Sensata Technologies Reports Third Quarter 2024 Financial Results

Sensata Technologies Reports Third Quarter 2024 Financial Results

Media & Investors:
James Entwistle
+1(508) 954-1561
jentwistle@sensata.com
investors@sensata.com

Sensata Technologies (NYSE: ST), a global industrial technology company and leading provider of sensors, sensor-rich solutions and electrical protection devices used in mission-critical systems to help its customers address increasingly complex engineering and operating performance requirements, today announced financial results for its third quarter ended September 30, 2024.

“Our third quarter core operating results demonstrate early positive returns from our strategic efforts to improve operational efficiency, drive execution, and expand margins," said Martha Sullivan, Interim President and CEO of Sensata. “We are confident that our continued efforts to streamline processes and improve manufacturing productivity will position us to deliver on our commitment to further increase adjusted operating margins in the fourth quarter."

Operating Results - Third Quarter

Operating results for the third quarter of 2024 compared to the third quarter of 2023 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.

Revenue:

Revenue was $982.8 million, a decrease of $18.5 million, or 1.8%, compared to $1,001.3 million in the third quarter of 2023.

Operating loss / income:

Operating loss of $199.2 million, or 20.3% of revenue, decreased by $315.5 million, or 271.4%, compared to operating income of $116.3 million, or 11.6% of revenue, in the third quarter of 2023.
The third quarter 2024 operating loss reflects certain charges, including: approximately $150 million in goodwill impairment related to the Dynapower business; approximately $141 million reflected in restructuring and other in connection with the loss on the sale of the Insights business and additional product lifecycle management related exits; and approximately $27 million in expenses related to product lifecycle management related exits reflected in cost of revenue.
Adjusted operating income was $188.4 million, or 19.2% of revenue, a decrease of $3.2 million, or 1.7%, compared to adjusted operating income of $191.6 million, or 19.1% of revenue, in the third quarter of 2023.

Loss / earnings per share:

Loss per share was $0.17, a decrease of $0.58, or 141.5%, compared to earnings per share of $0.41 in the third quarter of 2023. The loss per share includes the release of a tax valuation allowance related to certain intellectual property assets resulting in a $258 million tax benefit.
Adjusted earnings per share was $0.86, a decrease of $0.05, or 5.5%, compared to adjusted earnings per share of $0.91 in the third quarter of 2023.

Sensata generated free cash flow of $91.3 million in the third quarter of 2024, and ended the quarter with $506.2 million of cash on hand.

In July 2024, Sensata redeemed $700 million of bonds that were scheduled to mature in October 2025. The redemption was funded by proceeds from the $500 million senior notes issuance in June 2024 and approximately $200 million of cash on hand.

During the third quarter of 2024, Sensata returned approximately $55.4 million to shareholders, including $37.2 million of share repurchases and $18.1 million in quarterly dividends of $0.12 per share paid on August 28, 2024.

Operating Results - Nine Months

Operating results for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.

Revenue:

Revenue was $3,025.1 million, a decrease of $36.5 million, or 1.2%, compared to $3,061.6 million in the nine months ended September 30, 2023.

Operating income:

Operating income was $75.5 million, or 2.5% of revenue, a decrease of $307.6 million, or 80.3%, compared to operating income of $383.1 million, or 12.5% of revenue, in the nine months ended September 30, 2023.
Operating income for the nine month period includes the third quarter 2024 charges noted above, which were: approximately $150 million in goodwill impairment related to the Dynapower business; approximately $141 million reflected in restructuring and other in connection with the loss on the sale of the Insights business and additional product lifecycle management related exits; and approximately $27 million in expenses related to product lifecycle management related exits reflected in cost of revenue.
Adjusted operating income was $573.6 million, or 19.0% of revenue, a decrease of $16.7 million, or 2.8%, compared to adjusted operating income of $590.3 million, or 19.3% of revenue, in the nine months ended September 30, 2023.

Earnings per share:

Earnings per share was $0.81, a decrease of $0.49, or 37.7%, compared to earnings per share of $1.30 in the nine months ended September 30, 2023. Earnings per share in the 2024 period includes the release of a tax valuation allowance related to certain intellectual property assets resulting in a $258 million tax benefit.
Adjusted earnings per share was $2.68, a decrease of $0.12, or 4.3%, compared to adjusted earnings per share of $2.80 in the nine months ended September 30, 2023.

Sensata generated free cash flow of $254.1 million in the nine months ended September 30, 2024.

During the first nine months of 2024, Sensata returned approximately $101.6 million to shareholders including $54.3 million through its quarterly dividend, and $47.3 million of repurchased shares.

Guidance

For the fourth quarter of 2024, Sensata expects revenue of $870 to $900 million and adjusted EPS of $0.71 to $0.76.

Q4-2024 Guidance
$ in millions, except EPS	Q4-24 Guidance	Q3-24	Q/Q Change
Revenue	$870 - $900	$982.8	(11%) - (8%)
Adjusted Operating Income	$167.2 - $175.2	$188.4	(11%) - (7%)
Adj. Operating Margin	19.2% - 19.5%	19.2%	0 bps - 30 bps
Adjusted Net Income	$107 - $115	$130.1	(18%) - (12%)
Adjusted EPS	$0.71 - $0.76	$0.86	(17%) - (12%)

The decrease in revenue from the third quarter of 2024 to the fourth quarter of 2024 is primarily attributable to the following factors:

Sale of Insights business in the third quarter of 2024 (approximately $50 million)
Incremental exits of underperforming products (approximately $20 million)
Reduced production expectations in automotive and heavy vehicle (approximately $30 million)

Conference Call and Webcast

Sensata will conduct a conference call today at 4:30 p.m. Eastern Time to discuss its third quarter 2024 financial results and its outlook for the fourth quarter of 2024. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Technologies Q3 2024 Financial Results Conference Call." A live webcast of the conference call will also be available on the investor relations page of Sensata’s website at http://investors.sensata.com. Additionally, a replay of the call will be available until November 11, 2024. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 1693084.

About Sensata Technologies

Sensata Technologies is a global industrial technology company striving to create a safer, cleaner, more efficient and electrified world. Through its broad portfolio of mission-critical sensors, electrical protection components and sensor-rich solutions, Sensata helps its customers address increasingly complex engineering and operating performance requirements. With more than 19,000 employees and global operations in 15 countries, Sensata serves customers in the automotive, heavy vehicle & off-road, industrial, and aerospace markets. Learn more at www.sensata.com and follow Sensata on LinkedIn, Facebook, X and Instagram.

Non-GAAP Financial Measures

We supplement the reporting of our financial information determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures. 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. We believe presenting non-GAAP financial measures is useful for period-over-period comparisons of underlying business trends and our ongoing business performance. We also believe presenting these non-GAAP measures provides additional transparency into how management evaluates the business.

Non-GAAP financial measures should be considered as supplemental in nature and are not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, our non-GAAP financial measures may not be the same as, or comparable to, similar non-GAAP measures presented by other companies.

The non-GAAP financial measures referenced by Sensata in this release include: adjusted net income, adjusted earnings per share (“EPS”), adjusted operating income, adjusted operating margin, free cash flow, organic revenue growth, market outgrowth, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), net debt, and net leverage ratio. We also refer to changes in certain non-GAAP measures, usually reported either as a percentage or number of basis points, between two periods. Such changes are also considered non-GAAP measures.

Adjusted net income (or loss) is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are detailed in the accompanying reconciliation tables. Adjusted EPS is calculated by dividing adjusted net income (or loss) by the number of diluted weighted-average ordinary shares outstanding in the period. We believe that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Adjusted operating income (or loss) is defined as operating income (or loss), determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are detailed in the accompanying reconciliation tables. Adjusted operating margin is calculated by dividing adjusted operating income (or loss) by net revenue. We believe that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Free cash flow is defined as net cash provided by/(used in) operating activities less additions to property, plant and equipment and capitalized software. We believe that this measure is useful to investors and management as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to fund acquisitions, repurchase ordinary shares, or for the accelerated repayment of debt obligations.

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 and divestitures for the 12-month period following the respective transaction date(s). We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, net, provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable: (1) restructuring related and other, (2) financing and other transaction costs, and (3) deferred gain or loss on derivative instruments. We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Gross leverage ratio is defined as gross debt 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 debt is defined as total debt, finance lease, and other financing obligations less cash and cash equivalents. We believe net debt is a useful measure to management and investors in understanding trends in our overall financial condition.

Net leverage ratio is defined as net debt divided by last twelve months (LTM) adjusted EBITDA. We believe the net leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.

In discussing trends in our performance, we may refer to certain non-GAAP financial measures or the percentage change of certain non-GAAP financial measures in one period versus another, calculated on a constant currency basis. Constant currency is determined by stating revenues and expenses at prior period foreign currency exchange rates and excludes the impact of foreign currency exchange rates on all hedges and, as applicable, net monetary assets. We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Safe Harbor Statement

This earnings release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," "potential," "opportunity," "guidance," and similar terms or phrases. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives, business and market outlook, megatrends, priorities, growth, shareholder value, capital expenditures, cash flows, demand for products and services, share repurchases, and Sensata’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. These statements are subject to risks, uncertainties, and other important factors relating to our operations and business environment, and we can give no assurances that these forward-looking statements will prove to be correct.

A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements, including, but not limited to, risks related to public health crises, instability and changes in the global markets, supplier interruption or non-performance, the acquisition or disposition of businesses, adverse conditions or competition in the industries upon which we are dependent, intellectual property, product liability, warranty, and recall claims, market acceptance of new product introductions and product innovations, labor disruptions or increased labor costs, and changes in existing environmental or safety laws, regulations, and programs.

Investors and others should carefully consider the foregoing factors and other uncertainties, risks, and potential events including, but not limited to, those described in Item 1A: Risk Factors in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A: Risk Factors in our quarterly reports on Form 10-Q or other subsequent filings with the United States Securities and Exchange Commission. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
		2024			2023			2024			2023
Net revenue	$	982,830		$	1,001,302		$	3,025,074		$	3,061,589
Operating costs and expenses:
Cost of revenue		701,463			687,959			2,115,137			2,090,538
Research and development		42,685			45,448			133,324			136,244
Selling, general and administrative		102,453			85,661			283,772			263,123
Amortization of intangible assets		44,732			39,970			122,332			135,307
Goodwill impairment charge		150,100			—			150,100			—
Restructuring and other charges, net		140,624			26,004			144,897			53,262
Total operating costs and expenses		1,182,057			885,042			2,949,562			2,678,474
Operating (loss)/income		(199,227	)		116,260			75,512			383,115
Interest expense		(38,942	)		(44,306	)		(118,200	)		(138,856	)
Interest income		5,857			7,398			15,397			23,752
Other, net		(12,294	)		1,317			(19,741	)		(8,215	)
Loss/(income) before taxes		(244,606	)		80,669			(47,032	)		259,796
(Benefit from)/provision for income taxes		(219,572	)		17,868			(169,722	)		61,467
Net (loss)/income	$	(25,034	)	$	62,801		$	122,690		$	198,329

Net (loss)/income per share:
Basic	$	(0.17	)	$	0.41		$	0.81		$	1.30
Diluted	$	(0.17	)	$	0.41		$	0.81		$	1.30

Weighted-average ordinary shares outstanding:
Basic		150,717			152,046			150,681			152,421
Diluted		150,717			152,379			151,030			152,922

SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	506,215	$	508,104
Accounts receivable, net of allowances		753,735		744,129
Inventories		673,506		713,485
Prepaid expenses and other current assets		161,853		136,686
Total current assets		2,095,309		2,102,404
Property, plant and equipment, net		893,722		886,010
Goodwill		3,392,704		3,542,770
Other intangible assets, net		515,733		883,671
Deferred income tax assets		295,561		131,527
Other assets		121,301		134,605
Total assets	$	7,314,330	$	7,680,987

Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt and finance lease obligations	$	2,076	$	2,276
Accounts payable		459,710		482,301
Income taxes payable		23,909		32,139
Accrued expenses and other current liabilities		321,187		307,002
Total current liabilities		806,882		823,718
Deferred income tax liabilities		246,493		359,073
Pension and other post-retirement benefit obligations		32,196		38,178
Finance lease obligations, less current portion		21,702		22,949
Long-term debt, net		3,174,354		3,373,988
Other long-term liabilities		74,935		66,805
Total liabilities		4,356,562		4,684,711
Total shareholders' equity		2,957,768		2,996,276
Total liabilities and shareholders' equity	$	7,314,330	$	7,680,987

SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	For the nine months ended September 30,
		2024			2023
Cash flows from operating activities:
Net income	$	122,690		$	198,329
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		100,712			96,877
Amortization of debt issuance costs		4,510			5,110
Goodwill impairment charge		150,100			—
Loss/(gain) on sale of business		110,111			(5,877	)
Share-based compensation		27,393			24,454
Loss on debt financing		9,235			857
Amortization of intangible assets		122,332			135,307
Deferred income taxes		(235,943	)		12,323
Loss on equity investments, net		13,164			678
Unrealized (gain)/loss on derivative instruments and other		(991	)		15,712
Changes in operating assets and liabilities, net of effects of acquisitions		(37,247	)		(109,573	)
Acquisition-related compensation payments		(5,232	)		(22,620	)
Net cash provided by operating activities		380,834			351,577

Cash flows from investing activities:
Additions to property, plant and equipment and capitalized software		(126,759	)		(136,224	)
Investment in debt and equity securities		3,681			(390	)
Proceeds from the sale of business, net of cash sold		138,312			19,000
Net cash provided by/(used in) investing activities		15,234			(117,614	)

Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares		4,605			5,346
Payment of employee restricted stock tax withholdings		(9,746	)		(12,067	)
Proceeds from borrowings on debt		500,000			—
Payments on debt		(700,855	)		(448,640	)
Dividends paid		(54,266	)		(53,380	)
Payments to repurchase ordinary shares		(47,299	)		(60,290	)
Purchase of noncontrolling interest in joint venture		(79,393	)		—
Payments of debt financing costs		(13,379	)		(747	)
Net cash used in financing activities		(400,333	)		(569,778	)
Effect of exchange rate changes on cash and cash equivalents		2,376			—
Net change in cash and cash equivalents		(1,889	)		(335,815	)
Cash and cash equivalents, beginning of year		508,104			1,225,518
Cash and cash equivalents, end of period	$	506,215		$	889,703

Segment Performance

	For the three months ended September 30,						For the nine months ended September 30,
$ in 000s		2024			2023			2024			2023
Performance Sensing⁽¹⁾
Revenue	$	659,650		$	696,847		$	2,096,889		$	2,058,172
Operating income	$	161,902		$	177,599		$	524,067		$	527,072
% of Performance Sensing revenue		24.5	%		25.5	%		25.0	%		25.6	%

Sensing Solutions
Revenue	$	274,386		$	275,139		$	800,296		$	889,649
Operating income	$	80,967		$	80,717		$	233,285		$	258,891
% of Sensing Solutions revenue		29.5	%		29.3	%		29.1	%		29.1	%

Other⁽¹⁾
Revenue	$	48,794		$	29,316		$	127,889		$	113,768
Operating income	$	12,069		$	(965	)	$	28,054		$	4,743
% of Other revenue		24.7	%		-3.3	%		21.9	%		4.2	%

(1)

Effective January 1, 2024, we moved Insights from Performance Sensing, creating another operating segment, which is reported in "Other". We recast Performance Sensing to exclude Insights. Prior period amounts in the above table have been recast to reflect this realignment.

Revenue by Business, Geography, and End Market (Unaudited)

(percent of total revenue)	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
Performance Sensing⁽¹⁾	67.1	%	69.6	%	69.3	%	67.2	%
Sensing Solutions	27.9	%	27.5	%	26.5	%	29.1	%
Other⁽¹⁾	5.0	%	2.9	%	4.2	%	3.7	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

(percent of total revenue)	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
Americas	46.7	%	45.3	%	44.5	%	45.6	%
Europe	26.2	%	25.6	%	27.1	%	26.5	%
Asia/Rest of World	27.1	%	29.1	%	28.4	%	27.9	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

(percent of total revenue)	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
Automotive	54.0	%	55.8	%	55.2	%	53.1	%
Heavy vehicle and off-road ⁽¹⁾	17.2	%	17.6	%	18.1	%	17.6	%
Industrial, Appliance, HVAC⁽²⁾, & other	18.7	%	18.8	%	17.8	%	21.0	%
Aerospace	5.1	%	4.9	%	4.7	%	4.6	%
All other⁽¹⁾	5.0	%	2.9	%	4.2	%	3.7	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

⁽¹⁾		Effective January 1, 2024 we moved Insights from the Heavy vehicle and off-road operating segment within Performance Sensing, creating another operating segment, which is reported in "Other". Additionally, we moved the Insights business to the "other" end market. Prior period information in the tables above has been recast to reflect this realignment.

⁽²⁾		Heating, ventilation and air conditioning.

GAAP to Non-GAAP Reconciliations

The following unaudited tables provide a reconciliation of the difference between each of the non-GAAP financial measures referenced herein and the most directly comparable U.S. GAAP financial measure. Amounts presented in these tables may not appear to recalculate due to the effect of rounding.

Operating income and margin, income tax, net income, and earnings per share

($ in thousands, except per share amounts)	For the three months ended September 30, 2024
	Operating (Loss)/Income			Operating Margin		Income Taxes			Net (Loss)/Income			Diluted EPS
Reported (GAAP)	$	(199,227	)	(20.3	%)	$	(219,572	)	$	(25,034	)	$	(0.17	)
Non-GAAP adjustments:
Restructuring related and other ⁽¹⁾		210,180		21.4	%		(851	)		209,329			1.39
Financing and other transaction costs⁽²⁾		131,913		13.4	%		(512	)		139,494			0.92
Step-up depreciation and amortization		43,779		4.5	%		—			43,779			0.29
Deferred loss on derivative instruments		1,739		0.2	%		(111	)		427			0.00
Amortization of debt issuance costs		—		—	%		—			1,316			0.01
Deferred taxes and other tax related⁽³⁾		—		—	%		(239,221	)		(239,221	)		(1.58	)
Total adjustments		387,611		39.4	%		(240,695	)		155,124			1.03
Adjusted (non-GAAP)	$	188,384		19.2	%	$	21,123		$	130,090		$	0.86

⁽¹⁾		Includes a $150.1 million non-cash goodwill impairment charge related to Dynapower recorded in the third quarter of 2024, $32.5 million of charges associated with certain actions to restructure our IT operations and product lifecycle management including product line discontinuations, and $16.0 million of charges related to our entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. Refer to the Quarterly Report on Form 10-Q for additional information on these charges.

⁽²⁾		Includes $110.1 million loss on sale of Insights in the third quarter of 2024. Refer to the Quarterly Report on Form 10-Q for additional information.

⁽³⁾		Includes $257.7 million of deferred tax benefit due to the release of a valuation allowance in connection with a tax strategy in the third quarter of 2024.

($ in thousands, except per share amounts)	For the three months ended September 30, 2023
	Operating Income			Operating Margin		Income Tax			Net Income			Diluted EPS
Reported (GAAP)	$	116,260		11.6	%	$	17,868		$	62,801		$	0.41
Non-GAAP adjustments:
Restructuring related and other⁽¹⁾		31,549		3.2	%		(1,363	)		30,186			0.20
Financing and other transaction costs		5,662		0.6	%		—			6,038			0.04
Step-up depreciation and amortization		38,825		3.9	%		—			38,825			0.25
Deferred gain on derivative instruments		(663	)	(0.1	%)		39			(148	)		0.00
Amortization of debt issuance costs		—		—	%		—			1,688			0.01
Deferred taxes and other tax related		—		—	%		(1,122	)		(1,122	)		(0.01	)
Total adjustments		75,373		7.5	%		(2,446	)		75,467			0.50
Adjusted (non-GAAP)	$	191,633		19.1	%	$	20,314		$	138,268		$	0.91

⁽¹⁾

Includes $28.9 million of charges related to the Q3 2023 Plan incurred in the third quarter of 2023, $21.4 million of which was recorded in restructuring and other charges, net. Refer to our 2023 Annual Report on Form 10-K for additional information on the Q3 2023 Plan.

($ in thousands, except per share amounts)	For the nine months ended September 30, 2024
	Operating Income		Operating Margin		Income Tax			Net Income			Diluted EPS
Reported (GAAP)	$	75,512	2.5	%	$	(169,722	)	$	122,690		$	0.81
Non-GAAP adjustments:
Restructuring related and other⁽¹⁾		239,378	7.9	%		(2,235	)		237,143			1.57
Financing and other transaction costs⁽²⁾		138,726	4.6	%		(1,373	)		159,752			1.06
Step-up depreciation and amortization		118,718	3.9	%		—			118,718			0.79
Deferred loss/(gain) on derivative instruments		1,262	0.0	%		1,577			(4,438	)		(0.03	)
Amortization of debt issuance costs		—	—	%		—			4,509			0.03
Deferred taxes and other tax related⁽³⁾		—	—	%		(233,775	)		(233,775	)		(1.55	)
Total adjustments		498,084	16.5	%		(235,806	)		281,909			1.87
Adjusted (non-GAAP)	$	573,596	19.0	%	$	66,084		$	404,599		$	2.68

⁽¹⁾		Includes a $150.1 million non-cash goodwill impairment charge related to Dynapower recorded in the third quarter of 2024, $48.4 million of charges associated with certain actions to restructure our IT operations and product lifecycle management including product line discontinuations, and $16.0 million of charges related to our entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. Refer to the Quarterly Report on Form 10-Q for additional information on these charges.

⁽²⁾		Includes a $110.1 million loss on sale of Insights in the third quarter of 2024 and a $14.8 million mark-to-market loss on an equity investment held under the measurement alternative due to an observable marketplace transaction in the first quarter of 2024. This loss is presented in other, net on the condensed consolidated statement of operations.

⁽³⁾		Includes $257.7 million of deferred tax benefit due to the release of a valuation allowance in connection with a tax strategy in the third quarter of 2024.

($ in thousands, except per share amounts)	For the nine months ended September 30, 2023
	Operating Income			Operating Margin		Income Tax			Net Income		Diluted EPS
Reported (GAAP)	$	383,115		12.5	%	$	61,467		$	198,329	$	1.30
Non-GAAP adjustments:
Restructuring related and other ⁽¹⁾		65,568		2.1	%		(2,667	)		62,901		0.41
Financing and other transaction costs		14,175		0.5	%		2,776			17,568		0.11
Step-up depreciation and amortization ⁽²⁾		131,281		4.3	%		—			131,281		0.86
Deferred (gain)/loss on derivative instruments		(3,860	)	(0.1	%)		(198	)		788		0.01
Amortization of debt issuance costs		—		—	%		—			5,107		0.03
Deferred taxes and other tax related		—		—	%		12,102			12,102		0.08
Total adjustments		207,164		6.8	%		12,013			229,747		1.50
Adjusted (non-GAAP)	$	590,279		19.3	%	$	49,454		$	428,076	$	2.80

⁽¹⁾		Includes $28.9 million of charges related to the Q3 2023 Plan incurred in the third quarter of 2023, $21.4 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue. Also includes $25.7 million of charges related to the exit of the Spear Marine Business in the second quarter of 2023, $15.2 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue. Refer to our Quarterly Report on Form 10-Q for additional information on the Q3 2023 Plan and the exit of the Spear Marine Business.

⁽²⁾		Includes $13.5 million of accelerated amortization related to the exit of the Spear Marine Business in the second quarter of 2023.

Non-GAAP adjustments by location in statements of operations

(in thousands)	For the three months ended September 30,						For the nine months ended September 30,
		2024			2023			2024			2023
Cost of revenue ⁽¹⁾	$	30,770		$	7,208		$	46,744		$	15,572
Selling, general and administrative		22,584			3,727			38,375			7,749
Amortization of intangible assets ⁽²⁾		43,533			38,434			117,968			130,581
Goodwill impairment charge ⁽³⁾		150,100			—			150,100			—
Restructuring and other charges, net ⁽⁴⁾		140,624			26,004			144,897			53,262
Operating income adjustments		387,611			75,373			498,084			207,164
Interest expense, net		1,316			1,688			4,509			5,107
Other, net⁽⁵⁾		6,892			852			15,122			5,463
Provision for income taxes⁽⁶⁾		(240,695	)		(2,446	)		(235,806	)		12,013
Net income adjustments	$	155,124		$	75,467		$	281,909		$	229,747

⁽¹⁾		The three and nine months ended September 30, 2024 include charges of $27.3 million and $40.5 million, respectively, of charges associated with certain actions to restructure our IT operations and product lifecycle management including product line discontinuations. The three and nine months ended September 30, 2023 include a charge of $7.0 million to write down inventory in the third quarter of 2023 as a result of business reorganization decisions made as part of the Q3 2023 Plan. The nine months ended September 30, 2023 includes a charge of $10.5 million to write down inventory related to the exit of the Spear Marine Business in the second quarter of 2023.

⁽²⁾		The three and nine months ended September 30, 2024 include accelerated amortization of $9.6 million related to the entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. The nine months ended September 30, 2023 includes accelerated amortization of $13.5 million related to intangible assets assigned to the Spear Marine Business, which was exited in the second quarter of 2023.

⁽³⁾		The three and nine months ended September 30, 2024 include a $150.1 million non-cash goodwill impairment charge related to Dynapower recorded in the third quarter of 2024.

⁽⁴⁾		The three and nine months ended September 30, 2024 include a $110.1 million loss on sale of Insights in the third quarter of 2024 and $14.5 million of charges related to our entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. The three and nine months ended September 30, 2023 include $21.4 million of charges related to the Q3 2023 Plan incurred in the third quarter of 2023. The nine months ended September 30, 2023 includes certain charges related to the exit of the Spear Marine Business in the second quarter of 2023 and recorded in restructuring and other charges, net, including $1.2 million of severance costs, $1.7 million related to the write-down of property, plant, and equipment, and $12.3 million of other charges, including contract termination costs. The three and nine months ended September 30, 2023 include $3.8 million and $14.4 million, respectively, of expense related to compensation arrangements entered into concurrent with the closing of certain acquisitions.

⁽⁵⁾		The nine months ended September 30, 2024 includes a $14.8 million mark-to-market loss on an equity investment held under the measurement alternative due to an observable marketplace transactions.

⁽⁶⁾		Includes $257.7 million of deferred tax benefit due to the release of a valuation allowance in connection with a tax strategy in the third quarter of 2024.

Free cash flow

	For the three months ended September 30,								For the nine months ended September 30,
($ in thousands)		2024			2023		% ?			2024			2023		% ?
Net cash provided by operating activities	$	130,891		$	138,935		(5.8	%)	$	380,834		$	351,577		8.3	%
Additions to property, plant and equipment and capitalized software		(39,571	)		(51,780	)	23.6	%		(126,759	)		(136,224	)	6.9	%
Free cash flow	$	91,320		$	87,155		4.8	%	$	254,075		$	215,353		18.0	%

Adjusted corporate and other expenses

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)		2024			2023			2024			2023
Corporate and other expenses (GAAP)	$	(268,809	)	$	(75,117	)	$	(442,665	)	$	(219,022	)
Restructuring related and other		182,528			9,234			209,363			20,915
Financing and other transaction costs		18,941			1,973			23,844			5,566
Step-up depreciation and amortization		246			391			750			700
Deferred loss/(gain) on derivative instruments		1,739			(663	)		1,262			(3,860	)
Total adjustments		203,454			10,935			235,219			23,321
Adjusted corporate and other expenses (non-GAAP)	$	(65,355	)	$	(64,182	)	$	(207,446	)	$	(195,701	)

Adjusted EBITDA

				For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	LTM				2024			2023			2024			2023
Net (loss)/income	$	(79,548	)	$	(25,034	)	$	62,801		$	122,690		$	198,329
Interest expense, net		138,559			33,085			36,908			102,803			115,104
(Benefit from)/provision for income taxes		(209,438	)		(219,572	)		17,868			(169,722	)		61,467
Depreciation expense		136,940			33,696			33,317			100,712			96,877
Amortization of intangible assets		160,885			44,732			39,970			122,332			135,307
EBITDA		147,398			(133,093	)		190,864			278,815			607,084
Non-GAAP Adjustments
Restructuring related and other		585,304			210,180			31,549			239,378			65,568
Financing and other transaction costs		167,825			140,006			6,038			161,125			14,792
Deferred (gain)/loss on derivative instruments		(9,007	)		538			(187	)		(6,015	)		986
Adjusted EBITDA	$	891,520		$	217,631		$	228,264		$	673,303		$	688,430

Gross and net debt and leverage

	As of
($ in thousands)	September 30, 2024			December 31, 2023
Current portion of long-term debt and finance lease obligations	$	2,076		$	2,276
Finance lease obligations, less current portion		21,702			22,949
Long-term debt, net		3,174,354			3,373,988
Total debt and finance lease obligations		3,198,132			3,399,213
Less: discount, net of premium		797			(1,568	)
Less: deferred financing costs		(26,443	)		(24,444	)
Total gross indebtedness		3,223,778			3,425,225

Adjusted EBITDA (LTM)	$	891,520		$	906,647
Gross leverage ratio		3.6			3.8

Total gross indebtedness		3,223,778			3,425,225
Less: cash and cash equivalents		506,215			508,104
Net debt	$	2,717,563		$	2,917,121

Adjusted EBITDA (LTM)	$	891,520		$	906,647
Net leverage ratio		3.0			3.2

Guidance

	For the three months ending December 31, 2024
($ in millions, except per share amounts)	Operating Income				Net Income				EPS
	Low		High		Low		High		Low		High
GAAP	$	121.8	$	122.3	$	56.3	$	56.2	$	0.36	$	0.38
Restructuring related and other		18.9		24.9		18.9		24.9		0.13		0.16
Financing and other transaction costs		1.0		2.0		1.0		2.0		0.01		0.01
Step-up depreciation and amortization		25.5		26.0		25.5		26.0		0.17		0.17
Deferred (gain)/loss on derivative instruments⁽¹⁾		—		—		—		—		—		—
Amortization of debt issuance costs		—		—		1.3		1.4		0.01		0.01
Deferred taxes and other tax related		—		—		4.0		4.5		0.03		0.03
Non-GAAP	$	167.2	$	175.2	$	107.0	$	115.0	$	0.71	$	0.76
Weighted-average diluted shares outstanding (in millions)										151.0		151.0

⁽¹⁾

We are unable to predict movements in commodity prices and, therefore, the impact of mark-to-market adjustments on our commodity forward contracts to our projected operating results. In prior periods such adjustments have been significant to our reported GAAP earnings.

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