Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — Investor Day (December 2017)
26 slides from Sensata Technologies's investor day presentation, Dec 12, 2017
Slide 1: 2017 Investor Day
2017 InvestorDay & New York City | December 12, 2017 ¢ “eses' °s?° Sensata Technologies
Slide 2: Driving Value in a World Increasingly Dependent on Sensors
DRIVING VALUE IN A WORLD INCREASINGLY DEPENDENT ON SENSORS Martha Sullivan President & CEO
Slide 3: Key Messages
Key Messages • Sensata is a leading industrial technology company with attractive secular growth opportunities and is well-positioned for megatrends such as electrification, autonomy, and smart/connected products • Sensata has strengthened its business model, expanded its market and is uniquely posi
Slide 4: Highlights of Recent Performance
HIGHLIGHTS OF RECENT PERFORMANCE
Slide 5: Strong adjusted EPS growth over the past three years despite market challenges
Over the past three years, we have delivered strong adjusted EPS growth despite market challenges ADJUSTED EPS GROWTH* Key Drivers • Expanded adjusted EBIT margin by 160bps** from 2014 to 2017E 3-YEAR CAGR: 13% • Delivered $35M of M&A cost synergies • Core productivity improvements Strong EPS Growth
Slide 6: Driving returns from acquisitions and strengthening the balance sheet
We are driving attractive returns from acquisitions and delivering on our commitment to strengthen the balance sheet SCHRADER/CST ACQUISITIONS BALANCE SHEET NET LEVERAGE RATIO • Both acquisitions on track to deliver mid-teens or higher IRR 4.6x • Cost synergies improve profitability of acquisitions
Slide 7: Strong free cash flow and delivering on earnings expectations
We are generating strong free cash flow and are delivering on investor earnings expectations FREE CASH FLOW PERFORMING-TO-PROMISE • Managing through market volatility $1.2B • Driving strong profitability and IN FREE CASH FLOW GENERATION expanding margins while investing for the future • Poised to me
Slide 8: What Drives Sensata's Growth?
WHAT DRIVES SENSATA’S GROWTH?
Slide 9: Sensors are a fundamental building block
Sensors are a fundamental building block for electrification, autonomy and smart, connected products – enabling a clean and efficient world SENSATA 2017 INVESTOR DAY 9
Slide 10: Four key drivers shaping our markets through the next decade
Four key drivers are shaping our markets through the next decade and we are capitalizing on these trends CLEAN & ELECTRIFICATION AUTONOMY SMART & EFFICIENT Mandates for electrified Enabling autonomy CONNECTED Secular need for products and operational Connected cleaner, more efficiencies equipment wi
Slide 11: We help customers solve their most challenging problems
We help our customers solve their most challenging problems and continuously evolve to meet market demands A history of solving problems for customers 1995 2005 2015 2025 2035 Customers have relied on our …which allowed us to rapidly …and be ready today for industry expertise and solutions respond t
Slide 12: Expanded markets organically and through M&A driving revenue growth
We have expanded our markets organically and through M&A, which is driving strong revenue growth and strengthening our business model SERVED ADDRESSABLE MARKET (SAM) VOLUME/SCALE ADVANTAGE MEGATRENDS AUTO • Autonomy $18B NEW/EXPANDED MARKETS $21B • Electrification ~$30B* HVOR • Clean & Efficient
Slide 13: Why Does Sensata Win?
WHY DOES SENSATA WIN?
Slide 14: Focus on high-value segments with significant differentiation
We focus on high-value segments of the market where we have significant differentiation and industry-leading margins Advanced engineering Flexible and adaptable skills in sensors, software, ASIC, technology building blocks configured wireless, sub-systems, etc. for customized solutions Trusted brand
Slide 15: A trusted name in mission-critical sensing applications
Sensata is a trusted name in mission-critical sensing applications across a range of end markets Decades-long relationships with Strong incumbent positions with BLUE CHIP CUSTOMERS MARKET DISRUPTERS SENSATA 2017 INVESTOR DAY 15
Slide 16: Leveraging proven technologies across a broad set of applications
We leverage proven technologies across a broad set of applications to drive costs lower, speed time-to-market, and improve product performance TODAY FUTURE Wireless Sensing Truck and Car Autonomous Commercial Battery Cell Tire Monitoring Car Wear Wireless HUB Management Systems Sensor and Sensors Sy
Slide 17: Differentiated, customized solutions on a low-cost operation
We provide differentiated, customized solutions built on a highly-efficient, low-cost operation CONSOLIDATED SINGLE, INTEGRATED CULTURE OF RELENTLESS MANUFACTURING OPERATING SYSTEM FOR PRODUCTIVITY with only 12 sites globally REAL-TIME VISIBILITY IMPROVEMENTS SENSATA 2017 INVESTOR DAY 17
Slide 18: Three-Year Outlook and Key Drivers
THREE-YEAR OUTLOOK AND KEY DRIVERS
Slide 19: Revenue performance 2015-2017E impacted by three primary factors
Our revenue performance from 2015-2017E was adversely impacted by three primary factors -160 bps -200 bps -100 bps SHORT-TERM DILUTION END MARKET DECLINES MATURATION OF FROM ACQUISITIONS CONTROL SOLUTIONS SENSATA 2017 INVESTOR DAY 19
Slide 20: Accelerating organic revenue growth over the next three years
We expect to accelerate our organic revenue growth performance in the next three years as a result of the following key drivers Already secured business for nearly 90% of 2020E revenues CLEAN & EFFICIENT ELECTRIFICATION CHINA Next-gen gas powertrains Regenerative braking Sustained vehicle modernizat
Slide 21: Three-year outlook: growth, profitability and free cash flow
Our three-year outlook reflects a strong balance of growth, profitability improvement and free cash flow generation 2018E – 2020E* 4–6% ~250 bps 10–13% CAGR CAGR ORGANIC ADJUSTED EBIT ADJUSTED REVENUE GROWTH MARGIN EXPANSION ORGANIC EPS GROWTH *assumes constant share count and no M&A SENSATA 2017 IN
Slide 22: Schrader and CST lead to strong returns on capital
The higher margins and growth we are generating from Schrader and CST will lead to strong returns on capital . . . Expected IRR >20% ~13-15% Projected Revenue CAGR* mid-single mid-single digits digits Projected EBIT Margin ~1,300 bps ~600-800 bps Improvement** *2018E-2020E **From close of acquisitio
Slide 23: Important driver of future growth and profitability
. . . and will be an important driver of our future growth and profitability NEAR-TERM GROWTH CATALYSTS NEAR-TERM GROWTH CATALYSTS • China TPMS Legislation • Strong content growth in industrial applications REVENUE SYNERGIES • TPMS Adoption in HVOR Market REVENUE SYNERGIES • Expansion in Low Pressur
Slide 24: $1.8B of free cash flow expected over the next three years
We expect to generate $1.8B of free cash flow over the next three years, which extends our ability to drive superior shareholder returns Increasing optionality to deploy capital and drive attractive returns SHARE M&A BUYBACKS • Disciplined acquirers • Greater opportunity to purchase • Initial focus
Slide 25: Summary
SUMMARY
Slide 26: 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