Piyush Maheshwari

Piyush Maheshwari requested clarification on the margin performance in the Sensors and Safety Systems segment in Q4, noting that revenues were up sequentially but margins declined. He asked if this was due to mix, competitive/cost pressure, or higher investments, and how margins for this segment are projected for 2026 within the overall 18%-20% margin guidance. He also inquired about expectations for major regions based on Q1 and full-year guidance, specifically regarding visibility, confidence, and geographic demand trends.

Answer

Tami Newcombe (President and CEO) attributed the Q4 margin profile in Sensors and Safety Systems to record revenue in the defense and space business (PacSci EMC), which typically has a different (lower) margin. Neil Reynolds (CFO) projected mid-to-high 20s margins for the segment in 2026, influenced by strong defense growth and organic investments. Tami Newcombe added that North America and Europe (65% of business) are expected to continue strong secular tailwinds in defense and utilities. Rest of World is a mid-single-digit grower, while China has lower expectations in electronics but shows green shoots in sensors/industrial and utilities.

Piyush Maheshwari requested clarification on the margin performance in the Sensors and Safety Systems segment in Q4, given sequential revenue growth but declining margins, and asked for expectations on major regions based on Q1 and full-year guidance.

Answer

Tami Newcombe, President and CEO, attributed the Q4 margin profile in Sensors and Safety Systems to record revenue in the defense and space business (PacSci EMC), which typically has a different (lower) margin. Neill Reynolds, CFO, projected 2026 margins for the segment in the mid-to-high 20s, influenced by strong defense growth and organic investments. Tami Newcombe added that North America and Europe are expected to continue strong secular tailwinds in defense and utilities, while China has lower expectations despite some green shoots in specific markets.