Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — Q3 2021 Earnings Presentation
31 slides from Sensata Technologies's earnings presentation, Oct 26, 2021
Slide 1: Sensata Third Quarter 2021 Earnings Presentation
SENSATA THIRD QUARTER 2021 EARNINGS PRESENTATION October 26, 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: Q3-2021 GAAP Results
Q3-2021 GAAP Results $ and shares outstanding in millions, except EPS Q3-2021 Q3-2020 B/(W) Revenue $951.0 $788.3 20.6 % Gross Profit $322.1 $258.1 24.8 % (% of revenue) 33.9% 32.7% R&D $40.1 $33.4 (19.9)% (% of revenue) 4.2% 4.2% SG&A $85.8 $75.7 (13.3)% (% of revenue) 9.0% 9.6% Amortization of Int
Slide 4: Key Performance Highlights
Key Performance Highlights • Strong Q3-21 revenue outgrowth of 1,190 bps across all of Sensata Outgrowth • 570 bps of revenue outgrowth on average since 2018, driven by: exceeding long- ◦ 1,050 bps of outgrowth in Heavy Vehicle, Off-Road on average since 2018 term targets ◦ 650 bps of outgrowth in A
Slide 5: Sensata published its first Sustainability Report
Sensata published its first Sustainability Report Sensata is committed to enhancing sustainability across our business against these enterprise-wide longer-term goals: DIVERSITY, EQUITY PROTECTING OUR RESPONSIBLE & INCLUSION ENVIRONMENT SOURCING Our 2026 Our 2050 Our 2026 GOALS GOAL GOALS female rep
Slide 6: Electrification components driving growth for Sensata
Electrification components driving growth for Sensata Sensata components designed into BEVs Carryover components New EV-specific component initiatives • Electronic Stability Control • Contactors • Advanced battery sensing brake pressure • Fuses • E-motor position and temperature • Tire management so
Slide 7: Sensata moves beyond components to create Clean Energy Solutions
Sensata moves beyond components to create Clean Energy Solutions Addressing market needs for comprehensive electrification solutions Pending acquisition of Spear Power Systems enables full energy storage solutions for specialty transportation • Emissions regulations driving rapid growth • Lithium Io
Slide 8: Sensata Insights is expanding its capabilities to address more fleet analytics needs
Sensata Insights is expanding its capabilities to address more fleet analytics needs Sensata Insights forward 12 month order book has grown rapidly to $85M Industry-wide semiconductor supply constraints are limiting our ability to meet near-term demand >$9M* refrigeration and cargo monitoring new bu
Slide 9: Q3-21 Financials & Q4-21 Outlook
Q3-21 FINANCIALS & Q4-21 OUTLOOK
Slide 10: Q3-2021 Financial Summary
Q3-2021 Financial Summary $ in millions, except EPS Q3-2021 Q3-2020 B/(W) • Revenue growth YoY of 20.6% composed of: Revenue $951.0 $788.3 20.6 % • Organic revenue increased 16.6% Adjusted Operating Income $201.0 $154.8 29.8 % • Acquisition increased revenue by 2.3% % Revenue 21.1% 19.6% • Foreign e
Slide 11: Performance Sensing
Sensata Q3-21 organic revenue growth included 470 bps of market and 1,190 bps of market outgrowth PERCENT OF REVENUES Heavy Vehicle, Off-Road 2,400 bps of outgrowth; 1,050 bps on average since 2018 58.9% ~23% 31.4% Performance Sensing • Outgrowth driven by China VI emissions regulation, operator con
Slide 12: Q3-2021: Performance Sensing
Q3-2021: Performance Sensing Revenue Segment operating income $706.5 % operating margin $580.9 $193.7 $151.6 27.4% 26.9%* 26.1% 15.8%* Q3-21 Q3-20 Q3-21 Q3-20 Q3-21 YoY REVENUE GROWTH REPORTED ORGANIC • Increasing customer orders, Xirgo acquisition, and newly launched programs drove revenue increase
Slide 13: Q3-2021: Sensing Solutions
Q3-2021: Sensing Solutions Revenue Segment operating income % operating margin $244.6 $207.4 $75.3 $58.2 30.8% 28.1% Q3-21 Q3-20 Q3-21 Q3-20 • Revenue increase YoY reflects new Electrification Q3-21 YoY REVENUE GROWTH REPORTED ORGANIC launches and HVAC market recovery Industrial & Other 19.7% 17.9%
Slide 14: Corporate and Other Operating Expenses
Corporate and Other Operating Expenses $ in millions Q3-2021 Q3-2020 B/(W) Corporate and Other $72.7 $61.0 (19.3)% • Adj. Corporate and Other increase % Revenue 7.6% 7.7% primarily due to higher Megatrend investments and higher global incentive Adj. Corporate and Other $65.7 $53.4 (23.0)% compensati
Slide 15: Q3-2021 Non-GAAP Results
Q3-2021 Non-GAAP Results $ and shares outstanding in millions, except EPS Q3-2021 Q3-2020 B/(W) Revenue $951.0 $788.3 20.6 % Adj. Gross Profit $326.1 $258.8 26.0 % (% of revenue) 34.3% 32.8% R&D $40.1 $33.4 (19.9)% (% of revenue) 4.2% 4.2% Adj. SG&A $82.8 $68.9 (20.0)% (% of revenue) 8.7% 8.7% Adj.
Slide 16: Strong free cash generation enables investment in growth
Strong free cash generation enables investment in growth and enhances Sensata's balance sheet Free Cash Flow ($ millions) $240 $127 $133M trailing four- $100 $88 quarter average $77 Q3-20 Q4-20 Q1-21 Q2-21 Q3 21 $88M $37M Q3-21 free cash flow Q3-21 Capital Expenditures ~80% conversion rate expected
Slide 17: Q4-21 Financial Guidance
Q4-21 Financial Guidance $ in millions, except EPS Q4-21 GUIDANCE Q4-20 B/(W) • Q4-21 end-market growth expected to be ~(14%) YoY Revenue $895 – $925 $906.5 (1)% - 2% • Auto: ~(28)% organic (3)% - 0% ◦ NA: ~(28)% ◦ EU: ~(33)% ◦ China: ~(26)% Adj. Op Income $180 – $190 $195.6 (8)% - (3)% • HVOR: ~2%
Slide 18: We expect strong key end-market growth ex-Auto in 2021
We expect strong key end-market growth ex-Auto in 2021 Our Auto production estimates are slightly below IHS' forecast for the balance of the year OEM Production Growth Rates 25% 23% 13% (3%) global auto production YoY* 12% 5% 5% 3% (2)% (4)% (5)% (7)% (8)% Aerospace Industrial HVOR China Auto EU Aut
Slide 19: Key Messages – Looking Forward
Key Messages – Looking Forward Strong results well above markets M&A and technology partnerships are Strong Q3-21 performance enabled by strength important value creation amplifiers and resiliency of organizational model Accessing new high growth market areas and important additive technologies Deli
Slide 20: Appendix A: Other Financial Information
APPENDIX A OTHER FINANCIAL INFORMATION
Slide 21: Q3-2021 Cash Flow Statement
Q3-2021 Cash Flow Statement $ in millions Q3-2021 Q3-2020 B/(W) Net Income $85.0 $76.7 10.7 % Depreciation & Amortization $66.1 $61.5 7.5 % Changes in Working Capital ($44.5) $35.0 nm Other $18.8 ($50.2) nm Operating Cash Flow $125.3 $123.1 1.8 % Capital Expenditures ($36.8) ($23.2) (58.5)% Free Cas
Slide 22: Balance Sheet
Balance Sheet $ in millions SEP 30, 2021 DEC 31, 2020 Total Assets $ 8,504.8 $ 7,844.2 Working Capital $ 2,472.8 $ 1,484.8 Intangibles, Net & Other Long-Term Assets $ 5,202.1 $ 4,864.2 $ in millions SEP 30, 2021 DEC 31, 2020 Cash & Equivalents $ 1,958.1 $ 1,862.0 Current Debt (1) $ 6.6 $ 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 3Q 2021 2Q 2021 1Q 2021 4Q 2020 3Q 2020 Net income $ 373,275 $ 84,959 $ 112,916 $ 53,733 $ 121,667 $ 76,729 Interest expense, net 181,810 45,137 45,213 44,043 47,417 44,129 Provision for/(benefit from) income taxes 36,008 21,840 7,638 20,281 (1
Slide 27: Organic Revenue Growth
Organic Revenue Growth Q3-2021 0 Constant Currency % Reported % Change Less: Acquisition & Organic Growth Less: FX Impact Change (GAAP) Divestitures, net (non-GAAP) (non-GAAP) Performance Sensing 21.6% 1.8% 19.8% 3.1% 16.7% Sensing Solutions 17.9% 1.5% 16.4% —% 16.4% Sensata Total 20.6% 1.7% 18.9% 2
Slide 28: Free Cash Flow
Free Cash Flow $ in thousands Q3 YTD Total Sensata 2021 2020 Change 2021 2020 Change Net cash provided by operating activities $ 125,295 $ 123,066 1.8% $ 393,226 $ 293,338 34.1% Additions to property, plant and equipment and (36,838) (23,242) (58.5%) (100,410) (79,939) (25.6%) capitalized software F
Slide 29: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 Current portion of long-term debt, finance lease and other financing $ 6,632 $ 7,281 $ 9,678 $ 757,205 $ 7,049 obligations (1) Finance lease and other financing obligations, less cur
Slide 30: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q3 YTD Total Sensata 2021 2020 2021 2020 Provision for income taxes $ 21,840 $ 15,181 $ 49,759 $ 15,106 Non-GAAP adjustments: Deferred income tax and other tax expense/ 1,971 (7,272) 5,893 (7,803) (benefit) Current tax effect of non-GAAP adjustment
Slide 31: Other GAAP to Non-GAAP Reconciliations
Other GAAP to non-GAAP Reconciliations $ in thousands (except EPS amounts) Q3-2021 Q3-2020 Operating Operating Operating Operating Total Sensata Net Income EPS Net Income EPS Income Margin Income Margin Reported (GAAP) $ 161,339 17.0% $ 84,959 $ 0.53 $ 126,845 16.1% $ 76,729 $ 0.49 Non-GAAP adjustme