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Item 2. Management’s Discussion and Analysis

2024-11-04 compared with 2024-07-29 · 224 added, 153 removed, 306 unchanged (55% of the section changed)

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Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Annual Report.

The following discussion should also be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

The following discussion should also be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto (the "Financial Statements") included elsewhere in this Report.

Amounts and percentages in the following discussions and tables have been calculated based on unrounded numbers.

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

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.

Net revenue for the three months ended September 30, 2024 was $982.8 million, a decrease of 1.8% on a reported and organic basis compared to $1,001.3 million in the prior period.

Net revenue for the nine months ended September 30, 2024 was $3,025.1 million, a decrease of 1.2% compared to $3,061.6 million in the prior period.

Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rates, net revenue decreased 0.3% on an organic basis.

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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).

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.

Operating loss for the three months ended September 30, 2024 was $199.2 million (20.3% of net revenue), a decrease of $315.5 million, or 271.4% compared to operating income of $116.3 million (11.6% of net revenue) in the three months ended September 30, 2023.Operating income for the nine months ended September 30, 2024 decreased $307.6 million, or 80.3%, to $75.5 million (2.5% of net revenue) from $383.1 million (12.5% of net revenue) in the nine months ended September 30, 2023.

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

We generated $380.8 million of operating cash flows in the nine months ended September 30, 2024, ending the quarter with $506.2 million in cash and cash equivalents.

In the nine months ended September 30, 2024, we used cash of approximately $126.8 million for capital expenditures, $54.3 million for payment of cash dividends, and $47.3 million for share repurchases as part of our share repurchase plan.

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.

We determined that this reporting unit was impaired, and we recorded a $150.1 million non-

cash impairment charge.

Refer to Note 13:

Fair Value Measures of the Financial Statements, included elsewhere in this Report, for additional information.

In August 2024, we executed a purchase agreement whereby we agreed to sell the Insights Business to an affiliate of Balmoral Funds.

The total purchase price of the Insights Business was $165.0 million, with approximately $155.0 million before adjustments received and $10.0 million to be received twelve months after the closing of the transaction.

In both the three months and nine months ended September 30, 2024, we recognized a loss on sale of approximately $110.1 million presented in restructuring and other charges, net in our condensed consolidated statements of operations, and approximately $11.2 million of transaction-related expenses, which were presented in SG&A in our condensed consolidated statements of operations.

Disposal of the Financial Statements included elsewhere in this Report for additional information.

In June 2024, our indirect, wholly-owned subsidiary, STI, completed the issuance and sale of the 6.625% Senior Notes.

We used the proceeds from this issuance, together with cash on hand, for the redemption in full of the 5.0% Senior Notes, which were issued by our indirect, wholly-owned subsidiary, STBV.

This redemption was completed in July 2024.

Refer to Note 10:

Debt of the Financial Statements included elsewhere in this Report, for additional information regarding these debt transactions.

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.

On September 30, 2024, our net leverage ratio was 3.0x, compared to 3.2x at both June 30, 2024 and 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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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 Quarterly Report on Form 10-Q have been recast to reflect this realignment.

Prior year amounts in this Report have been recast to reflect this realignment.

Refer to Note 1:

Basis of Presentation and Note 15:

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

Segment Reporting of the Financial Statements included elsewhere in this Report 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 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.

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

We have derived the results of operations from the Financial Statements included elsewhere in this Report.

Prior year periods have been recast to reflect the reorganization of segments as detailed in Note 1:

Basis of Presentation included elsewhere in this Report.

Basis of Presentation of the Financial Statements included elsewhere in this Report.

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 For the six months ended

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

For the three months ended For the nine months ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Amount Percent (1)

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Operating costs and expenses 1,182.1 120.3 885.0 88.4 2,949.6 97.5 2,678.5 87.5

Operating income 129.9 12.5 118.0 11.1 274.7 13.5 266.9 13.0

Operating (loss)/income (199.2) (20.3) 116.3 11.6 75.5 2.5 383.1 12.5

Interest expense (38.9) (4.0) (44.3) (4.4) (118.2) (3.9) (138.9) (4.5)

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Other, net (12.3) (1.3) 1.3 0.1 (19.7) (0.7) (8.2) (0.3)

Income before taxes 99.0 9.6 69.0 6.5 197.6 9.7 179.1 8.7

Provision for income taxes 27.3 2.6 19.9 1.9 49.9 2.4 43.6 2.1

Net income $ 71.7 6.9 % $ 49.1 4.6 % $ 147.7 7.2 % $ 135.5 6.6 %

(Loss)/income before taxes (244.6) (24.9) 80.7 8.1 (47.0) (1.6) 259.8 8.5

(Benefit from)/provision for income taxes (219.6) (22.3) 17.9 1.8 (169.7) (5.6) 61.5 2.0

Net (loss)/income $ (25.0) (2.5) % $ 62.8 6.3 % $ 122.7 4.1 % $ 198.3 6.5 %

___________________________________

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

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

Net revenue for the three months ended September 30, 2024 decreased 1.8% compared to the prior period.

Net revenue for the nine months ended September 30, 2024 decreased 1.2% compared to the prior period.

Net revenue decreased 0.3% on an organic basis, which excludes a decrease of 0.9% 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 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.

Performance Sensing net revenue for the three months ended September 30, 2024 decreased 5.3% on a reported and organic basis compared to the prior period, which was primarily due to market decline across our vehicle end markets.

Performance Sensing net revenue for the nine months ended September 30, 2024 increased 1.9% compared to the prior period.

Excluding a decrease of 1.2% attributed to changes in foreign currency exchange rates, Performance Sensing net revenue increased 3.1% on an organic basis, which was primarily due to content growth across our vehicle end markets, partially offset by market declines.

Sensing Solutions

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.

Sensing Solutions net revenue for the three months ended September 30, 2024 decreased 0.3% on a reported and organic basis compared to the prior period, which is primarily due to inventory destocking in our aerospace and industrial markets, partially offset by market growth in our industrial market.

Sensing Solutions net revenue for the nine months ended September 30, 2024 decreased 10.0% compared to the prior period.

Excluding a decline of 0.5% attributed to changes in foreign currency exchange rates, Sensing Solutions net revenue declined 9.5% on an organic basis, which is primarily due to the non-recurrence of one-time pass-through revenue in 2023 and inventory destocking in the industrial and aerospace markets, partially offset by growth in our aerospace and industrial markets.

Operating costs and expenses

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.

Operating costs and expenses for the three and nine months ended September 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 For the six months ended

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

For the three months ended For the nine months ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Amount Percent (1)

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Amortization of intangible assets 44.7 4.6 40.0 4.0 122.3 4.0 135.3 4.4

Goodwill impairment charge 150.1 15.3 — — 150.1 5.0 — —

Restructuring and other charges, net 140.6 14.3 26.0 2.6 144.9 4.8 53.3 1.7

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Cost of revenue

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.

For the three months ended September 30, 2024, cost of revenue as a percentage of net revenue increased from the prior period, primarily due to (1) the impact of $27.3 million of contract termination costs and inventory charges related to product line lifecycle management, primarily in Sensing Solutions, and (2) the net impacts of customer pricing and manufacturing efficiencies, partially offset by (1) the impact of certain actions taken in the third quarter of 2023 as part of the Q3 2023 Plan and (2) the favorable effect of changes in foreign currency exchange rates.

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.

Restructuring and Other Charges, Net of the Financial Statements, included elsewhere in this Report for additional information regarding the write-downs related

to product line lifecycle management.

Refer to Note 5:

Restructuring and Other Charges, Net of our 2023 Annual Report for additional information regarding the Q3 2023 Plan.

For the nine months ended September 30, 2024, cost of revenue as a percentage of net revenue increased from the prior period, primarily due to (1) the impact of $40.5 million of contract termination costs and inventory charges related to product line lifecycle management, primarily in Sensing Solutions, and (2) the net impacts of customer pricing and manufacturing efficiencies, partially offset by the nonrecurrence of a $10.5 million write-down of inventory in the three months ended June 30, 2023 as a result of our decision to exit the Spear Marine Business.

Refer to Note 5:

Restructuring and Other Charges, Net of the Financial Statements, included elsewhere in this Report for additional information regarding exit of the Spear Marine Business.

Research and development expense

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.

For the three and nine months ended September 30, 2024, research and development expense did not fluctuate materially from the prior year periods.

Selling, general and administrative expense

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.

For the three months ended September 30, 2024, SG&A expense increased primarily due to costs and charges related to the sale of the Insights Business (including $5.8 million of accelerated vesting of restricted securities granted to employees of the Insights Business).

Refer to Note 16:

Disposal and Note 4:

Share-Based Payment Plans of the Financial Statements, included elsewhere in this Report, for additional information on the sale of the Insights Business and share-based compensation related to restricted securities, respectively.

For the nine months ended September 30, 2024, SG&A expense increased primarily due to (1) costs and charges related to the sale of the Insights Business (including accelerated vesting of restricted securities granted to employees of the Insights Business), (2) higher compensation costs, and (3) additional costs to remediate the material weaknesses identified in our internal controls over financial reporting for the year ended December 31, 2023, partially offset by cost savings as a result of actions taken as part of the Q3 2023 Plan.

Amortization of intangible assets

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.

For the three months ended September 30, 2024, amortization of intangible assets increased from the prior periods, primarily due to $9.6 million of accelerated amortization related to our decision to exit the Spear aerospace and defense business in the third quarter of 2024.

For the nine months ended September 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 nine months ended September 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, partially offset by $9.6 million of accelerated amortization related to our decision to exit the Spear aerospace and defense business in the third quarter of 2024.

Goodwill impairment charge

In the third quarter of 2024, we recorded a $150.1 million non-cash impairment charge for our Dynapower reporting unit within the Sensing Solutions segment.

The primary indicator of impairment was revised projections of future cash flows that were lower than previous projections, including future cash flows that were delayed beyond management's initial expectations.

Refer to Note 13:

Fair Value Measures of the Financial Statements, included elsewhere in this Report, for additional information

Restructuring and other charges, net

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.

In the three months ended September 30, 2024, restructuring and other charges, net increased from the prior year period, primarily 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 the nonrecurrence of severance charges incurred in the third quarter of 2023 related to the Q3 2023 Plan.

In the nine months ended September 30, 2024, restructuring and other charges, net increased from the prior year period, primarily due to (1) the loss on the sale of the Insights Business in the third quarter of 2024, (2) charges related to our decision to exit the Spear aerospace and defense business in the third quarter of 2024, and (3) contract termination costs related to certain product lifecycle management activities, primarily within Sensing Solutions, partially offset by (1) the nonrecurrence of severance charges incurred in the third quarter of 2023 related to the Q3 2023 Plan, (2) the non-recurrence of charges incurred

in the second quarter of 2023 related to our decision to exit the Spear Marine Business, and (3) lower acquisition-related deferred compensation .

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 components of restructuring and other charges, net.

Operating income

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.

Restructuring and Other Charges, Net of the Financial Statements, included elsewhere in this Report, for additional information regarding the components of restructuring and other charges, net.

Operating loss/income

For the three months ended September 30, 2024, operating loss was $199.2 million, compared to operating income of $116.3 million in the prior period.

This unfavorable impact was driven primarily by (1) a $150.1 million goodwill impairment charge related to the Dynapower business, (2) the loss on the sale of the Insights Business in the third quarter of 2024, (3) the impact of $27.3 million of contract termination costs and inventory charges related to product line discontinuations, primarily in Sensing Solutions, (4) charges related to our decision to exit the Spear aerospace and defense business in the third quarter of 2024, and (5) costs and charges related to the sale of the Insights Business (including accelerated vesting of restricted securities granted to employees of the Insights Business), partially offset by the nonrecurrence of severance charges incurred in the third quarter of 2023 related to the Q3 2023 Plan.

For the nine months ended September 30, 2024, operating income decreased from the prior year period, primarily due to (1) a $150.1 million goodwill impairment charge related to the Dynapower business, (2) the loss on the sale of the Insights Business in the third quarter of 2024, (3) the impact of $40.5 million of contract termination costs and inventory charges related to product line discontinuations, primarily in Sensing Solutions, (4) charges related to our decision to exit the Spear aerospace and defense business in the third quarter of 2024, (5) costs and charges related to the sale of the Insights Business (including accelerated vesting of restricted securities granted to employees of the Insights Business), and (6) higher compensation costs, partially offset by (1) the non-recurrence of charges incurred in the second quarter of 2023 related to our decision to exit the Spear Marine Business, (2) the nonrecurrence of severance charges incurred in the third quarter of 2023 related to the Q3 2023 Plan, and (3) cost savings as a result of actions taken as part of the Q3 2023 Plan.

Interest expense

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.

For the three months ended September 30, 2024, interest expense decreased from the prior periods, primarily due to lower interest expense on (1) the 5.0% Senior Notes, which were redeemed in July 2024, and (2) the 5.625% Senior Notes, which were redeemed in the fourth quarter of 2023, partially offset by higher interest expense related to the 6.625% Senior Notes, which were issued in June 2024.

For the nine months ended September 30, 2024, interest expense decreased from the prior periods, primarily due to lower interest expense on (1) the 5.625% Senior Notes, (2) the 5.0% Senior Notes, 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.

Refer to Note 10:

Debt of the audited consolidated financial statements and notes thereto included in the 2023 Annual Report for additional information regarding these debt transactions.

Debt of the Financial Statements, included elsewhere in this Report, and Note 14:

Debt of our Annual Report on Form 10-K for additional information regarding these debt transactions.

Interest income

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.

For the three and nine months ended September 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 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:

Fair Value Measures for additional information.

For the three months ended September 30, 2024, other, net represented a net loss of $12.3 million, an unfavorable impact on earnings of $13.6 million compared to a net gain of $1.3 million in the prior period.

This unfavorable impact was primarily due to the loss on the redemption of the 5.0% Senior Notes.

For the nine months ended September 30, 2024, other, net represented a net loss of $19.7 million, an unfavorable impact on earnings of $11.5 million compared to a net loss of $8.2 million in the prior period.

This unfavorable impact was primarily due to (1) 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, (2) the loss on the redemption of the 5.0% Senior Notes, and (3) losses on foreign currency forward contracts that are not designated as accounting hedges, partially offset by (1) gains on foreign

currency remeasurement of net monetary assets and (2) gains on commodity forward contracts that are not designated as accounting hedges.

Refer to Note 13:

Other, Net of our unaudited condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q, for more details regarding the components of other, net.

Provision for income taxes

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;

Fair Value Measures and Note 6:

Other, Net of the Financial Statements, included elsewhere in this Report, for additional details of our hedge accounting contracts and the components of other, net, respectively.

(Benefit from)/provision for income taxes

The (benefit from)/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.

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.

Other items impacting deferred tax expense include changes in tax rates, changes in our assessment of the realizability of our deferred tax assets, and other items as discussed below.

For the three and nine months ended September 30, 2024, the (benefit from)/provision for income taxes was impacted by (1) a deferred tax benefit of approximately $257.7 million due to a tax strategy to secure the future tax deductibility of certain Intellectual property which had a valuation allowance against it at December 31, 2023;

(2) a $12.8 million tax expense on the sale of the Insights Business;

and (3) deferred tax expense of $11.1 million on the settlement of the U.S.

qualified pension plan.

Non-GAAP Financial Measures

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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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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.

Adjusted operating margin is calculated by dividing adjusted operating income (or loss) by net revenue determined in accordance with

We define adjusted net income as follows:

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Net leverage ratio

Net leverage ratio represents net debt (total debt, finance lease and other financing obligations less cash and cash equivalents) divided by last twelve months ("LTM") adjusted EBITDA.

Net leverage ratio represents net debt (total debt, finance lease and other financing 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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These initiatives have been modified from time to time to reflect changes in overall market conditions and the competitive environment facing our business.

These initiatives include, among other items, acquisitions, divestitures, restructurings of certain business, supply chain or corporate activities, and various financing transactions.

These initiatives include, among other items, acquisitions, divestitures, restructurings of certain business, supply chain or corporate activities, and various

financing transactions.

We describe these adjustments in more detail below, each of which is net of current tax impacts, as applicable.

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includes depreciation expense associated with the step-up in fair value of assets acquired in connection with a business combination (e.g., property, plant and equipment and inventories) and amortization of intangible assets.

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.

These exclusions are made to allow for comparison to prior period operating results and to ensure that internal financial statements reflect depreciation and amortization on ordinary capital expenditures, rather than acquisition-related adjustments.

• Deferred taxes and other tax related :

includes adjustments for book-to-tax basis differences due primarily to the step-up in fair value of fixed and intangible assets and goodwill, the utilization of net operating losses, and adjustments to our valuation allowance in connection with certain acquisitions and tax law changes.

Other tax related items include certain adjustments to unrecognized tax benefits and withholding tax on repatriation of foreign earnings.

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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 June 30, 2024 and 2023.

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

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

For the three months ended September 30, 2024

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

Reported (GAAP) $ (199.2) (20.3) % $ (219.6) $ (25.0) $ (0.17)

Non-GAAP adjustments:

Restructuring related and other 26.8 2.6 (0.8) 26.0 0.17

Financing and other transaction costs 2.5 0.2 (1.0) 2.5 0.02

Step-up depreciation and amortization 37.6 3.6 — 37.6 0.25

Deferred gain on derivative instruments

Restructuring related and other (a)

210.2 21.4 (0.9) 209.3 1.39

Financing and other transaction costs (b)

131.9 13.4 (0.5) 139.5 0.92

Step-up depreciation and amortization 43.8 4.5 — 43.8 0.29

Deferred loss on derivative instruments 1.7 0.2 (0.1) 0.4 0.00

Amortization of debt issuance costs — — — 1.3 0.01

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Adjusted (non-GAAP) $ 188.4 19.2 % $ 21.1 $ 130.1 $ 0.86

For the three months ended June 30, 2023

For the three months ended September 30, 2023

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

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Non-GAAP adjustments:

Restructuring related and other 31.1 2.9 (0.6) 30.4 0.20

Financing and other transaction costs 4.3 0.4 (0.1) 3.9 0.03

Step-up depreciation and amortization 53.3 5.0 — 53.3 0.35

Deferred (gain)/loss on derivative instruments

Restructuring related and other (a)

31.5 3.2 (1.4) 30.2 0.20

Financing and other transaction costs (b)

5.7 0.6 — 6.0 0.04

Step-up depreciation and amortization 38.8 3.9 — 38.8 0.25

Deferred gain on derivative instruments (0.7) (0.1) 0.0 (0.1) 0.00

Amortization of debt issuance costs — — — 1.7 0.01

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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 six months ended June 30, 2024 and 2023.

For the six months ended June 30, 2024

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

For the nine months ended September 30, 2024

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

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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

Restructuring related and other (a)

239.4 7.9 (2.2) 237.1 1.57

Financing and other transaction costs (b)

138.7 4.6 (1.4) 159.8 1.06

Step-up depreciation and amortization 118.7 3.9 — 118.7 0.79

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

Deferred loss/(gain) on derivative instruments 1.3 0.0 1.6 (4.4) (0.03)

Amortization of debt issuance costs — — — 4.5 0.03

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Adjusted (non-GAAP) $ 573.6 19.0 % $ 66.1 $ 404.6 $ 2.68

For the six months ended June 30, 2023

For the nine months ended September 30, 2023

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

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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

Restructuring related and other (a)

65.6 2.1 (2.7) 62.9 0.41

Financing and other transaction costs (b)

14.2 0.5 2.8 17.6 0.11

Step-up depreciation and amortization 131.3 4.3 — 131.3 0.86

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Adjusted (non-GAAP) $ 590.3 19.3 % $ 49.5 $ 428.1 $ 2.80

(a) The following table presents the components of our restructuring related and other non-GAAP adjustment to net income for the three and nine months ended September 30, 2024 and 2023.

(amounts 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 September 30, For the nine months ended September 30,

(In millions) 2024 2023 2024 2023

Business and corporate repositioning (i)

$ 60.1 $ 30.7 $ 89.3 $ 66.0

150.1 0.8 150.1 (0.8)

Income tax effect (iii)

(0.9) (1.4) (2.2) (2.7)

Total non-GAAP restructuring related and other (iv)

$ 209.3 $ 30.2 $ 237.1 $ 62.9

__________________________

Primarily includes charges related to repositioning our business and corporate functions to more effectively respond to the challenges that face the business.

The three and nine months ended September 30, 2024 primarily includes (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 $ 32.5 million and $ 48.4 million, respectively, including severance, contract termination costs, and charges related to asset write-downs, (2) approximately $5.3 million and $19.9 million, respectively, of other various restructuring-related charges, (3) approximately $15.0 million in both periods of costs associated with exiting Spear, primarily recorded in restructuring and other charges, net, and (4) a $6.0 million pension settlement charge in both periods, recorded in restructuring and other charges, net.

The three and nine months ended September 30, 2023 primarily includes (1) $1.8 million and $28.4 million, respectively, of charges related to the exit the Spear Marine Business, $0.8 million and $14.4 million of which was recorded in restructuring and other charges, net, and $0.5 million and $13.0 million of which was recorded in cost of revenue, with the remainder recorded in selling general and administrative, (2) $21.4 million of charges incurred in both the three and nine months ended September 30, 2023, as part of the Q3 2023 Plan, recorded in restructuring and other charges, net, and (3) $8.2 million and $10.4 million of charges arising as an indirect result of actions taken in the Q3 2023 Plan, of which approximately $0.7 million and $2.7 million were recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue.

Relates primarily to a $ 150.1 million non-cash goodwill impairment charge recognized in the third quarter of 2024 related to the Dynapower reporting unit.

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.

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.

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.

(b) The following table presents the components of our financing and other transaction costs non-GAAP adjustment to net income for the three and nine months ended September 30, 2024 and 2023.

(amounts 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 September 30, For the nine months ended September 30,

(In millions) 2024 2023 2024 2023

Transaction (gain) / loss (i)

$ 123.4 $ 1.5 $ 126.2 (3.0)

Merger and acquisition compensation arrangements (ii)

8.5 4.2 12.6 16.2

Loss on debt financing (iii)

9.2 — 9.2 0.9

Loss/(gain) on investments (iv)

(1.1) 0.4 13.2 0.7

Income tax effect (v)

(0.5) — (1.4) 2.8

Total financing and other transaction costs (vi)

$ 139.5 $ 6.0 $ 159.8 $ 17.6

__________________________

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.

In the three and nine months ended September 30, 2024, this line includes a loss of $ 110.1 million on the sale of the Insights business.

Refer to Note 16:

Disposal for further information on this transaction.

Primarily relates to earnout compensation arrangements entered into concurrent with the closing of an acquisition.

Relates primarily to the loss on the redemption of the 5.0 % Senior Notes.

Refer to Note 10:

Deb t for additional information on financing transactions.

Represents mark-to-market losses or gains on our equity investments

We treat deferred taxes as a non-GAAP adjustment.

Accordingly, the income tax effect of financing and transaction related and other non-GAAP adjustment refers only to the current income tax effect.

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.

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 six months ended June 30,

For the nine months ended September 30,

(In millions) 2024 2023

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GAAP to adjusted corporate and other expenses.

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

For the three months ended September 30, For the nine months ended September 30,

(In millions) 2024 2023 2024 2023

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Step-up depreciation and amortization 0.2 0.4 0.8 0.7

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

Deferred loss/(gain) on derivative instruments 1.7 (0.7) 1.3 (3.9)

Total adjustments 203.5 10.9 235.2 23.3

Adjusted corporate and other expenses (non-GAAP) $ (65.4) $ (64.2) $ (207.4) $ (195.7)

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

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

GAAP to adjusted EBITDA.

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

For the three months ended September 30, For the nine months ended September 30,

(In millions) LTM 2024 2023 2024 2023

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

Net (loss)/income $ (79.5) $ (25.0) $ 62.8 $ 122.7 $ 198.3

Interest expense, net 138.6 33.1 36.9 102.8 115.1

Provision for income taxes 28.0 27.3 19.9 49.9 43.6

(Benefit from)/provision for income taxes (209.4) (219.6) 17.9 (169.7) 61.5

Depreciation expense 136.9 33.7 33.3 100.7 96.9

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Adjusted EBITDA $ 891.5 $ 217.6 $ 228.3 $ 673.3 $ 688.4

The following table provides a reconciliation of total debt, finance lease and other financing obligations in accordance with U.S.

GAAP to net leverage ratio.

(Dollars in millions) June 30,

The following table provides a reconciliation of total debt and finance lease obligations in accordance with U.S.

GAAP to gross and net leverage ratios.

(Dollars in millions) September 30,

2024 December 31,

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Total debt and finance lease obligations 3,198.1 3,399.2

debt discount, net of premium (0.9) (1.6)

debt premium, net of discount (debt discount, net of premium) 0.8 (1.6)

deferred financing costs (26.4) (24.4)

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Liquidity and Capital Resources

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,

As of September 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) September 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 earned.

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

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 June 30, 2024

As of September 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 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.

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

We have derived these summarized statements of cash flows from the Financial Statements included elsewhere in this Report.

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

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

For the six months ended

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

For the nine months ended

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

Net cash provided by/(used in):

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Operating activities.

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.

Net cash provided by operating activities for the nine months ended September 30, 2024 increased compared to the corresponding period of the prior year, primarily due to favorable changes in working capital, partially offset by lower cash provided by earnings.

Investing activities.

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).

Net cash provided by investing activities for the nine months ended September 30, 2024 was $15.2 million compared to a use of cash of $117.6 million for the corresponding period of the prior year.

This change was primarily due to the proceeds from the sale of our Insights business of $138.3 million in the nine months ended September 30, 2024.

For fiscal year 2024, we anticipate capital expenditures of approximately $165.0 million, which we expect to fund with cash on hand.

Financing activities .

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.

Net cash used in financing activities for the nine months ended September 30, 2024 decreased compared to the corresponding period of the prior year, primarily due to $500.0 million cash received from the issuance of the 6.625% Senior Notes in the second quarter of 2024, partially offset by higher payments on debt of approximately $252.2 million (reflecting the early redemption of our $700 million 5.0% Senior Notes in the third quarter of 2024 as compared to the prepayment of the Term Loan in the first half of 2023) and the payment of $79.4 million to repurchase the remaining equity interest in a former joint venture in the nine months ended September 30, 2024.

Refer to Note 12:

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Indebtedness and Liquidity

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.

As of September 30, 2024, we had $3.2 billion in gross indebtedness, which includes finance lease obligations and excludes debt discounts, premiums, and deferred financing costs.

In June 2024, our indirect, wholly-owned subsidiary, STI, completed the issuance and sale of the 6.625% Senior Notes.

In July 2024, we used the proceeds from this issuance, together with cash on hand, for the redemption in full of the 5.0% Senior Notes, which were issued by our indirect, wholly-owned subsidiary, STBV.

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.

Debt of the Financial Statements included elsewhere in this Report for additional information on these transactions and our overall debt.

Capital Resources

Senior Secured Credit Facilities

The Credit Agreement provides for the Senior Secured Credit Facilities, which consist of the Term Loan, the Revolving Credit Facility, and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances.

The credit agreement governing our secured credit facility (as amended, supplemented, waived, or otherwise modified, the "Credit Agreement") provides for the Senior Secured Credit Facilities, which consist of the Term Loan, the Revolving Credit Facility, and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances.

In the first and second quarters of 2023, we repaid the Term Loan balance in full.

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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 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.

As of September 30, 2024, we had $745.8 million available under the Revolving Credit Facility, net of $4.2 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 June 30, 2024, no amounts had been drawn against these outstanding letters of credit.

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

As of September 30, 2024, availability under the Accordion was approximately $2.8 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 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.

As of October 18, 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 provides that if our senior secured net leverage ratio exceeds a specified level, we are required to use a portion of our excess cash flow, as defined in the Credit Agreement, generated by operating, investing, or financing activities to prepay some or all of the outstanding borrowings under the Senior Secured Credit Facilities.

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 six months ended June 30, 2024.

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 nine months ended September 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 June 30, 2024, we believe we were in compliance with all covenants and default provisions under our credit arrangements.

As of September 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 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.

We currently have authorization for the September 2023 Program, under which approximately $423.1 million remained available as of September 30, 2024.

In the nine months ended September 30, 2024, we repurchased 1.3 million ordinary shares under the September 2023 Program.

In the nine months ended September 30, 2023, we repurchased 1.5 million ordinary shares under the January 2022 Program

In the nine months ended September 30, 2024 and 2023, we paid aggregate cash dividends of $54.3 million and $53.4 million, respectively.

On October 28, 2024, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable on November 27, 2024 to shareholders of record as of November 13, 2024.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update ("ASU") No.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures , to improve disclosures about a public entity's reportable segments.

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The guidance also requires that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting , in interim periods, and that a public entity provide the title and position of the chief operating decision maker.

Other requirements of the guidance are not expected to be material.

There is no change to the guidance for identification or aggregation of operating or reportable segments.

Other requirements of the guidance are not expected to be material.

2023-07 will be effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The guidance must be applied retrospectively to all prior periods presented.

The guidance will be applied retrospectively to all prior periods presented.

We adopted the guidance in FASB ASU No.

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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.

No material changes to our critical accounting policies and estimates, as previously disclosed, have occurred during the first nine months of 2024.

Quantitative and Qualitative Disclosures About Market Risk.

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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 2. Management’s Discussion and Analysis