Sensata Technologies Reports Third Quarter 2024 Financial Results

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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