Sensata Technologies Holding plc 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations supplements should be read in conjunction with the discussion in Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Annual Report. The following discussion should also be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto (the "Financial Statements") included elsewhere in this Report. Amounts and percentages in the following discussions and tables have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding. Overview Net revenue for the three months ended March 31, 2026 was $934.8 million, an increase of 2.6% on a reported basis compared to $911.3 million in the prior period. Excluding an increase of 2.2% attributed to changes in foreign currency exchange rates and a decrease of 3.8% related to the effect of disposals, net revenue increased 4.2% on an organic basis. Organic revenue growth (or decline), discussed throughout this Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A"), is a financial measure not presented in accordance with U.S. GAAP. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information regarding our use of organic revenue growth (or decline). Operating income for the three months ended March 31, 2026 was $141.6 million (15.2% of net revenue), an increase of $19.5 million, or 15.9% compared to operating income of $122.2 million (13.4% of net revenue) in the three months ended March 31, 2025. Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our earnings results for the three months ended March 31, 2026 compared to the prior periods. We generated $122.5 million of operating cash flows in the three months ended March 31, 2026, ending the quarter with $635.1 million in cash and cash equivalents. In the three months ended March 31, 2026, we used cash of approximately $17.9 million for capital expenditures, $17.5 million for payment of dividends, and $25.1 million for share repurchases as part of our share repurchase plan. Results of Operations The table below presents our historical results of operations, in millions of dollars and as a percentage of net revenue, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. We have derived the results of operations from the Financial Statements included elsewhere in this Report. Amounts and percentages in the table below have 21 Table of Contents been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding. For the three months ended March 31, 2026 March 31, 2025 Amount Percent Amount Percent Net revenue: Automotive $ 524.8 56.1 % $ 528.9 58.0 % Industrials 184.2 19.7 185.7 20.4 Aerospace, Defense, and Commercial Equipment 225.8 24.2 196.7 21.6 Net revenue 934.8 100.0 911.3 100.0 Operating costs and expenses 793.2 84.8 789.1 86.6 Operating income 141.6 15.2 122.2 13.4 Interest expense (34.1) (3.6) (38.0) (4.2) Interest income 3.9 0.4 4.3 0.5 Other, net 4.1 0.4 2.1 0.2 Income before taxes 115.5 12.4 90.6 9.9 Provision for income taxes 28.4 3.0 20.7 2.3 Net income $ 87.1 9.3 % $ 69.9 7.7 % Net Revenue Net revenue for the three months ended March 31, 2026 increased 2.6% compared to the prior period. Net revenue increased 4.2% on an organic basis, which excludes an increase of 2.2% attributed to changes in foreign currency exchange rates and a decrease of 3.8% due primarily to the effects of the divestiture of the Magnetic Speed and Positioning Business ("MSP Business") in the first quarter of 2025. Refer to Note 16: Disposals of the Financial Statements, included elsewhere in this Report, for additional information on the sale of the MSP Business. Automotive Automotive net revenue for the three months ended March 31, 2026 decreased 0.8% compared to the prior period. Excluding an increase of 2.5% attributed to changes in foreign currency exchange and a decrease of 4.0% due to the effects of a divestiture, Automotive net revenue increased 0.7% on an organic basis compared to the prior period, which was primarily due to product mix in the markets we serve. Industrials Industrials net revenue for the three months ended March 31, 2026 decreased 0.8% compared to the prior period. Excluding an increase of 1.5% attributed to changes in foreign currency exchange and a decrease of 3.0% due to the effect of divestitures, Industrials net revenue grew 0.7% on an organic basis compared to the prior period, which primarily reflects content growth in our Industrials business segment. Aerospace, Defense, and Commercial Equipment Aerospace, Defense, and Commercial Equipment net revenue for the three months ended March 31, 2026 increased 14.8% compared to the prior period. Excluding an increase of 1.8% attributed to changes in foreign currency exchange rates and a decline of 3.7% due to the effects of a divestiture, Aerospace, Defense, and Commercial Equipment net revenue grew 16.7% on 22 Table of Contents an organic basis due to growth in our commercial equipment and aerospace business. Operating Costs and Expenses Operating costs and expenses for the three months ended March 31, 2026 and 2025 are presented, in millions of dollars and as a percentage of net revenue, in the following table. Amounts and percentages in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding. For the three months ended March 31, 2026 March 31, 2025 Amount Percent Amount Percent Operating costs and expenses: Cost of revenue $ 648.5 69.4 % $ 638.7 70.1 % Research and development 31.9 3.4 36.8 4.0 Selling, general and administrative 93.4 10.0 86.0 9.4 Amortization of intangible assets 15.7 1.7 20.6 2.3 Restructuring and other charges, net 3.7 0.4 7.0 0.8 Total operating costs and expenses $ 793.2 84.8 % $ 789.1 86.6 % Cost of revenue For the three months ended March 31, 2026, cost of revenue as a percentage of net revenue decreased from the prior period, primarily due to the favorable effects of the MSP divestiture in the first quarter of 2025 and organic revenue growth, partially offset by the net impacts of inflation on material and logistics costs and tariffs. Research and development expense For the three months ended March 31, 2026, research and development expense did not fluctuate materially from the prior period. Selling, general and administrative expense For the three months ended March 31, 2026, selling, general and administrative expense did not fluctuate materially from the prior period. Amortization of intangible assets For the three months ended March 31, 2026, amortization of intangible assets decreased from the prior period, primarily due to the effect of amortization of intangible assets in accordance with their expected economic benefit, which generally results in acceleration of amortization expense in the early years of the life of an intangible asset. Restructuring and other charges, net In the three months ended March 31, 2026, restructuring and other charges, net decreased from the prior period, primarily due to higher transaction-related charges in 2025 corresponding to the business divestitures that took place in that year, partially offset by higher charges related to the Transformation Plan in the current period. Refer to Note 5: Restructuring and Other Charges, Net, included elsewhere in this Report, for additional information regarding the components of restructuring and other charges, net. Operating Income For the three months ended March 31, 2026, operating income was $141.6 million, compared to operating income of $122.2 million in the prior period. This favorable impact was driven primarily by (1) higher revenue in the current period, (2) a decrease in amortization of intangibles, and (3) cost savings as a result of actions taken as part of our restructuring plans, partially offset by the net impacts of inflation on material and logistics costs. Interest Expense For the three months ended March 31, 2026, interest expense did not fluctuate materially from the prior period. 23 Table of Contents Interest Income For the three months ended March 31, 2026, interest income did not fluctuate materially from the prior period. Other, Net Other, net primarily includes gains and losses related to currency remeasurement adjustments, foreign currency and commodity forward contracts not designated as hedging instruments, mark-to-market investments, debt refinancing, and the portion of our net periodic benefit cost excluding service cost. For the three months ended March 31, 2026, other, net represented a net gain of $4.1 million, a favorable impact on earnings of $2.0 million compared to a net gain of $2.1 million in the prior period. This favorable impact was primarily due to the absence of losses on forward currency forward contracts in the current year. Refer to Note 13: Fair Value Measures and Note 6: Other, Net of the Financial Statements, included elsewhere in this Report, for additional details of our hedge accounting contracts and the components of other, net, respectively. Provision for Income Taxes The provision for income taxes consists of (1) current tax expense, which relates primarily to our profitable operations in tax jurisdictions with limited or no net operating loss carryforwards and withholding taxes related to management fees, royalties, and the repatriation of foreign earnings; and (2) deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (a) book versus tax basis in intangible assets, (b) changes in net operating loss carryforwards and tax credits, and (c) changes in withholding taxes on unremitted earnings. Non-GAAP Financial Measures This section provides additional information regarding certain non-GAAP financial measures, including organic revenue growth (or decline), adjusted operating income, adjusted operating margin, adjusted net income, adjusted earnings per share ("EPS"), free cash flow, adjusted corporate and other expenses, net debt, gross and net leverage ratio, and adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA"), which are used by our management, Board of Directors, and investors. We use these non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance, and as a factor in determining compensation for certain employees. The use of our non-GAAP financial measures has limitations. They should be considered as supplemental in nature and are not intended to be considered in isolation from, or as an alternative to, reported net revenue growth (or decline), operating income, operating margin, net income, diluted EPS, net cash provided by operating activities, corporate and other expenses, or total debt and finance lease obligations, respectively, calculated in accordance with U.S. GAAP. In addition, our measures of organic revenue growth (or decline), adjusted operating income, adjusted operating margin, adjusted net income, adjusted EPS, free cash flow, adjusted corporate and other expenses, gross and net leverage ratio, and adjusted EBITDA may not be the same as, or comparable to, similar non-GAAP financial measures presented by other companies. Organic revenue growth (or decline) and market outgrowth Organic revenue growth (or decline) is defined as the reported percentage change in net revenue calculated in accordance with U.S. GAAP, excluding the period-over-period impact of foreign exchange rate differences as well as the net impact of material acquisitions, divestitures, and product life-cycle management actions 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. We believe that organic revenue growth (or decline) provides useful information in evaluating the results of our business because it excludes items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior period. Market outgrowth is calculated as organic revenue growth less our weighted market growth. Our weighted market growth is calculated using our regional and platform sales mix, as applicable, in the corresponding prior period. Market outgrowth is used to describe the impact of an increasing quantity and value of our products used in customer systems and applications above market growth. We believe this provides a more meaningful comparison of our revenue growth relative to the markets we serve. 24 Table of Contents Adjusted operating income, adjusted operating margin, adjusted net income, and adjusted EPS We define adjusted operating income as operating income (or loss), determined in accordance with U.S. GAAP, adjusted to exclude certain non-GAAP adjustments which are described under the heading Non-GAAP Adjustments below. Adjusted operating margin is calculated by dividing adjusted operating income (or loss) by net revenue determined in accordance with U.S. GAAP. We define adjusted net income as follows: net income (or loss) determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described under the heading Non-GAAP Adjustments below. Adjusted EPS is calculated by dividing adjusted net income by the number of diluted weighted-average ordinary shares outstanding in the period as determined in accordance with U.S. GAAP. 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. We believe investors and securities analysts also use these non-GAAP financial measures in their evaluation of our performance and the performance of other similar companies. These non-GAAP financial measures are not measures of liquidity. Free cash flow Free cash flow is defined as net cash provided by operating activities less additions to property, plant and equipment and capitalized software. Free cash flow conversion is defined as Free cash flow divided by Adjusted net income. We believe free cash flow is useful to management and investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to, among other things, fund acquisitions, repurchase ordinary shares, or accelerate the repayment of debt obligations. Adjusted corporate and other expenses Adjusted corporate and other expenses is defined as corporate and other expenses calculated in accordance with U.S. GAAP, excluding the portion of non-GAAP adjustments described below that relate to corporate and other expenses. We believe adjusted corporate and other expenses is useful to management and investors in understanding the impact of non-GAAP adjustments on operating expenses not allocated to our segments. Adjusted EBITDA Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S. 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) other, net. Refer to Non-GAAP Adjustments below for additional discussion of these adjustments. Gross leverage ratio Gross leverage ratio represents gross debt (total debt and finance lease obligations less unamortized issue costs) divided by last twelve months ("LTM") adjusted EBITDA. We believe that gross leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition. Net leverage ratio Net leverage ratio represents net debt (gross debt less cash and cash equivalents) divided by LTM adjusted EBITDA. We believe that the net leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition. Non-GAAP adjustments Many of our non-GAAP adjustments relate to a series of strategic initiatives developed by our management aimed at better positioning us for future revenue growth and an improved cost structure. These initiatives have been modified from time to time to reflect changes in overall market conditions and the competitive environment facing our business. These initiatives include, among other items, acquisitions, divestitures, restructurings of certain business, supply chain or corporate activities, and various financing transactions. We describe these adjustments in more detail below, each of which is net of current tax impacts, as applicable. 25 Table of Contents • Restructuring related and other : includes net charges related to certain restructuring and other exit activities, other costs (or income) that we believe are either unique or unusual to the identified reporting period, and the impact of commodity forward contracts that we believe impact comparisons to prior period operating results. Such costs include charges related to optimization of our manufacturing processes to increase productivity. This type of activity occurs periodically; however, each action is unique, discrete, and driven by various facts and circumstances. Such amounts are excluded from internal financial statements and analyses that management uses in connection with financial planning and in its review and assessment of our operating and financial performance, including the performance of our segments. • Financing and other transaction costs : includes costs incurred, such as legal, accounting, and other professional services, that are directly related to an acquisition, divestiture, or equity financing transaction, expenses related to compensation arrangements entered into concurrent with the closing of an acquisition, adjustments related to changes in the fair value of acquisition-related contingent consideration amounts. • Amortization of intangible assets : represents amortization of intangible assets. • Other, net: includes non-operating expenses (or non-operating income) recorded within Other, net on our condensed consolidated statements of operations. Refer to Note 6: Other, Net of the Financial Statements, included elsewhere in this Quarterly Report, for additional details of the components of Other, net. • Deferred taxes and other tax related : includes adjustments for deferred taxes and other timing differences including, but not limited to, book-to-tax basis differences on the fair value of intangible assets and goodwill, the utilization of net operating losses, and adjustments to our valuation allowance in connection with certain transactions and tax law changes. Other tax related items include certain adjustments to unrecognized tax benefits and withholding tax on repatriation of foreign earnings. • Amortization of debt issuance costs: represents interest expense related to the amortization of deferred financing costs as well as debt discounts, net of premiums. • Where applicable, the current income tax effect of non-GAAP adjustments. Our definition of adjusted net income excludes the deferred provision for (or benefit from) income taxes and other tax related items described above. As we treat deferred income taxes as an adjustment to compute adjusted net income, the deferred income tax effect associated with the reconciling items presented below would not change adjusted net income for any period presented. Non-GAAP reconciliations The following tables present reconciliations of certain financial measures calculated in accordance with U.S. GAAP to the related non-GAAP financial measures for the three months ended March 31, 2026 and 2025. Refer to the Non-GAAP Adjustments section above for additional information regarding these adjustments. Amounts and percentages in the tables below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding. For the three months ended March 31, 2026 (Dollars in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS Reported (GAAP) $ 141.6 15.2 % $ 28.4 $ 87.1 $ 0.59 Non-GAAP adjustments: Restructuring related and other (a) 16.6 1.8 (1.7) 14.9 0.10 Financing and other transaction costs (b) 0.1 — — 0.1 — Amortization of intangible assets 15.7 1.7 — 15.7 0.11 Amortization of debt issuance costs — — — 1.1 0.01 Other, net — — 0.8 (3.3) (0.02) Deferred taxes and other tax related — — 9.9 9.9 0.07 Total adjustments 32.4 3.5 9.0 38.4 0.26 Adjusted (non-GAAP) $ 174.0 18.6 % $ 19.4 $ 125.5 $ 0.86 26 Table of Contents For the three months ended March 31, 2025 (Dollars in millions, except per share amounts) Operating Income Operating Margin Income Taxes Net Income Diluted EPS Reported (GAAP) $ 122.2 13.4 % $ 20.7 $ 69.9 $ 0.47 Non-GAAP adjustments: Restructuring related and other (a) 18.3 2.0 1.6 19.9 0.13 Financing and other transaction costs (b) 5.4 0.6 — 5.4 0.04 Amortization of intangible assets 20.6 2.3 — 20.6 0.14 Amortization of debt issuance costs — — — 1.2 0.01 Other, net — — (0.5) (2.6) (0.02) Deferred taxes and other tax related — — 2.2 2.2 0.02 Total adjustments 44.3 4.9 3.3 46.7 0.31 Adjusted (non-GAAP) $ 166.5 18.3 % $ 17.4 $ 116.6 $ 0.78 (a) The following table presents the components of our restructuring related and other non-GAAP adjustment to net income for the three months ended March 31, 2026 and 2025 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the three months ended March 31, (In millions) 2026 2025 Business and corporate repositioning (i) $ 13.9 $ 18.1 Other 2.7 0.2 Income tax effect (1.7) 1.6 Total non-GAAP restructuring related and other $ 14.9 $ 19.9 __________________________ i. Primarily includes charges related to repositioning our business and corporate functions to more effectively respond to the challenges that face the business, including severance, contract termination costs, charges related to asset write-downs, and other various restructuring-related charges. (b) The following table presents the components of our financing and other transaction costs non-GAAP adjustment to net income for the three months ended March 31, 2026 and 2025 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): For the three months ended March 31, (In millions) 2026 2025 Transaction loss (i) $ — $ 4.7 Merger and acquisition compensation arrangements (ii) (0.4) 0.7 Other 0.4 — Income tax effect — — Total financing and other transaction costs $ 0.1 $ 5.4 __________________________ i. Primarily includes losses or gains related to the divestiture of a business, costs incurred, including for legal, accounting, and other professional services, that are directly related to an acquisition, divestiture, or other transaction. In the three months ended March 31, 2025, this line includes costs and losses associated with the disposition of the MSP Business. Refer to Note 16: Disposals for further information on this transaction. ii. Primarily relates to compensation arrangements entered into concurrent with the closing of an acquisition and compensation in connection with the closing of a transaction. The following table provides a reconciliation of net cash provided by operating activities in accordance with U.S. GAAP to free cash flow. For the three months ended March 31, (In millions) 2026 2025 Net cash provided by operating activities (GAAP) $ 122.5 $ 119.2 Additions to property, plant and equipment and capitalized software (17.9) (32.6) Free cash flow (non-GAAP) $ 104.6 $ 86.6 27 Table of Contents The following table provides a reconciliation of corporate and other expenses in accordance with U.S. GAAP to adjusted corporate and other expenses. For the three months ended March 31, (In millions) 2026 2025 Corporate and other expenses (GAAP) $ (75.7) $ (69.2) Restructuring related and other 12.9 15.8 Financing and other transaction costs 0.1 1.0 Total adjustments 13.0 16.8 Adjusted corporate and other expenses (non-GAAP) $ (62.7) $ (52.4) The following table provides a reconciliation of net income in accordance with U.S. GAAP to adjusted EBITDA. For the three months ended March 31, (In millions) LTM 2026 2025 Net income $ 48.5 $ 87.1 $ 69.9 Interest expense, net 126.5 30.2 33.7 Provision for income taxes 99.7 28.4 20.7 Depreciation expense 169.3 34.0 41.0 Amortization of intangible assets 75.4 15.7 20.6 EBITDA 519.4 195.5 185.9 Non-GAAP adjustments Restructuring related and other 311.0 15.0 11.0 Financing and other transaction costs 29.6 0.1 5.4 Other, net (17.8) (4.1) (2.1) Adjusted EBITDA $ 842.2 $ 206.5 $ 200.2 The following table provides a reconciliation of total debt and finance lease obligations in accordance with U.S. GAAP to gross and net debt balances and leverage ratios. (Dollars in millions) March 31, 2026 December 31, 2025 Current portion of long-term debt and finance lease obligations $ 2.4 $ 2.3 Finance lease obligations, less current portion 18.5 18.9 Long-term debt, net 2,829.4 2,828.6 Total debt and finance lease obligations 2,850.2 2,849.7 Less: debt premium, net 0.4 0.5 Less: deferred financing costs (17.1) (17.9) Total gross indebtedness $ 2,866.9 $ 2,867.2 Adjusted EBITDA (LTM) $ 842.2 $ 835.9 Gross leverage ratio 3.4 3.4 Total gross indebtedness $ 2,866.9 $ 2,867.2 Less: cash and cash equivalents 635.1 573.0 Net debt $ 2,231.8 $ 2,294.2 Adjusted EBITDA (LTM) $ 842.2 $ 835.9 Net leverage ratio 2.6 2.7 28 Table of Contents Liquidity and Capital Resources As of March 31, 2026 and December 31, 2025, we held cash and cash equivalents in the following regions (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): (In millions) March 31, 2026 December 31, 2025 United Kingdom $ 4.2 $ 3.6 United States 8.8 8.0 The Netherlands 432.4 421.8 China 125.6 80.7 Other 64.1 58.9 Total $ 635.1 $ 573.0 The amount of cash and cash equivalents held in these geographic regions fluctuates throughout the year due to a variety of factors, such as our use of intercompany loans and dividends and the timing of cash receipts and disbursements in the normal course of business. Our earnings are not considered to be permanently reinvested in certain jurisdictions in which they were earned. We recognize a deferred tax liability on these unremitted earnings to the extent the remittance of such earnings cannot be recovered in a tax-free manner. In certain jurisdictions, our cash balances are subject to withholding taxes immediately upon withdrawal of funds to a different jurisdiction. In addition, in order to take advantage of incentive programs offered by various jurisdictions, including tax incentives, we are required to maintain minimum cash balances in these jurisdictions. The transfer of cash from these jurisdictions could result in loss of incentives or higher cash tax expense, but those impacts are not expected to be material. Our cash and cash equivalents balances are held in the following significant currencies (amounts in the tables below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding): As of March 31, 2026 (In millions) United States Dollar ("USD") Euro ("EUR") British Pound Sterling ("GBP") Chinese Renminbi ("CNY") Other United Kingdom $ — € 0.0 £ 2.5 ¥ — United States 8.7 0.1 — — The Netherlands 422.7 8.1 0.3 — China 31.4 — — 651.1 Other 43.7 6.5 — — Total $ 506.5 € 14.7 £ 2.8 ¥ 651.1 USD Equivalent $ 16.9 $ 3.7 $ 94.2 $ 13.8 As of December 31, 2025 (In millions) USD EUR GBP CNY Other United Kingdom $ — € 0.0 £ 2.6 ¥ — United States 8.0 0.0 0.0 — The Netherlands 411.4 8.2 0.6 — China 20.1 — — 423.3 Other 43.8 1.9 — — Total $ 483.3 € 10.1 £ 3.2 ¥ 423.3 USD Equivalent $ 11.9 $ 4.3 $ 60.5 $ 13.0 29 Table of Contents Cash Flows: The table below summarizes our primary sources and uses of cash for the three months ended March 31, 2026 and 2025. We have derived these summarized statements of cash flows from the Financial Statements included elsewhere in this Report. Amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding. For the three months ended (In millions) March 31, 2026 March 31, 2025 Net cash provided by/(used in): Operating activities: Net income adjusted for non-cash items $ 156.6 $ 141.9 Changes in operating assets and liabilities, net (34.1) (22.7) Operating activities 122.5 119.2 Investing activities (16.5) (6.9) Financing activities (44.7) (119.1) Effects of exchange rate differences 0.8 1.3 Net change $ 62.1 $ (5.5) Operating activities. Net cash provided by operating activities for the three months ended March 31, 2026 increased compared to the corresponding period of the prior year, primarily due to higher cash provided by earnings, partially offset by unfavorable changes in working capital. Investing activities. Net cash used in investing activities for the three months ended March 31, 2026 was $16.5 million compared to cash used of $6.9 million for the corresponding period of the prior year. This change was primarily due to proceeds received for the sale of the MSP Business in the first quarter of 2025, partially offset by higher capital expenditures in the prior period. For fiscal year 2026, we anticipate additions to PP&E and capitalized software of up to approximately $150.0 million, which we expect to fund with cash flows from operations. Financing activities . Net cash used in financing activities for the three months ended March 31, 2026 was $44.7 million compared to cash used in financing activities of $119.1 million in the corresponding period of the prior year. This change was primarily due to a higher amount of cash paid to repurchase ordinary shares in the prior year. Indebtedness and Liquidity As of March 31, 2026, we had $2.9 billion in gross indebtedness, which includes finance lease obligations and excludes debt discounts, premiums, and deferred financing costs. Capital Resources Sources of liquidity Our sources of liquidity include cash on hand, cash flows from operations, and available capacity under the Revolving Credit Facility. As of March 31, 2026, we had $645.8 million available under the Revolving Credit Facility, net of $4.2 million of obligations in respect of outstanding letters of credit issued thereunder. Outstanding letters of credit are issued primarily for the benefit of certain operating activities. As of March 31, 2026, no amounts had been drawn against these outstanding letters of credit. This Revolving Credit Facility includes an accordion feature under which maximum borrowings may be increased under certain circumstances. We believe, based on our current level of operations and taking into consideration the restrictions and covenants included in the Credit Agreement, Revolving Credit Facility, and Senior Notes Indentures, that the sources of liquidity described above will be sufficient to fund our operations, capital expenditures, dividend payments, ordinary share repurchases, and debt service for at least the next twelve months. 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, 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 30 Table of Contents metrics such as interest coverage and leverage ratios. As of April 16, 2026, Moody’s Investors Service’s corporate credit rating for STBV was Ba2 with a stable outlook, and Standard & Poor’s corporate credit rating for STBV was BB+ with a stable outlook. Any future downgrades to STBV's credit ratings may increase our future borrowing costs but will not reduce availability under the Credit Agreement. Restrictions and Covenants The Credit Agreement provides that if our senior secured net leverage ratio exceeds a specified level, we are required to use a portion of our excess cash flow, as defined in the Credit Agreement, generated by operating, investing, or financing activities to prepay some or all of the outstanding borrowings under the Senior Secured Credit Facilities. The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and upon the incurrence of certain indebtedness (excluding any permitted indebtedness). These provisions were not triggered during the three months ended March 31, 2026. The Credit Agreement and the Senior Notes Indentures contain restrictions and covenants that limit the ability of our wholly-owned subsidiary, STBV, and certain of its subsidiaries to, among other things, incur subsequent indebtedness, sell assets, pay dividends, and make other restricted payments. For a full discussion of these restrictions and covenants, refer to Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources included in our 2025 Annual Report. These restrictions and covenants, which are subject to important exceptions and qualifications set forth in the Credit Agreement and Senior Notes Indentures, were taken into consideration when we established our share repurchase programs and will be evaluated periodically with respect to future potential funding of those programs. As of March 31, 2026, we believe we were in compliance with all covenants and default provisions under our credit arrangements. Share repurchase programs From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by our Board at any time. We currently have authorization for the September 2023 Program, under which approximately $257.3 million remained available as of March 31, 2026. In the three months ended March 31, 2026, and 2025, we repurchased 0.7 million and 3.5 million ordinary shares under the September 2023 Program. Dividends In the three months ended March 31, 2026 and 2025, we paid aggregate cash dividends of $17.5 million and $17.9 million, respectively. In April 2026, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable in May 2026 to shareholders of record as of May 13, 2026. Critical Accounting Policies and Estimates For a discussion of the critical accounting policies that require the use of significant judgments and estimates by management, refer to Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates included in our 2025 Annual Report. The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to exercise judgment in the process of applying our accounting policies. It also requires that we make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. No material changes to our critical accounting policies and estimates, as previously disclosed, have occurred during the first three months of 2026. Item 3. Quantitative and Qualitative Disclosures About Market Risk. No significant changes to our market risk have occurred since December 31, 2025. For a discussion of market risks affecting us, refer to Part II, Item 7A: Quantitative and Qualitative Disclosures About Market Risk included in our 2025 Annual Report.