Sensata Technologies Holding plc

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations, comprehensive (loss)/income, cash flows, and changes in shareholders' equity of Sensata Technologies Holding plc, a public limited company incorporated under the laws of England and Wales, and its consolidated subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," or "us."

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q. Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The accompanying interim financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (the "SEC") on February 29, 2024 (the "2023 Annual Report").

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 Heavy Vehicle and Off-Road ("HVOR") businesses (with the combined business remaining in Performance Sensing) and moving the 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. Prior year amounts in this Quarterly Report on Form 10-Q ("this Report") have been recast to reflect this realignment. Refer to Note 15: Segment Reporting for additional information.

In September 2024, we sold various assets and liabilities comprising our vehicle area networks and data collection business (collectively, the "Insights Business") to an affiliate of Balmoral Funds. See Note 16: Disposal for additional information.

In the three and nine months ended September 30, 2024, we present interest income on the condensed consolidated statements of operations separate from interest expense. In the three and nine months ended September 30, 2023, interest income had been included in interest expense, net. Accordingly, we reclassified prior period interest income to a separate caption in the condensed consolidated statements of operations to conform to current period presentation.

All U.S. dollar ("USD") and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated.

2. New Accounting Standards

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, to improve disclosures about a public entity's reportable segments. This guidance requires that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss and an amount for "other segment items" included in the determination of segment operating income. The guidance also requires that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by FASB Accounting Standards Codification ("ASC") Topic 280, Segment Reporting, in interim periods, and that a public entity provide the title and position of the chief operating decision maker. There is no change to the guidance for identification or aggregation of operating or reportable segments. FASB ASU No. 2023-07 will be effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The guidance will be applied retrospectively to all prior periods presented. We adopted the guidance in FASB ASU No. 2023-07 on January 1, 2024 and will include the required new annual and quarterly disclosures in our Annual Report on Form 10-K for the period ended December 31, 2024 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, respectively.

In December 2023, the FASB issued ASU No. 2023-09, Income taxes (Topic 740): Improvements to Income Tax Disclosures, to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The guidance also includes certain other amendments to improve the effectiveness of income tax disclosures. For public business entities, the standard is effective for annual periods beginning after December 15, 2024. We do not expect the adoption of FASB ASU No. 2023-09 to have an impact on our results of operations or financial condition, but it is expected to increase the amount of disclosures required in the notes to the consolidated financial statements.

3. Revenue Recognition

The following tables present net revenue disaggregated by segment and end market for the three and nine months ended September 30, 2024 and 2023 for ourtwo reportable segments, Performance Sensing ("PS") and Sensing Solutions ("SS"), and other:

(1) In the three months ended March 31, 2024, we realigned our segments, as discussed further in Note 1: Basis of Presentation and Note 15: Segment Reporting. As a result, certain revenue in the Automotive and HVOR end markets has been moved from Performance Sensing to Sensing Solutions. In addition, Insights revenue was moved from the HVOR end market (in Performance Sensing) to the other end market in a separate operating segment that is not aggregated within either of our reportable segments. The three and nine months ended September 30, 2023 have been retrospectively recast to reflect this change.

(2) Heating, ventilation and air conditioning.

4. Share-Based Payment Plans

The following table presents the components of non-cash compensation expense related to our equity awards for the three and nine months ended September 30, 2024 and 2023:

(1) In the three and nine months ended September 30, 2024, $5.8 million was related to the accelerated vesting of restricted securities associated with the sale of the Insights Business.

Equity Awards

We granted the following restricted stock units ("RSUs" and each, an "RSU") and performance-based restricted stock units ("PRSUs" and each, a "PRSU") under the Sensata Technologies Holding plc 2021 Equity Incentive Plan during the nine months ended September 30, 2024:

(1) These RSUs cliff vestone year from the grant date (various dates between March 2025 and July 2025).

(2) These RSUs vest on various dates over the next 15 months depending on service or performance criteria.

(3) These RSUs vest ratably over three years, one-third per year beginning on the first anniversary of the grant date. These RSUs will fully vest on various dates between February 2027 and September 2027.

(4) These PRSUs vest on various dates between April 2027 and June 2027. The number of units that ultimately vest will be between 0% and 150% and is dependent on the achievement of certain performance criteria.

(5) These awards include certain PRSUs with market performance conditions that will be evaluated relative to the performance of certain peers as defined in the award agreement. The number of units that ultimately vest (in April 2027 and June 2027) will be from 0% to 150%, depending on achievement of these performance criteria. Total grant date value of these PRSUs is approximately $6.2 million and was valued using the Monte Carlo method.

5. Restructuring and Other Charges, Net

Summary

The following table presents the charges and gains included as components of restructuring and other charges, net for the three and nine months ended September 30, 2024, and 2023:

(1)Includes net severance charges and facility and other exit costs relating to the Q3 2023 Plan. Of the charges recognized in the three and nine months ended September 30, 2023, $7.3 million was incurred by the Performance Sensing segment, $5.5 million was incurred by the Sensing Solutions segment and $8.5 million was incurred by Corporate and other functions.

(2)Each period presented includes severance charges, net of reversals, that do not represent the initiation of a larger restructuring plan. This includes, for the three and nine months ended September 30, 2024, severance related to certain actions to restructure our IT operations.

(3)See Note 16: Disposal for additional information on the sale of the Insights Business.

(4)Acquisition-related compensation arrangements consist of incentive compensation to previous owners of companies we have acquired. Payment is generally tied to technical and/or financial targets set at the time of acquisition.

(5)Represents charges that are not included in one of the other classifications. The three and nine months ended September 30, 2023 and 2024 primarily include charges related to the exit of Spear, as detailed under the heading Spear Power Systems below. The three and nine months ended September 30, 2024 also include contract termination costs related to certain product lifecycle management activities in the Sensing Solutions segment and pension settlement costs.

The following table presents a rollforward of our severance liability for the nine months ended September 30, 2024:

The severance liability as of September 30, 2024 and December 31, 2023 was entirely recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

Spear Power Systems

In June 2023, we announced that we had made the decision to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”). The exit of the Spear Marine Business 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.

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 Spear businesses had been included in the Sensing Solutions reportable segment. Exiting Spear resulted in charges in the three and nine months ended September 30, 2024 and 2023, as presented in the table below:

(1)Amortization of certain intangible assets related to the Spear acquisition was accelerated during the second quarter of 2023 in connection with the exit of the Spear Marine Business, as defined above. Additional accelerated amortization was recorded during the third quarter of 2024 to coincide with the divestiture of the remaining Spear operations. The amortization was accelerated proportionately to the foregone economic benefit of the closed operations.

Other

In the three months ended June 30, 2024, we initiated certain actions related to restructuring of our IT operations and product lifecycle management including product line discontinuations, primarily within Sensing Solutions, which, for the three and nine months ended September 30, 2024, resulted in total costs of $32.5 million and $48.4 million, respectively, including severance, contract termination costs, and inventory charges. Of the costs recognized for the three and nine months ended September 30, 2024, $27.3 million and $40.5 million, respectively, were included within cost of revenue, with the remainder included within restructuring and other charges, net.

6. Other, Net

The following table presents the components of other, net for the three and nine months ended September 30, 2024 and 2023:

(1)The nine months ended September 30, 2024 primarily includes a loss on an equity investment that does not have a readily determinable fair value for which we use the measurement alternative prescribed in FASB ASC Topic 321, Investments—Equity Securities. Refer to Note 13: Fair Value Measures for additional information.

7. Income Taxes

The following table presents the (benefit from)/provision for income taxes for the three and nine months ended September 30, 2024 and 2023:

The (benefit from)/provision for income taxes consists of (1) current tax expense, which relates primarily to our profitable operations in tax jurisdictions with limited or no net operating loss carryforwards and withholding taxes related to management fees, royalties, and the repatriation of foreign earnings; and (2) deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (a) book versus tax basis in intangible assets, (b) changes in net operating loss carryforwards, and (c) changes in withholding taxes on unremitted earnings. Other items impacting deferred tax expense include changes in tax rates and changes in our assessment of the realizability of our deferred tax assets.

During the third quarter of 2024 our benefit from income taxes includes the following: (1) a deferred tax benefit of approximately $257.7 million due to a tax strategy to secure the future tax deductibility of certain intellectual property which had a valuation allowance against it at December 31, 2023; (2) a $12.8 million tax expense on the sale of the Insights Business; (3) deferred tax expense of $11.1 million on the settlement of the U.S. qualified pension plan; and (4) no tax benefit or expense related to the goodwill impairment as discussed in Note 13: Fair Value Measures.

8. Net (Loss)/Income per Share

Basic and diluted net (loss)/income per share are calculated by dividing net (loss)/income by the number of basic and diluted weighted-average ordinary shares outstanding during the period. For the three and nine months ended September 30, 2024 and 2023 the weighted-average ordinary shares outstanding used to calculate basic and diluted net (loss)/income per share were as follows:

Net (loss)/income and net(loss)/income per share are presented in the consolidated statements of operations.

Certain potential ordinary shares were excluded from our calculation of diluted weighted-average ordinary shares outstanding because either they would have had an anti-dilutive effect on net (loss)/income per share or they related to equity awards that were contingently issuable for which the contingency had not been satisfied. These potential ordinary shares were as follows:

9. Inventories

The following table presents the components of inventories as of September 30, 2024 and December 31, 2023:

10. Debt

The following table presents the components of long-term debt, net and finance lease obligations as of September 30, 2024 and December 31, 2023:

Our indebtedness as of September 30, 2024 and December 31, 2023 consists of various tranches of senior unsecured notes as shown in the table above. We also have secured credit facilities (the "Senior Secured Credit Facilities") which provide for our $750.0 million revolving credit facility (the "Revolving Credit Facility") and incremental availability under which additional debt can be issued. Refer to Note 14: Debt of our 2023 Annual Report for additional information related to our indebtedness prior to the issuance of the $500.0 million aggregate principal amount of 6.625% senior notes due 2032 (the "6.625% Senior Notes") in June 2024.

Revolving Credit Facility

As of September 30, 2024, we had $745.8 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 September 30, 2024, no amounts had been drawn against these outstanding letters of credit.

Debt Financing Transactions

Issuance of 6.625% Senior Notes

The 6.625% Senior Notes were issued under an indenture dated as of June 6, 2024 (the "6.625% Senior Notes Indenture") among Sensata Technologies, Inc. ("STI"), as issuer, The Bank of New York Mellon, as trustee, and our guarantor subsidiaries named therein (the "Guarantors").

The 6.625% Senior Notes bear interest at a rate of 6.625% per annum and mature on July 15, 2032. Interest is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2025. STI's obligations under the 6.625% Senior Notes are guaranteed by Sensata Technologies B.V. ("STBV") and each of STBV's wholly-owned subsidiaries (other than STI) that is a Guarantor under STI's Senior Secured Credit Facilities and an issuer or a guarantor under our existing senior notes as follows (collectively, the "Existing Notes"): STI's 4.375% Senior Notes due 2030 and 3.75% Senior Notes due 2031 and STBV's 4.0% Senior Notes due 2029 and 5.875% Senior Notes due 2030.

The 6.625% Senior Notes are STI’s, and the guarantees are the Guarantors’, senior unsecured obligations and rank equally in right of payment to all existing and future senior indebtedness of STI or the Guarantors, respectively, including indebtedness under the Senior Secured Credit Facilities and the Existing Notes.

The 6.625% Senior Notes Indenture contains covenants that limit the ability of STBV and its subsidiaries (including STI and the other Guarantors) to, among other things: incur liens; engage in sale and leaseback transactions; with respect to any subsidiary of STBV (other than STI), incur indebtedness without such subsidiary’s guaranteeing the 6.625% Senior Notes; or consolidate, merge with, or sell, assign, convey, transfer, lease, or otherwise dispose of all or substantially all or substantially all of their properties or assets to, another person. These covenants are subject to important exceptions and qualifications set forth in the 6.625% Senior Notes Indenture.

The guarantees of the 6.625% Senior Notes and certain of these covenants will be suspended if the 6.625% Senior Notes are assigned an investment-grade rating by either S&P Global Ratings or Moody’s Investors Service, Inc. and no default has occurred and is continuing. The guarantees of the 6.625% Senior Notes and the suspended covenants will be reinstated in the event that the 6.625% Senior Notes are rated below investment grade by both rating agencies, or an event of default has occurred and is continuing at such time.

The 6.625% Senior Notes Indenture provides for events of default (subject in certain cases to customary grace and cure periods), which include, among others, nonpayment of principal or interest when due, breach of covenants or other agreements in the 6.625% Senior Notes Indenture, defaults in payment of certain other indebtedness, certain events of bankruptcy or insolvency, failure to pay certain judgments, and failure of the guarantees of significant subsidiaries to remain in full force and effect. Generally, if an event of default occurs, the trustee or the holders of at least 25% in principal amount of the then outstanding 6.625% Senior Notes may declare the principal of and accrued but unpaid interest on all of the 6.625% Senior Notes to be due and payable immediately. All provisions regarding remedies in an event of default are subject to the 6.625% Senior Notes Indenture.

At any time, and from time to time, prior to July 15, 2027, STI may redeem the 6.625% Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 6.625% Senior Notes being redeemed, plus a “make whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time on or after July 15, 2027, STI may redeem the 6.625% Senior Notes, in whole or in part, at the following prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to, but excluding, the redemption date:

In addition, at any time prior to July 15, 2027, STI may redeem up to 40% of the principal amount of the outstanding 6.625% Senior Notes (including additional 6.625% Senior Notes, if any) with the net cash proceeds of certain equity offerings at a redemption price (expressed as a percentage of principal amount) of 106.625%, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, provided that at least 60% of the aggregate principal amount of the 6.625% Senior Notes (including additional 6.625% Senior Notes, if any) remains outstanding immediately after each such redemption.

Upon the occurrence of certain changes in control, each holder of the 6.625% Senior Notes will have the right to require STI to repurchase the 6.625% Senior Notes at 101% of their principal amount plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

Upon changes in certain tax laws or treaties, or any change in the official application, administration, or interpretation thereof, STI may, at its option, redeem the 6.625% Senior Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, premium, if any, and all Additional Amounts (as defined in the 6.625% Senior Notes Indenture), if any, then due and which will become due on the date of redemption.

Redemption of 5.0% Senior Notes

In July 2024, we redeemed the $700.0 million aggregate principal amount outstanding on our 5.0% senior notes due 2025 (the "5.0% Senior Notes") in accordance with the terms of the indenture under which the 5.0% Senior Notes were issued and the terms of the notice of redemption, at a redemption price equal to 101% of the aggregate principal amount of the outstanding 5.0% Senior Notes, plus accrued and unpaid interest to (but not including) the redemption date. In addition to the $700.0 million aggregate principal amount outstanding, at redemption we paid the $7.0 million premium and $10.1 million accrued interest.

Accounting for Debt Financing Transactions

We account for our debt financing transactions as disclosed in Note 2: Significant Accounting Policies of the audited consolidated financial statements and notes thereto included in our 2023 Annual Report.

In connection with the issuance of the 6.625% Senior Notes, we recognized $6.3 million of deferred financing costs, which are presented as a reduction of long-term debt on our condensed consolidated balance sheets.

In connection with the redemption of the 5.0% Senior Notes, we recognized a loss of $9.2 million, presented in other, net, which reflects the $7.0 million early redemption premium and $2.2 million related to the write-off of unamortized deferred financing costs and debt discounts.

Accrued Interest

Accrued interest associated with our outstanding debt is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, accrued interest totaled $37.6 million and $45.2 million, respectively.

11. Commitments and Contingencies

We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business. Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial condition, and/or cash flows.

12. Shareholders' Equity

Purchase of noncontrolling interest in joint venture

In February 2024, we purchased the remaining 50% interest in our joint venture with Dongguan Churod Electronics Co., Ltd. for approximately $79.4 million. Prior to the transaction, we had been consolidating the joint venture. The purchase of the 50% non-controlling interest was accounted for as an equity transaction. No gain or loss was recognized in the condensed consolidated statements of operations. The difference between the fair value of the consideration paid and the amount by which the non-controlling interest was adjusted was recognized as a reduction of additional paid in capital recorded in equity.

Cash Dividends

In the three and nine months ended September 30, 2024, we paid aggregate cash dividends of $18.1 million and $54.3 million, respectively, compared to $18.3 million and $53.4 million in the three and nine months ended September 30, 2023, respectively. On October 28, 2024, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable on November 27, 2024 to shareholders of record as of November 13, 2024.

Foreign Currency Translation

Prior to October 1, 2023, the functional currency of our wholly-owned subsidiaries in China was USD. Effective October 1, 2023, as a result of significant changes in economic facts and circumstances in the operations of our China foreign entities, the functional currency of our wholly-owned subsidiaries in China changed to the Chinese Renminbi ("CNY"). The changes in economic facts and circumstances caused a permanent change to our strategy in China toward a more self-contained model, making China the primary economic environment in which these subsidiaries operate. This change was accounted for prospectively and does not impact prior period financial statements.

As a result of this change, in the fourth quarter of 2023, we started recording an adjustment to translate these subsidiaries' financial statements from CNY to USD (our reporting currency). These adjustments are included in other comprehensive income and are presented under the heading Accumulated Other Comprehensive Income below.

Treasury Shares

From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by the Board at any time. Under these programs, we may repurchase ordinary shares at such times and in amounts to be determined by our management, based on market conditions, legal requirements, and other corporate considerations, on the open market or in privately negotiated transactions, provided that such transactions were completed pursuant to an agreement and with a third party approved by our shareholders at the annual general meeting. Ordinary shares repurchased by us are recognized, measured at cost, and presented as treasury shares on our consolidated balance sheets, resulting in a reduction of shareholders' equity.

In January 2022, our Board of Directors authorized a $500.0 million ordinary share repurchase program (the “January 2022 Program”), which replaced the previous $500.0 million program approved in July 2019. In September 2023, our Board of Directors authorized a new $500.0 million ordinary share repurchase program (the “September 2023 Program”), which replaced the January 2022 Program and became effective on October 1, 2023.

In the three and nine months ended September 30, 2024, we repurchased 1.1 million and 1.3 million ordinary shares, respectively, for $38.7 million and $48.8 million, respectively. In the three and nine months ended September 30, 2023, we repurchased 0.9 million and 1.5 million ordinary shares, respectively, for $35.2 million and $60.3 million, respectively. All share repurchases in the three and nine months ended September 30, 2024 were made under the September 2023 Program and all share repurchases in the three and nine months ended September 30, 2023 were made under the January 2022 Program. As of September 30, 2024, $423.1 million remained available for repurchase under the September 2023 Program.

Accumulated Other Comprehensive Income

The following table presents the components of accumulated other comprehensive income for the nine months ended September 30, 2024:

The following table presents the amounts reclassified from accumulated other comprehensive income for the three and nine months ended September 30, 2024 and 2023:

(1) Refer to Note 14: Derivative Instruments and Hedging Activities for additional information regarding amounts to be reclassified from accumulated other comprehensive income in future periods.

13. Fair Value Measures

Measured on a Recurring Basis

The fair values of our assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 are shown in the below table.

Refer to Note 14: Derivative Instruments and Hedging Activities for additional information regarding our forward contracts. Cash equivalents consist of U.S. Government Treasury money market funds and are classified as Level 1 as they are exchange traded in an active market.

Measured on a Nonrecurring Basis

In the third quarter of 2024, impairment indicators were identified that suggested the carrying values of the Dynapower and Clean Energy Solutions ("CES") reporting units could exceed their fair values. The primary indicators of impairment were revised projections of future cash flows and actual performance that was lower than previous projections for these reporting units. We evaluated the goodwill of the Dynapower and CES reporting units for impairment using a combination of a market-based valuation method and an income approach that 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 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. Based on our analysis, the fair value of the CES reporting unit was significantly greater than the carrying value of the reporting unit. Accordingly, the goodwill related to the CES reporting unit was not impaired.

In the three months ended March 31, 2024, we made the decision to reorganize our segments, as discussed in more detail in Note 1: Basis of Presentation. This reorganization resulted in the creation of a new reporting unit for a business that was previously part of the Automotive reporting unit, which was moved to the Sensing Solutions segment. We reassigned assets and liabilities, including goodwill, from the Automotive reporting unit to the new reporting unit as required by FASB ASC Topic 350, Intangibles—Goodwill and Other. We evaluated our goodwill and other indefinite-lived intangible assets for impairment before and after the reorganization and formation of these reporting units and determined that they were not impaired. As a result of this reorganization, we allocated $143.4 million of goodwill to the new reporting unit in the three months ended March 31, 2024.

Financial Instruments Not Recorded at Fair Value

The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.

(1) Excluding any related debt discounts, premiums, and deferred financing costs.

In addition to the above, we hold certain equity investments that do not have readily determinable fair values for which we use the measurement alternative prescribed in FASB ASC Topic 321. Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. As of September 30, 2024 and December 31, 2023, we held equity investments under the measurement alternative of $6.3 million and $18.3 million, respectively, which are presented in other assets in the condensed consolidated balance sheets. In the nine months ended September 30, 2024, we adjusted the carrying value of one of these equity investments as a result of an observable price change in the first quarter of 2024, resulting in a loss of $14.8 million.

14. Derivative Instruments and Hedging Activities

Foreign Currency Derivatives

For the three and nine months ended September 30, 2024 and 2023, amounts excluded from the assessment of effectiveness of our foreign currency forward contracts that are designated as cash flow hedges were not material. As of September 30, 2024, we estimate that $11.3 million of net losses will be reclassified from accumulated other comprehensive income to earnings during the twelve-month period ending September 30, 2025. In the nine months ended September 30, 2024, $23.3 million of net gains was reclassified from accumulated other comprehensive income to earnings.

As of September 30, 2024, we had the following outstanding foreign currency forward contracts, which had the below hedge accounting designation in accordance with FASB ASC Topic 815, Derivatives and Hedging:

(1) Derivative financial instruments not designated as hedges are used to manage our exposure to currency exchange rate risk. They are intended to preserve economic value, and they are not used for trading or speculative purposes. We may also enter into intercompany derivative instruments with our wholly-owned subsidiaries in order to hedge certain forecasted expenses.

Commodity Risk Derivatives

As of September 30, 2024, we had the following outstanding commodity forward contracts, none of which were designated for hedge accounting treatment:

Financial Instrument Presentation

The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023:

These fair value measurements were all categorized within Level 2 of the fair value hierarchy.

The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive (loss)/income for the three months ended September 30, 2024 and 2023:

The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive (loss)/income for the nine months ended September 30, 2024 and 2023:

Credit Risk Related Contingent Features

We have agreements with our derivative counterparties that contain a provision whereby if we default on our indebtedness and repayment of the indebtedness has been accelerated by the lender, then we could also be declared in default on our derivative obligations.

As of September 30, 2024, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $30.2 million. As of September 30, 2024, we hadnot posted any cash collateral related to these agreements. If we breach any of the default provisions on any of our indebtedness as described above, we could be required to settle our obligations under the derivative agreements at their termination values.

15. Segment Reporting

We present financial information fortwo reportable segments, Performance Sensing and Sensing Solutions. In the three months ended March 31, 2024, we realigned our segments as a result of organizational changes that better allocate our resources to support changes to our business strategy. Refer to Note 1: Basis of Presentation for additional information. This realignment added an "other" segment that represents the aggregation of immaterial operating segments. As a result of this reorganization, we moved $143.4 million of goodwill from Performance Sensing to Sensing Solutions. Refer to Note 13: Fair Value Measures for additional information.

Prior to the three months ended March 31, 2024, the Performance Sensing reportable segment represented the aggregation oftwo operating segments, Automotive and HVOR. As a result of the segment realignment, Performance Sensing now represents one operating segment, as does Sensing Solutions. Other immaterial operating segments are aggregated in other, which was created as part of the segment realignment.

Our operating segments are businesses that we manage as components of an enterprise, for which separate financial information is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and assess performance. An operating segment’s performance is primarily evaluated based on segment operating income, which excludes amortization of intangible assets, impairment of goodwill and other intangible assets, and restructuring and other charges, certain costs associated with our strategic growth initiatives, and certain corporate costs or credits not associated with the operations of the segment, including share-based compensation expense and a portion of depreciation expense associated with assets recognized in connection with acquisitions. Corporate and other costs excluded from an operating (and reportable) segment’s performance are separately stated below and also include costs that are related to functional areas such as finance, information technology, legal, and human resources. We believe that segment operating income, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, this measure should be considered in addition to, and not as a substitute for, or superior to, operating income or other measures of financial performance prepared in accordance with U.S. GAAP. The accounting policies of each of our operating and reportable segments are materially consistent with those described in Note 2: Significant Accounting Policies of the audited consolidated financial statements and notes thereto included in our 2023 Annual Report.

The following table presents net revenue and segment operating income for our reportable segments and other operating results not allocated to our reportable segments for the three and nine months ended September 30, 2024 and 2023 (prior periods have been recast).

(1) The amounts previously reported for the three and nine months ended September 30, 2023 have been retrospectively recast to reflect the segment realignment as discussed in Note 1: Basis of Presentation.

16. Disposal

Insights Business

In August 2024, we executed a purchase agreement whereby we agreed to sell the Insights Business to an affiliate of Balmoral Funds ("the Buyer"). The closing of the transaction ("Closing") occurred in the third quarter of 2024, at which time net assets of approximately $263.4 million (which included approximately $247.0 million of intangible assets, net of accumulated amortization) transferred to the Buyer. The total purchase price of the Insights Business was $165.0 million, with approximately $155.0 million before adjustments received and $10.0 million to be received twelve months after Closing. In both the three months and nine months ended September 30, 2024, we recognized a loss on sale of approximately $110.1 million presented in restructuring and other charges, net in our condensed consolidated statements of operations, and approximately $11.2 million of transaction-related expenses, which were presented in selling, general and administrative ("SG&A") in our condensed consolidated statements of operations.

Concurrent with the closing, the parties entered into a Transition Services Agreement ("TSA") and a Supply Agreement. The terms of the TSA require that we provide various forms of commercial, operational, and back-office support to the Buyer fortwo tonine months, depending on the service, with the option to extend support services forone tosix months for certain services. The Supply Agreement commenced at Closing and has a term offive years or less. The terms of this agreement require that we sell certain tire pressure monitoring system products to the Buyer over the term of the agreement. We recognized a liability of $8.4 million related to this obligation, which represents the balance of this liability as of September 30, 2024, included in accrued expenses and other current liabilities, and other long-term liabilities on our condensed consolidated balance sheets.

For the three and nine months ended September 30, 2024 and 2023, the Insights Business was included in our Other segment. Refer to Note 1: Basis of Presentation and Note 15: Segment Reporting included elsewhere in this Report for additional information on the segment realignment that took place in the three-months ended March 31, 2024.

Cautionary Statements Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 included in our 2023 Annual Report and as may be updated from time to time in Item 1A: Risk Factors included 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.