Sensata Technologies (NYSE:ST) executives highlighted progress on a multi-year transformation plan while outlining a new operating structure and growth priorities during the company’s fourth-quarter and full-year 2025 earnings call. Management said the company delivered results “at or above the midpoint” of guidance ranges each quarter in 2025 and is moving into 2026 focused on accelerating growth across newly defined segments.
Transformation pillars and 2025 proof points
CEO Stephan von Schuckmann reiterated that Sensata’s transformation is built on three pillars: operational excellence, capital allocation, and growth. He said 2025 performance “sets a benchmark” for the organization and cited improved margins, cash generation, and a return to growth in the second half of the year.
Free cash flow was another major theme. The company generated record free cash flow of $490 million in 2025, which CFO Andrew Lynch said represented 97% conversion of adjusted net income. Von Schuckmann said the cash performance enabled accelerated capital allocation actions, including debt reduction and shareholder returns.
Q4 and full-year financial results
Lynch reported fourth-quarter 2025 revenue of $918 million, above the midpoint of guidance by $13 million and up about 1% year over year from $908 million. On an organic basis, revenue increased approximately 4% year over year, which management said marked the first year-over-year quarterly revenue increase since the first quarter of 2024.
Fourth-quarter adjusted operating income was $180 million and adjusted operating margin was 19.6%, up 30 basis points sequentially and year over year. Lynch said the quarter included about $15 million of “zero margin pass-through revenues” related to tariff recovery, which diluted adjusted operating margin by about 30 basis points. Excluding the tariff pass-through effect, fourth-quarter adjusted operating margin increased 60 basis points year over year and 40 basis points sequentially.
Adjusted EPS was $0.88, up $0.14 year over year, and adjusted net income was $130 million, up about 16%. Sensata recorded approximately $50 million of restructuring-related and other charges in the quarter, including about $16 million of primarily non-cash charges related to an electric vehicle program cancellation by an OEM customer; the company excluded these items from non-GAAP metrics.
For full-year 2025, Sensata reported revenue of $3.70 billion, down 6% from $3.93 billion in 2024, which Lynch attributed primarily to previously disclosed divestitures and product lifecycle management actions. On an organic basis, full-year revenue was approximately flat. Adjusted operating income was $705 million versus $749 million in 2024, while adjusted operating margin was 19.0%, flat year over year despite lower revenue. Lynch said tariff pass-through revenues diluted full-year adjusted operating margin by about 20 basis points; excluding that effect, adjusted operating margin increased 20 basis points year over year.
Adjusted EPS was $3.42, down $0.02 from the prior year, and adjusted net income was $503 million, down about $16 million, driven primarily by lower net revenue due to divestitures. Adjusted net income as a percentage of net revenue increased to 13.6% from 13.2%.
Capital allocation: debt reduction and shareholder returns
Management emphasized deleveraging and liquidity. Sensata reduced net leverage to 2.7x trailing twelve-month adjusted EBITDA at year-end 2025, down from 3.0x at year-end 2024. In the fourth quarter, the company retired $354 million of long-term debt and recorded an approximately $3 million net gain, which was excluded from adjusted results. Sensata ended 2025 with $573 million of cash on hand, which von Schuckmann said provided “ample liquidity.”
The company returned $191 million to shareholders in 2025, including $121 million of share buybacks and $70 million in dividends. Lynch also noted the company’s declared first-quarter 2026 dividend of $0.12 per share payable on February 25 to shareholders of record as of February 11.
New segment structure and growth strategy
Sensata announced it has reorganized into three operating and reporting segments: automotive (about 57% of 2025 revenue), industrials (about 21%), and aerospace, defense, and commercial equipment (about 22%). Von Schuckmann said the segmentation is designed to align with distinct business cycles, customer sets, and go-to-market strategies, and to provide clearer “mandates” for value creation and growth.
Lynch said each segment posted year-over-year organic revenue growth in the fourth quarter:
- Automotive: Q4 revenue of $527 million, down about 1% reported due to divestitures; up about 1% organically. Segment adjusted operating income was about $129 million, or 24.4% of revenue, with 100 basis points of year-over-year margin expansion.
- Industrials: Q4 revenue of $191 million, up 6% reported and 8% organically, driven by continued growth in gas leak detection. Segment adjusted operating income was $59 million, or 30.9% of revenue, with 620 basis points of year-over-year margin expansion.
- Aerospace, Defense, and Commercial Equipment: Q4 revenue of $199 million, up about 4% reported and 7% organically. Segment adjusted operating income was about $56 million, or 28.1% of revenue, with 310 basis points of year-over-year margin expansion.
On the call, executives described growth vectors within each segment, including content gains across propulsion types in automotive, data center opportunities in industrials, and a “super cycle” in commercial aviation and defense. Von Schuckmann highlighted rising opportunities in plug-in hybrid and extended-range electric vehicles, noting Sensata sees content per vehicle on EVs as “approximately double” that of internal combustion engine vehicles, and said the company expects PHEV and EREV production growth of 17% in 2026 with a 12% CAGR over the balance of the decade.
In industrials, von Schuckmann said Sensata is underpenetrated in data centers despite having products designed into existing facilities, and the company launched an internal initiative in the fourth quarter of 2025 to expand share. He described the approach as largely organic, built on existing electrical protection and sensing products already used inside and outside data centers, along with targeted R&D such as developing flow sensors for data center applications.
In aerospace and defense, management characterized aerospace as a smaller but high-margin area with growth potential, citing the commercial aircraft backlog. Executives also pointed to UAVs as a high-volume, platform-driven opportunity aligned with Sensata’s framework.
2026 outlook and Q1 guidance
Looking ahead, Lynch said Sensata expects first-quarter 2026 revenue of $917 million to $937 million, adjusted operating income of $168 million to $175 million, adjusted operating margin of 18.4% to 18.6%, adjusted net income of $118 million to $125 million, and adjusted EPS of $0.81 to $0.85. At the midpoint, the company expects year-over-year revenue growth of about 2% and EPS growth of $0.05. Guidance assumes approximately $12 million of tariff costs and pass-through revenues, based on trade policies and tariff rates in effect as of Feb. 18, 2026, and does not include potential impacts from future policy changes.
Management said first-quarter margins typically step down from the fourth quarter due to seasonality, but noted the expected midpoint step-down of about 110 basis points is improved from historical patterns. Lynch said Sensata expects margins to normalize to 19% or better in the second quarter and expand sequentially thereafter. While the company did not provide full-year guidance, Lynch said Sensata currently expects low single-digit year-over-year revenue growth in 2026, targeting at least 20 basis points of full-year margin expansion while reiterating the 19% margin floor.
Executives also discussed precious metals inflation as a headwind for 2026, citing exposures to silver, gold, and platinum. Lynch said the company hedges these metals and does not see risk to the first-quarter guide, and expects to offset the headwind over the full year through supply chain optimization, product redesign, and customer pass-through.
For free cash flow, Lynch said conversion may be lower than 2025’s 97% level, particularly in the first half, due to seasonality and higher variable compensation payments. Sensata is targeting free cash flow conversion in the “high 80s” for 2026, above an 80% floor the company established previously.
During Q&A, management also highlighted progress in Asia automotive bookings, including additional wins with Chinese OEMs and improved content parity with local OEMs in China. Lynch said the company overcame a China mix headwind that had pressured outgrowth earlier in the year, which helped enable automotive outgrowth in the back half of 2025.
About Sensata Technologies (NYSE:ST)
Sensata Technologies Holdings N.V. is a global industrial technology company specializing in the design, development and manufacture of sensors and electrical protection solutions. The company’s product portfolio includes pressure, temperature, position, speed, current and magnetic sensors, as well as circuit breakers and other protection devices. Sensata’s offerings serve a wide array of end markets, with a particularly strong presence in automotive original equipment manufacturers (OEMs), industrial automation, heating, ventilation and air conditioning (HVAC), commercial aerospace and renewable energy sectors.
Headquartered in Attleboro, Massachusetts, Sensata operates a network of manufacturing and engineering facilities across North America, Europe, Asia Pacific and Latin America.
