Executive Summary

Q3 revenue of $932M beat S&P Global consensus ($921M*) and grew +3% organically despite divestitures; adjusted EPS of $0.89 beat ($0.85*), with adjusted operating margin at 19.3% and ~20 bps tariff dilution .
GAAP loss per share of $1.12 reflected $259M non‑cash charges, including a $225.7M goodwill impairment in Dynapower due to slower clean‑energy adoption; adjusted EPS held flat YoY at $0.89 as margin initiatives offset lower sales .
Q4’25 guidance: revenue $890–$920M and adjusted EPS $0.83–$0.87 with adjusted margin 19.3%–19.5%; GAAP EPS $0.63–$0.65; tariff pass‑through expected ~$12M, neutral to adjusted results .
Cash execution accelerated deleveraging (net leverage 2.9x) and FCF conversion >100% in Q3; company launched tender offers to retire up to $350M of notes, reinforcing the deleveraging pillar .
Stock catalysts: consistent beat and margin resilience, debt tender, and strong FCF vs. the offset of clean‑energy impairment and cautious Q4 outlook (Novelis fire/Nexperia risks cited) .

What Went Well and What Went Wrong

What Went Well

Outperformance vs. expectations: “all key metrics exceeding our expectations”; Q3 adjusted operating margin expanded sequentially to 19.3% and adjusted EPS rose Q/Q to $0.89 despite seasonally lower revenue .
Strong cash and deleveraging: Q3 free cash flow $136.2M (105% conversion), cash $791M, net leverage down to 2.9x; initiated cash tender offers to purchase $350M of long‑term debt .
Segment margin execution and outgrowth: Performance Sensing margin 23.7% (+160 bps YoY) and Sensing Solutions margin 30.9% (+150 bps YoY); return to market outgrowth in auto (global) and double‑digit outgrowth in China .
- “We returned to market outgrowth... automotive business outgrowing global vehicle production by ~1%... HVR outgrowing by ~5%” .

What Went Wrong

Non‑cash impairment and electrification reset: $259M total charges, including $225.7M Dynapower goodwill impairment; management cited “changes in clean energy policy and emissions regulations” reducing expected demand .
Top‑line pressure YoY: Q3 revenue down 5.2% YoY to $932.0M (divestitures/product life‑cycle actions); nine‑month organic revenue down 1.0% .
End‑market and supply risks: HVOR softness persists; management flagged idiosyncratic supply risks (Novelis factory fire, potential Nexperia disruptions) driving a cautious Q4 stance (no major disruptions assumed) .

Financial Results

Headline metrics – last three quarters (USD, per share; margins as % of revenue)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$911.3	$943.4	$931.978
Adjusted Operating Income ($M)	$166.5	$179.1	$179.6
Adjusted Operating Margin (%)	18.3%	19.0%	19.3%
Adjusted EPS ($)	$0.78	$0.87	$0.89
GAAP EPS ($)	$0.47	$0.41	$(1.12)
Free Cash Flow ($M)	$86.6	$115.5	$136.2

Additional context:

Q3 revenue −5.2% YoY; organic +3.1% YoY; tariff pass‑through revenue ~$12M diluted adjusted margin by ~20 bps .
Q3 operating loss (GAAP) driven by $259M non‑cash charges (Dynapower impairment and electrification capacity) .

Consensus vs. Actuals (S&P Global for consensus; USD)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($M)*	$881.3*	$933.5*	$921.1*
Revenue Actual ($M)	$911.3	$943.4	$932.0
Primary EPS Consensus Mean ($)*	$0.72*	$0.84*	$0.851*
Adjusted/Primary EPS Actual ($)	$0.78	$0.87	$0.89

*Values retrieved from S&P Global.

Segment performance (Q3 2025 vs. Q3 2024)

Segment	Revenue Q3’24 ($M)	Revenue Q3’25 ($M)	Segment Op Income Q3’24 ($M)	Segment Op Income Q3’25 ($M)	Margin Q3’24	Margin Q3’25
Performance Sensing	$659.7	$656.9	$145.7	$155.6	22.1%	23.7%
Sensing Solutions	$274.4	$275.0	$80.8	$85.1	29.4%	30.9%

End‑market mix highlights (Q3 2025): Auto 57.6%, HVOR 17.0%, Industrial 14.0%, HVAC 6.0%, Aerospace 5.4% .

KPIs and Balance Sheet

KPI	Q3 2025
Free Cash Flow ($M)	$136.2
FCF Conversion (%)	105%
Cash & Equivalents ($M)	$791.3
Net Debt ($M)	$2,430.5
Net Leverage (LTM Adj. EBITDA)	2.9x
Gross Leverage	3.9x
Tariff pass‑through revenue	~$12M; ~20 bps margin dilution

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025 (as guided 7/29)	$900–$930	N/A (actual $932.0)	Achieved above midpoint
Adjusted EPS ($)	Q3 2025 (as guided 7/29)	$0.81–$0.87	N/A (actual $0.89)	Achieved above midpoint
Revenue ($M)	Q4 2025	N/A	$890–$920	New
Adjusted Operating Income ($M)	Q4 2025	N/A	$172–$179	New
Adjusted Operating Margin (%)	Q4 2025	N/A	19.3%–19.5%	New
Adjusted Net Income ($M)	Q4 2025	N/A	$121–$127	New
Adjusted EPS ($)	Q4 2025	N/A	$0.83–$0.87	New
GAAP EPS ($)	Q4 2025	N/A	$0.63–$0.65	New
Tariff assumption	Q4 2025	N/A	~$12M revenue offset by ~$12M expense; neutral to adjusted metrics	Neutral
Dividend	Q4 2025	$0.12/share (Q3 precedent)	$0.12/share, payable Nov 26, 2025	Maintained

Notes: Tariff expectations reflect policies as of Oct 28, 2025 . Management cited a cautious Q4 outlook given Novelis fire and potential Nexperia issues (no major disruption assumed) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Transformation pillars: ops excellence, capital allocation, return to growth	Q1: “exceeded the high end of guidance ranges”; focus on the three pillars . Q2: “back‑to‑basics approach continues to deliver,” improved FCF .	CEO: “exceptionally strong Q3,” sequential margin expansion; >100% FCF conversion; launching $350M debt tender .	Strengthening; accelerated deleveraging.
Deleveraging & capital allocation	Repurchases and dividend maintained; early FCF traction (Q1/Q2) .	Net leverage 2.9x; cash $791M; tender offers to retire up to $350M of notes .	More aggressive balance sheet actions.
Tariffs	Guidance embedded tariff pass‑through; neutral to adjusted metrics .	~$12M tariff pass‑through; ~20 bps margin dilution; neutral to adjusted EPS; similar exposure into Q4 .	Managed; stable framework.
China & Auto outgrowth	Q1/Q2: auto mixed; focus on content and local wins .	Auto outgrew by ~1% globally; double‑digit outgrowth in China; tire burst detection wins with local OEMs .	Improving trajectory.
HVAC/Industrial (gas leak detection)	Product traction noted in Q2; industrial growth resuming .	HVAC rose to 6% of mix; two new HL gas leak detection wins; >$100M near‑term potential; recast of reporting clarified .	Accelerating growth driver.
Aerospace	Steady growth earlier; end‑market recovering .	Record revenue in Q3; industry backlogs persist; production rate increases at key OEMs support outlook .	Positive, sustained growth.
Electrification/Dynapower	EV uncertainty; capex discipline emphasized .	Strategy refocus toward grid stabilization, defense/data center power; $225.7M non‑cash impairment recorded .	Strategic pivot; accounting reset completed.

Management Commentary

“Our focused execution against the key pillars of our transformation drove exceptionally strong results in the third quarter, with all key metrics exceeding our expectations.” – CEO Stephan von Schuckmann .
“We are now well ahead of our net leverage and cash conversion targets… As a result… we commenced cash tender offers to purchase $350 million of our long‑term debt.” – CEO .
“We recorded a non‑cash goodwill impairment charge… due to recent changes in clean energy policy… we have recast our growth plans… focusing on grid stabilization and redundant power supply in defense and data centers.” – CEO .
“Adjusted operating margins were diluted by ~20 bps due to $12 million of zero‑margin pass‑through revenues related to tariff recovery.” – CFO Andrew Lynch .
“We remain comfortable defending a margin floor of 19% on a full‑year basis.” – CFO .

Q&A Highlights

Auto outgrowth durability: Management expects continued outgrowth into 2026, with double‑digit outgrowth in China supported by local OEM wins (e.g., tire burst detection, contactors) .
HVAC step‑up and disclosure: Growth is “real” and driven by HL gas leak detection; revenue presentation recast into HVAC from industrial for clarity .
Debt tender & interest: Too early to specify mix; net interest impact immaterial in Q4 as cash yields roughly offset lower‑coupon notes; higher‑coupon notes offer more savings .
Free cash flow sustainability: Conversion target remains >80%; 2025’s high conversion reflects capex discipline amid EV volume uncertainty; not a new permanent capex baseline .
Margin framework and seasonality: 19% floor reiterated; Q4→Q1 margin seasonality driven by annual price resets and higher‑cost inventory in Q1; normalization from Q2 onward .

Estimates Context

Q3 2025 beat: Revenue $932.0M vs $921.1M*; adjusted EPS $0.89 vs $0.851* .
Track record: Q2 and Q1 also exceeded revenue and EPS consensus means (see table above) .
Implications: Modest upward adjustments to near‑term revenue/EPS likely in core segments; Dynapower impairment is non‑cash and excluded from adjusted EPS, limiting estimate changes there. Cautious Q4 revenue outlook may cap top‑line upward revisions, with margin expectations steady given tariff neutrality .