Sensata(ST) - 2025 Q2 - Quarterly Results

Financial Results Overview Second Quarter 2025 Financial Results 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] 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] Six Months 2025 Financial Results 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] Shareholder Returns 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 Third Quarter 2025 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][15] Segment and Revenue Analysis Segment Performance 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 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 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 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 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) Condensed Consolidated Statements of Operations 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 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 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 Non-GAAP Financial Measures Definitions 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][21] GAAP to Non-GAAP Reconciliations 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 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 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 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 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 Conference Call and Webcast 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] Safe Harbor Statement 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][32]