Sensata Technologies Holding plc earnings

Management highlights

• Transformation journey: Defined excellence, in acceleration phase, priorities include retaining execution and margin resilience, compounding value, and fulfilling growth mandate. • First quarter results: Revenue and adjusted operating income at high end of guidance, exceeded adjusted EPS and free cash flow expectations. Free cash flow $105 million, 83% conversion. • Segments: Automotive delivered market outgrowth, aerospace defense and commercial equipment was star performer with double-digit organic growth, industrial had modest organic growth. • Data center opportunities: Increased conviction in data center business, products specced by two hyperscalers, flow sensor advanced to customer validation

Guidance

• Second quarter guidance: Revenue $950 million - $980 million, adjusted operating income $182 million - $190 million, adjusted operating margin 19.2% - 19.4%, adjusted net income $131 million - $139 million, adjusted earnings per share 89 cents - 95 cents. • Tariff costs: Approximately $8 million in second quarter, ~$4 million lower than prior run rate. • Margin outlook: Current consensus estimates for adjusted operating margin expansion ~30 bps per quarter in back half if end market demand holds up, prepared to defend 19% annual margin floor if demand deteriorates

Segment performance

Automotive segment: Revenue of $525 million in the quarter, -1% YoY reported, 1% organic growth YoY and 4% outgrowth against a market that decreased by 3%. Operating margin 23.5%, +70 bps YoY. Industrial segment: Revenue of $184 million, -1% YoY reported, 1% organic growth YoY. Operating margin 27.1%, +100 bps YoY. Aerospace, Defense, and Commercial Equipment segment: Revenue of $226 million, +15% YoY or ~17% organic. Operating margin 28.1%, +260 bps YoY

Risks & headwinds

• Geopolitical events and oil prices pose end market demand risks for automotive. • Precious metals inflation of over 100% was a headwind in first quarter. • Volatility in end markets and supply chain challenges

Analyst Q&A

• Q: On auto content outgrowth by region and if 2% auto production decline is the right outgrowth to think about.

  A: IHS forecast 91 million vehicles in 2026, 2% down from 2025. Geopolitical tensions and China test cost subsidies influence. Automotive segment winning business in each region, including China, Southeast Asia, Japan, South Korea.

• Q: 60 - 80 bps of operating margin expansion sequentially, drivers.

  A: Operating margins didn't expand sequentially, less contraction than past years due to stronger productivity start.

• Q: Actions to navigate supply chain and geopolitical volatility.

  A: Prepared with playbook, think in scenarios, designed into mission critical applications.

• Q: Data center market incremental revenue and margins in 2027.

  A: AI leads to data center changes, Sensata has right to win, share more progress later, not seeing significant need to invest to intersect trend.

• Q: China automotive content and outgrowth opportunity.

  A: Shift to local OEMs, strong on electrification and contactor side, expect underlying content growth in high single digits in China.

• Q: HVAC side performance and margin.

  A: HVAC business ~25% of industrials, net organic growth 1% due to new content, expect to outgrow market with new content.

• Q: CapEx trend.

  A: Targeting 3 - 3.5% range, lower need due to factory automation, expect to normalize to that range.

• Q: Tariffs impact and refunds.

  A: No meaningful direct impact from metal tariff changes, run rate ~$8 million per quarter, following government process for refunds.

• Q: Precious metal inflation impact.

  A: ~$40 million paid in tariffs last year, working on structurally mitigating via negotiations, VAVE activities, and customer discussions.

• Q: Data center market structure and share.

  A: Architecture change creates new opportunity, not taking share from others, focusing on getting products spec'd in