Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — FY2017 Earnings Presentation
35 slides from Sensata Technologies's earnings presentation, Feb 1, 2018
Slide 1: Sensata Fourth Quarter and Full Year 2017 Earnings Presentation
SENSATA FOURTH QUARTER AND FULL YEAR 2017 EARNINGS PRESENTATION FEBRUARY 1, 2018
Slide 2: Forward-Looking Statements
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 are based on reasonable assumptions. No assurance
Slide 3: FY-2017 GAAP Results
FY-2017 GAAP Results FY-2017 FY-2016 Δ Revenue $3,306.7M $3,202.3M 3.3% Gross Profit $1,165.4M $1,118.0M 4.2% (% of revenue) 35.2% 34.9% R&D $130.2M $126.7M 2.8% (% of revenue) 3.9% 4.0% SG&A $302.8M $293.6M 3.1% (% of revenue) 9.2% 9.2% Profit from Operations $552.4M $492.2M 12.2% (% of revenue) 16
Slide 4: FY-2017: Solid revenue growth, margin expansion & double-digit adjusted EPS growth
FY-2017: Solid revenue growth, margin expansion & double- digit adjusted EPS growth Accelerating organic revenue growth– overall organic revenue growth of 4% up significantly y/y; organic revenue growth of 14% in HVOR; strength in industrial businesses and China Robust EBIT margin expansion – ad
Slide 5: FY-17 Performance by End Market
FY-17 Performance by End Market PERCENT OF REVENUES HVOR – Organic revenue growth: 13.5% • Strong performance in all market segments • High single digit content growth driven by increasing use of ~14% sensors and operator sensing technologies • Expect FY-18 to be another year of strong organic reven
Slide 6: Update on proposed re-domicile to the UK
Update on proposed re-domicile to the UK • Filed definitive proxy statement on January 19th • Shareholder meeting scheduled for February 16th • Process of soliciting votes for shareholder approval of the transaction has begun • Expect the UK High Court to approve the merger by the end of Q1-2018 Q4
Slide 7: Delivering solid results, poised to sustain strong performance
Delivering solid results, poised to sustain strong performance Intersecting attractive secular growth opportunities, including long-term megatrends such as electrification, autonomy, and smart/connected products Sustaining robust margin expansion • FY-17 adjusted EBIT margins expanded 100 bps Delive
Slide 8: Q4-2017 Financial Summary
Q4-2017 Financial Summary ADJUSTED NET INCOME GROWS 9% ORGANICALLY Q4-2017 Q4-2016 Δ • Revenue growth of 6.6% composed of: Revenue $840.5M $788.4M 6.6% • Organic revenue growth: 5.2% Adjusted EBIT $200.6M $179.6M 11.7% • Foreign exchange increases % revenue 23.9% 22.8% revenue by 1.4% Adjusted Net I
Slide 9: Q4-2017: Performance Sensing
Q4-2017: Performance Sensing REVENUE SEGMENT PROFIT % SEGMENT MARGIN (EXCLUDING FX) $180.7M $634.7M $162.0M $588.0M 28.6%* 27.5% Q4-2016 Q4-2017 Q4-2016 Q4-2017 Q4-17 REVENUE GROWTH REPORTED ORGANIC • HVOR continues to post strong growth, North America On-Road and Construction markets Automotive 5.1
Slide 10: Q4-2017: Sensing Solutions
Q4-2017: Sensing Solutions REVENUE SEGMENT PROFIT % SEGMENT MARGIN (EXCLUDING FX) $67.5M $63.2M $205.8M $200.4M 32.7%* 31.5% Q4-2016 Q4-2017 Q4-2016 Q4-2017 • Continued momentum in HVAC, Appliance Q4-17 REVENUE GROWTH REPORTED ORGANIC and Industrial markets Sensing Solutions 2.7% 2.3% • FY-17 organi
Slide 11: Q4-2017 Non-GAAP Results
Q4-2017 Non-GAAP Results Q4-2017 Q4-2016 Δ Revenue $840.5M $788.4M 6.6% Adj. Gross Profit $304.9M $285.7M 6.7% (% of revenue) 36.3% 36.2% R&D $33.2M $31.4M 5.6% (% of revenue) 3.9% 4.0% Adj. SG&A $71.7M $68.7M 4.4% (% of revenue) 8.5% 8.7% Adj. Other Opex1 $2.6M $1.4M 88.0% Adj. Other, net $3.2M ($4
Slide 12: Delivered on targeted net leverage ratio
Delivered on targeted net leverage ratio NET DEBT ($M) NET LEVERAGE RATIO ~$758M OF NET DEBT REDUCTION SINCE Q4-15 LEVERAGE RATIO LOWERED BY 1.6X 4.6x 3400 $3,317 3200 3000 3.0x 2800 2600 $2,559 2400 2200 2000 Q4-15 Q4-17 Q4-15 Q4-17 Q4 AND FULL YEAR 2017 EARNINGS SUMMARY 12
Slide 13: We will maintain a balanced, returns-driven approach to deploying capital
We will maintain a balanced, returns-driven approach to deploying capital Capital Deployment fueled by strong, growing free cash flow Critical to maintain a strong balance sheet while deploying capital to highest-return initiatives (situational approach) M&A Share Repurchase Expect highest returns E
Slide 14: Q1-18 Financial Guidance
Q1-18 Financial Guidance Q1-17 Q1-18 GUIDANCE REPORTED ORGANIC COMMENTS • FX expected to increase revenue by Revenue $807.3M $849M - $873M 5% - 8% 3% – 5% 2-3% – Adjusted EPS: positive impact of $0.03 - $0.04 from FX Adj. EBIT $170.7M $191M - $197M 12% - 15% 8% - 11% • Assumes 140 bps increase y/y i
Slide 15: 2018 Financial Guidance
2018 Financial Guidance FY-2017 FY-2018 GUIDANCE REPORTED ORGANIC ASSUMPTIONS • FX expected to increase revenue by Revenue $3,307M $3,442M – $3,542M 4%– 7% 3% – 5% 1-2% – Adjusted EPS: positive impact from FX of $0.10 - $0.14 Adj. EBIT $750M $818M – $846M 9% – 13% 7% – 10% • Cash tax rate: ~7.0% • D
Slide 16: Sensata continuously creates value for shareholders
Sensata continuously creates value for shareholders • We are a leader in the Sensing Market with differentiated solutions • We have demonstrated an ability to adapt and leverage our technologies and capabilities for new applications and market positions as megatrends shape our industry • Our acceler
Slide 17: Appendix
APPENDIX SENSATA FOURTH QUARTER 2017 EARNINGS SUMMARY
Slide 18: Q4-2017 GAAP Results
Q4-2017 GAAP Results Q4-2017 Q4-2016 Δ Revenue $840.5M $788.4M 6.6% Gross Profit $300.4M $278.9M 7.7% (% of revenue) 35.7% 35.4% R&D $33.2M $31.4M 5.6% (% of revenue) 3.9% 4.0% SG&A $75.6M $69.0M 9.6% (% of revenue) 9.0% 8.7% Profit from Operations $152.0M $127.7M 19.1% (% of revenue) 18.1% 16.2% Ta
Slide 19: FY-2017 Non-GAAP Results
FY-2017 Non-GAAP Results FY-2017 FY-2016 Δ Revenue $3,306.7M $3,202.3M 3.3% Adj. Gross Profit $1,185.6M $1,137.7M 4.2% (% of revenue) 35.9% 35.5% R&D $130.2M $126.7M 2.8% (% of revenue) 3.9% 4.0% Adj. SG&A $291.6M $289.4M 0.7% (% of revenue) 8.8% 9.0% Adj. Other Opex1 $18.5M $6.9M 166.7% Adj. Other
Slide 20: Q4-2017 Cash Flow Statement
Q4-2017 Cash Flow Statement Q4-2017 Q4-2016 Δ Net Income $169.1M $66.5M 154.2% Depreciation & Amortization $66.8M $79.2M (15.7%) Changes in Working Capital $12.8M ($27.7M) 146.4% Other ($63.4M) $7.2M (985.8%) Operating Cash Flow $185.4M $125.2M 48.1% Capital Expenditures ($41.0M) ($35.6M) (15.2%) Fr
Slide 21: FY-2017 Cash Flow Statement
FY-2017 Cash Flow Statement FY-2017 FY-2016 Δ Net Income $408.4M $262.4M 55.6% Depreciation & Amortization $270.4M $308.4M (12.3%) Changes in Working Capital ($94.8M) ($93.9M) (1.0%) Other ($26.2M) $44.6M (158.8%) Operating Cash Flow $557.6M $521.5M 6.9% Capital Expenditures ($144.6M) ($130.2M) (11.
Slide 22: Balance Sheet
Balance Sheet DEC 31, 2017 DEC 31, 2016 Total Assets $6,641.5M $6,241.0M Working Capital $1,218.8M $758.2M Intangibles, Net & Other $4,793.2M $4,899.5M Long-Term Assets DEC 31, 2017 DEC 31, 2016 Cash & Equivalents $753.1M $351.4M Current Debt $15.7M $14.6M Net Cash $737.4M $336.8M Q4 AND FULL YEAR 2
Slide 23: 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 24: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES
Slide 25: 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 26: Adjusted EBIT – Q4-2017
Adjusted EBIT – Q4-2017 Percentage amounts have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding. $ in thousands Q4-2017 Q4-2016 Change Total Sensata Amount Margin1 Amount Margin1 Amount Margin1 Net income $169,129 20.1% $66,527 8.4%
Slide 27: Adjusted EBIT – FY-17
Adjusted EBIT – FY-17 Percentage amounts have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding. $ in thousands FY-2017 FY-2016 Change Total Sensata Amount Margin1 Amount Margin1 Amount Margin1 Net income $408,357 12.3% $262,434 8.2% 5
Slide 28: Adjusted EBITDA
Adjusted EBITDA $ in thousands Period Total Sensata LTM FY-2017 Q4-2017 Q3-2017 Q2-2017 Q1-2017 Q4-2016 Net income $408,357 $408,357 $169,129 $88,035 $79,457 $71,736 $66,527 Interest expense, net 159,761 159,761 39,183 40,263 40,038 40,277 40,617 (Benefit from)/provision for income taxes (5,916) (5,
Slide 29: ANI, Adjusted EPS, and ANI Margin – Q4-2017
ANI, Adjusted EPS, and ANI Margin – Q4-2017 Per share and percentage amounts have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding. $ in thousands Q4-2017 Q4-2016 Change Total Sensata Amount EPS1 Margin2 Amount EPS1 Margin2 Amount EPS
Slide 30: ANI, Adjusted EPS, and ANI Margin – FY-17
ANI, Adjusted EPS, and ANI Margin – FY-17 Per share and percentage amounts have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding. $ in thousands FY-2017 FY-2016 Change Total Sensata Amount EPS1 Margin2 Amount EPS1 Margin2 Amount EPS1
Slide 31: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q4 FY Total Sensata 2017 2016 2017 2016 (Benefit from)/provision for income taxes ($53,675) $10,714 ($5,916) $59,011 Non-GAAP adjustments: Deferred income tax and other tax (benefit)/expense (67,343) 936 (55,156) 17,086 Adjusted taxes $13,668 $9,77
Slide 32: Free Cash Flow
Free Cash Flow $ in thousands Q4 FY Total Sensata 2017 2016 Change 2017 2016 Change Net cash provided by operating activities $185,367 $125,174 48.1% $557,646 $521,525 6.9% Additions to property, plant and equipment and capitalized software (41,048) (35,633) (15.2%) (144,584) (130,217) (11.0%) Free
Slide 33: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 31-Dec-17 30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 Current portion of long-term debt, capital lease and other financing obligations $15,720 $13,176 $10,704 $7,363 $14,643 Capital lease and other financing obligations 28,739 29,990 30,
Slide 34: Organic Revenue Growth
Organic Revenue Growth 2017 versus 2016 Total Sensata Q4 FY Reported net revenue (percentage) change 6.6% 3.3% Less year-over-year change due to: Foreign exchange rate differences 1.4% (0.7%) Organic revenue growth 5.2% 4.0% Performance Sensing Q4 FY Reported net revenue (percentage) change 7.9% 3.2
Slide 35: Segment Margin
Segment Margin $ in thousands Q4 FY Performance Sensing 2017 2016 Change 2017 2016 Change Segment profit $180,695 $161,986 11.5% $664,186 $615,526 7.9% Segment net revenue 634,696 587,985 7.9% 2,460,600 2,385,380 3.2% Segment margin (reported basis) 28.5% 27.5% 100 bps 27.0% 25.8% 120 bps Less year-