Sensata Technologies (ST) Q1 FY26 earnings call: guidance and Q&A

Can you provide more regional color on the 4% auto content outgrowth in Q1 and comment on its sustainability given the 2% decline in auto production forecast for the year?

Stephan outlined the global auto production forecast (91M vehicles, down 2% YoY) and factors influencing it. He highlighted regional wins in China (contactors), Japan/Korea (market share), and India (outgrowing production), as well as new product wins (HEC, FaultBreak Contactor). Andrew added that global auto outgrowth requires mid-single-digit content growth, while China needs high-single-digit content growth due to higher pricing pressure, but net outgrowth may not differ materially.

“So, overall, I'd say we've got a strong conviction that the team will outgrow the market in 2026.”

asked by Ryan Choi · answered by Stephan Von Schuckmann

Given recent volatility and input cost pressures, what actions is Sensata taking to achieve the expected 30 bps margin improvement in the back half of the year?

Stephan stated Sensata has a 'clear playbook' and uses scenario planning to manage current and future headwinds like material inflation and tariffs. He emphasized that being designed into mission-critical applications provides leverage to defend margins. Andrew added that the margin cadence is consistent with prior years, with sequential improvement after Q2, and the playbook for offsetting input costs is the same as for tariffs.

“So, what I'm saying is Sensata is prepared. What we do is we think in scenarios, and that prepares us for current or existing, but also future headwinds like material inflation, tariffs and everything else.”

asked by Mark Delaney · answered by Stephan Von Schuckmann

Can you provide more context on the incremental revenue potential from the data center market in 2027 and the anticipated margins as this revenue grows?

Stephan explained that AI drives demand for high-performance computing, leading to a shift to 800V DC with liquid cooling, which aligns with Sensata's sensing and electrical protection portfolio. Andrew noted that Sensata does not anticipate significant investment needs to capitalize on this trend, as it leverages existing products and technologies, making the growth capital-light. The focus is on getting existing products specced in.

“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 in harsh environment really matters.”

asked by Mark Delaney · answered by Stephan Von Schuckmann

Given improvements with local Chinese OEMs and new content, what magnitude of outperformance should be expected in the China Automotive market?

Stephan detailed the shift from international to local OEMs, winning business in contactors and classic applications, especially in electrification, and ramping up contactor production. He also noted emerging opportunities with battery-systems manufacturers. Andrew clarified that while underlying content growth in China needs to be high-single-digits due to mid-single-digit pricing pressure, the net outgrowth might not be materially different from the global business's low-single-digit outgrowth.

“So yes, we have a strong base business with the legacy products, and we're incumbent, and that's pretty much stable, I would say, but we're very much growing on and strongly growing on the electrification side of the business where we've gained a lot of traction.”

asked by Joseph Giordano · answered by Stephan Von Schuckmann

What is the impact of Section 232 metal tariffs, and have you filed for IEEPA reimbursements? Can you estimate the potential size of these refunds and the amount paid last year?

Andrew stated no meaningful direct impact from metal tariff changes. The current tariff run rate is ~$8M/quarter (down from ~$12M) due to recent changes and IEEPA cancellation. Sensata is following the government process for IEEPA refunds but is not speculating on the size. He confirmed Sensata paid over $40M in tariffs last year, with more than two-thirds being IEEPA.

“On the question of refunds, so we're certainly following the government prescribed process. And when we have more to share, we'll share that. But at this time, we're not going to speculate on the size or magnitude of potential recovery.”

asked by Joseph Spak · answered by Andrew Lynch

How does Sensata view the market structure in data centers, particularly the need to take share versus capitalizing on new opportunities with the 800-volt architecture?

Andrew explained that the opportunity with the new architecture (AC to high-voltage DC) is fundamentally about new sockets, not taking share from existing players. It requires meeting new specs for electrical protection (high-voltage contactors instead of fuses/breakers). Stephan added that existing products from automotive (pressure/flow/temp sensors, circuit breakers, contactors) are being designed into these new hyperscaler concepts, creating new revenue opportunities from mid-2027.

“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 share that we need to take or win. It's fundamentally new sockets.”

asked by Luke Junk · answered by Andrew Lynch