Tóm tắt Cuộc họp Báo cáo Kết quả Kinh doanh Quý 3/2026 của Sensata Technologies

Sensata Technologies (NYSE: ST) ghi nhận tăng trưởng hữu cơ trên diện rộng trong quý 3/2026, được hỗ trợ bởi nhu cầu từ mảng công nghiệp, thiết bị thương mại và trung tâm dữ liệu. Kết quả bao gồm khoản thanh toán 24 triệu USD từ khách hàng liên quan đến một chương trình xe điện bị hủy bỏ vào năm 2025.

Các Điểm chính

• Doanh thu quý 3 tăng 8% so với cùng kỳ năm ngoái lên 1,004 tỷ USD, với mức tăng trưởng hữu cơ đạt 7%. Nếu không tính khoản thanh toán 24 triệu USD do chấm dứt chương trình xe điện, doanh thu đạt 980 triệu USD, tăng 5% theo báo cáo và tăng 4% về mặt hữu cơ.
• Biên lợi nhuận hoạt động đã điều chỉnh đạt 21,5%. Nếu loại trừ khoản thanh toán chấm dứt chương trình, biên lợi nhuận đạt 19,5%, tăng 20 điểm cơ bản so với cùng kỳ năm ngoái.
• EPS đã điều chỉnh tăng 27% lên 1,13 USD, đánh dấu quý thứ tư liên tiếp đạt mức tăng trưởng EPS đã điều chỉnh ở mức hai chữ số.
• Dòng tiền tự do tăng 46% lên 198 triệu USD, đạt 119% thu nhập ròng đã điều chỉnh. Dòng tiền tự do lũy kế từ đầu năm đạt 489 triệu USD.
• Ban lãnh đạo dự kiến doanh thu từ trung tâm dữ liệu sẽ tăng 76%, từ 27 triệu USD năm 2025 lên 48 triệu USD năm 2026. Sensata đã giành được 7 hợp đồng thiết kế từ 6 hyperscaler, với doanh thu dự kiến bắt đầu tăng tốc từ giữa năm 2027.
• Trong quý 4/2026, ban lãnh đạo đưa ra dự báo doanh thu từ 942 triệu USD đến 972 triệu USD và EPS đã điều chỉnh từ 0,95 USD đến 0,99 USD, phản ánh sản lượng sản xuất ô tô suy yếu hơn và động lực thị trường đang thay đổi tại Trung Quốc.

Dữ liệu Tài chính Cốt lõi

Sensata kết thúc quý với 553 triệu USD tiền mặt và hạn mức tín dụng quay vòng 650 triệu USD chưa rút. Công ty đã mua lại khoảng 33 triệu USD nợ trên thị trường mở trong quý 3. Nợ ròng giảm từ 2,6 tỷ USD vào cuối năm 2024 xuống còn 1,9 tỷ USD vào tháng 9/2026.

Kết quả Kinh doanh và Hoạt động

Ngành Ô tô

Doanh thu mảng ô tô tăng 4% lên 556 triệu USD và tăng trưởng hữu cơ 3%, trong khi sản lượng sản xuất xe hạng nhẹ toàn cầu giảm khoảng 2%. Doanh thu đã bao gồm khoản thanh toán 24 triệu USD do chấm dứt chương trình.

Lợi nhuận hoạt động của bộ phận đạt 158 triệu USD, với biên lợi nhuận 28,4%. Nếu loại trừ khoản thanh toán này, biên lợi nhuận tăng 150 điểm cơ bản lên 25,2%, phản ánh năng suất và kỷ luật chi phí.

Ban lãnh đạo dự kiến mức tăng trưởng vượt thị trường ngành ô tô đạt khoảng 2% cho cả năm 2026. Bắc Mỹ đạt mức tăng trưởng hữu cơ hai chữ số bất chấp thị trường dự kiến sụt giảm, trong khi mức tăng trưởng tại Ấn Độ vượt 30% so với mức tăng trưởng thị trường 10%. Trung Quốc tiếp tục đầy thách thức khi các OEM nội địa giành thêm thị phần từ các nhà sản xuất đa quốc gia và áp lực giá làm giảm doanh thu trên mỗi xe.

Ngành Công nghiệp

Doanh thu mảng công nghiệp tăng 13% lên 210 triệu USD, trong đó tăng trưởng hữu cơ đạt 12%. Lợi nhuận hoạt động của bộ phận đạt 61 triệu USD, trong khi biên lợi nhuận hoạt động mở rộng 160 điểm cơ bản lên 28,8%.

Mức tăng trưởng được hỗ trợ bởi sản lượng và các ứng dụng trung tâm dữ liệu. Ban lãnh đạo cho biết sáng kiến trung tâm dữ liệu chủ yếu sử dụng các sản phẩm hiện có hoặc sản phẩm dẫn xuất, giúp hạn chế nhu cầu đầu tư lớn ban đầu.

Hàng không Vũ trụ, Quốc phòng và Thiết bị Thương mại

Doanh thu tăng khoảng 13% lên 238 triệu USD, theo cả báo cáo và về mặt hữu cơ. Đây là quý thứ ba liên tiếp bộ phận này đạt mức tăng trưởng hữu cơ hai chữ số, dẫn đầu là mảng thiết bị thương mại.

Lợi nhuận hoạt động đạt 63 triệu USD và biên lợi nhuận hoạt động đạt 26,7%, giảm từ mức 27,4% của cùng kỳ năm trước do đầu tư cho tăng trưởng và cơ cấu sản phẩm. Sản lượng xe tải Hạng 8 tại Bắc Mỹ tăng khoảng 50% so với cùng kỳ năm ngoái, hỗ trợ sự phục hồi của mảng thiết bị thương mại.

Cơ hội Trung tâm Dữ liệu

Ban lãnh đạo xác định trung tâm dữ liệu là cơ hội tăng trưởng dài hạn lớn trong các lĩnh vực quản lý nhiệt, bảo vệ điện, quản lý năng lượng và phát điện tại chỗ.

Sensata dự kiến doanh thu từ trung tâm dữ liệu sẽ tăng từ 27 triệu USD vào năm 2025 lên 48 triệu USD vào năm 2026. Dự báo này chủ yếu phản ánh các sản phẩm hiện có và không bao gồm cơ hội Dynapower rộng lớn hơn của công ty cũng như doanh thu từ các hợp đồng thiết kế đã giành được với các hyperscaler.

Hiện công ty đã giành được 7 hợp đồng từ 6 hyperscaler, tăng so với 5 hợp đồng trong quý trước và 1 hợp đồng vào đầu năm 2026. Ban lãnh đạo dự kiến các chương trình này sẽ bắt đầu tăng tốc vào khoảng giữa năm 2027. Công ty cũng kỳ vọng các kiến trúc điện áp cao và làm mát bằng chất lỏng sẽ mở rộng giá trị nội dung dịch vụ của Sensata thêm 1,5 đến 2,5 lần trên mỗi megawatt.

Sensata gần đây đã ra mắt cảm biến dòng chảy siêu âm Dòng FL dành cho các ứng dụng làm mát bằng chất lỏng. Các đợt giao hàng đầu tiên dự kiến vào giữa năm 2027, tùy thuộc vào tiến độ của khách hàng.

Dự báo của Ban lãnh đạo

Ở điểm giữa của khoảng dự báo, ban lãnh đạo kỳ vọng doanh thu quý 4 tăng khoảng 5% so với cùng kỳ năm ngoái và EPS đã điều chỉnh tăng 10%. Triển vọng này phản ánh sản lượng sản xuất ô tô suy yếu hơn, bao gồm mức sụt giảm dự kiến 4% so với cùng kỳ năm ngoái về sản lượng sản xuất xe hạng nhẹ toàn cầu trong quý 4.

Ban lãnh đạo kỳ vọng tỷ lệ chuyển đổi dòng tiền tự do cả năm 2026 sẽ vượt 100% thu nhập ròng đã điều chỉnh. Đối với quý 1/2027, công ty không kỳ vọng doanh thu tăng so với quý 4 chủ yếu do tính chu kỳ của ngành ô tô. Mặc dù vậy, công ty vẫn kỳ vọng biên lợi nhuận hoạt động quý 1 sẽ cải thiện nhẹ so với cùng kỳ năm ngoái.

Cho cả năm 2027, mô hình hoạt động của Sensata tiếp tục hướng tới mục tiêu mở rộng biên lợi nhuận hàng năm khoảng 20 điểm cơ bản, mặc dù công ty không đưa ra dự báo chính thức cho quý 1.

Rủi ro và Các Điểm cần Theo dõi

• Ban lãnh đạo dự kiến sản lượng sản xuất xe hạng nhẹ toàn cầu sẽ giảm khoảng 4% so với cùng kỳ năm ngoái trong quý 4 và giảm 2% cho cả năm 2026.
• Nhu cầu và cơ cấu thị trường ô tô Trung Quốc tiếp tục chịu áp lực khi các OEM đa quốc gia mất thị phần vào tay các nhà sản xuất nội địa và cạnh tranh về giá vẫn diễn ra gay gắt.
• Giá nhiên liệu và chi phí tài trợ cao hơn đang ảnh hưởng đến nhu cầu ô tô.
• Chi phí linh kiện điện tử và bảng mạch đang tăng lên, mặc dù ban lãnh đạo cho biết các biện pháp cắt giảm chi phí, tăng năng suất và điều chỉnh giá cho đến nay đã ngăn chặn ảnh hưởng đáng kể đến biên lợi nhuận.
• Tiến độ triển khai trung tâm dữ liệu vẫn biến động. Doanh thu từ các hợp đồng với hyperscaler và cảm biến Dòng FL phụ thuộc vào lịch trình xây dựng của khách hàng.
• Mức giảm giá hàng năm và việc bán hàng tồn kho chi phí cao hơn thường gây áp lực lên biên lợi nhuận so với quý trước trong quý đầu tiên.

Tóm tắt Phiên Hỏi & Đáp với Chuyên viên Phân tích

Các chuyên viên phân tích tập trung vào tính chu kỳ của mảng ô tô, rủi ro liên quan đến thị trường Trung Quốc, tăng trưởng trung tâm dữ liệu và lạm phát. Ban lãnh đạo giải thích sự suy yếu doanh thu so với quý trước dự kiến trong quý 1/2027 chủ yếu là do sụt giảm dự kiến khoảng 2 triệu xe toàn cầu so với quý 4, thay vì triển vọng yếu hơn ở các bộ phận khác của Sensata.

Về thị trường Trung Quốc, ban lãnh đạo cho biết Sensata đang giành được các dự án mới với các OEM và nhà cung cấp pin nội địa nhưng vẫn duy trì kỷ luật về mức sinh lời trong bối cảnh áp lực giá gay gắt. Công ty kỳ vọng các kiến trúc định hình bởi pin, bao gồm các hệ thống hóa học kép có tiềm năng xuất khẩu, sẽ hỗ trợ tăng trưởng trong tương lai.

Ban lãnh đạo từ chối đưa ra quy mô doanh thu trung tâm dữ liệu quy năm (run rate) cụ thể vào cuối năm 2027. Công ty lặp lại rằng 7 hợp đồng với các hyperscaler sẽ bắt đầu tăng tốc vào giữa năm 2027 và kỳ vọng tốc độ tăng trưởng cao sau đó.

Liên quan đến khoản thanh toán 24 triệu USD do chấm dứt chương trình xe điện, ban lãnh đạo cho biết không kỳ vọng sẽ có một khoản thanh toán khác với quy mô tương tự. Việc hủy bỏ diễn ra vào năm 2025 và không ảnh hưởng đến triển vọng doanh thu hiện tại của công ty.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good afternoon, and welcome to the Sensata Technologies Third Quarter 2026 Earnings Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mr. Jamie Entwistle, Senior Director of Investor Relations. Please go ahead, sir.

James Entwistle

Thank you, operator, and good afternoon, everyone. I'm James Entwistle, Senior Director of Investor Relations for Sensata, and I would like to welcome you to Sensata's Third Quarter 2026 Earnings Conference Call. Joining me on today's call is 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 reference a slide presentation during today's 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 call concludes.

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. A -- the company's actual results may differ materially from the projections described in those 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 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 today's call with comments on the overall business. Andrew will then cover our detailed results for the third quarter and our financial outlook for the fourth quarter. Stephane will then return for closing remarks. After that, we will take your questions.

Now I would like to turn the call over to Sensata's Chief Executive Officer, Stephan Von Schuckmann.

Stephan Von Schuckmann

Thank you, James, and good afternoon, everyone. Let's begin on Slide 4. Sensata delivered an exceptionally strong third quarter with revenue, adjusted operating income, adjusted operating margin and adjusted earnings per share, all exceeding our expectations. These results included a $24 million program termination payment from a customer related to the cancellation of an electric vehicle program. Andrew will clarify the impact of this termination payment in greater detail when he covers our Q3 results. However, given the magnitude of the benefit from this payment, I want to highlight a few points upfront.

First, our underlying results met or exceeded the midpoints of our guidance ranges across all key metrics without the benefit from this payment. Second, the related program cancellation occurred last year and there is no impact on our revenue outlook in connection with this payment. And third, while the recovery stands out in the quarter, it was earned by the hard work of our automotive team to turn a challenging situation into a commercially viable outcome. This is consistent with our broader theme in our automotive business. The team has done an outstanding job of exercising pricing discipline to defend margins in an inflationary environment, much like we did with tariffs last year.

With that said, my message for you today is that our core business is stronger, and we are growing conviction in our ability to accelerate long-term organic growth. Third quarter revenue grew approximately 8% year-over-year or 7% organically. Revenue and earnings growth were broad-based with all 3 segments delivering year-over-year organic revenue growth, market outgrowth and operating income growth.

During the quarter, we reduced net leverage to 2.1x trailing 12-month adjusted EBITDA and completed $33 million of open market debt repurchases during the quarter. Free cash flow was exceptionally strong with conversion at 119% and our year-to-date free cash flow of $489 million is in line with 2025 full year free cash flow of $490 million. 2025 was an all-time record for free cash flow, and our extraordinary pace this year puts us on track for another record breaking year.

As our results continue to improve and our business is growing stronger each quarter, we are increasingly focused on cultivating multiple pathways to higher quality organic growth. Let's turn to Slide 5 and take a broader look at how we are unlocking value in our business. Our transformation has never been just about improving margins or reducing debt? It is about converting more of our earnings into cash and allocating that capital effectively so we can invest confidently in future growth.

Our disciplined operating model is delivering exactly that improvement. We expect full year 2026 free cash flow conversion to exceed 100% of adjusted net income as our cash conversion cycle shortens and CapEx efficiency improves. Importantly, growth has accelerated alongside these improvements. Stronger cash generation and investment discipline have strengthened our balance sheet, reduced net interest expense and supported equity value creation.

From year-end 2024 through September 2026, we have reduced net debt from $2.6 billion to $1.9 billion. Over the same period, enterprise value grew 18%, while our equity market value grew 48%. While I'm encouraged by the value we have unlocked so far, I'm even more excited about the opportunity ahead of us. Let's turn to Slide 6 to discuss how we expect to accelerate value creating moving forward.

Sensata has a differentiated technology platform both around mission-critical sensing and electrical protection, deep customer integration, leading market positions and global scale. We see 2 clear pathways to accelerate growth. First, expanding core products into attractive adjacent markets; and second, innovating to solve increasingly complex customer challenges with our sensing and electrical protection expertise.

Turning to Slide 7. Let's take a look at the first pathway. We are extending motors and actuators into aerospace, contactors in isolation monitoring into high-voltage data centers and pressure and temperature sensing into power generation and liquid cooling. This is a capital-efficient approach because it builds on technologies, manufacturing capabilities and long-standing customer relationships, if required [indiscernible] pathway, innovation.

On Slide 8, our motors and actuators product line illustrates this approach. Demand for compact, high-performance motion control is creating attractive aerospace opportunities. With more than 50 years of aerospace and defense experience we have the in-flight pedigree that matters to our customers. Alongside that, our BEI Kimco Motor brands brings proven designs and technical expertise to support next-generation drone and UAV platforms.

Rather than fit customer requirements to a commercial or modified off-the-shelf solution, we offer bespoke solutions for our customers, customizing talk, speed, efficiency and form factor around the application. Our ability to deliver high talk and efficiency and compact lightweight motors is valuable with space, weight and power are constrained. With our U.S. engineering and manufacturing footprint, we are able to meet high standards for supply chain risk mitigation.

As we go to market, we engage early in the RFP process and withdraw proven designs, which enables us to deliver prototypes quickly, shorten development cycles and reduce customer development risk. In fact, we are finding that speed is the most significant factor in securing new business and we are meeting the challenge.

New motor business wins, reached a record this year doubling our pace of wins from last year and approximately triple our typical annual win rate from 2 years prior. These wins support our participation in a global drone and UAV market which is expected to grow at double-digit CAGR over the balance of the decade.

Moving ahead to Slide 9, let's talk about innovation. As the Motors example shows, a key differentiator is our ability to engineer solutions around evolving customer needs rather than rely solely on catalog products. Sometimes, it requires a small modification, other times, we innovate to develop an entirely new product, both draw on our technical expertise and close customer relationships.

In automotive, we continue to innovate to address evolving efficiency, safety, cost and weight requirements. For example, replacing actuation with force sensing and advancing contactors for more sophisticated electrical architectures. In aerospace, defense and commercial equipment, we innovate to enable commercial vehicle electrification and next-generation power systems.

In industrials, we develop innovative solutions for new regulatory requirements such as [indiscernible] leak detection and for emerging customer needs such as the ever expanding need for data centers, specific sensing and electrical protection solutions. I'll touch more on that in a moment.

First, let's move to Slide 10 to take a look at flow sensing as a recent example of innovation in our industrials business. Earlier this year, we discussed our data center sensing portfolio and shared a new flow sensing solution we were developing for liquid cooling applications. Last week, we followed through on that development work and announced the launch of that product. Our FL Series uses ultrasonic sensing to deliver continuous highly accurate coolant flow measurement. As computing density increases, that measurement becomes mission-critical. The little flow can cause overheating and constrained process of performance while excess flow, waste energy. Precise flow management helps customers maximize computing performance relative to power consumption, and that is exactly where we differentiated ourselves from competition.

Our solution combines proven capabilities with targeted innovation to solve a complex customer problem and add content in an attractive market. We expect initial shipments by mid-2027 subject to final customer timing. More broadly, our expanding data center portfolio positions us to meet a wider range of sensing and electrical needs, particularly with coolant distribution units or CDUs. Customers increasingly see Sensata as a one-stop shop for sensing and electrical protection solutions from grid to chip and our long-standing system expertise earns us a position as a valued partner and preferred supplier to many of our customers.

Turning to Slide 11. Let's look more closely at our data center growth. Data centers remain one of our most compelling long-term growth opportunities. Deployment timing remains dynamic, but demand for power management sensing, electrical protection and thermal management continues to strengthen, and our largest opportunities are still ahead. Our data center revenue from sensing and electrical protection spans 2 segments. Our Industrial segment, supply sensing and electrical protection components inside data centers, while aerospace, defense and commercial equipment supply sensors for generators used for on-site power generation.

Together, these businesses generated $27 million of revenue in 2025 and we expect $48 million of revenue in 2026, representing annual growth of 76%. While we are excited with this recent growth it is important to recognize that this has largely been driven by existing products as we have built our commercial presence in data centers. Notably, this does not include the opportunity we see with Dana Power nor does it reflect revenue from our design wins with hyperscalers that we have achieved thus far.

We now have a total of 7 wins, spanning 6 hyperscalers, including a win in China. It is up from 5 wins we shared last quarter and a single win we had at the start of the year. As we discussed on prior earnings calls, we expect these wins to begin ramping mid-2027. Beyond these design wins, the market growth drivers that underpin them are highly compelling. As coding moves from [indiscernible] to inroad to support higher GPU demand, demand for our thermal management solutions including our new flow sensor increases. More effective cooling allows chips to handle more power, driving a transition to 800 [indiscernible] data centers, which in turn increases the need for our contactors and isolation monitoring devices.

High voltage data centers are in turn driving higher grid loans creating demand for power and peak management such as the inverters, converters and rectifiers we sell under our Dynerpower brand. As the grids work to adjust to higher loads -- the backlog for grid connection has developed, creating demand for our on-site power generation, which in turn is driving demand for our pressure and temperature sensors. All of this contributes to robust opportunities for the next several years, and we expect to participate meaningfully. There are 4 key tailwinds for our growth. First, underlying market growth rate in the mid-teens as data center construction accelerates. Second, a 1.5x to 2.5x expansion in our serviceable addressable market,

Third, a stronger competitive position as sourcing shifts from opportunistic channel purchases to specification-driven decisions; and fourth, the need for power and peak management solutions with each new data center build. Sensata is well positioned to benefit from everyone of these tailwinds and and that is exactly why we have so much conviction in this opportunity.

With that, I will turn the call over to Andrew.

Andrew Lynch

Thank you, Stephane. Let's move to Slide 13. For clarity, unless otherwise specified, the amounts are referenced in U.S. dollars and rounded to whole millions and growth percentages are approximate. We delivered exceptionally strong third quarter results with revenue, adjusted operating income and adjusted earnings per share all above the high end of our guidance ranges. The quarter included a $24 million termination payment from a customer in connection with the cancellation of an electric vehicle program. We did not incorporate this payment into our third quarter guidance and therefore, I want to make it clear that our underlying results met or exceeded the midpoint of our guidance range without taking into consideration the benefit of this termination payment.

Third quarter revenue was $1.004 billion, an increase of $72 million or 8% from $932 million in the third quarter of 2025. On an organic basis, revenue grew 7% year-over-year. Without the termination payment, revenue would have been $980 million, representing 5% reported growth and 4% organic growth. Adjusted operating income was $215 million and adjusted operating margin was 21.5% compared with $180 million and 19.3% in the prior year quarter. Without the termination payment, adjusted operating income would have been $191 million and adjusted operating margin would have been 19.5% representing an increase of 20 basis points year-over-year.

Adjusted earnings per share was $1.13, an increase of $0.24 or 27% year-over-year. This was our fourth consecutive quarter of double-digit adjusted EPS growth. The result met the high end of our guidance range without the termination revenue and exceeded it by $0.16 as reported. Free cash flow was $198 million, an increase of $62 million or 46% year-over-year. Free cash flow conversion was 119% of adjusted net income, an increase of 14 percentage points compared with the prior year quarter.

Let's turn to Slide 14 to take a look at performance trends. The quarter extends the consistent progress we have made against our operating, capital allocation and growth priorities. Adjusted operating margin expanded year-over-year for the fifth consecutive quarter. Trailing 12 months free cash flow conversion increased to 113% and net leverage improved to 2.1x. Top line organic growth was again in the mid-single-digits territory and earnings grew significantly faster than revenue.

This combination of revenue growth, margin expansion, cash conversion and deleveraging demonstrates the continued effectiveness of our operational rigor and disciplined strategy. Moving ahead to Slide 15, let's review capital allocation. We ended the quarter with $553 million of cash on hand and our $650 million revolving credit facility remains undrawn.

In August, we returned approximately $17 million to shareholders through our quarterly dividend. And last week, we announced our fourth quarter 2026 dividend of $0.12 per share payable on November 25, 2026, to shareholders of record as of November 11, 2026.

We continued to reduce gross debt, completing approximately $33 million of open market debt repurchases during the quarter. We ended the quarter with net leverage at 2.1x and return on invested capital improved 80 basis points sequentially to 12.1%, representing 190 basis points of improvement since we began our transformation 7 quarters ago.

Turning to Slide 16. Let's take a closer look beyond ROIC to additional economic benefits we are seeing from deleveraging. First, we are meaningfully reducing net interest expense, which is driving cash savings and accelerating adjusted EPS growth. In 2025, this translated to approximately $0.06 of adjusted EPS compared to the prior year. And in 2026, we expect another $0.10 of year-over-year adjusted EPS growth from interest savings.

And second, by proactively retiring nearly 80% of our nearest term debt maturity due in 2029, we have reduced our refinancing exposure in a rising interest rate environment. Lower debt service costs and longer-term debt maturity profile position us well to invest in organic growth and innovation.

Now let's turn to Slide 17 to discuss our segments. Automotive revenue was $556 million, an increase of 4% on a reported basis and 3% organically while production decreased 2%. In total, automotive outgrew production by approximately 4% organically. Automotive segment revenue was $158 million and segment operating margin was 28.4%, compared with 23.7% in the prior year quarter.

Before the benefit of the termination payment, automotive operating margin increased 150 basis points year-over-year to 25.2%, reflecting productivity and disciplined cost management. Industrials revenue was $210 million, an increase of 13% on a reported basis and 12% organically. Industrial's operating income was $61 million and segment operating margin was 28.8%, an increase of 160 basis points year-over-year. The improvement reflects strong volume growth and operating leverage, which enabled disciplined investment in attractive growth opportunities.

Our data center growth initiative is primarily anchored to existing or derivative products and therefore, does not require significant upfront investment. And we are, therefore, less sensitive to the precise timing of market developments. Aerospace, defense and commercial equipment revenue was $238 million, an increase of approximately 13% on a reported basis and an organic basis. This was the segment's third consecutive quarter of double-digit organic growth, led by commercial equipment. Segment operating income was $63 million and segment operating margin was 26.7%, compared with 27.4% in the prior year quarter, with modest contraction attributable to growth investments and product mix.

Let's turn to Slide 18 for additional perspective on our end markets and fourth quarter assumptions. Higher fuel prices and financing costs are affecting automotive demand. Global light vehicle production fell approximately 2% in Q3, including 6% in China and 5% in North America. We expect a 4% year-over-year contraction in the fourth quarter, largely from China and approximately 2% lower global production for the full year.

Portfolio diversification and content gains support outgrowth, although China OEM mix remains a regional challenge. Despite this backdrop, automotive margins are expanding, pricing discipline is offsetting inflation and content gains are driving outgrowth. We expect full year outgrowth of approximately 2%, outperforming every market except China. Our growth in India exceeds 30% against a 10% market growth. North America is delivering double-digit organic growth against an expected 2% market contraction.

Outgrowth is accelerating to high single digits in Japan with low single-digit outgrowth expected in Europe and Korea. In China, multinational OEMs are losing share at an accelerating pace. Our content gains with local OEMs have meaningfully narrowed the content gap but pricing pressure continues to contribute to revenue per vehicle gap. Local OEM revenue now exceeds multinational OEM revenue. We expect the next automotive growth wave from battery supplier wins as battery supplier defined architectures gain traction.

Meanwhile, our other segments are delivering strong growth in China, with industrials expected to grow 15% this year and aerospace, defense and commercial equipment expected to grow 8%. In our Global Industrial segment, U.S. residential HVAC shipments have returned to growth after first half weakness and manufacturing indicators show signs of stabilization. However, both remain below 2024 levels. Market recovery offers potential tailwinds for our core, while data center and energy applications are compelling growth opportunities.

In aerospace, defense and commercial equipment, aircraft backlogs and defense spending support a positive outlook. North American on-road trucks began recovering in the third quarter with Class 8 production up approximately 50% year-over-year. We expect a recovery through year-end and into 2027. Data center infrastructure is driving growth in the construction vertical, while agriculture shows early signs of improvement. With that backdrop, let's move to Slide 19 for our fourth quarter guidance.

For the fourth quarter, we expect revenue of $942 million to $972 million, adjusted operating income of $185 million to $192 million, adjusted operating margin of 19.6% to 19.8%. And adjusted net income of $140 million to $145 million and adjusted earnings per share of $0.95 to $0.99. At the midpoint of these guidance ranges, we expect fourth quarter year-over-year revenue growth of approximately 5% and adjusted EPS growth of 10%.

Before turning the call back to Stephan, Allow me to put our guidance in context relative to consensus. It appears that recent automotive market developments are not yet fully reflected in revenue estimates with some having moved towards $950 million while others remain closer to $970 million. Our fourth quarter guide reflects the softer automotive production outlook and changing market dynamics in China.

Despite these challenges, we expect to outgrow production and deliver another quarter of sequential and year-over-year margin expansion. $0.97 of EPS at the midpoint of our guide is consistent with Street expectations. Looking ahead to 2027. I would like to offer a reminder regarding margin seasonality in Q1. Annual price reductions typically lower margins sequentially from Q4. Productivity generally offsets these reductions but there is a lag as we sell through higher cost inventory on hand. As that inventory clears, margins typically improve sharply in the second quarter.

With that frame Consensus estimates on margin in Q1 do not appear to fully reflect this dynamic, and we also note a widespread on revenue estimates, seemingly reflecting varying market assumptions. While we are not providing formal Q1 guidance today, I would like to share our directional expectations. We do not expect revenue to increase sequentially from Q4 into Q1, and therefore, we do not expect sequential volume leverage to mitigate sequential margin seasonality in the same manner that it did last year.

We do expect operating margins to expand modestly year-over-year in the first quarter. And for the full year, our operating model will continue to target 20 basis points of full year margin expansion that we have seen over the last 2 years. With that, I would like to turn the call back to Stephan for closing remarks.

Stephan Von Schuckmann

Thank you, Andrew. Before we move to Q&A, I have just a few closing thoughts. Let's turn to Slide 21. Our transformation has significantly strengthened Sensata with more resilient margins, better cash conversion and a healthier balance sheet, we have more capacity to invest in high-quality organic growth. .

Our new segment structure is working. Industrials and aerospace, defense and commercial equipment each delivered double-digit organic growth, more than offsetting softer automotive end markets. This is why we are pursuing multiple pathways to organic growth, expanding market presence for our existing products and innovating to develop new products. Secular trends are in our favor. Markets are growing. Our SAM is expanding. Our right to win is compelling, and I'm more confident than ever in our ability to deliver. I look forward to keeping you updated on our progress.

I will now turn the call back to James for Q&A.

James Entwistle

Thank you, Stephan and Andrew. We will now begin Q&A. In order to allow all who wish to ask a question, the opportunity to do so, we will limit each participant to 1 question. If you wish to ask an additional question, please reenter the queue. Operator, please introduce the first question. .

Operator

Our first question for today will come from Mark Delaney with Goldman Sachs.

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Mark Delaney

I'm hoping you could start with some additional commentary on how you're looking at the medium-term revenue outlook. You identified some nice progress the company is seeing, especially in the data center market or end markets are picking up cyclically as well. But then you talked about distinct China auto and you started to share some preliminary views on the first quarter of next year, you're talking about more potash into 1Q. And I didn't catch any sort of specific thoughts qualitatively what's maybe causing that more flattish trajectory into if you can kind of talk a little bit more on what's underpinning some of those comments around how you're seeing the revenue play out not only for 4Q, but some of the initial views you're trying to share for the first quarter.

Stephan Von Schuckmann

Mark, thanks for the question. Yes, the comment on Q1 seasonality on revenue is more just a function of the the global production outlook specifically for auto moving from Q4 into Q1. So despite some of the weakness that we're seeing regionally in the China market, -- it still is the seasonally strongest market in China, and we still expect a sequential step down in Q1 connected to the holiday in the first quarter. So third parties got that call at about a 2 million vehicle units step down sequentially into the first quarter. And so that's really what frames our sort of muted sequential outlook. -- specifically on automotive volume. And I wouldn't interpret that to mean anything about our growth prospects in the other segments or what we're seeing in terms of progress in data center, it's really specifically that automotive seasonality. .

Operator

Next question will come from Joe Giordano with TD Cowen.

Joseph Giordano

Can you talk about what you're seeing just in terms of China automotive exports displacing local production elsewhere? I know not much of a thing in the U.S. at this point, but like in in Europe and in other parts of the world? Like what are you seeing? And how much of a headwind has that been or -- or could it become? .

Andrew Lynch

Sure. Yes. So let me just comment on what we see in our auto business broadly, and then I'll let Stephan comment on the China dynamic specifically. So Yes, we're seeing challenges in China, but we're not concerned that this is going to be a headwind to our overall automotive out growth story. And the reason for that is if you look across the rest of our automotive business and the rest of our regions, we're outgrowing in every single region. And there's different drivers in each region. So in Europe, stepping up content on EVs as our next-generation vehicle platforms come to market, innovative products like our switchable contactors are driving that. In North America, we continue to gain share in that market as our ability to supply the market locally and the supply chain resilience plays in our favor.

In Japan. We've been talking for several quarters about disrupting -- displacing local suppliers and gaining share in that market. Korea, we continue to have a long-standing successful relationship with Korean high content per vehicle and some of those vehicles are very successful in the market, rapid growth in the India market and rapid out growth. So yes, while China may lag in the short term. Our view is that the rest of those regions are highly growthful and we expect to continue to outgrow the automotive market and then.

Stephan Von Schuckmann

And let me give you a bit more color around China. So China auto is one market, but overall, that's not the whole story. The team around Jackie is managing the transition with discipline. They're winning new business with local OEMs, and they're growing across the rest of the business. And let me -- I put -- lay out a little bit deeper because it's part of your question. Let me start with how the market is changing. I think that's clear to the market is shifting besides it towards Chinese OEMs with multinationals losing local share. Export growth also favors Chinese OEMs, as you've just mentioned, and JVs generally do not participate. So that's obviously creating a further mix headwind. And then if you exclude exports, the domestic market is down roughly -- and obviously, at the same time, as you all know, pricing pressure remains intense.

And our response to that is actually to compete on value and stay disciplined on returns. That's the one side. The other topic is that we're also winning with companies that are shaping China's future. So battery supplier wins we have really positioned us for growth as the architecture gains adoption and I'd like to mention that includes sophisticated dual chemistry systems of global export potential. So that's where we can benefit as well. And then -- and that's my point to the broader story around China. It extends well beyond China auto.

So within China, Industrial is expected to grow 10% this year and commercial equipment around 5%, so that's just to give you a bit more color around what's happening in China for Sensata.

Operator

Next question will come from William Stein with Truist Securities.

William Stein

Great. I really like the slide that you included in your presentation about the data center opportunity especially the significant growth from '25 to '26. Can you comment on your expected growth over the next couple of years? There certainly seems to be significant growth opportunity from all the the customers in this end market? And I'm hoping you can comment on your growth outlook there beyond '26.

Andrew Lynch

So sure, let me frame the old data center picture and explain to you why our data center business is growing today, but actually, the larger opportunity lies ahead of us is much greater -- so first, the market is moving in our direction. The data center market is growing at 15%, same is doubling -- and this obviously means an overall rising demand for exactly what we do, which is around thermal management, electrical protection and energy management. And we're winning in it. Those are the metrics that you've seen on that slide that you just mentioned, so the 76% growth from $27 million to $48 million and that growth is coming from our existing products and an expanded commercial presence.

And these numbers exclude Dynapar, which offers a total -- offers another level of opportunity in the space. And then from there, the opportunity actually gets much bigger. So we have the 7 wins in hyperscalers, which should ramp around 2027. That will really excel -- then we have technology shifts in the architectures around 800-volt architectures in liquid cooling, which expands the serviceable content from 1.5x to 2.5x per megawatt -- and then what's even more compelling in my point of view is that is the increasing right to win. So we'll expect that, that will translate into a meaningful higher take rate.

And then I think, overall, for the growth perspective going forward, what sets us apart in the breath is the breadth of our portfolio. So with the overall product portfolio, customers see us really as this one-stop shop from [indiscernible]. And that's basically giving us a lot of opportunities going forward, and we can do that on assets that we already have. So the market is moving our way, and we're already winning and we can scale basically at low risk.

William Stein

That's very helpful. Actually, it's a springboard to ask something about Dina power because you mentioned it I think since you acquired this, this might not have grown very much, but maybe the growth opportunity is still ahead of us in this end market specifically. But can you talk about how Dana aPower has been doing lately and any other any update or details about that business in the recent past and in the near future? .

Andrew Lynch

Yes, it's a good question. So Dana power is really a separate opportunity. Dana power takes us beyond cooling and protection into the data center pie itself. And by the way, that's a deliberate strategic choice that we took -- so we've reset Dana Power's focus toward data center power needs. At the same time, we're currently continuing to pursue active clean energy projects. So it's both clean energy and data center. And why it's so compelling in our point of view because these rising power loads play directly into diner power. So that creates opportunities for inverters, converters and rectifiers and those were used for power and peak management.

And then I think it's important also to mention that when power scale, efficiency wins. The Dana Power products convert energy with high efficiency, and that matters more and more as data centers compete for good capacity and as energy efficiency becomes more critical for to these AI economics. So that's another reason why we've shifted strategically. And so far, we've actually only scratched the surface. So Dana is not included in this $48 million that we have in Components wins. And the opportunity is orders of magnitude larger and it's all ahead of us. So it's something that's basically coming mid-2027 and onwards. So we've refocused the data centers, differentiate on efficiency and position basically for a much larger opportunity ahead of us.

Operator

The next question will come from Joe Spak with UBS.

Joseph Spak

You talked about some of the inflationary pressure and your sort of ability to help sort of manage some of that pressure you're seeing. We've all seen the impact from electronics. I think you don't buy a lot of memory, but it's obviously expanded the PCBs, et cetera. So can you just help us quantify or dimensionalize some of that pressure you're seeing maybe if it is weighing on some of that margin commentary you talked about for fourth quarter of this year or even first quarter of next year and just remind us about not only the sort of pricing process, but the recovery process or a lag, if there is one on that?

Stephan Von Schuckmann

Let me start with how we're managing it, and then Andrew can give you some more details on the number side. So stat I would say inflation is being managed systematically and our margins are protected and Q4 will be no different. So looking forward, that's no different. And I think it starts with knowing exactly where the exposure is. So memory is generally not an issue for us. It's boards and electronics that are more challenging. And then obviously, the inflation is driven by data center demand. And first, we take responsibility for our own costs. And what does that mean? -- that means internal cost actions, VAV, which is designing costs out of our product and in close collaboration with our suppliers. .

And then in that process, then comes pricing and prices are then adjusted to the new market relative. And where costs can't be designed out were offset with productivity -- we work with our customers on an appropriate price adjustments. I mean in [indiscernible] electronics, the supply is tight. -- and pricing reflects that. And we remain very, very disciplined on margins.

And then maybe I think this is an important point. I've mentioned in other calls, that works because our products create real value for our customers. So they're mission-critical, they're designed in nature, and that gives us resilience. And that's exactly why our our auto business in -- for Sensata, so differentiated. So we're clear on exposure, discipline on cost in the end, firm on pricing and resilient because our product [indiscernible].

Andrew Lynch

Yes. And Joe, on the dollar impact, it's been a bit of a moving target throughout the year. We've seen earlier in the year, metals were the story. We started to see some moderation there. we've seen electronics pick up. I think the more important point is that it's not dropping through in our margins. We're either designing the cost out or we're passing it through in price, but we're not seeing a margin impact the various drivers have been moving from quarter-to-quarter, but the margins have held up. .

Joseph Spak

And maybe as a quick follow-up, like in the quarter, like can you quantify like what percent of the organic growth was just passing through some of that pricing?

Andrew Lynch

Yes. So I mean, price was still a net headwind in the quarter of about 1.5% or so in auto, you would typically expect that to be in the 2% neighborhood. So it it's either showing up in price or we're offsetting it in productivity, but it's net neutral.

Operator

Our next question will come from Guy Hardwick with Barclays. .

Guy Drummond Hardwick

If I got this correct, that looks like an auto out growth has kind of trended to this year, 2%, 1%. And then excluding the termination or liquidated damage would be about 2% or 2 points in Q3 and guidance kind of implies around 1 point versus global production down 4%. Am I -- is that accurate, you believe, Andrew.

Andrew Lynch

Yes, we see market down about 4%, and we see revenue down 3-ish in the fourth quarter, some net outgrowth of about 1%. .

Guy Drummond Hardwick

Yes. Okay. slightly confused me is that China is almost 40% of special almost 40% of Q4 global light vehicle production looking at third-party estimates. So since -- I think you said in the past that China is 20%, 25% of water. Is that correct? Or is it higher than that? So I think you're underweight on a global basis, shouldn't you be kind of benefiting from a from outgrowth from China being down 8% in the market for Q4? .

Andrew Lynch

Yes. So China is about 1/4 of our revenue. But when you look at the impact on outgrowth, there's really 2 elements. There's the end-market element in terms of our performance in the China market. And then there's the sort of global mix impact associated with China production relative to global production. -- when you net those 2, undergrowing in China, but then getting a tailwind on a global basis, combined with the growth that we see in other regions, we're netting to outgrowth.

Operator

Next question will come from Amit Daryanani with Evercore ISI. .

Unknown Analyst

This is Victor Santiago on for Amit Daryanani. I was hoping to get more color on aerospace and defense growth of 4%, which appeared weaker than industry trends and high single-digit growth -- market growth that you cited in the deck. Can you talk about what drove the delta during the quarter and expectations going forward? .

Andrew Lynch

In aerospace and defense, specifically?

Unknown Analyst

Correct.

Andrew Lynch

Yes. I think we grew mid-singles in the quarter in aerospace and defense, specifically, that's roughly in line with market. The broader segment grew stronger, and that's driven by what we're seeing in the truck market in terms of recovery in North America. .

Unknown Analyst

Got it. Understood. I think looking at the deck, I think the marking was that the end market grew high single-digit percent, high single digits versus that mid-single-digit reported growth. So is it just more so trying to delta there.

Andrew Lynch

Yes. So much like auto, aerospace outgrowth can be lumpy in any given quarter. What we've seen sort of earlier in the year was an outgrowth tailwind driven by production mix with commercial light body aircraft. As we lap some of those comps, some of that outgrowth moderates, but this is still a very high-growth segment for us and still one that we would expect to be growthful moving forward. And with market outgrowth, it's just -- can be lumpy from quarter-to-quarter depending on the the prior year mix that you're comparing against given different shipset values per aircraft?

Operator

Next question will come from Shreyas Patil with Wolfe Research.

Shreyas Patil

Can I just to confirm, so the auto outgrowth for the quarter of -- that included the onetime payment that you received to $24 million -- so if I remove that, I think it would imply that the quarter you were maybe down 1 point versus the market. Am I looking at that correctly?

Stephan Von Schuckmann

I think when we calculated it, we were about 0.5% of our growth. So we still had some net outgrowth in the quarter.

Shreyas Patil

Okay. And then -- and then maybe pivoting to the data center opportunity. It's impressive that you're already getting to $48 million this year. Can you just remind us how many of -- how much -- how many of those 7 awards will be launching next year? And then how do we think about the run rate for the business as you get towards the end of '27,

Andrew Lynch

So a lot of those awards are based on the high-voltage architectures. And what we've been saying is that the start of revenue, depending on the buildout timing of these individual new architectures is mid of next year. And from then, we start gradually growing our revenue based on our thermal management products, our energy management products and so on. So it basically start in mid-2027 and from then a gradually grows. .

Shreyas Patil

Okay. Is there any way just to kind of dimension, I mean, if you're doing roughly $50 million at the moment with those added awards, I mean, by the time we exit 27 could this be kind of a triple-digit kind of business? Or is it just too early to tell?

Andrew Lynch

L -- it's a bit too early to expose an exact number now. But as we've mentioned, the opportunities are great for Sensata and we feel confident that we'll achieve a high growth rate. So we'll keep you updated from quarter-to-quarter. .

Operator

Next question will come from Wamsi Mohan with Bank of America.

Wamsi Mohan

I apologize if I'm hopping between calls. So if you already answered this. But are there any other EV programs that are under review. So should we be thinking that there are potentially more of these kind of termination payments potentially? Or was this a one-off that you don't expect really to recur?

Andrew Lynch

We don't expect any recurrence in that dimension. .

Wamsi Mohan

Okay. Okay. Sorry, I missed that. And then just if you think about the guidance. I think last quarter, you had said that Q4 would be roughly flat with Q3. If I take the midpoint of the new guide, it's about 2% below Q3 without the onetime. So could you just help bridge sort of what has changed in the -- at the higher level that's creating a little bit of a different seasonality to the course of the rest of the year?

Stephan Von Schuckmann

Sure, Wamsi. It's really just 2 factors. One is outperformance in the third quarter as the market developed a little sooner than we expected. And so that creates a bit of a higher jump-off point and then the other is the revision downward in China, you net those 2 out and you get to a number that reconciles to sort of what we expected a quarter ago.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. James Entwistle for any closing remarks. Please go ahead.

James Entwistle

Thank you, operator, and thanks to everyone who joined today's call. Before we conclude, I'd like to extend my gratitude to everyone who participated in our recent investor perception study. Your feedback clarifies shareholder priorities and opportunities to improve helping to guide our path forward.

To close, I'm pleased to announce that this quarter will be participating in 2 conferences. Andrew and Stephan will be attending the RW Baird Global Industrial Conference on Wednesday, November 11, in Chicago. And then Andrew and I will be attending the UBS Global Industrials and Transportation Conference on Wednesday, December 2 in Florida. We look forward to connecting with many of you there. Operator, you may now conclude the call.

Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.