Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — Q1 2019 Earnings Presentation
27 slides from Sensata Technologies's earnings presentation, May 1, 2019
Slide 1: Sensata First Quarter 2019 Earnings Presentation
SENSATA FIRST QUARTER 2019 EARNINGS PRESENTATION MAY 1, 2019
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: Q1-2019 GAAP Results
Q1-2019 GAAP Results $ and shares outstanding in millions, except EPS Q1-2019 Q1-2018 Δ Revenue $870.5 $886.3 (1.8%) Gross Profit $289.7 $303.8 (4.7%) (% of revenue) 33.3% 34.3% R&D $35.1 $36.0 (2.5%) (% of revenue) 4.0% 4.1% SG&A $70.5 $81.3 (13.2%) (% of revenue) 8.1% 9.2% Operating Income $142.6
Slide 4: Q1-2019: Another quarter of strong secular growth
Q1-2019: Another quarter of strong secular growth and returns-based capital deployment ✓ Organic revenue growth of ~1% – strong content growth more than offsets meaningful decline in Industrial, China Auto, European Auto markets ✓ Strong Secular growth – HVOR outgrows end-market by 850 basis points;
Slide 5: Q1-19 Performance by End Market
Q1-19 Performance by End Market PERCENT OF REVENUES HVOR – Organic revenue growth: 11% • Outgrew end market by 850 basis points • Generated solid overall organic revenue growth from NA on- ~17% road, construction and agriculture end markets • Closed agreement for GIGAVAC’s high-voltage contactors to
Slide 6: We continue to advance our megatrend initiatives
We continue to advance our megatrend initiatives across a diverse set of end markets Proof points of success: ELECTRIFICATION • AUTO: Secured agreement for Wireless Battery Management solution with large Chinese auto manufacturer; agreement validates strength of technology and customer value proposi
Slide 7: We have sustained attractive outgrowth in HVOR over the past two years
We have sustained attractive outgrowth in HVOR over the past two years MARKET OUTGROWTH Q1-19 FY-18 11.0% 15.5% ~880 bps 7.2% average outgrowth versus market for the past 8 quarters 2.5% End market Organic growth End market Organic growth Drivers • Electrification of cabins in off-road equipment • C
Slide 8: Key priorities for FY-19
Key priorities for FY-19 Sustain strong outgrowth relative to the market • Delivering on commitment to accelerate content growth Continue to align cost structure to lower volume • Executing initiatives to further streamline operations and drive higher productivity Maintain strong focus on capital de
Slide 9: Q1-2019 Financial Summary
Q1-2019 Financial Summary $ in millions, except EPS Q1-2019 Q1-2018 Δ • Revenue decline of 1.8% composed of: Revenue $870.5 $886.3 (1.8%) • Organic revenue growth: 0.8% Adjusted Op Income $188.6 $194.8 (3.2%) • Net effect of acq./divestitures % revenue 21.7% 22.0% decreases revenue by 1.4% Adjusted
Slide 10: Q1-2019: Performance Sensing
Q1-2019: Performance Sensing REVENUE SEGMENT OPERATING INCOME % OPERATING MARGIN $ in millions $662.8 $ in millions $640.0 $169.4 $150.5 25.6% 22.4%* Q1-2018 Q1-2019 Q1-2018 Q1-2019 Q1-19 REVENUE GROWTH REPORTED ORGANIC • Strong organic growth in HVOR despite slowing end market growth Automotive (7.
Slide 11: Q1-2019: Sensing Solutions
Q1-2019: Sensing Solutions REVENUE SEGMENT OPERATING INCOME $ in millions $230.5 % OPERATING MARGIN $ in millions $223.5 $75.0 $71.9 32.2% 33.6%* Q1-2018 Q1-2019 Q1-2018 Q1-2019 • Generated organic growth in Aerospace and Q1-19 REVENUE GROWTH REPORTED ORGANIC from sensing products sold into industri
Slide 12: Q1-2019 Non-GAAP Results
Q1-2019 Non-GAAP Results $ in millions, except EPS Q1-2019 Q1-2018 Δ Revenue $870.5 $886.3 (1.8%) Adj. Gross Profit $294.5 $309.7 (4.9%) (% of revenue) 33.8% 34.9% R&D $35.1 $36.0 (2.5%) (% of revenue) 4.0% 4.1% Adj. SG&A $69.1 $77.1 (10.4%) (% of revenue) 7.9% 8.7% Adj. Operating Income $188.6 $194
Slide 13: 2019 Financial Guidance
2019 Financial Guidance $ in millions, except EPS FY-2018 FY-2019 GUIDANCE REPORTED ASSUMPTIONS • FX expected to decrease revenue by Revenue $3,521.6 $3,540 - $3,640 1% - 3% ~$14M organic 1% - 4% – Adjusted EPS: positive impact from FX of $0.16 - $0.19 Adj. Op Income $832.0 $846 – $874 2% – 5% • Adj
Slide 14: Q2-19 Financial Guidance
Q2-19 Financial Guidance $ in millions, except EPS Q2-18 Q2-19 GUIDANCE REPORTED COMMENTS • Acquisitions/Divest, Revenue net expected to $913.9 $890 - $914 (3%) - 0% organic decrease revenue by (1%) – 2% ~$6M • FX expected to Adj. Op Income $219.4 $205 – $211 (7%) – (4%) decrease revenue by ~$9M – A
Slide 15: Appendix
APPENDIX SENSATA FIRST QUARTER 2019 EARNINGS SUMMARY
Slide 16: Q1-2019 Cash Flow Statement
Q1-2019 Cash Flow Statement $ in millions Q1-2019 Q1-2018 Δ Net Income $85.1 $90.5 (6.0%) Depreciation & Amortization $63.4 $62.9 0.7% Changes in Working Capital ($54.8) ($48.9) (12.2%) Other $19.1 $18.7 2.1% Operating Cash Flow $112.7 $123.3 (8.6%) Capital Expenditures ($41.7) ($30.9) (34.8%) Free
Slide 17: Sensata Peer Group
Sensata Peer Group ST Peer Group Sector 1. Ametek Inc Industrial 2. Amphenol Corp Tech 3. Aptiv Auto 4. Delphi Technologies Auto 5. Fortive Industrial Tech 6. FLIR Systems Tech 7. Gentex Auto 8. Littelfuse Industrial 9. Rockwell Industrial 10. Roper Industrial 11. TE Connectivity Industrial Tech 12.
Slide 18: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES
Slide 19: 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 20: 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 21: Adjusted EBITDA
Adjusted EBITDA $ in thousands Period 1 Total Sensata LTM Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Net income $593,570 $85,065 $254,099 $149,118 $105,288 $90,490 Interest expense, net 154,503 39,253 38,871 38,058 38,321 38,429 Provision for/(benefit from) income taxes (65,279) 21,467 (134,706) 24,562
Slide 22: Adjusted Operating Income & Margin, ANI, & Adjusted EPS
Adjusted Operating Income & Margin, ANI, & Adjusted EPS $ in thousands, except per share amounts Q1 2019 Q1 2018 Operating Operating Income Tax Net Diluted Operating Operating Income Tax Net Diluted Total Sensata Income Margin Provision Income EPS Income Margin Provision Income EPS Reported (GAAP) $
Slide 23: Other GAAP to Non-GAAP Reconciliations
Other GAAP to non-GAAP Reconciliations Q1 2019 Restructuring & Cost of Amortization Operating Interest Income Before $ in thousands Gross Profit1 SG&A Other Charges, Other, Net Income Taxes Net Income Revenue of Intangibles Income Expense, Net Taxes Net Reported (GAAP) $580,806 $289,693 $70,549 $36,
Slide 24: Organic Revenue Growth
Organic Revenue Growth Q1 2019 versus 2018 Reported Less Impact of: Constant Currency Less Impact of: Organic % Change Foreign Exchange % Change Acquisitions & % Change (GAAP) Rates (non-GAAP) Divestitures, Net (non-GAAP) Performance Sensing (3.4%) (1.2%) (2.2%) (3.6%) 1.4% Sensing Solutions 3.1% (0
Slide 25: Free Cash Flow
Free Cash Flow $ in thousands Q1 Total Sensata 2019 2018 Change Net cash provided by operating activities $112,693 $123,255 (8.6%) Additions to property, plant and equipment and capitalized software (41,690) (30,938) (34.8%) Free cash flow $71,003 $92,317 (23.1%) Q1 2019 EARNINGS SUMMARY 25
Slide 26: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 31-Mar-19 31-Dec-18 Current portion of long-term debt, finance lease and other financing obligations $13,660 $14,561 Finance lease and other financing obligations, less current portion 30,864 30,618 Long-term debt, net 3,216,729 3,21
Slide 27: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q1 Total Sensata 2019 2018 Provision for income taxes (GAAP) $21,467 $14,126 Non-GAAP adjustments: Deferred income taxes and other tax related 7,953 636 Current tax effect of non-GAAP adjustments (400) - Adjusted taxes (non-GAAP) $13,914 $13,490 Ad