Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — Q4 2020 Earnings Presentation
35 slides from Sensata Technologies's earnings presentation, Feb 2, 2021
Slide 1: Sensata Fourth Quarter and Full Year 2020 Earnings Presentation
SENSATA FOURTH QUARTER AND FULL YEAR 2020 EARNINGS PRESENTATION February 2, 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: Q4-2020 GAAP Results
Q4-2020 GAAP Results $ and shares outstanding in millions, except EPS Q4-2020 Q4-2019 B/(W) Revenue $906.5 $846.7 7.1 % Gross Profit $296.6 $290.2 2.2 % (% of revenue) 32.7% 34.3% R&D $33.3 $38.5 13.4 % (% of revenue) 3.7% 4.5% SG&A $77.0 $70.7 (8.9)% (% of revenue) 8.5% 8.4% Amortization of Intangi
Slide 4: FY-2020 GAAP Results
FY-2020 GAAP Results $ and shares outstanding in millions, except EPS FY-2020 FY-2019 B/(W) Revenue $3,045.6 $3,450.6 (11.7)% Gross Profit $926.5 $1,183.2 (21.7)% (% of revenue) 30.4% 34.3% R&D $131.4 $148.4 11.5 % (% of revenue) 4.3% 4.3% SG&A $294.7 $281.4 (4.7)% (% of revenue) 9.7% 8.2% Amortizat
Slide 5: Key Performance Highlights
Key Performance Highlights Executing well with • Return to revenue growth of 7.1% in Q4; sequential revenue growth of 15.0% recovery • Demonstrates market leadership and the strength and flexibility of organizational model Outgrowth • Strong revenue outgrowth: ◦ 990 bps of outgrowth Q4-20 in Heavy V
Slide 6: Sensata aims to be a leading provider of mission-critical sensor-rich solutions
Sensata aims to be a leading provider of mission-critical sensor-rich hardware and software solutions to help customers transition to an Electrified future Sensata is expanding its Electrification capabilities and opportunities • Sensata views the Electrification opportunity beyond auto EVs to inclu
Slide 7: Auto: Benefiting from Electrification growth
Auto: Benefiting from Electrification growth Higher content in battery electric vehicles • EV content per vehicle represents an average ~20% uplift from comparable-class ICE • Sensata components enable longer range and faster charging times, which are critically important to the broader adoption of
Slide 8: Heavy Vehicle and Industrial: Expanding electrification opportunities
Heavy Vehicle and Industrial: Expanding electrification opportunities • Partner of choice for high voltage electrical protection solutions to leading charging solutions providers • Multiple electric truck and bus platform new business wins with >$250 Sensata content per vehicle • Acquired Lithium Ba
Slide 9: Significant progress in Smart & Connected
Significant progress in Smart & Connected First commercial agreement with top 25 North American fleet manager • Launched commercial deployment with new SaaS business model • Initial rollout of the connected vehicle area network underway on small number of trucks and trailers with TPMS as the first s
Slide 10: Q4-20 Financials & 2021 Outlook
Q4-20 FINANCIALS & 2021 OUTLOOK
Slide 11: Q4-2020 Financial Summary
Q4-2020 Financial Summary $ in millions, except EPS Q4-2020 Q4-2019 B/(W) • Revenue increase YoY of 7.1% composed of: Revenue $906.5 $846.7 7.1 % • Organic revenue increased 5.3% Adjusted Operating Income $195.6 $192.5 1.6 % • Foreign exchange increased revenue by 1.8% % Revenue 21.6% 22.7% Adjusted
Slide 12: Performance Sensing: Sensata outgrew its end markets
Sensata outgrew its end markets by 770 bps in Q4-20 PERCENT OF REVENUES Heavy Vehicle, Off-Road (990 bps of outgrowth) 16.2% ~17% Performance Sensing 6.3% • Outgrowth led by China VI emissions regulations, operator controls • 880 bps 2020 outgrowth End Org Markets Growth Automotive End Markets (970
Slide 13: Q4-2020: Performance Sensing
Q4-2020: Performance Sensing Revenue Segment operating income $689.0 % operating margin* $632.9 $580.9 $185.1 $171.5 $151.6 26.9% 27.1% 26.1% 26.9%* 15.8%* Q4-20 Q3-20 Q4-19 Q4-20 Q3-20 Q4-19 Q4-20 YoY REVENUE GROWTH REPORTED ORGANIC • Revenue increase YoY and QoQ as customers' production recovered
Slide 14: Q4-2020: Sensing Solutions
Q4-2020: Sensing Solutions Revenue Segment operating income % operating margin* $217.5 $207.4 $213.8 $70.7 $69.1 $58.2 32.5% 32.3% 28.1% Q4-20 Q3-20 Q4-19 Q4-20 Q3-20 Q4-19 • Revenue increase YoY and QoQ reflects Industrial Q4-20 YoY REVENUE GROWTH REPORTED ORGANIC market recovery • Higher YoY segme
Slide 15: Corporate and Other Operating Expenses
Corporate and Other Operating Expenses $ in millions, except EPS Q4-2020 Q4-2019 B/(W) Corporate and Other $69.6 $59.6 (16.7)% • Adj. Corporate and Other increase % Revenue 7.7% 7.0% primarily due to higher global incentive compensation costs aligned to rapid Adj. Corporate and Other $58.5 $46.5 (25
Slide 16: Q4-2020 Non-GAAP Results
Q4-2020 Non-GAAP Results $ and shares outstanding in millions, except EPS Q4-2020 Q4-2019 B/(W) Revenue $906.5 $846.7 7.1 % Adj. Gross Profit $301.4 $297.8 1.2 % (% of revenue) 33.2% 35.2% R&D $33.3 $38.5 13.4 % (% of revenue) 3.7% 4.5% Adj. SG&A $70.8 $65.1 (8.7)% (% of revenue) 7.8% 7.7% Adj. Oper
Slide 17: Strong free cash generation enables investment in growth
Strong free cash generation enables investment in growth and enhances Sensata's balance sheet Free Cash Flow ($ millions) $240 $240M Q4-20 free cash flow, 178% conversion rate; $100 $69 $453M 2020 free cash flow, 130% conversion rate $45 85% conversion rate expected in 2021 Q1-20 Q2-20 Q3-20 Q4-20 $
Slide 18: Q1-21 Financial Guidance
Q1-21 Financial Guidance • YoY market expansion expected $ in millions, except EPS Q1-21 GUIDANCE Q1-20 B/(W) to be ~12% • Auto: ~16% • HVOR: ~16% Revenue $875 – $915 $774.3 13% - 18% • Industrial: ~9% organic 11% - 16% • Aerospace: ~(23%) • FX expected to increase Adj. Op Income $166 – $182 $136.7
Slide 19: FY-21 Financial Guidance
FY-21 Financial Guidance $ in millions, except EPS FY-21 GUIDANCE FY-20 B/(W) • FX expected to increase revenue by ~$64M at mid-point Revenue $3,425 – $3,575 $3,045.6 12% - 17% • OpInc margin of 20.9% ex-FX • Adjusted EPS: negligible impact organic 10% - 15% from FX at mid-point Adj. Op Income $695
Slide 20: We expect all end markets to return to growth in 2021
After a challenging 2020 we expect all of our end markets to return to growth in 2021 OEM Production Growth Rates 25% 13% global auto production growth 15% 9% 6% 3% 1% (6)% (9)% (18)% (21)% (23)% (25)% Aerospace Industrial HVOR China Auto EU Auto NA Auto 2020 Market Growth 2021E Market Growth Q4-202
Slide 21: Key Messages – Looking Forward
Key Messages – Looking Forward Strong response across units to Continuing execution of long-term rapidly improving markets Megatrend growth strategy Strong Q4-20 performance enabled by strength Electrification expansion continues with acquisition and flexibility of organizational model of Lithium Ba
Slide 22: Appendix A: Other Financial Information
APPENDIX A OTHER FINANCIAL INFORMATION
Slide 23: FY-2020 Non-GAAP Results
FY-2020 Non-GAAP Results $ and shares outstanding in millions, except EPS FY-2020 FY-2019 B/(W) Revenue $3,045.6 $3,450.6 (11.7)% Adj. Gross Profit $969.4 $1,208.3 (19.8)% (% of revenue) 31.8% 35.0% R&D $131.4 $148.4 11.5 % (% of revenue) 4.3% 4.3% Adj. SG&A $269.2 $267.4 (0.7)% (% of revenue) 8.8%
Slide 24: Q4-2020 Cash Flow Statement
Q4-2020 Cash Flow Statement $ in millions Q4-2020 Q4-2019 B/(W) Net Income $121.7 $53.5 127.3 % Depreciation & Amortization $62.6 $66.3 (5.6)% Changes in Working Capital $109.9 $46.3 137.2 % Other ($27.7) $19.9 NM Operating Cash Flow $266.4 $186.0 43.2 % Capital Expenditures ($26.8) ($38.1) 29.6 % F
Slide 25: FY 2020 Cash Flow Statement
FY 2020 Cash Flow Statement $ in millions FY 2020 FY 2019 B/(W) Net Income $164.3 $282.7 (41.9)% Depreciation & Amortization $255.2 $258.7 (1.4)% Changes in Working Capital $154.5 ($10.7) NM Other ($14.2) $88.8 NM Operating Cash Flow $559.8 $619.6 (9.6)% Capital Expenditures ($106.7) ($161.3) 33.8 %
Slide 26: Balance Sheet
Balance Sheet $ in millions DEC 31, 2020 DEC 31, 2019 Total Assets $ 7,844.2 $ 6,834.5 Working Capital $ 2,234.8 $ 1,330.9 Intangibles, Net & Other Long-Term Assets $ 4,864.2 $ 4,868.9 $ in millions DEC 31, 2020 DEC 31, 2019 Cash & Equivalents $ 1,862.0 $ 774.1 Current Debt $ 7.2 $ 6.9 Net Cash $ 1,
Slide 27: Appendix B: GAAP to Non-GAAP Reconciliations
APPENDIX B GAAP TO NON-GAAP RECONCILIATIONS
Slide 28: 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 29: 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 30: Adjusted EBITDA
Adjusted EBITDA $ in thousands Period Total Sensata FY 2020 4Q 2020 3Q 2020 2Q 2020 1Q 2020 4Q 2019 Net income/(loss) $ 164,286 $ 121,667 $ 76,729 $ (42,541) $ 8,431 $ 53,538 Interest expense, net 171,757 47,417 44,129 40,808 39,403 40,137 Provision for/(benefit from) income taxes 1,355 (13,751) 15,
Slide 31: Organic Revenue Growth
Organic Revenue Growth Q4-2020 0 Constant Currency % Organic Growth/ Reported % Change Less: Acquisition & Less: FX Impact Change (Decline) (GAAP) Divestitures, net (non-GAAP) (non-GAAP) Performance Sensing 8.9% 2.0% 6.9% —% 6.9% Sensing Solutions 1.7% 1.1% 0.6% —% 0.6% Sensata Total 7.1% 1.8% 5.3%
Slide 32: Free Cash Flow
Free Cash Flow $ in thousands Q4 FY Total Sensata 2020 2019 Change 2020 2019 Change Net cash provided by operating activities $ 266,437 $ 186,035 43.2% $ 559,775 $ 619,562 (9.6%) Additions to property, plant and equipment and capitalized software (26,780) (38,053) 29.6% (106,719) (161,259) 33.8% Fre
Slide 33: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Current portion of long-term debt, finance lease and other financing $ 7,205 $ 7,049 $ 407,042 $ 7,095 $ 6,918 obligations Finance lease and other financing obligations, less curren
Slide 34: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q4 FY Total Sensata 2020 2019 2020 2019 (Benefit from)/provision for income taxes $ (13,751) $ 27,060 $ 1,355 $ 107,709 Non-GAAP adjustments: Deferred income tax and other tax (benefit)/expense (33,053) 14,403 (40,856) 55,242 Current tax effect of
Slide 35: Other GAAP to Non-GAAP Reconciliations – Q4 and FY
Other GAAP to non-GAAP Reconciliations – Q4 and FY $ in thousands Q4 2020 FY 2020 Operating Operating Operating Operating Total Sensata Net income EPS Net income EPS income Margin income Margin Reported (GAAP) $ 154,161 17.0% $ 121,667 $ 0.77 $ 337,737 11.1% $ 164,286 $ 1.04 Non-GAAP adjustments: Re