Slide 1: Sensata Third Quarter 2023 Earnings Presentation
Sensata Third Quarter 2023 Earnings Presentation October 31, 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 Q3-2023
Key Performance Highlights Q3-2023 • Revenue of $1,001M in Q3-23, decline of (1.7%) YoY (decline of (0.7%) on a constant currency basis), in line with guidance • Outgrowth to market of 460 bps LTM, 660 bps over the past three years Financial • Adj. operating profit of $192M or 19.1%, decline of (2.9
Slide 4: Driving market leadership in nascent innovative applications
Driving market leadership in nascent innovative applications Gas Detection Sensors Electromechanical Braking $55M* $30M* new business wins to date new business wins to date • Second large win from additional • First A2L sensor to receive Underwriters leading brake system manufacturer Laboratories (U
Slide 5: Sensata is winning with the leading electric vehicle OEMs
Sensata is winning with the leading electric vehicle OEMs Expected Auto BEV+PHEV Deep relationships with fast growing BEV revenue by region OEMs according to IHS $1,200M* $380M $1.4B in Electrification new business wins from 2020-2023YTD to launch 2024-2026 2023E 2026E Asia 35% Auto BEV + PHEV Europ
Slide 6: Sensata is winning in Electrification Infrastructure
Sensata is winning in Electrification Infrastructure Dynapower is on track to achieve its Defense investment thesis • +30% YoY revenue growth • 1.2x YTD book to bill and improving Hydrogen Separation Renewable Energy Materials $1.4B in Electrification new business wins from 2020-2023YTD to launch 20
Slide 7: Q3-2023 Financials and Q4-2023 Financial Guide
Q3-2023 FINANCIALS AND Q4-2023 FINANCIAL GUIDE
Slide 8: Q3-2023 Financial Summary
Q3-2023 Financial Summary $ in millions, except EPS Q3-2023 Q3-2022 YoY B/(W) • Revenue decline YoY of (1.7%) Revenue $1,001.3 $1,018.3 (1.7%) composed of: Adjusted Operating Income $191.6 $197.3 (2.9%) ◦ Organic revenue decreased (0.7%) % Revenue 19.1% 19.4% ◦ Foreign exchange decreased revenue by
Slide 9: Q3-2023: Performance Sensing
Q3-2023: Performance Sensing Revenue Segment Operating Income $754.0 $739.4 (1) % operating margin (1) $186.0 $181.9 24.7% 24.6% Q3-23 Q3-22 Q3-23 Q3-22 Q3-23 YoY Revenue Growth Reported Organic • Automotive revenue increase reflects content growth and pricing, partially offset by unfavorable revenu
Slide 10: Q3-2023: Sensing Solutions
Q3-2023: Sensing Solutions Revenue Segment Operating Income $278.8 (1) % operating margin $247.3 (1) $71.3 $80.3 28.8% 28.8% Q3-23 Q3-22 Q3-23 Q3-22 Q3-23 YoY Revenue Growth Reported Organic • Industrial revenue decrease reflects weakness in HVAC, appliance, IT/Telecom markets, industry de-stocking,
Slide 11: Corporate and Other Operating Expenses
Corporate and Other Operating Expenses $ in millions Q3-2023 Q2-2023 Q3-2022 YoY B/(W) • Adj. Corporate and Other increase Corporate and Other $75.1 $81.5 $76.4 1.7 % YoY primarily due to higher employee costs % Revenue 7.5% 7.7% 7.5% Adj. Corporate and Other $64.2 $68.1 $63.3 (1.5%) % Revenue 6.4%
Slide 12: Capital deployment strategy, including repayment of debt, is improving ROIC
Capital deployment strategy, including repayment of debt, is improving ROIC (now 9.8%, up 50 bps from FYE 2022) Free Cash Flow ($ millions) $87 $0.12 3.1x $57 Quarterly Dividend Payment net leverage ratio as of September 30, 2023; on November 22, 2023 for shareholders of record as of <2.0x expected
Slide 13: Updated Q4-23 Financial Guidance
Updated Q4-23 Financial Guidance $ in millions, except EPS Q4-23 GUIDANCE Q4-22 B/(W) • Guide updated to reflect ($35-40M) revenue decrease and (60bps) margin Revenue (6%) - (1%) decrease related to expected UAW $950 – $1,000 $1,014.7 organic (5%) - 0% strike impacts Adj. Op Income $176 – $194 $204.
Slide 14: Implied Full Year 2023 Financial Guidance
Implied Full Year 2023 Financial Guidance $ in millions, except EPS 2023 GUIDANCE 2022 B/(W) • Revenue pressured by decline in Revenue (0%) - 1% Industrial market, FX, and UAW strike $4,012 – $4,062 $4,029.3 organic 1% - 2% in 2023 Adj. Op Income (2%) - 1% • Organic adj. Op Margin growing faster $76
Slide 15: $2B Electrification business and continued strategic focus drives confidence
Key messages from Sensata's Sensata has a long history of innovation in the face of rapidly recent Investor Event changing and new customer requirements We identify market trends and demands and respond with superior product development $2B Electrification Sensata’s core safe & efficient sensing bus
Slide 16: Appendix A: Other Financial Information
APPENDIX A: OTHER FINANCIAL INFORMATION
Slide 17: Q3-2023 GAAP Results
Q3-2023 GAAP Results $ and shares outstanding in millions, except EPS Q3-2023 Q3-2022 B/(W) Revenue $1,001.3 $1,018.3 (1.7%) Gross Profit $313.3 $323.7 (3.2%) (% of revenue) 31.3% 31.8% R&D $45.4 $47.9 5.2 % (% of revenue) 4.5% 4.7% SG&A $85.7 $90.0 4.8 % (% of revenue) 8.6% 8.8% Amortization of Int
Slide 18: Q3-2023 Non-GAAP Results
Q3-2023 Non-GAAP Results $ and shares outstanding in millions, except EPS Q3-2023 Q3-2022 B/(W) Revenue $1,001.3 $1,018.3 (1.7%) Adj. Gross Profit $320.6 $332.4 (3.6%) (% of revenue) 32.0% 32.6% R&D $45.4 $47.9 5.2 % (% of revenue) 4.5% 4.7% Adj. SG&A $81.9 $85.6 4.2 % (% of revenue) 8.2% 8.4% Adj.
Slide 19: Q3-2023 Cash Flow Statement
Q3-2023 Cash Flow Statement $ in millions Q3-2023 Q3-2022 B/(W) Net Income $62.8 $140.3 (55.2%) Depreciation & Amortization $73.3 $72.0 1.8 % Changes in Working Capital $8.3 ($23.1) (135.8%) Other ($5.4) ($95.3) (94.3%) Operating Cash Flow $138.9 $93.8 48.0 % Capital Expenditures ($51.8) ($36.4) (42
Slide 20: Balance Sheet
Balance Sheet $ in millions SEP 30, 2023 DEC 31, 2022 Total Assets $ 8,388.3 $ 8,756.2 Working Capital $ 1,620.5 $ 1,596.1 Intangibles, Net & Other Long-Term Assets $ 5,895.2 $ 5,981.2 $ in millions SEP 30, 2023 DEC 31, 2022 Cash & Equivalents $ 889.7 $ 1,225.5 Current Debt $ 1.9 $ 256.5 Net Cash $
Slide 21: Appendix B: GAAP to Non-GAAP Reconciliations
APPENDIX B: GAAP TO NON-GAAP RECONCILIATIONS
Slide 22: 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 23: 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 24: Adjusted EBITDA
Adjusted EBITDA In thousands Period Total Sensata LTM 3Q 2023 2Q 2023 1Q 2023 4Q 2022 3Q 2022 Net income $ 311,479 $ 62,801 $ 49,111 $ 86,417 $ 113,150 $ 140,253 Interest expense, net 158,780 36,908 38,105 40,091 43,676 44,856 Provision for income taxes 73,455 17,868 19,873 23,726 11,988 46,421 Depr
Slide 25: Organic Revenue Growth
Organic Revenue Growth Q3-2023 Constant Currency % Reported % Change Less: Acquisition & Organic Growth Less: FX Impact Change (GAAP) Divestitures, net (non-GAAP) (non-GAAP) Performance Sensing 2.0% (1.1%) 3.1% —% 3.1% Sensing Solutions (11.3%) (0.4%) (10.9%) —% (10.9%) Sensata Total (1.7%) (1.0%) (
Slide 26: Free Cash Flow
Free Cash Flow $ in thousands Q3 Q3 YTD Total Sensata 2023 2022 Change 2023 2022 Change Net cash provided by operating activities $ 138,935 $ 93,845 48.0% $ 351,577 $ 235,733 49.1% Additions to property, plant and equipment and capitalized (51,780) (36,355) (42.4%) (136,224) (110,424) (23.4%) softwa
Slide 27: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q3 Q3 YTD Total Sensata 2023 2022 2023 2022 Provision for income taxes $ 17,868 $ 46,421 $ 61,467 $ 74,029 Non-GAAP adjustments: Deferred income tax and other tax expense/(benefit) (1,122) 27,121 12,102 28,455 Current tax effect of non-GAAP adjustm
Slide 28: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Current portion of long-term debt, finance lease and other financing $ 1,888 $ 1,809 $ 198,696 $ 256,471 $ 6,536 obligations Finance lease and other financing obligations, less curre
Slide 29: Adjusted Corporate and Other Expenses
Adjusted Corporate and Other Expenses In thousands Q3 Q3 YTD Total Sensata 2023 2022 2023 2022 Corporate and other expenses $ (75,117) $ (76,409) $ (219,022) $ (228,894) Non-GAAP adjustments: Restructuring related and other 9,234 7,964 20,915 13,125 Financing and other transaction costs 1,973 4,988
Slide 30: Other GAAP to non-GAAP Reconciliations
Other GAAP to non-GAAP Reconciliations $ in thousands (except EPS amounts) Q3-2023 Q3-2022 Operating Operating Operating Operating Total Sensata Net Income EPS Net Income EPS Income Margin Income Margin Reported (GAAP) $ 116,260 11.6% $ 62,801 $ 0.41 $ 252,901 24.8% $ 140,253 $ 0.91 Non-GAAP adjustm