Core Viewpoint - Sensata Technologies (ST) has experienced a bearish trend recently, losing 8.4% in the past week, but the formation of a hammer chart pattern suggests a potential trend reversal as buying interest may be increasing [1][2]. Technical Analysis - The hammer chart pattern indicates a potential bottom in a downtrend, characterized by a small candle body and a long lower wick, suggesting that bears may be losing control [4][5]. - This pattern signals that after reaching a new low, buying interest emerges, pushing the stock price up towards its opening price, indicating a possible trend reversal [5]. Fundamental Analysis - There is rising optimism among Wall Street analysts regarding ST's future earnings, with a 3% increase in the consensus EPS estimate over the last 30 days, indicating improved earnings potential [2][8]. - The upward trend in earnings estimate revisions is a bullish indicator, as empirical research shows a strong correlation between these revisions and near-term stock price movements [7]. Zacks Rank - ST currently holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which typically outperform the market [9][10]. - The Zacks Rank serves as a timing indicator, suggesting that the company's prospects are beginning to improve, further supporting the likelihood of a trend reversal [10].

Core Insights - Sensata Technologies Holding plc (ST) reported Q2 2025 adjusted EPS of 87 cents, down from 92 cents year-over-year, but exceeded the Zacks Consensus Estimate by 3.6% [1][9] - Revenues for the quarter were $943.4 million, an 8.9% decline from the previous year, attributed to divestitures and product lifecycle optimization, yet surpassed management's expectations and consensus estimates [2][9] Financial Performance - Performance Sensing revenues, accounting for 69.1% of total revenues, decreased 9.9% year-over-year to $652.2 million, impacted by divested products and reduced truck production [5] - Sensing Solutions revenues, making up 30.9% of total revenues, increased 8.6% year-over-year to $291.2 million, marking the second consecutive quarter of growth [6] - Adjusted operating income for the quarter was $179.1 million, down from $196.7 million year-over-year, with an adjusted operating margin expanding by 20 basis points to 19% [7] Cash Flow and Shareholder Returns - The company generated $140.9 million in net cash from operating activities, slightly down from $143.5 million in the prior year, with free cash flow increasing to $115.5 million from $98.4 million [10] - Sensata returned approximately $37.7 million to shareholders, including $20.1 million in share repurchases and $17.6 million in dividends, and declared a third-quarter dividend of 12 cents per share [11] Future Outlook - For Q3 2025, Sensata projects revenues between $900-$930 million, indicating a sequential decline of 5% to 1%, and adjusted operating income expected to be $171-$179 million [12] - Adjusted EPS is estimated to be between 81-87 cents, suggesting a potential decrease of up to 7% sequentially [13]

Core Insights - Sensata reported revenue of $943.38 million for the quarter ended June 2025, reflecting a year-over-year decline of 8.9% and an EPS of $0.87 compared to $0.93 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $933.26 million by 1.09%, while the EPS surpassed the consensus estimate of $0.84 by 3.57% [1] Revenue Breakdown - Net Revenue from Sensing Solutions was $291.16 million, exceeding the four-analyst average estimate of $276.84 million, with a year-over-year increase of 8.6% [4] - Net Revenue from Performance Sensing was $652.23 million, slightly below the four-analyst average estimate of $656.62 million, showing a year-over-year decline of 9.9% [4] Operating Income - Operating income for Sensing Solutions was reported at $88.04 million, surpassing the three-analyst average estimate of $83.93 million [4] - Operating income for Performance Sensing was $146.88 million, also exceeding the three-analyst average estimate of $144.84 million [4] Stock Performance - Sensata's shares have returned +9.4% over the past month, outperforming the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Viewpoint - Sensata reported quarterly earnings of $0.87 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, but down from $0.93 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was +3.57%, and the company had a previous surprise of +8.33% with earnings of $0.78 per share against an expectation of $0.72 per share [2] - Sensata's revenues for the quarter were $943.38 million, surpassing the Zacks Consensus Estimate by 1.09%, compared to $1.04 billion in the same quarter last year [3] - Over the last four quarters, Sensata has exceeded consensus EPS estimates two times and revenue estimates three times [2][3] Stock Performance - Sensata shares have increased approximately 20.2% since the beginning of the year, outperforming the S&P 500's gain of 8.6% [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for it to outperform the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.82 on revenues of $903.87 million, and for the current fiscal year, it is $3.26 on revenues of $3.65 billion [8] - The Instruments - Control industry, to which Sensata belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook for the stock [9]

Financial Data and Key Metrics Changes - The company reported revenue of approximately $943 million for Q2 2025, a decrease from $1,036 million in Q2 2024, primarily due to divestitures, but showed a sequential growth of $32 million from Q1 2025 [26][30] - Adjusted operating income was approximately $179 million, with a margin of 19%, which included $12 million of zero-margin pass-through revenues related to tariff recovery [26][27] - Adjusted earnings per share were $0.87, reflecting a sequential increase of $0.09 but a decrease of $0.05 compared to the previous year due to divestitures [28] - Free cash flow reached $116 million, representing a conversion rate of 91% of adjusted net income, an increase of 17 percentage points year over year [28][29] Business Line Data and Key Metrics Changes - Performance Sensing revenue was approximately $652 million, a decrease of about 10% year over year, primarily due to product divestitures and lower on-road truck production [30] - Sensing Solutions revenue was approximately $291 million, an increase of about 9% year over year, driven by new content in the industrials business and market outgrowth in aerospace [30][31] - Adjusted operating income for Performance Sensing was approximately $147 million, with a margin of 22.5%, while Sensing Solutions had an adjusted operating income of approximately $88 million, with a margin of 30.2% [30][31] Market Data and Key Metrics Changes - The automotive market saw double-digit growth in China in the first half of 2025, while North America and Europe experienced market weakness [32] - The heavy vehicle and off-road business saw a decline, with on-road truck production down more than 20% in the first half of 2025 across North America and Europe [32][33] - The industrials business grew over 9% in Q2 2025, and aerospace revenue grew over 5% against a market that grew roughly 3% [22][31] Company Strategy and Development Direction - The company is focusing on three key pillars: improving operational performance, optimizing capital allocation, and returning to growth [9][39] - Capital allocation strategies include share repurchases and maintaining a strong balance sheet, with a net leverage ratio reduced from 3.1x to 3.0x [11][12] - The company aims to leverage core product technologies and prioritize platform-driven applications with high switching costs [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted resilience in the business despite challenges such as volatile end markets and geopolitical uncertainty [9] - The company expects to continue prioritizing deleveraging and maintaining operational excellence to support growth [12][39] - Management expressed confidence in returning to consistent growth, particularly in the Chinese market, driven by new energy vehicles [19][65] Other Important Information - The company successfully mitigated tariff costs in Q2 2025, recovering all costs compared to approximately 95% in the previous quarter [21] - The cybersecurity incident disclosed in April did not have a significant financial impact, and the business has fully recovered [38] Q&A Session Summary Question: EBIT margins and drivers of margin improvement - Management highlighted operational productivity as the primary driver for margin improvement, with a focus on operational excellence initiatives [46][50] Question: Product rationalization and backlog recoverability - Management indicated that significant SKU reduction has been completed, but the process is ongoing to ensure alignment with current market needs [59][61] Question: Updates on China positioning - The company noted a shift towards local OEMs in China, with 90% of new business wins coming from top local players, indicating a strong growth opportunity [64][66] Question: Demand pull forward in autos - Management clarified that there was no significant pull forward of demand in Q2, with normal business conditions prevailing [68] Question: Free cash flow and CapEx outlook - Management aims for a cash conversion rate of 80% or more, with expectations for an uptick in CapEx in the second half of the year [84][86] Question: Deleveraging strategy - The focus will be on accumulating cash on the balance sheet in the short term, with plans to address gross debt in the future [90][91] Question: Competitive landscape in China - Management acknowledged the competitive nature of the Chinese market, emphasizing cost focus and technical differentiation as key strategies [95][96]

Financial Data and Key Metrics Changes - The company reported revenue of approximately $943 million for Q2 2025, a decrease from $1,036 million in Q2 2024, primarily due to divestitures, but showed a sequential growth of $32 million from Q1 2025 [23] - Adjusted operating income was approximately $179 million, representing a margin of 19%, with adjusted operating margins improving by 70 basis points sequentially from 18.3% in Q1 2025 [23][24] - Adjusted earnings per share were $0.87, an increase of $0.09 sequentially from Q1 2025, but a decrease of $0.05 compared to Q2 2024 due to divestitures [24] - Free cash flow reached $116 million, a 17% increase year over year, with a cash conversion rate of 91%, up 17 percentage points from Q1 2025 [24] Business Line Data and Key Metrics Changes - Performance Sensing revenue was approximately $652 million, a decrease of about 10% year over year, primarily due to product divestitures and lower on-road truck production [26] - Sensing Solutions revenue was approximately $291 million, an increase of about 9% year over year, driven by new content in the industrials business and market outgrowth in aerospace [26][27] - Performance Sensing adjusted operating income was approximately $147 million, or 22.5% of revenue, while Sensing Solutions adjusted operating income was approximately $88 million, or 30.2% of revenue [26][27] Market Data and Key Metrics Changes - Automotive production estimates have been volatile, with double-digit market growth in China in the first half of 2025, partially offset by market weakness in North America and Europe [28] - The heavy vehicle and off-road business has seen softness, with on-road truck production down more than 20% in the first half of 2025 across North America and Europe [28] - The industrials business grew over 9% in Q2 2025, while aerospace saw over 5% revenue growth against a market that grew roughly 3% [20] Company Strategy and Development Direction - The company is focusing on three key pillars: improving operational performance, optimizing capital allocation, and returning to growth [7][10] - Capital allocation strategy includes share repurchases and dividends, with $100 million repurchased in Q1 2025 and $20 million in Q2 2025 [9][25] - The company aims to leverage core product technologies and prioritize platform-driven applications with high switching costs [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted resilience in the business despite challenges such as volatile end markets and geopolitical uncertainty [7] - The company has successfully mitigated tariff costs and is seeing a mix of volatility, resilience, and growth in end markets [18] - Future growth is expected to be driven by new business wins in China, particularly in the new energy vehicle market [15][16] Other Important Information - The company experienced a cybersecurity incident in April 2025, but has fully recovered without significant disruption to customers [32] - The company plans to maintain a focus on deleveraging, reducing net leverage from 3.1x to 3.0x trailing twelve months adjusted EBITDA [10][25] Q&A Session Summary Question: What is driving EBIT margin improvement? - Management indicated that operational productivity is the primary driver for margin expansion, with a focus on operational excellence initiatives [41][45] Question: How does market mix affect EBIT margins? - Management acknowledged that mix matters, with automotive being the lowest margin business and aerospace the highest, but they expect to offset any mix headwinds with growth in industrial [48][49] Question: What is the status of product rationalization and backlog scrubbing? - Management stated that significant SKU reduction has been done, but it is a continuous process [54][56] Question: What is the company's positioning in China? - The company noted a shift towards local OEMs, with 90% of new business wins in 2025 coming from top local OEMs and leading new energy vehicle players [60][61] Question: Is there any pull forward of demand in autos for Q2? - Management clarified that there was no pull forward of demand, and Q2 was considered normal in terms of order book correlation to production [62][64] Question: What are the expectations for CapEx and free cash flow? - Management indicated that they aim for a cash conversion rate of 80% or more, with CapEx expected to increase in the second half of the year [77][78]

PART I FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Sensata Technologies Holding PLC's unaudited condensed consolidated financial statements for Q2 and YTD June 30, 2025, encompassing balance sheets, operations, cash flows, and related notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$7.27 billion** as of June 30, 2025, from **$7.14 billion** at year-end 2024, driven by higher cash and receivables, while liabilities also rose to **$4.39 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $2,240,020 | $2,027,239 | | Goodwill | $3,383,845 | $3,383,800 | | **Total assets** | **$7,270,072** | **$7,143,264** | | Total current liabilities | $827,112 | $711,358 | | Long-term debt, net | $3,178,457 | $3,176,098 | | **Total liabilities** | **$4,389,861** | **$4,252,821** | | **Total shareholders' equity** | **$2,880,211** | **$2,890,443** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net revenue decreased to **$943.4 million** from **$1,035.5 million** year-over-year, yet operating income increased to **$138.1 million**, while net income declined to **$60.7 million** Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $943,384 | $1,035,535 | $1,854,639 | $2,042,244 | | Operating income | $138,062 | $129,947 | $260,258 | $274,739 | | Net income | $60,668 | $71,703 | $130,587 | $147,724 | | Diluted net income per share | $0.41 | $0.47 | $0.88 | $0.98 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for the six months ended June 30, 2025, increased to **$260.1 million**, while investing activities used **$33.6 million**, and financing activities resulted in a **$160.8 million** outflow Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $260,103 | $249,943 | | Net cash used in investing activities | ($33,606) | ($85,194) | | Net cash (used in)/provided by financing activities | ($160,776) | $365,090 | | **Net change in cash and cash equivalents** | **$68,107** | **$524,948** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, revenue disaggregation, restructuring plans, debt structure, shareholder equity movements, segment performance, and recent business disposals - The company operates two reportable segments: Performance Sensing (PS) and Sensing Solutions (SS), with segment operating income definition realigned in Q1 2025 to include 'megatrend' costs[23](index=23&type=chunk) Net Revenue by End Market for the Six Months Ended June 30 (in thousands) | End Market | 2025 | 2024 | | :--- | :--- | :--- | | Automotive | $1,058,744 | $1,138,579 | | HVOR | $318,548 | $377,845 | | Industrial | $300,385 | $275,890 | | HVAC | $81,884 | $79,311 | | Aerospace | $95,078 | $91,524 | | Other | $0 | $79,095 | | **Total** | **$1,854,639** | **$2,042,244** | - The company is executing two main restructuring plans: the '2H 2024 Plan' with expected charges of **$15.5-$16.5 million**, and the 'Q3 2023 Plan' with expected charges of **$26.7-$27.6 million**, involving reductions-in-force and site closures[32](index=32&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk) - In the first six months of 2025, the company repurchased **4.2 million** ordinary shares for **$120.6 million** and paid cash dividends of **$35.5 million**[53](index=53&type=chunk)[55](index=55&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial results, highlighting an 8.9% Q2 revenue decline, partially offset by Sensing Solutions growth, and an increase in operating income due to cost savings [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q2 2025 net revenue declined 8.9% to **$943.4 million** due to divestitures and Performance Sensing weakness, while operating income rose to **$138.1 million** from **$129.9 million** Q2 2025 vs Q2 2024 Revenue Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $943.4M | $1,035.5M | -8.9% | | Organic Revenue Change | - | - | -1.5% | | Performance Sensing Revenue | $652.2M | $723.9M | -9.9% | | Sensing Solutions Revenue | $291.2M | $268.1M | +8.6% | - The increase in Q2 operating income was primarily driven by a decrease in product line management charges, a **$17.9 million** decrease in amortization of intangibles, and cost savings from restructuring plans[114](index=114&type=chunk) - Amortization of intangible assets decreased significantly in Q2 and YTD 2025, mainly due to the divestiture of the Insights Business, which lowered amortization expense by **$9.8 million** and **$19.7 million**, respectively[111](index=111&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) This section details non-GAAP measures, showing Q2 2025 adjusted operating income at **$179.1 million** (19.0% margin) and adjusted diluted EPS at **$0.87** Reconciliation of GAAP to Non-GAAP Results (Q2 2025 vs Q2 2024, in millions, except per share) | (in millions, except per share) | Q2 2025 (GAAP) | Q2 2025 (Adjusted) | Q2 2024 (GAAP) | Q2 2024 (Adjusted) | | :--- | :--- | :--- | :--- | :--- | | Operating Income | $138.1 | $179.1 | $129.9 | $196.7 | | Operating Margin | 14.6% | 19.0% | 12.5% | 19.0% | | Net Income | $60.7 | $127.3 | $71.7 | $139.3 | | Diluted EPS | $0.41 | $0.87 | $0.47 | $0.92 | - Free cash flow for the first six months of 2025 was **$202.1 million**, an increase from **$162.7 million** in the same period of 2024[146](index=146&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$661.8 million** in cash and **$745.8 million** available under its revolving credit facility, with gross indebtedness at **$3.2 billion** - As of June 30, 2025, the company had **$661.8 million** in cash and cash equivalents and **$745.8 million** available under its Revolving Credit Facility[97](index=97&type=chunk)[159](index=159&type=chunk) Leverage Ratios | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total gross indebtedness | $3,222.1M | $3,223.4M | | Adjusted EBITDA (LTM) | $840.3M | $882.8M | | **Gross leverage ratio** | **3.8x** | **3.7x** | | Net debt | $2,560.3M | $2,629.7M | | **Net leverage ratio** | **3.0x** | **3.0x** | - Under the September 2023 share repurchase program, **$282.4 million** remained available as of June 30, 2025[164](index=164&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes to market risk exposures have occurred since the end of fiscal year 2024, with further details available in the 2024 Annual Report on Form 10-K - No significant changes to market risk have occurred since December 31, 2024[167](index=167&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to previously identified material weaknesses, with remediation efforts underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses identified as of December 31, 2024[170](index=170&type=chunk) - The material weaknesses relate to an inappropriate internal control environment, unclear objectives for risk assessment, and inadequate control activities, partly due to a lack of appropriate accounting personnel in Mexico[170](index=170&type=chunk) - Remediation efforts include hiring additional personnel (including a new Chief Accounting Officer in May 2024), formalizing a risk assessment process, implementing a new global account reconciliation system, and enhancing inventory count procedures[176](index=176&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal claims, but their outcomes are not expected to materially adversely affect financial condition or results - The company does not expect the outcome of ordinary course legal proceedings to have a material adverse effect on its results of operations, financial condition, or cash flows[177](index=177&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K have occurred - No material changes to the risk factors disclosed in the 2024 Annual Report have occurred[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased **843,026** shares at a weighted average price of **$27.94**, with **$282.4 million** remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Weighted Average Price Paid per Share | Shares Purchased Under Program | Value Remaining in Program | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 135,637 | $24.23 | — | $302.5M | | May 2025 | 246 | $21.37 | — | $302.5M | | June 2025 | 707,143 | $28.65 | 701,232 | $282.4M | | **Quarter total** | **843,026** | **$27.94** | **701,232** | **$282.4M** | [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) An executive officer entered into a Rule 10b5-1 trading plan on June 9, 2025, for the potential sale of up to **28,688** ordinary shares - An executive officer entered into a Rule 10b5-1 trading plan on June 9, 2025, for the potential sale of up to **28,688** ordinary shares, with the earliest possible sale date being September 8, 2025[181](index=181&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL data files - Exhibits filed with the report include CEO, CFO, and CAO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[183](index=183&type=chunk)

Q2 2025 Financial Performance - Revenue reached $943 million[14], exceeding guidance, but down approximately 9% year-over-year due to divestitures[19,36] - Adjusted Operating Income was $179 million[15], above guidance[6] - Adjusted EPS was $0.87[17], exceeding guidance[6] - Free Cash Flow was $116 million[17], with a conversion rate of 91%[6,17], up 20 percentage points year-over-year[6,19] Segment Performance - Performance Sensing Net Revenue decreased by 9.9% year-over-year to $652.2 million[23], or 6.1% organically[23] - Sensing Solutions Net Revenue increased by 8.6% year-over-year to $291.2 million[23], or 10.7% organically[23] Capital Allocation and Leverage - Net leverage ratio decreased to 3.0x[21] from 3.1x as of March 31, 2025[21] - Approximately 0.7 million shares were repurchased in Q2, and 4.2 million year-to-date[21] Q3 2025 Financial Guidance - Revenue is expected to be between $900 million and $930 million[31], a decrease of 1% to 5% sequentially[31] - Adjusted EPS is expected to be between $0.81 and $0.87[31], in line with Q2[31]

[Financial Results Overview](index=1&type=section&id=SENSATA%20TECHNOLOGIES%20REPORTS%20SECOND%20QUARTER%202025%20FINANCIAL%20RESULTS) [Second Quarter 2025 Financial Results](index=1&type=section&id=Operating%20Results%20-%20Second%20Quarter) In the second quarter of 2025, Sensata reported revenue of $943.4 million, an 8.9% decrease year-over-year, primarily due to divestitures and product lifecycle management actions, while GAAP operating margin improved to 14.6% and free cash flow reached $115.5 million - The CEO highlighted that the company's "back-to-basics" approach led to exceeding revenue and earnings commitments and a **significant improvement in free cash flow**[2](index=2&type=chunk) Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $943.4 | $1,035.5 | -$92.2 | -8.9% | | Operating Income (GAAP) | $138.1 | $129.9 | +$8.1 | +6.2% | | Operating Margin (GAAP) | 14.6% | 12.5% | +210 bps | N/A | | Adjusted Operating Income | $179.1 | $196.7 | -$17.6 | -8.9% | | Adjusted Operating Margin | 19.0% | 19.0% | 0 bps | N/A | | EPS (GAAP) | $0.41 | $0.47 | -$0.06 | -12.8% | | Adjusted EPS | $0.87 | $0.92 | -$0.05 | -5.4% | - The company generated **$115.5 million** in free cash flow and ended the quarter with **$661.8 million** in cash[5](index=5&type=chunk) [Six Months 2025 Financial Results](index=2&type=section&id=Operating%20Results%20-%20Six%20Months) For the first six months of 2025, revenue decreased by 9.2% year-over-year to $1,854.6 million, attributed to divestitures and product lifecycle management, with GAAP operating margin slightly increasing and free cash flow robust at $202.1 million Six Months 2025 Key Financial Metrics (vs. Six Months 2024) | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change (in millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,854.6 | $2,042.2 | -$187.6 | -9.2% | | Operating Income (GAAP) | $260.3 | $274.7 | -$14.5 | -5.3% | | Operating Margin (GAAP) | 14.0% | 13.5% | +50 bps | N/A | | Adjusted Operating Income | $345.6 | $385.2 | -$39.6 | -10.3% | | Adjusted Operating Margin | 18.6% | 18.9% | -30 bps | N/A | | EPS (GAAP) | $0.88 | $0.98 | -$0.10 | -10.2% | | Adjusted EPS | $1.65 | $1.81 | -$0.16 | -8.8% | - Free cash flow for the six months ended June 30, 2025, was **$202.1 million**[11](index=11&type=chunk) [Shareholder Returns](index=2&type=section&id=Shareholder%20Returns) Sensata actively returned capital to shareholders during the first half of 2025, totaling $156.1 million, with $37.7 million returned in the second quarter through share repurchases and quarterly dividends Capital Returned to Shareholders | Period | Share Repurchases (in millions) | Dividends Paid (in millions) | Total Return (in millions) | | :--- | :--- | :--- | :--- | | Q2 2025 | $20.1 | $17.6 | $37.7 | | H1 2025 | $120.6 | $35.5 | $156.1 | [Business Outlook](index=3&type=section&id=Guidance) [Third Quarter 2025 Guidance](index=3&type=section&id=Guidance) For the third quarter of 2025, Sensata anticipates revenue between $900 million and $930 million, with adjusted EPS projected to be in the range of $0.81 to $0.87, including an expected $15 million from tariff cost recovery Q3 2025 Guidance | Metric | Q3-25 Guidance Range (in millions) | | :--- | :--- | | Revenue | $900 - $930 | | Adjusted Operating Income | $171 - $179 | | Adjusted Operating Margin | 19.0% - 19.2% | | Adjusted Net Income | $119 - $127 | | Adjusted EPS | $0.81 - $0.87 | - The revenue guidance includes approximately **$15 million** related to expected tariff recovery from customers, which is expected to be offset by a corresponding tariff expense, resulting in no impact on adjusted earnings metrics[14](index=14&type=chunk)[15](index=15&type=chunk) [Segment and Revenue Analysis](index=10&type=section&id=Segment%20Performance) [Segment Performance](index=10&type=section&id=Segment%20Performance) For the first six months of 2025, the Performance Sensing segment's revenue declined to $1.30 billion, while the Sensing Solutions segment grew its revenue to $552.0 million and demonstrated higher profitability with a 29.7% operating margin Segment Financials for the Six Months Ended June 30 | Segment | Revenue 2025 (in millions) | Revenue 2024 (in millions) | Operating Income 2025 (in millions) | Operating Income 2024 (in millions) | Operating Margin 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Performance Sensing | $1,302.6 | $1,437.2 | $289.8 | $330.4 | 22.2% | | Sensing Solutions | $552.0 | $525.9 | $164.1 | $152.0 | 29.7% | [Revenue Breakdown](index=10&type=section&id=Revenue%20by%20Business%2C%20Geography%2C%20and%20End%20Market) The revenue mix for the first half of 2025 shows a shift towards the Sensing Solutions business, which grew to 29.8% of total revenue, with Asia's geographic contribution increasing and Automotive remaining the largest end market contributor [Revenue by Business](index=10&type=section&id=Revenue%20by%20Business) In the first six months of 2025, the Sensing Solutions segment's contribution to total revenue increased to 29.8% from 25.8% in the prior year, while Performance Sensing's share slightly decreased to 70.2% Revenue Mix by Business (Six Months Ended June 30) | Business | % of Total Revenue 2025 | % of Total Revenue 2024 | | :--- | :--- | :--- | | Performance Sensing | 70.2% | 70.4% | | Sensing Solutions | 29.8% | 25.8% | | Other | 0.0% | 3.8% | [Revenue by Geography](index=10&type=section&id=Revenue%20by%20Geography) The geographic revenue mix for the first half of 2025 saw the Americas' share decrease to 40.6% from 43.5% year-over-year, while Asia/Rest of World's share grew to 31.5% from 29.0% Revenue Mix by Geography (Six Months Ended June 30) | Geography | % of Total Revenue 2025 | % of Total Revenue 2024 | | :--- | :--- | :--- | | Americas | 40.6% | 43.5% | | Europe | 27.9% | 27.5% | | Asia/Rest of World | 31.5% | 29.0% | [Revenue by End Market](index=10&type=section&id=Revenue%20by%20End%20Market) For the first six months of 2025, the Automotive end market slightly increased its share of total revenue to 57.1%, with Industrial and Aerospace also seeing their revenue contributions grow Revenue Mix by End Market (Six Months Ended June 30) | End Market | % of Total Revenue 2025 | % of Total Revenue 2024 | | :--- | :--- | :--- | | Automotive | 57.1% | 55.8% | | Heavy vehicle and off-road | 17.2% | 18.5% | | Industrial | 16.2% | 13.5% | | Aerospace | 5.1% | 4.5% | [Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2025, Sensata reported Net Revenue of $1.85 billion, down from $2.04 billion in the prior year, with Operating Income at $260.3 million and Net Income at $130.6 million Statement of Operations Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net revenue | $1,854,639 | $2,042,244 | | Operating income | $260,258 | $274,739 | | Net income | $130,587 | $147,724 | | Diluted EPS | $0.88 | $0.98 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Sensata's balance sheet showed total assets of $7.27 billion, a slight increase from year-end 2024, with cash and cash equivalents rising to $661.8 million and total liabilities at $4.39 billion Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $661,777 | $593,670 | | Total current assets | $2,240,020 | $2,027,239 | | Total assets | $7,270,072 | $7,143,264 | | Total liabilities | $4,389,861 | $4,252,821 | | Total shareholders' equity | $2,880,211 | $2,890,443 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash provided by operating activities was $260.1 million, with $33.6 million used in investing activities and $160.8 million used in financing activities, primarily for share repurchases and dividends Cash Flow Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $260,103 | $249,943 | | Net cash used in investing activities | ($33,606) | ($85,194) | | Net cash (used in)/provided by financing activities | ($160,776) | $365,090 | | Net change in cash and cash equivalents | $68,107 | $524,948 | [Non-GAAP Reconciliations and Definitions](index=3&type=section&id=Non-GAAP%20Financial%20Measures) [Non-GAAP Financial Measures Definitions](index=3&type=section&id=Non-GAAP%20Financial%20Measures) Sensata supplements its GAAP financial reporting with non-GAAP measures such as adjusted net income, adjusted EPS, adjusted operating income, free cash flow, and adjusted EBITDA, which management uses for internal decision-making and to provide useful comparisons of underlying business trends - The company utilizes several non-GAAP financial measures to evaluate its business performance, including **Adjusted net income and adjusted EPS**, **Adjusted operating income and margin**, **Free cash flow**, **Organic revenue growth**, **Adjusted EBITDA**, and **Net debt and leverage ratios**[18](index=18&type=chunk)[21](index=21&type=chunk) [GAAP to Non-GAAP Reconciliations](index=11&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP results to the company's non-GAAP metrics, showing how GAAP net income of $60.7 million was adjusted to an adjusted net income of $127.3 million for Q2 2025, and how free cash flow and adjusted EBITDA are derived [Operating Income, Net Income, and EPS Reconciliation](index=11&type=section&id=Operating%20income%20and%20margin%2C%20income%20tax%2C%20net%20income%2C%20and%20earnings%20per%20share) For Q2 2025, GAAP operating income of $138.1 million was adjusted by $41.0 million for items like restructuring and amortization to reach an adjusted operating income of $179.1 million, while GAAP net income of $60.7 million was adjusted by $66.7 million to arrive at an adjusted net income of $127.3 million Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | Reported (GAAP) | Total Adjustments | Adjusted (non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $138,062 | $41,011 | $179,073 | | Net Income | $60,668 | $66,652 | $127,320 | | Diluted EPS | $0.41 | $0.45 | $0.87 | [Free Cash Flow Reconciliation](index=13&type=section&id=Free%20cash%20flow) Free cash flow for Q2 2025 was $115.5 million, calculated from $140.9 million in net cash from operating activities less $25.4 million in capital expenditures, representing a 17.4% increase compared to the same period in 2024 Free Cash Flow Calculation (Q2 2025, in thousands) | Metric | Amount | | :--- | :--- | | Net cash provided by operating activities | $140,904 | | Less: Additions to PP&E and capitalized software | ($25,385) | | **Free cash flow** | **$115,519** | [Adjusted EBITDA Reconciliation](index=14&type=section&id=Adjusted%20EBITDA) For the last twelve months (LTM) ending June 30, 2025, Sensata's adjusted EBITDA was $840.3 million, derived from a net income of $111.3 million, adjusted for interest, taxes, D&A, and other non-GAAP items Adjusted EBITDA Calculation (LTM, in thousands) | Metric | Amount | | :--- | :--- | | Net income | $111,340 | | Interest expense, net | $136,790 | | (Benefit from)/provision for income taxes | ($124,330) | | Depreciation & Amortization | $284,324 | | Other Non-GAAP Adjustments | $432,145 | | **Adjusted EBITDA** | **$840,269** | [Debt and Leverage Reconciliation](index=14&type=section&id=Gross%20and%20net%20debt%20and%20leverage) As of June 30, 2025, the company's net debt was $2.56 billion, resulting in a net leverage ratio of 3.0x when compared to an LTM adjusted EBITDA of $840.3 million, consistent with the end of 2024 Net Leverage Ratio (as of June 30, 2025, in thousands) | Metric | Amount | | :--- | :--- | | Total gross indebtedness | $3,222,124 | | Less: cash and cash equivalents | ($661,777) | | **Net debt** | **$2,560,347** | | Adjusted EBITDA (LTM) | $840,269 | | **Net leverage ratio** | **3.0x** | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) [Conference Call and Webcast](index=3&type=section&id=Conference%20Call%20and%20Webcast) Sensata will host a conference call and webcast at 5:00 p.m. Eastern Time on the day of the release to discuss the second quarter 2025 financial results and provide an outlook for the third quarter - A conference call is scheduled for 5:00 p.m. Eastern Time to discuss Q2 2025 results, with a live webcast available on the investor relations page of Sensata's website[16](index=16&type=chunk) [Safe Harbor Statement](index=6&type=section&id=Safe%20Harbor%20Statement) This earnings release contains forward-looking statements regarding future financial and operating results, which are subject to various risks and uncertainties, including global market instability, supplier issues, trade tariffs, and competition - The report includes forward-looking statements that are subject to risks and uncertainties, with key risk factors including **instability in global markets**, **supplier interruption**, **changes in trade-related tariffs**, **competition in dependent industries**, and **cybersecurity incidents**[31](index=31&type=chunk)[32](index=32&type=chunk)

Industry Overview - The Zacks Instruments – Control industry is positioned to benefit from a focus on energy-efficient production processes and integrated software systems, with rising demand for advanced technology to replace legacy industrial controls driving growth [1] - The industry comprises manufacturers of precision and specialty motion-control components and systems used across various sectors, providing solutions for flow measurement, control, and communication for air, water, and other gases and liquids [3] Growth Drivers - The industry's growth is primarily driven by the emphasis on digitized technologies in manufacturing, such as the Industrial Internet of Things, and the demand for process automation and safety automation systems [4] - Increased adoption of automation and higher investments in new technologies are expected to drive growth, particularly in North America, supported by rising infrastructural investments in the energy sector and favorable government policies [6] Challenges - Elevated customer inventory levels, high capital expenditures for infrastructure upgrades, and intense market volatility may hinder the process automation and instrumentation market [2] - Material cost inflation and rising transportation costs, along with high raw material prices due to geopolitical tensions, are affecting industry players' margins and profitability [5] Market Performance - The Zacks Instruments – Control industry has lagged behind the S&P 500 and the broader Zacks Computer and Technology sector over the past year, gaining only 2.2% compared to the S&P 500's 18.2% and the sector's 23.3% [9] - The industry has a trailing 12-month Enterprise Value-to-EBITDA (EV/EBITDA) ratio of 13.89X, which is below the S&P 500's 17.98X and the sector's 18.29X [12] Notable Companies - **Watts Water Technologies, Inc. (WTS)**: Focuses on water safety and flow control products, benefiting from cost-reduction actions and a strong balance sheet, with a long-term earnings growth expectation of 7.4% and a stock gain of 24.8% in the past year [15] - **Sensata Technologies Holding plc (ST)**: A global industrial technology company specializing in sensor-based solutions, with a long-term earnings growth expectation of 7.3% and a focus on electrification for hybrid and electric vehicles [18][19] - **Thermon Group Holdings, Inc. (THR)**: Provides engineered industrial process heating solutions, with a recent acquisition enhancing its market exposure and a long-term earnings surprise of 12.7% on average in the trailing four quarters [22]