Good day, and welcome to Sensata's Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] please note this event is being recorded. I would now like to turn the conference over to James Entwistle, Senior Director of Investor Relations. Please go ahead.

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 Fourth Quarter and Full Year 2025 Financial Results 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. The 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. 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 call will relate to non-GAAP financial measures. Our GAAP and non-GAAP financial measures, 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 business. Andrew will cover our results for the fourth quarter and full year of 2025 as well as our financial outlook for the first quarter of 2026. Stephan will then return for closing remarks. We will then take your questions. Now I would like to turn the call over to Sensata's Chief Executive Officer, Stephan Von Schuckmann.

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 would like to begin today with an update on Sensata's transformation journey. Throughout the year, I've spoken about our transformation through a framework of 3 key pillars: operational excellence, capital allocation and growth, along with the various initiatives which underpin them. These key pillars for value creation are fundamental to everything we do. Initiatives that we discussed this year are simply building blocks, laying a foundation on which we build our future. As we enter 2026, I'm proud of the work we did to put those building blocks firmly in place, and I'm excited to share more about the next phase of our transformation. Before we get to the next phase of our transformation, I would like to take a moment to acknowledge the magnitude of what we accomplished this year and to thank the Sensata team for their tremendous work. Our team demonstrated resilience and determination to perform, continuously overcoming the many challenges that came our way and always delivered on our commitments. I'll share more proof points in a moment, but at a high level, as we reflect on the year, the outcome of our 3-pillar approach is compelling. With our focus on operational excellence, we reported results at or above the midpoint of our guidance ranges every quarter this year. With our focus on capital allocation, we created urgency to improve cash generation, reducing both gross and net leverage and returning capital to shareholders. And with our focus on returning to growth, we overcame structural challenges in our business and end market mix, ultimately returning to outgrowth in the second half of 2025 and returning to revenue growth in the fourth quarter. We…

Thank you, Stephan, and good afternoon, everyone. Let's begin on Slide 18. As Stephan mentioned earlier, 2025 was a transformative year for us as we rolled out new initiatives framed around 3 key pillars. Our Q4 and full year results are proof points for the progress we made. We reported revenue of $918 million for the fourth quarter of 2025, which exceeded the midpoint of our guidance range by $13 million. Fourth quarter revenue represented an increase of $10 million or approximately 1% compared to $908 million in the fourth quarter of 2024. This was the first year-over-year quarterly revenue increase since the first quarter of 2024. On an organic basis, revenue increased approximately 4% year-over-year in the fourth quarter. We delivered adjusted operating income of $180 million and adjusted operating margin of 19.6% in the fourth quarter of 2025, an increase of 30 basis points, both sequentially and year-over-year. Adjusted operating margin was diluted by approximately 30 basis points due to approximately $15 million of 0 margin pass-through revenues related to tariff recovery. Excluding the dilutive impact of tariff pass-through, fourth quarter adjusted operating margin increased by 60 basis points year-over-year and 40 basis points sequentially. Tariff pass-through revenues did not meaningfully impact sequential performance as we recorded similar levels of tariff cost and pass-through revenues in both the third and fourth quarter of 2025. Adjusted earnings per share of $0.88 in the fourth quarter of 2025 increased by $0.14 year-over-year as we delivered on our margin expansion plans. Adjusted net income was $130 million in the fourth quarter of 2025, an increase of approximately 16% year-over-year. We recorded approximately $50 million of restructuring-related and other charges in the fourth quarter. While these charges primarily related to our ongoing transformation efforts, they also included approximately $16 million of primarily…

Thank you, Andrew. Let's turn to Slide 25, and I'll make a few closing remarks. I'm tremendously pleased with the 2025 results that Andrew just shared. We are in the early stages of what we expect will be a multiyear transformation journey. However, these results are evidence of just how significantly our business has changed for the better in such a short period of time. As we look ahead to 2026, we are in a fundamentally different place than we were a year ago. We have built an organization that is intently focused on execution, and we have adopted a highly structured way of working. We start with KPIs that are designed to create value. We underpin those KPIs with targets that are benchmark-driven always against best-in-class performance. For each target, we define metrics against which we regularly evaluate progress. And behind those metrics are a pipeline of measures, each with accountable owners. The structured style of working is deeply ingrained in our organization. While 2025 was indeed a compelling proof point that our approach is working, maximizing value creation must always be our goal. Unlocking value means continuously raising the bar. As we turn the corner into 2026, we must build upon the foundation we laid in 2025. We have taken bold steps to do exactly that. We have reorganized our business into 3 distinct operating segments, each with unique growth and end market characteristics and specific growth mandates. We developed a clear framework through which to pursue growth, and we installed the right leadership team, including new segment leaders to execute the next phase of our transformation journey. As with everything we do, the goal of this transformation is value creation, and that is how we will measure our success. I could not be more excited for what is ahead. The future is bright, and I look forward to updating you on our progress along the way. I'll turn the call back to James for Q&A.

Thank you, Stephan and Andrew. We will now move to Q&A. In order to ensure adequate time for all participants to ask a question, we will limit each participant to one question. Should you wish to ask a follow-up question, please reenter the queue. Operator, please introduce the first question.

[Operator Instructions] The first question today comes from Wamsi Mohan with Bank of America.

Stephan, given the transformation underway where you've made a lot of progress here, can you just talk about how you see the longer-term revenue potential of the portfolio? I appreciate your 2026 guidance that you have given. But how should investors think about the ultimate like revenue growth potential here over a longer period of time, especially since you emphasized how key it is to your strategy?

Wamsi, thanks for the question. So I think it's very important to mention that the overall growth opportunity that we've shown you on the slides today and especially in the call and in the different segments, that is real. So it's definitely real growth. We have different products, different solutions for each segment. So we feel that's real, and that's definitely also the next building block of value creation. Secondly, we have a very clear growth mandate per segment. And also equally important to mention, we have the right team in place to execute this growth. So we've had our proof points, as we've mentioned in the call, and Sensata has returned back to growth in the second half of 2025. And -- additionally to that, we have a broad opportunity for growth across all products and all segments. So if you ask me, I feel really good about the growth opportunities that we have in 2025 (sic) [ 2026 ], and I feel equally optimistic around the growth opportunities that we've shown in each and every segment in 2027 and onwards. Yes, there's still a lot of work to do. And we still need to penetrate some of these markets and some we're in, like I've mentioned. But I feel very confident that we're on a good track, and I feel very confident about growth going forward in 2027 and onwards.

The next question comes from Joe Giordano with TD Cowen.

Look, I think you guys explained the segmentation well in terms of like the thought process behind it. My first initial thought when I saw it was, okay, 2 of these segments are fairly small, and this is a company like focused on efficiency. So Stephan, can you talk to me how you balance like, okay, now we have 3 reporting structures, 3 presidents, you kind of add a little, like -- I don't want, bureaucracy is the wrong word there, clearly. But like you add more kind of fixed structure there. How do you weigh that against what you're getting by separating it this way?

Let me let Andrew start on the fixed cost structure part on the overhead, and then I'll jump in. Thanks, Joe.

Yes. So Joe, I mean, just from a cost perspective, you're right. We've added a little bit of cost to the overhead structure here in our corporate costs, and we expect that to be sort of the normalized run rate moving forward, take variable compensation costs out. That was a little higher in Q4. But in general, we expect the second half run rate to sort of be our normalized run rate moving forward. We expect that to pay for itself. I mean the expectation is that, that's an investment. And with that investment, we will drive growth and margin expansion in each of our segments that more than offset that incremental cost. And I'll let Stephan talk to the thinking around strategy here.

Exactly. So Joe, I see it as this, the resegmentation, and we mentioned it in the script, is all about value creation. And we've been executing, which is the first building block around value creation. But if you look at the second building block, which is everything around growth, we felt that with this segmentation, this gives us this level of opportunity. And allow me to order that a bit strategically. So the resegmentation is anchored in our end markets. And I think that's very important around value creation. It also reflects how we structurally manage and operate the business at Sensata despite now having 3 instead of 2 segments. What it also does, it strengthens alignment with our strategic pillars. So driving focused growth and again, operational excellence, which was a focus in 2025, and does this by recognizing the distinct characteristics and value drivers of each segment. That alone is for me, value creating. And additionally to that, each segment now operates with a clear growth mandate and defined accountability, supported by designated leadership, which is responsible for executing these very segment-specific strategies. So that's our path to value creation by splitting up into 3 segments coming from 2 in the past.

The next question comes from Mark Delaney with Goldman Sachs.

You have [ Vermont ] on for Mark. The company mentioned that they're targeting low single-digit outgrowth in the Auto segment in 2026. And you previously talked about targeting bookings with domestic OEMs in Asia and in China. Can you maybe talk a little more about how those bookings with the domestics have been tracking and to what extent that and other factors are underpinning the low single-digit outgrowth expectation in 2026?

Yes. Absolutely. Thanks for the question. Do you want to start?

So let me jump in first and then Andrew, please add. So to the point in winning additional business in Asia, let me explain it the following way. So since the last call -- so let me start differently. So what we've done, and this has been very supportive in the business development in these last couple of months, is first of all, we've strengthened our Asia team from an organizational point of view. So we've implemented a China President, and you saw that in the beginning, a gentleman called Jackie. Jackie has been highly successful within China in winning new business. And since the last call that we had together, Jackie has won additional business, specifically with Chinese OEMs. So it's been very successful, and I feel very bullish about that. We've been winning business with contactors, but also with other content around sensing. And it's been a great part for us, utilizing our plants and -- with broad business wins. Now addition to that, so if I look at the -- allow me to look at the region maybe a little bit more from a broader perspective. We've also won good solid business in Japan. And let me give you one specific example. So we have doubled our revenue with a leading Japanese OEM, and we've also won further business in Japan in these recent months. I've actually just been in Japan, and it was very, very good to see what business the team has won there and exciting to see that. And then I've actually -- while I was down there, I traveled over to South Korea to meet our team in South Korea. And we've also won good business with customers in South Korea. And think about it from this point of view, the content per vehicle of the business that we've now won in South Korea with local customers has exceeded the North American OEM content and -- content per vehicle. And that is obviously traditionally the highest content per vehicle for Sensata, and we've now managed to exceed that in South America. So overall, I think we've made good progress there. Look, again, a lot of work to do, and we have a great ambition for 2026 to win further business, but I'm very, very happy with the progress that we've made in China and Japan and South Korea and overall in Southeast Asia. Andrew, any point you wanted to add?

Yes. I'll just add on the content per vehicle dynamic. As you noted, we had a challenge earlier in the year with our mix and our exposure to local OEMs. The enabler for us returning to outgrowth in Q3 was effectively that we've overcome that headwind. We won enough business with local OEMs in China that if you take the top 10 to 20 OEMs in that market and compare them to the multinationals where we've historically had really strong content, we're effectively at parity. And so we've overcome that mix headwind in China, which has enabled us to outgrow that market in the back half. And then more broadly, the automotive market as a whole, we saw production start to normalize in the sense that China was not outgrowing the broader market by such a rate that it made it impossible to outgrow the market. And we expect similar in '26. We expect market growth across regions to be more or less similar. And so our content difference in China will be less relevant because of the similar market growth in each region.

The next question comes from Robert Jamieson with Vertical Research.

Just want to focus back on the new segment structure. And I think the separation obviously makes a lot of sense. And as Joe alluded to, there's obviously some costs that come with that. But as we think about this as we go forward, does this potentially help you become more nimble from an organic reinvestment standpoint in the different segments where you see fit given you have dedicated leadership and potentially have them -- have a higher ability to capture opportunities as they arise, more quickly to drive growth through the cycle, particularly given the focus on winning with the right products and customers across the portfolio? Is that the right way to think about part of this change?

To keep it short, that's exactly the right way to see it, yes. That's exactly the thinking behind it. Each segment that we've defined is unique for itself and each segment has ample opportunity for growth. And with a very strong and partially new leadership team in place, we feel very confident that we can generate values by doing that. I think this is -- you summarized it very well.

Okay. Perfect. And then sorry, just one quick follow-up there, too. Stephan, as you've traveled quite a bit across the globe, any new learnings or areas of focus outside of what you've discussed today that you'd like to improve upon just across any of the new segments?

So one big learning is, especially now that I've also been to Southeast Asia and I met my teams in Japan and Korea -- and I'll still travel on beyond that. To be open, I'm even more confident with what I see and the strong team that we have and the capabilities that we have. This is really, I think, something that stands out with Sensata in comparison to others. When I travel to Japan, we have a long, long-standing team with a great amount of experience and have been with the company for many years. So they know exactly how to generate business and how to generate value there. With the right guidance and with the right leadership now in place and especially with the new team, I really feel good about that. So that's basically been a reconfirmation of what I have seen in other areas that I visited, for example, in China, which I see a similar picture or even in Mexico and other regions. I wouldn't list them all up now, but that's been very encouraging. And I think that foundation gives us the opportunity around value creation and growth and everything that we have ahead of us.

The next question comes from Joseph Spak with UBS.

I wanted to touch, Stephan, on some of the opportunities you mentioned in the data center, and I know you have some content in and outside, as you highlighted on the slides. And some of that actually looks new for '26. But I guess the question is, as you sort of form this team to focus more on the opportunity, is that expected to deliver mostly organic results? And if so, is that leveraging existing tech and finding new uses? Or does that mean new R&D? Or will there be some inorganic opportunities potentially that present themselves? And then I guess just a quick aside to that as well. Like I know you've taken like almost $400 million of write-downs on Dynapower, but were those -- were any of those asset write-downs, meaning that if you start to leverage that tech for these opportunities, the margin accretion could be quite good?

Thanks for the question. Let me elaborate a bit how we see data centers and what organic growth opportunities we have with them. So I think, first of all, very important to mention that we have -- that our products are in data centers today. So in existing data centers that are up and running. And I'll say that for products that are both inside data centers and outside of data centers. And that's really broad. So inside data centers, we're talking about electrical protection. So we're talking about circuit protection, circuit breakers, fuses, content. Those are all existing products. Think of sensing, so pressure and temperature sensing, think of refrigerant leak detection and so on. Those are all existing products within data centers today. They are designed in hyperscalers that design those Sensata products into data centers that exist. The same applies to products outside of data centers or Sensata products outside of data centers. So we're talking about power and peak management, which is converters, inverters. We're talking about electrical protection, so like contactors, motor protection and so on. So these are all existing products inside of the data center. That's very important. So this is all organic -- organic growth if we grow with -- if data centers are growing, we grow with them if they're designed into the concept. Now beyond that, it's still within the range of organic growth. We're also designed into future data center concepts. So you have the hyperscalers that specify the Tier 3 components. And basically, once they specified and once they're approved, they're designed into these future concepts. So we're designed into future data concepts with certain hyperscalers. So not all, but with certain. And on the other hand, we're in deep discussions with others. So we obviously have the ambition within 2026 to try and get design into most hyperscaler concepts of the Googles and Amazons and Meta and so on. And now beyond that, we want to leverage our sensing capabilities to develop further unique products to broaden the product portfolio that we have today, everything that I've just mentioned, which is organic growth, we're going to broaden that, and that is related to own R&D. And you could see on some of the slides, that's, for example -- one example is flow sensors. So that's within our own development, and we're going to design a specific flow sensor for data centers and going to design that in the future data centers that we're currently discussing. So that's just -- that's it. And then we have -- within data centers, we have specific focus areas, like liquid cooling for data center racks where we feel we have a very competitive position. So overall, strong position with existing products, a lot of ideas for future products that we're currently working on, and that will give us ample opportunity to grow within the data center segment -- market.

And on the Dynapower question, just to add some clarity there. So the charge that we took was a goodwill impairment charge. And so we won't see any margin lift associated with lower amortization or depreciation for that example. But I think it does raise an important point, which is how we think about margin expansion and productivity. And we're focused on real margin expansion. And so when we say we're looking to expand margin at least 20 basis points next year, we're focused on doing that through a combination of improved volume and volume leverage and productivity. One of the things that will help margins over time is the fact that we've gotten more disciplined about our capital expenditures and deploying flexible line concepts to keep CapEx lean, and we expect that will show up in lower depreciation expenses over time. But our focus is on real margin expansion and not write-offs.

The next question comes from Luke Junk with Baird.

Just curious about a couple of the newer areas that you unearthed tonight, specifically data center and defense. Just wondering if you'd be able to speak to materiality for both of those in terms of percentage of sales today. And then just as we're trying to think about the growth profile potential, I don't know if you could speak to any historical growth in terms of recent growth trends or maybe put a finer point on some of the opportunity from here?

Sure, Luke. I'll take the first part of that question on the size of the segment. So Aerospace, Defense and Commercial Equipment segment in total is about $800 million of revenue on an annualized basis. If you break that down, there's obviously multiple market verticals that we serve within that segment. I'll give you sort of a high-level breakdown. About 40% of that is on-road truck across the 3 key regions that we serve there. Another roughly 25% tied to the construction end market. Another roughly 10% tied to the agricultural market. The balance of that segment would be in other off-road vehicles as well as commercial aviation, defense, aftermarket, distribution. Those all break down pretty equally in sort of the 7% to 10% size range each. So pretty diversified. And within those, we see the highest growth opportunity from end markets in commercial aviation and defense given the higher level of spend. And then on top of the end market growth opportunity, there's obviously opportunity around new content that we called out. And I'll turn it over to Stephan to talk a little bit more about the growth that we see.

Exactly. So let me explain the growth opportunity around defense in a bit more detail. So here, I think it's important to mention, we also said it in the script, we're obviously in a period of a super cycle growth of EU and U.S. Defense spending. And Sensata has a fantastic opportunity to participate in this growth. And today, there are multiple defense applications being served with our products across fighter jets, helicopters, ground transportation vehicles. These are obviously all strongly growing applications. And then we have the emerging UAV, or unmanned aerial vehicle market, where we really see significant growth opportunities. And you also saw in the slide that within those UAVs, we really have existing business with all different types of products in powertrain systems and precision sensing and feedback, flight control and actuation systems and mission systems and targeting, where we have a broad range of products within the actual drones or UAVs today. And because this market where we expect a double-digit percent CAGR is growing significantly, we feel we're going to participate with our products in that growth.

Andrew, it would be possible just to break down the Industrials segment as well, similar from an end market standpoint, quick?

Sure thing. Industrials, as you know, is -- we've historically talked about that in terms of commercial versus residential. And I think that split still largely applies. We're focused on those verticals rather than applications, like HVAC and appliance, like, we've previously disclosed. So I'll just give you the breakdown here. So that resi and commercial sort of combined would be about 80% of the segment and then the remaining 20% would be the clean energy opportunities that we see around, for example, Dynapower microgrid applications outside of the data center as well as electrical protection components that we sell into grid hardening applications.

The next question comes from Samik Chatterjee with JPMorgan.

This is M.P. on behalf of Samik Chatterjee. I just wanted to ask how much of the industrial growth during 4Q was linked -- sorry, during the full year was linked to A2L gas leak detection sensors and how did the rest of the Industrial business track during the year? And also we'll squeeze in another one there, you will be launching this flow sensors in 2026. Will that be a similar contribution like the A2L this year?

Yes, I'll take the first part of the question on the size. So we launched A2L last year -- in 2024. We saw somewhere in the order of magnitude of $10 million to $15 million of revenue primarily in the fourth quarter of 2024. And then that ramps significantly to about $70 million in 2025. So you could think of the year-on-year growth is somewhere in the order of magnitude of $50 million to $60 million. And then we think that matures at north of $100 million annualized run rate business as our incremental wins continue to stack and as we see that market mature.

And let me add to that. So that's actually been a success story in 2025. We've won 2 major new businesses with OEMs long term -- with long-term agreements with A2L. So that's, I think, was a really, really good success in 2025. The team has done a fantastic job to fill our order books, and we have a really high market share in North America. And what's quite interesting with this business is -- and that's something we also discussed now during the trip in Japan and in Korea, obviously, depending on regulation, we see great opportunities there as well. And if you're looking at a market size, a SAM in North America of roughly $150 million, you see the same amount of sizable business in Southeast Asia. So in this case, more in Japan and in South Korea. So that's a great opportunity. And by the way, with A3, similar size of business that we're working on. So great growth in '25, and we're going to see continued growth in '26 onwards and especially now if South Korea and Japan comes in, that will be good for us as well.

The next question comes from Konsta Tasoulis with Wells Fargo.

Just going back to the data centers. How long have you guys been working on the opportunity there? And where do you feel the bigger value-add opportunity is? And where are you more differentiated? Is it more like electrical protection side? Or is it the sensors? And is that something that could be another -- in terms of dollars, look like A2L, the leak detectors in the next year or 2?

So we've been working on this quite some time. We've spent a lot of time in 2025 where we've intensified our efforts. And look, it's pretty broad. So I wouldn't say it's based on a single group of products, be it electrical protection sensors. It's pretty broad. I mean we want to -- when we speak about designing into future data center concepts, we don't only want to do that with a specific group of products. We're looking at all opportunities that we have and all the opportunities that I've just mentioned in this call, so inside and outside of data centers. Look, give us some time, this is developing, and we'll be more precise once we go further through the calls of every quarter. But it's got a lot of opportunity, and we feel very confident that this could be a significant growth driver for the segment and for Sensata.

The next question comes from Steven Fox with Fox Advisors.

I was just curious if you could provide any more color around the segment margins from the aspects of where do you see the most opportunity for margin expansion and maybe where the incremental margins may differ?

Yes. So I mean, we're focused on operating margin expansion across all of our segments over time. Now certainly, growth is going to be an element of that operating margin expansion, and we see higher growth opportunity in Industrials and Aerospace, Defense and Commercial Equipment, given the stronger underlying market growth that we expect in those sectors over time. So I would say Automotive will continue to be sort of our -- we'll look to outgrow the market by a couple of percentage points, and we'll look for variable contribution margin in the 20% to 30% range on that business, depending on the product mix and region. Industrials and Aerospace would be similar, but with higher growth rates.

When it gets to strengthening our margins, we don't differentiate between segments. So when we speak about improving productivity or plant performance irrespective of the individual segment, we do that across all segments. When we speak about reducing product costs, we tackle all our products in every single segment. We don't only focus on specific products per segment. So it's an exercise that we've been pushing very hard in 2025 overall businesses that we have with Sensata, and we're going to do exactly the same, if not, even harder in 2026 going forward. So it's not a specific segment-related exercise. This is a very, very broad initiative to push on margin improvement.

The next question comes from Shreyas Patil with Wolfe Research.

So looking at Q4, you mentioned organic -- Auto organic growth was 1%, but it looks like industry production was up 2%. So it looks like you underperformed the market by about 1 point. You're pointing to low single-digit outgrowth in '26. Just thinking maybe if you could help give us some of the drivers of outgrowth for this year? And are there opportunities to add content in areas outside of the powertrain, such as domain consolidation or autonomy?

Yes, sure. I'll take the first part of that question. So a little bit of this is a function of using whole numbers here on the percent. But yes, you're right, the Auto production rounds to 2% and our revenue rounded to 1%. Biggest reason for that is, again, regional mix. So if you unpack the growth rates in Auto production in the fourth quarter, China grew about 4% year-over-year in Q4. The North America and Europe both decreased by about 0.5%. Korea, where we mentioned we now have even higher content per vehicle, dropped by about 6% year-on-year in the fourth quarter. And so while there was average market growth of close to 2%, the market mix of where that growth occurred was not in our favor from a content per vehicle perspective. Looking ahead to 2026, as we look at third-party production forecasts as well as what we're hearing from our customers and seeing in our order book, we're seeing relatively similar growth rates in every region. And so we don't expect this regional mix dynamic to be meaningful in 2026. And that's important because as the regional mix and growth rates normalize, our underlying content growth will be the true driver of our market outgrowth.

And let me add to that. I think you asked the question around growth opportunities. And let me start a bit broader. And I think it's -- in this case, it's important to mention that Sensata is in a really desirable position. And let me explain that. Let me explain why I call it a desirable position, is because we can literally grow in any region with any type of application, and that's really irrespective of it's an ICE, hybrid or EV related. So what does that ultimately mean? We can follow any pace of electrification. If it speeds up or if it slows down, we will follow that pace. So take an example where we have a high push in content. Andrew mentioned the content increase, for example, in China. Strong push towards electrification. We benefit from that. We have doubled the content of an ICE. If we win business, that obviously supports our growth path in China. Around plug-in hybrids and EVs, we also said we have growth potential in that market. I mean that's actually a strong growing application where we see a 12% CAGR overall. And if we win business with PHEVs or EREVs, we will grow with the market depending where PHEVs and EREVs are sold the most. So that is another area where we see a content bridge opportunity for Sensata to grow.

The next question comes from Joe Giordano with TD Cowen.

I appreciate the follow-up here. One thing I just wanted to like a more existential question, I guess. But Sensata in the past got itself into trouble by chasing the shiny thing, right, and then ending up with a bunch of businesses that were subscale. So as you talk about small businesses today into attractive markets like data center and grid hardening and all these things, I think we all appreciate why Sensata would want to chase that. But how do you make a decision and be confident that these are businesses that we should win, that we can participate in profitably and then we can ultimately have scale and kind of prevent the same issues that we all kind of saw years ago?

So I think in this case, it's important that a lot of these products exist really today with Sensata. So these are an existing product range within our portfolio. It could be within Auto. They could be within other areas of business. So it's not a new development of a product. It might be a slight adaption of a product, but we have high standards, high-quality products that we can apply out of, for example, Auto and apply into other applications, be it data centers. So I would say, in that case, the risk is manageable. The second thing is, Joe, if you look at our growth framework that we've set for ourselves. So we say we want to maximize value from our core products, as I've just mentioned, that is maximizing because we're using an existing product portfolio. And then we'll leverage our scale and pedigree. So a lot of these products that are already produced at high scale, where we have existing production line and existing equipment that we can use in this case, no additional assets required. No additional plant structure is required. We use our competitive footprint around the world, and we produce our products as we do every day, just for a new type of segment. And then, look, we've also defined rigorous standards for this new business. So it's not just an area where we would step in. It needs to be high volume. It needs to be platform-driven business. It needs to be -- they need to be mission-critical. They need to be regulated socket. That's important for us. And they also need to be hard-to-do applications. I think that's also important. So it's not something that you can copy that easily. So we have, I think, a high standard that we've set ourselves before we enter these markets or we enter new markets within the segments to manage that risk accordingly.

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

Thanks, everyone, for joining today's presentation. This concludes our fourth quarter and full year 2025 earnings conference call. Operator, you may now end the call.

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