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ST

Sensata Technologies Holding plc (ST)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $911.3M and adjusted EPS $0.78, both above S&P Global consensus (revenue +$30M, EPS +$0.06); adjusted operating margin was 18.3% with modest net tariff costs in-quarter as pass-throughs lagged timing .*
  • Management guided Q2 2025 revenue to $910–$940M (including ~$20M tariff pass-through) and adjusted EPS to $0.80–$0.86, with adjusted operating margin of 18.6%–18.8% (19.0%–19.2% excluding tariff dilutive effects) .
  • Sensing Solutions returned to year-over-year growth and margin expansion, while Performance Sensing was down on mix and weaker HVOR; free cash flow conversion improved to 74% with $86.6M FCF in Q1 and $100.5M buybacks .
  • Strategic progress on operational excellence and tariff mitigation (80% of Mexico-sourced revenue USMCA-qualified; ~95% gross tariff exposure mitigated) and new electrification wins in Japan and China were highlighted as near-term catalysts .

What Went Well and What Went Wrong

What Went Well

  • Exceeded high end of Q1 guidance ranges for revenue, adjusted operating income and adjusted EPS; “We delivered a strong first quarter 2025… exceeding the high end of our guidance” — CEO Stephan von Schuckmann .
  • Sensing Solutions grew revenue 1% YoY and expanded margin to 29.2% (vs. 28.0% LY) driven by industrial stability and A2L leak-detection products; operating income rose to $76.1M .
  • Free cash flow conversion improved 26 pts YoY to 74%; $86.6M FCF and $100.5M share repurchases; “we are confident in our ability to improve free cash flow” — CFO Brian Roberts .

What Went Wrong

  • Total revenue declined 9.5% YoY to $911.3M; adjusted EPS fell to $0.78 from $0.89 and adjusted operating margin compressed 40 bps YoY to 18.3% .
  • Performance Sensing revenue down 8.8% YoY to $650.4M and margin fell to 22.0% (from 23.7%) amid mix headwinds and HVOR weakness; HVOR orders slowed more than anticipated .
  • Minor net tariff costs in Q1 and increased macro uncertainty (e.g., second-half auto production cuts in North America and Europe); ransomware incident disrupted operations ~2 weeks (no material financial impact) .

Financial Results

Core metrics versus prior quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$982.8 $907.7 $911.3
GAAP EPS ($)$(0.17) $0.04 $0.47
Adjusted EPS ($)$0.86 $0.76 $0.78
Adjusted Operating Margin (%)19.2% 19.3% 18.3%
Free Cash Flow ($USD Millions)$91.3 $138.9 $86.6

Q1 2025 actuals versus S&P Global consensus

MetricConsensus Estimate*ActualSurprise*
Revenue ($USD Millions)881.3*$911.3 +$30.0*
Primary EPS ($)0.72*$0.78 +$0.06*

Values retrieved from S&P Global.

Segment performance (Q1 2025 vs Q1 2024)

SegmentQ1 2024 Revenue ($M)Q1 2025 Revenue ($M)Q1 2024 Operating Income ($M)Q1 2025 Operating Income ($M)
Performance Sensing$713.3 $650.4 $169.0 $142.9
Sensing Solutions$257.8 $260.8 $72.3 $76.1
Other$35.6 $0.0 $6.8 $0.0

KPIs

KPIQ3 2024Q4 2024Q1 2025
Cash on Hand ($USD Millions)$506.2 $593.7 $588.1
Net Leverage Ratio (x)3.0 3.0 3.1
Share Repurchases ($USD Millions)$37.2 $21.6 $100.5
Dividend per Share ($)$0.12 (Aug 28) $0.12 (paid Q4) $0.12 (paid Feb 26)

Non-GAAP adjustments (Q1 2025)

  • Total non-GAAP adjustments added $0.31 to diluted EPS; adjusted EPS was $0.78 vs $0.47 GAAP .
  • Adjusted operating margin 18.3% vs 13.4% GAAP; adjustments included restructuring ($18.3M), financing costs ($5.4M), and amortization of intangibles ($20.6M) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q2 2025N/A$910–$940 (incl. ~$20 tariff pass-through) N/A
Adjusted EPS ($)Q2 2025N/A$0.80–$0.86 N/A
Adjusted Operating Margin (%) excl tariffQ2 2025“19% or better” (as of Feb call) 19.0%–19.2% Maintained
Adjusted Operating Income ($USD Millions)Q2 2025N/A$169–$177 N/A
Tariff pass-through revenue ($USD Millions)Q2 2025negligible in Q1 ($2M) ~$20M Raised
Dividend per Share ($)Q2 2025$0.12 (paid Q1) $0.12 (approved, payable May 28) Maintained
Full-year 2025 Adjusted Operating MarginFY 2025“Equivalent or slightly better than 2024 (19.0%)” “At or above 2024” reiterated Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (prior)Q4 2024 (prior)Q1 2025 (current)Trend
Tariffs / MacroAnticipated production cuts; cautious outlook Framework of exposure; 70% NA mfg in Mexico; limited China tariff impact to-date 80% Mexico-sourced revenue USMCA-qualified; ~95% tariff exposure mitigated; ~$20M Q2 pass-through revenue, net-zero adj OI impact Escalating, then largely mitigated
Operational ExcellenceLean reimplementation; design-driven cost reduction Benchmarking supply chain, productivity initiatives Standardized production system, procurement strategy, inventory optimization Intensifying execution
Product Innovation (HVOR/EV/HVAC)A2L leak-detection ramp in industrials Strong pipeline; electrification content normalization over time HVDUs enabling megawatt charging, PyroFuse launch, SIM200 IMD; A2L continues to drive growth Building momentum
Regional TrendsChina share shift to locals; content headwind EV wins for next-gen Europe; content parity expected in ’26–’27 Wins in Japan (exhaust/fuel sensing) and China EVs; Europe regulatory volatility Diversifying wins
Regulatory / LegalEU tire pressure mandate supportive —Ransomware incident resolved; no material impact Managed/contained
Free Cash Flow & Capital AllocationConversion ~70%, debt stack improved 76% FY conversion; net leverage <3x; buybacks/dividends 74% conversion in Q1; repurchased ~$100M; dividend maintained Improving discipline
HVOR DemandSignificant downturn in NA/EU —Orders slowed more than anticipated; tariff/regulatory impacts Weaker, cautious

Management Commentary

  • “We started the year with a strong first quarter which exceeded the high end of our guidance ranges… improving our operational performance, optimizing our capital allocation, and returning Sensata to growth” — CEO Stephan von Schuckmann .
  • “Our expectation is to pass [tariff costs] through to our customers… we have mitigated more than 95% of our gross tariff exposure” — CEO .
  • “Free cash flow conversion improved 26 percentage points year-over-year to 74%… repurchase of ~3.5M shares during the first quarter” — CFO Brian Roberts .
  • “Including ~$20M tariff revenue, adjusted operating margin [Q2] will be 18.6%–18.8%; excluding tariff dilutive effects, 19.0%–19.2%” — CFO .

Q&A Highlights

  • Second-half outlook: Management quantified $20–$30M per quarter potential revenue impact in Q3–Q4 from North American auto production cuts; largely production-driven, not outgrowth .
  • Tariff pass-through: ~95% of exposure negotiated; Q2 book ~$20M tariff revenue implies ~$1M residual exposure .
  • Margin cadence: Ex-tariff, Q2 back to 19%+; plan to expand pre-tariff adjusted operating margins ~20 bps per quarter in 2H even on lower revenue .
  • Sensing Solutions incrementals: Expect continued margin strength with industrial stabilization and A2L adoption .
  • EV programs: Push-outs in some regions (Europe earlier gen), but acceleration in China EV platforms; next-gen 800V launches supportive over ’25–’27 .
  • Cybersecurity: Ransomware temporary disruption; no material financial impact .

Estimates Context

  • Q1 2025 beat: Revenue $911.3M vs $881.3M consensus; Primary EPS $0.78 vs $0.72 consensus; number of estimates: 15 revenue, 16 EPS.*
  • Q2 2025 setup: Guidance midpoint ($925M; $0.83) broadly aligns with consensus ranges; tariff pass-through dilutes reported margin but neutral to adjusted OI.*

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 execution strong with revenue and EPS beats; margin compression modest and largely seasonal, with minor net tariff costs; Sensing Solutions turned to growth and margin expansion .
  • Tariff risk has been substantially mitigated (80% USMCA-qualified, ~95% reimbursement agreements); Q2 includes ~$20M pass-through revenue that dilutes reported margin but is neutral to adjusted operating income .
  • Near-term headwind: auto production cuts in North America could trim Q3–Q4 revenue $20–$30M per quarter; management still targets pre-tariff margin expansion of ~20 bps per quarter in 2H .
  • FCF discipline and capital allocation: 74% conversion in Q1; ~$100M buybacks; dividend maintained; net leverage ~3.1x with path to further deleveraging .
  • Segment mix: watch continued industrial/A2L momentum and aerospace backlog; monitor HVOR demand and Europe regulatory clarity for auto .
  • Electrification content pipeline is building (HVDUs enabling megawatt charging; PyroFuse; SIM200 IMD); expect contributions as next-gen platforms launch over ’25–’27 .
  • Trading lens: watch tariff policy headlines (impact largely offset), second-half auto production revisions, and margin cadence versus the 19%+ target; any upside in volumes could leverage standardized operations to expand margins faster .

*All S&P Global consensus values are marked with an asterisk and sourced from S&P Global.