Slide 1: Sensata Second Quarter 2023 Earnings Presentation
Sensata Second Quarter 2023 Earnings Presentation July 25, 2023
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures Safe Harbor Statement This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terminology such as "may," "will," "could,"
Slide 3: Key Performance Highlights Q2 2023
Key Performance Highlights Q2 2023 • Record revenue of $1,062M in Q2-23 • LTM outgrowth to market of 535 bps; average outgrowth since 2020 of 735 bps Robust financial • Adj. operating profit of $206M or 19.4% (20.1% or 110 bps increase on constant currencies) performance • ANI of $149M grew 15.1% Yo
Slide 4: Launching new high-performance products to address Electrification Megatrend
Launching exciting new high-performance products to address Electrification Megatrend holistically Compact Power Gen-5 Inverter New N3-Battery Management System Launching Q3-23 Launched Q2-23 • Enables Green Hydrogen Electrolysis; Microgrids, and • Monitors and manages key safety, performance, and c
Slide 5: Q2-2023 Financials and Q3-2023 Financial Guide
Q2-2023 FINANCIALS AND Q3-2023 FINANCIAL GUIDE
Slide 6: Q2-2023 Financial Summary
Q2-2023 Financial Summary • Revenue growth YoY of 4.1% composed of: ◦ Organic revenue increased 3.4% $ in millions, except EPS Q2-2023 Q2-2022 YoY B/(W) ◦ Acquisitions net of divestitures increased revenue by 2.1% Revenue $1,062.1 $1,020.5 4.1 % ◦ Foreign exchange decreased revenue Adjusted Operatin
Slide 7: Q2-2023: Performance Sensing
Q2-2023: Performance Sensing Revenue Segment Operating Income $757.4 $731.6 (1) % operating margin (1) $191.1 $179.3 25.2% 24.5% Q2-23 Q2-22 Q2-23 Q2-22 Q2-23 YoY Revenue Growth Reported Organic • Automotive revenue increase reflects market growth, content, and pricing, partially offset by unfavorab
Slide 8: Q2-2023: Sensing Solutions
Q2-2023: Sensing Solutions Revenue Segment Operating Income $304.7 $288.9 (1) % operating margin $84.2 $85.7(1) 27.6% 29.7% Q2-23 Q2-22 Q2-23 Q2-22 Q2-23 YoY Revenue Growth Reported Organic • Industrial revenue increase reflects the positive net impact of acquisitions and divestitures offset by weak
Slide 9: Corporate and Other Operating Expenses
Corporate and Other Operating Expenses $ in millions Q2-2023 Q1-2023 Q2-2022 YoY B/(W) • Adj. Corporate and Other decrease YoY Corporate and Other $81.5 $62.4 $76.4 (6.7)% primarily due to cost containment and lower incentive compensation % Revenue 7.7% 6.3% 7.5% Adj. Corporate and Other $68.1 $63.4
Slide 10: Capital deployment strategy improving ROIC
Capital deployment strategy, including repayment of debt, is improving ROIC (now 9.8%, up 50 bps from FYE 2022) Free Cash Flow ($ millions) $68 $56 $0.12 3.2x Quarterly Dividend Payment net leverage ratio as of June 30, 2023; on August 23, 2023 for shareholders of record as of <3.0x expected by 2023
Slide 11: Q3-23 Financial Guidance
Q3-23 Financial Guidance $ in millions, except EPS Q3-23 GUIDANCE Q3-22 B/(W) • Q3-23 end-market growth expected to Revenue (4%) - 0% be ~(6%) YoY $980 – $1,020 $1,018.3 ◦ Auto: ~(5%) organic (3%) - 1% ◦ HVOR: ~2% Adj. Op Income $183 – $199 $197.3 (7%) - 1% ◦ Industrial: ~(15%) ◦ Aerospace: ~5% Adj.
Slide 12: Key Messages – Looking Forward
Key Messages – Looking Forward Deliver strong outgrowth to market Foster a culture of innovation Long-term company outgrowth target of 400-600 bps Helping customers solve their mission-critical, hard-to- do engineering challenges Execute long-term strategy to drive organic revenue growth Reach our E
Slide 13: Appendix A: Other Financial Information
APPENDIX A: OTHER FINANCIAL INFORMATION
Slide 14: Q2-2023 GAAP Results
Q2-2023 GAAP Results $ and shares outstanding in millions, except EPS Q2-2023 Q2-2022 B/(W) Revenue $1,062.1 $1,020.5 4.1 % Gross Profit $330.0 $333.9 (1.2)% (% of revenue) 31.1% 32.7% R&D $44.9 $48.0 6.5 % (% of revenue) 4.2% 4.7% SG&A $91.3 $97.3 6.2 % (% of revenue) 8.6% 9.5% Amortization of Inta
Slide 15: Q2-2023 Non-GAAP Results
Q2-2023 Non-GAAP Results $ and shares outstanding in millions, except EPS Q2-2023 Q2-2022 B/(W) Revenue $1,062.1 $1,020.5 4.1 % Adj. Gross Profit $341.1 $335.2 1.8 % (% of revenue) 32.1% 32.8% R&D $44.9 $48.0 6.5 % (% of revenue) 4.2% 4.7% Adj. SG&A $89.1 $91.6 2.8 % (% of revenue) 8.4% 9.0% Adj. Op
Slide 16: Q2-2023 Cash Flow Statement
Q2-2023 Cash Flow Statement $ in millions Q2-2023 Q2-2022 B/(W) Net Income $49.1 $34.8 41.0 % Depreciation & Amortization $87.2 $68.2 27.9 % Changes in Working Capital ($46.4) ($40.0) 16.1 % Other $25.9 $31.6 (17.9)% Operating Cash Flow $115.8 $94.5 22.4 % Capital Expenditures ($47.6) ($38.4) (24.0)
Slide 17: Balance Sheet
Balance Sheet $ in millions JUN 30, 2023 DEC 31, 2022 Total Assets $ 8,392.6 $ 8,756.2 Working Capital $ 1,595.7 $ 1,596.1 Intangibles, Net & Other Long-Term Assets $ 5,916.0 $ 5,981.2 $ in millions JUN 30, 2023 DEC 31, 2022 Cash & Equivalents $ 857.3 $ 1,225.5 Current Debt $ 1.8 $ 256.5 Net Cash $
Slide 18: Appendix B: GAAP to Non-GAAP Reconciliations
APPENDIX B: GAAP TO NON-GAAP RECONCILIATIONS
Slide 19: Non-GAAP Measures
Non-GAAP Measures We supplement the reporting of our financial information determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures. We use these non-GAAP financial measures internally to make operating and strategic decisions, inc
Slide 20: Non-GAAP Measures – continued
Non-GAAP Measures – continued Free Cash Flow – is defined as net cash provided by/(used in) operating activities less additions to property, plant and equipment and capitalized software. We believe free cash flow is useful to management and investors as a measure of cash generated by business operat
Slide 21: Adjusted EBITDA
Adjusted EBITDA In thousands Period Total Sensata LTM 2Q 2023 1Q 2023 4Q 2022 3Q 2022 2Q 2022 Net income $ 388,931 $ 49,111 $ 86,417 $ 113,150 $ 140,253 $ 34,841 Interest expense, net 166,728 38,105 40,091 43,676 44,856 44,842 Provision for income taxes 102,008 19,873 23,726 11,988 46,421 20,020 Dep
Slide 22: Organic Revenue Growth
Organic Revenue Growth Q2-2023 Constant Currency % Reported % Change Less: Acquisition & Organic Growth Less: FX Impact Change (GAAP) Divestitures, net (non-GAAP) (non-GAAP) Performance Sensing 3.5% (1.7%) 5.2% —% 5.2% Sensing Solutions 5.5% (0.9%) 6.4% 7.6% (1.2%) Sensata Total 4.1% (1.4%) 5.5% 2.1
Slide 23: Free Cash Flow
Free Cash Flow $ in thousands Q2 Q2 YTD Total Sensata 2023 2022 Change 2023 2022 Change Net cash provided by operating activities $ 115,754 $ 94,533 22.4% $ 212,642 $ 141,888 49.9% Additions to property, plant and equipment and capitalized (47,562) (38,358) (24.0%) (84,444) (74,069) (14.0%) software
Slide 24: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q2 Q2 YTD Total Sensata 2023 2022 2023 2022 Provision for income taxes $ 19,873 $ 20,020 $ 43,599 $ 27,608 Non-GAAP adjustments: Deferred income tax and other tax expense/(benefit) 6,433 9,669 13,224 1,334 Current tax effect of non-GAAP adjustments
Slide 25: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Current portion of long-term debt, finance lease and other financing $ 1,809 $ 198,696 $ 256,471 $ 6,536 $ 6,566 obligations Finance lease and other financing obligations, less curre
Slide 26: Adjusted Corporate and Other Expenses
Adjusted Corporate and Other Expenses In thousands Q2 Q2 YTD Total Sensata 2023 2022 2023 2022 Corporate and other expenses $ (81,464) $ (76,362) $ (143,905) $ (152,485) Non-GAAP adjustments: Restructuring related and other 13,110 2,647 11,681 5,161 Financing and other transaction costs 974 2,778 3,
Slide 27: Other GAAP to non-GAAP Reconciliations
Other GAAP to non-GAAP Reconciliations $ in thousands (except EPS amounts) Q2-2023 Q2-2022 Operating Operating Operating Operating Total Sensata Net Income EPS Net Income EPS Income Margin Income Margin Reported (GAAP) $ 118,013 11.1% $ 49,111 $ 0.32 $ 138,943 13.6% $ 34,841 $ 0.22 Non-GAAP adjustme