What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-29 compared with 2024-04-29 · 151 added, 74 removed, 308 unchanged (42% of the section changed)

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Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

Net revenue for the three months ended March 31, 2024 was $1,006.7 million, an increase of 0.9% compared to $998.2 million in the prior period.

Excluding a decrease of 1.4% attributed to changes in foreign currency exchange rates, net revenue increased 2.3% on an organic basis.

Net revenue for the three months ended June 30, 2024 was $1,035.5 million, a decrease of 2.5% compared to $1,062.1 million in the prior period.

Excluding a decrease of 1.3% attributed to changes in foreign currency exchange rates, net revenue decreased 1.2% on an organic basis.

Organic revenue growth (or decline), discussed throughout this Item 2:

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Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information regarding our use of organic revenue growth (or decline).

Operating income for the three months ended March 31, 2024 decreased $4.1 million, or 2.7%, to $144.8 million (14.4% of net revenue) from $148.8 million (14.9% of net revenue) in the three months ended March 31, 2023.

Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our earnings results for the three months ended March 31, 2024 compared to the prior year periods.

We generated $106.5 million of operating cash flows in the three months ended March 31, 2024, ending the quarter with $460.4 million in cash and cash equivalents.

In the three months ended March 31, 2024, we used cash of approximately $42.1 million for capital expenditures, $18.1 million for payment of cash dividends, and $10.1 million for share repurchases as part of our share repurchase plan.

Net revenue for the six months ended June 30, 2024 was $2,042.2 million, a decrease of 0.9% compared to $2,060.3 million in the prior period.

Excluding a decrease of 1.4% attributed to changes in foreign currency exchange rates, net revenue increased 0.5% on an organic basis.

Operating income for the three months ended June 30, 2024 increased $11.9 million, or 10.1%, to $129.9 million (12.5% of net revenue) from $118.0 million (11.1% of net revenue) in the three months ended June 30, 2023.

Operating income for the six months ended June 30, 2024 increased $7.9 million, or 3.0%, to $274.7 million (13.5% of net revenue) from $266.9 million (13.0% of net revenue) in the six months ended June 30, 2023.

Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our earnings results for the three and six months ended June 30, 2024 compared to the prior year periods.

We generated $249.9 million of operating cash flows in the six months ended June 30, 2024, ending the quarter with $1,033.1 million in cash and cash equivalents.

In the six months ended June 30, 2024, we used cash of approximately $87.2 million for capital expenditures, $36.1 million for payment of cash dividends, and $10.1 million for share repurchases as part of our share repurchase plan.

On June 6, 2024, our indirect, wholly-owned subsidiary, Sensata Technologies, Inc.

("STI"), completed the issuance and sale of $500.0 million aggregate principal amount of 6.625% senior notes due 2032 (the "6.625% Senior Notes").

proceeds from this issuance, together with cash on hand, for the redemption in full of the $700.0 million aggregate principal amount of 5.0% senior notes due 2025 (the "5.0% Senior Notes"), which were issued by our indirect, wholly-owned subsidiary, Sensata Technologies B.V.

This redemption was completed on July 15, 2024.

We executed the issuance of the 6.625% Senior Notes and the subsequent redemption of the 5.0% Senior Notes to eliminate the near-term uncertainty related to the 5.0% Senior Notes, which would have been due in October 2025, to extend the maturity horizon of our capital structure, and to add flexibility to our liquidity position.

On June 30, 2024, subsequent to the issuance of the 6.625% Senior Notes, our net leverage ratio was 3.2x, compared to 3.3x at March 31, 2024 and 3.2x at December 31, 2023.

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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Refer to Note 1:

Presentation and Note 15:

Basis of Presentation and Note 15:

Segment Reporting included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Results of Operations

The table below presents our historical results of operations, in millions of dollars and as a percentage of net revenue, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The table below presents our historical results of operations, in millions of dollars and as a percentage of net revenue, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.

We have derived the results of operations from the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

For the three months ended

March 31, 2024 March 31, 2023

Amount Margin (1)

For the three months ended For the six months ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Amount Percent (1)

Performance Sensing $ 723.9 69.9 % $ 693.6 65.3 % $ 1,437.2 70.4 % $ 1,361.3 66.1 %

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(1) Represents the amount presented divided by total net revenue.

Net revenue for the three months ended March 31, 2024 increased 0.9% compared to the prior period.

Net revenue for the three months ended June 30, 2024 decreased 2.5% compared to the prior period.

Net revenue decreased 1.2% on an organic basis, which excludes a decrease of 1.3% attributed to changes in foreign currency exchange rates.

The decrease includes $26 million of one-time pass-through revenue in the three months ended June 30, 2023, related to our Sensing Solutions business.

Net revenue for the six months ended June 30, 2024 decreased 0.9% compared to the prior period.

Net revenue increased 0.5% on an organic basis, which excludes a decrease of 1.4% attributed to changes in foreign currency exchange rates.

Performance Sensing

Performance Sensing net revenue for the three months ended March 31, 2024 increased 6.8% compared to the prior period.

Performance Sensing net revenue for the three months ended June 30, 2024 increased 4.4% compared to the prior period.

Excluding a decrease of 1.7% attributed to changes in foreign currency exchange rates, Performance Sensing net revenue increased 6.1% on an organic basis, which was primarily due to content growth across both Automotive and HVOR.

Performance Sensing net revenue for the six months ended June 30, 2024 increased 5.6% compared to the prior period.

Excluding a decrease of 1.7% attributed to changes in foreign currency exchange rates, Performance Sensing net revenue increased 7.3% on an organic basis, which was primarily due to content growth across both Automotive and HVOR.

Sensing Solutions

Sensing Solutions net revenue for the three months ended March 31, 2024 decreased 9.0% compared to the prior period.

Excluding a decline of 0.7% attributed to changes in foreign currency exchange rates, Sensing Solutions net revenue declined 8.3% on an organic basis, which primarily reflects inventory destocking in the industrial markets, partially offset by growth in the aerospace market.

Sensing Solutions net revenue for the three months ended June 30, 2024 decreased 19.0% compared to the prior period.

Excluding a decline of 0.7% attributed to changes in foreign currency exchange rates, Sensing Solutions net revenue declined 18.3% on an organic basis, which is primarily due to one-time pass-through revenue and inventory destocking in the industrial markets, partially offset by growth in the aerospace market.

Sensing Solutions net revenue for the six months ended June 30, 2024 decreased 14.4% compared to the prior period.

Excluding a decline of 0.7% attributed to changes in foreign currency exchange rates, Sensing Solutions net revenue declined 13.7% on an organic basis, which is primarily due to one-time pass-through revenue and inventory destocking in the industrial markets, partially offset by growth in the aerospace market.

Operating costs and expenses

Operating costs and expenses for the three months ended March 31, 2024 and 2023 are presented, in millions of dollars and as a percentage of net revenue, in the following table.

Operating costs and expenses for the three and six months ended June 30, 2024 and 2023 are presented, in millions of dollars and as a percentage of net revenue, in the following table.

Amounts and percentages in the table below have been calculated based on unrounded numbers.

Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

For the three months ended

March 31, 2024 March 31, 2023

Amount Margin (1)

For the three months ended For the six months ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Amount Percent (1)

Operating costs and expenses:

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Cost of revenue

For the three months ended March 31, 2024, cost of revenue as a percentage of net revenue increased from the prior period, primarily due to (1) the unfavorable effect of changes in foreign currency exchange rates, (2) the net impacts of inflation on material and logistics costs and pricing recoveries from customers, and (3) unfavorable product mix.

For the three months ended June 30, 2024, cost of revenue as a percentage of net revenue increased from the prior period, primarily due to (1) the net impacts of inflation on material and logistics costs and pricing recoveries from customers and (2) the impact of $13.2 million of inventory write-downs related to product line discontinuations, partially offset by the nonrecurrence of $10.5 million write-down of inventory in the three months ended June 30, 2023 as a result of our decision to exit the Marine Business.

Refer to Note 5:

Restructuring and Other Charges, Net of our unaudited condensed consolidated financial statements, included elsewhere in this quarterly report on Form 10-Q for additional information regarding the write-downs related to product line discontinuations and charges related to the exit of the Spear Marine Business.

For the six months ended June 30, 2024, cost of revenue as a percentage of net revenue increased from the prior period, primarily due to (1) the net impacts of inflation on material and logistics costs and pricing recoveries from customers, (2) the impact of $13.2 million of inventory write-downs related to product line discontinuations, and (3) the unfavorable effect of changes in foreign currency exchange rates, partially offset by the nonrecurrence of $10.5 million write-down of inventory in the three months ended June 30, 2023 as a result of our decision to exit the Marine Business.

Research and development expense

For the three months ended March 31, 2024, research and development ("R&D") expense did not fluctuate materially from the prior year period.

For the three and six months ended June 30, 2024, research and development ("R&D") expense did not fluctuate materially from the prior year periods.

Selling, general and administrative expense

For the three months ended March 31, 2024, selling, general and administrative ("SG&A") expense did not fluctuate materially from the prior year period.

For the three months ended June 30, 2024, selling, general and administrative ("SG&A") expense increased primarily due to (1) additional costs to remediate the material weaknesses identified in our internal controls over financial reporting for the year ended December 31, 2023 and (2) increased transaction costs, partially offset by lower compensations costs.

For the six months ended June 30, 2024, selling, general and administrative ("SG&A") expense did not fluctuate materially from the prior year period.

Amortization of intangible assets

For the three months ended March 31, 2024, amortization of intangible assets decreased from the prior period, primarily due to 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.

For the three and six months ended June 30, 2024, amortization of intangible assets decreased from the prior periods, primarily due to (1) the non-recurrence of a $13.5 million charge for accelerated amortization of intangible assets in the three months ended June 30, 2023 as a result of our exit from the Spear Marine Business and (2) 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.

Restructuring and other charges, net

In the three months ended March 31, 2024, restructuring and other charges, net decreased from the prior year period, primarily due to lower charges for acquisition-related incentive compensation and lower severance charges, partially offset by the non-recurrence of a gain on sale of business that occurred in the first quarter of 2023.

In the three months ended June 30, 2024, restructuring and other charges, net decreased from the prior year period, primarily due to (1) the non-recurrence of charges related to the Spear Marine Business in the second quarter of 2023, (2) lower charges for acquisition-related incentive compensation and (3) lower severance charges.

In the six months ended June 30, 2024, restructuring and other charges, net decreased from the prior year period, primarily due to (1) the non-recurrence of charges related to the Spear Marine Business in the second quarter of 2023, (2) lower charges for acquisition-related incentive compensation and (3) lower severance charges, partially offset by the non-recurrence of a gain on sale of a business that occurred in the first quarter of 2023.

Refer to Note 5:

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Operating income

For the three months ended March 31, 2024, operating income did not fluctuate materially from the prior year period, as lower gross margin as described under the heading Cost of revenue above was largely offset by lower restructuring charges.

For the three months ended June 30, 2024, operating income did not fluctuate materially from the prior year period, as lower gross margin as described under the heading Cost of revenue above was largely offset by lower restructuring charges.

For the six months ended June 30, 2024, operating income did not fluctuate materially from the prior year period, as lower gross margin as described under the heading Cost of revenue above was largely offset by lower restructuring charges.

Interest expense

For the three months ended March 31, 2024, interest expense decreased $10.4 million from the prior period, primarily due to the repayment of the Term Loan and 5.625% Senior Notes in the year ended December 31, 2023.

For the three and six months ended June 30, 2024, interest expense decreased from the prior periods, primarily due to lower interest expense on the 5.625% Senior Notes, which were redeemed in the fourth quarter of 2023, and the Term Loan, which was paid in full in the second quarter of 2023 and partially offset by interest expense on the 6.625% Senior Notes.

Refer to Note 14:

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Interest income

For the three months ended March 31, 2024, interest income decreased from the prior period, primarily due to lower average cash equivalent balances in the first quarter of 2024 compared to the first quarter of 2023.

For the three and six months ended June 30, 2024, interest income decreased from the prior periods, primarily due to lower average cash equivalent balances in the respective periods compared to the prior periods.

Other, net primarily includes currency remeasurement gains and losses on net monetary assets, gains and losses on foreign currency and commodity forward contracts not designated as hedging instruments, mark-to-market gains and losses on investments, losses related to debt refinancing, and the portion of our net periodic benefit cost excluding service cost.

For the three months ended March 31, 2024, other, net represented a net loss of $11.5 million, an unfavorable impact on earnings of $12.9 million compared to a net gain of $1.4 million in the prior period.

This unfavorable impact was primarily due to a loss of $14.8 million recognized as a result of observable price changes related to an equity investment held using the measurement alternative.

For the three months ended June 30, 2024, other, net represented a net gain of $4.1 million, a favorable impact on earnings of $15.0 million compared to a net loss of $10.9 million in the prior period.

For the six months ended June 30, 2024, other, net represented a net loss of $7.4 million, a favorable impact on earnings of $2.1 million compared to a net loss of $9.5 million in the prior period.

This favorable impact was primarily due to (1) the impact of foreign currency remeasurement of net monetary assets and (2) the net impact of forward contracts on commodities and foreign currency exchange rates that are not designated as accounting hedges, partially offset by a loss of $14.8 million recognized in the first quarter of 2024 as a result of observable price changes related to an equity investment held using the measurement alternative.

Refer to Note 13:

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

For the three months ended March 31, 2024, the provision for income taxes decreased $1.2 million from the prior period, predominantly due to lower income before taxes, the effective settlement of uncertain tax positions, and changes in our jurisdictional mix of profits.

For the three and six months ended June 30, 2024, the provision for income taxes increased $7.4 million and $6.3 million from the prior period, predominantly due to the increase in profit before tax and changes in our jurisdictional mix of earnings.

Non-GAAP Financial Measures

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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.

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.

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.

Our weighted market growth is calculated using our regional and platform sales mix, as applicable, in the corresponding prior period.

Market outgrowth is used to describe the impact of an increasing quantity and value of our products used in customer systems and applications above market growth.

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.

We believe this provides a more meaningful comparison of our revenue growth relative to the markets we serve.

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Free cash flow is defined as net cash provided by operating activities less additions to property, plant and equipment and capitalized software.

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.

Adjusted corporate and other expenses

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• Financing and other transaction costs :

includes losses or gains related to debt financing transactions, losses or gains related to the divestiture of a business, costs incurred, including for legal, accounting, and other professional services, that are directly related to an acquisition, divestiture, or equity financing transaction, mark-to-market losses or gains on our equity investments, expenses related to compensation arrangements entered into concurrent with the closing of an acquisition, and gains related to changes in the fair value of acquisition-related contingent consideration amounts.

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 :

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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 three months ended March 31, 2024 and 2023.

GAAP to the related non-GAAP financial measures for the three months ended June 30, 2024 and 2023.

Refer to the Non-GAAP Adjustments section above for additional information regarding these adjustments.

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.

For the three months ended March 31, 2024

For the three months ended June 30, 2024

(Dollars in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS

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Adjusted (non-GAAP) $ 196.7 19.0 % $ 23.5 $ 139.9 $ 0.93

For the three months ended March 31, 2023

For the three months ended June 30, 2023

(Dollars in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS

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Adjusted (non-GAAP) $ 205.7 19.4 % $ 15.3 $ 149.2 $ 0.97

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 six months ended June 30, 2024 and 2023.

For the six months ended June 30, 2024

(Dollars in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS

Reported (GAAP) $ 274.7 13.5 % $ 49.9 $ 147.7 $ 0.98

Non-GAAP adjustments:

Restructuring related and other 29.2 1.4 (1.4) 27.8 0.18

Financing and other transaction costs 6.8 0.3 (0.9) 20.3 0.13

Step-up depreciation and amortization 74.9 3.7 — 74.9 0.50

Deferred (gain)/loss on derivative instruments (0.5) 0.0 1.7 (4.9) (0.03)

Amortization of debt issuance costs — — — 3.2 0.02

Deferred taxes and other tax related — — 5.4 5.4 0.04

Total adjustments 110.5 5.4 4.9 126.8 0.84

Adjusted (non-GAAP) $ 385.2 18.9 % $ 45.0 $ 274.5 $ 1.82

For the six months ended June 30, 2023

(Dollars in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS

Reported (GAAP) $ 266.9 13.0 % $ 43.6 $ 135.5 $ 0.88

Non-GAAP adjustments:

Restructuring related and other 34.0 1.7 (1.3) 32.7 0.21

Financing and other transaction costs 8.5 0.4 2.8 11.5 0.08

Step-up depreciation and amortization 92.5 4.5 — 92.5 0.60

Deferred (gain)/loss on derivative instruments (3.2) (0.2) (0.2) 0.9 0.01

Amortization of debt issuance costs — — — 3.4 0.02

Deferred taxes and other tax related — — 13.2 13.2 0.09

Total adjustments 131.8 6.4 14.5 154.3 1.01

Adjusted (non-GAAP) $ 398.6 19.3 % $ 29.1 $ 289.8 $ 1.89

The following table provides a reconciliation of net cash provided by operating activities in accordance with U.S.

GAAP to free cash flow.

For the three months ended March 31,

For the six months ended June 30,

(In millions) 2024 2023

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GAAP to adjusted corporate and other expenses.

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

(In millions) 2024 2023 2024 2023

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Step-up depreciation and amortization 0.3 0.3 0.5 0.3

Deferred (gain)/loss on derivative instruments (0.4) (2.3)

Deferred gain on derivative instruments (0.1) (0.9) (0.5) (3.2)

Total adjustments 25.9 13.4 31.8 12.4

Adjusted corporate and other expenses (non-GAAP) $ (67.6) $ (68.1) $ (142.1) $ (131.5)

The following table provides a reconciliation of net (loss)/income in accordance with U.S.

The following table provides a reconciliation of net income in accordance with U.S.

GAAP to adjusted EBITDA.

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

(In millions) LTM 2024 2023 2024 2023

Net (loss)/income $ (14.3) $ 76.0 $ 86.4

Net income $ 8.3 $ 71.7 $ 49.1 $ 147.7 $ 135.5

Interest expense, net 142.4 35.1 38.1 69.7 78.2

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Financing and other transaction costs 33.9 3.5 4.0 21.1 8.8

Deferred loss/(gain) on derivative instruments 0.7 (1.5) (4.1)

Deferred (gain)/loss on derivative instruments (9.7) (5.1) 5.3 (6.6) 1.2

Adjusted EBITDA $ 902.2 $ 231.8 $ 234.7 $ 455.7 $ 460.2

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GAAP to net leverage ratio.

(Dollars in millions) March 31,

(Dollars in millions) June 30,

2024 December 31,

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Liquidity and Capital Resources

As of March 31, 2024 and December 31, 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):

(In millions) March 31,

As of June 30, 2024 and December 31, 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):

(In millions) June 30,

2024 December 31,

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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.

Our earnings are not considered to be permanently reinvested in certain jurisdictions in which they were

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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Our cash and cash equivalents balances are held in the following significant currencies (amounts 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):

As of March 31, 2024

As of June 30, 2024

(In millions) USD EUR GBP CNY Other

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USD Equivalent $ 16.2 $ 15.6 $ 95.6 $ 10.0

The table below summarizes our primary sources and uses of cash for the three months ended March 31, 2024 and 2023.

The table below summarizes our primary sources and uses of cash for the six months ended June 30, 2024 and 2023.

We have derived these summarized statements of cash flows from the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

For the three months ended

(In millions) March 31, 2024 March 31, 2023

For the six months ended

(In millions) June 30, 2024 June 30, 2023

Net cash provided by/(used in):

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Operating activities.

Net cash provided by operating activities for the three months ended March 31, 2024 increased compared to the corresponding period of the prior year, primarily due to timing of supplier payments and customer receipts.

Net cash provided by operating activities for the six months ended June 30, 2024 increased compared to the corresponding period of the prior year, primarily due to timing of supplier payments and customer receipts.

Investing activities.

Net cash used in investing activities for the three months ended March 31, 2024 increased compared to the corresponding period of the prior year, primarily due to (1) no cash received for divestitures in the three months ended March 31, 2024 (compared to $14.0 million in the prior year period) and (2) an increase in cash paid for capital expenditures.

Net cash used in investing activities for the six months ended June 30, 2024 increased compared to the corresponding period of the prior year, primarily due to no cash received for divestitures in the six months ended June 30, 2024 (compared to $19.0 million in the prior year period).

For fiscal year 2024, we anticipate capital expenditures of approximately $175.0 million, which we expect to fund with cash on hand.

Financing activities .

Net cash used in financing activities for the three months ended March 31, 2024 decreased from the prior year period.

The prior year period included an early payment of $250.0 million on the Term Loan balance, which did not have a corresponding payment in the three months ended March 31, 2024.

Partially offsetting this decrease was payment of $79.4 million to repurchase the remaining equity interest in a joint venture.

Net cash from financing activities provided cash of $365.1 million for the six months ended June 30, 2024 compared to use of $515.0 million in the prior year period.

This change is primarily due to $500.0 million cash received from the issuance of the 6.625% Senior Notes in the second quarter of 2024, combined with the impact of the prepayment of the

Term Loan in the first half of 2023.

In addition, in we paid $79.4 million to repurchase the remaining equity interest in a former joint venture in the six months ended June 30, 2024.

Refer to Note 12:

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Indebtedness and Liquidity

As of March 31, 2024, we had $3.4 billion in gross indebtedness, which includes finance lease and other financing obligations and excludes debt discounts, premiums, and deferred financing costs.

As of June 30, 2024, we had $3.9 billion in gross indebtedness, which includes finance lease and other financing obligations and excludes debt discounts, premiums, and deferred financing costs.

On June 6, 2024, our indirect, wholly-owned subsidiary, Sensata Technologies, Inc.

("STI"), completed the issuance and sale of $500.0 million aggregate principal amount of 6.625% senior notes due 2032 (the "6.625% Senior Notes").

On July 15, 2024, we used the proceeds from this issuance, together with cash on hand, for the redemption in full of the $700.0 million aggregate principal amount of 5.0% senior notes due 2025 (the "5.0% Senior Notes"), which were issued by our indirect, wholly-owned subsidiary, Sensata Technologies B.V.

Refer to Note 10:

Debt of our condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q, for additional information on these transactions and our overall debt.

Capital Resources

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Our sources of liquidity include cash on hand, cash flows from operations, and available capacity under the Revolving Credit Facility.

As of March 31, 2024, we had $746.1 million available under the Revolving Credit Facility, net of $3.9 million of obligations in respect of outstanding letters of credit issued thereunder.

As of June 30, 2024, we had $746.1 million available under 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, 2024, no amounts had been drawn against these outstanding letters of credit.

As of June 30, 2024, no amounts had been drawn against these outstanding letters of credit.

Availability under the Accordion varies each period based on our attainment of certain financial metrics as set forth in the terms of the Credit Agreement and the indentures under which our senior notes were issued (the "Senior Notes Indentures").

As of March 31, 2024, availability under the Accordion was approximately $2.0 billion.

As of June 30, 2024, availability under the Accordion was approximately $2.0 billion.

We believe, based on our current level of operations and taking into consideration the restrictions and covenants included in the Credit Agreement and Senior Notes Indentures, that the sources of liquidity described above will be sufficient to fund our operations, capital expenditures, dividend payments, ordinary share repurchases, and debt service for at least the next twelve months.

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Our ability to raise additional financing, and our borrowing costs, may be impacted by short- and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios.

As of April 20, 2024, Moody’s Investors Service’s corporate credit rating for STBV was Ba2 with a positive outlook, and Standard & Poor’s corporate credit rating for STBV was BB+ with a stable outlook.

As of July 20, 2024, Moody’s Investors Service’s corporate credit rating for STBV was Ba2 with a positive outlook, and Standard & Poor’s corporate credit rating for STBV was BB+ with a stable outlook.

Any future downgrades to STBV's credit ratings may increase our future borrowing costs but will not reduce availability under the Credit Agreement.

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The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and upon the incurrence of certain indebtedness (excluding any permitted indebtedness).

These provisions were not triggered during the three months ended March 31, 2024.

These provisions were not triggered during the six months ended June 30, 2024.

The Credit Agreement and the Senior Notes Indentures contain restrictions and covenants that limit the ability of our wholly-owned subsidiary, STBV, and certain of its subsidiaries to, among other things, incur subsequent indebtedness, sell assets, pay dividends, and make other restricted payments.

For a full discussion of these restrictions and covenants, refer to Part II, Item 7:

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources included in our 2023 Annual Report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources included in our

2023 Annual Report.

These restrictions and covenants, which are subject to important exceptions and qualifications set forth in the Credit Agreement and Senior Notes Indentures, were taken into consideration when we established our share repurchase programs and will be evaluated periodically with respect to future potential funding of those programs.

As of March 31, 2024, we believe we were in compliance with all covenants and default provisions under our credit arrangements.

As of June 30, 2024, we believe we were in compliance with all covenants and default provisions under our credit arrangements.

Share repurchase programs

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

We currently have authorization for the September 2023 Program, under which approximately $461.8 million remained available as of March 31, 2024.

In the three months ended March 31, 2024, we repurchased 0.3 million ordinary shares under the September 2023 Program.

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

In the three months ended March 31, 2024 and 2023, we paid aggregate cash dividends of $18.1 million and $16.8 million, respectively.

On April 24, 2024, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable on May 22, 2024 to shareholders of record as of May 8, 2024.

We currently have authorization for the September 2023 Program, under which approximately $461.8 million remained available as of June 30, 2024.

In the six months ended June 30, 2024, we repurchased 0.3 million ordinary shares under the September 2023 Program.

In the six months ended June 30, 2023, we repurchased 0.6 million ordinary shares under the January 2022 Program

In the six months ended June 30, 2024 and 2023, we paid aggregate cash dividends of $36.1 million and $35.1 million, respectively.

On July 18, 2024, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable on August 28, 2024 to shareholders of record as of August 14, 2024.

Recently Issued Accounting Pronouncements

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For public business entities, the standard is effective for annual periods beginning after December 15, 2024.

We are currently evaluating the impact on our income tax related disclosures.

We do not expect the adoption of FASB ASU No.

2023-09 to have an impact on our results of operations or financial condition, but it is expected to increase the amount of disclosures required in the notes to the consolidated financial statements.

Critical Accounting Policies and Estimates

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Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates included in our 2023 Annual Report.

The preparation of consolidated financial statements in accordance with U.S.

GAAP requires us to exercise judgment in the process of applying our accounting policies.

It also requires that we make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes.

No material changes to the Company’s critical accounting policies and estimates, as previously disclosed, have occurred during the first six months of 2024, except for the addition of the Company’s Definite-lived Intangible Assets policy as discussed below.

Definite-lived intangible assets

We perform reviews on a regular basis to determine whether facts or circumstances exist that indicate that the carrying values of our definite-lived intangible assets are impaired.

If we determine that such facts or circumstances exist, we estimate the recoverability of the related asset or asset group (at the lowest level of identifiable cash flows) by comparing the projected undiscounted net cash flows associated with the asset or asset group to its carrying value.

If the sum of the projected

undiscounted net cash flows is less than the carrying value of an asset or asset group, an impairment charge would be measured as the excess of the carrying value over the fair value of that asset or asset group.

We determine fair value by using the appropriate income approach valuation methodology, depending on the nature of the definite-lived intangible asset.

As of June 30, 2024, we estimated the recoverability of the definite-lived intangible assets within our Insights reporting unit, which represents the asset group, by comparing the projected probability-weighted undiscounted net cash flows associated with the intangible assets to their carrying value.

The total carrying value of the indefinite lived intangible assets within the Insights reporting unit was approximately $250 million.

These probability-weighted cash flows included scenarios associated with a long-term hold and use of the reporting unit and scenarios associated with near term execution of strategic alternatives for the reporting unit.

The sum of the projected probability-weighted undiscounted net cash flows exceeded the carrying value of the intangible assets within the asset group.

However, if the probability of executing on a strategic alternative for the asset group were to increase, we may be required to recognize a material charge related to these definite-lived intangible assets.

Quantitative and Qualitative Disclosures About Market Risk.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis