Sensata Technologies Holding Plc · NYSE:ST
Sensata Technologies — Q1 2018 Earnings Presentation
31 slides from Sensata Technologies's earnings presentation, Apr 24, 2018
Slide 1: Sensata First Quarter 2018 Earnings Presentation
SENSATA FIRST QUARTER 2018 EARNINGS PRESENTATION APRIL 24, 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: Q1-2018 GAAP Results
Q1-2018 GAAP Results Q1-2018 Q1-2017 Δ Revenue $886.3M $807.3M 9.8% Gross Profit $303.8M $274.9M 10.5% (% of revenue) 34.3% 34.0% R&D $36.0M $31.8M 13.2% (% of revenue) 4.1% 3.9% SG&A $81.3M $70.1M 16.0% (% of revenue) 9.2% 8.7% Profit from Operations $147.7M $121.6M 21.4% (% of revenue) 16.7% 15.1%
Slide 4: Solid start to the year highlighted by strong organic growth and robust margin expansion
Solid start to the year highlighted by strong organic growth and robust margin expansion Organic revenue growth of 6.4%– automotive business accelerates to 4.5% organic revenue growth on down market; 14.2% organic revenue growth in HVOR, fourth straight quarter of double-digit growth; Robust EBI
Slide 5: Q1-18 Performance by End Market
Q1-18 Performance by End Market PERCENT OF REVENUES HVOR – Organic revenue growth: 14.2% • Another quarter of strong growth in all HVOR submarkets • Performance reflects 970 basis points of outgrowth relative to ~15% end market production • Expect HVOR to sustain attractive growth rates for the rema
Slide 6: Five drivers will fuel our growth over the next decade
Five drivers will fuel our growth over the next decade CLEAN & CHINA ELECTRIFICATION AUTOMONY SMART & EFFICIENT Sustained Tightening efficiency Enabling autonomy CONNECTED Secular need for modernization of mandates make and operational Connected cleaner, more infrastructure electrified products effi
Slide 7: We are actively winning business in these areas today
We are actively winning business in these areas today CLEAN & EFFICIENT Robust growth for new sensor content on hybrids and gasoline exhaust systems Winning business in aerospace for new engine platforms Emerging as clear leader in TPMS for the HVOR market CHINA Gaining market share in advan
Slide 8: Q1-2018 Financial Summary
Q1-2018 Financial Summary ADJUSTED NET INCOME GROWS 17% ORGANICALLY Q1-2018 Q1-2017 Δ • Revenue growth of 9.8% composed of: Revenue $886.3M $807.3M 9.8% • Organic revenue growth: 6.4% Adjusted EBIT $197.1M $170.7M 15.5% • Foreign exchange increases % revenue 22.2% 21.1% revenue by 3.4% Adjusted Net
Slide 9: Operating leverage on organic revenue growth delivers strong growth in adjusted EBIT
Operating leverage on organic revenue growth delivers strong growth in adjusted EBIT Q1-18 Guide Changes from Guide Q1-18 Actual Q1 Guide Organic Organic FX Organic Q1 Actual Midpoint Growth Growth Net Revenue $861.0 4.0% $6.1 $19.2 $886.3 6.4% Adj. EBIT $194.0 9.7% ($2.2) $5.3* $197.1 12.8% % of re
Slide 10: Q1-2018: Performance Sensing
Q1-2018: Performance Sensing REVENUE SEGMENT PROFIT % SEGMENT MARGIN (EXCLUDING FX) $662.8M $169.4M $600.1M $151.7M 26.0%* 25.3% Q1-2017 Q1-2018 Q1-2017 Q1-2018 Q1-18 REVENUE GROWTH REPORTED ORGANIC • HVOR continues to post strong growth, NA Class 8 Truck and Construction markets Automotive 8.7% 4.5
Slide 11: Q1-2018: Sensing Solutions
Q1-2018: Sensing Solutions REVENUE SEGMENT PROFIT % SEGMENT MARGIN (EXCLUDING FX) $223.5M $71.9M $67.4M $207.1M 32.4%* 32.6% Q1-2017 Q1-2018 Q1-2017 Q1-2018 • Continued momentum in industrial markets Q1-18 REVENUE GROWTH REPORTED ORGANIC • Industrial Sensing and Aerospace businesses Sensing Solution
Slide 12: Q1-2018 Non-GAAP Results
Q1-2018 Non-GAAP Results Q1-2018 Q1-2017 Δ Revenue $886.3M $807.3M 9.8% Adj. Gross Profit $308.2M $280.0M 10.1% (% of revenue) 34.8% 34.7% R&D $36.0M $31.8M 13.2% (% of revenue) 4.1% 3.9% Adj. SG&A $77.1M $68.8M 12.0% (% of revenue) 8.7% 8.5% Restructuring & amortization1 $1.8M $8.1M (78.1%) Adj. Ot
Slide 13: Adjusted gross margins increase 70 basis points when normalizing for FX, integration costs and commodity hedges
Adjusted gross margins increase 70 basis points when normalizing for FX, integration costs and commodity hedges ADJUSTED GROSS MARGIN (REPORTED) ADJUSTED GROSS MARGIN (PRO FORMA)* 70 bps 35.5% 10 bps 34.7% 34.8% 34.8% Q1-17 Q1-18 Q1-17 Q1-18 *Incremental 60 bps y/y improvement driven by FX: +20 bps,
Slide 14: Q2-18 Financial Guidance
Q2-18 Financial Guidance Q2-17 Q2-18 GUIDANCE REPORTED ORGANIC COMMENTS • Strong sequential earnings and margin Revenue $839.9M $891M - $915M 6% - 9% 3% - 5% expansion • FX expected to increase revenue by approximately $27M Adj. EBIT $189.6M $207M - $213M 9% - 12% 4% - 8% – Adjusted EPS: positive im
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 $3,475M – $3,575M 5%– 8% 3% – 5% 2-3% – Adjusted EPS: positive impact from FX of $0.10 - $0.14 Adj. EBIT $750M $818M – $846M 9% – 13% 7% – 10% • Adjusted tax rate: ~7.0%
Slide 16: Sensata continuously creates value for shareholders
Sensata continuously creates value for shareholders • Accelerating organic revenue growth • Industry leading-margins that continue to expand • Demonstrated track record of double- digit organic EPS growth • Robust free cash flow performance • Balanced, value-creating capital deployment Q1-2018 EARNI
Slide 17: Appendix
APPENDIX SENSATA FIRST QUARTER 2018 EARNINGS SUMMARY
Slide 18: Q1-2018 Cash Flow Statement
Q1-2018 Cash Flow Statement Q1-2018 Q1-2017 Δ Net Income $90.5M $71.7M 26.1% Depreciation & Amortization $62.9M $69.1M (8.9%) Changes in Working Capital ($48.9M) ($32.4M) (50.7%) Other $18.7M $11.3M 65.1% Operating Cash Flow $123.3M $119.7M 3.0% Capital Expenditures ($30.9M) ($33.1M) 6.4% Free Cash
Slide 19: Balance Sheet
Balance Sheet MAR 31, 2018 DEC 31, 2017 Total Assets $6,782.9M $6,641.5M Working Capital $1,352.7M $1,218.8M Intangibles, Net & Other $4,764.3M $4,793.2M Long-Term Assets MAR 31, 2018 DEC 31, 2017 Cash & Equivalents $828.3M $753.1M Current Debt $8.2M $15.7M Net Cash $820.1M $737.4M Q1-2018 EARNINGS
Slide 20: 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 21: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES
Slide 22: 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 23: Non-GAAP Measures - continued
Non-GAAP Measures - continued Adjusted taxes – represents provision for/(benefit from) income taxes, determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments recorded to provision for/(benefit from) income taxes in our U.S. GAAP financial statements, such as deferred income ta
Slide 24: Adjusted EBIT – Q1-2018
Adjusted EBIT – Q1-2018 Percentage amounts have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding. $ in thousands Q1 2018 Q1 2017 Change Total Sensata Amount Margin1 Amount Margin1 Amount Margin1 Net income $90,490 10.2% $71,736 8.9% 2
Slide 25: Adjusted EBITDA
Adjusted EBITDA $ in thousands Period Total Sensata LTM YTD 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Net income $427,111 $90,490 $90,490 $169,129 $88,035 $79,457 $71,736 Interest expense, net 157,913 38,429 38,429 39,183 40,263 40,038 40,277 Provision for/(benefit from) income taxes (6,122) 14,1
Slide 26: ANI, Adjusted EPS, and ANI Margin – Q1-2018
ANI, Adjusted EPS, and ANI Margin – Q1-2018 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 Q1 2018 Q1 2017 Change Total Sensata Amount EPS1 Margin2 Amount EPS1 Margin2 Amount EPS
Slide 27: Adjusted Taxes and Adjusted Tax Rate
Adjusted Taxes and Adjusted Tax Rate $ in thousands Q1 Total Sensata 2018 2017 Provision for income taxes $14,126 $14,332 Non-GAAP adjustments: Deferred income tax and other tax expense/(benefit) 636 3,542 Adjusted taxes $13,490 $10,790 Adjusted EBIT $197,091 $170,690 Adjusted tax rate 6.8% 6.3% Q1-
Slide 28: Free Cash Flow
Free Cash Flow $ in thousands Q1 Total Sensata 2018 2017 Change Net cash provided by operating activities $123,255 $119,701 3.0% Additions to property, plant and equipment and capitalized software (30,938) (33,059) 6.4% Free cash flow $92,317 $86,642 6.5% Q1-2018 EARNINGS SUMMARY 28
Slide 29: Net Debt and Net Leverage Ratio
Net Debt and Net Leverage Ratio $ in thousands As of Total Sensata 31-Mar-18 31-Dec-17 Current portion of long-term debt, capital lease and other financing obligations $8,178 $15,720 Capital lease and other financing obligations 27,735 28,739 Long-term debt 3,221,676 3,225,810 Total debt, capital le
Slide 30: Organic Revenue Growth
Organic Revenue Growth Q1 2018 versus Q1 2017 0 Total Sensata Q1 Reported net revenue (percentage) change 9.8% Less year-over-year change due to: Foreign exchange rate differences 3.4% Organic revenue growth 6.4% Performance Sensing Q1 Reported net revenue (percentage) change 10.4% Less year-over-ye
Slide 31: Segment Margin
Segment Margin $ in thousands Q1 Performance Sensing 2018 2017 Change Segment profit $169,410 $151,736 11.6% Segment net revenue 662,829 600,143 10.4% Segment margin (reported basis) 25.6% 25.3% 30 bps Less year-over-year change due to: Foreign exchange rate differences (0.4%) 0.0% (40 bps) Segment