ST 10-K & 10-Q changes, risk factors and insider trading
Sensata Technologies Holding plc · NYSE · Industrial Instruments For Measurement, Display, And Control · CIK 1477294 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our global effective tax rate ("ETR") may be volatile and could increase due to changes in our geographic mix of earnings, tax laws and rates, and the outcome of tax audits, which could adversely affect our results of operations, cash flows, and financial condition.”
New heading “Global tax reforms—including the OECD Pillar Two global minimum tax and related local implementations—may increase our tax compliance costs and ETR and create additional uncertainty in our financial results.”
New heading “Changes in U.S. federal tax laws and regulations—including modifications to international tax rules—could increase our tax liabilities, compliance costs, and earnings volatility and adversely affect our financial results.”
Removed heading “Our global effective tax rate is subject to a variety of different factors that could create volatility in that tax rate, expose us to greater than anticipated tax liabilities, or cause us to adjust previously recognized tax assets and liabilities.”
Removed heading “We have identified material weaknesses in our internal control over financial reporting. These material weaknesses could in the future adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.”
Largest changes
“We have identified material weaknesses in our internal control over financial reporting. These material weaknesses could in the future adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.”see in full comparison
“We are subject to income taxes in the United Kingdom, the United States, China, the Netherlands, Mexico, and numerous other jurisdictions. Our ETR can vary materially from period to period due to factors outside our control, including changes in tax laws and rates, differences between statutory and effective rates across jurisdictions, the utilization and expiration of tax attributes (such as net operating losses and tax credits), valuation allowance assessments, and the tax effects of acquisitions, dispositions, restructurings, and other strategic transactions. …”see in full comparison
“Changes in U.S. federal tax laws and regulations—including modifications to international tax rules—could increase our tax liabilities, compliance costs, and earnings volatility and adversely affect our financial results.”see in full comparison
“Many jurisdictions in which we operate have enacted or proposed significant tax changes, including the OECD’s Pillar Two framework, which establishes a global minimum jurisdictional ETR for large multinational enterprises and became effective for fiscal years beginning on or after December 31, 2024. Based on our current operating structure and geographic mix of earnings, taxes arising under the Pillar Two framework were not significant to our overall income tax provision for the year ended December 31, 2025. …”see in full comparison
“We have identified material weaknesses in our internal control over financial reporting and those weaknesses have led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2024 or 2023. We did not specify objectives with sufficient clarity to enable an appropriate level of risk assessment and monitoring. …”see in full comparison
“For example, the European Commission (the "EC") has been conducting investigations of state aid and have focused on whether EU sovereign country laws or rulings provide favorable treatment to taxpayers conflicting with its interpretation of EU law. EC findings may have retroactive effect and can cause increases in tax liabilities where we considered ourselves in full compliance with local legislation.”see in full comparison
Full comparison: every changed paragraph (34)
Much of our business depends on, and is directly affected by, the global automobile industry. Sales in our automotive end markets accounted for approximately 56%57% of our total net revenue in fiscal year 2024.2025. Declines in demand such as those experienced as a result of the COVID-19 pandemic and other adverse developments like those we have seen in past years in the automotive industry, including but not limited to customer bankruptcies and increased demands on us for lower prices, could have adverse effects on our results of operations and could impact our liquidity and our ability to meet restrictive debt covenants. In addition, these same conditions could adversely impact certain of our vendors’ financial solvency, resulting in potential liabilities or additional costs to us to ensure uninterrupted supply to our customers.
Because of the prevalence of ICE vehicles today, applications in these vehicles make up most of our current transportation addressable markets (automotive and HVORcommercial equipment). These addressable markets are large today and growing, with expectations that they will continue to grow over the next ten years. However, the automotive market is rapidly changing with the transformation into electrification. Many of the components and subsystems we have historically developed and produced, such as those used in braking, tires, and environmental control from traditional ICE vehicles, will play a significant role in this expansion, as we can convert much of this technology for use in electric vehicle applications. If the pace of customer adoption of EVs slows, and this demand is not replaced by demand of more traditional vehicles served by our core ICE business, our results of operations, financial condition, and cash flows could be materially adversely affected.
In addition, a product recall could generate substantial negative publicity about our business and interfere with our manufacturing plans and product delivery obligations as we seek to repair affected products. Our costs associated with product liability, warranty, and recall claims could be material. The insurance coverages that the Company maintains may not apply to all types of claims and proceedings, and, where insurance exists, the amount of insurance coverage may not be adequate to cover the total claims and liabilities.
We use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in bothall of our Performance Sensing and Sensing Solutions segments, including those containing certain commodities (e.g., semiconductors, resins, and metals), which may experience significant volatility in their price and availability due to, among other things, new laws or regulations, including the impact of tariffs, trade barriers, trade disputes, export or sourcing restrictions, economic sanctions, and global economic or political events including government actions, labor strikes, suppliers' allocations to other purchasers, interruptions in production by suppliers, changes in foreign currency exchange rates, and prevailing price levels.
We have entered into hedge arrangements for certain metals used in our products in an attempt to minimize commodity pricing volatility and may continue to do so from time to time in the future. Such hedges might not be economically successful. In addition, these hedges do not qualify as accounting hedges in accordance with U.S. generally accepted accounting principles. Accordingly, the change in fair value of these hedges is recognized in earnings immediately, which could cause volatility in our results of operations from quarter to quarter.
Accordingly, the change in fair value of these hedges is recognized in earnings immediately, which could cause volatility in our results of operations from quarter to quarter.
We operate in markets that are highly competitive, and we compete on the basis of product performance in mission-critical operating environments, quality, service, reliability, manufacturing footprint, and commercial competitiveness across the industries and end markets we serve. A significant element of our competitive strategy is to design and manufacture high-quality products that meet the needs of our customers at a commercially competitive price, particularly in markets where low-cost, country-based suppliers, primarily in China with respect to the Sensing SolutionsIndustrials segment, have entered the markets or increased their per-unit sales in these markets by delivering products at low cost to local OEMs. In addition, certain of our competitors in the transportation sensor market are influenced or controlled by major OEMs or suppliers, thereby limiting our access to these customers. These customers may choose to develop relationships with additional suppliers or elect to produce some or all of these products internally, primarily to reduce risk of delivery interruptions or as a means of extracting more value from us. Certain of our customers currently have, or may develop in the future, the capability to internally produce the products that we sell to them and may compete with us with respect to those and other products and with respect to other customers.
We are at risk of attack by a growing list of adversaries through increasingly sophisticated methods. Because the techniques used to obtain unauthorized access or sabotage systems change frequently, we may be unable to anticipate these techniques or implement adequate preventative measures. In addition, we may not be able to detect incidents in our IT systems or assess the severity or impact of an incident in a timely manner. We have experienced attacks to our systems and networks and have from time-to-time experienced cybersecurity incidents, such as computer viruses and malware, unauthorized parties gaining access to our IT systems, and similar incidents, which to date have not had a material impact on our business. Refer to Note 15: Commitments and Contingencies, for a discussion of our April 2025 cybersecurity incident. If we are unable to efficiently and effectively maintain and upgrade our system safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access. Additionally, we have been an acquisitive organization and the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risk as we might not adequately identify weaknesses in the targets’ information systems, which could expose us to unexpected liabilities or make our own systems more vulnerable to attack.
Climate change is receiving increasing attention worldwide, which has led to increased stakeholder and societal expectations on companies to address change and significant legislative and regulatory efforts to limit GHG emissions. For example, adoption of GHG or climate change rules in jurisdictions in which we operate facilities could require installation of emission controls, acquisition of emission credits, emission reductions, or other measures that could be costly, and could also impact utility rates and increase the amount we spend annually for energy. Additionally, jurisdictions throughout the world are enacting more stringent disclosure requirements related to climate change impacts of an entity’s business. Such increased disclosure requirements could increase our costs and could result in risks to our reputation or consumer demand for our products if we do not meet increasingly demanding stakeholder expectations and standards. Many of our customers are adopting specific environmental requirements, including renewable‑energy commitments, emissions‑reduction targets, and circularity or waste‑reduction goals. Meeting these expectations may increase our costs, and failure to do so could negatively impact customer relationships or future business awards.
Changes in consumer preferences dueand togovernment transitioning to a greener economyregulations may result in increased costs, reduced demand for our ICE products, and reduced profits. Part of our strategy to address these risks includes our transition to EVs, which presents additional risks, including reduced demand for, and therefore profits from, our ICE vehicles, which we are using to fund our growth strategy; higher costs or reduced availability of materials related to EV technologies impacting profitability; and risks related to the success of our EV strategy.
Our business, including our employees, customers, and suppliers, is located throughout the world. We employ approximately 93%92% of our workforce outside of the U.S. We have many manufacturing, administrative, and sales facilities outside of the U.S. Our subsidiaries located outside of the U.S. generated approximately 60%61% of our net revenue in fiscal year 20242025 (including approximately 18%20% in China), and we expect sales from non-U.S. markets to continue to represent a significant portion of our total net revenue. International sales and operations are subject to changes in local government regulations and policies, including those related to tariffs and trade barriers, economic sanctions, investments, taxation, exchange controls, and repatriation of earnings.
Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse impact on our business, financial condition, liquidity, and results of operations. As has occurred with the COVID-19 pandemic, a global pandemic could cause significant disruption to the global economy, including in all of the regions in which we, our suppliers, distributors, business partners, and customers do business and in which our workforce is located. A global pandemic and efforts to manage it, including those by governmental authorities, could have significant impacts on global markets, and could have a significant, negative impact on our sales and operating results. Disruptions could include: partial shutdowns of our facilities as mandated by government decree; government actions limiting our ability to adjust certain costs; significant travel restrictions; “work-from-home” orders; limited availability of our workforce; supplier constraints; supply chain interruptions; logistics challenges and limitations; and reduced demand from certain customers. The COVID-19 pandemic has had, and could continue to have,had these effects on the economy and our business.
As of December 31, 2024,2025, we had $3,223.4$2.9 millionbillion of gross outstanding indebtedness, including various tranches of senior unsecured notes (the “Senior Notes”). The credit agreement governing our secured credit facility (as amended, supplemented, waived, or otherwise modified, the "Credit Agreement") provides for senior secured credit facilities (the "Senior Secured Credit Facilities") consisting of a term loan facility (the "Term Loan"), a $750.0$650.0 million revolving credit facility (the "Revolving Credit Facility"), and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances. In fiscal year 2023, we repaid the remaining balance on the Term Loan. Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information related to our outstanding indebtedness.
We have recorded a significant amount of goodwill and other identifiable intangible assets. Goodwill and other intangible assets, net totaled approximately $3.9$3.6 billion as of December 31, 2024,2025, or 54%53% of our total assets. Goodwill, which represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized, was approximately $3.4$3.2 billion as of December 31, 2024,2025, or 47% of our total assets. Goodwill and other identifiable intangible assets were recognized at fair value as of the corresponding acquisition date.
In the third quarter of 2024,2025, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair values.value. Accordingly, we evaluated the Dynapower reporting unit for impairment and determined that our Dynapower reporting unitit was impaired. In the third quarter of 2024,2025, we recorded a $150.1$225.7 million non-cash impairment charge. This impairment was primarily driven by a lower long-rangeoutlook financialwithin forecastcertain resulting from specific discrete eventsmarkets that changed the timingreporting unit operates in following recent tax legislation being enacted and a strategic shift to focus on other markets. This revised outlook led to downward revisions of our forecasted performance.future cash flows. If Dynapower does not achieve the forecasted future cash flows, there is a possibility that additional impairments of the remaining $229.8$4.1 million of goodwill may be recognized in the future.
Refer to Note 11: Goodwill and Other Intangible Assets, Net, Net of our Financial Statements included elsewhere in this Report for additional information related to our goodwill and other identifiable intangible assets and the Dynapower impairment charge. Refer to Critical Accounting Policies and Estimates, in Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Report for additional information related to the assumptions used in the development of the fair value of our reporting units.
Our global effective tax rate ("ETR") may be volatile and could increase due to changes in our geographic mix of earnings, tax laws and rates, and the outcome of tax audits, which could adversely affect our results of operations, cash flows, and financial condition.
We are subject to income taxes in the United Kingdom, the United States, China, the Netherlands, Mexico, and numerous other jurisdictions. Our ETR can vary materially from period to period due to factors outside our control, including changes in tax laws and rates, differences between statutory and effective rates across jurisdictions, the utilization and expiration of tax attributes (such as net operating losses and tax credits), valuation allowance assessments, and the tax effects of acquisitions, dispositions, restructurings, and other strategic transactions. The determination of our provision for (or benefit from) income taxes requires significant judgment and is inherently uncertain. Changes in facts and circumstances, audit outcomes, or interpretations of tax laws could result in our actual tax liabilities differing from amounts previously recognized, which could require us to record additional tax expense, interest, or penalties in future periods.
Global tax reforms—including the OECD Pillar Two global minimum tax and related local implementations—may increase our tax compliance costs and ETR and create additional uncertainty in our financial results.
Many jurisdictions in which we operate have enacted or proposed significant tax changes, including the OECD’s Pillar Two framework, which establishes a global minimum jurisdictional ETR for large multinational enterprises and became effective for fiscal years beginning on or after December 31, 2024. Based on our current operating structure and geographic mix of earnings, taxes arising under the Pillar Two framework were not significant to our overall income tax provision for the year ended December 31, 2025. However, the Pillar Two rules are complex and continue to evolve through legislative amendments, administrative guidance, and differing local interpretations. As additional jurisdictions implement the rules, or as guidance and enforcement practices develop, the impact of Pillar Two on our tax profile may increase. Changes in our business activities, acquisitions, or geographic mix of earnings could also result in higher exposure to minimum taxes, incremental cash tax obligations, and increased compliance and administrative costs. In addition, the European Commission has conducted, and may continue to conduct, investigations into whether certain tax rulings or regimes in European Union member states constitute impermissible state aid. Adverse findings in these investigations may have retroactive effect and could result in additional tax liabilities, even where we believe we have complied with applicable local tax laws.
Changes in U.S. federal tax laws and regulations—including modifications to international tax rules—could increase our tax liabilities, compliance costs, and earnings volatility and adversely affect our financial results.
U.S. federal income tax laws and regulations are subject to ongoing change through legislation, administrative guidance, and judicial interpretation. Such changes may affect, among other things, the taxation of foreign subsidiaries, limitations on the deductibility of interest and other expenses, the treatment of cross-border payments, and the availability and utilization of foreign tax credits. New or amended U.S. tax rules may be effective retroactively or include transition provisions that require us to reassess deferred tax assets and liabilities, valuation allowances, and prior-year tax positions. In addition, interactions between U.S. tax rules and foreign tax regimes, including global minimum tax frameworks, may increase complexity and reduce the expected benefits of our current tax structure. Our ability to anticipate and effectively respond to changes in U.S. tax laws may be limited, particularly where guidance continues to evolve. For a more detailed discussion of our income tax provision, effective tax rate, deferred taxes, valuation allowances, uncertain tax positions, cash taxes, and the impact of recent tax law developments, see Note 7: Income Taxes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Our global effective tax rate is subject to a variety of different factors that could create volatility in that tax rate, expose us to greater than anticipated tax liabilities, or cause us to adjust previously recognized tax assets and liabilities.
We are subject to income taxes in the United Kingdom (the "U.K."), China, Mexico, the U.S., and many other jurisdictions. As a result, our global effective tax rate from period to period can be affected by many factors, including changes in tax legislation, changes in tax rates and tax laws, our jurisdictional mix of earnings, the use of global funding structures, the tax characteristics of our income, the effects on our revenues and costs of complying with transfer pricing requirements under differing laws of various countries, consequences of acquisitions and dispositions of businesses and business segments, the generation of sufficient future taxable income to realize our deferred tax assets, and the taxation of subsidiary income in the jurisdiction of its parent company regardless of whether or not distributed. Significant judgment is required in determining our worldwide provision for (or benefit from) income taxes, and our determination of the amount of our tax liability is always subject to review by applicable tax authorities. Refer to Note 7: Income Taxes of our Financial Statements included elsewhere in this Report for additional information related to our accounting for income taxes.
We cannot provide any assurances as to what our tax rate will be in any period because of, among other things, uncertainty regarding the nature and extent of our business activities in any particular jurisdiction in the future and the tax laws of such jurisdictions, as well as changes in U.S. and other tax laws, treaties, and regulations, in particular related to proposed tax laws by the U.S. or other governments, which could increase our tax liabilities. Our actual global tax rate may vary from our expectation and that variance may be material. We continually monitor all global regulatory developments and consider alternatives to limit their detrimental impacts. However, not all unfavorable developments can be moderated, and we may consequently experience adverse effects on our effective tax rate and cash flows.
For example, the European Commission (the "EC") has been conducting investigations of state aid and have focused on whether EU sovereign country laws or rulings provide favorable treatment to taxpayers conflicting with its interpretation of EU law. EC findings may have retroactive effect and can cause increases in tax liabilities where we considered ourselves in full compliance with local legislation.
Furthermore, most OECD members, including EU member states, have implemented the Pillar Two framework, which establishes a global minimum jurisdictional effective tax rate of 15% for large multinational enterprises. The legislation is effective for our fiscal year beginning January 1, 2024. The dynamic nature of the legislative landscape, with outgoing changes and updates to the rules, creates uncertainty and potential for retroactive tax liabilities. We continue to evaluate the guidance and regulations of the Pillar Two framework. Any further developments could result in complexity and uncertainty in countries where we do business and could increase our effective tax rate.
We could be subject to future audits conducted by both foreign and domestic tax authorities, and the resolution of such audits could impact our tax rate in future periods, as would any reclassification or other changes (such as those in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements. There can be no assurance that we would be successful in attempting to mitigate the adverse impacts resulting from any changes in law, audits, and other matters. Our inability to mitigate the negative consequences of any changes in the law, audits, and other matters could cause our global tax rate to increase, our use of cash to increase, and our financial condition and results of operations to suffer.
We are organized as a holding company, a legal entity that is separate and distinct from our operating entities. As a holding company without significant operations of its own, our principal assets are the shares of capital stock of our subsidiaries. We rely on dividends, interest, and other payments from these subsidiaries to meet our obligations for paying principal and interest on outstanding debt, repurchasing ordinary shares, and corporate expenses. Certain ofWhile our subsidiaries generally may remit funds to us, certain foreign subsidiaries are subject to foreign‑exchange verification and other regulatory requirementsprocesses ofthat thecan jurisdictionscreate compliance complexity and timing delays in whichmaking they operatedividend or other restrictions that may limit the amounts that subsidiaries can pay in dividends or other payments to us.payments. No assurance can be given that there will not be furtherfuture changes in law, regulatory actions, or other circumstances thatwill couldnot restrictfurther therestrict, ability of our subsidiaries to pay dividendsdelay, or otherwise makeaffect paymentsour ability to us.receive funds from these subsidiaries. Furthermore, no assurance can be given that our subsidiaries may be able to make timely payments to us in order for us to meet our obligations.
We have identified material weaknesses in our internal control over financial reporting. These material weaknesses could in the future adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
We have identified material weaknesses in our internal control over financial reporting and those weaknesses have led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2024 or 2023. We did not specify objectives with sufficient clarity to enable an appropriate level of risk assessment and monitoring. Additionally, our control activities did not adequately establish policies, procedures, information protocols and communications to design and operate effective control, due in part, to a lack of appropriate accounting personnel, impacting areas such as inventory and account reconciliation processes in our Americas Accounting and Shared Services teams located in Mexico. Our management is taking action to remediate the deficiencies in its internal controls over financial reporting by developing a remediation plan, which could include the engagement of third-party consultants to evaluate and help formalize internal controls design and framework; the completion of a risk assessment to determine areas within the internal control structure to strengthen, document and execute; and the augmentation, reorganization or replacement of personnel where necessary to ensure appropriate levels of knowledge and execution to support internal control structure assessment, design, and execution.
If actions to remediate these material weaknesses are not completed on a timely basis, or if other remediation efforts are not successful, we may, in the future, identify additional internal control deficiencies that could rise to the level of a material weakness, or uncover errors in financial reporting.
Failure to have effective internal control over financial reporting and disclosure controls and procedures could impair our ability to produce accurate financial statements on a timely basis, or provide reliable financial statements needed for business decision processes, and our business and results of operations could be harmed. Additionally, investors could lose confidence in our reported financial information and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected. Also, failure to maintain effective internal control over financial reporting could result in sanctions by regulatory authorities, and our independent registered public accounting firm may not be able to attest that such internal controls are effective when they are required to do so.
English law imposes additional restrictions on certain corporate actions. For example, English law provides that a board of directors may only allot, or issue, securities with the prior authorization of shareholders, such authorization being up to the aggregate nominal amount of shares and for a maximum period of five years, each as specified in the articles of association or relevant shareholder resolution. English law also generally provides shareholders with preemptive rights when new shares are issued for cash; however, it is possible for the articles of association, or shareholders at a general meeting, to exclude preemptive rights. Such an exclusion of preemptive rights may be for a maximum period of up to five years as specified in the articles of association or relevant shareholder resolution. WeOur currently onlyshareholders have authorizationalready approved a general authority for the directors to allot equity securities and a specific authority to issue shares under our equity plan excluding preemptive rights, together with the related disapplication of pre‑emptive rights and subject to the limits set forth in those resolutions, until our next annual general meeting. ThisBoth authorizationthe general allotment authority and exclusionthe needsequity‑plan toallotment beauthority—along renewedwith bythe ourassociated shareholdersexclusions periodicallyof pre‑emptive rights—require periodic renewal, and we intendplan to renewseek theshareholder authorizationapproval andfor exclusioneach authority at each annual general meeting.
Management's Discussion & Analysis (MD&A)
New heading “Deferred taxes and valuation allowances”
New heading “Senior Secured Credit Facilities”
Removed heading “Selected Segment Information”
Removed heading “Selected Geographic Information”
Removed heading “Net Revenue by End Market”
Removed heading “Performance Sensing”
Removed heading “Sensing Solutions”
Removed heading “Recently issued accounting standards to be adopted in a future period”
Largest changes
Our consolidated revenue decreasedsee in full comparison3.0%5.8% in fiscal year20242025 from the prior year. Excludingaandecreaseincrease of0.7%0.6% attributed to changes in foreign currency exchange rates and a decrease of0.8%6.5% due to the effect of divestitures, net revenuedecreasedincreased1.5%0.1% on an organic basis. Organic revenue growth (or decline), discussed throughout this MD&A, is a financial measure not presented in accordance with U.S. GAAP. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of organic revenue growth (or decline). Organic revenuedeclinegrowth was primarily driven byrevenue mix, market declines, and inventory destocking in our Industrial business, partially offset bycontent growth inthe Automotive, HVOR, and Aerospace businesses and the impact of pricing recoveries, Operating income for fiscal year 2024 decreased $32.4 million, or 17.8%, to $149.3 million (3.8% of net revenue) compared to $181.7 million (4.5% of net revenue) in the prior year. This decrease was primarily driven by a decrease in revenue, an increase of $94.7 million in restructuring and other charges, net, driven by the loss on the sale of the Insights business, and a $41.5 million increase in selling, general and administrative ("SG&A") costs. These decreases were partially offset by a $171.6 million reduction in the goodwill impairment charge taken in 2024 and lower intangible asset charges in the current year. Refer to Results of Operations included elsewhere in this MD&A for additional discussion ofouroperatingIndustrialsearningsbusinessresults for the year ended December 31, 2024.segment.
“Operating income for fiscal year 2025 increased $88.2 million, or 59.1%, to $237.5 million (6.4% of net revenue) compared to $149.3 million (3.8% of net revenue) in the prior year. This increase was primarily driven by $98.5 million of lower net restructuring and other charges, and a $65.5 million decrease in intangible asset amortization charges, partially offset by lower revenue and a $75.6 million increase in goodwill impairment charges in the current period. …”see in full comparison
“For the year ended December 31, 2025, our effective tax rate was 74.6%, compared to 1,185.4% in 2024 and 121.9% in 2023. The unusually high and volatile effective tax rates primarily reflect the impact of non-deductible goodwill impairment charges, the 2024 capital restructuring to secure future IP deductibility, and other non-recurring items including unbenefited losses on asset sales and restructuring costs. Because many of these items are either non-deductible or only partially deductible, they had a disproportionate impact relative to the level of pre-tax income in each period.”see in full comparison
“In the year ended December 31, 2025, operating income increased $88.2 million, or 59.1%, to $237.5 million (6.4% of net revenue) compared to $149.3 million (3.8% of net revenue) in the prior year, primarily due to (1) a decrease in product line and product lifecycle management charges, (2) a decrease in amortization of intangibles, and (3) cost savings as a result of actions taken as part of our restructuring plans, partially offset by a larger goodwill impairment charge taken in the current year than the prior year.”see in full comparison
“Discrete tax items, including non-deductible goodwill impairment charges, restructuring costs, acquisition and disposition related expenses, and changes in valuation allowances, also affected our income tax provision. In periods where pre-tax income is low or losses are incurred, these discrete items may result in an effective tax rate that is not meaningful or is not comparable to other periods.”see in full comparison
see in full comparisonWeAevaluatequalitative analysis is performed by evaluating events and circumstances that most affect thegoodwillfair value of each reporting unit, including macroeconomic conditions, market conditions, industry trends, cost factors, financial performance, and other relevant qualitative factors. Based on an evaluation of the factors that most affect the fair value of each reporting unit, we determine whether it is more likely than not that a reporting unit's fair value exceeds its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unitforis less than its carrying amount, we perform a goodwill impairment test using the quantitative method. If we conclude that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, it is not necessary to perform the quantitative goodwill impairment test and no further testing is required. The results of the qualitative analyses performed as of October 1,or2025, did not indicate a need to perform quantitative analysis, as we determined that it is moreoftenlikelyifthanimpairmentnotindicatorsthataretheidentified,fairusingvalueaofquantitativeeachmethod.of our reporting units exceeded their respective carrying values. No events or circumstances occurred between October 1, 2025 and December 31, 2025 that would more likely than not reduce the fair values of the reporting units below their carrying amounts In performing our evaluation under the quantitative method, we estimated the fair values of our reporting units using the discounted cash flow method, and, when applicable, a market multiples approach (the "Market Approach") using comparable companies appropriate to the reporting unit. For the discounted cash flow method, we prepared detailed annual projections of future net cash flows for the reporting unit for the subsequent ten fiscal years (the "Discrete Projection Period"). We estimated the value of the net cash flows beyond the tenth fiscal year (the "Terminal Year") by using either the Gordon Growth Model or the H-Model. The net cash flows from the Discrete Projection Period and the Terminal Year were discounted at an estimated weighted-average cost of capital ("WACC") appropriate for each reporting unit. The estimated WACC was derived, in part, from comparable companies appropriate to each reporting unit. As these assumptions were largely unobservable, the estimated fair values fall within Level 3 of the fair value hierarchy. A change in our cash flow forecast or the discount rate used would result in an increase or decrease in our calculated fair value. We believe that our procedures for estimating discounted future net cash flows, including the Terminal Year valuation, were reasonable and consistent with accepted valuation practices.
Full comparison: every changed paragraph (205)
We believe regulatory requirements for safer vehicles, higher fuel efficiency, and lower emissions, as well as customer demand for operator productivity and convenience, drive the need for advancements in powertrain management, efficiency, safety, and operator controls. These advancements lead to sensor growth rates that we expect to exceed underlying production growth in many of our key end markets, which we expect will continue to offer us significant growth opportunities. In fiscal year 2024, according to third party data, global production of light vehicles decreased approximately 1% and global production in the heavy vehicle and off-road ("HVOR") markets we serve decreased approximately 7%, each from the prior year.
In fiscal year 2024,2025, we used $701.9 million of cash to pay debt, including the early redemption of the full $700.0 million aggregate principal amount outstanding onreduced our 5.0%total Seniorgross Notesdebt inby accordance$354.0 with the terms of the indenture under which the 5.0% Senior Notes were issued.million. These repayments brought our gross outstanding indebtedness at December 31, 20242025 to $3.2$2.9 billion, representing a net leverage ratio of 3.0x,2.7x, compared to gross indebtedness of $3.4$3.2 billion as of December 31, 20232024 (representing a net leverage ratio of 3.2x3.0x). Net leverage ratio, discussed throughout this Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A"), is a financial measure not presented in accordance with U.S. generally accepted accounting principles ("GAAP"). Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of net leverage ratio.
Our consolidated revenue decreased 3.0%5.8% in fiscal year 20242025 from the prior year. Excluding aan decreaseincrease of 0.7%0.6% attributed to changes in foreign currency exchange rates and a decrease of 0.8%6.5% due to the effect of divestitures, net revenue decreasedincreased 1.5%0.1% on an organic basis. Organic revenue growth (or decline), discussed throughout this MD&A, is a financial measure not presented in accordance with U.S. GAAP. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of organic revenue growth (or decline). Organic revenue declinegrowth was primarily driven by revenue mix, market declines, and inventory destocking in our Industrial business, partially offset by content growth in the Automotive, HVOR, and Aerospace businesses and the impact of pricing recoveries, Operating income for fiscal year 2024 decreased $32.4 million, or 17.8%, to $149.3 million (3.8% of net revenue) compared to $181.7 million (4.5% of net revenue) in the prior year. This decrease was primarily driven by a decrease in revenue, an increase of $94.7 million in restructuring and other charges, net, driven by the loss on the sale of the Insights business, and a $41.5 million increase in selling, general and administrative ("SG&A") costs. These decreases were partially offset by a $171.6 million reduction in the goodwill impairment charge taken in 2024 and lower intangible asset charges in the current year. Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our operatingIndustrials earningsbusiness results for the year ended December 31, 2024.segment.
Operating income for fiscal year 2025 increased $88.2 million, or 59.1%, to $237.5 million (6.4% of net revenue) compared to $149.3 million (3.8% of net revenue) in the prior year. This increase was primarily driven by $98.5 million of lower net restructuring and other charges, and a $65.5 million decrease in intangible asset amortization charges, partially offset by lower revenue and a $75.6 million increase in goodwill impairment charges in the current period. Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our operating results for the year ended December 31, 2025.
We generated $551.5$621.5 million of operating cash flows in fiscal year 2024,2025, ending the year with $593.7$573.0 million in cash. In addition to the aforementioned $701.9$352.2 million of cash used to pay debt, in fiscal year 2024,2025, we used cash of approximately $68.9$120.6 million for share repurchases and $72.2$70.4 million for payment of dividends. In fiscal year 2025,2026, we will continue to execute our capital allocation strategy that is currently designed to reduce our leverage and return capital to shareholders through our dividend and opportunistic share repurchases. This strategy reduces risk in our capital structure, lowers interest expense, and improves net income and earnings per share. We expect improving free cash flow (net cash provided by operating activities less capital expenditures) to further reduce our net leverage ratio, and over time, we believe higher profitability will naturally allow net leverage to decline and returns on invested capital to improve. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information related to our use of free cash flow.
In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair value. The primary indicators of impairment were revised projections of future cash flows and actual performance that was lower than previous projections for this reporting unit. We evaluated the goodwill of the Dynapower reporting unit for impairment using a combination of a market-based valuation method and an income-based approach which discounts forecasted cash flows. As these assumptions were largely unobservable, the estimated fair values fall within Level 3 of the fair value hierarchy. A change in our cash flow forecast or the discount rate used would result in an increase or decrease in our calculated fair value. We determined that our Dynapower reporting unit was impaired, and in the third quarter of 2024, we recorded a $150.1 million non-cash goodwill impairment charge. If Dynapower does not achieve the forecasted future cash flows, there is a possibility that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.
In August 2024, we executed a purchase agreement whereby we agreed to sell the Insights Business to a third party. The total stated purchase price of the Insights Business was $165.0 million, subject to normal post-closing adjustments. In the year ended December 31, 2024, we recognized a loss on sale of approximately $98.8 million, presented in restructuring and other charges, net in our consolidated statements of operations, and approximately $11.2 million of transaction-related expenses, which were presented in SG&A costs in our consolidated statements of operations. See Note 21: Disposals of the Financial Statements included elsewhere in this Report for additional information.
On June 6, 2023, we announced that we had made the decision to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”). In September 2024, we made the decision to exit the Spear aerospace and defense business and entered into an asset purchase agreement that closed in October 2024, wherein a third party assumed control of a majority of the remaining Spear assets. The exit of Spear was the result of a change in strategy with respect to the business and involved ceasing sales, marketing, and business operations. It resulted in the elimination of certain positions, primarily in the U.S., and the closure of operations in Belgium. Spear had been included in the Sensing Solutions reportable segment. Exiting Spear resulted in charges in the year ended December 31, 2024 of approximately $22.2 million, consisting of accelerated amortization of intangible assets, disposal of inventory and property, plant and equipment ("PP&E"), severance charges, and other charges, including contract termination costs.
Refer to Note 5: Restructuring and Other Charges, Net, of our Financial Statements included elsewhere in this Report for additional information on our exit from Spear.
Selected Segment Information
We present financial information for two reportable segments, Performance Sensing and Sensing Solutions. Set forth below is selected information for each of these segments for the periods presented. In the three months ended March 31, 2024, we realigned our business as a result of organizational changes that better allocate our resources to support changes to our business strategy. The most significant changes include combining our Automotive and HVOR businesses (with the combined business remaining in Performance Sensing) and moving the various assets and liabilities comprising our Insights Business out of Performance Sensing to a new operating segment, which is not aggregated within either of our reportable segments. We combined the Automotive and HVOR businesses to better leverage our core capabilities and prioritize product focus. We also moved certain shorter-cycle businesses from Performance Sensing to Sensing Solutions, which will benefit from organizing these businesses together, by allowing us to scale core capabilities and better serve our customers. The amounts previously reported in the tables below for the years ended December 31, 2023 and 2022 have been retrospectively recast to reflect this change.
Amounts and percentages in the tables below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding. The following table presents net revenue by segment and non-segment for the identified periods:
The following table presents segment operating income in U.S. dollars ("USD") and as a percentage of segment and non-segment net revenue for the identified periods:
For a reconciliation of total segment and non-segment operating income to consolidated operating income, refer to Note 20: Segment Reporting of our Financial Statements included elsewhere in this Report.
Selected Geographic Information
We are a global business with significant operations around the world and a diverse revenue mix by geography, customer, and end market. The following table presents (as a percentage of total) PP&E and net revenue by geographic region for the identified periods:
Refer to Note 20: Segment Reporting of our Financial Statements included elsewhere in this Report for additional information related to our PP&E, net balances by selected geographic area as of December 31, 2024 and 2023 and net revenue by selected geographic area for the years ended December 31, 2024, 2023, and 2022.
Net Revenue by End Market
Our net revenue for the years ended December 31, 2024, 2023, and 2022 was derived from the following end markets:
(1) Heating, ventilation, and air conditioning
We are a significant supplier to multiple OEMs within many of these end markets, thereby reducing customer concentration risk.
We derive a significant portion of our revenue from sales into the automotive end market, and conditions in the automotive industry can have a significant impact on the amount of revenue that we recognize. Outside of the automotive industry, we sell our products and solutions to end-users in a wide range of industries, end markets, and geographic regions, and the drivers of demand for these products and solutions vary considerably and are influenced by industry, market, or geographic conditions. Changes in demand for these products and solutions could impact our revenue materially. Our overall net revenue is impacted by various factors, which we characterize as "organic" or "inorganic." Inorganic factors include fluctuations in foreign currency exchange rates and the net effect of acquisitions and divestitures. Organic factors include fluctuations in overall economic activity within the industries, end markets, and geographic regions in which we operate, which we term market growth. For more information about revenue risks relating to our business, refer to Item 1A: Risk Factors included elsewhere in this Report.
Organic factors include fluctuations in overall economic activity within the industries, end markets, and geographic regions in which we operate, which we term market growth. Other organic factors combine to reflect what we refer to as market outgrowth. Such factors include (but are not limited to): (a) the number of our products used within existing applications, or the development of new applications requiring these products, due to regulations or other factors; (b) the "mix" of products sold, including the proportion of new or upgraded products and their pricing relative to existing products; (c) changes in product sales prices (including quantity discounts, rebates, and cash discounts for prompt payment); (d) changes in the level of competition faced by our products, including the launch of new products by competitors; (e) our ability to successfully develop, launch, and sell new products and applications; and (f) the evolution of the markets we serve to safer, cleaner, and more efficient, electrified, and connected technologies.
While the factors described above may impact net revenue in each of our reportable segments, the magnitude of that impact can differ. For more information about revenue risks relating to our business, refer to Item 1A: Risk Factors included elsewhere in this Report.
We manufacture most of our products, subcontracting only a limited number to third parties. As such, our cost of revenue consists principally of the following:
•Production Materials Costs. We source production materials globally to ensure a highly effective and efficient supply chain. However, we are still impacted by local market conditions, including fluctuations in foreign currency exchange rates. A portion of our production materials contains certain commodities, resins, and metals, the cost of which may vary with underlying pricing and foreign currency exchange rates. We use forward contracts to economically hedge a portion of our exposure to the potential change in prices associated with certain of these commodities, and we use forward contracts to economically hedge our exposure to foreign exchange rate fluctuations. The terms of these forward contracts fix the price of these commodities at a future date for various notional amounts. Gains and losses recognized on these derivatives are recorded in other, net and are not included in cost of revenue. Refer to Note 6: Other, Net of our Financial Statements included elsewhere in this Report for additional information.
•Employee Costs. Wages and benefits, including variable incentive compensation, for employees involved in our manufacturing operations and certain customer service and engineering activities is reflected in cost of revenue. A substantial portion of these costs can fluctuate on an aggregate basis in direct correlation with changes in production volumes. These costs may decline as a percentage of net revenue due to economies of scale associated with higher production volumes, and conversely, may increase with lower production volumes. These costs also fluctuate based on local labor market conditions. We rely on contract workers for direct labor in certain geographies. As of December 31, 2024, we had approximately 2,300 direct labor contract workers worldwide.
•Sustaining Engineering Activity Costs. Modifications of existing products for use by new and existing customers in familiar applications are included in cost of revenue, as are costs related to improvements in our manufacturing processes.
•Other.We manufacture most of our products, subcontracting only a limited number to third parties. As such, our cost of revenue consists principally of production materials costs and employee costs. Our remaining cost of revenue primarily consists of: gains and losses on certain foreign currency forward contracts that are designated as cash flow hedges; material yields; costs to import raw materials, such as tariffs; depreciation of fixed assets used in the manufacturing process; freight costs; warehousing expenses; maintenance and repair expenses; costs of quality assurance; operating supplies; and other general manufacturing expenses, such as expenses for energy consumption and operating lease expense.expenses.
Changes in cost of revenue as a percentage of net revenue have historically been impacted by several factors, including:
•changes in the price of raw materials, including the impact of changes in costs to import such raw materials, such as tariffs;
•changes in customer prices and surcharges;
•implementation of cost improvement measures aimed at increasing productivity, including reduction of fixed production costs, refinements in inventory management, design and process driven changes, and the coordination of procurement within each subsidiary and at the business level;
•product lifecycles, as we typically incur higher costs associated with new product development (related to excess manufacturing capacity and higher production costs during the initial stages of product launches) and during the phase-out of discontinued products;
•changes in production volumes, as a portion of production costs are fixed;
•transfer of production to our lower-cost manufacturing facilities;
•changes in depreciation expense;
•fluctuations in foreign currency exchange rates;
•changes in product mix;
•changes in logistics costs; and
•acquisitions and divestitures – acquired and divested businesses may generate higher or lower cost of revenue as a percentage of net revenue than our core business.
We develop products that address increasingly complex engineering and operating performance requirements to help our customers solve their most difficult challenges in the automotive, HVOR, industrial, clean energy, and aerospace end markets. We believe that continued focused investment in research and development ("R&D") is critical to our future growth and maintaining our leadership positions in the markets we serve. Our R&D efforts are directly related to timely development of new and enhanced products that are central to our business strategy. We continually develop our technologies to meet an evolving set of customer requirements and new product introductions. We conduct such activities in areas that we believe will increase our long-term revenue growth. Our development expense is typically associated with engineering core technology platforms to specific applications and engineering major upgrades that improve the functionality or reduce the cost of existing products. In addition, we continually consider new technologies where we may have expertise for potential investment or acquisition.
A large portion of our R&D activities is directed towards technologies and market trends that we believe have the potential for significant future growth, but that relate to products that are not currently within our core business or include new features and capabilities relative to existing products. Expenses related to these activities are less likely to result in increased near-term revenue than our more mainstream development activities.
Research and development ("R&D") expense consists of costs related to product design, development,design and processdevelopment. engineering.Our development expense is typically associated with engineering core technology platforms to specific applications and engineering major upgrades that improve the functionality or reduce the cost of existing products. Costs related to modifications of existing products for use by new and existing customers in familiar applications are presented in cost of revenue and are not included in R&D expense. The level of R&D expense in any period is related to the number of products in development, the stage of the development process, the complexity of the underlying technology, the potential scale of the product upon successful commercialization, and the level of our exploratory research.
Selling, general and administrative ("SG&A") expense consists of all expenditures incurred in connection with the sale and marketing of our products, as well as administrative overhead costs, including: salary and benefit costs for sales and marketing personnel and administrative staff; share-based compensation expense; charges related to the use and maintenance of administrative offices, including depreciation expense; other administrative costs, including expenses relating to information systems, human resources, and legal, finance, and accounting services; other selling and marketing related costs, such as expenses incurred in connection with travel and communications; and transaction costs associated with acquisitions.
Changes in SG&A expense as a percentage of net revenue have historically been impacted by a number of factors, including:
•changes in sales volume, as higher volumes enable us to spread the fixed portion of our selling, marketing, and administrative expense over higher revenue (e.g., expenses relating to our sales and marketing personnel can fluctuate due to prolonged trends in sales volume, while expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume);
•changes in customer prices and surcharges;
•changes in the mix of products we sell, as some products may require more customer support and sales effort than others;
•new product launches in existing and new markets, as these launches typically involve a more intense sales and marketing activity before they are integrated into customer applications and systems;
•changes in our customer base, as new customers may require different levels of sales and marketing attention;
•fluctuations in foreign currency exchange rates; and
•acquisitions and divestitures - acquired and divested businesses may require different levels of SG&A expense as a percentage of net revenue than our core business.
Depreciation expense includes depreciation of PP&E,property, plant and equipment, which includes assets held under finance lease and amortization of leasehold improvements. Depreciation expense is included in either cost of revenue or SG&A expense depending on the use of the asset as a manufacturing or administrative asset. Depreciation expense will vary according to the age of existing PP&E and the level of capital expenditures.
We have recognized a significant amount of definite-lived intangible assets. Acquisition-related definite-lived intangible assets are amortized on an economic-benefit basis, according to the useful lives of the assets, or on a straight-line basis if a pattern of economic benefits cannot be reliably determined. The amount of amortization expense related to definite-lived intangible assets depends on the amount and timing of definite-lived intangible assets acquired and where previously acquired definite-lived intangible assets are in their estimated life cycle. In general, the economic benefit of a definite-lived intangible asset is concentrated towards the beginning of its useful life.
Restructuring and other charges, net also includes the gain,gain or loss, net of transaction costs, from the sale of businesses, expense incurred from acquisition-related compensation arrangements, and other operating income or expense that is not presented elsewhere in operating income.
Amounts recognized in restructuring and other charges, net will vary according to the extent of our restructuring programs and other income or expense items not presented elsewhere in operating income.
As of December 31, 2024 and 2023, we had gross outstanding indebtedness of $3,223.4 million and $3,425.2 million, respectively. This indebtedness consists of a secured credit facility and various tranches of senior unsecured notes (together, the "Senior Notes"). Refer to Note 14: Debt of our Financial Statements included elsewhere in this Report for additional information on our indebtedness.
The credit agreement governing our secured credit facility (as amended, supplemented, waived, or otherwise modified, the "Credit Agreement") provides for senior secured credit facilities (the "Senior Secured Credit Facilities"), consisting of the Term Loan, the $750.0 million revolving credit facility (the "Revolving Credit Facility"), and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances.
The Senior Notes accrue interest at fixed rates. However, the Term Loan and the Revolving Credit Facility accrue interest at variable interest rates, which could drive some of the variability in interest expense. As of December 31, 2024, we had no amounts outstanding on the Term Loan or Revolving Credit Facility. Refer to Item 7A: Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this Report for more information regarding our exposure to potential changes in variable interest rates.
What changed in the latest 10-Q
Risk Factors
Information regarding risk factors appears in Part I, Item 1A: Risk Factors, included in our 2025 Annual Report. There have been no material changes to the risk factors disclosed therein.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
Largest changes
“For the six months ended June 30, 2026, operating income was $307.0 million, compared to operating income of $260.3 million in the prior period. This favorable impact was driven primarily by (1) higher revenue in the current period, (2) a decrease in restructuring charges and amortization of intangibles, and (3) cost savings as a result of actions taken as part of our restructuring plans, partially offset by the net impacts of inflation on material and logistics costs.”see in full comparison
“For the six months ended June 30, 2026, cost of revenue as a percentage of net revenue decreased from the prior period, primarily due to the favorable effects of the MSP divestiture in the first quarter of 2025 and organic revenue growth, partially offset by the net impacts of inflation on material and logistics costs and tariffs.”see in full comparison
Our ability to raise additional financing, and our borrowing costs, may be impacted by short- and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios. As ofsee in full comparisonAprilJuly 16, 2026, Standard & Poor's corporate credit rating for STBV was BB+ with a stable outlook and Moody’s Investors Service’s corporate credit rating for STBV was Ba2with a stable outlook, and Standard & Poor’s corporate credit rating for STBV was BB+with a stable outlook. Any future downgrades to STBV's credit ratings may increase our future borrowing costs but will not reduce availability under the Credit Agreement.
For the three months endedsee in full comparisonMarchJune31,30, 2026, operating income was$141.6$165.4 million, compared to operating income of$122.2$138.1 million in the prior period. This favorable impact was driven primarily by (1) higher revenue in the current period, (2) a decrease in restructuring charges and amortization of intangibles, and (3) cost savings as a result of actions taken as part of our restructuring plans, partially offset by the net impacts of inflation on material and logistics costs.
Net revenue for the three months endedsee in full comparisonMarchJune31,30, 2026 was$934.8$990.6 million, an increase of2.6%5.0% on a reported basis compared to$911.3$943.4 million in the prior period. Excluding an increase of2.2%1.1% attributed to changes in foreign currency exchange rates and a decrease of3.8%0.5% related to the effect of disposals, net revenue increased4.2%4.4% on an organic basis. Organic revenue growth (or decline), discussed throughout this Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A"), is a financial measure not presented in accordance with U.S. GAAP. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information regarding our use of organic revenue growth (or decline). Net revenue for the six months ended June 30, 2026 was $1,925.4 million, an increase of 3.8% on a reported basis compared to $1,854.6 million in the prior period. Excluding an increase of 1.6% attributed to changes in foreign currency exchange rates and a decrease of 2.1% related to the effect of disposals, net revenue increased 4.3% on an organic basis.
“Net revenue for the six months ended June 30, 2026 increased 3.8% compared to the prior period. Net revenue increased 4.3% on an organic basis, which excludes an increase of 1.6% attributed to changes in foreign currency exchange rates and a decrease of 2.1% due primarily to the effects of the divestiture of the Magnetic Speed and Position Business ("MSP Business") in the first quarter of 2025. Refer to Note 16: Disposals of the Financial Statements, included elsewhere in this Report, for additional information on the sale of the MSP Business.”see in full comparison
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Net revenue for the three months ended MarchJune 31,30, 2026 was $934.8$990.6 million, an increase of 2.6%5.0% on a reported basis compared to $911.3$943.4 million in the prior period. Excluding an increase of 2.2%1.1% attributed to changes in foreign currency exchange rates and a decrease of 3.8%0.5% related to the effect of disposals, net revenue increased 4.2%4.4% on an organic basis. Organic revenue growth (or decline), discussed throughout this Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A"), is a financial measure not presented in accordance with U.S. GAAP. Refer to Non-GAAP Financial Measures included elsewhere in this MD&A for additional information regarding our use of organic revenue growth (or decline). Net revenue for the six months ended June 30, 2026 was $1,925.4 million, an increase of 3.8% on a reported basis compared to $1,854.6 million in the prior period. Excluding an increase of 1.6% attributed to changes in foreign currency exchange rates and a decrease of 2.1% related to the effect of disposals, net revenue increased 4.3% on an organic basis.
Operating income for the three months ended MarchJune 31,30, 2026 was $141.6$165.4 million (15.2%16.7% of net revenue), an increase of $19.5$27.3 million, or 15.9%19.8%, compared to operating income of $122.2$138.1 million (13.4%14.6% of net revenue) in the three months ended MarchJune 31,30, 2025. Operating income for the six months ended June 30, 2026 was $307.0 million (15.9% of net revenue), an increase of $46.7 million, or 18.0%, compared to operating income of $260.3 million (14.0% of net revenue) in the six months ended June 30, 2025. Refer to Results of Operations included elsewhere in this MD&A for additional discussion of our earnings results for the three and six months ended MarchJune 31,30, 2026 compared to the prior periods.
We generated $122.5$332.5 million of operating cash flows in the threesix months ended MarchJune 31,30, 2026, ending the quarter with $635.1$403.3 million in cash and cash equivalents. In addition to $401.1 million used to pay debt, in the threesix months ended MarchJune 31,30, 2026, we used cash of approximately $17.9$41.5 million for capital expenditures, $17.5$34.9 million for payment of dividends, and $25.1 million for share repurchases as part of our share repurchase plan.
The table below presents our historical results of operations, in millions of dollars and as a percentage of net revenue, for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025. We have derived the results of operations from the Financial Statements included elsewhere in this Report. Amounts and percentages in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
Net revenue for the three months ended MarchJune 31,30, 2026 increased 2.6%5.0% compared to the prior period. Net revenue increased 4.2%4.4% on an organic basis, which excludes an increase of 2.2%1.1% attributed to changes in foreign currency exchange rates and a decrease of 3.8%0.5% due primarily to the effects of thediscontinued divestitureproduct of the Magnetic Speed and Positioning Business ("MSP Business")lines in the first quarter of 2025. Refer to Note 16: Disposals of the Financial Statements, included elsewhere in this Report, for additional information on the sale of the MSP Business.
Net revenue for the six months ended June 30, 2026 increased 3.8% compared to the prior period. Net revenue increased 4.3% on an organic basis, which excludes an increase of 1.6% attributed to changes in foreign currency exchange rates and a decrease of 2.1% due primarily to the effects of the divestiture of the Magnetic Speed and Position Business ("MSP Business") in the first quarter of 2025. Refer to Note 16: Disposals of the Financial Statements, included elsewhere in this Report, for additional information on the sale of the MSP Business.
Automotive net revenue for the three months ended MarchJune 31,30, 2026 decreasedincreased 0.8%3.3% compared to the prior period. Excluding an increase of 2.5%1.5% attributed to changes in foreign currency exchange and a decrease of 4.0% due to the effects of a divestiture,rates, Automotive net revenue increased 0.7%1.8% on an organic basis compared to the prior period, which was primarily due to productcontent mixgrowth in theour marketsAutomotive webusiness serve.segment.
Automotive net revenue for the six months ended June 30, 2026 increased 1.4% compared to the prior period. Excluding an increase of 2.0% attributed to changes in foreign currency exchange and a decrease of 2.0% due to the effects of a divestiture, Automotive net revenue increased 1.4% on an organic basis compared to the prior period, which was primarily due to content growth in our Automotive business segment.
Industrials net revenue for the three months ended MarchJune 31,30, 2026 decreasedincreased 0.8%2.9% compared to the prior period. Excluding an increase of 1.5%0.9% attributed to changes in foreign currency exchange and a decrease of 3.0%2.2% due to the effect of divestitures,discontinued product lines, Industrials net revenue grew 0.7%4.2% on an organic basis compared to the prior period, which primarily reflects content growth in our Industrials business segment.
Industrials net revenue for the six months ended June 30, 2026 increased 0.7% compared to the prior period. Excluding an increase of 1.1% attributed to changes in foreign currency exchange and a decline of 2.6% due to the effect of divestitures, Industrials net revenue grew 2.2% on an organic basis compared to the prior period, which primarily reflects content growth in our Industrials business segment.
Aerospace, Defense, and Commercial Equipment net revenue for the three months ended MarchJune 31,30, 2026 increased 14.8%11.5% compared to the prior period. Excluding an increase of 1.8%0.6% attributed to changes in foreign currency exchange rates and a decline of 3.7% due to the effects of a divestiture,rates, Aerospace, Defense, and Commercial Equipment net revenue grew 16.7%10.9% on an organic basis due to growth in our commercial equipment and aerospace business.business and product mix in the markets we serve.
Aerospace, Defense, and Commercial Equipment net revenue for the six months ended June 30, 2026 increased 13.1% compared to the prior period. Excluding an increase of 1.2% attributed to changes in foreign currency exchange rates and a decline of 1.8% due to the effects of a divestiture, Aerospace, Defense, and Commercial Equipment net revenue grew 13.7% on an organic basis due to growth in our commercial equipment and aerospace business and product mix in the markets we serve.
Operating costs and expenses for the three and six months ended MarchJune 31,30, 2026 and 2025 are presented, in millions of dollars and as a percentage of net revenue, in the following table. Amounts and percentages in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
For the three months ended MarchJune 31,30, 2026, cost of revenue as a percentage of net revenue decreased from the prior period, primarily due to the favorable effects of the MSP divestiture in the first quarter of 2025 and organic revenue growth, partially offset by the net impacts of inflation on material and logistics costs and tariffs.
For the six months ended June 30, 2026, cost of revenue as a percentage of net revenue decreased from the prior period, primarily due to the favorable effects of the MSP divestiture in the first quarter of 2025 and organic revenue growth, partially offset by the net impacts of inflation on material and logistics costs and tariffs.
For the three and six months ended MarchJune 31,30, 2026, research and development expense did not fluctuate materially from the prior period.
For the three and six months ended MarchJune 31,30, 2026, selling, general and administrative expense did not fluctuate materially from the prior period.
For the three and six months ended MarchJune 31,30, 2026, amortization of intangible assets decreased from the prior period, primarily due to the effect of amortization of intangible assets in accordance with their expected economic benefit, which generally results in acceleration of amortization expense in the early years of the life of an intangible asset.
In the three and six months ended MarchJune 31,30, 2026, restructuring and other charges, net decreased from the prior period, primarily due to higher transaction-related charges in 2025 corresponding to the business divestitures that took place in that year, partially offset by higher charges related to the Transformation Plan in the current period.
For the three months ended MarchJune 31,30, 2026, operating income was $141.6$165.4 million, compared to operating income of $122.2$138.1 million in the prior period. This favorable impact was driven primarily by (1) higher revenue in the current period, (2) a decrease in restructuring charges and amortization of intangibles, and (3) cost savings as a result of actions taken as part of our restructuring plans, partially offset by the net impacts of inflation on material and logistics costs.
For the six months ended June 30, 2026, operating income was $307.0 million, compared to operating income of $260.3 million in the prior period. This favorable impact was driven primarily by (1) higher revenue in the current period, (2) a decrease in restructuring charges and amortization of intangibles, and (3) cost savings as a result of actions taken as part of our restructuring plans, partially offset by the net impacts of inflation on material and logistics costs.
For the three and six months ended MarchJune 31,30, 2026, interest expense did not fluctuate materially from the prior period.
For the three and six months ended MarchJune 31,30, 2026, interest income did not fluctuate materially from the prior period.
For the three months ended MarchJune 31,30, 2026, other, net represented a net gainloss of $4.1$3.6 million, aan favorableunfavorable impact on earnings of $2.0$4.6 million compared to a net gain of $2.1$0.9 million in the prior period. This favorableunfavorable impact was primarily due to the absence of losses on forward currencycommodity forward contracts and on the remeasurement of net monetary assets in the current year.year, partially offset by the gain on debt financing transactions in the current period.
For the six months ended June 30, 2026, other, net represented a net gain of $0.4 million, an unfavorable impact on earnings of $2.6 million compared to a net gain of $3.1 million in the prior period. This unfavorable impact was primarily due to losses on the remeasurement of net monetary assets and a lower gain on commodity forward contracts in the current year, partially offset by the gain on debt financing transactions in the current period.
The following tables present reconciliations of certain financial measures calculated in accordance with U.S. GAAP to the related non-GAAP financial measures for the three months ended MarchJune 31,30, 2026 and 2025. Refer to the Non-GAAP Adjustments section above for additional information regarding these adjustments. Amounts and percentages in the tables below have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
The following tables present reconciliations of certain financial measures calculated in accordance with U.S. GAAP to the related non-GAAP financial measures for the six months ended June 30, 2026 and 2025.
(a) The following table presents the components of our restructuring related and other non-GAAP adjustment to net income for the three and six months ended MarchJune 31,30, 2026 and 2025 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):
(b) The following table presents the components of our financing and other transaction costs non-GAAP adjustment to net income for the three and six months ended MarchJune 31,30, 2026 and 2025 (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):
__________________________ i.Primarily includes losses or gains related to the divestiture of a business, costs incurred, including for legal, accounting, and other professional services, that are directly related to an acquisition, divestiture, or other transaction. In the threesix months ended MarchJune 31,30, 2025, this line includes costs and losses associated with the disposition of the MSP Business. Refer to Note 16: Disposals for further information on this transaction.
As of MarchJune 31,30, 2026 and December 31, 2025, we held cash and cash equivalents in the following regions (amounts have been calculated based on unrounded numbers, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):
The table below summarizes our primary sources and uses of cash for the threesix months ended MarchJune 31,30, 2026 and 2025. We have derived these summarized statements of cash flows from the Financial Statements included elsewhere in this Report. Amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.
Operating activities. Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026 increased compared to the corresponding period of the prior year, primarily due to higher cash provided by earnings,earnings partiallyand offset by unfavorablefavorable changes in working capital.
Investing activities. Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was $16.5$35.9 million compared to cash used of $6.9$33.6 million for the corresponding period of the prior year. This change was primarily due to proceeds received for the sale of the MSP Business in the first quarter of 2025, partially offset by higher capital expenditures in the prior period. For fiscal year 2026, we anticipate additions to PP&E and capitalized software of up to approximately $150.0$125.0 million, which we expect to fund with cash flows from operations.
Financing activities. Net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 was $44.7$468.5 million compared to cash used in financing activities of $119.1$160.8 million in the corresponding period of the prior year. This change was primarily due tothe settlement of our cash tender offer in the second quarter of 2026, partially offset by a higher amount of cash paid to repurchase ordinary shares in the prior year.
As of MarchJune 31,30, 2026, we had $2.9$2.5 billion in gross indebtedness, which includes finance lease obligations and excludes debt discounts, premiums, and deferred financing costs.
Our sources of liquidity include cash on hand, cash flows from operations, and available capacity under the Revolving Credit Facility. As of MarchJune 31,30, 2026, we had $645.8 million available under the Revolving Credit Facility, net of $4.2 million of obligations in respect of outstanding letters of credit issued thereunder. Outstanding letters of credit are issued primarily for the benefit of certain operating activities. As of MarchJune 31,30, 2026, no amounts had been drawn against these outstanding letters of credit. This Revolving Credit Facility includes an accordion feature under which maximum borrowings may be increased under certain circumstances.
Our ability to raise additional financing, and our borrowing costs, may be impacted by short- and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios. As of AprilJuly 16, 2026, Standard & Poor's corporate credit rating for STBV was BB+ with a stable outlook and Moody’s Investors Service’s corporate credit rating for STBV was Ba2 with a stable outlook, and Standard & Poor’s corporate credit rating for STBV was BB+ with a stable outlook. Any future downgrades to STBV's credit ratings may increase our future borrowing costs but will not reduce availability under the Credit Agreement.
The Credit Agreement provides that if our senior secured net leverage ratio exceeds a specified level, we are required to use a portion of our excess cash flow, as defined in the Credit Agreement, generated by operating, investing, or financing activities to prepay some or all of the outstanding borrowings under the Senior Secured Credit Facilities. The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and upon the incurrence of certain indebtedness (excluding any permitted indebtedness). These provisions were not triggered during the threesix months ended MarchJune 31,30, 2026.
The Credit Agreement and the Senior Notes Indentures contain restrictions and covenants that limit the ability of our wholly-owned subsidiary, STBV, and certain of its subsidiaries to, among other things, incur subsequent indebtedness, sell assets, pay dividends, and make other restricted payments. For a full discussion of these restrictions and covenants, refer to Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources included in our 2025 Annual Report. These restrictions and covenants, which are subject to important exceptions and qualifications set forth in the Credit Agreement and Senior Notes Indentures, were taken into consideration when we established our share repurchase programs and will be evaluated periodically with respect to future potential funding of those programs. As of MarchJune 31,30, 2026, we believe we were in compliance with all covenants and default provisions under our credit arrangements.
From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by our Board at any time. We currently have authorization for the September 2023 Program, under which approximately $257.3 million remained available as of MarchJune 31,30, 2026. In the threesix months ended MarchJune 31,30, 2026, and 2025, we repurchased 0.7 million and 3.54.2 million ordinary shares under the September 2023 Program.
In the threesix months ended MarchJune 31,30, 2026 and 2025, we paid aggregate cash dividends of $17.5$34.9 million and $17.9$35.5 million, respectively. In AprilJuly 2026, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable in MayAugust 2026 to shareholders of record as of MayAugust 13,12, 2026.
For a discussion of the critical accounting policies that require the use of significant judgments and estimates by management, refer to Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates included in our 2025 Annual Report. The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to exercise judgment in the process of applying our accounting policies. It also requires that we make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. No material changes to our critical accounting policies and estimates, as previously disclosed, have occurred during the first threesix months of 2026.
ST insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (2 insiders, 2 trade dates, 9,058 shares, about $437.4K). Net open-market shares: -9,058 (purchases minus sales); net value about -$437.4K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Mcintosh Alice Martins |
Shares withheld for tax | 214 | $42.35 | $9.1K |
| 2026-09-02 | Hertzke Patrick Norton |
Shares withheld for tax | 3,074 | $42.04 | $129.2K |
| 2026-07-21 | Lynch Andrew Charles |
Shares withheld for tax | 1,388 | $46.51 | $64.6K |
| 2026-07-01 | Lynch Andrew Charles |
Grant/award | 1,364 | — | — |
| 2026-07-01 | Lynch Andrew Charles |
Shares withheld for tax | 903 | $46.55 | $42.0K |
| 2026-06-12 | Caljouw Lynne J |
Open-market sale | 2,723 | $50.35 | $137.1K |
| 2026-06-09 | Zide Stephen M |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Zide Stephen M |
Shares withheld for tax | 285 | $49.65 | $14.2K |
| 2026-06-09 | Mirshekari Ali John |
Shares withheld for tax | 439 | $49.65 | $21.8K |
| 2026-06-09 | Sonnenberg Steven Alan |
Shares withheld for tax | 433 | $49.65 | $21.5K |
| 2026-06-09 | Absmeier John P |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Absmeier John P |
Shares withheld for tax | 547 | $49.65 | $27.2K |
| 2026-06-09 | Vijayvargiya Jugal K. |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Vijayvargiya Jugal K. |
Shares withheld for tax | 249 | $49.65 | $12.4K |
| 2026-06-09 | Teich Andrew C |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Teich Andrew C |
Shares withheld for tax | 506 | $49.65 | $25.1K |
| 2026-06-09 | Sullivan Martha N. |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Sullivan Martha N. |
Shares withheld for tax | 508 | $49.65 | $25.2K |
| 2026-06-09 | Skidmore Constance Ellen |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Skidmore Constance Ellen |
Shares withheld for tax | 418 | $49.65 | $20.8K |
| 2026-06-09 | Eyler Phillip |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Eyler Phillip |
Shares withheld for tax | 547 | $49.65 | $27.2K |
| 2026-06-09 | Bolsinger Lorraine A |
Shares withheld for tax | 495 | $49.65 | $24.6K |
| 2026-06-09 | Bolsinger Lorraine A |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Black Daniel |
Grant/award | 3,827 | — | — |
| 2026-06-09 | Black Daniel |
Shares withheld for tax | 208 | $49.65 | $10.3K |
| 2026-06-09 | Schupmann Laurie |
Grant/award | 3,827 | — | — |
| 2026-06-01 | Siedel Richard W. Jr. |
Shares withheld for tax | 374 | $49.29 | $18.4K |
| 2026-05-20 | Stott David K |
Open-market sale | 6,335 | $47.40 | $300.3K |
| 2026-05-06 | Caljouw Lynne J |
Disposition to issuer | 3,226 | $45.00 | $145.2K |
| 2026-05-06 | Caljouw Lynne J |
Disposition to issuer | 3,714 | $44.23 | $164.3K |
| 2026-05-06 | Caljouw Lynne J |
Option exercise | 3,226 | $43.67 | $140.9K |
Well-known investors holding ST (13F)
None of the 59 investors we track reported a position in their latest 13F.