Slide 1: Sensata Second Quarter 2021 Earnings Presentation
SENSATA SECOND QUARTER 2021 EARNINGS PRESENTATION July 27, 2021
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: Q2-2021 GAAP Results
Q2-2021 GAAP Results $ and shares outstanding in millions, except EPS Q2-2021 Q2-2020 B/(W) Revenue $992.7 $576.5 72.2 % Gross Profit $334.4 $164.1 103.8 % (% of revenue) 33.7% 28.5% R&D $42.9 $30.2 (41.9)% (% of revenue) 4.3% 5.2% SG&A $86.8 $64.7 (34.1)% (% of revenue) 8.7% 11.2% Amortization of I
Slide 4: Key Performance Highlights
Key Performance Highlights • Record revenue of $992.7M grew 72.2% in Q2-21 from the prior-year period Executing well • Strong results despite lower automotive production include rising channel inventories amid economic • Adjusted operating income of $209.3M (or 21.1% margin) in Q2-21 recovery • Demo
Slide 5: Sensata Insights is addressing expanding customer needs in fast-growing markets
Sensata Insights is addressing expanding customer needs in fast-growing markets Sensata Insights is advancing rapidly Key recent business wins support future growth >$800M Pipeline* >$10M container tracking Refrigerated container tracking solution for global Could yield >$170M annual revenue opportu
Slide 6: Sensata is making significant progress winning new business in Electrification
Sensata is making significant progress winning new business in Electrification Holistic Electrification approach Key recent business wins support across business units future growth >$11M PDU award >$600M Pipeline* Power distribution unit subsystem new business award from leading European heavy vehi
Slide 7: Q2-21 Financials & 2021 Outlook
Q2-21 FINANCIALS & 2021 OUTLOOK
Slide 8: Q2-2021 Financial Summary
Q2-2021 Financial Summary $ in millions, except EPS Q2-2021 Q2-2020 B/(W) • Revenue growth YoY of 72.2% composed of: Revenue $992.7 $576.5 72.2 % • Organic revenue increased 62.9% Adjusted Operating Income $209.3 $75.0 179.1 % • Acquisition increased revenue by 4.4% % Revenue 21.1% 13.0% • Foreign e
Slide 9: Sensata outgrew its end markets by 1,140 bps in Q2-2021
Sensata outgrew its end markets by 1,140 bps in Q2-2021 PERCENT OF REVENUES Heavy Vehicle, Off-Road Inventory 9.6% 2,850 bps of outgrowth 67.2% 57.6% 95.7% ~23% Performance Sensing Total • Outgrowth adjusted for low prior-year volumes: 1,640 bps • Channel restocking of 960 bps ($9M) excluded from ou
Slide 10: Outgrowth remains strong after adjustment for unusually low revenue in Q2-20
Outgrowth remains strong after adjustment for unusually low revenue in Q2-20 Heavy Vehicle, Off-Road Revenue Outgrowth to Market 16.4% 95.7% 12.1% • Heavy vehicle outgrowth driven by 9.6% 57.6% China VI emissions regulation, 28.5% Outgrowth operator controls, RADAR safety, and tire pressure monitori
Slide 11: Q2-2021: Performance Sensing
Q2-2021: Performance Sensing Revenue Segment operating income % operating margin $741.9 $202.1 $385.2 27.2% 26.9%* $60.8 15.8% 15.8%* Q2-21 Q2-20 Q2-21 Q2-20 Q2-21 YoY REVENUE GROWTH REPORTED ORGANIC • Record revenue: Customers' production recovery, Xirgo acquisition, and newly launched programs Aut
Slide 12: Q2-2021: Sensing Solutions
Q2-2021: Sensing Solutions Revenue Segment operating income % operating margin $250.8 $191.3 $76.5 $55.8 30.5% 29.2% Q2-21 Q2-20 Q2-21 Q2-20 • Revenue increase YoY reflects HVAC market Q2-21 YoY REVENUE GROWTH REPORTED ORGANIC recovery and new Electrification launches Industrial & Other 32.9% 29.2%
Slide 13: Corporate and Other Operating Expenses
Corporate and Other Operating Expenses $ in millions Q2-2021 Q2-2020 B/(W) Corporate and Other $74.0 $47.5 (55.9)% • Adj. Corporate and Other increase % Revenue 7.5% 8.2% primarily due to higher Megatrend investments and higher global incentive Adj. Corporate and Other $67.7 $39.9 (69.7)% compensati
Slide 14: Q2-2021 Non-GAAP Results
Q2-2021 Non-GAAP Results $ and shares outstanding in millions, except EPS Q2-2021 Q2-2020 B/(W) Revenue $992.7 $576.5 72.2 % Adj. Gross Profit $337.4 $165.4 104.0 % (% of revenue) 34.0% 28.7% R&D $42.9 $30.2 (41.9)% (% of revenue) 4.3% 5.2% Adj. SG&A $83.6 $58.5 (42.9)% (% of revenue) 8.4% 10.1% Adj
Slide 15: Strong free cash generation enables investment in growth
Strong free cash generation enables investment in growth and enhances Sensata's balance sheet Free Cash Flow ($ millions) $240 $136M trailing four $127 quarter average $100 $77 $45 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 $127M $36M Q2-21 free cash flow, 84% conversion rate; Q2-21 Capital Expenditures 85% conv
Slide 16: Q3-21 Financial Guidance
Q3-21 Financial Guidance $ in millions, except EPS Q3-21 GUIDANCE Q3-20 B/(W) • Q3-21 end-market growth expected to be ~2% YoY Revenue $920 – $950 $788.3 17% - 21% • Auto: ~(9)% organic 12% - 16% ◦ NA: ~(20)% ◦ EU: ~(6)% ◦ China: ~(8)% Adj. Op Income $189 – $199 $154.8 22% - 29% • HVOR: ~25% • Indus
Slide 17: FY-21 Updated Financial Guidance
FY-21 Updated Financial Guidance $ in millions, except EPS FY-21 GUIDANCE FY-20 B/(W) • Tightening range to reflect H1-21 performance and Revenue $3,770 – $3,840 $3,045.6 24% - 26% expectations for H2-21 organic 19% - 21% • FX expected to increase revenue by ~$71M at mid-point Adj. Op Income $782 –
Slide 18: We expect strong end-market growth ex-Auto in 2021
We expect strong end-market growth ex-Auto in 2021 Sensata estimates for Auto production are now lower than IHS for the balance of the year Heavy Vehicle and Industrial markets expected to show robust improvement OEM Production Growth Rates 5% global auto production growth* 23% 20% 17% 13% 12% 8% 5%
Slide 19: Key Messages – Looking Forward
Key Messages – Looking Forward Strong results well above rapidly M&A and technology partnerships are improving markets important value creation amplifiers Strong Q2-21 performance enabled by strength Accessing new high growth market areas and and flexibility of organizational model important additiv
Slide 20: Appendix A: Other Financial Information
APPENDIX A OTHER FINANCIAL INFORMATION
Slide 21: Q2-2021 Cash Flow Statement
Q2-2021 Cash Flow Statement $ in millions Q2-2021 Q2-2020 B/(W) Net Income/(Loss) $112.9 ($42.5) NM Depreciation & Amortization $66.5 $63.4 5.0 % Changes in Working Capital ($20.8) $31.1 NM Other $4.8 $19.8 (75.8)% Operating Cash Flow $163.4 $71.7 127.8 % Capital Expenditures ($36.4) ($27.2) (34.1)%
Slide 22: Balance Sheet
Balance Sheet $ in millions JUN 30, 2021 DEC 31, 2020 Total Assets $ 8,418.4 $ 7,844.2 Working Capital $ 2,340.2 $ 1,484.8 Intangibles, Net & Other Long-Term Assets $ 5,241.2 $ 4,864.2 $ in millions JUN 30, 2021 DEC 31, 2020 Cash & Equivalents $ 1,861.8 $ 1,862.0 Current Debt (1) $ 7.3 $ 757.2 Net C
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 2Q 2021 1Q 2021 4Q 2020 3Q 2020 2Q 2020 Net income/(loss) $ 365,045 $ 112,916 $ 53,733 $ 121,667 $ 76,729 $ (42,541) Interest expense, net 180,802 45,213 44,043 47,417 44,129 40,808 Provision for/(benefit from) income taxes 29,349 7,638 20,281
Slide 27: Organic Revenue Growth
Organic Revenue Growth Q2-2021 0 Constant Currency % Reported % Change Less: Acquisition & Organic Growth Less: FX Impact Change (GAAP) Divestitures, net (non-GAAP) (non-GAAP) Performance Sensing 92.6% 5.8% 86.8% 6.6% 80.2% Sensing Solutions 31.1% 3.1% 28.0% —% 28.0% Sensata Total 72.2% 4.9% 67.3% 4
Slide 28: Free Cash Flow
Free Cash Flow $ in thousands Q2 H1 Total Sensata 2021 2020 Change 2021 2020 Change Net cash provided by operating activities $ 163,420 $ 71,728 127.8% $ 267,931 $ 170,272 57.4% Additions to property, plant and equipment and (36,400) (27,150) (34.1%) (63,572) (56,697) (12.1%) capitalized software Fr
Slide 29: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Current portion of long-term debt, finance lease and other financing $ 7,281 $ 9,678 $ 757,205 $ 7,049 $ 407,042 obligations (1) Finance lease and other financing obligations, less c
Slide 30: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q2 H1 Total Sensata 2021 2020 2021 2020 Provision for/(benefit from) income taxes $ 7,638 $ 1,441 $ 27,919 $ (75) Non-GAAP adjustments: Deferred income tax and other tax (benefit)/ (6,200) 4,400 3,922 (531) expense Current tax effect of non-GAAP ad
Slide 31: Other GAAP to Non-GAAP Reconciliations
Other GAAP to non-GAAP Reconciliations $ in thousands (except EPS amounts) Q2-2021 Q2-2020 Operating Operating Operating Operating Net (Loss)/ Total Sensata Net Income EPS (Loss)/ EPS Income Margin Margin Income Income Reported (GAAP) $ 164,755 16.6% $ 112,916 $ 0.71 $ (1,868) (0.3)% $ (42,541) $ (0