Reportable Business Segments

6 Months Ended

Jun. 30, 2024

Reportable Business Segments

Reportable Business Segments

Note 13—Reportable Business Segments

The Company organizes its reportable business segments based on the manner in which management evaluates the performance of the Company, combined with the nature of the individual business activities and the product-based solutions offered. The Company aligns its businesses into the following three reportable business segments:

●Harsh Environment Solutions – the Harsh Environment Solutions segment designs, manufactures and markets a broad range of ruggedized interconnect products, including connectors and interconnect systems, printed circuits and printed circuit assemblies and other products for use in the industrial, defense, commercial aerospace, automotive, mobile networks and information technology and data communications end markets.

●Communications Solutions – the Communications Solutions segment designs, manufactures and markets a broad range of connector and interconnect systems, including high speed, radio frequency, power, fiber optic and other products, together with antennas, for use in the information technology and data communications, mobile devices, industrial, mobile networks, broadband communications, automotive, commercial aerospace and defense end markets.

●Interconnect and Sensor Systems – the Interconnect and Sensor Systems segment designs, manufactures and markets a broad range of sensors, sensor-based systems, connectors and value-add interconnect systems used in the automotive, industrial, information technology and data communications, mobile networks, defense and commercial aerospace end markets.

This segment structure reflects (i) the manner in which the Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, regularly assesses information for decision-making purposes, including the allocation of resources, and (ii) how the Company operates its businesses, assesses performance, and communicates results and strategy, among other items, to the Board and its stockholders. The Company has three segment managers to lead their respective reportable business segments, each reporting directly to the Chief Executive Officer. The accounting policies of the segments are the same as those for the Company as a whole and are described herein and in Note 1 of the Notes to Consolidated Financial Statements in the 2023 Annual Report. The Company evaluates the performance of the segments and allocates resources to each of them based on, among other things, profit or loss from operations before certain corporate and other related items such as interest, stock-based compensation expense, income taxes, amortization related to certain intangible assets and nonrecurring gains and losses. The Company also incurs general corporate expenses and costs which are not allocated to the reportable business segments but have been included in “Corporate / Other” in the following tables for reconciliation purposes. Assets are reviewed by the CODM on a consolidated basis and therefore are not presented by reportable business segment.

Net sales by segment for the three and six months ended June 30, 2024 and 2023 are as follows:

	External				Intersegment
Three Months Ended June 30,	2024		2023		2024		2023
Harsh Environment Solutions	$	1,046.0	$	888.9	$	21.9	$	24.0
Communications Solutions		1,444.6		1,161.6		13.4		12.1
Interconnect and Sensor Systems		1,119.1		1,003.4		6.4		4.3
Consolidated Net sales	$	3,609.7	$	3,053.9	$	41.7	$	40.4
Six Months Ended June 30,
Harsh Environment Solutions	$	1,962.0	$	1,743.1	$	41.5	$	47.8
Communications Solutions		2,710.3		2,288.4		24.6		26.0
Interconnect and Sensor Systems		2,193.7		1,996.5		11.4		9.4
Consolidated Net sales	$	6,866.0	$	6,028.0	$	77.5	$	83.2

Segment operating income and the reconciliation of segment operating income to consolidated income before income taxes for the three and six months ended June 30, 2024 and 2023 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Segment operating income:
Harsh Environment Solutions	$	259.6	$	240.3	$	504.1	$	466.6
Communications Solutions		350.6		238.5		636.8		469.1
Interconnect and Sensor Systems		203.3		185.9		398.7		364.7
Total segment operating income		813.5		664.7		1,539.6		1,300.4
Corporate / Other:
Stock-based compensation expense		(26.6)		(23.8)		(50.4)		(45.5)
Acquisition-related expenses		(70.0)		(4.0)		(70.0)		(9.4)
Other operating expenses		(18.1)		(17.0)		(35.5)		(33.9)
Interest expense		(56.3)		(35.0)		(94.4)		(71.0)
Gain on bargain purchase acquisition		—		5.4		—		5.4
Other income (expense), net		21.3		5.6		37.3		9.8
Income before income taxes	$	663.8	$	595.9	$	1,326.6	$	1,155.8

Depreciation and amortization expense by segment for the three and six months ended June 30, 2024 and 2023 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Harsh Environment Solutions	$	46.0	$	19.8	$	68.7	$	44.3
Communications Solutions		41.2		40.6		86.3		79.8
Interconnect and Sensor Systems		34.0		31.8		67.9		62.8
Corporate / Other		2.4		1.9		4.5		3.5
Total	$	123.6	$	94.1	$	227.4	$	190.4

For the three and six months ended June 30, 2024, depreciation and amortization expense for the Harsh Environment Solutions segment includes $16.6 related to the amortization of acquired backlog resulting from the CIT acquisition, while for the six months ended June 30, 2023, depreciation and amortization expense for the Harsh Environment Solutions segment included $5.4 related to the amortization of acquired backlog resulting from an acquisition that closed in the first quarter of 2023.