SENSATA FIRST QUARTER 2019 EARNINGS PRESENTATION MAY 1, 2019 - PowerPoint PPT Presentation

SENSATA FIRST QUARTER 2019 EARNINGS PRESENTATION MAY 1, 2019

Forward-Looking Statements and Non-GAAP Measures 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, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this earnings presentation, including, without limitation, risks associated with regulatory, legal, governmental, political, economic and military matters; adverse conditions in the automotive industry; competition in our industry, including pressure from customers to reduce prices; supplier interruptions, which could limit access to manufactured components or raw materials; business disruptions due to natural disasters; labor disruptions; difficulties with or failures integrating acquired businesses; market acceptance of new products; fluctuations in foreign exchange rates; and our level of indebtedness. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date the statements were made; and we undertake no obligation to publicly update or revise any forward-looking statements, whether to reflect any future events or circumstances or otherwise. See "Risk Factors" in the Company's 2018 Annual Report on Form 10-K and other public filings and press releases. Copies of our filings are available from our Investor Relations department or from the SEC website, www.sec.gov. Non-GAAP Financial Measures Where we have used non-GAAP financial measures, reconciliations to the most comparable GAAP measures are provided, along with a disclosure on the usefulness of the non- GAAP measure, at the back of this presentation or in the “Investor Relations” section of the Company’s website, www.investors.sensata.com. 2 Q1 2019 EARNINGS SUMMARY

Q1-2019 GAAP Results Δ Q1-2019 Q1-2018 $ and shares outstanding in millions, except EPS Revenue $870.5 $886.3 (1.8%) Gross Profit $289.7 $303.8 (4.7%) (% of revenue) 33.3% 34.3% R&D $35.1 $36.0 (2.5%) (% of revenue) 4.0% 4.1% SG&A $70.5 $81.3 (13.2%) (% of revenue) 8.1% 9.2% Operating Income $142.6 $147.7 (3.4%) (% of revenue) 16.4% 16.7% Tax Rate 20.2% 13.5% 670 bps Net Income $85.1 $90.5 (6.0%) (% of revenue) 9.8% 10.2% Diluted EPS $0.52 $0.52 0.0% Diluted Shares Outstanding 164.5 172.9 (8.3) 3 Q1 2019 EARNINGS SUMMARY

Q1-2019: Another quarter of strong secular growth and returns-based capital deployment ✓ Organic revenue growth of ~1% – strong content growth more than offsets meaningful decline in Industrial, China Auto, European Auto markets ✓ Strong Secular growth – HVOR outgrows end-market by 850 basis points; auto delivers end market outgrowth of 490 basis points ✓ Growth in new products pressuring margin performance – clear path to higher margins as volumes of new products increase in the future ✓ Capturing megatrend opportunities in Electrification and Smart & Connected – closed agreement for Wireless Battery Management (Electrification) and secured first Wireless Gateway win for on-road trucks and trailers (HVOR) ✓ Value-creating capital deployment – repurchased $150M of Sensata stock in Q1-19; total repurchases of ~$550M over past 10 months 4 Q1 2019 EARNINGS SUMMARY

Q1-19 Performance by End Market PERCENT OF REVENUES HVOR – Organic revenue growth: 11% • Outgrew end market by 850 basis points ~17% • Generated solid overall organic revenue growth from NA on- road, construction and agriculture end markets • Closed agreement for GIGAVAC’s high -voltage contactors to be used on electric buses in Paris • Expect end market decline of ~2% in FY-19 Auto – Organic revenue decline: (1%) • Outgrew end market by 490 basis points • Strong content growth helped to offset weak markets in ~58% Europe (-5%) and China (-17%) • Legislative mandates drive solid content growth in Europe • Lowering full year forecast for end market production due to incremental softness in Europe and China Industrial & Other – Organic rev decline: (1%) • Aerospace business and sensor products deliver solid growth • Underlying content growth in for industrial sensors primarily ~25% driven by HVAC and small appliance end markets • Lower housing starts, European PMI declines, & semiconductor weakness leading to lower demand from industrial customers 5 Q1 2019 EARNINGS SUMMARY

We continue to advance our megatrend initiatives across a diverse set of end markets Proof points of success: ELECTRIFICATION • AUTO: Secured agreement for Wireless Battery Management solution with large Chinese auto manufacturer; agreement validates strength of technology and customer value proposition • HVOR: Closed large transaction for GIGAVAC technology for production of electric buses in Europe • INDUSTRIAL: Won award in China as leading component supplier for charging stations • GIGAVAC: Built ~$300M sales pipeline for Auto in first six months of ownership SMART & CONNECTED • HVOR: Closed first agreement for Wireless Gateway Solution with one of the world’s largest truck manufacturers - solution moves Sensata up the “value stack” • INDUSTRIAL: Developing wireless sensors for factory automation 6 Q1 2019 EARNINGS SUMMARY

We have sustained attractive outgrowth in HVOR over the past two years MARKET OUTGROWTH Q1-19 FY-18 ~880 bps 15.5% 11.0% average outgrowth versus 7.2% market for the past 8 quarters 2.5% End market Organic growth End market Organic growth Drivers • Electrification of cabins in off-road equipment • Cleaner and more efficient powertrains • Electrification of medium-duty trucks and buses 7 Q1 2019 EARNINGS SUMMARY

Key priorities for FY-19 Sustain strong outgrowth relative to the market • Delivering on commitment to accelerate content growth Continue to align cost structure to lower volume • Executing initiatives to further streamline operations and drive higher productivity Maintain strong focus on capital deployment • Continue to execute a combination of share repurchases and bolt-on M&A to drive attractive long-term returns 8 Q1 2019 EARNINGS SUMMARY

Q1-2019 Financial Summary • Revenue decline of 1.8% Δ Q1-2019 Q1-2018 $ in millions, except EPS composed of: Revenue $870.5 $886.3 (1.8%) • Organic revenue growth: 0.8% $188.6 Adjusted Op Income $194.8 (3.2%) • Net effect of acq./divestitures % revenue 22.0% 21.7% decreases revenue by 1.4% Adjusted Net Income $139.3 $147.0 (5.2%) • Foreign exchange decreases % revenue 16.0% 16.6% revenue by 1.2% Adjusted EPS $0.85 $0.85 0.0% • Adjusted Op Income declines 3.2%, new product launches ($0.04) $0.03 $0.04 ($0.03) and lower productivity offset lower operating expenses $0.85 $0.85 • Favorability from positive FX offset by the net impact of valves divestment and GIGAVAC acquisition • Adjusted EPS benefited $0.04 as a result of share buybacks Q1-2018 Operational FX Share Acq/Div, net Q1-2019 in previous periods Repurchases 9 Q1 2019 EARNINGS SUMMARY

Q1-2019: Performance Sensing REVENUE SEGMENT OPERATING INCOME % OPERATING MARGIN $ in millions $662.8 $ in millions $640.0 $169.4 $150.5 25.6% 22.4%* Q1-2018 Q1-2019 Q1-2018 Q1-2019 • Strong organic growth in HVOR despite Q1-19 REVENUE GROWTH REPORTED ORGANIC slowing end market growth Automotive (7.1%) (1.1%) • Auto performance in-line with expectations as HVOR 11.3% 11.0% Europe and China markets remain weak Performance Sensing (3.4%) 1.4% • Customer pricing changes effective at the Foreign exchange 1.2% negative impact beginning of the year, divestiture of Valves, new product launches, and higher R&D 3.6% negative impact from net effect of investment in megatrends lead to lower acquisitions/divestitures profitability * % of revenue, excludes FX 10 Q1 2019 EARNINGS SUMMARY

Q1-2019: Sensing Solutions REVENUE SEGMENT OPERATING INCOME % OPERATING MARGIN $ in millions $230.5 $ in millions $223.5 $75.0 $71.9 33.6%* 32.2% Q1-2018 Q1-2019 Q1-2018 Q1-2019 • Generated organic growth in Aerospace and from sensing products sold into industrial Q1-19 REVENUE GROWTH REPORTED ORGANIC markets that benefit from content gains Sensing Solutions 3.1% (0.9%) • Global industrial demand slowing, particularly for control products in China Foreign exchange 0.9% negative impact • Segment margins are up 140 basis points 4.9% positive impact from GIGAVAC acquisition after adjusting for FX due to productivity gains partly offset by GIGAVAC acquisition * % of revenue, excludes FX 11 Q1 2019 EARNINGS SUMMARY