Executive Summary

Q4 revenue $907.7M declined 8.5% y/y but exceeded the top end of guidance and beat public consensus by ~2.4%; adjusted EPS $0.76 matched consensus while GAAP EPS was $0.04 .
Adjusted operating margin rose sequentially for a fourth straight quarter to 19.3% (vs 19.2% in Q3 and 18.5% in Q4’23), reflecting portfolio optimization and operational improvements .
Free cash flow was $138.9M in Q4 (up ~145% y/y), and net leverage improved to 3.0x LTM adjusted EBITDA at year-end; cash ended at $593.7M .
2025 outlook: revenue roughly flat organically at ~$3.6B given ~$300M revenue exited in 2024; Q1’25 guide embeds seasonal margin step-down (18.2–18.4% AOI margin) with a return to ≥19% in Q2 and continued improvement in H2 .
Setup/catalysts: execution on operational excellence, continued margin progress, Sensing Solutions stabilization, and ICE share gains vs EV softness; watch tariff risk (Mexico exposure) and China mix normalization in H2’25 .

What Went Well and What Went Wrong

What Went Well
- Revenue beat guidance and public consensus; CFO: “revenue of $908 million exceeded the top end of our $870–$900 million guidance range… adjusted operating margins increased sequentially for our fourth consecutive quarter” . Q4 revenue $907.7M; adj. op. margin 19.3% .
- Strong cash generation and deleveraging: Q4 FCF $138.9M; FY FCF $393.0M; net leverage at 3.0x; “reduced net leverage to under 3x… for the first time in 3 years” .
- ICE share gains/outgrowth: ~350 bps outgrowth in Performance Sensing amid EV slowdown; CEO highlighted new ICE wins (e.g., Toyota exhaust pressure sensing) .
What Went Wrong
- Top-line contraction and mix: Q4 revenue down 8.5% y/y; Sensing Solutions revenue -8% y/y FY’24; adj. EPS down 6% y/y in Q4 .
- Portfolio actions/impairments: ~$370M annualized revenue exited (Insights sale + product pruning); $150.1M Dynapower goodwill impairment in Q3 weighed on FY GAAP results .
- Near-term margin seasonality and macro: Q1’25 AOI margin guided to 18.2–18.4% (down ~110–90 bps q/q); tariff uncertainty with ~70% of North America manufacturing in Mexico (mitigations in place) .

Financial Results

Headline P&L (chronological: oldest → newest)

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	$992.5	$982.8	$907.7
GAAP Operating Margin (%)	(20.3%)	(20.3%) due to Q3 charges	8.1%
Adjusted Operating Margin (%)	18.5%	19.2%	19.3%
Adjusted EPS ($)	$0.81	$0.86	$0.76
GAAP EPS ($)	$(1.34)	$(0.17) (tax/impairment effects)	$0.04

Q4 2024 Actual vs Public Consensus (S&P Global consensus unavailable; using public proxies)

Metric	Q4 2024 Actual	Public Consensus	Surprise
Revenue ($M)	$907.7	$886.8 (Nasdaq preview)	+2.4% (Nasdaq)
Adjusted EPS ($)	$0.76	$0.76 (Zacks/Nasdaq)	In line

Segment Performance (Q4 y/y)

Segment	Q4 2023 Revenue ($M)	Q4 2024 Revenue ($M)	Δ y/y	Q4 2023 Op Inc ($M)	Q4 2024 Op Inc ($M)	Margin Q4’24
Performance Sensing	$691.8	$646.7	(6.5%)	$170.5	$152.0	23.5%
Sensing Solutions	$267.0	$261.0	(2.3%)	$79.3	$79.3	30.4%
Other	$33.7	$0.0 (Insights moved/exited)	n/m	$2.7	$0.0	n/a

KPIs and Balance Sheet

KPI	Q4 2023	Q3 2024	Q4 2024
Free Cash Flow ($M)	$56.7	$91.3	$138.9
Cash & Equivalents ($M)	$508.1	$506.2	$593.7
Net Debt ($M)	$2,917.1	$2,717.6	$2,629.7
Net Leverage (x LTM Adj. EBITDA)	3.2x	3.0x	3.0x
LTM Adjusted EBITDA ($M)	$906.6	$891.5	$881.6

End-Market/Geography Mix (Q4)

Geography: Americas 39.1%, Europe 26.7%, Asia/ROW 34.2% .
End markets: Automotive 59.4%; HVOR 16.2%; Industrial/Appliance/HVAC & other 19.0%; Aerospace 5.4% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q1 2025	—	$870–$890	New
Adjusted Operating Income ($M)	Q1 2025	—	$158–$164	New
Adjusted Operating Margin (%)	Q1 2025	—	18.2%–18.4%	New
Adjusted EPS ($)	Q1 2025	—	$0.70–$0.73	New
FY Revenue (organic)	FY 2025	—	~Flat vs 2024 at ~$3.6B	New
Dividend ($/sh)	Q1 2025	$0.12 (Q4’24 declaration)	$0.12 declared for Q1’25	Maintained
Tariff assumption	2025	—	Excludes potential new tariffs	Note

Context vs public consensus for Q1’25: Nasdaq cites current consensus EPS $0.77 on $900.3M revenue; guide is below on both metrics .

Earnings Call Themes & Trends

Topic	Q2 2024 (7/29)	Q3 2024 (11/4)	Q4 2024 (2/11)	Trend
Margin progression	Sequential adj. margin +30 bps; commit to 20–30 bps/qtr	Q3 adj. margin 19.2% despite charges	Q4 adj. margin 19.3%, 4th straight sequential increase	Improving
Portfolio optimization	Identified ~$200M product exits	Sold Insights; Dynapower impairment; more exits	~$370M annualized revenue exited in H2’24	Pruning complete, base reset
ICE vs EV	Strong ICE content; EV slower	EV slowdown; outgrowth from ICE	~350 bps outgrowth; new ICE wins incl. Toyota; EV content to ramp in EU in ‘26/’27	ICE tailwind near term; EV later
Industrial/Sensing Solutions	Softer industrial demand	Still soft; charges/realignment	Stabilizing; margins solid (29.5% FY)	Bottoming
China strategy	—	—	CEO to focus on selective OEMs; H2’25 normalization; Europe/S.E. Asia expansion	Targeted growth
FCF & leverage	FCF up; refinancing; deleveraging in focus	Net leverage ~3.0x	FCF conversion 76% FY; target high-70s/80% in 2025	Strong discipline
Tariffs/macro	—	—	China tariff impact ~$1M/qtr; ~70% NA manuf. in Mexico; mitigate via footprint	Watch risk
“Megatrend” spend	—	—	Reallocating to segments (mostly Performance Sensing) from Q1’25	Transparency up

Management Commentary

CEO Stephan von Schuckmann: “There is a significant opportunity to create shareholder value by returning Sensata, over time, to growth, driving operational excellence, and efficiently deploying capital.” . Priorities: “returning Sensata to growth… improving operational performance… optimizing capital allocation” .
On growth vectors: “A2L leak protection sensor for HVAC… market leadership position… meaningful growth driver… strong value proposition across powertrains… continued wins in electrification… expanding share with local players in China” .
Operational excellence: “Delivering a high-quality product on time, at the lowest possible cost… optimize inventory… accelerate design-driven cost reductions… demand more of our supply chain” .
CFO Brian Roberts: “Revenue exceeded the top end of our range… adjusted operating margins increased sequentially for our fourth consecutive quarter… improved free cash flow conversion to 76%” . “Expect adjusted operating margins to return to 19% or better in Q2 and continue to improve in H2’25” .

Q&A Highlights

Auto outgrowth/ICE share: ICE portfolio strength drove ~350 bps outgrowth; China expected to normalize to typical outgrowth patterns in H2’25 .
European EV content: Next-gen EV platform launches should drive more balanced ICE/EV content in Europe in 2026–2027 .
Margin bridge 2025: Full-year adj. margin ~19–19.3%; Q1 seasonality down then rebound ≥19% in Q2; H2 further improvement from productivity plus volume .
FCF conversion: Inventory reductions boosted Q4; aiming for high-70s to ~80% conversion in 2025 .
Tariffs: China tariff impact modest (~$1M/quarter); ~70% of NA manufacturing in Mexico; will leverage global footprint and potentially customer pass-throughs if needed .
Segment margins: Sensing Solutions margins strong, potential to expand as HVAC rebounds; “megatrend” engineering expense to be reallocated (majority to Performance Sensing) .

Estimates Context

S&P Global consensus was unavailable due to data access limits during this analysis window. As a proxy, public sources indicate Q4 adjusted EPS matched consensus at $0.76 and revenue beat by ~2.36% (Nasdaq/Zacks) .
For Q1’25, Nasdaq cites current consensus of $0.77 EPS on $900.3M revenue, below which management guided ($0.70–$0.73 EPS; $870–$890M revenue), implying likely downward estimate revisions if management’s range holds .

Key Takeaways for Investors

Q4 execution was solid: revenue beat and sequential margin progress despite y/y declines; cash generation and deleveraging support equity value .
2025 is a reset year: ~flat organic revenue on a lower base after ~$300M revenue exits, with margin cadence driven by Q1 seasonality and H2 productivity gains .
Near-term mix favors ICE content and Sensing Solutions margins; EV content acceleration in Europe is more a 2026–2027 story per design-ins .
Watch tariffs and FX: Mexico exposure (~70% of NA manufacturing) and currency remain variables; management sees limited China tariff impact and has mitigation levers .
FCF conversion trajectory is improving (aiming high-70s/80%); balance sheet flexibility (3.0x net leverage) enables continued dividends and opportunistic buybacks .
Estimate setup: Q1’25 guide below public consensus on both revenue and EPS; delivery against Q2 rebound to ≥19% margins is the next key checkpoint for sentiment .

Sensata Technologies Holding plc (ST)·Q4 2024 Earnings Summary