Sensata cuts debt ratio to 3.2x, expects 2.5x ratio by end of 2025

By Devika Patel

Knoxville, Tenn., July 25 – Sensata Technologies Holding plc intends to use the strong free cash flow it is generating to reduce leverage to 2.5x by the end of 2025 from 3.2x at the end of the last quarter.

The company paid off its variable-rate term loan last quarter as part of this bid to continue cutting leverage.

“We paid down the balance of our outstanding variable-rate term loan during the second quarter,” executive vice president and chief financial officer Paul S. Vasington said on the company’s second quarter ended June 30 earnings conference call on Tuesday.

“Our net leverage ratio was 3.2x at the end of June 2023, and we expect this to decline to below 2.5x by the end of 2025, primarily through strong free cash flow generation,” he said.

In the second quarter, the company produced record quarterly revenue of $1,062,000,000, a 4.1% increase from the second quarter of 2022.

Cash and cash equivalents were $857,312,000 as of June 30, 2023, compared to $1,225,518,000 as of Dec. 31, 2022.

Net long-term debt was $3,770,507,000 as of June 30, 2023, compared to $3,958,928,000 as of Dec. 31, 2022.

Current portion of long-term debt, finance lease and other financing obligations was $1,809,000 as of June 30, 2023, compared to $256,471,000 as of Dec. 31, 2022.

Based in Swindon, United Kingdom, Sensata is a producer of sensors and controls for manufacturers in the automotive, appliance, aircraft, industrial and HVAC markets.

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