Sensata Technologies Holding Plc · NYSE:ST

Sensata Technologies — Investor Day (December 2017)

30 slides from Sensata Technologies's investor day presentation, Dec 12, 2017

  1. Slide 1: 2017 Investor Day

    2017 InvestorDay & New York City | December 12, 2017 ¢ “eses' °s?° Sensata Technologies

  2. Slide 2: Well-positioned to deliver margin expansion, double-digit EPS growth & strong capital returns

    WELL-POSITIONED TO DELIVER MARGIN EXPANSION, DOUBLE-DIGIT EPS GROWTH & STRONG CAPITAL RETURNS Paul Vasington CFO

  3. Slide 3: Sensata is a compelling investment

    Sensata is a compelling investment  A leading position in sensing  Industry-leading margins and strong cash generation  Demonstrated track record of double-digit EPS growth over the past 5 years  Above market revenue growth  Increasingly balanced and effective capital allocation SENSATA 2017 IN

  4. Slide 4: Our balanced portfolio mitigates industry or geographic-specific risk

    Our balanced portfolio mitigates industry or geographic-specific risk TOTAL 2017E REVENUE: $3.3 billion REGIONS MARKETS Europe Americas Automotive HVOR, Industrial 31% 42% ~60% & Other ~40% Asia Pacific 27% KEY MARKETS IN DETAIL AUTOMOTIVE HVOR, INDUSTRIAL & OTHER Non-North American ~41% Industrial

  5. Slide 5: Strong adjusted EBIT margin expansion in 2017

    Strong adjusted EBIT margin expansion in 2017 ADJUSTED EBIT MARGIN HIGHLIGHTS • 110 bps of adjusted EBIT 22.8% +110 bps margin expansion, includes 21.7% impact from ~$19M of integration costs • Margin expansion in FY-17 primarily driven by strong M&A cost synergies • FX expected to reduce adjusted E

  6. Slide 6: We expect our third straight year of double-digit organic EPS growth

    We expect our third straight year of double-digit organic EPS growth ADJUSTED EPS EPS DRIVERS 10% organic growth $3.16 • Growing M&A cost synergies $2.89 • Net productivity gains • Highly effective cost management FY-16 FY-17E* *Midpoint of FY-17 guidance SENSATA 2017 INVESTOR DAY 6

  7. Slide 7: We leveraged our balance sheet to create shareholder value

    We leveraged our balance sheet to create shareholder value and expect to return to a normalized net leverage ratio by the end of 2017 NET DEBT ($M) NET LEVERAGE ~$616M OF NET DEBT REDUCTION SINCE Q4-15 LEVERAGE RATIO OF ~3.0X BY END OF 2017 4.6x $3,317 ~$616M ~1.3x $2,701 3.3x Q4-15 Q3-17 Q4-15 Q3-1

  8. Slide 8: New peer group reflects the attractiveness of our business model

    New peer group reflects the attractiveness of our business model and opportunity to create shareholder value industrial INDUSTRIAL Sensata auto tech AUTO TECH / INDUSTRIAL TECH SENSATA 2017 INVESTOR DAY 8

  9. Slide 9: Results stack up well versus peers, but are not reflected in valuation

    Results stack up well versus peers, but are not reflected in valuation ADJUSTED EBIT MARGIN ADJUSTED Y/Y EBIT MARGIN EXPANSION Q3 2017 YTD Q3 2017 YTD Sensata 23.0%* Sensata 110 bps* Peer Median 19.3% Peer Median 14 bps ADJUSTED EPS GROWTH FY-18 FORWARD P/E MULTIPLE Q3 2017 YTD as of December 6, 201

  10. Slide 10: We are poised for higher revenue growth over the next three years

    We are poised for higher revenue growth over the next three years HVOR • Fastest growing segment of Sensata portfolio • Both on-road and off-road segments expected to remain strong • High-single digit content growth AUTO • Acceleration of content growth due to China, and new applications serving cle

  11. Slide 11: Nearly 70% of Sensata's portfolio demonstrates sustainable growth above its markets

    Nearly 70% of Sensata’s portfolio demonstrates sustainable growth above its markets TOTAL REVENUE 70% 30% outgrows markets grows in-line with end market SENSATA 2017 INVESTOR DAY 11

  12. Slide 12: Financial Outlook

    FINANCIAL OUTLOOK

  13. Slide 13: We expect to report strong performance in 2017

    We expect to report strong performance in 2017… 110 3.5% bps 10% $413M Org. Revenue Growth* Adj. EBIT Margin Expansion* Adj. Organic EPS Growth* Free Cash Flow* *Midpoint of 2017E Sensata Guidance SENSATA 2017 INVESTOR DAY 13

  14. Slide 14: We expect strong 2017 performance and even better results for FY-18

    We expect to report strong performance in 2017 and are forecasting even better results for FY-18 $533M 4% 11% 110 110 3.5% bps bps 10% $413M Org. Revenue Growth* Adj. EBIT Margin Expansion* Adj. Organic EPS Growth* Free Cash Flow* *Midpoint of FY-2017E and FY-2018E Sensata guidance; detailed FY-18E

  15. Slide 15: We expect a positive EPS tailwind from foreign exchange in 2018

    We expect a positive EPS tailwind from foreign exchange in 2018 FY 2018 FX IMPACT HIGHLIGHTS • Sensata’s global functional Revenue ~$36M currency is the U.S. dollar • Hedge net cash flows on a rolling basis and out 18-24 months EBIT ~$18M • 80-90% of annual exposure hedged EPS ~$0.08 – $0.12 • Compa

  16. Slide 16: Our outlook anticipates revenue growth, margin expansion, and EPS growth over 3 years

    Our outlook anticipates a strong combination of revenue growth, margin expansion, and EPS growth over the next 3 years 2018E – 2020E Organic revenue growth ~4-6% CAGR Adjusted EBIT margin ~250 bps higher (% of revenue) ~25.3% Adjusted Organic EPS growth ~10-13% CAGR Reported EPS growth ~10-14% CAGR

  17. Slide 17: We are accelerating our organic revenue growth

    We are accelerating our organic revenue growth REVENUE BRIDGE 3-YEAR ORGANIC REVENUE GROWTH CAGR: 4–6% HIGHLIGHTS $3.9B* • Already secured business $3.3B* for ~90% of 2020E revenue midpoint • 2–3x acceleration in organic growth rate from previous 3 years (2015–2017E) 2017E Volume FX Price 2020E * Mi

  18. Slide 18: We expect sustained EBIT margin expansion over the next 3 years

    We expect sustained EBIT margin expansion over the next 3 years ADJUSTED EBIT* ADJUSTED EBIT MARGIN* $1,200 M 30% 3-year CAGR ~8-11%* ~$978M ~25.3% $1,000 M 25% ~22.8% ~$748M $800 M 20% $600 M 15% $400 M 10% $200 M 5% $M 0% 2017E 2020E 2017E 2020E *Midpoint of FY-2017E and FY-2018E Sensata Guidance;

  19. Slide 19: We expect to significantly exceed our original M&A cost synergy target

    We expect to significantly exceed our original M&A cost synergy target for the Schrader & CST acquisitions $55M HIGHLIGHTS FY-19E • Updated synergy target of $55M $8M represents 7% of acquired FY-18E revenue $12M • ~$35M of cost synergies already captured by end of FY-17E FY-15–FY-17E $35M $35M • ~$

  20. Slide 20: We will continue to drive double-digit adjusted EPS growth

    We will continue to drive double-digit adjusted EPS growth ADJUSTED EPS BRIDGE HIGHLIGHTS • Flat share count 3-year CAGR ~10-14% $4.43 • Reflects no impact from additional acquisitions • 50 bps per year increase in cash $3.16 tax rate • Continued growth investment • Adjusted Net Income as a percenta

  21. Slide 21: Capital Deployment

    CAPITAL DEPLOYMENT

  22. Slide 22: We have a track record of delivering attractive free cash flow

    We have a track record of delivering attractive free cash flow . . . $400–425M* $391M $356M 12.0% 12.2% 12.6% of of of revenue revenue revenue 2015 2016 2017E *% of revenue shown as midpoint of 2017E guidance SENSATA 2017 INVESTOR DAY 22

  23. Slide 23: We expect free cash flow performance to accelerate through 2020E

    . . .and we expect this performance to accelerate through 2020E FREE CASH FLOW HIGHLIGHTS $1.8B Greater free cash flow resulting primarily from: ~19% CAGR* • Higher income • Improved working capital $1.2B management and completion of acquisition integration • Maintain attractive tax position • Low c

  24. Slide 24: Moving to the UK will increase our flexibility to deploy capital

    Moving to the UK will increase our flexibility to deploy capital  Allows for flexible and effective capital allocation  The UK is a shareholder-friendly corporate governance environment  Sensata has significant presence in the UK; improves administrative efficiency  Eliminates the requirement fo

  25. Slide 25: We will maintain a balanced, returns-driven approach to deploying capital

    We will maintain a balanced, returns-driven approach to deploying capital Capital Deployment fueled by strong, growing free cash flow Critical to maintain a strong balance sheet while deploying capital to highest-return alternatives (situational approach) M&A Share Repurchase Expect highest returns

  26. Slide 26: We expect to continue driving strong returns on invested capital

    We expect to continue driving strong returns on invested capital 13.5% 13.0% 11.9% 12.0% / 2015 2016 2017E / 2020E ROIC WACC *Assumes share repurchases to hold share count flat SENSATA 2017 INVESTOR DAY 26

  27. Slide 27: Sensata is an attractive investment

    Sensata is an attractive investment  Accelerating organic revenue growth  Expanding adjusted EBIT margins: ~250 bps*  Delivering double-digit adjusted EPS organic growth: ~11% CAGR*  Generating robust free cash flow: 19% CAGR* from 2017E-2020E  Increasing flexibility for value-creating capital

  28. Slide 28: Appendix

    APPENDIX

  29. Slide 29: FY-2018 Financial Guidance

    FY-2018 Financial Guidance FY 2018 Guidance Reported Organic Revenue $3,410M – $3,510M 4% – 7% 3% – 5% Adj. EBIT $812M – $840M 9% – 12% 7% – 10% Adj. EPS $3.52 – $3.68 11% – 17% 9% – 13% SENSATA 2017 INVESTOR DAY 29

  30. Slide 30: Details of FX impact on financials

    Details of FX impact on financials As of September 30, 2017 Major Long/ Net Cash Flow 2018 Avg Y/Y Rate Change P/L Y/Y EPS Currency Short Exposure ($mm) Rate1 Fav / (Unfav) Classification Impact EUR Long $380 1.13 0.7% Revenue $0.02 CNY2 Long 170 6.71 2.0% Revenue 0.02 KRW Long 30 1,139 2.7% Revenue

Sensata Technologies Holding — Investor Day (December 2017) on 6ix