Sensata Technologies Q1 2026 Earnings Call - Margin Resilience Amidst Volatility and Data Center Priming

Christopher Glynn, Analyst, Oppenheimer0: Good afternoon, everyone, and welcome to the Sensata Technologies Q1 2026 earnings call. I would now like to turn the conference call over to Mr. James Entwistle, Senior Director of Investor Relations. Please go ahead.

James Entwistle, Senior Director of Investor Relations, Sensata Technologies: Thank you, operator, and good afternoon, everyone. I’m James Entwistle, Senior Director of Investor Relations for Sensata, and I’d like to welcome you to Sensata’s 1st quarter 2026 earnings conference call. Joining me on today’s call are Stephan von Schuckmann, Sensata’s Chief Executive Officer, and Andrew Lynch, Sensata’s Chief Financial Officer. In addition to the financial results press release we issued earlier today, we will be referencing a slide presentation during today’s conference call. A PDF of this presentation can be downloaded from Sensata’s investor relations website. This conference call is being recorded, and we will post a replay on our investor relations website shortly after the conclusion of today’s call. As we begin, I would like to reference Sensata’s safe harbor statement on slide 2.

During this conference call, we will make forward-looking statements regarding future events or the financial performance of the company that involve certain risks and uncertainties. The company’s actual results may differ materially from the projections described in such statements. Factors that might cause such differences include, but are not limited to, those discussed in our forms 10-Q and 10-K, as well as other filings with the SEC. We encourage you to review our GAAP financial statements in addition to today’s presentation. Much of the information that we will discuss during today’s earnings call will relate to non-GAAP financial measures. Our GAAP and non-GAAP financials, including reconciliations, are included in our earnings release, in the appendices of our presentation materials, and in our SEC filings. Stephan will begin the call today with comments on the overall business.

Andrew will cover our detailed results for the first quarter of 2026 and our financial outlook for the second quarter of 2026. Stephan will return for closing remarks. After that, we will take your questions. I would like to turn the call over to Sensata’s Chief Executive Officer, Stephan von Schuckmann.

Christopher Glynn, Analyst, Oppenheimer3: Thank you, James, and good afternoon, everyone. Let’s begin on slide 3. As I typically do at the start of our earnings calls, I’d like to begin today with an update on Sensata’s transformation journey. When we talk about transformation at Sensata, what we mean is that we have embarked on a journey to unlock untapped potential across our organization. We are encouraged that the market has taken notice of the progress we are making. However, what I find even more exciting is the vast opportunity ahead of us. Tapping into that opportunity means maximizing value for our shareholders sustainably over the short and long term. We like to think of this as a pursuit of excellence over multiple phases, and that we are still early in this journey.

The initial phase, which we completed last year, was to define what excellence looks like and systematically build it into the foundation of our business. Our next phase is one of acceleration, expanding on the foundation by delivering incrementally better performance and increasing focus on strategic initiatives in pursuit of our aspiration to be best in class. Finally, transformation maturity means achieving and sustaining best-in-class performance and market leadership. Last year, as we embarked on the first phase of our journey, we defined what excellence looks like for us, and we deployed a key pillars framework designed to maximize value creation. As we built up a system around those pillars, we focused on consistency of execution, sequentially improving each quarter, and creating value for our shareholders.

When I updated you in February on our year-end call, I shared that this framework is now foundational to everything that we do and is deeply ingrained in our business. As we advance to the next phase of our journey, our priorities framework is, first, to retain the consistency of execution and margin resilience that we installed in the business over the past year. Second, to continuously compound value by delivering year-over-year growth and margin expansion, not only in aggregate, but now also at segment level. Third, to fulfill our growth mandate by delivering on our near-term growth targets, while also importantly priming our future growth engine as we work on the strategic growth initiatives we laid out for each of our segments. In this phase of our transformation, these priorities are all equally important. Balancing strategy, growth, and executing effectively is the standard to which we hold ourselves.

Just as we did last year, each quarter we will update you with proof points of our progress. Before we get to the first quarter proof points, allow me to set the stage with where we have made progress these last few months. Our new leadership team is gaining meaningful momentum in their respective areas. Nicholas and our operations team are making progress on inventory reduction and supplier payment terms optimization, which is evident in our first quarter cash conversion. Similarly, with improved focus on factory performance, productivity is accelerating, which is demonstrated in our first quarter margin expansion. Marcus, Alice, and Brian have hit the ground running in their respective roles, and I will share more color on this as I provide segment updates in just a few moments.

Before we get to the segments, let’s turn to slide 4. I will briefly cover our strong first quarter results, which clearly demonstrate the continued and consistent progress that we are making. We delivered revenue and adjusted operating income at the high end of our guidance range. We exceeded our expectations on adjusted EPS and free cash flow. Free cash flow of $105 million was again a bright spot. This represented 83% conversion, outpacing the first quarter of 2025, which is particularly noteworthy as 2025 was a record year for Sensata. With our improved free cash flow, we progressed further on our deleveraging journey. The results of the quarter are indicative of the progress we are making on our transformation journey and demonstrate that our strategy is creating value for shareholders.

This is evident not only in the quarterly results, but also in the sustained improvement in return on invested capital, which has continuously increased and now stands at 10.8%. Last year, I spoke a lot about margin resilience, which requires operating our business with an inherent understanding that headwinds will arise. To prepare for this, we continuously make structural improvements which increase our underlying earnings power. Margin resilience not only positions us to manage through headwinds, it also ensures we maximize the benefit from tailwinds. Our Q1 results are an example of margin resilience in action. Despite multiple headwinds, including precious metals inflation of over 100%, our first quarter adjusted operating margins improved by 30 basis points year-over-year to 18.6%.

This stands in sharp contrast to the first quarter of 2025, when our results decreased 40 basis points from the prior year. While I’m pleased with our consolidated results for the first quarter, I’m even more excited by the performance we are seeing in our segments with our reorganized business. Growth is our clear strategic focus, and our Q1 results are indicative of the progress that we are making as we delivered organic growth in each of our segments. Let’s turn to slide five, and I will take you through a few highlights for each of our segments. In our automotive business, we again delivered market outgrowth, demonstrating our ability to grow regardless of powertrain mix. As you may recall, we returned to market outgrowth in the back half of 2025 after several challenging quarters.

Our outgrowth accelerated to 4% in the first quarter as we are gaining traction on multiple fronts. For example, in Europe, we are outgrowing production as our content per EV continues to improve. In the U.S., we are outgrowing production as our ICE portfolio benefits from the resurgence of truck and SUV production. We are also securing future growth, stacking electrification wins with innovative new products such as our High Efficiency Contactor, or HEC, and our FaultBreak contactor, where we have secured meaningful new business wins in both Europe and the U.S. For example, in Europe, we secured a design win on an EV platform at a large German automotive OEM, leveraging our HEC to enable switching between 400 and 800 volt charging architectures.

In China, our local contactor volume continues to ramp as we expand our business with key local OEMs, and we are now gaining traction with battery and battery systems manufacturers. Japan and Korea continue to be growth accelerators for us as we enjoy our highest content per vehicle in Korea, and we continue to grow our market share with leading OEMs in Japan. We are also seeing green shoots of our next wave of growth in automotive with our performance in India. We are significantly outgrowing production in this fast-growing market, and our revenue with a key OEM more than doubled year-over-year. Andrew will cover our detailed Q2 guidance and the full year outlook in his remarks.

As I speak about automotive, I want to take the opportunity to assure you that while we are thrilled with our first quarter results and excited about our second quarter outlook, we are also keenly aware of some of the end market demand risks that are posed by geopolitical events and the effects on oil prices. In the spirit of margin resilience, we have developed plans for a number of scenarios, and we are prepared to act swiftly to preserve our margins in the event that automotive end markets deteriorate. Our aerospace, defense, and commercial equipment segment was a star performer in the quarter with double-digit organic growth. While truck production remains soft, particularly in North America, we’re seeing an increased demand for build slots in the back half of the year. Given the longer lead times for these vehicles, we’re now entering a replenishment cycle.

We also observed an increase in demand from our diesel engine and power generation customers as they are benefiting from the demand for generator sets tied to data center construction. Aerospace and defense continues to experience steady mid-single-digit growth, driven by both strong commercial backlogs and increased military spending. In addition to ramping up to supply the market-driven growth, we’re focused on securing our share of wallet on near-term content growth opportunities in defense applications. We recently secured a circuit breaker win from a German manufacturer of armored ground transport vehicles for a defense application in Europe, and we have similar opportunities in Europe in our pipeline. We’re also closely monitoring recently publicized developments around the U.S. government asking traditional automotive OEMs to support defense production. It’s still too early to quantify any impacts, but we will update you should opportunities materialize.

Our Industrials business continues to experience end market softness, particularly in HVAC, where unit shipments in the North American market decreased in the first quarter. Nonetheless, we delivered modest organic growth, primarily through share gain. We booked two additional HAL leak detection wins in the first quarter, further expanding our market leadership position as this product line continues to be a growth accelerator in North America. We remain focused on expanding this product offering into Europe and Asia. In the near term, European heat pump demand has returned to growth, supported by elevated fossil fuel prices alongside policy incentives, energy security concerns, and improving cost economics. We expect this combination to be a positive demand driver for us over time. Let’s turn to slide six, as I’d like to elaborate on the data center opportunities in our industrial business.

We have increased conviction around our right to win in data centers, building on our existing data center business. I’d like to provide more color on the opportunity and general timeframe for growth acceleration. Inside the data center, electrical protection sockets and power distribution units and sensing sockets and coolant distribution units create demand for our products. Outside the data center, there are meaningful opportunities for our Dynapower product in uninterrupted power supply or UPS systems, and HVAC demand grows with the cooling needs for each data center. We are incumbent in data centers today with both low voltage AC electrical protection as well as with sensing and HVAC applications. With this incumbency, we are already benefiting from secular growth. As we look at the technological roadmap for data centers, we see a major inflection point in the data center ecosystem.

The opportunity for Sensata is significant, and our right to win is compelling. This inflection point is driven by the rapid evolution of GPU platforms and the associated changes in power and thermal management requirements. Allow me to elaborate. Today, most deployed data centers rely on low voltage AC electrical architectures where air cooling meets current thermal requirements. Industry roadmaps from leading GPU manufacturers point towards higher voltage DC power systems, including 800 volt DC, which drives substantially higher rack densities and accelerate the need for liquid cooling solutions. These transitions increase demand for high voltage contactors and for pressure, temperature, and flow sensors. These application areas are closely aligned with our portfolio, where our performance, reliability, and application expertise support a strong competitive position. In parallel with our EPC and distribution partnerships, we’re engaging earlier in the design cycle with hyperscalers and ODMs to support upfront specifications.

This approach strengthens downstream pull-through by enabling EPCs and channel partners to deliver against predefined customer requirements. Since our last update, the strategy has resulted in our products being specced by two hyperscalers, and our new flow sensor product has advanced from development to customer validation. From a timing perspective, industry roadmaps indicate that adoption of liquid cooling is expected to accelerate beginning around mid-2027, particularly in high-density AI and high-performance computing deployments. As these systems scale, leading GPU and infrastructure suppliers anticipate a subsequent shift towards higher voltage power architectures. While the revenue opportunity is medium-term, the time to get specced in is now, and that’s exactly where our focus is. This is what Sensata does well, and it is the call to our automotive legacy. In parallel, our Dynapower business is actively bidding on several large programs with an extensive opportunity pipeline for UPS projects.

The highlights I just shared are just a peek into the growth engine that we are priming at Sensata. I have even more conviction in our growth prospects than I did just a quarter ago. With our new segmentation, Marcus, Alice, and Brian each have clear growth mandates for their respective businesses. They, along with their strong teams, are bringing the end market focus that is required to deliver on our growth mandate. With that, I would like to extend my gratitude to Team Sensata for their collective commitment to our transformation and consistency of execution. Now let me turn the call over to Andrew to provide greater detail on the first quarter and our thoughts around the second quarter and full year.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Thank you, Stephan. Let’s turn to slide 8. For clarity, unless otherwise specified, amounts are referenced in millions of U.S. dollars and growth percentages are approximate. We delivered first quarter revenue, adjusted operating income, and adjusted earnings per share at or above the high end of our expectations despite volatility in our end markets. As Stephan noted, this demonstrates a continuation of the momentum and consistency of execution that we achieved last year. We reported first quarter revenue of $935 million, an increase of $24 million or 3% from $911 million in the first quarter prior year. On an organic basis, revenue grew 4% year-over-year as we had a $34 million inorganic revenue headwind from divestitures, which was partially offset by a $20 million revenue tailwind from FX.

This was the final quarter of meaningful revenue impacts from the initiatives we began in 2024 to exit $200 million of annual revenues related to underperforming products. Adjusted operating income was $174 million, and adjusted operating margin was 18.6%, compared with $167 million and a margin of 18.3% in the prior year quarter. This year-over-year improvement of 30 basis points was attributable to stronger revenues and improved productivity. Margin benefits from the divestiture of underperforming products approximately offset headwinds from tariffs on a year-over-year basis. Adjusted earnings per share was $0.86, an increase of $0.08 year-over-year, exceeding the high end of our first quarter guidance range by $0.01.

We delivered $105 million of free cash flow in the quarter, which was an increase of $18 million or 21% year-over-year. Our free cash flow conversion rate was 83% of adjusted net income, an increase of 9 percentage points compared to 74% in the prior year period. This was an encouraging start to the year in what is typically our most challenging quarter for free cash flow, as we have timing-related headwinds attributable to interest and variable compensation payments, the latter of which was a $20 million headwind year-over-year. Let’s move to slide 9 to unpack this further. Free cash flow of $105 million not only exceeded our expectations, it was a record first quarter result for Sensata.

This outperformance was driven by the momentum we are gaining on working capital efficiency with our initiatives to reduce inventory and optimize supplier payment terms. We are thrilled to have such a strong start to the year, particularly after the record full-year result that we delivered last year. As we move to slide 10, I will discuss capital deployment. We returned $43 million of capital to shareholders in the quarter. In addition to our quarterly dividend, we repurchased $25 million of shares to offset the impact of share-based compensation. Our net leverage ratio at the end of the first quarter was 2.65 times trailing 12 months adjusted EBITDA compared to 3.06 times for the prior year quarter. Deleveraging will continue to be our capital allocation priority.

We have conviction in this approach, and we are pleased with the improvements we are delivering in return on invested capital, which improved by 70 basis points to 10.8% for the 12 months ended March 31, 2026, compared to 10.1% for the 12 months ended March 31, 2025. Earlier this month, we announced our second quarter dividend of $0.12 per share, payable on May 27 to shareholders of record as of May 13. Now let’s turn to slide 11 to discuss our segments. All three of our segments delivered organic revenue growth and operating margin expansion in the first quarter. We see this as an encouraging proof point for the traction we are gaining from our reorganization.

Our automotive segment delivered $525 million of revenue in the quarter, a decrease of 1% year-over-year on a reported basis. On an organic basis, we delivered 1% growth year-over-year and 4% outgrowth against a market that decreased by 3%. Our market outgrowth was driven by both content gains and production mix as our versatile portfolio of ICE, EV, and powertrain agnostic products continues to perform in a market with uneven powertrain adoption rates. Automotive segment operating margin was 23.5% in the quarter, a year-over-year increase of 70 basis points from 22.8%, driven by both productivity and portfolio optimization measures.

Our Industrial segment delivered $184 million of revenue in the quarter, which was a year-over-year decrease of approximately 1% on a reported basis and a year-over-year increase of 1% on an organic basis. Organic growth was enabled by share gains despite ongoing softness in U.S. residential and construction markets. Industrial’s operating margin was 27.1% in the first quarter, a year-over-year increase of 100 basis points from 26.1%, primarily due to productivity gains. The Aerospace, Defense, and Commercial Equipment segment delivered $226 million of revenue in the quarter, an increase of 15% year-over-year or approximately 17% on an organic basis. We had revenue growth across every market vertical, including Aerospace, Defense, on-road trucks, and off-highway equipment.

Segment operating margin was 28.1%, a year-over-year increase of 260 basis points from 25.5% as we gained operating leverage from strong volume growth. Adjusted corporate operating expenses were $63 million, an increase of $10 million year-over-year, primarily due to higher variable compensation expense, which was supported by stronger underlying performance. Let’s turn to slide 12 to discuss what we are seeing in our end markets. Global auto production decreased by approximately 3% in the first quarter. For the full year, third-party forecasters are expecting a production decrease of approximately 2%. Recent downward revisions to third-party forecasts are primarily attributable to China and the Middle East, we do not expect these revisions to have a meaningful impact on our business.

In our industrials end markets, U.S. residential and construction markets remained soft in the first quarter, which was evident in the year-over-year decrease in U.S. residential HVAC shipments. We expect HVAC shipments to stabilize in the second quarter and return to growth in the second half of 2026. In aerospace, defense, and commercial equipment, commercial aircraft backlogs are strong, defense spending is accelerating, and on-highway trucks are starting to show signs of recovery. In the first quarter, although North American truck build rates did not improve, our order book increased. We are optimistic that this is a leading indicator for a replenishment cycle in the second half of 2026 as lead times generally result in our revenue growth preceding truck build rates.

With that backdrop, let’s move to slide 13 and I will share our guidance for the second quarter of 2026 and some color on our outlook for the year. For the second quarter, we expect revenue of $950 million-$980 million. Adjusted operating income of $182 million-$190 million. Adjusted operating margin of 19.2%-19.4%. Adjusted net income of $131 million-$139 million. Adjusted earnings per share of $0.89-$0.95. Our second quarter guidance includes approximately $8 million in tariff costs and associated passthrough revenues. This is approximately $4 million lower than our prior run rate due to recent changes in U.S. tariff rates.

Our tariff expectations are based on trade policies in effect as of April 27, 2026. Our second quarter guidance does not include any potential tariff refunds related to the recent IEEPA tariff ruling, nor does it reflect any possible passthrough of such refunds. Due to geopolitical uncertainty and end market volatility, we are continuing our practice of providing guidance one quarter at a time. That said, we do want to share our view that current consensus estimates for adjusted operating margin expansion of approximately 30 basis points per quarter in the back half are consistent with our view, provided that end market demand holds up. Should end market demand deteriorate materially, we are prepared to take reasonable measures to defend the 19% annual margin floor that we committed to last year. Now, I’d like to turn the call back to Stephan for closing remarks.

Christopher Glynn, Analyst, Oppenheimer3: Thank you, Andrew. Before we move to Q&A, I would like to leave you with some closing thoughts. As we progress through 2026, we do not expect our path ahead to be free of challenges. It rarely is. Sensata is prepared. The operational principles we’ve brought into the organization have proven effective over the last five quarters. Just as we did last year, we will operate our business in a manner to overcome challenges and perform in line with the expectations we set and to deliver margin expansion for the year. As we do so, the underlying earnings power in our business will continue to strengthen, and we are primed for accelerated earnings expansion as market cycles turn more favorable. We are proud of what we have accomplished so far, and I have conviction that our business is primed for excellence.

We have an outstanding leadership team and a committed organization that is rallying behind them. We have achieved organization-wide operational discipline. Our productivity engine is delivering, our strategic initiatives are accelerating, and our growth opportunities are robust. I will now turn the call back over to James.

James Entwistle, Senior Director of Investor Relations, Sensata Technologies: Thank you, Stephan and Andrew. We will now begin Q&A. Operator, please introduce the first question.

Christopher Glynn, Analyst, Oppenheimer0: Ladies and gentlemen, at this time, we’ll begin that question and answer session. If you’d like to ask a question, please press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. We’ll pause momentarily to assemble the roster. Our first question today comes from Wamsi Mohan from Bank of America. Please go ahead with your question.

Christopher Glynn, Analyst, Oppenheimer1: Hey, guys. Thanks for taking my question. This is Ryan Shay on for Wamsi Mohan. Two questions from me. One on auto content outgrowth of 4% a quarter. Stephan von Schuckmann, I know you gave some details earlier in the call, but can you share any further color by the regions? As auto production declines 2% year-over-year, is that the right outgrowth to think about?

Christopher Glynn, Analyst, Oppenheimer3: Thanks, thanks for the question. Let me start a bit broader, you know, by starting with the IHS prediction or forecast, which is roughly 91 million vehicles for the year of 2026. That’s around, you know, 2% down from what we saw in 2025. I think it’s important to mention there are two factors that need to be considered that can substantially influence these, the IHS forecast. The first one are geopolitical tensions and obviously, them being related to the oil price. The second factor that’s important are test cost subsidies in China. As we know, you know, these were in place in Q3, Q4 of 2025, which led to a strong demand.

Since quarter 1 of 2026, subsidy policies have changed, and this has obviously resulted in a weak demand. Nevertheless, the automotive segment and the segment leads around, you know, Marcus and the team, and also our China president, Jackie, they have a very clear and accountable growth mandate. To get to your question around regions, they are winning meaningful business in each and every region. In China, with contactors. In Southeast Asia, for example, in Japan, we made good progress on winning new business, as we’ve mentioned in the call, and so have we in South Korea. We’ve been winning, you know, in all types of powertrain platforms from ICE to battery electric vehicles.

I think it’s also important to mention that we’ve been winning in the regions and we’ve been making good progress, but we’ve also been winning in automotive with new products. The 2 products that I mentioned in the call, the High Efficiency Contactor, which was the first win for this new product with the German OEM, and also the business mentioned around the FaultBreak contactor. Then there’s additional opportunities in China with the battery system manufacturers that I feel we’re gaining good momentum and making good progress. Overall, I’d say, you know, we’ve got strong conviction that the team will outgrow the market in 2026. I hope that that fully answers your question around automotive.

Christopher Glynn, Analyst, Oppenheimer1: Got it. Yeah, very helpful. Thank you so much for that. Last question from me. The 60 to 80 basis points of operating margin expansion sequentially seems pretty high than prior quarters. Can you give us a bridge of the drivers that’s leading this?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. Operating margins did not expand sequentially. They contract sequentially on typical Q4 to Q1 timing related items. We’ve seen less contraction than what we’ve typically seen in past years as we’ve gotten a head start on productivity compared to what we’ve seen in past years. Stronger start to the year and really encouraged by that. Certainly a head start on our targets for the year. If your question’s relating to Q2, you know, step up in margins from Q1 to Q2, it’s again, the same themes.

It’s that, you know, the head start on the year, stronger productivity earlier in the year gives us a stronger lift as we move into the second quarter and volume certainly helping.

Christopher Glynn, Analyst, Oppenheimer1: Got it. Thanks so much.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Mark Delaney from Goldman Sachs. Please go ahead with your question.

Mark Delaney, Analyst, Goldman Sachs: Yes, good afternoon. Thanks for taking the questions. I had 1 to start also on the margin topic. The company mentioned that it expects margin improvement of about 30 bps year-over-year in the back half, provided that market conditions don’t meaningfully deteriorate. Given all the supply chain and geopolitical volatility that’s occurred over the last 90 days and pressure on input costs, can you speak more on the actions that Sensata is already taking to navigate this environment and put the company in a position to expand margins in the back half?

Christopher Glynn, Analyst, Oppenheimer3: Let me start with that, Mark. You know, I think it’s important to say that, you know, despite all challenge that we have, we have a clear, you know, playbook to respond, and we’ve been working through that playbook throughout 2025, and we use that same playbook, you know, for 2026. What I’m saying is, Sensata is prepared. What we do is we think in scenarios, and that prepares us for, you know, current or existing, but also future headwinds like materials inflation, tariffs, and everything else. Equally important to mention is that, we’re designed into mission-critical application, which obviously gives us a position of leverage. That, you know, saying that, Sensata can, it may defend its margins.

I think that pretty much differentiates us from others. I don’t know, Andrew, if you want to add something to that.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. I think thematically, those are exactly the factors that give us leverage and confidence in our ability to execute. I would say it’s the same margin cadence that we observed last year, where we see sequential improvement each quarter. You know, Q2 tends to normalize to where we exited the back half of the prior year. We see sequential improvement each quarter thereafter as our productivity engine kicks in. Certainly, there’s headwinds and challenges associated with input costs, but that’s no different than the headwinds or challenges we saw last year around tariffs. The playbook around offsetting those is exactly the same.

Mark Delaney, Analyst, Goldman Sachs: That’s helpful context. Thanks. Stephan, you spoke about a number of areas where you’re seeing some progress in the data center market. Based on all these engagements that are underway, are you able to give more context on how much incremental revenue this market could add in 2027 and the types of margins investors can anticipate as data center revenue grows? Thanks.

Christopher Glynn, Analyst, Oppenheimer3: Allow me to, Mark, to answer that question a little bit broader. I think you’re probably all aware of that, but I still wanna mention this. AI leads, you know, in the end, leads to more data processing and demand for high-performance computing. This will lead to a change in rec architecture to high voltage, 800 volts with liquid cooling. That obviously means that Sensata is sensing an electrical protection, the sensing and electrical protection portfolio to serve these demanding application. This shift pivots the industry right into the center of Sensata’s expertise, which is serving these mission-critical applications with automotive-grade reliability, where meeting robust performance specification, harsh environment really matters.

I really feel we have, you know, the right to win here, and we’ll share more progress once we go through the individual earnings calls going forward.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Mark, I would maybe just add to that. You know, although the, you know, we’re not at a point where we’re providing a dollar revenue forecast or specific timing, the other side of that is that we’re not seeing a significant need to invest to intersect this trend. If you look at, you know, a typical automotive product portfolio and design cycle, we’re often designing to a customer specification. That requires investing in the program ahead of revenue. With the data center pull, what we’re expecting is to get spec’d in with products that we have today and technologies that we have today. The growth is real, and we’re excited about it.

The other side of that is that we’re not finding ourselves having to invest significantly to pursue and win these applications. With that frame that, you know, what’s important to us is that the demand is there and that the revenue will come, but less concern over the precise timing of when.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Christopher Glynn from Oppenheimer. Please go ahead with your question.

Christopher Glynn, Analyst, Oppenheimer: Yeah, thanks. Just wanted to follow up on that in terms of the timing of you being able to speak with a lot more specificity about some of the data center opportunities in cooling and UPS. There is an element of the next gen architectures playing more to. There’s also an element of your, the timing of your posture to be more purposeful about what you’re going after. You know, I’m wondering how much of this is kinda catch up versus maybe in the current gen data center architectures, it’s just not, you know, as much opportunity.

Christopher Glynn, Analyst, Oppenheimer3: You know, as we just, as I explained, you know, in air-cooled data center concepts, the opportunity is, you know, not as stronger or somewhat limited in comparison to liquid-cooled data center concepts. If I break that down onto a product level, Andrew can also maybe add a bit to timing, on the air-cooled data center concepts, it’s about temperature sensors and circuit breakers where we’re gaining momentum. As soon as we go to the high voltage liquid-cooled data center concepts around 800 volts, that expands our product portfolio to pressure sensors, flow sensors, temperature sensors, circuit breakers, and contactors. And that is basically the add-on opportunity if you compare the two concepts to each other.

What we’re seeing out there in the market, is first of all, these concepts are being placed into the market and our, you know, task these last couple of months has been to get specced into these concepts. Our expectation is that these data centers or these new data centers that are based on the high voltage 800 volt architectures will be, you know, will start showing revenue growth for Sensata, you know, around mid-2027. So just over a year from now, from a timing point of view.

Christopher Glynn, Analyst, Oppenheimer: Thanks. Appreciate the deeper dive. To what extent do the products get, you know, represented as an integrated solution or a co-packaged solution for you guys versus, you know, independent design wins into the liquid cooling and other targeted applications?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. It’s more technology-oriented that the wins on the electrical protection products will tend to be grouped, and the wins on the thermal management products will tend to be driven by different decision makers and in different applications. I would expect that those will scale, you know, at relatively the same rate because they’re interconnected.

Christopher Glynn, Analyst, Oppenheimer: Thanks. Thanks again.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Joe Giordano from TD Cowen. Please go ahead with your question.

Joe Giordano, Analyst, TD Cowen: Hey, guys. Thanks for taking my questions. I want to start on China automotive. I’m just curious, just given like the improvements you’ve made on the ground in terms of getting your content with local large players, and if I think about the comps of the last couple of years, right? Like you had dramatic mixed shift away from like incumbents, multinational incumbents. What’s the, like the opportunity set for you as you add first time ever content on these new customers? Like, what magnitude should you be outgrowing that market? It seems like it should be like very large, just given where you’re coming from and adding for the first time.

Christopher Glynn, Analyst, Oppenheimer3: First of all, let me frame what the, you know, what the business opportunity looks like, and then we can speak about growth numbers. As you know, Joe, you know, we were focused a lot on international OEMs in the past, and we basically, pretty much, you know, strongly shifted away from international OEMs more to local OEMs. We’ve won a lot of business with them, be it on the contactor side, but also like, you know, our classic applications and products that we’ve been offering in the market. Predominantly it’s been on electrification and on the contactor side. That’s the one side of it.

Actually, you know, I was just in our factory in Wuxi a couple of weeks ago, and we’re busy wrapping up this contactor business, and it’s quite a significant volume, that will place us to be, you know, in a good third position within the market in China. The second thing is, this is something that’s starting to grow, is that, we’re seeing opportunities, with, battery systems. Yeah, with battery systems now. We’re seeing further opportunities. It’s also related to contactors. This is slowly but surely emerging, and we’re gaining traction with them. That’s the next level of opportunity that we see. Yes, we have a, you know, a strong base business with the legacy products and, we’re incumbent and, that’s pretty much stable, I would say.

We’re very much strongly growing on the electrification side of the business where we’ve gained a lot of traction. Maybe one last word to that. There are not that many suppliers on contactors that can deliver at scale but can also deliver on a high quality level. That’s where Sensata comes in. We know how to deliver at scale, and we know how to deliver on a high quality level. That has sort of allowed us to position ourselves, you know, within that market in China. To growth?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. Joe, on the, on the, on the outgrowth question. If you think about our auto business on a global basis first, you’re typically looking at a price down framework of low single digits, kind of 1%-2% a year depending on, depending on the year. Which means that to deliver low single digits outgrowth requires underlying content growth more in the mid single digits range. That’s what we expect on a global basis. If you do that same math in China, the pricing pressure is higher. Price tends to be mid single digits in price downs year on year. To outgrow that market requires underlying content growth in the high single digit range. That’s exactly what we saw last year, and we expect to continue to outgrow that market.

Where the pricing dynamic is right now, I wouldn’t expect the net outgrowth to be materially different to what it is for our global business. The underlying content growth I would expect to be stronger to your point.

Joe Giordano, Analyst, TD Cowen: Interesting color. Thank you for that. Last quarter, you started talking about, you know, drones a little bit. Just curious, you saw the aerospace business grew significantly over market here. I’m just curious how much of that was attributable to some of those faster-growing newer areas for you.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. I’d say the growth that we’re seeing right now is primarily attributable to our core business and just acceleration of defense demand and consistent with what we were seeing in our order book as we put out our guide earlier this year. The opportunity beyond that is probably more medium term, but we’re seeing traction on that in terms of opportunity to bid on and quote that type of business.

Christopher Glynn, Analyst, Oppenheimer3: I mean, we’ve been active, Joe. As I mentioned in the call, we just had a recent win with circuit breakers for a German manufacturer of armored ground transportation vehicles, which is, I think, an important win with a product in that case, in Germany or in Europe, which is, you know, not as strong as our defense business that we have in North America. We see similar opportunities in the pipeline. We’re gaining traction there and starting to build our order book, which looks promising.

Amit Daryanani / Irvin Liu, Analyst, Evercore ISI: Thanks, guys.

Christopher Glynn, Analyst, Oppenheimer3: No, thanks.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Guy Hardwick from Barclays. Please go ahead with your question.

Guy Hardwick, Analyst, Barclays: Hi. Good evening, gentlemen.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Hey, Guy.

Guy Hardwick, Analyst, Barclays: I have a question on the HVAC side. I think you said in your prepared remarks that your HVAC revenues are down. Obviously the market was down double-digits in Q1. I think it’s expected to be down double-digits again in Q2. I think you said it should return to growth in the second half. I think that’s kind of consistent with like sell side AHRI forecast. Question is, how much do you think you outperformed in Q1, and is that kind of a, I imagine it was considerable margin, and is that something we could extrapolate through Q2 or some implicit in Q2 guidance? Will that outperformance continue when the market kind of stabilizes in the second half?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: The HVAC business is about 25% or so of our overall industrials business. With a quarter of our business down, you know, the end market demand down double digits and the net organic growth of 1%, there was certainly some outgrowth there that was primarily driven by the new content that we launched last year with our A2L product. You know, moving forward, we expect to continue to outgrow the market with our new content and then participate in market growth as the market recovers. Certainly if we get recovery in the back half, that would be a, you know, a growth accelerator for us.

At the same time, you know, as we communicated at the start of the year, we recognize and understand the risk in this market, and so we built an operating plan that does not rely on market growth for us to deliver on our margin expansion aspirations. We’d be encouraged to see it. The channel’s been soft for some time, and it looks like there will be a replenishment cycle in the back half, but we’re not super dependent on it either.

Guy Hardwick, Analyst, Barclays: Just my follow-up question is, obviously incremental margins were excellent in ADC&E, and your margins moved up in Industrial quite nicely, even though revenues were flattish, was there any positive mix effects in those two segments which could have led to that, those margins?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. On aerospace defense and commercial equipment, with the growth that we’re seeing in Aero, which is our highest margin end market, there’s meaningful variable contribution margin from that. Just more broadly, when we see that level of growth, 15% year-on-year, the operating leverage that we get from that is sharper than what you get from lower mid-single digits growth. That was certainly a contributor as well. Sorry, I may have missed the second part of your question there.

Guy Hardwick, Analyst, Barclays: No, no. I think you answered. It is ready. Was there any businesses, and you partly answered that, which had positive mix other than Aero?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Got it. No, the mix was generally consistent across most of the commercial equipment space. Again, just the growth in this business, and particularly at these high growth rates, tends to come with a higher variable contribution margin, and we benefit from that.

Guy Hardwick, Analyst, Barclays: Thank you.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Amit Daryanani from Evercore ISI. Please go ahead with your question.

Amit Daryanani / Irvin Liu, Analyst, Evercore ISI: Hi. Thank you for the question. This is Irvin Liu on for Amit. I had a financial question for Andrew. It’s good to see free cash flow conversion higher than what we have seen historically for Q1 at 83%. Though CapEx was lower than what we’ve seen historically. Can you just give us a sense on how CapEx should trend through the year, especially given the lower than expected CapEx in Q1?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. We’re still targeting CapEx in the 3% to 3.5% range. That’s the general framework for where we think we need to operate our business. The demands have been lower largely because of acceleration of factory automation that we worked on last year and more flexible line concepts. As a result of that, we’re seeing just a little bit softer need for capital in the short term. We still expect it’ll normalize to that 3% to 3.5% range. You know, to the extent that we run lower, that’ll continue to benefit free cash flow. We don’t expect it to be structurally below 3%.

Christopher Glynn, Analyst, Oppenheimer3: Let me add to that. You know, we’ve been, you know, systematically working on optimizing our CapEx. Let me give you 2 examples where we’ve been doing that. So 1 optimization is around CapEx used for machine and equipment, where we’ve started to expand our focus around purchasing machines and equipment out of Southeast Asia or even China, which is substantially cheaper than equipment, you know, bought from Europe or North America. That has allowed us to optimize our CapEx on the 1 hand. Everything that’s, you know, that’s required around CapEx to maintain our factories around the world, what we call so-called CapEx to keep the lights on, we’ve been optimizing that as well.

Those have been two opportunities where we’ve reduced CapEx and that has helped us in the end to reduce it overall and to be able to deploy it for other topics like smart automation.

Amit Daryanani / Irvin Liu, Analyst, Evercore ISI: Got it. Thanks. If I can tack on another data center related question. It’s great to see products spec by two hyperscalers. Can you give us a sense on what the total TAM or perhaps what a per megawatt TAM could look like for you all, across electrical and sensing products that you’re selling into, for data centers and data center adjacent opportunities?

Christopher Glynn, Analyst, Oppenheimer3: Look, I think that’s a question we’ll take with us for the next call.

Amit Daryanani / Irvin Liu, Analyst, Evercore ISI: Got it. Thanks a lot.

Christopher Glynn, Analyst, Oppenheimer3: Thanks for the question, Jeff.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Joseph Spak from UBS. Please go ahead with your question.

Joseph Spak, Analyst, UBS: Thanks. Good afternoon. Andrew, just a couple of questions on tariffs, and I guess two flavors. One is, I know in the past you said, you know, you sourced 70% from Mexico. I think 80% of that was USMCA compliant. There was a change on Section 232 metal tariffs. Wondering if there’s any impact to you there. Then on IEEPA, I know you said the guidance doesn’t include any repayments, but have you filed for any reimbursements, or do you plan for any? Like, can you give us a sense to how big that can be if it is true?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. On the first part of the question, we’re not seeing any meaningful direct impact from the changes in metal tariffs. Obviously, we’re monitoring the impact on end market demand, but it’s not directly impacting us in any material way in terms of the metals or commodities that we source. And we expect that with the current tariff rates in place and with the cancellation of the IEEPA tariffs, that our run rate moving forward would be approximately $8 million per quarter, which is about, you know, a third lower than the $12 million run rate that we had previously. On the question of refunds, we’re certainly following the government-prescribed process.

You know, when we have more to share, we’ll share that. At this time, we’re not gonna speculate on the size or magnitude of a potential recovery.

Joseph Spak, Analyst, UBS: Okay. Can you remind us how much you think you paid last year on IEEPA?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. We paid, a little over $40 million in tariffs last year, and the vast majority of that was IEEPA. More than two-thirds.

Joseph Spak, Analyst, UBS: Perfect. I just wanted to back on the business head, turn our attention back to CE, you know, the market you said was down 1%, you were up 16%. And I know you sort of talked about some potential, you know, improvement and, you know, more order books being filled there. I guess I just want to understand whether, you know, you’re lining up with that future builds, and like maybe there’s some inventory being built or like there’s something else going on that’s really causing that strong outperformance that we saw this quarter.

I guess as we see builds improve, you know, over the course of the year, would you then expect that outlook to come in a little bit, or is there something sustainable about what we saw this quarter?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. Let me just start with, when we talk about that segment in aggregate, aerospace, defense, and commercial equipment, about a quarter of it is in the aerospace end market, and about three quarters of it is in the commercial equipment end market. The growth rate that we shared, the 15% or 17% organic, is for the total segment. Certainly there was market growth in aerospace. On the commercial equipment side, yes, we believe the market in total down about 1%. We saw, you know, outgrowth to that market primarily driven by what we believe was a inventory replenishment ahead of an expected production acceleration in the back half.

We do not expect that that is indicative of what the go-forward growth or outgrowth would be if this end market actually recovers and production normalizes in the back half. There’s always an inventory build that happens as you get into a replenishment cycle, especially with the production having been significantly suppressed for the last 8 quarters. I’d expect to continue to grow and to outgrow, but likely not at that same clip.

Joseph Spak, Analyst, UBS: Okay, sorry. Just one quick clarification. I was just looking at the 16% commercial coming in the back of your slides, I think on 19. You’re saying that’s not just truck. Is that what you were?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: No, that’s right. If you’re looking at.

Joseph Spak, Analyst, UBS: I think I heard you say that at least.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah, that’s right. If you’re looking at that end market at the back end of the slides, yes, that is the growth that we experienced in the end market as well.

Joseph Spak, Analyst, UBS: Okay. It was strong. Some of that was also construction and ag.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Correct, yes.

Joseph Spak, Analyst, UBS: Okay. Okay. Thank you.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. For example, you know, we’re seeing pull-through in diesel demand related to generator sets for data center. There’s more than just the more than just the truck replenishment cycle.

Joseph Spak, Analyst, UBS: Perfect. Thanks.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Thanks.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Kosta Tasoulis from Wells Fargo. Please go ahead with your question.

Kosta Tasoulis, Analyst, Wells Fargo: Hey, guys. Thanks for taking my questions. I wanna ask about the 100% precious metal inflation you saw in the quarter. You’re still able to get 30 basis points of margin expansion. Can you maybe frame the puts and takes of that impact, like what the headwind was and what the offsets were?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. Lots of challenges we worked through in the first quarter. You know, let me just start with, not only did we have a significant precious metal challenge, we also had about a 40 basis points headwind from FX. We had about $20 million of lift on FX on the top line, and effectively no drop-through on the bottom line. We were really pleased with the margin expansion we were able to deliver year-over-year with those two challenges. I think that points to just the continued improvement in underlying earnings power in the business, independent of these challenges. With respect to metals, we have roughly $40 million of annual precious metals buy.

On those precious metals in the first quarter, from a year-on-year perspective, rates are up approximately 100%. We have, through the first half of the year, about 80% hedge coverage on these metals, which gives us, you know, some mitigation, but more importantly, it gives us time to execute the more permanent and structural mitigation that we’re working through in our business. With that, maybe I’ll turn it over to Stephan and let him share a little color on how we’re thinking about structurally mitigating this.

Christopher Glynn, Analyst, Oppenheimer3: Yeah, thanks, Andy. Let me add to that. Basically, how we manage the impact, especially around metals inflation, is very different when you look at the different types of businesses we have. I think overall, you know, the commonality of all businesses is that we’re in strong negotiations with our supply base when it gets to, you know, pushing on metal inflation impacts towards some products. Equally important, but that differs depending on the product that we have and which metals are designed into the individual products, but we’re doing our VAVE activities or so-called design activities to basically design the metal content of the product.

In our industrial business, that’s a, you know, quite a big task to design, for example, silver out of our products or to de-content the product of silver, so that once the, you know, the hedged period runs out, that we have limited impact or literally no impact with our, you know, our products going forward related to metals. Of course, I think the last lever is to, you know, discuss any impact directly with our customers, and, you know, speak about compensation, which we’re, we know, we’re in continuous discussions with them and, you know, we see openness for that as well.

Kosta Tasoulis, Analyst, Wells Fargo: Yeah. Okay. Let me just, let’s talk about, you know, winning business. I mean, I think, you know, with the, with the drones, I think a lot of that is just, it’s customer access, right? It’s like an emerging technology, get customer access. You’re in the designing phase with them. You can grow that business. How can you apply, you know, maybe some of those learnings to getting more business in the, in the data center opportunity?

Christopher Glynn, Analyst, Oppenheimer3: Around drones? Okay. First of all, if I, if I... Let me give you know, a bit more depth on the drone business or the, or so-called UAVs. We see overall, we see a double-digit CAGR, which is, you know, I think, there’s a lot of opportunity there, especially around military drones. On the other hand, you know, we’re designing with drones and with different applications and products, be it in sensing, position sensing, or different, you know, different types of products. We presented that in the last earnings call. Can you just repeat your question related to data centers and I can answer?

Kosta Tasoulis, Analyst, Wells Fargo: Yeah. You guys were able to get in on those design ends with the drones. You know.

Christopher Glynn, Analyst, Oppenheimer3: Yeah

Kosta Tasoulis, Analyst, Wells Fargo: ... that, you know, that’s quite spectacular. What, I guess, strategy can you use from getting in on those business to getting on more data center business? Any learnings from there that you can apply to winning data center business?

Christopher Glynn, Analyst, Oppenheimer3: It’s pretty similar in the end, you know. If you take products that, existing products that we got designed in the drone business like temperature sensors, pressure sensors, voice coil actuators, high efficiency motors, those products were ultimately not, you know, not designed for drone applications. Because of the fast design cycles of, you know, of drones, we’ve managed to get designed into these applications. Eventually, you know, we’ll be delivering for, you know, for these drones. On the data center, it’s pretty similar, you know. We’re in, you know, they’re the products that we’ve carried over from our automotive business, be it from electrical protection, be it from, you know, sensing products.

You know, those are products that we’ve carried over and designed into data centers now, as mentioned into hyperscaler concepts. Very similar in the style of business and how we, you know, manage our business.

Kosta Tasoulis, Analyst, Wells Fargo: Okay. Thank you for taking my call.

Christopher Glynn, Analyst, Oppenheimer3: Existing products.

Kosta Tasoulis, Analyst, Wells Fargo: Yeah

that we’ve designed into those applications. Yeah.

Okay. Thank you.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Luke Junk from Baird. Please go ahead with your question.

Luke Junk, Analyst, Baird: I appreciate you taking the question, and we’re pretty deep in the call, so maybe I’ll just ask one, and it’s a little bigger picture. Stephan, just would be great to get your perspective on market structure within the data center business. Specifically, how do you think about the need to take share in data center with these reference designs? If you’re doing so, who do you think you’re taking share from? Just market share is a factor in this data center story. How important is it? Or are these more jump ball dynamics, especially thinking about the 800 volt opportunity that you’ve outlined?

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Luke, thanks for the question. Maybe I’ll start and let Stephan chime in here. I think the beauty with some of the new content opportunity that we’ve laid out in data center, particularly with the architecture change, is that it’s not shares that we need to take or win. It’s fundamentally new sockets. Today you’re dealing with, you know, AC power architecture moving towards high voltage DC, and that creates a fundamentally different electrical protection design, moving from fuses and circuit breakers towards high voltage contactors. It’s not that we need to take share, it’s that we need to have a product that meets the spec and then go and get specced in, and that’s exactly what we’re focused on.

That’s part of the reason why we have so much conviction in our right to win in this space, is that as Stephan mentioned on the call, as the architectures change, it’s moving right into our wheelhouse in terms of our technology set, the products we offer, our ability to meet the spec and perform in robust, you know, high performance applications.

Christopher Glynn, Analyst, Oppenheimer3: I think, you know, let me add some technical aspects to that. If you look at, you know, the data center concepts today, I think I mentioned it earlier, they’re air-cooled. The products that we deliver into those concepts today are basically temperature sensors and circuit breakers. These, you know, these new concepts coming up, it’s not taking market share. They have a whole different product range because of the liquid cooling that they require because of the increased computing power. That obviously gives us the opportunity again to take existing products like pressure sensors, flow sensors, temperature sensors, existing circuit breakers and contactors, and designing those into the data center concepts together with hyperscalers.

Then, you know, giving us potential revenue, as I stated, from mid-2027 onwards. Not taking share from anyone away. It’s getting into those hyperscaler concept designs and placing our products in there, that is the task.

Luke Junk, Analyst, Baird: Appreciate that. I’ll take my other questions offline. Thank you.

Christopher Glynn, Analyst, Oppenheimer3: Thank you.

Christopher Glynn, Analyst, Oppenheimer0: Our next question comes from Shreyas Patil from Wolfe Research. Please go ahead with your question.

Christopher Glynn, Analyst, Oppenheimer2: Hey, thanks so much. Just one question from me as well. I’m just wondering if you could provide some color on the segment outgrowth expectations. It looks like it. I guess if you’re doing either 4 point south growth auto and, you know, double-digit organic in aero and commercial, I guess shouldn’t organic growth in Q2 be above that 1%-4% that you’re guiding?

Christopher Glynn, Analyst, Oppenheimer3: look, I think, let me frame that generally. I think it’s important to mention with all the examples that we’ve given, that Sensata has multiple growth vectors. I’ve mentioned many examples, you know, where we’ve won business and where we’re in. I think it’s equally important that our segment leaders, around Alice, Marcus and Brian, you know, they have very clear and accountable growth mandates as well. As you can recall, we’ve, you know, we’ve returned Sensata back to growth, and that’s not so long ago. That’s in the second half of 2025. We’ve actually accelerated that growth in the quarter, in quarter one of 2026.

Of course one can question is, you know, is that growth momentum enough? You know, we always need to see where we come from. I think the team has done a fantastic job in accelerating that growth, and we’re now even showing growth over all segments in all areas with all different types of products, be it new products and so on. I, you know, I feel we’ve made good progress. Yeah.

Andrew Lynch, Chief Financial Officer, Sensata Technologies: Yeah. Just to hone in on the outgrowth topic. Third party forecasters are projecting auto production down a couple % again in the second quarter. If we were to deliver, you know, similar outgrowth, that would put auto, you know, on an absolute basis, organic growth in the kind of 1%-2% range for the quarter. If you look at the other two segments, you know, we certainly don’t expect that we’re continuing to grow, gonna grow at, you know, 15% in aerospace defense and commercial equipment. That likely moderates to sort of mid to high single digits. Industrials is not gonna get back into a growth cycle until the back half of the year.

With that frame, I think that puts us squarely in the 1%-4% revenue growth guide for the second quarter.

Christopher Glynn, Analyst, Oppenheimer2: Okay. That makes sense. Thanks a lot.

Christopher Glynn, Analyst, Oppenheimer3: Thank you.

Christopher Glynn, Analyst, Oppenheimer0: With that, we’ll be concluding today’s question and answer session. I’d like to turn the floor back over to James Entwistle for closing remarks.

James Entwistle, Senior Director of Investor Relations, Sensata Technologies: Thanks, Jamie, and thanks to everyone who joined us on today’s call. Before we conclude, I’d just like to announce some upcoming conferences that we’ll be attending during the second quarter. We will be at the Oppenheimer Industrial Growth Conference on Tuesday, May 5, which is virtual. The TD Cowen Technology, Media and Telecom Conference on Wednesday, May 27 in New York City. The Wells Fargo Industrials Conference on Wednesday, June 10 in Chicago. We look forward to connecting with many of you at those conferences in the coming months. Jamie, you may now conclude the call.

Christopher Glynn, Analyst, Oppenheimer0: With that, ladies and gentlemen, we’ll conclude today’s conference call and presentation. We do thank you for joining. You may now disconnect your line.