ST Sensata Technologies Holding

Joshua Young VP, IR
Martha Sullivan CEO, President & Executive Director
Paul Vasington CFO, CAO & EVP
Amit Daryanani RBC Capital Markets
Wamsi Mohan Bank of America Merrill Lynch
Shawn Harrison Longbow Research
Christopher Glynn Oppenheimer
Richard Kwas Wells Fargo Securities
Brian Johnson Barclays Bank
Tristan Margot Cowen and Company
Alvin Park Stifel, Nicolaus & Company
Mark Delaney Goldman Sachs Group
Jim Suva Citigroup
Craig Hettenbach Morgan Stanley
William Stein SunTrust Robinson Humphrey
Call transcript
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Good day, and welcome to the Sensata Technologies First Quarter 2018 Earnings Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mr. Joshua Young, Vice President, Investor Relations. ahead. go Please

Joshua Young

much, to very Earnings good everybody. morning, Call. Thank you Andrew, to like welcome XXXX Sensata's I'd you and First Conference Quarter

Joining Sensata's Martha Paul call Sensata's me CEO; Vasington, Officer. and and Sullivan, Financial Chief on today's President are

release earnings redesigned during will be presentation issued earlier conference downloaded presentation Investor can call. The from the be to today, a newly referencing Relations addition website. we In this Sensata's slide today's we PDF of

shortly after a post will webcast today's of We conclusion replay call. the today's also of

begin, I'd on we like Before safe to harbor Slide reference statement Sensata's #X.

Reconciliation our in related Slide call the the our today's We discuss first and in such such call, might presentation. financial During will the earnings XX-Q GAAP review will to the course limited non-GAAP described to The in are not and company's of during this or to release quarter non-GAAP uncertainties. performance that results and information forward-looking conference Factors GAAP other differences in filings. as events regarding those today's well financial of of the X, subsequent measures. but for presentation. subsequent our projections discussed actual our risks addition our financial we future we XXXX. you to Most results encourage materially measures Sensata's of we cause to, On will financial included statements. be statements GAAP of statements are SEC differ involve that XX-K our company make the in webcast show Forms include, from as may

management year the to will are Slides full for for the details quarter performance evaluate the the well provides XXXX as financials of and call segment our quarter will primary an guidance. second begin cover company business with today's on XXXX the Martha update overall XX summary. then and Additionally, first its guidance business. XX, provide which uses Paul as measures of

questions your take We after will our then remarks. prepared

like Martha I'd call the Sensata's and to to President CEO, over turn Now Sullivan.

Martha Sullivan

morning. joining XXXX. We in for extended Thank first margin start you, to line this Joshua, had of and growth by great quarter. generating a and combination year expansion everyone revenue growth, us earnings from organic Sensata the our last momentum a strong top thanks to

organic past Our EPS one the few per XX.X% share over adjusted organic delivered in strongest the of growth Sensata earnings was years. of has growth quarters

basis delivered quarter, expanded guidance. the For reported exceeding our was revenues representing adjusted $XXX.X the revenue On of EBIT high I list the midpoint we highlights of our of quarter. million, We the organic growth $X.XX, some the X, EPS and Slide first of key points end year-over-year our by XXX which adjusted of of first margins guidance. X.X%, of above

we First, revenue growth our accelerate to continued rate. organic

points quarter XXX up X.X% first the XXXX. growth basis year-over-year, in Our nearly was of organic revenue rate totaling

Our of in posted market market in accelerated XX.X%, In first our basis HVOR XXX the auto, straight was all points industrial XXX double-digit end by organic above our rate production growth which its outgrew delivering healthy our quarter. of quarter. end auto, and the fourth growth, growth Meanwhile, approximately revenue business X.X% points basis quarter HVOR and production. businesses had to strong organic performances

the our well as strength our industrial as content X.X% customers business industrial revenue Solutions of demand in Finally, organic Sensing sensing growth from aerospace business. generated on healthy and continued of growth

of M&A EBIT organic costs basis, lower adjusted by productivity the adjusted volume, our XXX adjusted expansion points robust Next, We generating cost EBIT quarter by This of XXX higher XXXX. expanded expansion. On the first basis margin was margin EBIT and an integration are basis margins points. expanded in we margins result synergies. on strong

organic adjusted continued line, On earnings basis. XX.X% in We growth. on growth double-digit an EPS we reported XX.X% deliver to bottom per the share,

secured quarter, redomicile the approval Kingdom. the United our we During shareholder also to for

As are ensure capital repurchases that of to improve project deployment share our intensive efficiencies and a year-long reminder, part administrative was strategy. this an

steps we While beginning to our fully With there from reserves Slide X Sensata content include to XXXX with the we include redomicile key company, transaction for U.K. our General deployment performance of balance is are healthy before from is to in the terms authorization our the now continues lead of as complete revenue part steps free organic remaining repurchase Court and a growth. shares. as cash These we shares a a XX. able which Annual getting as of getting our amount regarding which, X repurchase are May organic and way Meeting, shows market HVOR, trade revenue by to in approval and solid result High end share distributable PLC shareholders expect scheduled strong market, growth, strong repurchases. sheet capital flow, the growth and of

America Our to on-road in America. content growth strong and very of both business, market strongest the in truck to business, growth be due both under in North and was North Europe HVOR's off-road continued represents construction strong which just market. HVOR XX% significant Within regions revenues,

of As we look growth will the healthy we rates. forward that HVOR sustain to year, expect the remainder

I Next, segment which industrial approximately of revenues. represent and Sensata's want end turn are Solutions by other and served our total to to markets, XX% Sensing

business. organic of American North performers. and strongest first our our growth the From XXXX, geographic were we in of perspective, X.X% generated businesses revenue this a Asian quarter the segment For

business In business of industry remain our addition, aerospace healthy. generated in this we fundamentals long-cycle growth as solid

will forward, believe expectations global in industrial line demand original for Going our year. with the full we remain

X.X% growth a market the due We shared QX declined on X.X%. growth steadily in you seeing Finally, numbers. of that we second this a expect automotive in row, growth Investor with design in to Day our you are wins, at rate our the business new that automotive business accelerated growth to for posting growing and organic revenue our its increase quarter

a legislation. a growth of rapidly result powertrains. modernization as of automotive rise new Our was with content in vehicle primarily solid vehicles on China had fleet of strength quarter as business result a driven more efficient and per continues also America growing by content to as North

diesel and December. On at I first to Investor offset Finally, content auto the our Day you outperform X, we in declines. our European with shared that business Slide market continues show

markets by cleaner next need be five drivers more first, efficient We transportation and the the driven our constant equipment. expect to decade, key for over and

Secondly, in China, driven consumer the modernization we of industrial well by offerings as are new seeing equipment growth regulation. and as

we to electrified passenger everything using auto which that Third, smart are X autonomy growing other vehicles well mandates insights and equipment. actions for as off-road finally, in there Fourth, is more from enabling that markets. making on about Level for autonomous end X, from automated as new are to take based And information connected, and data. equipment gained all connected material and products

that growth our will clean revenues and smart beyond opportunities. of and X China electrification and drivers years, autonomy are next and the While immediate-term trends our are efficient, impact connected more

and We I these detail business related wins X. drivers, are to discuss closing pursuing will more in actively X new which on Slide

and me efficient. Let clean start with

clean China initially this the are than rise out are next over expected. from hybrid in systems. our vehicles. next-gen you often and seeing robust faster deployed gasoline play and to that efficient few are these hybrid trend Europe and Keep engines and We content China being on expect gas we Europe exhaust into years, in sensors for demand mind we plug-in even vehicles We seeing on our in used customers and with that we shared

drive engine their new we incremental Three sensors early closing the of our sensor win to aerospace position some Big HVOR, new are leader use portfolio as engines secured of our sensing one the higher strategy we in are see they as leverage to engines. is We a and tire the expand and these sensing In efficiency. XXXX. into good density proof pressure a pressure of our our of rapidly point business, in This to win seek wins with manufacturers we emerging improve and from strong the expect larger aerospace power clear revenue systems. our In of as business, for as

in of the tires. our improves it We and their life customers to solution and global fuel committing fleet extends this are competitive position a have of their efficiency as market, clearly the differentiated,

content We efficient vehicles. continue the cleaner of and automotive for from are benefit mandates we to In in of seeing modernization more growth China. our strong overall business, advance

Chinese with For new as effect with to example, are initially TPMS gaining they OEMs the legislation take prepare local to comply scheduled we in share XXXX.

are result We coal secured looking braking sensing industrial VI are a vehicles. quarter also is on their range, Furthermore, that accomplish and next-generation within win for as continue demand used the this. we of large a is heat. to customers energy of Many electrification, of our braking seeing a from we see to Within our regenerate for China vehicles vehicle regenerative on they sensors in China legislation drive focused system are transitions to ways electric one in key legislation. growth business to content extend how electrified to the as our

several sensing. is It and with efficient portfolio business opportunities a factoring content highly won seeing sensor are also are exciting customers from are and we in Thermal and additional that e-motor efficiency. before increasing as systems. energy on growth management improve such electric electrical hybrid battery batteries large to the We vehicles, core for of drag significantly systems thermal this for customers new management our subsystems

engines electrified recover products be our with that for the needs So TPMS business customer used to further to our while we core our will in to previous of you hybrids energy I ongoing over hybrid decade, the fuel vehicles. X and China vehicles, the and will the clean modernization portfolio, winning want and industrial in that address efficient next whether and on core that products plug-in and regenerate growth sensing and drivers today it consumer highlighted slide stress are sensing

Sensata of financial So another to quarter it wrap up, performance. strong posted

the the in in repurchases. over business that turn provide first now our closing the of to more to second will quarter Paul in for include the XXXX. balanced, market, detail exciting like year financial I'd deploy ability to guidance the of a are share we for verge are to and and results Paul? having full capital We the and review guidance update call quarter returns-driven areas on to approach

Paul Vasington

first Key margins the growth, on exchange income million to revenue was include Of the for of to of as basis reflects increase compared quarter, the the quarter, XX.X% quarter. points $XXX.X quarter XXX X.X%. of first first XXXX. X, rates foreign on in an Thank revenue an an this shown Adjusted quarter net in changes the in on XXXX $XXX.X an highlights Of compared the organic X.X% XXXX. Adjusted the by revenue income XX.X% or increased you, The EBIT quarter. of in million quarter organic Slide basis basis. million grew Adjusted quarter increase, this increased year of XXXX, organic Martha. of the $X.XX the X.X% quarter and of XX.X% quarter margins first XXX first on organic the to $XXX revenue result in were was EBIT prior XX.X% XXX grew in or tailwinds was increase compared basis. were growth in was compared or and of of Adjusted increase XX.X% XX% XXXX of first the of quarter Adjusted quarter basis. first EPS revenue net from and the points foreign a to rates. or net basis quarter from exchange $X.XX points from the XXXX an $X.XX

basis, foreign higher exchange cost of acquisition lower primarily volume, grew EPS organic and XX.X% an impact the on spend due productivity rates, to integration synergies. on Excluding adjusted

above quarter generated Slide of first on Turning initial Sensata strong leverage expectations. our organic operational X. slightly the growth revenue XXXX and to in

slide, On the was organic we double how XX.X% right-hand EBIT our the growth which show revenue by organically, of X.X% in adjusted quarter. grew rate the side I

of guidance, slide midpoint previous see more guidance. than our the You of million can while million organic middle we our that revenue more versus the contributed of the FX delivered in revenue $XX.X of $X.X

and of movements in a while adjusted increase resulted increased adjusted adjusted for $X.XX our lowered EBIT EBIT, million EBIT by organic to points compared quarter XXXX, EBIT by to about and of EPS margins adjusted adjusted and margins unfavorable basis points. higher $X.X the XX was pull-through EPS revenue XX adjusted basis of profit. in $X.XX Also, which foreign organic revenue first incremental added original by when guidance Our in rates strong about exchange

I and XX. I'd Performance Now segments, on Sensing start Slide comment like business with to on X our will

reported HVOR, of an organic to of Class very the markets strongest which Our X.X% strong. XX.X% Performance in the in quarter increase revenue XXXX, the growth the first reported the segment, and of remaining first growth the revenue period. continues XX.X% X revenues have Sensing truck growth million $XXX.X quarter of for first organic the to XXXX, business with in North quarter or construction revenue compared XXXX of of both America same

of XXXX, production. for quarter profit in quarter another the reported revenue by first growth strong or despite of revenue of XX.X% a million which business $XXX.X organic X.X% of posted Performance of quarter growth led double-digit China, year-over-year Sensing in automotive the XXXX. Our first revenue decline organic was

profit Excluding up XX%, reflects the Performance rates, improvements effects year-ago quarter. synergies as from basis acquisition benefit the prior XX of and increasing a of points year percentage Sensing revenue foreign was exchange the of productivity from gains. These the

the of quarter industrial from an on markets As Sensing Sensing in XX, we revenues well million quarter Solutions first of from Solutions sensing. revenue X.X%, Slide $XX.X growth quarter year. profit the quarter. shown of Solutions end many XXXX, the positive the increase as in growth organic momentum up above-market X.X% of same continued reported in first in reflecting Sensing was of million of reported last $XXX.X serve XXXX, continued prior X.X% year the as

Excluding revenue capabilities to in basis support and exchange the a in million result income as as percentage higher well primarily other XX.X%, employee redomicile million as initiatives. development first Solutions of and foreign as and quarter sales a Sensing was the compensation rates, $XX.X costs and a decrease growth costs design $X.X transaction. were unfavorable not benefit in point foreign profit approximately of year-over-year in rates, and XXXX, segment Corporate to higher exchange included expenses to operating marketing year-over-year resources of related movements investment up XX due

versus our period unfavorable to The support other SG&A reflects in first in growth R&D costs rates XX in increased sales and Slide new in this shows back efforts of the amortization XXXX. and Sensata's reflect were corporate wins spending quarter non-GAAP profit charges in investments and design up XXXX higher reflects margins QX were integration the first lower and costs expenses, year-over-year results, slightly and XXXX. movements unfavorable to added year. quarter rates. higher foreign prior and compensation exchange foreign quarter the movements development million spending gross this design non-GAAP exchange $XX.X Excluding Adjusted quarter increased same The benefit results. Restructuring marketing. and expenses in XX.X%, higher

and our bottom higher Our income basis points And the the XX adjusted first to in year of the on XX.X% points, the expectation. net rate compared quarter XXXX. prior tax in Organically, basis line quarter. of adjusted compared XXX by of by EPS XXXX XXXX quarter the to first improved of in EPS by adjusted line, with year-ago margins increased in increased quarter XX.X% the is first

of of to making financial and side underlying in and both of improvement on reflected XXXX gross and quarter the expense first appear last make of XXXX integration To increased adjusted and the on points normalized gross basis included margins in XX rates point as first period first a quarter adjustments, margin other gross of for margin. costs, have for adjusted After shown production non-GAAP changes purpose useful commodities prices a in income in measure the adjusted are to year ordinarily changes XX quarter statement. the in of same commodity the impact forma compare the So we exchange that in line. used foreign compared the Changes these in basis margin XXXX gross in have in provides comparison, our index right-hand hedges Slide adjusted pro our Slide that XX the our performance. this more way we operating is income our XX

to gross commodity hedge However, volatility. use adjusted hedges We arrangements related not margin. risk earnings reflected commodity reduce the and commodity of are often impact in

operations, we of of of adjusted the expect revenues million margins million, evaluate financial our trends of our approximately quarter million Slide I revenues ongoing gross reported the the by X% midpoint $XX our quarter XXXX. guidance, commodity second X%. exchange $XXX year-over-year we of revenue $XXX expect in report Overall, of our and rates between will inclusive consider and we representing foreign guidance the At in for growth So that to effects hedges. increase better to On these understand XX, XXXX. to show second

exchange Excluding of growth the of second to differences, quarter expect the organic X% report in effect we foreign rate to of XXXX. revenue X%

Our the midpoint current XXXX. guidance fill rate revenue quarter of the for XX% of approximately is second

We million, the XXXX of between first to million sequentially expect million $XXX increase of and which $XX EBIT $XXX from of report $XX adjusted This on represent organic EBIT would growth of would represent to adjusted sequential X%. revenues. a higher quarter X% million

On report EPS represent of Changes million EPS are $X.XX, X% $XXX the foreign would to and exchange XX%. organic $X.XX rates $XXX $X.XX. and expected approximately between adjusted adjusted in net we bottom to which line, by adjusted and million income between expect growth to increase

me the let XX. to XXXX not that impact, shown year Now full Besides updating we with February. Slide the full on year FX changes shared are revenue you for guidance to turn in initially rates' our guidance any we making

to range revenues $X.XXX year a on to basis. increase reported $X.XXX for billion a be X% the XXXX, expect in a to billion We of full X%

increase foreign exchange revenues X% to expect our We by to rates X%.

exchange, in organic growth foreign X% X% XXXX. Excluding we to expect of revenue

which of million We $XXX expect represent organic $XXX growth X% adjusted to EBIT million, between and XX%. would

On for adjusted and to share organic million income would $XXX and growth the between XXXX, adjusted bottom which and $XXX earnings line, XX%. we X% million the $X.XX net full between per of represent expect year $X.XX

where conclude generate that in $XXX my $XXX XXXX, cash remarks and with double-digit of approximately applications. M&A these the would we solutions no $XXX approximately differentiated Slide share investment a assumes between consistent combine solutions is XX. assumes chain, margins, for to industry-leading free deliver to earnings I low-cost XXX.X million note share our global our flow guidance $XXX sensing strong leader When million summary we adjusted and per opportunity-rich provide a count on market, of cash million supply expect expenditures will in free Sensata diluted which We we million shares. sensing capital and Sensata's growth. with I million. flow mission-critical

mega growing well is and we are growth from revenue industry trends. accelerating, to Our benefit positioned

our Additionally, we investment are to position deployment. are believe in capital our is sheet our and flow greater in for This we time nearly to flexibility the a XXXX, offering balance for an compelling shareholders. of final provide excellent we in investors. cash Sensata, for attractive and an exciting strong are for optionality future grow returns With we expectations opportunity a steps establishing XX% and free

Now like I'd over call the to to turn back Joshua.

Joshua Young

Q&A Andrew, you. the please assemble Thank roster.


[Operator Instructions].

The of first question comes Markets. RBC Amit Capital Daryanani from

Amit Daryanani

I really a you this guess calendar organic a us us start But just for you are -- X% Can as with, just for was are to X% strong -- guys walk for still maybe from you of may, you see 'XX, rest the walk good me connect growth talking about conservative through Or June decelerating, to being can maybe point? quarter growth. Organic year? QX. you had and QX you the do -- What X.X%. you help if the dots? the at

Martha Sullivan

yes. Amit,

here think look at throughout we've these calls, So about year. talked you around the thing is, at to growth in initiatives I also and out recognize way look this a the don't our linear play if on content productivity, our past

earnings really the from then improvement. there forward year, Content throughout in a sequentially continue at when big growth strong took will moving step and growth. quarter we're the we overall first with look some up we very content So

remind just of I secular you way the growth plays our So would out.

really we relative investors thing the of to our the think that content I very, year. that evidence to strong to market you're very seeing through and end movement, expect now growth encouraging should continue is be

Amit Daryanani

how meeting's for on take touch And around what U.K. guys? sense time but Got sounds the you High on this dimensions does like approval the it. missed could guess, how process? part, look like shareholder U.K. to May meeting capital maybe is of how long on put for any -- is the Martha, the XX but do long allocation board could process we the approved? for Court XX, -- Court line or buyback I the for your get I just High And It you May

Martha Sullivan


pull which So shareholder May XX. the the one on now for really is us approval, happens

So that beyond there but can be puts don't the this timing expect and extend decision Court, we takes shareholder meeting. to High at

get to as driven, will I had a on effort Those how back think economically be deployed quarter-to-quarter deployment. and will decisions optionality have XXXX, to you very get capital in we Amit. can capital relative see, intensive to

optionality So balance We've at in see expect in smaller of this around point, full expect that talked bite-sized then, XXXX. would and is a scale. deployment to see More acquisitions. as we share capital And we result pipeline to our repurchases. about bolt-on having


The of Bank next question comes Merrill Lynch. from Wamsi America Mohan of

Wamsi Mohan


QX to days for is EBIT you X% just and as lower to obviously that than and are revenue of what XX%, if June to to your But out operating I X% revenue the guide is look the could guide of the you've for bit a sort half. reacceleration translating growth. at look adjusted in organic go adjusted back implying wondering, And takes X% we here of I'm So little to quarter, your help that. leverage QX? XX year back full on obviously, some EBIT X% puts X% of into X% the done X% better and same growth of growth dimensionalize

that is to drive So going And in what follow-up. particular that's reacceleration? have it a I

Paul Vasington

of. Paul. Sure, take couple A note of to It's Wamsi. things

They the reduction $XX They not million launches. strong we very million sequential lumpy. new So on linear. talked performance, of are profit and Martha can about of product revenue. be the about cost $XX talked

So we're half. cost-reduction savings activities in and stronger expecting much the second

is QX strong QX, reflects strong a quarter. It very in feel of performance we so it. good about a think continuation I the

Wamsi Mohan

just this JV at showing some share in of you You not players Okay. wins the address are early competitive be increased also domestic to activity gains. market brands. could well. And some seem cited hearing any seeing as maybe auto Are Martha, China We're where that TPMS we local point? some adoption with in you but

Martha Sullivan

we where past, do particular local and in it's application. have that dynamic in China from is competition competitive in been the The unchanged

with And ratio. which sensors we not that's designing rate high China really is We're a on how taking at in very pace of are China. our It's phenomena. consistent new TPMS hit the actually outside tire by in customers in on now China. a perform and pressure win So demand encouraged

million when I rate to we left XXXX, we'd which we more think time implementation. would on at by alone, run we we $XX expect opportunity mention, that full were Wamsi, a than about the get double to


The comes Longbow Harrison next question from of Shawn Research.

Shawn Harrison

investments in flow-through a SG&A this we dollar throughout would going increases I expect the the on both basis, you incremental to of that, sequential progress made basis on quarter, guess, Are The R&D incremental and level beyond the year? off? kind you of to a functions see revenues, as in

Paul Vasington

points R&D, will So the little think perspective, exiting we of dollars you would XX for an move And from up out Shawn, so to continue basis get we're ongoing see we expect that continued if slightly. up end QX. XX, QX, Paul. the investment about time year versus probably it's to by index would some of I to the the say a there, bit

As it year. in QX SG&A, the it's and we slight, end increase basis on flat, $X to going down from index of or depending the where quarter are a million the in relates point to relatively maybe the be XX up here to

increases but slight So very manageable.

Shawn Harrison

cycle if year-over-year. the Inventory basis up as you could related think that to in where just XXXX? is a days then was cycle were there little a cash a Was a little should -- And be the And Okay. bit. bit you maybe velocity to exiting quarter? goal on day's a down cash follow-up, timing

Paul Vasington

revenue. you're little of bit very We banking a driver I a the see, collection the you working push and going linearity going certainly if look of receipt think at end see don't of strong see into the quarter the issue. to be the QX. We cash is biggest the see at receivables. a us, flows, some quarter We against to holidays

was it. timing good So cash all, feel that it's else. anything think I I in good more a It and flow quarter, than about just


Glynn Christopher comes next Oppenheimer. from question The of

Christopher Glynn

a for second. December to back harkening Just

America North in the highlighted speed and XX You X transmissions.

overall Just dynamic to the over wondering horizon into upward? context nicely successions. expectation continues the in that the plan that fits that customers' planning auto and multiyear and your growth the how move platform Does of accelerate content

Martha Sullivan

Chris, us. just of steady the propel that well There as is for helping adoption dimensions that are growth of other given those the one the content to though. content a efficient pace areas transmissions, XXXX. And highly that's in our cadence will of of improvement be

of really efficient we're attractive growing extend content engines they So as is seeing hybrid-type a over today, adoption they X-year Sensata, drive adapted highly growth are being feature they not hybridization well. and horizon, GDI are just for GDI. for now the that content but time where growth plug-in vehicles, as

that's really content Europe, and a North propel to early going America and China, nice to happening in So that's growth. phenomena continue in days

Christopher Glynn

Great. And just chain then supply on the initiatives.

Is a through pressure margin Sensing Performance I on through the Jan on against upward out the think, be to typically, normal X upward of year the chain you downs. expected supply price XQ? get that an slope the of on year the benefits cadence

Martha Sullivan

Chris. is roll initiatives our That typically, out, the way,

that right. you have So

make think first the Sensing challenging the I observation comp. the comps for half half are than one the would second I on Solutions more thing is

as of So year about we well. out the that's think how playing part


Securities. The Fargo question Kwas Instructions]. next [Operator of Rich comes Wells from

Richard Kwas

that, Europe, like expectations? still guess year contribution On markets, contributing, How auto a for then side, cited presentation. looks a one on the there's somewhere developed it basis for rough on of seems the think more mid-single-digit than like question, a from of growth And initial low contribution so growth year? more It there quarter. for your developed to the you is the half little markets, know expected versus do was I in the year-over-year -- organic the an I auto coming it basis a, about full we China out estimate, coming the within for North little and the around over America,

Martha Sullivan

China organic -- drive. America, the auto is in a the a remains outpacing so performance in much markets, think organic seeing overall growth, market. not still we're overall Look, is a to align Rich, overall Yes. end very I our It's huge which -- going part our organic down part of with broad-based clearly, performance. of business. North strong And company

is strong very see So across been broad-based growth organic helpful there, auto business. our growth return but to it's

Richard Kwas

sounds of out like China discretionary there's And it more TPMS, other than correct?

Martha Sullivan

things our we over fact in China vehicle content track. The China, per next propelling about X that the the talked that are double years. We're will on that

Richard Kwas

then, terms number in for cost we Okay. here there real up then Paul, on modeling that could the that of should $X to of put onetime And on we million? a about million, How is the as forward we $X redomicile, corporate year? quick. go think the And related

Paul Vasington

fees, pretty redomicile. -- are with have the All We other legal the in QX. we'll additional what much done

So through gave we much number and to that it. the excluding what a for we rate just have. the to -- other, million corporate versus QX number higher at you is business of run you've seen The any the $XX.X pretty get you add-backs

that's number that but So as much you said X -- many $XX lumpy we get pretty if million -- you'll times, and $XX to the the I've It's million, million multiply take $XX the for for to little a average, year, you'll full good to a year. that pretty see. quarter-to-quarter, that on range the expect quarters,


from Brian comes The next Barclays. Johnson question of

Brian Johnson


what is in automotive China? by as growth the like falloff the with organic on you organic growth the than down diesel there? you that offset -- strong from Especially, in seeing well? gas in want you Or Did sensing, of greater regions out to I other IHS, portion have for frankly, drill competitive were driven in the in the play Within guiding automotive that did organic Europe.

Martha Sullivan

drop-off more the play example. market did Yes. for our share we call we on than diesel decline. movement guide. We've diesel for out dramatic as as right, that with so IHS expected it party, developing a end able been to the And to, line third much are offset very you're seeing And well we way in really

Brian Johnson

So geography? look growth how does just look you your organic European that at if

Martha Sullivan

we're focus Look, on performing performing there, end challenges our diesel. we're having diesel and that so total. In with we've we're at talked about way, is strongest year, to production, and we're well broad-based not providing growing we're the in decline, a works mentioned deal given of I offset where in as overall and the globally on the but grower the fact Europe. market includes how overall our organically facing that you that of that the the end


Joe Cowen. comes question The from of next Giordano

Tristan Margot

Joe. is car law your view and Martha, the out is companies phasing change you. ownership Chinese ownership car on interested in for this affects what Tristan caps in -- in for This I'm the how regarding of

Martha Sullivan

I not understand sure the I'm really question.

say, you're ownership what did caps? about -- you asking So

Tristan Margot

Yes. the I believe JVs ownership in was current been the limit reduced. on has XX%. believe caps I

lower. be to going it's Now

Martha Sullivan


well correct. that's local both multinational in We're represented China OEMs. on and So really

automotive bring So we're while some is across interesting of and where exception may that into content-ed not well very we're OEMs. players well represented, it the China, with Toyota

we're China. in it's interesting, greater but who from So somewhat presence about agnostic benefits

Tristan Margot

you mentioned share? sensor you which And you elaborate management Got part taking market this? of hybrids. it. this In new seeing thermal then wins and new applications? for in you Can Is on Are are EVs like this?

Martha Sullivan

share disproportionate sensor taking content, we're and by new systems, those which, part our the applications in playbook. always content or increasing has of new more of been way, much There's

we're auto, sensors, sure that we ASPs, end small today, seeing challenging more matters, sophistication, dual-function is the sensors, use make where that's growing. content look sensor to greater point important So a overall of And incumbency in this where much positioned really much in share we're is that, so forward. is still way we system, interesting. is The work as really higher market overall pretty but take


Sheerin The comes from next Stifel. question of Matthew

Alvin Park

Sheerin. Park is filling Matt This Alvin in for

the rate spread HVOR XXX is for I organic bp in and which some to by production -- you production, auto kind give your -- year end growth assume the what market market see gains where on for with a of spread bp beyond? content market gain, you where end continuing spread fiscal You just of mentioned Could share you XXX color compared offset erosion. for remainder and ASP the

Martha Sullivan

both expect content to growth markets. end we Well, in those of continue

our the the platforms outperformance is As so on adoption greater market. our on The way launched, exactly way as grows takes content in what's we of form really -- of launched, overall applications launched our does correct. every mentioned, our way driving linear it first content which but in included a projection is in XXXX, get organic That years, It important grows. happens new engines growth get your grow new all, were part rate assumption is previous guide. is is quarter, for that a that not our

Alvin Park

And another question.

type fatality and you have investment? do generated expectations your on in in And you the given Quanergy might traction updates from incident Uber any terms In LiDAR, see of LiDAR, concentration terms especially in sales have any significant investment design of the from of the this you seen wins? what terms of

Martha Sullivan

limitation LiDAR on that are I'd and double-down What perspective a we the is important function are today. out vehicles sensing is the what of that are seeing sensors say, -- on how

of that it. evolve there's So the to AI, focus in X, functionality elements driving of attention with There that. LiDAR been big the Level Level lot need including of on sensor, along are and other a piece X

We've large. XXXX So had but of in lot well revenue, that is a opportunity the this issues. on terms of early always beyond is perspective engagement those the

horizon looking function. we're think the at, a validated case measured, way. that So like just we the in time and things be that conservatively, very careful a for much still ways development $X fatalities the home and to market end sensing is work off, has still bring that, But billion


Sachs. Mark of The question from comes Delaney Goldman next

Mark Delaney


XXXX? out and about remaining effort. quarter the company beyond Of And think does Is the the more between XXXX, by pretty or right, expand nice this basis margins basis on split it XXX XXX that XXX to that XXXX some my EBIT weighted one if progress other? linearly roughly obviously, guidance points year XXXX XXXX and implies I about year to points. from about goal talked math's to this basis a points, for

Paul Vasington

large the are a to will driving way basis in you correct be on that What's Mark, the integration in points. terms improvement continued XXX drive synergies. of going

we integration driving part remaining less the that and leverage be laid within big growing volumes. to of costs, going out more productivity synergies, as getting normal The Investor has cadence is our business a cost that on around So the at the impact. Day,

Martha Sullivan

to out. more spread be tends evenly productivity And

Paul Vasington

not So just year given higher margin the integration than expansion closer probably synergies the X the are the but little third being in bit big so a first strong in years 'XX, a 'XX, change. consistent, in relatively the I -- is would say

Mark Delaney

know these that helpful. for discussion locked I costs, commodity mindful Okay, commodity on I excluding... we increasing in year? remarks. is be mean, that there's And to some prepared the XXXX hedging have prices in then, still of that's just the Or any need with been next of for

Paul Vasington

So horizon. similar we commodity XX-month to exposures, XX, do hedge FX a exposures, where hedge out over we

line of things improvement was you when our indication at trying and hedging commodities And -- we net onetime or gross there show show were margin normalize from to we of the gross look financials. abnormal in that last to that margin, and to at and which gross some that better you look we things this in our up so bring what a the and you you in year those for on tried our give we year's P&L, losses economic margin commodity other impact gains have real reside how item into to


question next comes Jim Suva of from The Citi.

Jim Suva

them the that shares management's secondarily, rate? How is or And balanced should about your then plan with decrease of on vesting? the tax float options keep stock outstanding capital, we think kind to

Paul Vasington

and basis first that's XX the up year-over-year the year. will for about the was points rate in quarter, full be increase what tax the Jim,

year, last cash so and as around X.X% EBIT. taxes around will a were of we we X%, adjusted So percentage end up

-- of at M&A want on we what opportunities us. about balanced As want we're we share relative the be that thinking pipeline to and comments managing how share look in to the are to made that terms we in it relates -- front share to of count, how repurchase, monetizing

are the we actually those forward. drivers be go So how will as many acquired of shares


comes Hettenbach question Morgan of Craig next Stanley. The from

Craig Hettenbach

aerospace you business. but Yes. also macro A seeing question on solid backdrop the growth. helps, industrial the of Certainly, mentioned kind

company-specific or in industrial? drivers growth strongest the for of some about you that segments market you So end feel any

Martha Sullivan

It's a as same benefiting talked Vehicle a And geographies yes, around said of and efficiency. in the of the which and business about lot indices PMI we're see we've strength number the themes very in we diversified that, strong Heavy Having our Off-Road that auto really drive do in well. is portfolio, of and from the a regions. towards

seeing air-conditioning that So seeing flow, in we're well. from growth we're important becoming U.S. Asia as systems, and the content the like Yes, now expand nice variable design and things refrigerant in the really out on engines It's compact so drive very long going us. opportunities. long-cycle over into new are are to term, aerospace, a those for nice in the going play that

in helping in that channels, helping get to drive that end us would we growth. just investing that's I investing fragmented mention our digital the our presence, thing and more much is in are other front our investing The so market overall a of to overall business, and

Craig Hettenbach

it. Got

just to the traction know expected years. coming market today small on follow-up grow I it's a a but the as Just EVs. over of part

front? of from any in So color other perspective a you're the design terms seeing what on EV pipeline

Martha Sullivan


So a mentioned. we couple of those

very on regenerative of system that subsystem. design vehicles. and very highly we braking we're getting specifically win that for notable electric large With So hybrids parts configured into systems specifically, a quarter, won wins content-ed a management really thermal are this

of the of size much EVs So see. that's market ultimately and will be those opportunities. seeing overall those how The hybrids today. that really on We're -- happening is based plug-in going to


SunTrust. William of [Operator next from The Instructions]. Stein question comes

William Stein

HVOR Great. HVOR strong this and peaked I Am though, have And the the results as of about I quarter. look cyclical. expect right in wrong, market in growth or to very in growth been in you how one saying really margins. Historically through that two, we delivered right for quarter one shape has fourth that year? do the about progress you?

Martha Sullivan

sure I'm don't where peaking right not So from different the we I think about are hugely piece. it's now.

probably really of Class the to market all that I we're attention paying think that the is area X trucks. the --

Heavy it's X. Vehicle X makes look at ag on-road and back So just if what Class our up made and and and we North business, and up and Class construction up of American Off-Road and on-road European

revenues. of about XX% only represents and So Off-Road X Class total Heavy our Vehicle

that mindful business. cyclical a So it we're is

projections think is in I to have quite look that the time what mindful We're our guide. holding and year can as all the it when at we the for view cycle. we of our points of

William Stein

helpful. in That's about talks profitability if lot metrics, organic it. change profitability. One company Appreciate the on can. the I a The

you're make year, sort the -- And the the what's remove remind last CST still an just those and the of acquisition acquisitions. want adjusting costs? correct, Schrader can in thing because you you're thing relate stripping only FX. out that's experiencing haven't left to you're But only that at done to point, I size is savings us sure, this of to assuming I from for acquisitions think or you

Paul Vasington

go is I the through back And we if 'XX. XXXX, end generated then we've million, in a showed had million of that and Well, chart go. about of there think 'XX. XX-ish remainder just in another the to mostly to There $XX million Day, synergies Investor $XX $XX was in generated we we've

them. be expectation, I we're would delivering to and So say on track that would the


the Young question-and-answer concludes any back would I over This our like conference for to turn session. to remarks. closing Joshua

Joshua Young

morning. interest Thank in will in you, the Boston and conferences quarter: us in second Andrew. and We Sensata. day. New We you, to York, good Massachusetts. I'd in Conference Industrials to our Sensata at the in Fargo be in Bank Growth Lynch these following conferences, you Conference this of like see hope the headquarters to for Tech joining attending JPMorgan your appreciate the America Conferences Thank the we Wells Merrill Attleboro, and at investor Global Oppenheimer Francisco. everybody you thank Technology visit the Industrial us invite and San continued


The for conference attending has now concluded. Thank you today's presentation.

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