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Item 7. Management’s Discussion and Analysis

2026-02-12 compared with 2025-02-13 · 117 added, 132 removed, 177 unchanged (58% of the section changed)

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This section generally discusses fiscal 2025 and 2024 items and year-over-year comparisons between 2025 and 2024.

Discussions of 2022 items and year-over-year comparisons between 2023 and 2022 are not included herein.

Discussions of 2023 items and year-over-year comparisons between 2024 and 2023 are not included herein, other than within the Results of Operations by Segment which reflects the changes made to our segment reporting made in 2025.

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, 2024 for that discussion.

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:

Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”).

The Company is a global leader in the Automatic Identification and Data Capture (“AIDC”) industry, ensuring frontline operations everywhere are digitized, automated and intelligent.

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

Effective in the fourth quarter of 2025, we realigned our reportable segments from the former Enterprise Visibility & Mobility (EVM) and Asset Intelligence & Tracking (AIT) segments to two new segments:

Connected Frontline (“CF”) and Asset Visibility and Automation (“AVA”).

Our CF and AVA segment results will also exclude share-based compensation expense from the measurement of segment operating income.

Refer to Part I, Item 1 of this document for additional information.

• The AIT segment is an industry leader in barcode printing and asset tracking technologies.

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 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.

• The CF segment is focused on unifying teams, customers, and AI agents to deliver enhanced frontline experiences.

This segment brings together solutions that empower frontline workers with the information and tools they need to make smarter decisions and improve customer service.

Principal product categories include mobile computing, point of sale solutions, self-service kiosks and interactive touchscreen displays, workflow optimization software solutions, and related services.

• The AVA segment provides solutions that track critical assets and automate workflows to provide the real-time, data-driven insights necessary to optimize supply chains, manufacturing, and logistics.

The principal product categories include thermal barcode printing and related supplies and sensors, data capture, fixed industrial scanning, machine vision, RFID, real-time location systems (RTLS), and related services.

2025 Financial Summary and Other Recent Developments

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• Net income was $419 million, or $8.18 per diluted share in the current year, compared to Net income of $528 million, or $10.18 per diluted share in the prior year.

• 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.

• We repurchased $587 million of common shares, including $303 million in the fourth quarter.

Exit & Restructuring Actions:

In the fourth quarter of 2025, we announced our intention to dispose of or exit our robotics automation solutions business in an effort to better align resources with our strategic priorities.

In relation to this decision, we incurred approximately $55 million in one-time costs in the fourth quarter, principally consisting of long-lived asset impairments of $45 million, including an intangible asset impairment of $34 million, a right-of-use lease asset impairment of $8 million, and property, plant and equipment impairment of $3 million.

The other one-time costs consisted of employee severance and working capital-related charges.

These one-time costs are classified as Exit and restructuring on the Consolidated Statement of Operations.

Additional costs may be incurred in 2026, as we complete the divestiture of this business.

In the fourth quarter of 2025, the Company committed to certain organizational changes designed to generate cost efficiencies while better aligning our organizational structure with the Company’s long-term growth strategy (collectively referred to as the “2025 Productivity Plan”).

The total cost under the 2025 Productivity Plan, which is expected to be substantially completed in 2026 and will primarily consist of employee severance costs, is estimated to be approximately $35- 40 million, including $21 million recognized in the fourth quarter of 2025.

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.

We expect annualized pre-tax operating costs savings of at least $20 million from these actions, net of re-investment into advancing the Company’s AI product portfolio, reorganizing our sales force, and absorbing increased employee-related costs.

Acquisitions:

On September 30, 2025, the Company acquired Elo Holdings, Inc.

(“Elo”) for $1,303 million in cash, net of cash on hand.

Elo is an innovator of solutions that engage customers, enhance self-service, and accelerate automation across a wide range of end

The Elo acquisition expands our portfolio of self-service and consumer-facing workflow offerings.

The operating results of Elo are included in the CF segment.

On February 28, 2025, the Company acquired Photoneo for approximately $62 million in cash.

Photoneo is a leading developer and manufacturer of 3D machine vision offerings.

The Photoneo acquisition complements and expands our machine vision offerings across several industries.

The operating results of Photoneo are included in the AVA segment.

See Note 5, Business Acquisitions in the Notes to Consolidated Financial Statements for additional details.

Results of Operations:

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Year Ended December 31, Percent

Change 2024 vs 2023

Change 2025 vs 2024 Percent

Change 2024 vs 2023

2025 2024 2023

Tangible products $ 4,418 $ 4,016 $ 3,665 10.0 % 9.6 %

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Year Ended December 31, Percent

Change 2024 vs 2023

Change 2025 vs 2024 Percent

Change 2024 vs 2023

2025 2024 2023

North America $ 2,695 $ 2,492 $ 2,353 8.1 % 5.9 %

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Year Ended December 31, As a Percentage of Net sales

2025 2024 2023 2025 2024 2023

Selling and marketing $ 653 $ 600 $ 581 12.1 % 12.0 % 12.7 %

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General and administrative 433 381 334 8.0 % 7.6 % 7.3 %

Settlement and related costs — — 372 — % — % 6.4 %

Amortization of intangible assets 114 104 104 NM NM NM

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Total Operating expenses $ 1,893 $ 1,671 $ 1,642 35.1 % 33.5 % 35.8 %

Consolidated Organic Net sales growth (decline):

Consolidated Organic Net sales growth:

Year Ended December 31,

Reported GAAP Consolidated Net sales growth (decline)

8.7 % (20.7) %

Reported GAAP Consolidated Net sales growth

Impact of foreign currency translations (1)

(0.6) % 1.4 %

Impact of acquisitions (2)

Consolidated Organic Net sales growth (decline) (3)

8.1 % (19.8) %

Consolidated Organic Net sales growth (3)

(1) Operating results reported in U.S.

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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.

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

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

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

2025 compared to 2024

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.

Total Net sales increased $415 million or 8.3% compared to the prior year reflecting growth in both our AVA and CF segments associated with improved demand trends that began in the middle of 2024, along with contributions from our recent Elo and Photoneo acquisitions.

Excluding the effects of foreign currency changes and acquisitions, Consolidated Organic Net sales increased by 6.2%.

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

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.

Gross margin decreased to 48.1% for the current year compared to 48.4% in the prior year.

The decrease was primarily due to unfavorable impacts of tariffs, net of mitigating actions, along with lower services and software margins, largely offset by volume leverage favorability.

Gross margin was higher in AVA and declined in CF.

As we exited 2025, the unfavorable impacts of existing import tariffs have been fully mitigated.

Operating expenses for the years ended December 31, 2025 and 2024 were $1,893 million and $1,671 million, or 35.1% and 33.5% of Net sales, respectively.

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.

Current year Operating expenses were higher than the prior year primarily due to higher employee and employee-related costs, the inclusion of operating expenses and higher acquisition and integration costs associated with recently acquired companies, and higher exit and restructuring costs primarily driven by the planned divestiture of our robotics automation solutions business.

The higher employee and employee-related costs in the current year include higher share-based compensation costs, primarily driven by changes made in the current year to the timing of the annual grant and eligibility provisions as well as improved expected attainment associated with performance-based awards.

Operating income was $700 million for the current year compared to $742 million for the prior 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 decrease was due to higher Operating expenses, partly offset by higher Gross profit.

Total other expense, net, increased primarily due to non-recurring interest rate swap gains in the prior year and foreign exchange transaction losses in the current year, partly offset by lower net interest costs associated with the Company’s borrowings driven by rate favorability and higher interest income on cash equivalents in the current year.

The Company’s effective tax rates for the years ended December 31, 2025 and December 31, 2024 were 25.2% and 16.9%, respectively.

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.

The increase in the effective tax rate compared to the prior year was primarily due to increased taxes related to foreign earnings subject to U.S.

taxation as a result of 2025 U.S tax legislation, lower share-based compensation deductions, increased reserves for uncertain tax positions, and U.S.

state income taxes, partly offset by the generation of U.S.

and Canadian tax credits and the release of certain Canadian valuation allowance reserves.

Net income decreased 20.6% compared to the prior year due to lower Operating income, higher non-operating expenses, and higher income taxes, as described above.

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 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”)

To the extent applicable, Share-based Compensation, Amortization of intangible assets, Acquisition and integration costs, Exit and restructuring costs, as well as certain other non-recurring costs (impairment of goodwill and other intangible assets, and business acquisition purchase accounting adjustments) are excluded from segment results.

Connected Frontline (“CF”)

(amounts in millions, except percentages)

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Operating income $ 585 $ 559 $ 328 4.7 % 70.4 %

AIT Organic Net sales (decline):

CF Organic Net sales growth:

Year Ended December 31,

AIT Reported GAAP Net sales (decline)

(0.2) % (10.1) %

CF Reported GAAP Net sales growth

Impact of foreign currency translations (1)

(0.7) % 1.3 %

AIT Organic Net sales (decline) (2)

(0.9) % (8.8) %

Impact of acquisition (2)

CF Organic Net sales growth (3)

(1) Operating results reported in U.S.

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

(2) For purposes of computing Organic Net sales growth, amounts directly attributable to the acquisition of Elo are excluded for twelve months following the September 30, 2025 acquisition date.

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

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

2025 compared to 2024

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 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”)

Total Net sales for CF increased $246 million, or 9.1%, compared to the prior year primarily due to higher sales of mobile computing products and the net sales of Elo.

CF Organic Net sales increased by 5.6%.

Gross margin decreased to 47.2% in the current year compared to 49.2% in the prior year primarily due to unfavorable impacts of tariffs, net of mitigating actions, and lower services and software margins, partly offset by volume leverage favorability.

Operating income increased 4.7% in the current year compared to the prior year due to higher Gross profit, partly offset by higher Operating expenses.

The inclusion of Elo’s results of operations also contributed to the higher Gross profit and Operating expenses.

2024 compared to 2023

Total Net sales for CF increased $434 million, or 19.0%, compared to 2023 primarily due to higher sales of mobile computing products, favorable foreign currency changes, as well as higher services and software sales.

CF Organic Net sales increased by 18.5%.

Gross margin increased to 49.2% in 2024 compared to 45.2% in 2023 primarily due to volume leverage, favorable business mix, higher service and software margins, lower freight rates, and lower inventory-related charges.

Operating income increased 70.4% in 2024 compared to 2023 due to higher Gross profit, partly offset by higher Operating expenses.

Asset Visibility & Automation (“AVA”)

(amounts in millions, except percentages)

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Operating income $ 514 $ 420 $ 427 22.4 % (1.6) %

EVM Organic Net sales growth (decline):

AVA Organic Net sales growth (decline):

Year Ended December 31,

EVM Reported GAAP Net sales growth (decline)

AVA Reported GAAP Net sales growth (decline)

7.5 % (1.6) %

Impact of foreign currency translations (1)

(0.5) % 1.5 %

Impact of acquisitions (2)

EVM Organic Net sales growth (decline) (3)

Impact of acquisition (2)

AVA Organic Net sales growth (decline) (3)

7.0 % (2.2) %

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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 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.

(2) For purposes of computing AVA Organic Net sales growth (decline), amounts directly attributable to the acquisition of Photoneo are excluded for twelve months following the February 28, 2025 acquisition date.

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

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

2025 compared to 2024

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.

Total Net sales for AVA increased $169 million, or 7.5%, compared to the prior year primarily due to higher sales of printing products, as well as higher sales of RFID, supplies and sensors, and data capture products.

AVA Organic Net sales increased by 7.0%.

Gross margin increased to 50.0% in the current year compared to 48.0% for the prior year primarily due to primarily due to favorable business mix, lower inventory related charges, and volume leverage favorability.

Operating income for the current year increased 22.4% compared to the prior year due to higher Gross profit partially offset by higher Operating expenses.

2024 compared to 2023

Total Net sales for AVA decreased $37 million, or 1.6%, compared to 2023 primarily due to lower sales of data capture and printing products, partly offset by favorable foreign currency changes and higher sales of services and software and RFID products.

AVA Organic Net sales decreased by 2.2%.

Gross margin increased to 48.0% in 2024 compared to 47.7% in the previous year primarily due to favorable business mix, partly offset by higher inventory related charges.

Operating income decreased by 1.6% in 2024 compared to 2023 due to lower Gross profit, partly offset by lower Operating expenses.

Liquidity and Capital Resources

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The following table summarizes our cash flow activities for the years indicated (in millions):

Year Ended December 31, $ Change 2024 vs 2023

$ Change 2023 vs 2022

Year Ended December 31, $ Change 2025 vs 2024 $ Change 2024 vs 2023

2025 2024 2023

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Effect of exchange rates on cash balances 1 (3) — 4 (3)

Net increase (decrease) in cash and cash equivalents, including restricted cash $ 763 $ 21 $ (227) $ 742 $ 248

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

• $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.

Net (decrease) increase in cash and cash equivalents, including restricted cash $ (776) $ 763 $ 21 $ (1,539) $ 742

Cash flow provided by (used in):

Operating activities $ 917 $ 1,013 $ (4) $ (96) $ 1,017

Purchases of property, plant and equipment (86) (59) (87) (27) 28

Free cash flow (Non-GAAP) (1)

$ 831 $ 954 $ (91) $ (123) $ 1,045

(1) Free cash flow, a non-GAAP measure, is defined as Net cash provided by (used in) operating activities in a period minus purchases of property, plant and equipment (capital expenditures) made in that period.

The change in our cash and cash equivalents balance during the current year was primarily due to the following:

• $96 million decrease in net operating cash inflows primarily due to larger reductions in inventory in the prior year, higher employee incentive compensation payments in the current year, and cash receipts from the settlements of terminated interest rate swap agreements in the prior year.

These items were partly offset by favorable timing of customer collections.

• $1,398 million increase in net investing cash outflows primarily due to the acquisitions of Elo and Photoneo and higher capital expenditures in the current year.

• $49 million increase in net financing cash outflows primarily due to higher share repurchases in the year, partly offset by borrowings to help fund the acquisition of Elo in the fourth quarter as well as the timing of transactions associated with servicing factored receivables.

• Free cash flow remains strong, with the decline compared to the prior year due to lower operating cash inflows and higher capital expenditures, as described above.

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

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Revolving Credit Facility 275 —

Receivables Financing Facilities 108 129

Receivables Financing Facility 161 108

Total debt $ 2,511 $ 2,183

Debt issuance costs (9) (2)

Unamortized debt issuance costs (8) (9)

Unamortized discounts (2) (3)

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Total long-term debt $ 2,361 $ 2,092

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

The Company has a Revolving Credit Facility that is available for working capital and other general business purposes, including letters of credit.

As of December 31, 2024, the Company had letters of credit totaling $10 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1,500 million to $1,490 million.

As of December 31, 2024, the Revolving Credit Facility had an average interest rate of 5.68%.

Upon borrowing, interest payments are made monthly and are subject to variable rates plus an applicable margin.

The Revolving Credit Facility matures on May 25, 2027.

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 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.

In the fourth quarter of 2025, we increased our borrowings under the Revolving Credit Facility to help fund the acquisition of Elo.

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

Receivables Factoring

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 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.

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 $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.

See Note 19, Accounts Receivable Factoring in the Notes to Consolidated Financial Statements for further details.

Share Repurchases

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.

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.

The timing, volume, and nature of repurchases are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time.

Repurchases may be affected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934.

During the year ended December 31, 2025, the Company repurchased 2,138,127 shares of common stock for approximately $587 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.

Subsequent to the year ended December 31, 2025, the Company repurchased 401,649 shares of common stock for approximately $100 million through February 5, 2026.

Additionally, on February 4, 2026, the Company’s Board of Directors authorized additional share repurchases of up to $1 billion.

The timing, volume, and nature of repurchases are also subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time.

Future Cash Requirements

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See Note 13, Leases in the Notes to Consolidated Financial Statements for further details related to the Company’s lease arrangements.

In addition to the expected cash requirements described above, the Company may use cash to fund strategic acquisitions, investments, or repurchase common stock under its share repurchase program.

In addition to the expected cash requirements described above, we may use cash to fund strategic acquisitions, investments, or repurchase common stock under our share repurchase program.

In October 2025, we announced our commitment to repurchase $500 million of shares over the following twelve months, of which $403 million had already been repurchased as of February 5, 2026.

We also expect to spend approximately $85 million to $95 million on capital expenditures in 2026.

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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.

Our estimate of the current year income tax provision includes the impact of the 2025 U.S.

tax legislation.

We account for acquired businesses using the acquisition method of accounting.

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market-based discount rates and other market factors.

Our annual impairment testing, most recently completed in the fourth quarter of 2024, continues to indicate that the fair values of each of our reporting units significantly exceed their respective carrying values.

Our annual impairment testing, most recently completed in the fourth quarter of 2025 both immediately before and after the Company’s segment and reporting unit change, continues to indicate that the fair values of each of our reporting units exceed their respective carrying values.

Revenue Recognition

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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 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.

These supplemental non-GAAP financial measures – Consolidated Organic Net sales growth, CF Organic Net sales growth, AVA Organic Net sales growth (decline), and Free cash flow – 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis