Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — Q3 2020 Earnings Presentation
32 slides from Sensata Technologies's earnings presentation, Oct 27, 2020
Slide 1: Sensata Third Quarter 2020 Earnings Presentation
SENSATA THIRD QUARTER 2020 EARNINGS PRESENTATION October 27, 2020
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures Safe Harbor Statement This earnings release contains "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995, which relate to future events and are subject to risks and uncertainties. The forward-looking statem
Slide 3: Q3-2020 GAAP Results
Q3-2020 GAAP Results $ and shares outstanding in millions, except EPS Q3-2020 Q3-2019 B/(W) Revenue $788.3 $849.7 (7.2%) Gross Profit $258.1 $294.8 (12.5%) (% of revenue) 32.7% 34.7% R&D $33.4 $38.2 12.5% (% of revenue) 4.2% 4.5% SG&A $75.7 $68.2 (11.1%) (% of revenue) 9.6% 8.0% Amortization of Inta
Slide 4: Key Performance Highlights
Key Performance Highlights Well-positioned • Substantial QoQ revenue growth of 37%, outperforming updated guidance provided Sept 8, 2020 for recovery • Demonstrates strength of organizational model and resiliency of supply chain • Attractive outgrowth – despite organic revenue decrease of (17.4)% YT
Slide 5: Significant progress made in Smart & Connected
Significant progress made in Smart & Connected First commercial agreement with top 25 North American fleet manager • Moving from trials to commercial deployment with new business model • Initial rollout in Q4-20 on small number of trucks • Bundled recurring monthly subscription of equipment, mainten
Slide 6: Benefiting from Electrification growth across markets
Benefiting from Electrification growth across markets Increasing content in battery electric vehicles • Additional $32M in electrification new business wins in Q3 brings year- to-date total to $140M; significantly faster pace than prior year • Electric vehicle business wins with largest and most inn
Slide 7: Q3-20 Financials & Outlook
Q3-20 FINANCIALS & OUTLOOK Paul Vasington CHIEF FINANCIAL OFFICER
Slide 8: Q3-2020 Financial Summary
Q3-2020 Financial Summary $ in millions, except EPS Q3-2020 Q3-2019 B/(W) • Revenue decrease YoY of 7.2% composed of: Revenue $788.3 $849.7 (7.2%) • Organic revenue decrease: 7.5% Adjusted Operating Income $154.8 $199.5 (22.4%) • Foreign exchange increased revenue by 0.3% % Revenue 19.6% 23.5% Adjus
Slide 9: Sensata outgrew contracting end markets by 480 bps in Q3-20
Sensata outgrew contracting end markets by 480 bps in Q3-20 PERCENT OF REVENUES Industrial & Other Aerospace (2.2)% (24.4)% ~26% (8.2)% (34.3)% End Markets Org Growth End Markets Org Growth • Industrial outperformance led by strength in medical (ventilators) and factory automation • Aerospace outper
Slide 10: Q3-2020: Performance Sensing
Q3-2020: Performance Sensing Revenue Segment operating income $628.6 % operating margin* $580.9 $170.2 $151.6 $385.2 27.1% 26.1% $60.8 26.9%* 15.8% 15.8%* Q3-20 Q2-20 Q3-19 Q3-20 Q2-20 Q3-19 Q3-20 YoY REVENUE GROWTH REPORTED ORGANIC • Revenue decline YoY driven by impacts from COVID; substantial QoQ
Slide 11: Q3-2020: Sensing Solutions
Q3-2020: Sensing Solutions Revenue Segment operating income % operating margin* $207.4 $221.1 $191.3 $71.6 $58.2 $55.8 32.4% 28.1% 29.2% Q3-20 Q2-20 Q3-19 Q3-20 Q2-20 Q3-19 • Revenue decrease YoY largely due to impact of Q3-20 YoY REVENUE GROWTH REPORTED ORGANIC COVID-19; QoQ increase reflects marke
Slide 12: Corporate and Other Operating Expenses
Corporate and Other Operating Expenses $ in millions, except EPS Q3-2020 Q3-2019 B/(W) • Adjustments between GAAP and non-GAAP Corporate and Other $61.0 $53.4 (14.3%) Corporate and Other expenses include % Revenue 7.7% 6.3% restructuring-related and other costs, financing Adj. Corporate and Other $5
Slide 13: Q3-2020 Non-GAAP Results
Q3-2020 Non-GAAP Results $ and shares outstanding in millions, except EPS Q3-2020 Q3-2019 B/(W) Revenue $788.3 $849.7 (7.2%) Adj. Gross Profit $258.8 $303.0 (14.6%) (% of revenue) 32.8% 35.7% R&D $33.4 $38.2 12.5% (% of revenue) 4.2% 4.5% Adj. SG&A $68.9 $63.7 (8.3%) (% of revenue) 8.7% 7.5% Adj. Op
Slide 14: Strong financial performance leads to liquidity improvements
Strong financial performance leads to liquidity improvements Free Cash Flow ($ millions) $69 $100 $750M $45 10-year unsecured debt issued at historically low interest rate of 3.75% Repaid $400M Revolver on market strength Q1-20 Q2-20 Q3-20 $7M 3.6x net leverage ratio restructuring savings achieved i
Slide 15: Q4-20 Financial Guidance
Q4-20 Financial Guidance $ in millions, except EPS Q4-20 GUIDANCE Q4-19 B/(W) COMMENTS • YoY market contraction Revenue $810 – $850 $846.7 (4%) - 0% expected to be (6-8)% organic (5%) - (1%) • Auto: (4-6)% • HVOR: (8-9)% • Sensing Solutions: (13-14)% Adj. Op Income $160 – $176 $192.5 (17%) - (9%) •
Slide 16: Key Messages – Looking Forward
Key Messages – Looking Forward We are capitalizing on improving Megatrend investments for long- end markets term growth reached new stage Strong Q3-20 performance driven by strength of First commercial fleet commercial agreement on organizational model and resiliency of supply recurring revenue mode
Slide 17: Appendix A: Other Financial Information
APPENDIX A OTHER FINANCIAL INFORMATION
Slide 18: Q3 YTD 2020 GAAP Results
Q3 YTD 2020 GAAP Results $ and shares outstanding in millions, except EPS Q3 YTD 2020 Q3 YTD 2019 B/(W) Revenue $2,139.1 $2,603.9 (17.9%) Gross Profit $630.0 $893.0 (29.5%) (% of revenue) 29.5% 34.3% R&D $98.1 $110.0 10.8% (% of revenue) 4.6% 4.2% SG&A $217.7 $210.7 (3.3%) (% of revenue) 10.2% 8.1%
Slide 19: Q3 YTD 2020 Non-GAAP Results
Q3 YTD 2020 Non-GAAP Results $ and shares outstanding in millions, except EPS Q3 YTD 2020 Q3 YTD 2019 B/(W) Revenue $2,139.1 $2,603.9 (17.9%) Adj. Gross Profit $668.1 $910.5 (26.6%) (% of revenue) 31.2% 35.0% R&D $98.1 $110.0 10.8% (% of revenue) 4.6% 4.2% Adj. SG&A $198.5 $202.3 1.9% (% of revenue)
Slide 20: Q3-2020 Cash Flow Statement
Q3-2020 Cash Flow Statement $ in millions Q3-2020 Q3-2019 B/(W) Net Income $76.7 $70.7 8.6 % Depreciation & Amortization $61.5 $65.1 (5.5)% Changes in Working Capital $35.0 $22.7 54.3 % Other ($50.2) $22.9 (319.1)% Operating Cash Flow $123.1 $181.4 (32.1)% Capital Expenditures ($23.2) ($41.7) 44.2 %
Slide 21: Q3 YTD 2020 Cash Flow Statement
Q3 YTD 2020 Cash Flow Statement $ in millions Q3 YTD 2020 Q3 YTD 2019 B/(W) Net Income $42.6 $229.2 (81.4)% Depreciation & Amortization $192.6 $192.4 0.1 % Changes in Working Capital $44.6 ($57.1) 178.1 % Other $13.5 $69.0 (80.4)% Operating Cash Flow $293.3 $433.5 (32.3)% Capital Expenditures ($79.9
Slide 22: Balance Sheet
Balance Sheet $ in millions SEP 30, 2020 SEP 30, 2019 Total Assets $ 7,559.5 $ 6,843.6 Working Capital $ 2,087.5 $ 1,329.1 Intangibles, Net & Other Long-Term Assets $ 4,845.6 $ 4,894.0 $ in millions SEP 30, 2020 SEP 30, 2019 Cash & Equivalents $ 1,610.2 $ 721.4 Current Debt $ 7.0 $ 7.9 Net Cash $ 1,
Slide 23: Appendix B: GAAP to Non-GAAP Reconciliations
APPENDIX B GAAP TO NON-GAAP RECONCILIATIONS
Slide 24: 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 25: Non-GAAP Measures – continued
Non-GAAP Measures – continued Free Cash Flow – represents 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 operation
Slide 26: Adjusted EBITDA
Adjusted EBITDA $ in thousands Period Total Sensata LTM YTD 2020 3Q 2020 2Q 2020 1Q 2020 4Q 2019 3Q 2019 Net Income/(Loss) $ 96,157 $ 42,619 $ 76,729 $ (42,541) $ 8,431 $ 53,538 $ 70,675 Interest expense, net 164,477 124,340 44,129 40,808 39,403 40,137 39,556 Provision for/(benefit from) income taxe
Slide 27: Other GAAP to Non-GAAP Reconciliations – Q3-2020
Other GAAP to non-GAAP Reconciliations – Q3-2020 $ in thousands Q3-2020 Restructuring Interest Income Cost of Operating Income Total Sensata Gross profit SG&A Amortization and other expense, Other, net before Net income revenue income taxes charges, net net taxes Reported (GAAP) $ (530,255) $ 258,05
Slide 28: Other GAAP to Non-GAAP Reconciliations – Q3 YTD 2020
Other GAAP to non-GAAP Reconciliations – Q3 YTD 2020 $ in thousands Q3 YTD 2020 Restructuring Interest Cost of Operating Income Income Total Sensata Gross profit SG&A Amortization and other expense, Other, net Net income revenue income before taxes taxes charges, net net Reported (GAAP) $ (1,509,104
Slide 29: Organic Revenue Growth
Organic Revenue Growth Q3-2020 0 Constant Currency % Reported % Change Less: Acquisition & Organic Growth/(Decline) Less: FX Impact Change (GAAP) Divestitures, net (non-GAAP) (non-GAAP) Performance Sensing (7.6%) 0.3% (7.9%) —% (7.9%) Sensing Solutions (6.2%) 0.2% (6.4%) —% (6.4%) Sensata Total (7.2
Slide 30: Free Cash Flow
Free Cash Flow $ in thousands Q3 Q3 YTD Total Sensata 2020 2019 Change 2020 2019 Change Net cash provided by operating activities $ 123,066 $ 181,361 (32.1%) $ 293,338 $ 433,527 (32.3%) Additions to property, plant and equipment and capitalized software (23,242) (41,657) 44.2% (79,939) (123,206) 35.
Slide 31: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Current portion of long-term debt, finance lease and other financing obligations $ 7,049 $ 407,042 $ 7,095 $ 6,918 Finance lease and other financing obligations, less current portion 28,360 28
Slide 32: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q3 Q3 YTD Total Sensata 2020 2019 2020 2019 Provision for income taxes $ 15,181 $ 28,341 $ 15,106 $ 80,649 Non-GAAP adjustments: Deferred income tax and other tax (benefit)/expense (7,272) 16,040 (7,803) 40,839 Current tax effect of non-GAAP adjust