Heating, ventilation and air conditioning

(3) Effective April 1, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting.

The amounts previously reported in the tables above for the three and six months ended June 30, 2022 have been retrospectively recast to reflect this change.

In addition, the six months ended June 30, 2023 includes amounts for the three months ended March 31, 2023 that have been retrospectively adjusted for this change.

Share-Based Payment Plans

The following table presents the components of non-cash compensation expense related to our equity awards for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

The following table presents the components of non-cash compensation expense related to our equity awards for the three and six months ended June 30, 2023 and 2022:

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Stock options $ ( 205 ) $ 2 $ ( 86 ) $ 309

1 unchanged sentence

Share-based compensation expense $ 10,401 $ 9,199 $ 17,607 $ 15,739

Equity Awards

We granted the following restricted stock units ("RSUs" and each, an "RSU") and performance-based restricted stock units ("PRSUs" and each, a "PRSU") under the Sensata Technologies Holding plc 2021 Equity Incentive Plan during the six months ended June 30, 2023:

Awards Granted To:

Type of Award Number of Units Granted (in thousands) Weighted Average Grant Date Fair Value

Directors RSU (1)

Various executives and employees RSU (2)

Various executives and employees PRSU (3)

Various executives and employees PRSU (4)

____________________________________

(1) These RSUs cliff vest one year from the grant date (May and June 2024).

(2) These RSUs vest ratably over three years , one-third per year beginning on the first anniversary of the grant date.

These RSUs will fully vest on various dates between January 2026 and June 2026.

(3) These PRSUs vest on various dates between April 2026 and June 2026.

The number of units that ultimately vest will be between 0 % and 150 % and is dependent on the achievement of certain performance criteria.

(4) These awards include certain PRSUs with market performance conditions that will be evaluated relative to the performance of certain peers as defined in the award agreement.

The number of units that ultimately vest (in April 2026) will be from 0 % to 150 %, depending on achievement of these performance criteria.

Total grant date value of these PRSUs is approximately $ 5.6 million and was valued using the Monte Carlo method.

Related share-based compensation expense recognized in the three and six months ended June 30, 2023 was $ 0.6 million.

Restructuring and Other Charges, Net

The following table presents the components of restructuring and other charges, net for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

The following table presents the components of restructuring and other charges, net for the three and six months ended June 30, 2023 and 2022:

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Severance costs, net (1)

$ 4,749 $ — $ 8,962 $ 587

Facility and other exit costs 310 1,241 535 2,289

2 unchanged sentences

3,330 12,834 10,602 31,089

Other (1)(2)(3)

12,870 ( 1,178 ) 13,036 ( 7,335 )

Restructuring and other charges, net $ 21,259 $ 12,897 $ 27,258 $ 26,630

___________________________________

(1) We have reclassified acquisition-related compensation arrangements for the three months ended March 31, 2022 from the "other" caption within restructuring and other charges, net, to correspond to current period presentation.

(2) The three months ended March 31, 2022 primarily includes gains related to changes in the fair value of acquisition-related contingent consideration amounts.

The following table presents a rollforward of our severance liability for the three months ended March 31, 2023:

(1) The three and six months ended June 30, 2023 include certain costs to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”) as discussed below.

(2) We have reclassified acquisition-related compensation arrangements for the three and six months ended June 30, 2022 from the "other" caption within restructuring and other charges, net, to correspond to current period presentation.

(3) The six months ended June 30, 2022 primarily includes gains related to changes in the fair value of acquisition-related contingent consideration amounts.

On June 6, 2023, we announced that we had made the decision to exit the Marine Business, which was included in the Sensing Solutions reportable segment.

Exiting the Marine Business resulted in a charge of $ 38.3 million in the three and six months ended June 30, 2023.

The charge included $ 13.5 million of accelerated amortization of definite-lived intangible assets, presented in amortization of intangible assets, and a $ 10.5 million write-down of inventory, presented in cost of revenue.

In addition, certain of these charges are presented in restructuring and other charges, net, including $ 1.2 million of severance costs, $ 1.7 million related to the write-down of property, plant, and equipment, $ 2.3 million related to the write-down of accounts receivables, and $ 9.1 million of other charges, including contract termination costs.

The following table presents a rollforward of our severance liability for the six months ended June 30, 2023:

Balance as of December 31, 2022 $ 8,617

2 unchanged sentences

Foreign currency remeasurement 166

Balance as of March 31, 2023 $ 7,334

The severance liability as of March 31, 2023 and December 31, 2022 was entirely recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

The following table presents the components of other, net for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

Balance as of June 30, 2023 $ 5,401

The severance liability as of June 30, 2023 and December 31, 2022 was entirely recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

The following table presents the components of other, net for the three and six months ended June 30, 2023 and 2022:

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Currency remeasurement loss on net monetary assets $ ( 9,307 ) $ ( 14,090 ) $ ( 10,566 ) $ ( 14,157 )

Gain/(loss) on foreign currency forward contracts 184 ( 1,243 )

Gain on commodity forward contracts 1,899 9,424

Gain on foreign currency forward contracts 4,423 3,165 4,607 1,922

Loss on commodity forward contracts ( 6,269 ) ( 18,254 ) ( 4,370 ) ( 8,830 )

Loss on debt financing ( 372 ) — ( 857 ) —

3 unchanged sentences

Other, net $ ( 10,924 ) $ ( 39,240 ) $ ( 9,532 ) $ ( 89,696 )

The following table presents the provision for income taxes for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

The following table presents the provision for income taxes for the three and six months ended June 30, 2023 and 2022:

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Provision for income taxes $ 19,873 $ 20,020 $ 43,599 $ 27,608

The provision for income taxes consists of (1) current tax expense, which relates primarily to our profitable operations in tax jurisdictions with limited or no net operating loss carryforwards and withholding taxes related to management fees, royalties, and the repatriation of foreign earnings;

and (2) deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (a) book versus tax basis in intangible assets, (b) changes in net operating loss

carryforwards, and (c) changes in withholding taxes on unremitted earnings.

Other items impacting deferred tax expense include changes in tax rates and changes in our assessment of the realizability of our deferred tax assets.

7 unchanged sentences

Basic and diluted net income per share are calculated by dividing net income by the number of basic and diluted weighted-average ordinary shares outstanding during the period.

For the three months ended March 31, 2023 and 2022 the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:

For the three months ended

March 31, 2023 March 31, 2022

For the three and six months ended June 30, 2023 and 2022 the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Basic weighted-average ordinary shares outstanding 152,700 156,477 152,609 156,950

4 unchanged sentences

These potential ordinary shares were as follows:

For the three months ended

March 31, 2023 March 31, 2022

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Anti-dilutive shares excluded 1,625 1,426 1,003 715

Contingently issuable shares excluded 1,366 1,383 1,317 1,192

The following table presents the components of inventories as of March 31, 2023 and December 31, 2022:

The following table presents the components of inventories as of June 30, 2023 and December 31, 2022:

2023 December 31,

3 unchanged sentences

Inventories $ 660,082 $ 644,875

The following table presents the components of long-term debt, finance lease and other financing obligations as of March 31, 2023 and December 31, 2022:

Maturity Date March 31,

The following table presents the components of long-term debt, finance lease and other financing obligations as of June 30, 2023 and December 31, 2022:

Maturity Date June 30,

2023 December 31,

22 unchanged sentences

(1) On February 6, 2023, we prepaid $ 250.0 million of outstanding principal on our Term Loan balance.

Accordingly, that portion of the principal balance outstanding on the Term Loan has been presented as current portion of long-term debt on our consolidated balance sheet as of December 31, 2022.

On April 25, 2023, we announced that we intend to pay down the remaining balance on the Term Loan in the second quarter of 2023.

Accordingly, the remaining principal balance outstanding on the Term Loan has been presented as current portion of long-term debt on our condensed consolidated balance sheet as of March 31, 2023.

Accordingly, that portion of the principal balance outstanding on the Term Loan as of December 31, 2022 was presented as current portion of long-term debt.

On May 3, 2023, we prepaid $ 196.8 million of outstanding principal on the Term Loan, representing the remaining balance on the Term Loan as of that date plus $ 0.5 million in interest.

Our debt consists of secured credit facilities and various tranches of senior unsecured notes.

Refer to Note 14:

Debt of our 2022 Annual Report for additional information related to our existing indebtedness.

As of March 31, 2023, we had $ 746.1 million available under our $ 750.0 million revolving credit facility (the "Revolving Credit Facility"), net of $ 3.9 million of obligations in respect of outstanding letters of credit issued thereunder.

Debt of the audited consolidated financial statements and notes thereto included in the 2022 Annual Report for additional information regarding our existing indebtedness.

As of June 30, 2023, we had $ 746.1 million available under our $ 750.0 million revolving credit facility (the "Revolving Credit Facility"), net of $ 3.9 million of obligations in respect of outstanding letters of credit issued thereunder.

Outstanding letters of credit are issued primarily for the benefit of certain operating activities.

As of March 31, 2023, no amounts had been drawn against these outstanding letters of credit.

As of June 30, 2023, no amounts had been drawn against these outstanding letters of credit.

Accrued Interest

Accrued interest associated with our outstanding debt is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets.

As of March 31, 2023 and December 31, 2022, accrued interest totaled $ 54.4 million and $ 50.1 million, respectively.

As of June 30, 2023 and December 31, 2022, accrued interest totaled $ 48.9 million and $ 50.1 million, respectively.

Commitments and Contingencies

3 unchanged sentences

Cash Dividends

On February 22, 2023, we paid a cash dividend of $ 0.11 per share, or $ 16.8 million in aggregate, to shareholders of record as of February 8, 2023.

On April 13, 2023, we announced that our Board of Directors approved a quarterly dividend of $ 0.12 per share, payable on May 24, 2023 to shareholders of record as of May 10, 2023.

In the three and six months ended June 30, 2023, we paid aggregate cash dividends of $ 18.3 million and $ 35.1 million, respectively, compared to $ 17.2 million in each of the three and six months ended June 30, 2022.

On July 20, 2023, we announced that our Board of Directors approved a quarterly dividend of $ 0.12 per share, payable on August 23, 2023 to shareholders of record as of August 9, 2023.

Treasury Shares

From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by the Board at any time.

On January 20, 2022, we announced that our Board of Directors had authorized a new $ 500.0 million ordinary share repurchase program (the “January 2022 Program”), which replaced the previous $ 500.0 million program approved in July 2019.

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.

In the three and six months ended June 30, 2023, we repurchased 0.6 million ordinary shares (for an aggregate value of $ 25.1 million).

We did not repurchase any ordinary shares under this program in the three months ended March 31, 2023.

In the three months ended March 31, 2022, we repurchased 1.1 million ordinary shares under the January 2022 Program.

As of March 31, 2023, $ 224.5 million remained available for repurchase under the January 2022 Program.

In the three and six months ended June 30, 2022, we repurchased 1.7 million ordinary shares (for an aggregate value of $ 78.9 million) and 2.8 million ordinary shares (for an aggregate value of $ 146.2 million), respectively.

All share repurchases in these periods were made under the January 2022 Program.

As of June 30, 2023, $ 199.4 million remained available for repurchase under the January 2022 Program.

Accumulated Other Comprehensive Loss

The following table presents the components of accumulated other comprehensive loss for the three months ended March 31, 2023:

The following table presents the components of accumulated other comprehensive loss for the six months ended June 30, 2023:

Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Accumulated Other Comprehensive Loss

3 unchanged sentences

Other comprehensive income 11,493 617 12,110

Balance as of March 31, 2023 $ 18,472 $ ( 31,536 ) $ ( 13,064 )

The following table presents the amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022:

For the three months ended March 31, Affected Line in Condensed Consolidated Statements of Operations

Balance as of June 30, 2023 $ 27,158 $ ( 31,312 ) $ ( 4,154 )

The following table presents the amounts reclassified from accumulated other comprehensive loss for the three and six months ended June 30, 2023 and 2022:

For the three months ended June 30, For the six months ended June 30, Affected Line in Condensed Consolidated Statements of Operations

Component 2023 2022 2023 2022

10 unchanged sentences

(1) Refer to Note 14:

Derivative Instruments and Hedging Activities for additional information on amounts to be reclassified from accumulated other comprehensive loss in future periods.

Derivative Instruments and Hedging Activities for additional information regarding amounts to be reclassified from accumulated other comprehensive loss in future periods.

Fair Value Measures

Measured on a Recurring Basis

The fair values of our derivative assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are shown in the below table.

All fair value measures presented in the table below are categorized in Level 2 of the fair value hierarchy.

The fair values of our assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 are shown in the below table.

2023 December 31,

Foreign currency forward contracts $ 33,583 $ 31,126

Commodity forward contracts 5,091 4,181

Cash equivalents (Level 1) $ 380,130 $ 860,034

Foreign currency forward contracts (Level 2) 43,046 31,126

Commodity forward contracts (Level 2) 2,011 4,181

Total $ 425,187 $ 895,341

Foreign currency forward contracts $ 10,438 $ 9,866

Commodity forward contracts 2,734 4,671

Foreign currency forward contracts (Level 2) $ 8,162 $ 9,866

Commodity forward contracts (Level 2) 5,260 4,671

Total $ 13,422 $ 14,537

Refer to Note 14:

Derivative Instruments and Hedging Activities for additional information related to our forward contracts.

As of March 31, 2023 and December 31, 2022, we also held cash equivalents of $ 653.3 million and $ 860.0 million, respectively, consisting of U.S.

Government Treasury money market funds that are categorized in Level 1 of the fair value hierarchy.

Derivative Instruments and Hedging Activities for additional information regarding our forward contracts.

Cash equivalents consist of U.S.

Government Treasury money market funds and are classified as Level 1 as they are exchange traded in an active market.

Measured on a Nonrecurring Basis

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, 2022 and determined that they were not impaired.

No events or changes in circumstances occurred in the three months ended March 31, 2023 that would have triggered the need for an additional impairment review of our goodwill and other indefinite-lived intangible assets.

In the three months ended June 30, 2023, we exited the Marine Business, as discussed further in Note 5:

Restructuring and Other Charges, Net .

We considered the exit of the Marine Business and determined that goodwill related to the Clean Energy Solutions reporting unit was not impaired as of the date of the exit.

No other events or changes in circumstances occurred in the six months ended June 30, 2023 that would have triggered the need for an additional impairment review of our goodwill and other indefinite-lived intangible assets.

Financial Instruments Not Recorded at Fair Value

The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022.

The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022.

All fair value measures presented are categorized in Level 2 of the fair value hierarchy.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Carrying Value (1)

15 unchanged sentences

(1) Excluding any related debt discounts, premiums, and deferred financing costs.

In addition to the above, we hold certain equity investments that do not have readily determinable fair values for which we use the measurement alternative prescribed in FASB ASC Topic 321, Investments—Equity Securities .

As of March 31, 2023 and December 31, 2022, we held a $ 15.0 million equity investment using the measurement alternative, which is presented as a component of other assets in the condensed consolidated balance sheets.

There were no impairments or changes resulting from observable transactions for this investment in the three months ended March 31, 2023 and 2022 and no adjustments have been made to its carrying value as of March 31, 2023 and December 31, 2022.

In addition to the above, we hold certain equity investments that do not have readily determinable fair values for which we use the measurement alternative prescribed in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 321, Investments—Equity Securities .

As of June 30, 2023 and December 31, 2022, we held equity investments under the measurement alternative of $ 18.3 million and $ 15.0 million, respectively, which are presented in other assets in the condensed consolidated balance sheets.

There were no impairments or changes resulting from observable transactions for these investments in the three and six months ended June 30, 2023 and 2022 and no adjustments have been made to their carrying values as of June 30, 2023 and December 31, 2022.

Derivative Instruments and Hedging Activities

Hedges of Foreign Currency Risk

For the three months ended March 31, 2023 and 2022, amounts excluded from the assessment of effectiveness of our foreign currency forward contracts that are designated as cash flow hedges were not material.

As of March 31, 2023, we estimated that $ 21.8 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending March 31, 2024.

As of March 31, 2023, we had the following outstanding foreign currency forward contracts:

For the three and six months ended June 30, 2023 and 2022, amounts excluded from the assessment of effectiveness of our foreign currency forward contracts that are designated as cash flow hedges were not material.

As of June 30, 2023, we estimated that $ 30.1 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending June 30, 2024.

As of June 30, 2023, we had the following outstanding foreign currency forward contracts:

(in millions) Effective Date(s) Maturity Date(s) Index (Exchange Rates) Weighted-Average Strike Rate Hedge

Designation (1)

20.0 EUR March 29, 2023 April 28, 2023 Euro ("EUR") to USD 1.09 USD Not designated

364.3 EUR Various from April 2021 to March 2023 Various from April 2023 to March 2025 EUR to USD 1.10 USD Cash flow hedge

474.0 CNY March 28, 2023 April 28, 2023 USD to Chinese Renminbi ("CNY") 6.85 CNY Not designated

530.0 CNY Various in January 2023 Various from April 2023 to September 2023 USD to CNY 6.76 CNY Cash flow hedge

609.0 JPY March 29, 2023 April 28, 2023 USD to Japanese Yen ("JPY") 131.83 JPY Not designated

19,364.0 KRW Various from June 2021 to March 2023 Various from April 2023 to February 2025 USD to Korean Won ("KRW") 1,248.39 KRW Cash flow hedge

25.0 MYR March 28, 2023 April 28, 2023 USD to Malaysian Ringgit ("MYR") 4.37 MYR Not designated

20.0 MXN March 29, 2023 April 28, 2023 USD to Mexican Peso ("MXN") 18.23 MXN Not designated

3,616.3 MXN Various from April 2021 to March 2023 Various from April 2023 to March 2025 USD to MXN 21.76 MXN Cash flow hedge

6.3 GBP March 29, 2023 April 28, 2023 British Pound Sterling ("GBP") to USD 1.23 USD Not Designated

57.6 GBP Various from April 2021 to March 2023 Various from April 2023 to March 2025 GBP to USD 1.24 USD Cash flow hedge

11.0 EUR June 21, 2023 July 31, 2023 Euro ("EUR") to USD 1.09 USD Not designated

375.0 EUR Various from July 2021 to June 2023 Various from July 2023 to June 2025 EUR to USD 1.09 USD Cash flow hedge

770.0 CNY June 21, 2023 July 31, 2023 USD to Chinese Renminbi ("CNY") 7.16 CNY Not designated

300.0 CNY Various in January 2023 Various from July 2023 to September 2023 USD to CNY 6.74 CNY Cash flow hedge

436.0 JPY June 21, 2023 July 31, 2023 USD to Japanese Yen ("JPY") 141.47 JPY Not designated

26,312.5 KRW Various from August 2021 to June 2023 Various from July 2023 to May 2025 USD to Korean Won ("KRW") 1,273.23 KRW Cash flow hedge

25.0 MYR June 21, 2023 July 31, 2023 USD to Malaysian Ringgit ("MYR") 4.63 MYR Not designated

4,318.3 MXN Various from July 2021 to June 2023 Various from July 2023 to June 2025 USD to Mexican Peso ("MXN") 20.78 MXN Cash flow hedge

5.2 GBP June 21, 2023 July 31, 2023 British Pound Sterling ("GBP") to USD 1.27 USD Not designated

58.6 GBP Various from July 2021 to June 2023 Various from July 2023 to June 2025 GBP to USD 1.23 USD Cash flow hedge

___________________________________

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Hedges of Commodity Risk

As of March 31, 2023, we had the following outstanding commodity forward contracts, none of which were designated for hedge accounting treatment in accordance with FASB ASC Topic 815, Derivatives and Hedging :

As of June 30, 2023, we had the following outstanding commodity forward contracts, none of which were designated for hedge accounting treatment in accordance with FASB ASC Topic 815, Derivatives and Hedging :

Commodity Notional Remaining Contracted Periods Weighted-Average Strike Price Per Unit

Silver 862,162 troy oz.

April 2023 to January 2025 $ 22.84

July 2023 to May 2025 $ 23.31

Gold 7,169 troy oz.

April 2023 to January 2025 $ 1,875.71

Nickel 207,887 pounds April 2023 to January 2025 $ 11.24

Aluminum 3,904,000 pounds April 2023 to January 2025 $ 1.21

Copper 7,591,333 pounds April 2023 to January 2025 $ 4.03

July 2023 to May 2025 $ 1,932.48

Nickel 200,265 pounds July 2023 to May 2025 $ 11.47

Aluminum 3,902,120 pounds July 2023 to May 2025 $ 1.19

Copper 7,730,119 pounds July 2023 to May 2025 $ 3.98

Platinum 9,047 troy oz.

April 2023 to January 2025 $ 969.95

July 2023 to May 2025 $ 982.97

Palladium 1,221 troy oz.

April 2023 to January 2025 $ 2,100.68

July 2023 to May 2025 $ 1,944.38

Financial Instrument Presentation

The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022:

The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022:

Asset Derivatives Liability Derivatives

Balance Sheet Location March 31,

Balance Sheet Location June 30,

2023 December 31,

2022 Balance Sheet Location March 31,

2022 Balance Sheet Location June 30,

2023 December 31,

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These fair value measurements were all categorized within Level 2 of the fair value hierarchy.

The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive income for the three months ended March 31, 2023 and 2022:

Derivatives designated as

hedging instruments Amount of Deferred (Loss)/Gain Recognized in Other Comprehensive Income Location of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income Amount of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income

hedging instruments Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive Income Location of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income Amount of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income

2023 2022 2023 2022

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Derivatives not designated as

hedging instruments Amount of Gain/(Loss) Recognized in Net Income Location of Gain/(Loss) Recognized in Net Income

hedging instruments Amount of (Loss)/Gain Recognized in Net Income Location of (Loss)/Gain Recognized in Net Income

Commodity forward contracts $ ( 6,269 ) $ ( 18,254 ) Other, net

Foreign currency forward contracts $ 4,423 $ 3,165 Other, net

Derivatives designated as

hedging instruments Amount of Deferred Gain Recognized in Other Comprehensive Income Location of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income Amount of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income

2023 2022 2023 2022

Foreign currency forward contracts $ 1,284 $ 33,778 Net revenue $ 11,033 $ 13,740

Foreign currency forward contracts $ 31,339 $ 1,380 Cost of revenue $ 6,100 $ 5,232

Derivatives not designated as

hedging instruments Amount of (Loss)/Gain Recognized in Net Income Location of (Loss)/Gain Recognized in Net Income

Commodity forward contracts $ ( 4,370 ) $ ( 8,830 ) Other, net

Foreign currency forward contracts $ 4,607 $ 1,922 Other, net

Credit Risk Related Contingent Features

We have agreements with our derivative counterparties that contain a provision whereby if we default on our indebtedness and repayment of the indebtedness has been accelerated by the lender, then we could also be declared in default on our derivative obligations.

As of March 31, 2023, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 13.3 million.

As of March 31, 2023, we had no t posted any cash collateral related to these agreements.

As of June 30, 2023, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 13.6 million.

As of June 30, 2023, we had no t posted any cash collateral related to these agreements.

If we breach any of the default provisions on any of our indebtedness as described above, we could be required to settle our obligations under the derivative agreements at their termination values.

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("Elastic M2M") for an aggregate cash purchase price of $ 51.6 million, subject to certain post-closing items.

In addition to the aggregate cash purchase price, the previous shareholders of Elastic M2M are entitled to up to $ 30.0 million of additional acquisition-related incentive

compensation, which was pending the completion of certain technical milestones in fiscal year 2022 and achievement of financial targets in fiscal years 2022 and 2023.

In addition to the aggregate cash purchase price, the previous shareholders of Elastic M2M are entitled to up to $ 30.0 million of additional acquisition-related incentive compensation, which was pending the completion of certain technical milestones in fiscal year 2022 and achievement of financial targets in fiscal years 2022 and 2023.

All technical milestones were completed in fiscal year 2022.

As of December 31, 2022, we had recognized $ 24.7 million of this acquisition-related incentive compensation.

In three months ended March 31, 2023, we recognized an additional $ 3.3 million of this acquisition-related incentive compensation.

This incentive compensation is recorded in restructuring and other charges, net.

Elastic M2M was a privately-held innovator of connected intelligence for operational assets across heavy-duty transport, warehouse, supply chain and logistics, industrial, light-duty passenger car, and a variety of other industry segments.

In the three and six months ended June 30, 2023, we recognized an additional $ 0.2 million and $ 3.5 million, respectively, of this acquisition-related incentive compensation.

This acquisition-related incentive compensation is recorded in restructuring and other charges, net.

Elastic M2M is an innovator of connected intelligence for operational assets across heavy-duty transport, warehouse, supply chain and logistics, industrial, light-duty passenger car, and a variety of other industry segments.

Elastic M2M primarily serves telematics service providers and resellers, enabling them to leverage Elastic M2M’s cloud platform and analytics capabilities to deliver sensor-based operational insights to their end users.

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The allocation of the purchase price related to this acquisition was finalized in the three months ended March 31, 2023.

The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed:

The following table summarizes the final allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed:

Net working capital, excluding cash $ 35

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We are integrating Dynapower into our Sensing Solutions reportable segment.

We recorded measurement period adjustments in the three months ended June 30, 2023 that predominantly reflected an updated valuation of definite-lived intangible assets.

Accordingly, definite-lived intangible assets increased $ 57.2 million (primarily customer relationships).

Along with other adjustments, including the associated deferred income tax liability on acquired intangibles, goodwill decreased $ 41.0 million.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed:

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The terms of the TSA required that we provide various forms of commercial, operational, and back-office support to LTI.

As of March 31, 2023, the Transition Period has ended.

The Transition Period ended in the three months ended March 31, 2023.

Closing occurred in July 2022, at which time assets of approximately $ 70 million (including allocated goodwill of $ 45 million) and liabilities of approximately $ 2 million transferred to LTI.

Transferred assets and liabilities excluded inventories and accounts payable, which transferred to LTI at the end of the Transition Peri od.

We received cash consideration of

$ 198.8 million at Closing and recognized a pre-tax gain of $ 135.1 million.

We received cash consideration of $ 198.8 million at Closing and recognized a pre-tax gain of $ 135.1 million in the three months ended September 30, 2022.

Cash consideration received at Closing excluded amounts held in escrow until various milestones were met through the Transition Period.

The Qinex Business manufactures semiconductor burn-in test sockets and thermal control solutions and was formed through the combination of Sensata’s semiconductor interconnect business with Wells-CTI in 2012.

In the three months ended June 30, 2023, we received an escrow payment of $ 15.0 million, which includes $ 10.0 million (presented in cash flows from operating activities) related to the transfer of inventory.

Approximately $ 4.0 million remains in escrow as of June 30, 2023.

The Qinex Business manufactured semiconductor burn-in test sockets and thermal control solutions and was formed through the combination of Sensata’s semiconductor interconnect business with Wells-CTI in 2012.

The Qinex Business was included in our Sensing Solutions segment (and Industrial Solutions reporting unit).

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The Sensing Solutions reportable segment is also an operating segment.

Effective April 1, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting.

This product move resulted in a reallocation of $ 57.1 million of goodwill from the HVOR reporting unit to the Industrial Solutions reporting unit based on its fair value relative to the total fair value of the HVOR reporting unit .

Our operating segments are businesses that we manage as components of an enterprise, for which separate financial information is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and assess performance.

An operating segment’s performance is primarily evaluated based on segment operating income, which excludes amortization of intangible assets, restructuring and other charges, net, certain costs associated with our strategic megatrend initiatives, and certain corporate costs or credits not associated with the operations of the segment, including share-based compensation expense and a portion of depreciation expense associated with assets recognized in connection with acquisitions.

Corporate and other costs excluded from an operating (and reportable) segment’s performance are separately stated below and also include costs that are related to functional areas such as finance, information technology, legal, and human resources.

Corporate and other expenses excluded from an operating (and reportable) segment’s performance are separately stated below and also include costs that are related to functional areas such as finance, information technology, legal, and human resources.

We believe that segment operating income, as defined above, is an appropriate measure for evaluating the operating performance of our segments.

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Significant Accounting Policies of the audited consolidated financial statements and notes thereto included in our 2022 Annual Report.

The following table presents net revenue and segment operating income for our reportable segments and other operating results not allocated to our reportable segments for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

The amounts previously reported in the table below for the three and six months ended June 30, 2022 have been retrospectively recast to reflect the move of the material handling products between operating segments as described above.

In addition, the six months ended June 30, 2023 includes amounts for the three months ended March 31, 2023 that have been retrospectively adjusted for this change.

For the three months ended For the six months ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Performance Sensing $ 757,444 $ 731,645 $ 1,495,712 $ 1,434,340

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements