What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-13 compared with 2024-02-15 · 95 added, 104 removed, 214 unchanged (48% of the section changed)

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Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for that discussion.

The Company is a global leader in providing Enterprise Asset Intelligence (“EAI”) solutions in the Automatic Identification and Data Capture (“AIDC”) industry.

The AIDC market consists of mobile computing, data capture, radio frequency identification devices (“RFID”), barcode printing, and other workflow automation products and services.

The Company is a global leader in providing Enterprise Asset Intelligence (“EAI”) offerings in the Automatic Identification and Data Capture (“AIDC”) industry.

The AIDC market consists of mobile computing, data capture, radio frequency identification devices (“RFID”), barcode printing, and other workflow automation offerings.

The Company’s operations consist of two reportable segments that provide complementary offerings to our customers:

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Its major product lines include barcode and card printers, RFID and RTLS offerings, and supplies, including temperature-monitoring labels, and services.

• The EVM segment is an industry leader in automatic information and data capture solutions.

• The EVM segment is an industry leader in automatic information and data capture offerings.

Its major product lines include mobile computing, data capture, fixed industrial scanning and machine vision, services, and workflow optimization solutions.

Our workflow optimization solutions include cloud-based software subscriptions, retail solutions, and robotic automation solutions.

Change in Segments

In the second quarter of 2023, our advanced location technology solutions business, which is primarily comprised of RFID devices and RTLS offerings, moved from our EVM segment into our AIT segment contemporaneous with a change in our organizational structure and management of the business.

We have reported our segment results reflecting this change, including historical periods, on a comparable basis.

This change does not have an impact on the Consolidated Financial Statements.

During the past year, we have maintained our position as a market leader in our core businesses, which are generally considered to be comprised of our mobile computing and data capture products, printing products and supplies, as well as support and repair services.

Customers across the industries that we serve have benefited from our core offerings to keep pace with the increasingly on-demand economy and to invest in their long-term technology capabilities.

The Company continues to focus on scaling and integrating our recent acquisitions providing growth opportunities across our solution offerings.

Macroeconomic Environment

We entered 2023 facing headwinds from global cost inflation, rising interest rates, and a stronger U.S.

dollar, which have negatively impacted our current year results.

As the year progressed, we experienced a broad-based decline in customer demand across our core product offerings.

Demand declines were most pronounced in our mobile computing and printing businesses within our EVM and AIT segments, respectively, as we believe many of our customers were absorbing significant capacity built-out in recent years, while also experiencing tighter capital spending budgets.

These dynamics, coupled with a general trend in distributors reducing their inventory levels, negatively impacted our current year results.

We have been partially mitigating the financial impacts of these operating headwinds through a combination of cost management actions and targeted list price increases.

Throughout 2023, we also experienced an overall improvement in both component part availability and costs of transportation, which enabled us to better meet customer demand as compared to the prior year.

We are not yet seeing signs of a broad-based recovery in end-market demand.

2024 Financial Summary and Other Recent Developments

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• Net income was $528 million, or $10.18 per diluted share in the current year, compared to Net income of $296 million, or $5.72 per diluted share in the prior year.

• Net cash used in operating activities was $4 million in the current year compared to net cash provided by operating activities of $488 million in the prior year.

• We repurchased $52 million of common shares in the current year compared to $751 million in the prior year.

Restructuring Activity

As a result of the impacts on our business discussed above, the Company expanded the scope of its 2022 Productivity Plan and initiated a U.S.

employee voluntary retirement plan (“VRP”) in the current year (the “Programs”).

During the first quarter of 2024, the Company committed to additional actions under the 2022 Productivity Plan which will bring the total expected cost of the Programs to approximately $130 million.

These costs are classified within Exit and restructuring on the Consolidated Statements of Operations.

The Programs are expected to impact over 9% of our global employee base and are estimated to result in annualized net cost savings of approximately $120 million, primarily within Operating expenses.

The Company has realized approximately $50 million of net savings to date, primarily in the third and fourth quarters of the current year.

The actions under the VRP have been completed in the current year and the remaining actions under the 2022 Productivity Plan are expected to be substantially completed in the first half of 2024.

• Net cash provided by operating activities was $1,013 million in the current year compared to net cash used in operating activities of $4 million in the prior year.

As we entered 2024, we saw the stabilization of distributor inventory levels in both of our segments and the beginning of a modest recovery in demand trends in certain of our offerings within our EVM segment.

The demand trend recovery broadened across offerings within both segments beginning in the second half of the year contributing to improved revenue and profitability.

As we look ahead to 2025, we expect increased uncertainty and volatility in global trade policy and foreign currency exchange rates.

The Company completed its actions under the 2022 Productivity Plan in the current year.

Total charges associated with the 2022 Productivity Plan and the U.S.

voluntary retirement plan (“VRP”), which was completed in 2023, were $127 million, including $17 million recorded in the current year.

The costs of these actions are classified within Exit and restructuring on the Consolidated Statements of Operations.

Together, these programs have impacted over 9% of our global employee base and have generated approximately $120 million of annualized net cost savings, primarily within Operating expenses.

In the second quarter, the Company completed a private offering of $500 million senior unsecured notes (the “Senior Notes”) with a 6.5% fixed interest rate;

the proceeds of which, were partially used to repay outstanding debt.

Additionally, with the issuance of the fixed rate Senior Notes, the Company terminated its interest rate swap agreements which were intended to result in a fixed interest rate on a portion of our variable rate debt.

On December 27, 2024, the Company entered into a definitive agreement to acquire Photoneo, a leading developer and manufacturer of 3D machine vision offerings.

The purchase price of approximately €60 million is expected to be funded with cash on hand.

The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2025.

The acquired business will become part of the EVM segment.

Results of Operations:

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Total Operating expenses $ 1,671 $ 1,642 $ 2,095 33.5 % 35.8 % 36.2 %

Consolidated Organic Net sales (decline) growth:

Consolidated Organic Net sales growth (decline):

Year Ended December 31,

Reported GAAP Consolidated Net sales (decline) growth

Reported GAAP Consolidated Net sales growth (decline)

8.7 % (20.7) %

Impact of foreign currency translations (1)

Impact of acquisitions (2)

(0.6) % 1.4 %

Consolidated Organic Net sales (decline) growth (3)

Impact of acquisitions (2)

Consolidated Organic Net sales growth (decline) (3)

8.1 % (19.8) %

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Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S.

This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period, inclusive of the Company’s foreign currency hedging program.

(2) For purposes of computing Organic Net sales (decline) growth, amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions.

(3) Consolidated Organic Net sales (decline) growth is a non-GAAP financial measure.

This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods.

(2) For purposes of computing Organic Net sales growth (decline), amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions.

(3) Consolidated Organic Net sales growth (decline) is a non-GAAP financial measure.

See the Non-GAAP Measures section at the end of this item.

2024 compared to 2023

Total Net sales decreased $1,197 million or 20.7% compared to the prior year reflecting declines in both of our segments resulting from broad-based decline in demand for our core products as well as a reduction of inventory levels at our distributors.

Current year Net sales of both segments included the benefit of targeted list price increases, partially offset by the negative effects of foreign currency changes.

Prior year Net sales of both segments were negatively impacted by supply chain bottlenecks, which were most pronounced in our EVM segment.

Excluding the effects of foreign currency changes and acquisitions, Consolidated Organic Net sales decreased by 19.8%.

Total Net sales increased $397 million or 8.7% compared to the prior year reflecting growth in our EVM segment that was partially offset by a slight decline in our AIT segment as the current year recovery in demand trends benefited EVM earlier in the year than AIT.

Excluding the effects of foreign currency changes and acquisitions, Consolidated Organic Net sales increased by 8.1%.

Gross margin increased to 48.4% for the current year compared to 46.3% in the prior year.

As compared to the prior year, Gross margin was significantly higher in our AIT segment, while Gross margin in our EVM segment was modestly lower.

Both segments, particularly AIT, benefited from lower premium freight and component part costs compared to the prior year, and were negatively impacted by volume deleveraging, particularly EVM.

The increase was primarily due to volume leverage, higher service and software margins, lower freight rates, and lower inventory-related charges.

Gross margin was higher in both segments, particularly EVM.

Operating expenses for the years ended December 31, 2024 and 2023 were $1,671 million and $1,642 million, or 33.5% and 35.8% of Net sales, respectively.

Excluding the $372 million settlement charge in the prior year, Operating expenses would have been 29.8% of Net sales.

The increase as a percentage of Net sales over the prior year reflects the impact of expense deleveraging.

Current year Operating expenses were lower than the prior year primarily due to the prior year including a $372 million settlement charge, lower employee incentive compensation, cost efficiencies attributed to our Exit and restructuring actions, lower Amortization of intangible assets, and lower Acquisition and integration costs, partially offset by higher Exit and restructuring costs and the inclusion of operating expenses associated with recently acquired businesses.

Current year Operating expenses were higher than the prior year primarily due to higher incentive compensation, partially offset by lower Exit and restructuring costs and incremental savings largely attributed to our Exit and restructuring actions.

Operating income was $742 million for the current year compared to $481 million for the prior year.

The decrease was due to lower Gross profit partially offset by lower Operating expenses.

Net income decreased 36.1% compared to the prior year primarily due to lower Operating income, as described above, as well as higher Other (expense) income, net.

Other (expense) income, net was an expense of $147 million for the current year, compared to income of $15 million in the prior year primarily due to higher interest expense associated with higher interest rates and average outstanding debt levels as well as lower interest rate swap gains in the current year.

The increase was due to higher Gross profit partially offset by higher Operating expenses.

Net income increased 78.4% compared to the prior year primarily due to higher Operating income, as described above, as well as lower Interest (expense) income, net which included higher interest rate swap gains and interest income in the current year.

The Company’s effective tax rates for the years ended December 31, 2024 and December 31, 2023 were 16.9% and 11.4%, respectively.

The decrease in the effective tax rate compared to the prior year was primarily due to favorability in discrete items.

Diluted earnings per share decreased to $5.72 as compared to $8.80 in the prior year due to lower Net income, partially offset by lower average shares outstanding.

The increase in the effective tax rate compared to the prior year was primarily due to lower rate benefits from tax credits and discrete items as well as higher state income taxes.

Diluted earnings per share increased to $10.18 as compared to $5.72 in the prior year primarily due to higher Net income.

Results of Operations by Segment

The following commentary should be read in conjunction with the financial results of each reportable business segment as detailed in Note 20, Segment Information & Geographic Data in the Notes to Consolidated Financial Statements.

To the extent applicable, segment operating income excludes business acquisition purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, as well as certain other non-recurring costs (such as the settlement in the prior year).

To the extent applicable, segment operating income excludes Amortization of intangible assets, Acquisition and integration costs, Exit and restructuring costs, as well as certain other non-recurring costs (such as the Settlement costs in 2022, impairment of goodwill and other intangibles, and business acquisition purchase accounting adjustments).

Asset Intelligence & Tracking Segment (“AIT”)

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Operating income $ 335 $ 346 $ 361 (3.2) % (4.2) %

AIT Organic Net sales (decline) growth:

AIT Organic Net sales (decline):

Year Ended December 31,

AIT Reported GAAP Net sales (decline) growth

AIT Reported GAAP Net sales (decline)

(0.2) % (10.1) %

Impact of foreign currency translations (1)

AIT Organic Net sales (decline) growth (2)

(0.7) % 1.3 %

AIT Organic Net sales (decline) (2)

(0.9) % (8.8) %

(1) Operating results reported in U.S.

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(2) AIT Organic Net sales (decline) growth is a non-GAAP financial measure.

(2) AIT Organic Net sales (decline) is a non-GAAP financial measure.

See the Non-GAAP Measures section at the end of this item.

2024 compared to 2023

Total Net sales for AIT decreased $186 million or 10.1% compared to the prior year primarily due to lower sales of printing products and the negative effects of foreign currency changes, partially offset by targeted list price increases.

Total Net sales for AIT decreased $4 million or 0.2% compared to the prior year primarily due to lower sales of printing products and supplies, partially offset by favorable foreign currency changes and higher sales of RFID products.

Excluding the impact of foreign currency changes, AIT Organic Net sales decreased by 0.9%.

Gross margin increased to 47.7% in the current year compared to 43.3% for the prior year primarily due to lower premium freight and component part costs, and price increases, partially offset by the negative impact of foreign currency changes and volume deleveraging.

Operating income decreased 4.2% in the current year compared to the prior year due to lower Gross profit and higher Operating expenses.

Gross margin increased to 48.1% in the current year compared to 47.7% for the prior year primarily due to favorable foreign currency changes, partially offset by higher inventory-related charges.

Operating income decreased 3.2% in the current year compared to the prior year due to higher Operating expenses partially offset by higher Gross profit.

Enterprise Visibility & Mobility Segment (“EVM”)

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Operating income $ 534 $ 343 $ 711 55.7 % (51.8) %

EVM Organic Net sales (decline) growth:

EVM Organic Net sales growth (decline):

Year Ended December 31,

EVM Reported GAAP Net sales (decline) growth

EVM Reported GAAP Net sales growth (decline)

13.7 % (25.6) %

Impact of foreign currency translations (1)

Impact of acquisitions (2)

(0.5) % 1.5 %

EVM Organic Net sales (decline) growth (3)

Impact of acquisitions (2)

EVM Organic Net sales growth (decline) (3)

13.2 % (24.9) %

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(2) For purposes of computing EVM Organic Net sales (decline) growth, amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions.

(3) EVM Organic Net sales (decline) growth is a non-GAAP financial measure.

This impact is calculated by

translating the current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods.

(2) For purposes of computing EVM Organic Net sales growth (decline), amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions.

(3) EVM Organic Net sales growth (decline) is a non-GAAP financial measure.

See the Non-GAAP Measures section at the end of this item.

2024 compared to 2023

Total Net sales for EVM decreased $1,011 million or 25.6% compared to the prior year primarily due to lower sales of mobile computing products (contributing the majority of the total decrease) and data capture products, which were partially offset by higher sales of services and software, and contributions from our recent acquisitions.

Current year Net sales included the benefit of targeted list price increases, substantially offset by the negative effects of foreign currency changes.

Excluding the impacts of foreign currency changes and acquisitions, EVM Organic Net sales decreased by 24.9%.

Gross margin decreased to 45.6% in the current year compared to 46.4% for the prior year primarily due to product volume deleveraging, the negative impact of foreign currency changes and inventory-related charges, partially offset by pricing, higher service and software margins, and lower premium freight and component part costs.

Operating income for the current year decreased 51.8% compared to the prior year due to lower Gross profit, partially offset by lower Operating expenses.

Total Net sales for EVM increased $401 million or 13.7% compared to the prior year primarily due to higher sales of mobile computing products, and services and software, partially offset by lower sales of data capture products.

Excluding the impacts of foreign currency changes and acquisitions, EVM Organic Net sales increased by 13.2%.

Gross margin increased to 48.6% in the current year compared to 45.6% for the prior year primarily due to volume leverage, favorable business mix, higher service and software margins, lower inventory-related charges, and lower freight rates.

Operating income for the current year increased 55.7% compared to the prior year due to higher Gross profit partially offset by higher Operating expenses.

Liquidity and Capital Resources

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2024 2023 2022

Cash flow (used in) provided by:

Cash flow provided by (used in):

Operating activities $ 1,013 $ (4) $ 488 $ 1,017 $ (492)

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The change in our cash and cash equivalents balance during the current year is reflective of the following:

• $492 million of incremental operating cash outflows primarily due to reduced operating profits and higher cash payments for income taxes, Exit and restructuring actions, interest, inventory purchases, and the settlement, partially offset by favorability in the timing of customer collections and lower employee incentive compensation payments.

• $876 million less in investing activities primarily due to cash payments for the acquisition of Matrox in the prior year.

• $136 million less in financing activities primarily due to increased borrowings in the prior year as a result of the Company refinancing its long-term credit facilities, partially offset by lower common stock repurchases in the current year.

• $1,017 million change in operating activities primarily due to the timing of cash payments and the reduction of overall inventory levels, lower legal settlement, income tax, and employee incentive compensation payments, higher cash receipts on interest rate swaps attributed to the termination of those agreements, as well as overall improved operating profits.

• $307 million change in financing activities primarily due to current year net debt repayments as a portion of the recently issued Senior Notes was utilized to reduce total debt, compared to net borrowings in the prior year.

The following table shows the carrying value of the Company’s debt (in millions):

Term Loan A $ 1,575 $ 1,684

Senior Notes 500 —

Revolving Credit Facility — 413

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Total long-term debt $ 2,092 $ 2,047

In May 2022, the Company refinanced its long-term credit facilities by entering into its third amendment to the Amended and Restated Credit Agreement, which increased the Company’s borrowing under Term Loan A from $875 million to $1.75 billion and the Company’s borrowing capacity under the Revolving Credit Facility from $1 billion to $1.5 billion, extended the maturities of the facilities to May 25, 2027, and replaced LIBOR with SOFR as the benchmark reference rate.

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in March 2024 and the majority due upon maturity in 2027.

The Company may make prepayments in whole or in part, without premium or penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions.

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in the second quarter of 2026 and the majority due upon maturity in 2027.

The Company has and may make prepayments in whole or in part, without premium or penalty;

and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions.

As of December 31, 2024, the Term Loan A interest rate was 5.71%.

Interest payments are made monthly and are subject to variable rates plus an applicable margin.

In the second quarter of 2024, the Company completed a private offering of $500 million senior unsecured notes (the “Senior Notes”) with a 6.5% fixed interest rate.

The net proceeds of the issuance, after deducting debt issuance costs which were deferred, were approximately $492 million.

The Senior Notes mature on June 1, 2032, and interest is payable semi-annually in arrears in June and December of each year, commencing on December 1, 2024.

The Company may make prepayments in whole or in part, without premium or penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions.

The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of Zebra’s existing and future subsidiaries.

The Senior Notes contain covenants that, among other things, limit the ability of Zebra to:

(i) grant or incur liens;

(ii) have its subsidiaries guarantee debt without becoming guarantors;

and (iii) merge or consolidate with another company or sell all or substantially all of its assets.

Revolving Credit Facility

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The Revolving Credit Facility matures on May 25, 2027.

Receivables Financing Facilities

The Company has two Receivables Financing Facilities with financial institutions that have a combined total borrowing limit of up to $280 million.

Receivables Financing Facility

As of December 31, 2024, the Company has a Receivables Financing Facility with a borrowing limit of up to $180 million.

As collateral, the Company pledges perfected first-priority security interests in its U.S.

domestically originated accounts receivable.

The Company has accounted for transactions under its facilities as secured borrowings.

The Company’s first facility allows for borrowings of up to $180 million and matures on March 19, 2024.

The Company’s second facility allows for borrowings of up to $100 million and matures on May 13, 2024.

As of December 31, 2023, the Company’s Consolidated Balance Sheets included $483 million of gross receivables that were pledged under the facilities.

As of December 31, 2023, $129 million had been borrowed and was classified as current.

Borrowings under the facilities bear interest at a variable rate plus an applicable margin.

As of December 31, 2023, the facilities had an average interest rate of 6.81%.

The Company has accounted for transactions under this facility as secured borrowings.

During the first quarter of 2024, the Company amended this facility to extend the maturity to March 19, 2027 but otherwise did not substantially change the terms of the facility.

As of December 31, 2024, the Company’s Consolidated Balance Sheets included $638 million of gross receivables that were pledged under the facility.

As of December 31, 2024, $108 million had been borrowed, of which $79 million was classified as current.

Borrowings under the facility bear interest at a variable rate plus an applicable margin.

As of December 31, 2024, the facility had an average interest rate of 5.38%.

Interest is paid monthly on these borrowings.

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Receivables Factoring

The Company transfers certain receivables to banks without recourse as part of its credit and cash management activities.

Such transfers are accounted for as sales and the related receivables are removed from the Company’s balance sheet.

The Company has a Receivables Factoring arrangement, pursuant to which certain receivables originated from the EMEA and Asia-Pacific regions up to a maximum of €75 million, as amended, are sold to a bank without recourse in exchange for cash.

Transactions under the Receivables Factoring arrangement are accounted for as sales and the related receivables are removed from the Company’s balance sheet.

The Company does not maintain any beneficial interest in the receivables sold.

The Company services the receivables on behalf of the banks, but otherwise maintains no significant continuing involvement with respect to the receivables.

The bank’s purchase of eligible receivables is subject to a maximum amount of uncollected receivables.

The Company services the receivables on behalf of the bank, but otherwise maintains no significant continuing involvement with respect to the receivables.

Sale proceeds that are representative of the fair value of factored receivables, less a factoring fee, are reflected in Cash flows from operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Cash flows from financing activities on the Consolidated Statements of Cash Flows.

The Company has two Receivables Factoring arrangements.

One arrangement allows for the factoring of up to €150 million of uncollected receivables originated from the EMEA and Asia-Pacific regions.

In the third quarter, the Company amended its second arrangement to allow the factoring of uncollected receivables originated from the EMEA region from up to $25 million to $50 million.

Otherwise, the amendment did not substantially change the terms of the arrangement.

As of December 31, 2024 and 2023, there were a total of $28 million and $56 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

As servicer of sold receivables, the Company had $112 million and $130 million of obligations that were not yet remitted to banks as of December 31, 2023 and 2022, respectively.

As servicer of sold receivables, the Company had $51 million and $112 million of obligations that were not yet remitted to the bank as of December 31, 2024 and 2023, respectively.

These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Cash flows from financing activities on the Consolidated Statements of Cash Flows.

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On May 17, 2022, the Company announced that its Board of Directors authorized a share repurchase program for up to $1 billion of its outstanding shares of common stock.

This authorization augments the previous $1 billion share repurchase authorization which was announced on July 30, 2019.

The newly authorized share repurchase program does not have a stated expiration date.

The authorized share repurchase program does not have a stated expiration date.

The level of the Company’s repurchases depends on a number of factors, including its financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors its management may deem relevant.

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During the year ended December 31, 2024, the Company repurchased 130,560 shares of common stock for approximately $47 million.

As of December 31, 2023, the Company has cumulatively repurchased 3,517,602 shares of common stock for approximately $1.1 billion, resulting in a remaining amount of share repurchases authorized under the plans of $893 million.

As of December 31, 2024, the Company has cumulatively repurchased 539,574 shares of common stock for approximately $154 million, resulting in a remaining amount of share repurchases authorized under the plans of $846 million.

Subsequent to the year ended December 31, 2024, the Company has repurchased 128,466 shares of common stock for approximately $50 million through February 6, 2025.

Future Cash Requirements

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Included in the Company’s Cash and cash equivalents are amounts held by foreign subsidiaries, which was $52 million and $33 million as of December 31, 2024 and 2023, respectively.

We do not expect that Cash and cash equivalents held by foreign subsidiaries will need to be repatriated in order to fund the Company’s U.S.

We do not expect that Cash and cash equivalents held by foreign subsidiaries will need to be repatriated to fund the Company’s U.S.

operations based on current cash requirements.

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• Debt obligations — We expect to make total payments of approximately $210 million associated with the Company’s debt facilities in 2025.

This expected use of cash is based on the Company’s current borrowings and applicable interest rates and margins as of December 31, 2023, and includes principal and interest payments along with expected cash settlements associated with the Company’s interest rate swaps.

This expected use of cash is based on the Company’s current borrowings and applicable interest rates and margins as of December 31, 2024, and includes principal and interest payments.

In the ordinary course of business, the Company may decide to borrow additional amounts or repay principal earlier than contractually owed, which would affect future cash payments.

See Note 12, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s debt facilities.

• Leases obligations — We lease certain manufacturing facilities, distribution centers, sales and administrative offices, equipment, and vehicles.

• Leases obligations — We lease various manufacturing and repair facilities, distribution centers, research facilities, sales and administrative offices, equipment, and vehicles.

As of December 31, 2024, the Company’s fixed lease commitments totaled $233 million, of which $46 million is payable in 2025.

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In particular, our income tax provision or benefit is dependent on our ability to forecast future taxable income in the U.S., U.K., Singapore, and other jurisdictions.

Significant judgments included in our forecasts include projecting future sales volumes and pricing, costs to manufacture and procure products and to deliver services and solutions, among other factors.

Significant judgments included in our forecasts include projecting future sales volumes and pricing, costs to manufacture and procure products and to deliver offerings, among other factors.

There were no significant changes in estimates to our income tax provision during the current year.

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Revenue Recognition

We recognize revenues when we transfer control of promised goods, solutions or services to our customers in an amount that reflects the consideration we expect to receive.

We recognize revenues when we transfer control of promised offerings to our customers in an amount that reflects the consideration we expect to receive.

The consideration that we expect to receive is estimated by reflecting reductions to our transaction price for product returns, rebates, and other incentives.

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The Company has provided reconciliations of the supplemental non-GAAP financial measures, as defined under the rules of the Securities and Exchange Commission, presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

These supplemental non-GAAP financial measures – Consolidated Organic Net sales (decline) growth, AIT Organic Net sales (decline) growth, and EVM Organic Net sales (decline) growth – are presented because our management evaluates our financial results both including and excluding the effects of business acquisitions and foreign currency translation, as applicable.

These supplemental non-GAAP financial measures – Consolidated Organic Net sales growth (decline), AIT Organic Net sales (decline), and EVM Organic Net sales growth (decline) – are presented because our management evaluates our financial results both including and excluding the effects of business acquisitions and foreign currency translation, as applicable.

Management believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of our business from period to period and trends in our historical operating results.

1 unchanged sentence

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