Sensata (ST) Q3 2026 Earnings Call Transcript

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DATE

Tuesday, Oct. 27, 2026

CALL PARTICIPANTS

• Senior Director of Investor Relations – James Entwistle
• Chief Executive Officer – Stephan Von Schuckmann
• Chief Financial Officer – Andrew Lynch

TAKEAWAYS

• Revenue — $1,003.6 million, representing 7.7% reported growth and 6.8% organic growth year over year.
• Program Termination Payment — $24 million, resulting from a customer payment related to the cancellation of an electric vehicle program.
• Adjusted EPS — $1.13, including a $0.16 per share benefit from the termination payment, reflecting a 27% increase year over year.
• Adjusted Operating Margin — 21.5%, an increase from 19.3% in the prior year quarter due to productivity and disciplined cost management.
• Free Cash Flow — $198 million, representing 119% conversion of adjusted net income during the third quarter.
• Net Leverage — 2.1x trailing 12-month adjusted EBITDA, an improvement from 2.7x at the end of fiscal 2025.
• Automotive Revenue — $556 million, outgrowing market production by approximately 4% organically.
• Industrials Revenue — $210 million, increasing 12% organically driven by strong volume and operating leverage.
• Aerospace, Defense, and Commercial Equipment Revenue — $238 million, representing 13% organic growth led by the commercial equipment sector.
• Data Center Revenue — $48 million projected for 2026, representing 76% annual growth from $27 million in 2025.
• Debt Repurchases — $33 million in open market debt repurchases completed during the third quarter.
• ROIC — 12.1%, representing an 80 basis point sequential improvement and 190 basis points since the start of the transformation program.
• Net Debt — $1.9 billion as of September 30, 2026, down from $2.6 billion at the end of 2024.
• Data Center Design Wins — seven total wins across six hyperscalers, including a new win in China, with ramp-up expected to begin in mid-2027.
• Motor Business Wins — tripling the annual win rate from two years prior, supporting participation in the global drone and UAV market.
• Interest Expense Savings — $0.10 expected contribution to year-over-year adjusted EPS growth in 2026 due to proactive debt reduction.
• Q4 Revenue Guidance — $942 million to $972 million, reflecting a softer automotive production outlook and market dynamics in China.
• Q4 Adjusted EPS Guidance — $0.95 to $0.99, representing 10% growth at the midpoint.
• Regional Outgrowth — growing more than 30% in India and delivering double-digit organic growth in North America against a 2% market contraction.
• Class 8 Truck Production — rising 50% year over year in North America, supporting a positive outlook for the commercial vehicle segment.

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RISKS

• Lynch stated, “Our fourth quarter guide reflects the softer automotive production outlook and changing market dynamics in China,” where multinational manufacturers are losing market share.
• Von Schuckmann warned that supply remains tight for circuit boards and electronics, with pricing reflecting high demand from the data center sector.

SUMMARY

Sensata Technologies Holding plc (ST +4.01%) reported third quarter results that exceeded management’s projections, aided by a payment related to the cancellation of an electric vehicle program. Management stated that the underlying business met or exceeded target ranges, with organic revenue growth occurring across all three reporting segments. The company reported a significant increase in free cash flow and a reduction in net leverage, reflecting an emphasis on operational efficiency and debt reduction. Management indicated that the core technology platform is being expanded into adjacent markets, particularly in high-voltage data centers and aerospace applications.

• CEO Von Schuckmann stated, “Sensata has a differentiated technology platform built around mission-critical sensing and electrical protection, deep customer integration, leading market positions and global scale,” during his discussion of the company’s competitive right to win.
• The company launched the FL series flow sensor for data center liquid cooling, utilizing ultrasonic sensing for accurate measurement, with initial shipments expected by mid-2027.
• Management reported that local OEM revenue in China now exceeds multinational OEM revenue, as the team shifts focus toward battery supplier architectures and Chinese manufacturers.
• Data center architectures are expected to drive a 1.5 to 2.5 times expansion in the company’s serviceable addressable market as computing density shifts toward 800-volt systems and liquid cooling.
• CFO Lynch noted that first quarter 2027 margins typically face sequential pressure from annual price reductions and the time required to clear higher cost inventory.

INDUSTRY GLOSSARY

• CDU (Coolant Distribution Unit): A system used in data centers to manage and circulate coolant for liquid-based thermal management.
• SAM (Serviceable Addressable Market): The specific portion of the total addressable market that a company can capture with its current products and capabilities.
• UAV (Unmanned Aerial Vehicle): An aircraft operated without a human pilot on board, commonly referred to as a drone.
• A2L: A classification for refrigerants with lower toxicity and flammability that require specialized leak detection sensors.
• VAV (Value Analysis/Value Engineering): A systematic method to improve the value of products by examining their functions and reducing associated costs.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to the Sensata Technologies Third Quarter 2026 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. James Entwistle, Senior Director of Investor Relations. Please go ahead, sir.

James Entwistle: Thank you, operator, and good afternoon, everyone. I’m James Entwistle, Senior Director of Investor Relations for Sensata, and I would like to welcome you to Sensata’s Third Quarter 2026 Earnings Conference Call. Joining me on today’s call are Stephan Von Schuckmann, Sensata’s Chief Executive Officer; and Andrew Lynch, Sensata’s Chief Financial Officer. In addition to the financial results press release we issued earlier today, we will reference a slide presentation during today’s call. A PDF of this presentation can be downloaded from Sensata’s Investor Relations website. This conference call is being recorded, and we will post a replay on our Investor Relations website shortly after the call concludes.

As we begin, I would like to reference Sensata’s safe harbor statement on Slide 2. During this conference call, we will make forward-looking statements regarding future events or the financial performance of the company that involve certain risks and uncertainties. The company’s actual results may differ materially from the projections describ

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