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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 260 added, 237 removed, 709 unchanged (41% of the section changed)

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Refer to Item 1:

Business included elsewhere in this Report for additional discussion on our growth drivers.

We anticipate significant change in the markets that we serve over the next 10 years, as our customers transform their businesses and product portfolios to adjust to decarbonization trends.

Many equipment categories are electrifying, and significant investment is being made in global infrastructure to support this trend.

During fiscal year 2023, we recognized Electrification revenue of approximately $673 million.

New business wins ("NBOs") were approximately $657 million in fiscal year 2023, of which more than half were in Electrification.

We define NBOs as incremental revenue to our current base of business that is expected to be recognized on average in the fifth year after entry into the agreement, when programs typically reach their normal volume.

Accordingly, NBOs are an indicator of future revenue potential.

Business included in this Report for additional discussion on our business.

We believe regulatory requirements for safer vehicles, higher fuel efficiency, and lower emissions, as well as customer demand for operator productivity and convenience, drive the need for advancements in powertrain management, efficiency, safety, and operator controls.

These advancements lead to sensor growth rates that we expect to exceed underlying production growth in many of our key end markets, which we expect will continue to offer us significant growth opportunities.

In fiscal year 2023, according to third party data, global production of light vehicles increased approximately 9% and global production in the heavy vehicle and off-road ("HVOR") markets we serve increased approximately 1% to 2%, each from the prior year.

In fiscal year 2024, according to third party data, global production of light vehicles decreased approximately 1% and global production in the heavy vehicle and off-road ("HVOR") markets we serve decreased approximately 7%, each from the prior year.

Fiscal year 2024 highlights

In the fourth quarter of 2023, we determined that, as of October 1, 2023, our Insights reporting unit was impaired.

As a result, we recorded a $321.7 million non-cash impairment charge, representing the entire goodwill balance allocated to Insights.

This impairment was primarily driven by reprioritization of our investments into electrification.

This reprioritization evolved from an assessment of our business strategy, beginning in the second half of 2023.

With electrification as the clear future of our company and the best area of focus for management, in the fourth quarter of 2023, we decided to narrow our investment in Insights.

Our assessment of the potential of the business has not changed, but our focus has moved from growth of the business to profitability.

These decisions resulted in significant cost restructuring and a lower long-range financial forecast for the reporting unit, impacting the valuation of the business with respect to the goodwill impairment analysis.

Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.

We are considering strategic alternatives for this business as we continue to focus our investment priorities in line with our strategy.

In the year ended December 31, 2023, we committed to a plan to reorganize our business (the “Q3 2023 Plan”).

The Q3 2023 Plan, consisting of voluntary and involuntary reductions-in-force, site closures, and other cost-savings initiatives, was commenced to adjust our cost structure and business activities to better align with weaker market demand we have been experiencing due to continued economic uncertainty in many of our end markets and to take active measures to accelerate margin recovery.

Our business strategy remains the same with increasing focus and effort in penetrating the fast-growing electrification trend where we are having great success with significant NBOs.

The reductions-in-force, which are subject to the laws and regulations of the countries in which the actions are planned, are expected to impact 466 positions.

Over the life of the Q3 2023 Plan, we expect to incur restructuring charges of between $20.5 million and $25.5 million, primarily related to reductions-in-force.

The majority of the actions under the Q3 2023 Plan are expected to be completed on or before June 30, 2024.

In the year ended December 31, 2023, we recognized approximately $23.5 million of charges related to the Q3 2023 Plan.

As of December 31, 2023, our severance liability related to the Q3 2023 Plan was $6.0 million.

Refer to Note 5:

Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional information.

We expect that the actions taken in the Q3 2023 Plan will result in annualized savings of approximately $40 million to $50 million.

On June 6, 2023, we announced that we had made the decision to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”).

The exit of the Spear Marine Business was the result of a change in strategy with respect to the business and involved ceasing sales, marketing, and business operations.

It resulted in the elimination of certain positions, primarily in the U.S.

and the closure of operations in Belgium.

The Spear Marine Business had been included in the Sensing Solutions reportable segment.

Exiting the Spear Marine Business resulted in charges in the year ended December 31, 2023 of approximately $38.5 million, consisting of accelerated amortization, inventory and property, plant and equipment ("PP&E") write-downs, severance charges, and other charges, including contract termination costs.

Refer to Note 5:

Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional information on the Q3 2023 Plan and our exit from the Spear Marine Business.

In fiscal year 2023, we used $848.9 million of cash to pay debt, including prepaying the entire remaining outstanding principal on our variable-rate term loan facility ("Term Loan") balance in the first half of 2023 and the early redemption of the full $400.0 million aggregate principal amount outstanding on our 5.625% senior notes due 2024 (the "5.625% Senior Notes") in accordance with the terms of the indenture under which the 5.625% Senior Notes were issued.

In fiscal year 2024, we used $701.9 million of cash to pay debt, including the early redemption of the full $700.0 million aggregate principal amount outstanding on our 5.0% Senior Notes in accordance with the terms of the indenture under which the 5.0% Senior Notes were issued.

These repayments brought our gross outstanding indebtedness at December 31, 2024 to $3.2 billion, representing a net leverage ratio of 3.0x, compared to gross indebtedness of $3.4 billion as of December 31, 2023 (representing a net leverage ratio of 3.2x).

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Fiscal year 2024 financial summary

Our consolidated revenue increased 0.6% in fiscal year 2023 from the prior year.

Excluding a decrease of 1.4% attributed to changes in foreign currency exchange rates and an increase of 0.5% due to the net effect of acquisitions and divestitures, net revenue increased 1.5% on an organic basis.

Our consolidated revenue decreased 3.0% in fiscal year 2024 from the prior year.

Excluding a decrease of 0.7% attributed to changes in foreign currency exchange rates and a decrease of 0.8% due to the effect of divestitures, net revenue decreased 1.5% on an organic basis.

Organic revenue growth (or decline), discussed throughout this MD&A, is a financial measure not presented in accordance with U.S.

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

Organic revenue growth was primarily driven by an increase in demand in markets we serve in the Automotive, HVOR, and Aerospace businesses, content

growth, and the impact of pricing recoveries, partially offset by revenue mix, market declines, and inventory destocking in our Industrial business.

Organic revenue decline was primarily driven by revenue mix, market declines, and inventory destocking in our Industrial business, partially offset by content growth in the Automotive, HVOR, and Aerospace businesses and the impact of pricing recoveries,

Operating income for fiscal year 2024 decreased $32.4 million, or 17.8%, to $149.3 million (3.8% of net revenue) compared to $181.7 million (4.5% of net revenue) in the prior year.

This decrease was primarily due to the $321.7 million impairment of the Insights reporting unit in the fourth quarter.

In addition, operating income in the prior year included $135.1 million of gain on sale of various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business"), for which there was no comparable amount in fiscal year 2023.

Other charges during the year, such as those related to our exit from the Spear Marine Business and the entry into the Q3 2023 Plan, and the unfavorable effect of changes in foreign currency exchange rates, were partially offset by the net impacts of pricing recoveries from customers with inflation on material and logistics costs, volume leverage, and cost savings during the year resulting from repositioning actions taken in fiscal year 2022.

Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our earnings results for the year ended December 31, 2023.

This decrease was primarily driven by a decrease in revenue, an increase of $94.7 million in restructuring and other charges, net, driven by the loss on the sale of the Insights business, and a $41.5 million increase in selling, general and administrative ("SG&A") costs.

These decreases were partially offset by a $171.6 million reduction in the goodwill impairment charge taken in 2024 and lower intangible asset charges in the current year.

Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our operating earnings results for the year ended December 31, 2024.

We generated $551.5 million of operating cash flows in fiscal year 2024, ending the year with $593.7 million in cash.

In fiscal year 2023, in addition to paying $848.9 million on debt as discussed elsewhere, we used cash of approximately $88.4 million for share repurchases and $71.5 million for payment of cash dividends.

In fiscal year 2024, we will continue to execute our capital allocation strategy that is currently designed to reduce our leverage and return capital to shareholders through our dividend and opportunistic share repurchases.

In addition to the aforementioned $701.9 million of cash used to pay debt, in fiscal year 2024, we used cash of approximately $68.9 million for share repurchases and $72.2 million for payment of dividends.

In fiscal year 2025, we will continue to execute our capital allocation strategy that is currently designed to reduce our leverage and return capital to shareholders through our

dividend and opportunistic share repurchases.

This strategy reduces risk in our capital structure, lowers interest expense, and improves net income and earnings per share.

We expect improving free cash flow (cash from operations less capital expenditures) will naturally allow net leverage to decline and returns on invested capital to improve over time.

We expect improving free cash flow (net cash provided by operating activities less capital expenditures) to further reduce our net leverage ratio, and over time, we believe higher profitability will naturally allow net leverage to decline and returns on invested capital to improve.

Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of free cash flow.

In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair value.

The primary indicators of impairment were revised projections of future cash flows and actual performance that was lower than previous projections for this reporting unit.

We evaluated the goodwill of the Dynapower reporting unit for impairment using a combination of a market-based valuation method and an income-based approach which discounts forecasted cash flows.

As these assumptions were largely unobservable, the estimated fair values fall within Level 3 of the fair value hierarchy.

A change in our cash flow forecast or the discount rate used would result in an increase or decrease in our calculated fair value.

We determined that our Dynapower reporting unit was impaired, and in the third quarter of 2024, we recorded a $150.1 million non-cash goodwill impairment charge.

If Dynapower does not achieve the forecasted future cash flows, there is a possibility that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.

In August 2024, we executed a purchase agreement whereby we agreed to sell the Insights Business to a third party.

The total stated purchase price of the Insights Business was $165.0 million, subject to normal post-closing adjustments.

In the year ended December 31, 2024, we recognized a loss on sale of approximately $98.8 million, presented in restructuring and other charges, net in our consolidated statements of operations, and approximately $11.2 million of transaction-related expenses, which were presented in SG&A costs in our consolidated statements of operations.

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

On June 6, 2023, we announced that we had made the decision to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”).

In September 2024, we made the decision to exit the Spear aerospace and defense business and entered into an asset purchase agreement that closed in October 2024, wherein a third party assumed control of a majority of the remaining Spear assets.

The exit of Spear was the result of a change in strategy with respect to the business and involved ceasing sales, marketing, and business operations.

It resulted in the elimination of certain positions, primarily in the U.S., and the closure of operations in Belgium.

Spear had been included in the Sensing Solutions reportable segment.

Exiting Spear resulted in charges in the year ended December 31, 2024 of approximately $22.2 million, consisting of accelerated amortization of intangible assets, disposal of inventory and property, plant and equipment ("PP&E"), severance charges, and other charges, including contract termination costs.

Refer to Note 5:

Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional information on our exit from Spear.

Selected Segment Information

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Set forth below is selected information for each of these segments for the periods presented.

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

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.

The most significant changes include combining our Automotive and HVOR businesses (with the combined business remaining in Performance Sensing) and moving the various assets and liabilities comprising our Insights Business out of Performance Sensing to a new operating segment, which is not aggregated within either of our reportable segments.

We combined the Automotive and HVOR businesses to better leverage our core capabilities and prioritize product focus.

We also moved certain shorter-cycle businesses from Performance Sensing to Sensing Solutions, which will benefit from organizing these businesses together, by allowing us to scale core capabilities and better serve our customers.

The amounts previously reported in the tables below for the years ended December 31, 2023 and 2022 have been retrospectively recast to reflect this change.

Amounts and percentages in the tables below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

The following table presents net revenue by segment for the identified periods:

The following table presents net revenue by segment and non-segment for the identified periods:

For the year ended December 31,

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Sensing Solutions 1,061.3 27.0 1,156.7 28.5 1,210.7 30.0

127.9 3.3 147.5 3.6 173.3 4.3

Total net revenue $ 3,932.8 100.0 % $ 4,054.1 100.0 % $ 4,029.3 100.0 %

The following table presents segment operating income in U.S.

dollars ("USD") and as a percentage of segment net revenue for the identified periods:

dollars ("USD") and as a percentage of segment and non-segment net revenue for the identified periods:

For the year ended December 31,

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Sensing Solutions 312.6 29.5 % 338.2 29.2 % 356.7 29.5 %

Total segment operating income $ 1,043.3 $ 1,051.7 $ 1,070.4

For a reconciliation of total segment operating income to consolidated operating income, refer to Note 20:

28.1 21.9 % 7.5 5.1 % 11.1 6.4 %

Total segment and other operating income

$ 1,016.8 $ 1,043.3 $ 1,051.7

For a reconciliation of total segment and non-segment operating income to consolidated operating income, refer to Note 20:

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

Effective February 1, 2024, we combined our Automotive and HVOR businesses to better leverage core capabilities and prioritize product focus into one business, Vehicles, under the Performance Sensing reportable segment.

The Sensing Solutions reportable segment will benefit from organizing our predominantly shorter-cycle businesses together, by allowing us to scale core capabilities and better serve our customers.

We are still evaluating what impact this reorganization will have on our reportable segments, operating segments, and reporting units in the first quarter of 2024.

Selected Geographic Information

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Industrial 14.2 % 16.3 % 18.1 %

Appliance and HVAC (1)

4.0 % 4.1 % 4.7 %

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A portion of our production materials contains certain commodities, resins, and metals, the cost of which may vary with underlying pricing and foreign currency exchange rates.

We use forward contracts to economically hedge a portion of our exposure to the potential change in prices associated with certain of these commodities, including the impact of exchange rate fluctuations.

We use forward contracts to economically hedge a portion of our exposure to the potential change in prices associated with certain of these commodities, and we use forward contracts to economically hedge our exposure to foreign exchange rate fluctuations.

The terms of these forward contracts fix the price of these commodities at a future date for various notional amounts.

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• transfer of production to our lower-cost manufacturing facilities;

• changes in depreciation expense, including those arising from the adjustment of PP&E to fair value associated with acquisitions;

• changes in depreciation expense;

• fluctuations in foreign currency exchange rates;

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• acquisitions and divestitures – acquired and divested businesses may generate higher or lower cost of revenue as a percentage of net revenue than our core business.

• the increase in the carrying value of inventory adjusted to fair value upon the application of purchase accounting associated with acquisitions.

Research and development expense

We develop products that address increasingly complex engineering and operating performance requirements to help our customers solve their most difficult challenges in the automotive, HVOR, fleet management, industrial, clean energy, and aerospace industries.

We develop products that address increasingly complex engineering and operating performance requirements to help our customers solve their most difficult challenges in the automotive, HVOR, industrial, clean energy, and aerospace end markets.

We believe that continued focused investment in research and development ("R&D") is critical to our future growth and maintaining our leadership positions in the markets we serve.

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In addition, we continually consider new technologies where we may have expertise for potential investment or acquisition.

A large portion of our R&D activities is directed towards technologies and market trends that we believe have the potential for significant future growth, but that relate to products that are not currently within our core business or include new features and capabilities for existing products.

Expenses related to these activities are less likely to result in increased near-term revenue than our more mainstream development activities.

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Selling, general and administrative expense

Selling, general and administrative ("SG&A") expense consists of all expenditures incurred in connection with the sale and marketing of our products, as well as administrative overhead costs, including:

SG&A expense consists of all expenditures incurred in connection with the sale and marketing of our products, as well as administrative overhead costs, including:

salary and benefit costs for sales and marketing personnel and administrative staff;

share-based incentive compensation expense;

share-based compensation expense;

charges related to the use and maintenance of administrative offices, including depreciation expense;

other administrative costs, including expenses relating to information systems, human resources, and legal, finance, and accounting services;

other administrative costs, including expenses relating to information systems, human resources, and legal, finance,

and accounting services;

other selling and marketing related costs, such as expenses incurred in connection with travel and communications;

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Interest income relates to interest earned on our cash and cash equivalent balances, and varies according to the balances in, and the interest rates provided by, these investments.

Other, net primarily includes gains and losses associated with the remeasurement of non-USD denominated monetary assets and liabilities into USD, changes in the fair value of derivative financial instruments not designated as cash flow hedges, mark-to-market gains and losses on investments, losses on debt financing transactions, and net periodic benefit cost, excluding

service cost.

Other, net primarily includes gains and losses associated with the remeasurement of monetary assets and liabilities denominated in a currency that is not the functional currency, changes in the fair value of derivative financial instruments not designated as cash flow hedges, mark-to-market gains and losses on investments, losses on debt financing transactions, and net periodic benefit cost, excluding service cost.

Amounts recognized in other, net vary according to changes in foreign currency exchange rates, changes in the forward prices for the foreign currencies and commodities that we hedge, the value of equity investments recorded on our consolidated balance sheets at fair value, the number and magnitude of debt financing transactions we undertake, and the change in funded status of our pension and other post-retirement benefit plans.

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and withholding taxes related to interest, royalties, and repatriation of foreign earnings;

and deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to the step-up in fair value of fixed and intangible assets, including goodwill, acquired in connection with business combination transactions, the utilization of net operating losses, changes in tax rates, and changes in our assessment of the realizability of our deferred tax assets.

and deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to the intangible assets, including goodwill, acquired in connection with business combination transactions, the utilization of net operating losses, changes in tax rates, and changes in our assessment of the realizability of our deferred tax assets.

Our current tax expense is favorably impacted by the amortization of definite-lived intangible assets and other tax benefits derived from our operating and capital structure, including tax incentives in both the U.K.

and China as well as favorable tax status in Mexico.

In addition, our tax structure takes advantage of participation exemption regimes that permit the receipt of intercompany dividends without incurring taxable income in those jurisdictions.

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• establishing or releasing a portion of the valuation allowance related to our gross deferred tax assets;

• foreign tax rate differential - we operate in multiple jurisdictions including but not limited to Bulgaria, China, Malaysia, Malta, the Netherlands, South Korea, the U.S., and the U.K.

• foreign tax rate differential - we operate in multiple jurisdictions including but not limited to Bulgaria, China, Malaysia, Malta, Mexico, the Netherlands, Switzerland, the U.S., and the U.K.

This can result in a foreign tax rate differential that may reflect a tax benefit or detriment.

This foreign tax rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates, tax holidays, and favorable tax regimes available to certain of our foreign subsidiaries;

• changes in tax laws and rates, including the potential or actual impact of activities by the Organization for Economic Co-operation and Development ("OECD") related to the European Union's ("EU's") Pillar Two directive and the European Commission ("EC") challenges to sovereign EU member states;

• changes in tax laws and rates, including the potential or actual impact of activities by the Organization for Economic Co-operation and Development ("OECD") initiatives such as Pillar Two, the European Commission ("EC") challenges to

sovereign EU member states, and uncertainty surrounding potential changes to United States tax laws and regulations under the new administration;

• losses incurred in certain jurisdictions, which cannot be currently benefited, if it is not more likely than not that the associated deferred tax asset will be realized in the foreseeable future;

• foreign currency exchange gains and losses;

• as a result of income tax audit settlements, final assessments, or lapse of applicable statutes of limitation, we may recognize an income tax expense or benefit including adjustment of previously accrued interest and penalties;

• income tax audit settlements, final assessments, or lapse of applicable statutes of limitation, which may result in recognizing an income tax expense or benefit including adjustment of previously accrued interest and penalties;

• in certain jurisdictions, we recognize withholding and other taxes on intercompany payments, including dividends, and such taxes are deducted if they cannot be credited against the recipient's tax liability in its country of residence.

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We base our estimates on historical experience and assumptions believed to be reasonable under the circumstances, and we re-evaluate such estimates on an ongoing basis.

Actual results could differ from our estimates under different assumptions or conditions.

Actual results may materially differ from our estimates under different assumptions or conditions.

Our significant accounting policies and estimates are more fully described in Note 2:

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We have derived these results of operations from our Financial Statements.

The amounts previously reported in the tables below for the years ended December 31, 2022 and 2021 have been retrospectively recast to reflect this change.

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.

The most significant changes include combining our Automotive and HVOR businesses (with the combined business remaining in Performance Sensing) and moving the Insights Business out of Performance Sensing to a new operating segment, which is not aggregated within either of our reportable segments.

We combined the Automotive and HVOR businesses to better leverage our core capabilities and prioritize product focus.

We also moved certain shorter-cycle businesses from Performance Sensing to Sensing Solutions, which will benefit from organizing our predominantly shorter-cycle businesses together, by allowing us to scale core capabilities and better serve our customers.

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

Amounts and percentages in the table below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

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Sensing Solutions 1,061.3 27.0 1,156.7 28.5 1,210.7 30.0

127.9 3.3 147.5 3.6 173.3 4.3

Total net revenue 3,932.8 100.0 % 4,054.1 100.0 % 4,029.3 100.0 %

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Other, net (21.5) (0.5) (13.0) (0.3) (94.6) (2.3)

Income before taxes 17.8 0.4 396.7 9.8 413.9 10.8

Provision for income taxes

(Loss)/income before taxes

(11.8) (0.3) 17.8 0.4 396.7 9.8

Net (loss)/income

(Benefit from)/provision for income taxes

(140.3) (3.6) 21.8 0.5 86.0 2.1

Net income/(loss)

$ 128.5 3.3 % $ (3.9) (0.1) % $ 310.7 7.7 %

The discussion that follows compares operating results for fiscal year 2024 to fiscal year 2023.

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The below discussion provides information on the material factors impacting fiscal year 2024 compared to fiscal year 2023.

Net revenue for the year ended December 31, 2023 increased 0.6% compared to the prior year.

Net revenue increased 1.5% on an organic basis, which excludes a decrease of 1.4% attributed to changes in foreign currency exchange rates and an increase of 0.5% due to the net effect of acquisitions and divestitures.

Net revenue for the year ended December 31, 2024 decreased 3.0% compared to the prior year.

Net revenue decreased 1.5% on an organic basis, which excludes a decrease of 0.7% attributed to changes in foreign currency exchange rates and a decrease of 0.8% due to the effect of a divestiture.

Performance Sensing

Performance Sensing net revenue for the year ended December 31, 2023 increased 2.8% compared to the prior year.

Excluding a decrease of 1.6% attributed to changes in foreign currency exchange rates and an increase of 0.1% due to the effect of acquisitions, Performance Sensing net revenue increased 4.3% on an organic basis.

Both the Automotive and HVOR operating segments contributed to these results as discussed below.

Automotive net revenue for the year ended December 31, 2023 increased 3.3% compared to the prior year.

Excluding a decrease of 1.8% attributed to changes in foreign currency exchange rates, automotive net revenue increased 5.1% on an organic basis.

This organic revenue growth was primarily due to market growth, partially offset by unfavorable revenue mix.

HVOR net revenue for the year ended December 31, 2023 increased 1.8% compared to the prior year.

Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rates and an increase of 0.3% due to the effect of acquisitions, HVOR net revenue increased 2.4% on an organic basis.

This organic revenue growth was primarily due to market and content growth, partially offset by channel inventory de-stocking.

Performance Sensing net revenue for the year ended December 31, 2024 decreased 0.2% compared to the prior year.

Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rate, Performance Sensing net revenue increased 0.7% on an organic basis.

Automotive end market net revenue for the year ended December 31, 2024 increased 0.6% compared to the prior year.

Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rates, automotive end market net revenue increased 1.5% on an organic basis.

This organic revenue growth was primarily due to content growth, partially offset by unfavorable market conditions.

HVOR end market net revenue for the year ended December 31, 2024 decreased 2.7% compared to the prior year.

Excluding a decrease of 0.6% attributed to changes in foreign currency exchange rates, HVOR end market net revenue decreased 2.1% on an organic basis.

This organic revenue decline was primarily due to market decline, partially offset by content growth.

Sensing Solutions

Sensing Solutions net revenue for the year ended December 31, 2024 decreased 8.2% compared to the prior year.

Excluding a decrease of 0.9% attributed to changes in foreign currency exchange rates and an increase of 1.7% due to the net effect of acquisitions and divestitures, Sensing Solutions net revenue decreased 6.0% on an organic basis, which primarily reflects weakness in our industrial markets and inventory destocking, partially offset by market and content growth in the aerospace business and pricing.

Excluding a decrease of 0.3% attributed to changes in foreign currency exchange rates, Sensing Solutions net revenue decreased 7.9% on an organic basis, which primarily reflects weakness in our industrial content and inventory destocking, partially offset by market and content growth in the aerospace business.

Operating costs and expenses

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Cost of revenue

Cost of revenue as a percentage of net revenue increased in the year ended December 31, 2023, primarily due to (1) unfavorable product mix, (2) the unfavorable effect of changes in foreign currency exchange rates, (3) the impact of certain actions taken in relation to the Q3 2023 Plan, (4) the net unfavorable impacts of acquisitions and divestitures on gross margin, and (5) the $10.5 million write-down of inventory as a result of our decision to exit the Spear Marine Business, partially offset by (1) the net impacts of pricing recoveries from customers, inflation on material and logistics costs, and volume leverage, and (2) cost savings as a result of repositioning actions taken in fiscal year 2022.

In the year ended December 31, 2024, cost of revenue as a percentage of net revenue increased versus the prior year period, due to (1) higher depreciation expense, (2) lower net revenues, and (3) the net impacts of customer pricing and manufacturing efficiencies.

Refer to Note 5:

Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional details regarding our exit of the Spear Marine Business and actions taken as part of the Q3 2023 Plan.

Restructuring and Other Charges, Net , of our Financial Statements included elsewhere in this Report for additional details regarding our exit of the Spear businesses.

Research and development expense

R&D expense decreased in the year ended December 31, 2023, primarily as a result of lower costs as a result of certain repositioning actions taken in fiscal year 2022 that were not part of a larger restructuring plan.

R&D expense in the year ended December 31, 2024 did not fluctuate materially from the prior year period.

Selling, general and administrative expense

SG&A expense decreased in the year ended December 31, 2023, primarily as a result of (1) cost savings as a result of repositioning actions taken in fiscal year 2022, (2) lower selling expenses, (3) lower compensation expense, and (4) lower transaction costs as a result of reduced mergers and acquisitions activity, partially offset by increased SG&A expense from our acquisitions (net of divestitures).

SG&A expense increased in the year ended December 31, 2024 due primarily to (1) $20.3 million of accelerated amortization recorded on right-of-use lease assets that the Company intends to cease using in the near term, (2) higher share-based compensation expense, and (3) additional costs incurred to remediate the material weaknesses identified in our internal controls over financial reporting for the year ended December 31, 2023.

Refer to Note 21:

Acquisitions and Divestitures of our Financial Statements included elsewhere in this Report for additional information related to our acquisitions and divestitures.

Divestitures of our Financial Statements included elsewhere in this Report for additional information related to our acquisitions and divestitures.

Amortization of intangible assets

Amortization expense increased in the year ended December 31, 2023, primarily due to (1) increased amortization due to newly acquired intangible assets and (2) a charge of $13.5 million in the second quarter of 2023 for accelerated amortization of intangible assets due to our exit from the Spear Marine Business, partially offset by the effect of amortization of intangible assets in accordance with their expected economic benefit.

Amortization expense decreased in the year ended December 31, 2024, primarily due to the divestiture of the Insights Business resulting in approximately $12.0 million lower amortization expense during fiscal year 2024 and the effect of amortization of intangible assets in accordance with their expected economic benefit, which generally results in acceleration of amortization expense in the early years of the life of an intangible asset.

We expect amortization expense to be approximately $80.1 million in fiscal year 2025.

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Restructuring and Other Charges, Net and Note 11:

Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information regarding the charges related to the exit of the Spear Marine Business and amortization on our intangible assets, respectively.

Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information regarding the charges related to the exit of the Spear businesses and amortization of our intangible assets, respectively.

Goodwill impairment charge

In the year ended December 31, 2023, we recorded a $321.7 million non-cash goodwill impairment charge in the fourth quarter of 2023, representing the entire goodwill balance allocated to Insights.

This impairment was primarily driven by reprioritization of our investments into electrification in accordance with our business strategy.

With electrification as the clear future of our company and the best area of focus for management, we narrowed our investment in Insights.

Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.

In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair value.

Accordingly, we evaluated the Dynapower reporting unit for impairment and determined that it was impaired.

In the third quarter of 2024, we recorded a $150.1 million non-cash impairment charge.

This impairment was primarily driven by a lower long-range financial forecast resulting from specific discrete events that changed the timing of our

forecasted performance.

If Dynapower does not achieve the forecasted future cash flows, or if there were a change in the discount rate or other valuation inputs, there is a possibility that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.

Restructuring and other charges, net

We recorded a net charge of $54.5 million in restructuring and other charges, net in the year ended December 31, 2023, an unfavorable change in earnings compared to a net gain of $66.7 million in the prior year.

This change was primarily driven by (1) the non-recurrence of the $135.1 million gain on the sale of the Qinex Business in fiscal year 2022, (2) charges incurred as a result of the entry into the Q3 2023 Plan, and (3) charges incurred as a result of our exit from the Spear Marine Business, partially offset by (1) a reduction in expense for acquisition-related compensation arrangements, and (2) the non-recurrence of $15.6 million of transaction-related charges to sell the Qinex Business in fiscal year 2022.

Restructuring and other charges, net increased in the year ended December 31, 2024 versus the prior year period, due to a $98.8 million loss recognized on the sale of the Insights Business partially offset by a decrease in net severance charges recognized.,..

Refer to Note 5:

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Operating income

In the year ended December 31, 2023, operating income decreased $488.4 million or 72.9%, to $181.7 million (4.5% of net revenue) compared to $670.1 million (16.6% of net revenue) in the prior year, primarily due to (1) the $321.7 million goodwill impairment charge related to the Insights reporting unit, (2) the non-recurrence of the $119.5 million gain on the sale of the Qinex Business in fiscal year 2022, net of the related transaction costs, (3) $38.5 million of charges incurred as a result of our exit from the Spear Marine Business, (4) the unfavorable effect of changes in foreign currency exchange rates, (5) charges incurred related to the Q3 2023 Plan, (6) unfavorable product mix, and (7) increased amortization of intangible assets as a result of new acquisitions, partially offset by (1) cost savings as a result of repositioning actions taken in fiscal year 2022, (2) the net impacts of pricing recoveries from customers, inflation on material and logistics costs, and volume leverage, and (3) lower expense for acquisition-related compensation arrangements.

In the year ended December 31, 2024, operating income decreased $32.4 million, or 17.8%, to $149.3 million (3.8% of net revenue) compared to $181.7 million (4.5% of net revenue) in the prior year, primarily due to (1) a $150.1 million goodwill impairment charge related to the Dynapower business, (2) a $98.8 million loss on the sale of the Insights Business, (3) higher SG&A expense, (4) the impact of organic revenue declines together with the net impact of customer pricing and manufacturing efficiencies, and (5) the unfavorable impact of foreign exchange rates, partially offset by (1) a $321.7 million goodwill impairment charge related to the Insights reporting unit in the prior year and (2) a $28.1 million decrease in amortization of intangibles.

Interest expense

In the year ended December 31, 2023, interest expense decreased $13.4 million from the prior period, primarily due to the early payment on the Term Loan in the first half of 2023.

In the year ended December 31, 2024, interest expense decreased $26.4 million from the prior period, primarily due to lower interest expense on (1) the 5.0% Senior Notes, which were redeemed in July 2024, (2) the 5.625% Senior Notes, which were redeemed in the fourth quarter of 2023, and (3) the Term Loan, which was paid in full in the second quarter of 2023, partially offset by higher interest expense related to the 6.625% Senior Notes, which were issued in June 2024.

Refer to Note 14:

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Interest income

In the year ended December 31, 2023, interest income increased $14.6 million compared to the prior period, primarily due to higher interest rates, partially offset by lower cash balances.

In the year ended December 31, 2024, interest income decreased $15.1 million compared to the prior period, primarily due to lower cash balances, as we used cash on hand to pay down debt.

Other, net for the years ended December 31, 2024, 2023, and 2022 consisted of the following (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

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(In millions) 2024 2023 2022

Currency remeasurement (loss)/gain on net monetary assets (1)

Currency remeasurement gain/(loss) on net monetary assets (1)

$ 4.0 $ (20.2) $ (18.2)

Gain/(loss) on foreign currency forward contracts (2)

(Loss)/gain on foreign currency forward contracts (2)

(2.6) 4.2 4.3

Loss on commodity forward contracts (2)

Gain/(loss) on commodity forward contracts (2)

3.5 (2.8) (3.4)

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__________________________

(1) Relates to the remeasurement of non-USD denominated monetary assets and liabilities into USD.

(1) Relates to the remeasurement of foreign denominated monetary assets and liabilities into the functional currency.

(2) Relates to changes in the fair value of derivative financial instruments that are not designated as hedges.

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(4) The year ended December 31, 2022 primarily relates to mark-to-market losses on our investment in Quanergy Systems, Inc.

("Quanergy"), as disclosed in Note 18:

Fair Value Measures of our Financial Statements included elsewhere in this Report.

Provision for income taxes

The components of provision for income taxes for the years ended December 31, 2023, 2022, and 2021 are described in more detail in the table below, reconciled to the U.S.

("Quanergy").

(Benefit from)/provision for income taxes

The components of (benefit from)/provision for income taxes for the years ended December 31, 2024, 2023, and 2022 are described in more detail in the table below, reconciled to the U.S.

statutory rate for each year (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

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$ (2.5) $ 3.7 $ 83.3

Dispositions and capital restructurings (6)

Capital restructurings and dispositions (6)

40.6 (286.4) 4.5

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(10.4) (9.0) (10.8)

Unrealized foreign currency exchange losses/(gains), net 1.5 9.3 (6.1)

Unrealized foreign currency exchange losses

Reserve for tax exposure (0.9) 1.1 1.3

1 unchanged sentence

(2.6) (0.3) 2.6

Provision for income taxes

(10.9) (5.2) 12.1

(Benefit from)/provision for income taxes

$ (140.3) $ 21.8 $ 86.0

__________________________

(1) Represents the product of the applicable statutory tax rate and income before taxes, as reported in the consolidated statements of operations.

(2) We operate in multiple jurisdictions, including but not limited to Bulgaria, China, Malaysia, Malta, Mexico, the Netherlands, South Korea, the U.S., and the U.K.

(2) We operate in multiple jurisdictions, including but not limited to Bulgaria, China, Malaysia, Malta, Mexico, the Netherlands, Switzerland, the U.S., and the U.K.

This can result in a foreign tax rate differential that may reflect a tax benefit or detriment.

This foreign tax rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates.

Certain of our subsidiaries are currently eligible, or have been eligible, for tax exemptions or reduced tax rates in their respective jurisdictions.

(3) During the year ended December 31, 2023, we incurred a non-cash impairment charge for goodwill that is nondeductible for tax purposes.

(4) During the years ended December 31, 2023, 2022, and 2021, we established an additional valuation allowance and recognized a deferred tax expense.

The valuation allowance as of December 31, 2023 and 2022 was $569.6 million and $249.5 million, respectively.

The increase in valuation allowance during the year ended December 31, 2023 is principally due to our inability to recognize the future tax benefits associated with a $300.0 million deferred tax asset created upon the transfer of certain intellectual property rights.

A large portion of our valuation allowance is against interest carryforwards due to our assessment of our inability to utilize these carryforwards based on our forecasts of future taxable income.

The remaining valuation allowance primarily relates to foreign tax credits, capital loss carryforwards, goodwill tax basis, and net operating losses in jurisdictions outside the U.S.

It is more likely than not that these attributes will not be utilized in the foreseeable future.

However, any future release of all or a portion of this valuation allowance resulting from a change in this assessment will impact our future provision for (or benefit from) income taxes.

This differential can vary annually based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates.

Additionally, one of our subsidiaries was eligible for a reduced tax rate in China through December 31, 2024.

The impact on current tax expense of this reduced corporate income tax rate is included in the foreign tax rate differential, and the impact of the deferred tax remeasurement is included in the change in tax laws or rates.

(3) During the years ended December 31, 2024 and 2023, we incurred a non-cash impairment charge for goodwill that is nondeductible for tax purposes.

(4) During the year ended December 31, 2024, we implemented a strategy to secure the future tax deductibility of certain intellectual property, leading to a $257.7 million reduction in the valuation allowance against this deferred tax asset, initially established in the year ended December 31, 2023.

This reduction was counterbalanced by an increase in the valuation allowance due to losses from the sale of the Insights Business.

(5) In China, we benefit from the R&D super deduction regime.

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In the U.S., we benefit from the federal R&D credit.

(6) During the year ended December 31, 2023, we recorded a deferred tax benefit related to the intercompany transfer of certain intellectual property rights.

Based on our corporate structure at December 31, 2023, it is more likely than not that the future tax benefits associated with this intercompany transfer will not be realized.

As such, this benefit has been fully offset by a valuation allowance.

The increase in our effective tax rate for the year ended December 31, 2022 is due to the tax accounting impacts of the divestiture of the Qinex Business, partially offset by separate intangible property transfers.

(6) The increase in our effective tax rate for the year ended December 31, 2024, is primarily due to the strategy executed to secure the future deductibility of certain intellectual property rights.

This unfavorable impact was partially offset by losses from the sale of the Insights business.

For the year ended December 31, 2023, the transfer of these intellectual property rights led to the recording of a deferred tax asset with a full valuation allowance.

Additionally, the increase in our effective tax rate for the year ended December 31, 2022, was due to the tax accounting impacts of the divestiture of the Qinex Business, partially offset by separate intangible prop erty transfers.

(7) Refer to Note 7:

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Organic revenue growth (or decline) is defined as the reported percentage change in net revenue, calculated in accordance with U.S.

GAAP, excluding the period-over-period impact of foreign currency exchange rate differences as well as the net impact of material acquisitions and divestitures for the 12-month period following the respective transaction date(s).

GAAP, excluding the period-over-period impact of foreign currency exchange rate differences (or "constant currency") as well as the net impact of material acquisitions and divestitures for the 12-month period following the respective transaction date(s).

We believe that organic revenue growth (or decline) provides investors with helpful information with respect to our operating performance, and we use organic revenue growth (or decline) to evaluate our ongoing operations as well as for internal planning and forecasting purposes.

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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.

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

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

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GAAP, excluding certain non-GAAP adjustments which are described under the heading Non-GAAP adjustments below.

Adjusted EPS is calculated by dividing adjusted net income by the number of diluted weighted-average ordinary shares outstanding in the period.

We may also refer to certain of these measures, or changes in these measures, on a constant currency basis.

Adjusted operating margin calculated on a constant currency basis is determined by stating revenues and expenses at prior period foreign currency exchange rates and excludes the impact of foreign currency exchange rates on all hedges.

Adjusted EPS on a constant currency basis is determined in the same manner as adjusted operating margin, but also excludes the change in gain or loss on the remeasurement of monetary assets and liabilities.

Adjusted EPS is calculated by dividing adjusted net income by the number of diluted weighted-average ordinary shares outstanding in the period as determined in accordance with U.S.

Management uses adjusted operating income, adjusted operating margin, adjusted net income, and adjusted EPS (and the constant currency equivalent of each) as measures of operating performance, for planning purposes (including the preparation of our annual operating budget), to allocate resources to enhance the financial performance of our business, to evaluate the effectiveness of our business strategies, in communications with our Board of Directors and investors concerning our financial performance, and as factors in determining compensation for certain employees.

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Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S.

GAAP, excluding interest expense, net, provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable:

GAAP, excluding interest expense, interest income, and provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable:

(1) restructuring related and other, (2) financing and other transaction costs, and (3) deferred loss or gain on derivative instruments.

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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 :

includes unrealized losses or gains on derivative instruments that do not qualify for hedge accounting as well as the impact of commodity prices on our raw material costs relative to the strike price on our commodity forward contracts.

• Step-up depreciation and amortization :

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

• Amortization of intangible assets :

Beginning with the three months ended December 31, 2024, we started adjusting operating income and net income to exclude the amortization of all our intangible assets, and we discontinued the use of adjustments to exclude step-up depreciation in our non-GAAP measures.

Prior periods have not been recast.

• 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.

includes adjustments for deferred taxes and other timing differences including, but not limited to, book-to-tax basis differences on the fair value of intangible assets and goodwill, the utilization of net operating losses, and adjustments to our valuation allowance in connection with certain transactions and tax law changes.

Other tax related items include certain adjustments to unrecognized tax benefits and withholding tax on

repatriation of foreign earnings.

• Amortization of debt issuance costs:

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321.4 8.2 (5.1) 316.4 2.10

Financing and other transaction costs

Financing and other transaction costs (b)

133.1 3.4 (1.4) 155.4 1.03

Step-up depreciation and amortization (b)

Amortization of intangible assets (c)

142.1 3.6 — 142.1 0.94

Deferred gain on derivative instruments

Deferred loss/(gain) on derivative instruments

2.6 0.1 0.5 (0.4) —

Amortization of debt issuance costs — — — 5.7 0.04

Deferred taxes and other tax related

Deferred taxes and other tax related (d)

— — (228.7) (228.7) (1.52)

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411.5 10.2 (3.7) 407.8 2.67

Financing and other transaction costs (c)

Financing and other transaction costs (b)

16.3 0.4 2.7 24.2 0.16

Step-up depreciation and amortization 148.3 3.7 — 148.3 0.95

Deferred (gain)/loss on derivative instruments

Amortization of intangible assets (c)

168.6 4.2 — 168.6 1.11

Deferred gain on derivative instruments

(4.1) (0.1) 0.3 (1.7) (0.01)

Amortization of debt issuance costs — — — 6.8 0.04

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36.5 0.9 (3.5) 34.5 0.22

Financing and other transaction costs (e)

Financing and other transaction costs (b)

(75.6) (1.9) 2.8 10.7 0.07

Step-up depreciation and amortization

Amortization of intangible assets (c)

148.3 3.7 — 148.3 0.95

Deferred loss on derivative instruments

Deferred (gain)/loss on derivative instruments

(1.5) 0.0 (0.4) 1.5 0.01

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$ 171.3 $ 77.6 $ 27.2

Supply chain repositioning and transition (ii)

Pre-acquisition legal matters (iii)

150.1 333.8 10.8

Income tax effect (v)

Income tax effect (iii)

(5.1) (3.7) (3.5)

Total non-GAAP restructuring related and other (vi)

Total non-GAAP restructuring related and other (iv)

$ 316.4 $ 407.8 $ 34.5

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

Fiscal year 2023 includes (1) $28.8 million of charges related to the exit the Spear Marine Business, $14.4 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue, (2) $23.5 million of charges incurred as part of the Q3 2023 Plan, recorded in restructuring and other charges, net, and (3) $18.8 million of charges arising as an indirect result of actions taken in the Q3 2023 Plan, of which approximately $2.1 million was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue.

Primarily includes costs related to optimization of our manufacturing processes to increase productivity and rationalize our manufacturing footprint and supply chain workforce rationalization.

Represents charges incurred related to legal matters associated with acquired businesses, for which new information is brought to light after the measurement period for the business combination is closed, but for which the liability relates to events or activities that occurred prior to our acquisition of the business.

Relates primarily to a $321.7 million non-cash goodwill impairment charge recognized in the fourth quarter of 2023 related to the Insights reporting unit.

Fiscal year 2024 included (1) certain actions related to restructuring of our IT operations and product lifecycle management including product line discontinuations within the Sensing Solutions segment, resulting in total costs of $46.7 million, including severance, contract termination costs, and charges related to asset write-downs, (2) approximately $105.8 million, of other various restructuring-related charges, including those related to our 2H 2024 Plan, (3) approximately $12.6 million of costs associated with exiting Spear, primarily recorded in restructuring and other charges, net, and (4) a $6.2 million pension settlement charge, recorded in restructuring and other charges, net.

Fiscal year 2023 primarily included (1) $28.8 million of charges related to the exit the Spear Marine Business, $14.5 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue, (2) $23.5 million of charges incurred as part of the Q3 2023 Plan, recorded in restructuring and other charges, net, and (3) $18.8 million of charges arising as a result of actions taken in the Q3 2023 Plan, of which approximately $2.1 million was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue.

Fiscal year 2024 primarily relates to a $150.1 million non-cash goodwill impairment charge related to the Dynapower reporting unit.

Fiscal year 2023 primarily relates to a $321.7 million non-cash goodwill impairment charge related to the Insights reporting unit.

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.

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Certain portions of these adjustments are non-operating and are excluded from the non-GAAP adjustments to operating income.

(b) Step-up depreciation and amortization in the year ended December 31, 2023 includes $13.5 million of accelerated amortization related to the exit of the Spear Marine Business in the second quarter of 2023.

(c) Financing and other transaction costs in the year ended December 31, 2022 includes gains of $135.1 million and $9.4 million on the sale of the Qinex Business and changes in the fair value of acquisition-related contingent consideration, respectively, partially offset by $48.9 million of expense related to compensation arrangements entered into concurrent with the closing of acquisitions, each of which were recorded in restructuring and other charges, net.

Also includes $75.6 million of mark-to-market losses on our equity investments, primarily our investment in Quanergy, which are presented in other, net in our consolidated statements of operations.

(d) Deferred taxes and other tax related adjustments for the years ended December 31, 2022 and 2021 include current tax expense of $14.7 million and $10.9 million, respectively, related to the repatriation of earnings from certain Asian subsidiaries to their parent companies in the Netherlands.

(b) The following table presents the components of our financing and other transaction costs non-GAAP adjustment to net income for fiscal years 2024, 2023, and 2022 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

For the year ended December 31,

(In millions) 2024 2023 2022

Transaction loss/(gain), net (i)

$ 121.9 $ (1.2) $ (115.4)

Merger and acquisition compensation arrangements (ii)

11.1 17.4 42.3

Loss on debt financing (iii)

Loss/(gain) on investments (iv)

14.0 (0.2) 75.6

Income tax effect (v)

(1.4) 2.7 2.8

Total financing and other transaction costs (vi)

$ 155.4 $ 24.2 $ 10.7

__________________________

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.

Fiscal year 2024 includes a loss of $98.8 million on the sale of the Insights Business.

Fiscal year 2022 includes gains of $135.1 million on the sale of the various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business").

Primarily relates to earnout compensation arrangements entered into concurrent with the closing of an acquisition and compensation in connection with the closing of a transaction.

Fiscal year 2024 amounts relate to the redemption of the 5.0% Senior Notes.

Fiscal year 2023 amounts relate to the redemption of the 5.625% Senior Notes and the prepayment on the Term Loan.

Fiscal year 2022 amounts relate to the redemption of the 4.875% Senior Notes.

Refer to Note 14:

Deb t for additional information on financing transactions.

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

In fiscal year 2022, this represents losses on our investment in Quanergy, which are presented in other, net in our consolidated statements of operations.

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.

(c) In the three months ended December 31, 2024, we discontinued the use of adjustments to exclude step-up depreciation and amortization in our non-GAAP measures and we adjusted operating income and net income to exclude the amortization of all our intangible assets.

The years ended December 31, 2023 and 2022 have not been recast.

If we had recast these non-GAAP measures for the years ended December 31, 2024, 2023, and 2022, adjusted operating income and adjusted net income would have increased by an additional $3.6 million, $5.3 million and $5.5 million, respectively.

(d) Deferred taxes and other tax related adjustments for the year ended December 31, 2022 includes current tax expense of $14.7 million related to the repatriation of earnings from certain Asian subsidiaries to their parent companies in the Netherlands.

The decision to repatriate these earnings was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

(e) Financing and other transaction costs in the year ended December 31, 2021 includes a $30.1 million loss related to the early redemption of the $750.0 million aggregate principal amount outstanding on the 6.25% senior notes due 2026 (the "6.25% Senior Notes").

The loss primarily reflects the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs.

The loss is presented in other, net in our consolidated statements of operations.

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

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Financing and other transaction costs 20.8 6.8 15.7

Step-up depreciation and amortization 0.9 1.2 1.7

Deferred (gain)/loss on derivative instruments (4.1) (1.5) 8.3

Amortization of intangible assets and other

Deferred loss/(gain) on derivative instruments

2.6 (4.1) (1.5)

Total adjustments

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Adjusted corporate and other expenses (non-GAAP) $ (263.9) $ (263.1) $ (267.1)

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

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

GAAP to adjusted EBITDA.

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(In millions) 2024 2023 2022

Net (loss)/income

Net income/(loss)

$ 128.5 $ (3.9) $ 310.7

Interest expense, net 139.6 150.9 178.8

Provision for income taxes

(Benefit from)/provision for income taxes

(140.3) 21.8 86.0

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GAAP to net and gross leverage ratio.

For the year ended December 31,

As of and for the year ended December 31,

($ in millions) 2024 2023 2022

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3,199.5 3,399.2 4,240.1

debt discount, net of premium (1.6) (3.4) (5.2)

debt premium/(discount), net

1.0 (1.6) (3.4)

deferred financing costs (24.9) (24.4) (29.9)

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Operating activities:

Net (loss)/income adjusted for non-cash items

Net income/(loss) adjusted for non-cash items

$ 611.2 $ 639.6 $ 609.9

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Operating Activities

Refer to Results of Operations included elsewhere in this MD&A for discussion of the drivers of changes in net (loss)/income in fiscal years 2023 and 2022.

Net cash provided by operating activities for the year ended December 31, 2023 decreased from the prior year as higher cash generated from earnings was more than offset by inventory build and a negative impact from the timing of supplier payments and customer receipts.

Refer to Results of Operations included elsewhere in this MD&A for discussion of the drivers of changes in net income/(loss) in fiscal years 2024 and 2023.

Net cash provided by operating activities for the year ended December 31, 2024 increased from the prior year primarily due to favorable changes in working capital, partially offset by decreased cash provided by earnings.

Investing Activities

Investing activities primarily include cash exchanged for the acquisition or divestiture of a business or group of assets, cash paid for additions to PP&E and capitalized software, and the acquisition or sale of certain debt and equity securities.

Net cash used in investing activities for the year ended December 31, 2023 decreased compared to the corresponding period of the prior year, primarily due to lower cash paid for acquisitions (there were no acquisitions in the year ended December 31,

2023, while in the prior period we acquired Elastic M2M and Dynapower), partially offset by (1) lower cash received from sale of businesses and (2) an increase in cash paid for capital expenditures.

Net cash used in investing activities for the year ended December 31, 2024 decreased compared to the corresponding period of the prior year, primarily due to cash received for the divestiture of the Insights Business in the year ended December 31, 2024, and a decrease in cash paid for capital expenditures.

In the year ended December 31, 2024, we received cash proceeds of $135.7 million from the sale of a business, compared to $19.0 million in the year ended December 31, 2023.

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Financing Activities

Net cash used in financing activities for the year ended December 31, 2023 increased primarily due to (1) the early payment of the entire Term Loan balance and the 5.625% Senior Notes in the year ended December 31, 2023 and (2) an increase in cash paid to shareholders in the form of cash dividends, partially offset by lower cash paid to repurchase ordinary shares as part of our share repurchase program.

Net cash used in financing activities for the year ended December 31, 2024 decreased primarily due to $500.0 million of cash received from the issuance of the 6.625% Senior Notes in the second quarter of 2024 and lower payments on debt of approximately $147.0 million, partially offset by the payment of $79.4 million to purchase the remaining equity interest in a former joint venture in the current year.

Refer to Note 14:

Debt and Note 16:

Shareholders' Equity of our Financial Statements included elsewhere in this Report for additional information.

Indebtedness and Liquidity

The following table details our gross outstanding indebtedness as of December 31, 2024 and the associated interest expense for the year then ended (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

(In millions) Balance as of December 31, 2023

Interest Expense for the year ended December 31, 2023

Term Loan (1)

(In millions) Balance as of December 31, 2024 Interest Expense for the year ended December 31, 2024

5.0% Senior Notes (1)

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__________________________

(1) On May 3, 2023, we prepaid the remaining balance on our outstanding variable rate Term Loan.

(2) On December 18, 2023, we redeemed in full the $400.0 million aggregate principal amount outstanding on our 5.625% Senior Notes.

(1) In July 2024, we redeemed in full the $700.0 million aggregate principal amount outstanding on our 5.0% Senior Notes.

(2) Relates to interest costs capitalized as PP&E in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 835-20, Capitalization of Interest.

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Debt Instruments

As of December 31, 2023, our debt instruments included $700.0 million aggregate principal amount of 5.0% senior notes due 2025 (the "5.0% Senior Notes"), $450.0 million aggregate principal amount of 4.375% senior notes due 2030 (the "4.375% Senior Notes"), $750 million aggregate principal amount of 3.75% senior notes due 2031 (the "3.75% Senior Notes"), $1.0 billion aggregate principal amount of 4.0% senior notes due 2029 (the "4.0% Senior Notes"), and $500.0 million aggregate principal amount of 5.875% senior notes due 2030 (the "5.875% Senior Notes").

In the year ended December 31, 2023, we prepaid the entire principal outstanding on our Term Loan.

Per the terms of the Senior Secured Credit Facilities, balances outstanding on the Term Loan, once repaid, may not be re-borrowed.

As of December 31, 2024, our debt instruments included $450.0 million aggregate principal amount of 4.375% senior notes due 2030 (the "4.375% Senior Notes"), $750 million aggregate principal amount of 3.75% senior notes due 2031 (the "3.75% Senior Notes"), $1.0 billion aggregate principal amount of 4.0% senior notes due 2029 (the "4.0% Senior Notes"), $500.0 million aggregate principal amount of 5.875% senior notes due 2030 (the "5.875% Senior Notes"), and $500 million aggregate principal amount of 6.625% senior notes due 2032 (the "6.625% Senior Notes").

There are no outstanding borrowings on the Revolving Credit Facility as of December 31, 2024.

In August 2023, we entered into an amendment (the “Thirteenth Amendment”) to (i) the Credit Agreement, and (ii) the Foreign Guaranty, dated as of May 12, 2011 (as amended, supplemented, waived, or otherwise modified prior to the Thirteenth Amendment).

Among other changes to the Credit Agreement, the Thirteenth Amendment, (i) released the Foreign Guarantors

(excluding STBV) (the "Specified Foreign Guarantors") from all of their remaining obligations as guarantors and securing parties under the Credit Agreement, subject to an obligation to reinstate the guarantees under certain conditions, and (ii) modified certain of the operational and restrictive covenants and other terms and conditions of the Credit Agreement to provide us increased flexibility and permissions thereunder.

The Specified Foreign Guarantors were released from their guaranty obligations with respect the 5.625% Senior Notes (collectively with the 5.0% Senior Notes, the 4.375% Senior Notes, the 3.75% Senior Notes, the 4.0% Senior Notes, and the 5.875% Senior Notes, the “Senior Notes”), the 5.0% Senior Notes, the 4.0% Senior Notes, the 5.875% Senior Notes, the 4.375% Senior Notes, and the 3.75% Senior Notes, in each case in accordance with the terms of the relevant indenture pursuant to which the Senior Notes were issued (the "Senior Notes Indentures").

On December 18, 2023, we redeemed in full the $400.0 million aggregate principal amount outstanding on the 5.625% Senior Notes in accordance with the terms of the indenture under which the 5.625% Senior Notes were issued, at a redemption price of 100.0% of the aggregate principal amount of the outstanding 5.625% Senior Notes, plus a $4.0 million "make-whole" premium, plus accrued and unpaid interest to (but not including) the redemption date.

In June 2024, we completed the issuance and sale of $500.0 million aggregate principal amount 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 $700.0 million aggregate principal amount of the 5.0% Senior Notes.

Refer to Note 14:

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All letters of credit issued thereunder will terminate at the final maturity of the Revolving Credit Facility unless cash collateralized prior to such time.

The following table presents the remaining mandatory principal repayments of long-term debt, in millions, excluding finance lease payments and discretionary repurchases of debt, in each of the years ended December 31, 2024 through 2028 and thereafter.

For the year ended December 31, Aggregate Maturities

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Capital Resources

Senior Secured Credit Facilities

On August 22, 2023, we entered into the Thirteenth Amendment of the Credit Agreement, which (i) released the Specified Foreign Guarantors from all of their remaining obligations as guarantors and securing parties under the Credit Agreement, subject to an obligation to reinstate the guarantees under certain conditions, and (ii) modified certain of the operational and restrictive covenants and other terms and conditions of the Credit Agreement to provide us increased flexibility and permissions thereunder.

The Credit Agreement provides for the Senior Secured Credit Facilities consisting of the Term Loan, the Revolving Credit Facility, and 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.

Sources of liquidity

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As of December 31, 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 Senior Notes Indentures.

As of December 31, 2023, availability under the Accordion was approximately $2.0 billion.

We believe, based on our current level of operations for the year ended December 31, 2023, and taking into consideration the restrictions and covenants included in the Credit Agreement and Senior Notes Indentures discussed below and in Note 14:

This Revolving Credit Facility includes an accordion feature under which maximum borrowings may be increased to $2.8 billion under certain circumstances.

We believe, based on our current level of operations for the year ended December 31, 2024, and taking into consideration the restrictions and covenants included in the Credit Agreement, Revolving Credit Facility, and Senior Notes Indentures discussed below and in Note 14:

Debt of our Financial Statements included elsewhere in this Report, that the sources of liquidity described above will be sufficient to fund our operations, capital expenditures, dividend payments, ordinary share repurchases, and debt service for the short and long term.

However, we cannot make assurances that our business will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.

Further, our highly-leveraged nature may limit our ability to procure additional financing in the future.

Further, the amount of our debt may limit our ability to procure additional financing in the future.

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.

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

These restrictions and covenants were not materially modified in the Thirteenth Amendment.

We do not believe that these restrictions and covenants will prevent us from funding share repurchases under our share repurchase programs with available cash and cash flows from operations.

We do not believe that these restrictions and covenants will prevent us from funding share repurchases under our share repurchase programs or maintaining our dividend with available cash and cash flows from operations.

As of December 31, 2024, we believe that we were in compliance with all the covenants and default provisions under the Credit Agreement and the Senior Notes Indentures.

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On September 26, 2023, our Board of Directors authorized the September 2023 Program, which replaced the January 2022 Program, effective October 1, 2023.

During the year ended December 31, 2021, we repurchased approximately 0.8 million ordinary shares under the July 2019 Program, at a weighted-average price per share of $59.28.

During the year ended December 31, 2022, we purchased approximately 6.3 million ordinary shares under the January 2022 Program, at a weighted average price per share of $46.08.

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These purchases were made under the January 2022 Program and the September 2023 Program.

During the year ended December 31, 2024, we repurchased approximately 1.9 million ordinary shares at a weighted average price per share of $36.19.

These purchases were made under the September 2023 Program.

As of December 31, 2024, approximately $403.0 million remained available under the September 2023 Program.

In the second quarter of 2022, we began paying quarterly cash dividends of $0.11 per share to our shareholders.

In the second quarter of 2023, we increased the dividends to $0.12 per share.

In the years ended December 31, 2023 and 2022, we paid

aggregate cash dividends of $71.5 million and $51.1 million, respectively.

On January 25, 2024, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable on February 28, 2024 to shareholders of record as of February 14, 2024.

Critical Accounting Policies and Estimates

In the second quarter of 2023, we increased the quarterly dividends to $0.12 per share.

In the years ended December 31, 2024, 2023, and 2022 we paid aggregate cash dividends of $72.2 million, $71.5 million, and $51.1 million respectively.

On January 24, 2025, we announced that our Board of Directors declared a quarterly dividend of $0.12 per share, payable on February 26, 2025 to shareholders of record as of February 12, 2025.

Critical Accounting Estimates

As discussed in Note 2:

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The most critical judgments and estimates we make in the implementation of this model relate to identifying the contract with the customer and determination of the transaction price associated with the performance obligation(s) in the contract, specifically related to variable consideration.

While many of the agreements with our customers specify certain terms and conditions that apply to any transaction between the parties, many of which are in effect for a defined term, the vast majority of these agreements do not result in contracts (as defined in FASB ASC Topic 606) because they do not create enforceable rights and obligations on the parties.

While many of the agreements with our customers specify certain terms and conditions that apply to any transaction between the parties, many of which are in effect for a defined term, the majority of these agreements do not result in contracts (as defined in FASB ASC Topic 606) because they do not create enforceable rights and obligations on the parties.

Specifically, (1) the parties are not committed to perform any obligations in accordance with the specified terms and conditions until a customer purchase order is received and accepted by us and (2) there is a unilateral right of each party to terminate the agreement at any time without compensating the other party.

For this reason, the vast majority of our contracts (as defined in FASB ASC Topic 606) are customer purchase orders.

For this reason, the majority of our contracts (as defined in FASB ASC Topic 606) are customer purchase orders.

If this assessment were to change, it could result in a material change to the amount of net revenue recognized in a period.

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In determining the transaction price related to a contract, we determine whether the amount promised in a contract includes a variable amount (variable consideration).

Variable consideration may be specified in the customer purchase order, in another agreement that identifies terms and conditions of the transaction, or based on our customary practices.

Variable consideration may be specified in the customer purchase order, in another agreement that identifies terms and conditions of the transaction, or based on our

customary practices.

We have identified certain types of variable consideration that may be included in the transaction price related to our contracts, including sales returns (which generally include a right of return for defective or non-conforming product) and trade discounts (including retrospective volume discounts and early payment incentives).

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Identification of reporting units.

As of October 1, 2023, we had seven reporting units, Automotive, HVOR, Insights, Industrial Solutions, Aerospace, Clean Energy Solutions, and Dynapower.

Upon acquisition of Dynapower in the third quarter of 2022, it was included in the Clean Energy Solutions reporting unit for external reporting purposes.

As of October 1, 2023, we determined to continue to separately review the results of Dynapower for decision-making purposes, and, accordingly, created a

new reporting unit.

As of September 30, 2024, we had seven reporting units, Automotive, HVOR, Industrial Solutions, Aerospace, Clean Energy Solutions, Aftermarket and Dynapower.

During the second half of 2024, we reorganized our Sensing Solutions operating segment, which resulted in the realignment of our reporting units during Q4 2024.

As a result of this reorganization, our Clean Energy Solutions reporting unit, which includes high-voltage contactors, was combined with our existing Industrial Solutions reporting unit creating one reporting unit, Industrial Solutions.

There have been no subsequent changes to our reporting units as of December 31, 2024.

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If the carrying value of a reporting unit exceeds its estimated fair value, we recognize an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB ASC Topic 350.

We evaluated the goodwill of each reporting unit for impairment as of October 1, 2023, using a quantitative method.

We evaluate the goodwill of each reporting unit for impairment as of October 1, or more often if impairment indicators are identified, using a quantitative method.

In performing our evaluation under the quantitative method, we estimated the fair values of our reporting units using the discounted cash flow method, and, when applicable, a market multiples approach (the "Market Approach") using comparable companies appropriate to the reporting unit.

For the discounted cash flow method, we prepared detailed annual projections of future net cash flows for the reporting unit for the subsequent ten fiscal years (the "Discrete Projection Period").

We estimated the value of the net cash flows beyond the tenth fiscal year (the "Terminal Year") by using either the Gordon Growth Model or the H-Model.

We estimated the value of the net cash flows beyond the tenth fiscal year (the "Terminal Year")

by using either the Gordon Growth Model or the H-Model.

The net cash flows from the Discrete Projection Period and the Terminal Year were discounted at an estimated weighted-average cost of capital ("WACC") appropriate for each reporting unit.

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We believe that our procedures for estimating discounted future net cash flows, including the Terminal Year valuation, were reasonable and consistent with accepted valuation practices.

Based on this evaluation, we determined that goodwill in our Insights reporting unit was impaired, driven primarily by a lower long-range financial forecast resulting from the impact of restructuring actions taken in the third and fourth quarters of 2023 and consequent business decisions regarding our level of investment in Insights in future years considering Sensata’s focus on electrification.

Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.

In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed the fair value.

The primary indicators of impairment were revised projections of future cash flows and actual performance that was lower than previous projections for the reporting unit.

We evaluated the goodwill of the Dynapower reporting unit for impairment using a combination of a market-based valuation method and an income approach that discounts forecasted cash flows.

As these assumptions were largely unobservable, the estimated fair values fall within Level 3 of the fair value hierarchy.

A change in our cash flow forecast or the discount rate used would result in an increase or decrease in our calculated fair value.

We determined that our Dynapower reporting unit was impaired, and in the third quarter of 2024, we recorded a $150.1 million non-cash impairment charge.

If Dynapower does not achieve the forecasted future cash flows, or if the discount rate or other assumptions were to change, it is reasonably possible that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.

Based on our 2023 evaluation, we determined that goodwill in our Insights reporting unit was impaired, driven primarily by a lower long-range financial forecast resulting from the impact of restructuring actions taken in the third and fourth quarters of 2023 and consequent business decisions regarding our level of investment in Insights in future years considering Sensata’s focus on electrification.

Other valuation assumptions for the Insights reporting unit valuation that were impacted by macroeconomic factors also contributed to the impairment.

Accordingly, we recorded a $321.7 million non-cash impairment charge in the fourth quarter of 2023, representing the entire goodwill balance allocated to Insights.

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Changes to these assumptions could affect the estimated fair value of one or more of our reporting units and could result in a goodwill impairment charge in a future period.

Types of events that could result in an additional goodwill impairment.

Types of events that could result in a goodwill impairment.

As noted above, the assumptions used in the quantitative calculation of fair value of our reporting units, including the long-range forecasts, the selection of the discount rates, and the estimation of the multiples or long-term growth rates used in valuing the Terminal Year involve significant judgments.

Changes to these assumptions could affect the estimated fair values of our reporting units calculated in prior years and could result in a goodwill impairment charge in a future period.

We believe that certain factors, such as a future recession, any material adverse conditions in the automotive industry and other industries in which we operate, and other factors identified

We believe that certain factors, such as a future recession, any material adverse conditions in the automotive industry and other industries in which we operate, and other factors identified in Item 1A:

Risk Factors included elsewhere in this Report could cause us to revise our long-term projections.

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the timing of our most recent quantitative impairment tests and the relative amount by which a reporting unit’s fair value exceeded its then carrying value, the inputs and assumptions underlying our valuation models and the sensitivity of our fair value measurements to those inputs and assumptions, the impact that adverse economic or market conditions may have on the degree of uncertainty inherent in our long-term operating forecasts, and changes in the carrying value of a reporting unit’s net assets from the time of our most recent goodwill impairment test.

We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Insights and Dynapower reporting units, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.

Based on the results of this analysis, we do not consider any of our reporting units outside of Insights, which was already fully impaired, to be at risk of failing the goodwill impairment test.

We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Dynapower reporting unit, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.

Based on the results of this analysis, we do not consider any of our reporting units outside of Dynapower, which was impaired during 2024, to be at risk of failing the goodwill impairment test.

As part of the process of preparing our financial statements, we are required to estimate our provision for (or benefit from) income taxes in each of the jurisdictions in which we operate.

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In the event that actual results differ from these estimates, or we adjust our estimates in the future, we may need to adjust our valuation allowance assessment, which could materially impact our consolidated financial position and results of operations.

Recently Issued Accounting Standards

Recently issued accounting standards adopted in the current period

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

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

2023-07 will be effective for

annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

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.

We will adopt the guidance in FASB ASU No.

2023-07 on January 1, 2024 and will include the required new annual and quarterly disclosures in our Annual Report on Form 10-K for the period ended December 31, 2024 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, respectively.

We adopted ASU No.

2023-07 on January 1, 2024 and have included the required new annual disclosures in our Annual Report on Form 10-K for the year ended December 31, 2024.

Recently issued accounting standards to be adopted in a future period

In December 2023, the FASB issued ASU No.

2023-09, Income taxes (Topic 740):

Improvements to Income Tax Disclosures , to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

The guidance also includes certain other amendments to improve the effectiveness of income tax disclosures.

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.

Improvements to Income Tax Disclosures , which introduces new disclosure requirements for income taxes.

This update is effective for annual periods beginning after December 31, 2024.

While this ASU is not yet effective for the year ending December 31, 2024, we anticipate that it will significantly enhance the transparency and detail of our income tax disclosures in future periods.

Key changes include:

• Enhanced rate reconciliation disclosures, requiring a tabular reconciliation of the effective tax rate using both percentages and amounts, with detailed information on significant reconciling items.

• Detailed disclosures of income taxes paid, broken out between federal (national), state/local, and foreign taxes, and by individual jurisdictions when they represent 5% or more of the total income taxes paid.

• More detailed disclosures about deferred tax liabilities, particularly those related to unremitted earnings of foreign subsidiaries .

We are currently assessing the impact of these new requirements on our financial reporting and will implement the necessary changes in our disclosures for the year ending December 31, 2025.

In November 2024, the FASB issued ASU No.

2024-03 Income Statement (Topic 220):

Reporting Comprehensive Income ,

which requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement .

2024-03 does not change or remove current expense presentation requirements within the Consolidated Statements of Operations.

However, the amendments require disclosure, on an annual and interim basis, of disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact that the adoption of ASU No.

2024-03 will have on its consolidated financial statements and disclosures.

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-K

Item 7. Management’s Discussion and Analysis