Sensata Technologies (NYSE:ST) reported second-quarter 2026 results that exceeded its expectations, with revenue, adjusted operating income and adjusted earnings per share all rising from a year earlier. Chief Executive Officer Stephan von Schuckmann said the company recorded its fourth consecutive quarter of organic growth, with growth across each of its three operating segments.
Second-quarter revenue increased 5% to $991 million from $943 million in the prior-year period. Organic revenue rose 4.4%, while foreign exchange provided a roughly 1% inorganic tailwind. Adjusted operating income totaled $193 million, producing an adjusted operating margin of 19.5%, up 50 basis points from 19.0% a year earlier. Adjusted EPS rose 12.6% year over year to $0.98.
Cash Flow and Deleveraging
Free cash flow reached $186 million in the second quarter, up 61% from $115 million a year earlier. Free cash flow conversion was 130% of adjusted net income for the quarter, compared with 91% in the prior-year period. Year-to-date conversion stood at 108%.
Chief Financial Officer Andrew Lynch said the company has improved its cash conversion cycle by about 15 days over the past 18 months, primarily through lower inventories and supplier-payment-term optimization. Sensata also reduced capital intensity through greater use of existing capacity, automation and more flexible production lines. Capital expenditures were just over 2% of revenue year to date, though Lynch said spending is expected to normalize toward prior-year run rates during the second half.
The company used about $400 million of cash during the quarter to retire $406 million of long-term debt. Net leverage declined to 2.4 times trailing-12-month adjusted EBITDA, from 3.0 times a year earlier, reaching the company’s below-2.5-times target two quarters ahead of schedule. Gross indebtedness was approximately $2.5 billion, down $762 million from June 30, 2025.
Sensata ended the quarter with $403 million in cash and $650 million available under its undrawn revolving credit facility. The company also returned $18 million to shareholders through its quarterly dividend and announced a third-quarter dividend of $0.12 per share, payable Aug. 26 to shareholders of record as of Aug. 12.
Segment Results
- Automotive: Revenue rose 3.3% to $545 million, including 1.8% organic growth. The segment outgrew flat global auto production by about 2%, supported by content gains and production mix. Operating margin expanded 120 basis points to 24.2%.
- Industrials: Revenue increased 2.9% to $212 million, or 4.2% organically, aided by share gains and stabilization in U.S. HVAC production. Operating margin declined 100 basis points to 27.1%, as Sensata reinvested productivity gains from Automotive into industrial growth initiatives, including data centers.
- Aerospace, Defense and Commercial Equipment: Revenue climbed 11.5% to $234 million, or 10.9% organically, marking the segment’s second consecutive quarter of double-digit growth. Revenue increased across aerospace, defense, on-road trucks and off-highway equipment. Operating margin rose 340 basis points to 27.8% on operating leverage from higher volumes.
In Automotive, von Schuckmann said Sensata outgrew both internal-combustion-engine and electric-vehicle production in North America and Europe. North American ICE revenue increased about 14% against a market that grew 2%, while EV revenue was approximately flat despite EV production declining more than 30%. In Europe, EV revenue grew 30% while EV production increased 10%.
India was a particular area of growth, with automotive revenue rising more than 40% in the second quarter and more than 50% year to date. Sensata plans to open a manufacturing facility in Chennai to localize production for Indian customers. Lynch said India automotive revenue exceeded $20 million in the quarter, representing about 5% of the company’s automotive business.
Data Center Opportunity
Management highlighted data centers as a developing growth platform, with opportunities in electrical protection, thermal management, and power and peak-load management. The company is targeting applications including circuit breakers, high-voltage contactors, pressure and temperature sensors, liquid-cooling systems, converters and inverters.
Von Schuckmann said changing data center architectures, including higher-voltage systems, liquid cooling and increased on-site generation, could expand Sensata’s addressable market by 1.5 times to 2.5 times on a per-megawatt basis, excluding capacity deployment growth. However, he said the company was not yet prepared to disclose expected market share, content per megawatt, or a revenue framework because customer designs and deployment timelines are still evolving.
During the quarter, Sensata was specified into three additional hyperscaler concepts, bringing its year-to-date total to five platform concept wins across four major hyperscaler brands. The company was also named a preferred vetted vendor by a major hyperscaler. One specification led to an award with an original design manufacturer for pressure and temperature sensors used in coolant distribution units, with shipments expected to begin in the first quarter of 2027.
Lynch said industrial components revenue tied to data centers approximately doubled in the first half of 2026 compared with the first half of 2025.
Third-Quarter Outlook
For the third quarter, Sensata expects revenue of $957 million to $987 million, adjusted operating income of $186 million to $193 million, and adjusted operating margin of 19.4% to 19.6%. The company forecast adjusted net income of $137 million to $142 million and adjusted EPS of $0.93 to $0.97.
The outlook includes approximately $10 million in tariff costs and associated pass-through revenue, similar to the level experienced in the second quarter. Management said tariff changes announced recently were not expected to have a significant impact on the business. The guidance does not include potential tariff refunds related to recent IEPA tariff rulings.
Lynch said third-quarter revenue seasonality is primarily driven by automotive production shutdowns in Europe during the summer. The company expects fourth-quarter revenue to be roughly flat sequentially from the third quarter, while continuing to expect year-over-year margin expansion.
About Sensata Technologies (NYSE:ST)
Sensata Technologies Holdings N.V. is a global industrial technology company specializing in the design, development and manufacture of sensors and electrical protection solutions. The company’s product portfolio includes pressure, temperature, position, speed, current and magnetic sensors, as well as circuit breakers and other protection devices. Sensata’s offerings serve a wide array of end markets, with a particularly strong presence in automotive original equipment manufacturers (OEMs), industrial automation, heating, ventilation and air conditioning (HVAC), commercial aerospace and renewable energy sectors.
Headquartered in Attleboro, Massachusetts, Sensata operates a network of manufacturing and engineering facilities across North America, Europe, Asia Pacific and Latin America.
