Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — Q4 2019 Earnings Presentation
32 slides from Sensata Technologies's earnings presentation, Feb 11, 2020
Slide 1: Sensata Fourth Quarter and Full Year 2019 Earnings Presentation
SENSATA FOURTH QUARTER AND FULL YEAR 2019 EARNINGS PRESENTATION FEBRUARY 11, 2020
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures Forward-Looking Statements This earnings presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Sensata believes that its expectations
Slide 3: FY-2019 GAAP Results
FY-2019 GAAP Results $ and shares outstanding in millions, except EPS FY-2019 FY-2018 Δ Revenue $3,450.6 $3,521.6 (2.0%) Gross Profit $1,183.2 $1,254.8 (5.7%) (% of revenue) 34.3% 35.6% R&D $148.4 $147.3 0.8% (% of revenue) 4.3% 4.2% SG&A $281.4 $305.6 (7.9%) (% of revenue) 8.2% 8.7% Operating Incom
Slide 4: Q4-2019 Highlights: Attractive outgrowth vs End-Markets
Q4-2019 Continued • Attractive outgrowth vs End-Markets – organic revenue decline of (0.8%) in Q4-19 reflects 490 basis points of outgrowth in Auto and 1190 basis points of outgrowth in outgrowth versus HVOR end-markets • China business benefits from strong secular growth, easier y/y comparisons – r
Slide 5: Aero/Industrial business delivers growth, Auto remains less than 60% of revenue
Aero/Industrial business delivers growth, Auto business remains less than 60% of total revenue PERCENT OF REVENUES Aero, Industrial & Other – Organic rev increase: 0.7% • Aerospace posts double-digit organic growth as a result of end- market strength, content growth, and solid aftermarket performanc
Slide 6: We have delivered on our promise to significantly outgrow our end-markets
Over the past two years, we have delivered on our promise to significantly outgrow our end-markets AUTO OUTGROWTH VS. END-MARKET HVOR OUTGROWTH VS. END-MARKET 2017 Investor Day Commitment: 2017 Investor Day Commitment: 400–600 bps 600–800 bps 600–800 830 bps ~700 bps bps ~500 bps 400–600 640 bps bps
Slide 7: We continue to advance our megatrend initiatives
We continue to advance our megatrend initiatives SMART & CONNECTED — KEY PROGRESS MADE • Proof-of-concepts currently being tested with leading NA fleet managers • Sensata solution actively capturing data on trucks and trailers – information gathered from hundreds of thousands of miles driven • Value
Slide 8: Key messages
Key messages We are delivering attractive end- We continue to monitor market outgrowth in-line with end-markets that remain expectations weak and volatile Expect to sustain current levels of outgrowth in Auto and HVOR businesses in 2020E We are generating solid free We are accelerating our cash flow
Slide 9: Q4-19 and FY-19 Financials & 2020 Guidance
Q4-19 AND FY-19 FINANCIALS & 2020 GUIDANCE PAUL VASINGTON, CHIEF FINANCIAL OFFICER
Slide 10: Q4-2019 Financial Summary
Q4-2019 Financial Summary $ in millions, except EPS Q4-2019 Q4-2018 Δ • Revenue decline of (0.1%) composed of: Revenue $846.7 $847.9 (0.1%) • Foreign exchange decreases Adjusted Op Income $192.5 $210.1 revenue by (0.3%) (8.4%) % revenue 22.7% 24.8% • GIGAVAC acquisition increases Adjusted Net Income
Slide 11: Q4-2019: Performance Sensing
Q4-2019: Performance Sensing REVENUE SEGMENT OPERATING INCOME % OPERATING MARGIN $639.0M $632.9M $177.5M $165.1M 27.8%* 26.1%* Q4-2018 Q4-2019 Q4-2018 Q4-2019 Q4-19 REVENUE GROWTH REPORTED ORGANIC • Auto performance driven by growth in China, Automotive (0.8%) (1.1%) NA Auto grows low single-digits
Slide 12: Q4-2019: Sensing Solutions
Q4-2019: Sensing Solutions REVENUE SEGMENT OPERATING INCOME % OPERATING MARGIN $213.8M $208.9M $68.8M $68.2M 32.9%* 31.9%* Q4-2018 Q4-2019 Q4-2018 Q4-2019 • Aerospace business delivers double-digit organic Q4-19 REVENUE GROWTH REPORTED ORGANIC revenue growth Sensing Solutions 2.3% 0.7% • Industrial
Slide 13: Q4-2019 Non-GAAP Results
Q4-2019 Non-GAAP Results $ in millions, except EPS Q4-2019 Q4-2018 Δ Revenue $846.7 $847.9 (0.1%) Adj. Gross Profit $297.8 $311.7 (4.5%) (% of revenue) 35.2% 36.8% R&D $38.5 $35.5 8.3% (% of revenue) 4.5% 4.2% Adj. SG&A $65.1 $64.4 1.0% (% of revenue) 7.7% 7.6% Adj. Operating Income $192.5 $210.1 (8
Slide 14: FY-2019 Non-GAAP Results
FY-2019 Non-GAAP Results $ in millions, except EPS FY-2019 FY-2018 Δ Revenue $3,450.6 $3,521.6 (2.0%) Adj. Gross Profit $1,208.3 $1,277.5 (5.4%) (% of revenue) 35.0% 36.3% R&D $148.4 $147.3 0.8% (% of revenue) 4.3% 4.2% Adj. SG&A $267.4 $292.5 (8.6%) (% of revenue) 7.7% 8.3% Adj. Operating Income $7
Slide 15: Q1-20 Financial Guidance
Q1-20 Financial Guidance $ in millions, except EPS Q1-19 Q1-20 GUIDANCE Y/Y Change • FX expected to decrease revenue by Revenue $870.5 $793 – $817 (9%) – (6%) ~$5M organic growth (8%) – (6%) – Adjusted EPS: ($0.01) impact from FX Adj. Op Income $188.6 $149 – $155 (21%) – (18%) • ~$0.03 benefit from
Slide 16: 2020 Financial Guidance
2020 Financial Guidance $ in millions, except EPS FY-2019 FY-2020 GUIDANCE Y/Y Change • FX expected to decrease revenue by ~$15M Revenue $3,450.6 $3,399 – $3,499 (1%) – 1% organic growth (1%) – 2% – Adjusted EPS: negative impact from FX of ($0.04) Adj. Op Income $785.7 $753 – $781 (4%) – (1%) • Adju
Slide 17: Global Auto & Industrial end-markets to improve, HVOR to weaken
We expect the global Auto & Industrial end-markets to improve year-over-year, while HVOR end-markets will further weaken OEM Production: GLOBAL AUTO CHINA AUTO EUROPE AUTO NA AUTO HVOR INDUSTRIAL (6%) (5%) (10%) (6%) (5%) (4%) (4%) (2%) (6%) (9%) (7%) (3%) Content growth will help to offset end mark
Slide 18: Appendix A: Other Financial Information
APPENDIX A OTHER FINANCIAL INFORMATION
Slide 19: Q4-2019 GAAP Results
Q4-2019 GAAP Results $ and shares outstanding in millions, except EPS Q4-2019 Q4-2018 Δ Revenue $846.7 $847.9 (0.1%) Gross Profit $290.2 $304.4 (4.6%) (% of revenue) 34.3% 35.9% R&D $38.5 $35.5 8.3% (% of revenue) 4.5% 4.2% SG&A $70.7 $69.9 1.2% (% of revenue) 8.4% 8.2% Operating Income $120.7 $162.
Slide 20: Q4-2019 Cash Flow Statement
Q4-2019 Cash Flow Statement $ in millions Q4-2019 Q4-2018 Δ Net Income $53.5 $254.1 (78.9%) Depreciation & Amortization $66.3 $62.2 6.5% Changes in Working Capital $46.3 $21.4 116.2% Other $19.9 ($137.3) 114.5% Operating Cash Flow $186.0 $200.4 (7.2%) Capital Expenditures ($38.1) ($48.5) 21.6% Free
Slide 21: FY-2019 Cash Flow Statement
FY-2019 Cash Flow Statement $ in millions FY-2019 FY-2018 Δ Net Income $282.7 $599.0 (52.8%) Depreciation & Amortization $258.7 $245.3 5.5% Changes in Working Capital ($10.7) ($66.9) 84.0% Other $88.8 ($156.8) 156.6% Operating Cash Flow $619.6 $620.6 (0.2%) Capital Expenditures ($161.3) ($159.8) (0.
Slide 22: Balance Sheet
Balance Sheet $ in millions DEC 31, 2019 DEC 31, 2018 Total Assets $6,834.5 $6,797.7 Working Capital $1,330.9 $1,277.2 Intangibles, Net & Other $4,868.9 $4,880.5 Long-Term Assets $ in millions DEC 31, 2019 DEC 31, 2018 Cash & Equivalents $774.1 $729.8 Current Debt $6.9 $14.6 Net Cash $767.2 $715.3 Q
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 FY Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Net income $282,714 $282,714 $53,538 $70,675 $73,436 $85,065 $254,099 Interest expense, net 158,554 158,554 40,137 39,556 39,608 39,253 38,871 Provision for/(benefit from) income taxes 107,709 107,709
Slide 27: Other GAAP to Non-GAAP Reconciliations – Q4-2019
Other GAAP to non-GAAP Reconciliations – Q4-2019 $ in thousands Q4 2019 Restructuring Cost of Operating Interest Income Total Sensata Gross profit SG&A Amortization and other Other, net Income taxes Net income revenue income expense, net before taxes charges, net Reported (GAAP) ($556,482) $290,209
Slide 28: Other GAAP to Non-GAAP Reconciliations – FY 2019
Other GAAP to non-GAAP Reconciliations – FY 2019 $ in thousands FY 2019 Restructuring Cost of Amortization Operating Interest Income before Total Sensata Gross profit SG&A and other Other, net Income taxes Net income revenue of intangibles income expense, net taxes charges, net Reported (GAAP) ($2,2
Slide 29: Organic Revenue Growth
Organic Revenue Growth Q4 0 Constant Currency % Reported % Change Less: Acquisition & Organic Growth/(Decline) Less: FX Impact Change (GAAP) Divestitures, net (non-GAAP) (non-GAAP) Performance Sensing (1.0% ) (0.3%) (0.7% ) 0.6% (1.3% ) Sensing Solutions 2.3% (0.4%) 2.7% 2.0% 0.7% Sensata Total (0.1
Slide 30: Free Cash Flow
Free Cash Flow $ in thousands Q4 FY Total Sensata 2019 2018 Change 2019 2018 Change Net cash provided by operating activities $186,035 $200,424 (7.2%) $619,562 $620,563 (0.2%) Additions to property, plant and equipment and capitalized software (38,053) (48,512) 21.6% (161,259) (159,787) (0.9%) Free
Slide 31: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 31-Dec-19 30-Sep-19 30-Jun-19 31-Mar-19 31-Dec-18 Current portion of long-term debt, finance lease and other financing obligations $6,918 $7,863 $13,582 $13,660 $14,561 Finance lease and other financing obligations 28,810 29,415 30,1
Slide 32: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q4 FY Total Sensata 2019 2018 2019 2018 Provision for/(benefit from) income taxes $27,060 ($134,706) $107,709 ($72,620) Non-GAAP adjustments: Deferred income tax and other tax expense/(benefit) 14,403 (149,044) 55,242 (128,261) Current tax effect o