Sensata(ST) - 2024 Q1 - Quarterly Results

Sensata Technologies Q1 2024 Financial Results Overview Q1 2024 Highlights and CEO Statement Sensata Technologies reported a solid Q1 2024, achieving upper-end guidance for revenue and adjusted operating margin, securing over $1.3 billion in electrification business - Sensata Technologies reported a solid start to Q1 2024, with revenue and adjusted operating margin reaching the upper end of guidance[2] - The company secured over $1.3 billion in electrification business over the past three years, solidifying its position as a trusted electrification partner[2] First Quarter 2024 Financial Performance Key Financial Metrics Sensata's Q1 2024 revenue increased 0.9% to $1,006.7 million, while operating income decreased 2.7% to $144.8 million, and adjusted diluted EPS fell 3.3% to $0.89 Q1 2024 Key Financial Metrics (Year-over-Year) | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (%) | |:--------------------|:-------------------|:-------------------|:---------| | Revenue | $1,006.7 | $998.2 | +0.9% | | Revenue (Constant Currency) | N/A | N/A | +2.3% | | Operating Income | $144.8 | $148.8 | -2.7% | | Operating Income (% of Revenue) | 14.4% | 14.9% | -0.5 pp | | Adjusted Operating Income | $188.5 | $192.9 | -2.3% | | Adjusted Operating Income (% of Revenue) | 18.7% | 19.3% | -0.6 pp | | Diluted EPS | $0.50 | $0.56 | -10.7% | | Adjusted Diluted EPS | $0.89 | $0.92 | -3.3% | | Adjusted Diluted EPS (Constant Currency) | N/A | N/A | +1.1% | Cash Flow and Shareholder Returns Sensata's Q1 2024 operating cash flow increased to $106.5 million and free cash flow to $64.4 million, with $28.1 million returned to shareholders via dividends and share repurchases Q1 2024 Cash Flow and Shareholder Returns | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change | |:-----------------------|:-------------------|:-------------------|:-------| | Operating Cash Flow | $106.5 | $96.9 | +$9.6M | | Free Cash Flow | $64.4 | $60.0 | +$4.4M | | Total Shareholder Returns | $28.1 | N/A | N/A | | Dividends Paid | $18.1 | N/A | N/A | | Shares Repurchased | $10.1 | N/A | N/A | Second Quarter 2024 Guidance Q2 2024 Financial Outlook Sensata forecasts Q2 2024 revenue between $1.025 billion and $1.055 billion, a 1-3% year-over-year decrease, with adjusted EPS projected at $0.89 to $0.95, down 2-8% Q2 2024 Guidance (Year-over-Year) | Metric | Q2 2024 Guidance | Q2 2023 | Y/Y Change | |:--------------------|:-------------------|:-------------------|:---------| | Revenue | $1,025 - $1,055M | $1,062.1M | (3%) - (1%) | | Organic Growth | N/A | N/A | (2%) - 1% | | Adjusted Operating Income | $192 - $202M | $205.7M | (7%) - (2%) | | Adjusted Net Income | $134 - $144M | $149.2M | (10%) - (4%) | | Adjusted EPS | $0.89 - $0.95 | $0.97 | (8%) - (2%) | - Foreign exchange rate changes are expected to reduce Q2 2024 revenue by approximately $13 million and adjusted EPS by approximately $0.02[9] Company Information and Disclosures Conference Call and Webcast Information Sensata Technologies held a conference call on April 29, 2024, to discuss Q1 2024 financial results and Q2 outlook, with dial-in and webcast details provided - Sensata held a conference call on April 29, 2024, to discuss Q1 2024 financial results and the Q2 outlook[10] - The conference call dial-in numbers are 1-844-784-1726 or 1-412-380-7411, with the conference name 'Sensata Q1 2024 Financial Results Conference Call'[10] - The webcast is available on the company's investor relations page at http://investors.sensata.com, with replay services until May 6, 2024[10] About Sensata Technologies Sensata Technologies is a global industrial technology company focused on creating a cleaner, more efficient, electrified, and connected world through advanced sensing solutions - Sensata Technologies is a global industrial technology company committed to creating a cleaner, more efficient, electrified, and connected world[11] - The company serves automotive, heavy vehicle and off-road, industrial, and aerospace markets with a wide range of sensors, electrical protection components, and sensor-rich solutions[11] - Sensata employs over 21,000 people across 16 countries worldwide[11] Non-GAAP Financial Measures: Definitions Sensata supplements GAAP reporting with non-GAAP financial measures, including adjusted net income, adjusted EPS, and free cash flow, for internal operations, strategic decisions, and investor transparency - Sensata uses non-GAAP financial measures such as adjusted net income, adjusted EPS, adjusted operating income, free cash flow, organic revenue growth, and adjusted EBITDA to supplement GAAP reporting[15] - These non-GAAP metrics are utilized for internal operations and strategic decisions, including annual operating plan development, overall business performance assessment, and certain employee compensation determinations[12] - The company believes these measures aid in understanding ongoing operations, analyzing operating trends, and providing additional transparency[13] Safe Harbor Statement This earnings release contains forward-looking statements regarding future financial and operating performance, subject to various risks and uncertainties that could materially affect actual results - This earnings release contains forward-looking statements concerning expectations, forecasts, and assumptions about future financial and operating performance, objectives, business, and market outlook[25] - These statements are subject to various potential risks, uncertainties, and other factors, including global market instability, supplier disruptions, business acquisitions or dispositions, industry competition, intellectual property, product liability, warranty and recall claims, new product market acceptance, and labor disputes[26] - Investors should carefully consider these factors and other risks described in the company's Form 10-K and Form 10-Q reports, with no obligation to update these statements unless legally required[27] Media & Investor Contact Contact information for media and investors is provided, including the name, phone number, and email address of Alexia Taxiarchos - Media and Investor Contact: Alexia Taxiarchos, Phone: (508) 236-1761, Email: ataxiarchos@sensata.com, investors@sensata.com[50] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Operations Sensata's Q1 2024 net revenue was $1,006.7 million, slightly above Q1 2023, with operating income decreasing to $144.8 million and net income falling to $76.0 million Q1 2024 Condensed Consolidated Statements of Operations | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | |:--------------------------------|:-------------------|:-------------------| | Net revenue | $1,006.7 | $998.2 | | Total operating costs and expenses | $861.9 | $849.3 | | Operating income | $144.8 | $148.8 | | Income before taxes | $98.6 | $110.1 | | Provision for income taxes | $22.6 | $23.7 | | Net income | $76.0 | $86.4 | | Diluted EPS | $0.50 | $0.56 | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets were $7.616 billion, slightly down from December 31, 2023, with cash and equivalents at $460.4 million and total liabilities at $4.641 billion March 31, 2024 Condensed Consolidated Balance Sheets | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | |:--------------------------------|:--------------------------|:--------------------------| | Cash and cash equivalents | $460.4 | $508.1 | | Total current assets | $2,098.5 | $2,102.4 | | Total assets | $7,616.0 | $7,681.0 | | Total current liabilities | $794.0 | $823.7 | | Long-term debt, net | $3,375.5 | $3,374.0 | | Total liabilities | $4,641.1 | $4,684.7 | | Total shareholders' equity | $2,974.8 | $2,996.3 | Condensed Consolidated Statements of Cash Flows In Q1 2024, net cash from operating activities increased to $106.5 million, with $42.1 million used in investing activities and $107.9 million in financing activities, primarily due to reduced debt payments Q1 2024 Condensed Consolidated Statements of Cash Flows | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | |:------------------------------------|:-------------------|:-------------------| | Net cash provided by operating activities | $106.5 | $96.9 | | Net cash used in investing activities | $(42.1) | $(22.9) | | Net cash used in financing activities | $(107.9) | $(265.4) | | Net change in cash and cash equivalents | $(47.7) | $(191.4) | | Cash and cash equivalents, end of period | $460.4 | $1,034.1 | Segment and Revenue Analysis Segment Performance Overview In Q1 2024, Sensata adjusted segments, moving 'Insights' to 'Other', with Performance Sensing revenue increasing to $713.3 million and Sensing Solutions revenue decreasing to $257.8 million Q1 2024 Segment Performance (Year-over-Year) | Segment | Q1 2024 Revenue (Millions) | Q1 2023 Revenue (Millions) | Q1 2024 Operating Income (Millions) | Q1 2023 Operating Income (Millions) | Q1 2024 Operating Margin | Q1 2023 Operating Margin | |:------------------|:---------------------------|:---------------------------|:------------------------------------|:------------------------------------|:-------------------------|:-------------------------| | Performance Sensing | $713.3 | $667.8 | $185.1 | $169.1 | 26.0% | 25.3% | | Sensing Solutions | $257.8 | $283.5 | $72.5 | $84.0 | 28.1% | 29.6% | | Other | $35.6 | $47.0 | $6.8 | $5.0 | 19.1% | 10.6% | - Effective January 1, 2024, the company adjusted its operating segments, moving 'Insights' from Performance Sensing to a new 'Other' segment, with prior-period data restated accordingly[35] Revenue by Business, Geography, and End Market In Q1 2024, Performance Sensing comprised 70.9% of total revenue, Sensing Solutions decreased to 25.6%, and Automotive remained the largest end market at 55.9% Q1 2024 Revenue Composition (Percentage of Total Revenue) | Category | Q1 2024 | Q1 2023 | |:------------------------|:------|:------| | By Business: | | | | Performance Sensing | 70.9% | 66.9% | | Sensing Solutions | 25.6% | 28.4% | | Other | 3.5% | 4.7% | | By Geography: | | | | Americas | 42.6% | 45.3% | | Europe | 28.3% | 27.2% | | Asia/Rest of World | 29.1% | 27.5% | | By End Market: | | | | Automotive | 55.9% | 52.6% | | Heavy vehicle and off-road | 18.8% | 17.5% | | Industrial | 12.4% | 14.9% | | Appliance and HVAC | 4.7% | 4.8% | | Aerospace | 4.6% | 4.4% | | All other | 3.6% | 5.8% | - Effective January 1, 2024, the Insights business was moved to the 'All other' end market, and prior-period information in the table has been restated accordingly[40] GAAP to Non-GAAP Reconciliations Operating Income and Margin, Net Income, and Earnings Per Share Reconciliation This section details the Q1 2024 and Q1 2023 GAAP to adjusted non-GAAP reconciliation for operating income, net income, and diluted EPS, including restructuring and transaction costs Q1 2024 Operating Income, Net Income, and EPS Reconciliation | Metric | Reported (GAAP) Q1 2024 (Millions) | Total Adjustments Q1 2024 (Millions) | Adjusted (non-GAAP) Q1 2024 (Millions) | Reported (GAAP) Q1 2023 (Millions) | Total Adjustments Q1 2023 (Millions) | Adjusted (non-GAAP) Q1 2023 (Millions) | |:--------------------|:---------------------------|:---------------------------|:-----------------------------|:---------------------------|:---------------------------|:-----------------------------| | Operating Income | $144.8 | $43.7 | $188.5 | $148.8 | $44.1 | $192.9 | | Operating Margin | 14.4% | 4.3% | 18.7% | 14.9% | 4.4% | 19.3% | | Net Income | $76.0 | $58.6 | $134.6 | $86.4 | $54.2 | $140.7 | | Diluted EPS | $0.50 | $0.39 | $0.89 | $0.56 | $0.35 | $0.92 | - Q1 2024 adjustments include a $14.8 million mark-to-market loss on an equity investment, reported in 'Other, net' on the condensed consolidated statements of operations[42][43] Free Cash Flow Reconciliation Q1 2024 free cash flow increased 7.3% to $64.4 million, driven by $106.5 million net cash from operating activities, offset by $42.1 million in capital expenditures Q1 2024 Free Cash Flow Reconciliation | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (%) | |:----------------------------------------------------|:-------------------|:-------------------|:---------| | Net cash provided by operating activities | $106.5 | $96.9 | 9.9% | | Additions to property, plant and equipment and capitalized software | $(42.1) | $(36.9) | (14.2%) | | Free cash flow | $64.4 | $60.0 | 7.3% | Adjusted Corporate and Other Expenses Reconciliation Q1 2024 adjusted corporate and other expenses were $(74.5) million, compared to $(63.4) million in Q1 2023, including adjustments for restructuring, transaction costs, and depreciation Q1 2024 Adjusted Corporate and Other Expenses Reconciliation | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | |:------------------------------------|:-------------------|:-------------------| | Corporate and other expenses (GAAP) | $(80.3) | $(62.4) | | Total adjustments | $5.8 | $(1.0) | | Adjusted corporate and other expenses (non-GAAP) | $(74.5) | $(63.4) | Adjusted EBITDA Reconciliation Q1 2024 adjusted EBITDA was $223.8 million, slightly below Q1 2023's $225.5 million, reconciled from net income by adding back interest, taxes, depreciation, amortization, and non-GAAP adjustments Q1 2024 Adjusted EBITDA Reconciliation | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | |:--------------------------|:-------------------|:-------------------| | Net income | $76.0 | $86.4 | | EBITDA | $205.3 | $222.0 | | Non-GAAP Adjustments | $18.6 | $3.5 | | Adjusted EBITDA | $223.8 | $225.5 | Net Debt and Leverage Reconciliation As of March 31, 2024, total gross indebtedness was $3.425 billion, with a gross leverage ratio of 3.8x, and net debt was $2.965 billion, resulting in a net leverage ratio of 3.3x March 31, 2024 Net Debt and Leverage | Metric | March 31, 2024 (Millions) | December 31, 2023 (Millions) | |:------------------------------------|:--------------------------|:--------------------------| | Total gross indebtedness | $3,424.9 | $3,425.2 | | Adjusted EBITDA (LTM) | $905.0 | $906.6 | | Gross leverage ratio | 3.8 | 3.8 | | Net debt | $2,964.6 | $2,917.1 | | Net leverage ratio | 3.3 | 3.2 | Q2 2024 Guidance Reconciliation This section provides the Q2 2024 GAAP to non-GAAP guidance reconciliation for operating income, net income, and EPS, with non-GAAP adjustments primarily including restructuring and transaction costs Q2 2024 Guidance (GAAP to Non-GAAP Reconciliation) | Metric | GAAP Low | GAAP High | Non-GAAP Low | Non-GAAP High | |:------------------------------------|:-------|:--------|:-----------|:------------| | Operating Income (Millions) | $140.5 | $145.0 | $192.0 | $202.0 | | Net Income (Millions) | $77.0 | $80.3 | $134.0 | $144.0 | | EPS | $0.50 | $0.53 | $0.89 | $0.95 |