ST Sensata Technologies Holding

Joshua Young Vice President of Investor Relations
Martha Sullivan President and Chief Executive Officer
Paul Vasington Executive Vice President and Chief Financial Officer
Wamsi Mohan Bank of America Merrill Lynch
Deepa Raghavan Wells Fargo
David Kelley Jefferies
Jed Dorsheimer Canaccord Genuity
Steven Fox Cross Research
Shawn Harrison Longbow Research
Christopher Glynn Oppenheimer
Brian Johnson Barclays
Alvin Park Stifel
Mark Delaney Goldman Sachs
Jim Suva Citi
Craig Hettenbach Morgan Stanley
Call transcript
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Good morning, ladies and gentlemen, and welcome to the Sensata Technologies Q1 2019 Earnings Call. All participants will be in listen-only mode. (Operator Instructions) Please note, that this event is being recorded. At this time, I would like to turn the conference over to Mr. Joshua Young, Vice President of Investor Relations. sir. ahead, go Please

Joshua Young

and Sensata's everybody. conference first Denise welcome call. like you to quarter good you, I'd morning to Thank XXXX earnings

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

today's website, addition a can today, will shortly earlier call. Sensata's be webcast presentation today's downloaded also we PDF replay The Relations slide we conference a from to call. conclusion the and referencing of the In post of release, during issued of we earnings will be this at Investor presentation today's

Harbor I'd on Before to we begin, like number reference Sensata's Safe statement X. Slide

discussed segment other XXXX. The During regarding Sensata's financial actual measures Slides materially differ to provide Most then business. the conference XX-K, future in are Paul this for webcast year addition for in you of we financial such management results call, details projections begin statements will the in and quarter, and show full the uses from are to and an first call well our such our statements. but first include, described XXXX its for or cause performance will as GAAP non-GAAP XX-Q make related with limited our not of second which uncertainties. review Martha the financial will non-GAAP might the performance our financials overall to and update of forward-looking today's business quarter guidance. involve presentation. Slide be encourage the primary X, Factors to to included financial as earnings we statements Company's On call course of events XX differences evaluate XXXX that that Company guidance the with that may we of Company measures presentation. in will the summary, and of quarter filings of to, SEC. today's the cover information subsequent Reconciliations our today's during on provides back XX subsequent GAAP those number Forms discuss as will in of We the results well measures. The release GAAP as the are our risks the

take our prepared remarks. then questions your will We after

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

Martha Sullivan

and for Thank you, everyone morning. us Joshua, the to thanks on call joining this

end-markets We Slide in of On that of highlights while our the important quarter some quarter. key list continue X advancing significantly to megatrend benefit first outgrow the our long-term I will initiatives first the growth.

revenues represented our the reported million, revenue of high-end growth guidance is adjusted exceeded EPS guidance the quarter. with which X%. the of for midpoint our of We we quarter, $XXX.X of first delivered which $X.XX, the line of and For organic in revenue approximately

end-markets notable to auto of or business below which our down have initially reflected strong products underlying revenue basis costs Our Much our initially. end-market while the revenue decline new most HVOR points. declines in our X%. a XX%, performance outgrew margins driven higher first basis was the that and of We company which secular in our by by outgrew XXX production quarter end-market growth. average are by points XXX first outperformance serve. European our the environment, slowdown deliver our The most this difficult down end-market auto Despite which quarter end-market was auto was and were we in continue meaningful we China

margins these below adjusted rapid products, new QX As operating in guidance. our our of a growth of result the were

initiatives during the and will We expect gained as new that our into of productivity remainder operating as year, improve and the products traction XXXX. new margins scale

talk has connected, megatrend call. as some These a a battery our the Sensata a solution. detail initiatives In signed our smart later are I supplier gateway milestones initiative. important of vehicle OEM their auto for in an In wireless will Next, smart we these the on selected management more and closed for with we of trucks. two agreement and truck to develop manufacturer important wireless electrification our area solution Chinese and Sensata in connected network large establish agreements to about major the electrification, potential global and

Finally, we be repurchased to We buyers Sensata of of Sensata continue stock. first XXXX. shares quarter $XXX in the active million of

above of Slide use repurchased past we in end-market which the XX% our X.X% first have of the an quarter. create by attractive growth. stock quarter. our with months, XXX begin belief returns. that organic reflecting Over capital XX in is posted market points I'll growth revenue the HVOR X million $XXX of shows first organic our our growth repurchasing was basis to revenue This shares long-term

double-digit Our agricultural healthy organic growth businesses, revenue and North truck quarter. the American delivered in both on-road

continue our are used example auto. This that Paris revenue is A These how we and good the in key the electrification to of buses which in part in an market is positions us to HVOR, agreement win in to well previous high-end that grow X%. highlight of HVOR for buses X% GIGAVAC's believe for to end-market outside production Public emissions organic of of Transport's city. the a quarter decline we the growth the we While will business is is the decline in effort our in the bus Europe of Europe. electric high-voltage market to driving electric post in the to great continue to to X% reduce secured contactors at close be guidance

was posted revenue production our organic first an XXX the declined Next, which points business which decline basis X% in end-market above X.X% of automotive quarter.

geographic China. posted solid in the declines content business market. growth of end-market growth quarter Solid a face weaker-than-expected in overall a of auto and content a offset European Europe perspective, our From meaningful

ahead expect As global and our a China. weakness we than end-market the automotive in of we guidance incremental for XXXX, to weaker of result remainder be production look as previous Europe

I our other which end-markets Sensing industrial, and Solutions served turn to to want Finally, are segment. aerospace by

industrial decline particularly China; industrial was sold this revenue a For due customers. by offset organic and growth our into partially of XXXX, business aerospace to demand products our growth into controlled quarter X% our weak the in customers, first for in for sensor posted sold products we

housing weakness starts In decline all Solutions. at PMI, and to particularly in lower European in in America, a pressuring Germany, are market in growth addition semiconductor sharp Sensing a softer North China,

electric our we organic to Slide Solutions investing compared weakening result As flat for previous will initiatives a a for progress challenging expectations year Despite expect organic make our for future report update in market, manufacturers full Electrification our digit growth. we to Sensing of we Connected or X, range & some shows potential and our revenue end-markets, for growth wireless low-single the Smart BMS it significant On for advancing I'm start in megatrend electric going continue Management Solution growth. vehicle which our introduced Battery to Day. safety Investor progress and electrification this the you to megatrends. vehicles. to first BMS, and the increase of with of an has help at

with battery working the improve electric energy customers are vehicles. and reliability We to density, reduce manufacturing costs increase pack battery of design and

a Sensata. per As we hundred believe to BMS the compelling of electric dollars for of proposition, potential has our solution content vehicle add this value result a few

develop Wall wireless Company, technology is validation Sensata, S-Volt an signed new market an in first a in to This part technology. and opportunity and believe customers important solution. quarter, further BMS of commercialize Group the Energy and Technology $X.X [ph] represents XXXX. the business Motor wireless with our we an acceleration the for of Great value China our BMS agreement see the we anticipate in Longer of billion that wins term, we During

the three We sometime BMS years. generate our in to expect next first revenues from

are continue also to wireless we other [ph], will addition battery auto platforms. work S-Volt with in In interested to using and OEMs with makers other pack BMS who their broadly pack battery

in of station component suppliers player award the the received can a relates for During quarter, award high-voltage our we and from China one as charging we an stations. top also in the charging be Electric significant to Vehicle market. GIGAVAC we believe contactors, the Forum This

and in key small of presence the And the time our of the automotive industry. positive The GIGAVAC's scale in are global closed scale infrastructure. we in short value we the GIGAVAC further a lack that to was One $XXX potential already auto Sensata resulted is in our rapid acquisition auto Historically, seeing based in of was a on of their high-voltage value the to sales tremendous contactors deal, due ability their since to speaks has from has that Electrification. alone. reflected strong, This million in in base pipeline. pipeline growth already customer potential response sales that our drivers, the

connected largest and business, recently for smart HVOR wireless the supplier the sensors is a market. our in megatrend. our to Turning Sensata major delivered transportation milestone we of

the additive to host wireless This advantage, our leveraging This for And ability solution we Wireless increased their combined to will has area managing drive application. and which Gateway the OEM vehicle strong uptime systems their the both, deliver leading of utilization trailers the and We platform value safety a wireless and trailers, area truck standard will tire selected their link fleet commercial that insights time. produced includes and with establish to bring be as in manage Sensata trucks positions industry. trucks for market to and that digital a global trucks believe Wireless for Sensata creates years' supplier new better monitoring integrated for to most with few When pressure a to Gateway also tractor-trailer Sensata vehicle provide network trucks sensors just a fleet enable operators. of condition Gateway this Wireless connecting actionable A to market trailers. network, and for an for the wireless as the various by OEM one in insights sensors, on-road major are solution first operators position has gateway the our sensors and fleet. and third-party tremendous

about to Sensata addition retrofit and will about for are long-term our and Gateway already create OEM I market for show retrofitted in In trucks trailers a potential HVOR. the the On to drive growth this Wireless market. trucks, X, details we billion Combined, that to believe growth. Slide be to pursue large excited the market more $X the new on market and our we opportunity

quarter, we eight points the due business. XXXX past year compared quarter in the the averaged the first while production. growth XXX slowed in in the delivering business first to underlying revenue XXXX, to the full outgrowth are And of quarters, end-market strong content growth organic compared of HVOR still basis we our double-digit HVOR to in Over growth have end-market

end-market the of the technologies, relates of for Slide over vary our While, the have powertrains, the cleaner HVOR attractive outgrowth content investment by need show to Slide. priorities attractive quarter, drivers X, which we help of driven our efficient demonstrates cabins of the to and have secular ago, that growth market remainder paying by and electrification and buses. The the medium-duty decision On offset content our strong strategic can equipment, will is sustained of this of opportunities much sensing and electrification past is to years two the growth future offered off offload level any few and and XXXX. this more the production. performance in on slowdown included which trucks strong made operator I quarter this being gains A to this the show key our years legislation with the Slide of we content we for invest

to will points our that XXX end-market continue automotive basis are opportunities growth our to XXX basis by we business our our on its to committed and delivering secular Day, end-markets. for promise. we we Investor and First, execute points outgrow At outgrow

cost base aligning we streamline seeing business lower initiatives the we in to Second, further operations. our executing the our are with and volumes are

Finally, capital towards deploy M&A share repurchases. we continue to will actively and

provide for long-term I'd buying shareholders. for our with believe to we off Paul? the returns review and and the quarter will a call second great full now to are quarter good stock guidance provide results and Paul more back guidance to detail the like to our year turn first to updated our for in XXXX. We an start GIGAVAC over financial

Paul Vasington

Adjusted compared revenue a XXXX. currency you, Key in net growth of X or a of acquisition exchange organic Changes of X% on the by product effect quarter of X.X% beginning in effects operating the price the million decline and GIGAVAC quarter. and net the year quarter, first as revenues declined constant X.X% $X.XX the $X.XX XXXX. our XXXX first first from X.X% decreased in million decreased compared $X.XX revenue decrease of performance, by The reflects increase to occurred of from Thank prior launches, Martha. to the highlights and EPS X.X%. by and the which basis. the first quarter include quarter, and of Slide lower to the expenses. net foreign foreign $XXX.X the share first X.X% new X.X%. was was the Adjusted for valves operating divestitures, $XXX.X shown the in of year, divestiture quarter, from a of on effect operational the the of divestitures, rates that a income and at Due net declined effect quarter quarter this compared income quarter Adjusted was customer the revenues was The net million of flat currency $X.XX decrease to offset a from in decline repurchases. changes the in acquisitions $XXX.X acquisitions result of increase a $X.XX was currency and partially and quarter

will XX. our start business to Performance comment the on XXXX. on like two Sensing quarter segments in Slide Now with I first I'd of

$XXX of the the acquisitions of the year, quarter reflecting revenue X.X%. foreign from to which impact and negative for revenues compared divestitures, and same of reported the X.X% net million a business Sensing X.X% quarter, Performance reduced exchange of both decrease effect first last Our by

Heavy first we and to due and these X.X% once content in of Excluding organic revenue had off-road compared strongest reported factors, business, in the strong growth organic points segment, last same revenue year. the growth this again, the vehicle XX% first underlying XXX it's growth by to growth quarter, quarter end-market in every the revenue business. the period which in the basis outpaced generated

but the business, by outpaced of inorganic basis Automotive first decline XXX reported points. X.X% Our end-market the revenue quarter, in

line in markets remained the was weak. China as automotive in expectations performance Europe with and Our

quarter X% down we expect to to to be X%. compared Sensing Performance ahead, to of down production year. compared to the for Looking year, guidance was previous X% automotive the auto X% same about global to XX.X% million, as for profit a our the end-market $XXX.X decline last be

a XXX the basis income and price at that year. changes emerging in currency, last in investment percentage year, of same segment was points decline The business effect was related primarily beginning by last revenue quarter, from driven Sensing the our the product of new megatrends. foreign as Performance first of effect Excluding profit the XX.X% year, decline of of launches a divestiture operating the high to customer into R&D valves go the quarter

increase our primarily decline products industrial an in the in by HVAC, China. Sensing first was It And particularly same quarter, due from benefit increasing of As compared slowdown exchange inorganic Solutions an XX, demand, in from X.X%. of On rates global the last and Solutions GIGAVAC inorganic in profit same shown of increase in partially impact for the growth growth revenue $XXX.X such was first quarter to quarter, quarter This offset reported the on negative Sensing contribution of into markets X.X% of as aerospace. of year. factoring we million year. industrial $XX content as sold Slide was a Sensing million a revenue foreign the X.X% to reported in from last X.X% declined of from the basis, positive the acquisition X.X%,

currency, Excluding XX.X% when Sensing controls related percent change. to were year-over-year in segment operating the efforts costs to first and down of in redomicile included compensation to to prior was a Corporate million cost prior the expense in included to million the and quarter, not primarily other profit basis foreign lower the approximately $XX.X $XX.X successful in impact as up variable U.K. strong and Solutions due first due income to costs the quarter year compared one-time year our of points the productivity XXX revenue

million as first were XXXX from Slide quarter quarter XX million, year-over-year $XXX.X favorable the busters, of primarily in non-GAAP positive year-over-year, currency. lower gross results, Excluding into product and million Adjusted primarily customer to non-GAAP favorable price to and X.X% of first changes profit declined the improvements $X effect Sensata's acquisitions our other added charges of year-over-year, shows a primarily costs the results. compensation $XX.X result due a launches. XXXX. R&D corporate back to productivity from net and effect that costs, to costs effect new currency. SG&A year were were take costs foreign variable due beginning foreign

a X.X% result, income to prior down the quarter. year was operating As compared adjusted

as the quarter including of Finally, adjusted flat XXXX, repurchases. benefit EPS compared was of the first share to

to compared rate As EBIT. cash of transitioned our previously, as have a before to tax we've our adjusted of tax we showing rate percent practice percent showing as a communicated tax of as profit previous adjusted our cash

our For the our in on footnote tax below P&L. comparison show our based purposes, methodology rate we cash old

tax but of cash was the rate up Our in for our quarter with year-over-year, line XXXX. first guidance

midpoint we on million previous our XX. are guidance turn to compared for we for the by of net reducing shown XXXX the Slide full-year full-year guidance, - reducing guidance revenue to expectations. our Now let the At me our new our are XXXX $XX

to automotive We X% decline to driven lower to X% end-markets our production weaker in expectation in automotive compared previous end-market to than is Europe end-market expect X% decline outlook the expected for China. by Auto and X%. The to

end-market guidance HVOR of X% to at previous a the decline. X% decline the to expect our We high-end X% of

weaker particularly our also in China. industrial in expect end-market, production We

result, we representing revenue the X% a XXXX, $X.XX X%. $X.XX for growth As full-year expect billion between to of to billion

approximately revenues divestiture foreign by of in currency effect to rates GIGAVAC, the acquisition X%. reduced of We of X% our our $X or And valve net million. to revenues expect by exchange decreased

We expect organic full-year. growth X% between the X% and revenue for

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

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

decline million. annual $XXX $XXX for XXXX, million, at guidance XX million reported for a to On We quarter approximately expect $XXX XXXX. cash the full-year revenues approximately assumes, to flow $XX exchange the that to of and and foreign is the foreign of of expansion of decline and previously Slide lower of of of organic X% by second approximately midpoint cash net to by of report of which growth million we of capital Despite and impact quarter we report guided. or and growth. expect Explaining revenues the revenues between million. reduce acquisitions effect the in generate quarter. $XXX second Overall, At and net revenue acquisitions our the will million effect our the million midpoint expect X% financial free revenues shows million rate $XXX net between of XXXX, expect the $X in guidance, X% reduced divestitures we $XXX to $X guidance and year-over-year second divestitures, we flat representing approximately the exchange to flow

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

adjusted to expect million. operating $XXX report and $XXX We million income between

the report line, midpoint between of a guidance. million, X% of income the net would On expect bottom we $XXX and to our at million adjusted represent $XXX which decline

our year and report of my XXXX, of production despite decline for and previously We expect $X.XX strong adjusted following Sensata to growth with of comments delivering end-markets, the X% to like our to include expected a would growth. EPS most which secular the of while than X%. a deliver EPS margin be and in strong adjusted represent expansion another of meaningful decline end-markets $X.XX, key we we expect between I'd weaker to is solid expect to underlying in points. growth balance

greater productivity lower and to cost we are to the initiatives drive demand our executing experiencing. are align We market

continue we take deployment, a create returns driven to capital will for balanced of terms value the most approach shareholders. in to our Finally,

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

Joshua Young

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


of question please Merrill of first The Instructions] Bank be from Mohan [Operator Wamsi will sir. you, Lynch, America ahead. go Thank

Wamsi Mohan

you. thank Yes,

flow Paul, background some morning. the the here largely this great see nice on unchanged free and end-market, in despite here deterioration the noise airport cash performance here job there's to significant it's this Sorry, so at Martha that.

color get have past in you in all? improvement far is Did there Martha, incremental is so helpful course can the So be things Any a quarter? would clearly, us this weak XQ, China or of and stimulus you better any sense is at March month helping all at of whether over quick give I followup. but this the some and saw

Martha Sullivan

Europe and a we We've make me Sure, the leading the Relative of just that's end-market to it end-markets, probably would changed perspective elements clear is for observation at really really of that that prior carefully China, turning the Europe, thanks flow. had cash if capital Wamsi, overall call, let one we the But back Auto. inventories. are to forward on seen number from our going look to be working indicator improve. watching particularly it

And of where rate months, high end so and look And overall sitting that incrementally rate China. we end-market, which about very at it X.X demand improved, is our production has at incrementally, overall recognized while It's where in we our our inventory improved March, impacts what view X.X is really but continue us huge China. that I'd to that a closely. worse correction, in watch say that's so sitting at not because revenue, marginally overall Wamsi; something and sitting that's today we for

Wamsi Mohan

and assumption Okay. sort as think it that we within of say first it, sort some of as know the Do and through of here. the that given over about auto to the clearly, you to helpful. but risk very of that fourth two-point last think or on year I handicap the And as relatively of made early quarter look Thank Thanks macro you year low embedded of that's that's that's number you. course it's the your this year, year? you captured in worst quarter down-take sort this the potential worse at of you've the has hard about the is would our we of a Martha, assumptions, the models environment, go this for weak

Martha Sullivan

at look case. said in objective and into our would and it's guide, to to that think realistic trying be providing I to just recognize, try recognize that the outlook, road - with guide. the we're using that, Having would I analytics. there momentum and outlook we've we followed But be our momentum say, as we important base of middle down-markets I an to is in What Sure. a do guidance is

impactful. things to also is could more incentives just they if the go so be think There volatile our overall that when China markets balanced are get I the perspective. trying very can question better no are overall way; in So other

Wamsi Mohan

Martha, good execution. very Thanks


The go Please next Raghavan Deepa from ahead. question will Fargo. of be Wells

Deepa Raghavan

the Good your X% it And on fits your to morning core to underlying macro to into curious low-end at growth, I lingering overall Europe my questions of at Two from market X% headwinds? I is newer if all. and much That's year a revenue How what's weakness underlying versus this followup. just first, there. as on European curious And updates just still any especially WLTP production? and recovery you're have production assumption the expecting next any all? high-end? mean, the

Martha Sullivan


look to be we Europe to at quantitatively, overall it previous when So, down guide. for from down year, we're our that the expecting incrementally and X% is just close

has dynamics. relates in in measure customers in overall that impacts exporting as we're it end-market impact are place, our to now of Europe we there the also and WLTP, to much as and but a second As demand stabilized where of been Keep we'll pretty takes exit that well. mind we effect some knock-on now in China, believe that that seeing so Europe first Europe quarter, to is the from

continues that when European the two what the So end-market, things suppliers to move. we're those China overall European looking dynamics are and closely; at the then of to happens

Deepa Raghavan

credit things on My China the - table? any direct should At And weaker? potential a you. expect we followup hearing that of automotive about from are still be if this have automotive; we stimulus you other is measures, we on happen? there expecting that if get And should what rebound is to if what Thank time Sensata automotive were is stimulus? but kind

Martha Sullivan

been enacted. that measures have been have There now

to although have And been impact. tremendous overall be in vehicles that we in polluting have have not the impact, to We're in expect incentives the so been will impact and been that in take And more VAT know there counting one is we late on older so, we upgrade particular those has place broadly China. year, those an incentives NEVs. of know more to sort around that enacted,

very to in as in As it Sensata, end-market that and year-over-year second relates in we it in easier quarter. actually China the particularly mind China, that much saw to of keep relates third last our so the began in the in quarter contraction become year half; fourth the comps, large

the So execution our comps, on the into we second half part, easier secular our much from of improvement year. frankly, growth, comes continued quite also of as get but

Deepa Raghavan

you. Got it, thank


next question from Kelley ahead. go Jefferies. David of be will Please The

David Kelley

for morning, questions, from thanks Good a taking my couple me.

Just performances looking segment are a R&D could you the product and give at margin; us the investment and color then Slide higher on XX the right launches the taking more of some in that of impacts bit place now?

Paul Vasington

Smart From R&D the investment an to Connected around we've in perspective, increase ongoing. like related & that year-over-year these of trends is and the mentioned dollars million of couple some initiatives emerging some have Electrification we

Martha Sullivan

products; of lower, because that for to quality company new are the brand processes typical redundancy the of in which and our down typically terms quarter so we lot margin. in much in quarter at quarter; activity yields it so that a very in launching that's margins mission-critical new these first not our us brand where that's lower when equipment. will than ensure our usually bit Those mind, to average, that because are be. the and way are generally levels And early so that once the they unusual products, What's of in we new to margins stabilization a have improve. keep is we is there new need and first are we operate will are is is our to product I year think get those of launches, overall that's the relative launch products little the

not in always is intense product quarter is Sensata generally underlines the The news secular of our lowest proof-point good the launch which is quarter. for performance. most margin product So the our the new first It's launch. growth new the quarter

Performance that having the us operating what's the Sensing. is but early be as element the of will the the through serve margin in to year, great year an it it's and lower that So well in very balance of go driving forward we

David Kelley

earlier some a round been be I kind this Thank from you, off to you you as and weakness? the just auto broader QX And call kicks seeing a quick to guess, end-markets, expansion any the think has I this the seems auto thing How opportunities the you And back half product followup the call tied much we to mentioned specifically great. year? as an of nice of where to a offset? to of to the are end-market is might it of testing anything Okay, quarter think referenced launches; It I helpful. do that that space recurring out and weakness believe there recent think Europe out and end-market relates that's in biggest broadly, rest in surprise weakness. of of on And be content more point; emissions downside. some your next the Europe you're general specific

Martha Sullivan

question. Good

is related what vehicles protocol. are, round product closely. we've emissions another supply there to looking the new don't another the testing. evaporative that see it's protocols emissions, And September very going getting given believe to I expect actual at that overall very, in to of one in in and it chain So happens market we watching and we're that been bottleneck or

in country. our well, of the overhang impacts mindful be Brexit Turkey, in geographies been industry We learned for we're come a around to continuing has the particular, We're conditions being and seeing. that's the has we're the to a to specific about but does strong monitor downside. the of that some incremental countries economic as that what's in potential example. not Europe round, the that Germany, down think Europe; not what's driving in it's incremental so expecting really first driving from more in I It much look happening at downside

launches; in As decline. growth Those are we product very new important. are us and it with are expectations, line our overall and legislatively offset growth our relates that to very content launches much that end-market applications helping to with driving much active very that's in Europe mandated are overall


be question The Canaccord Please of go Dorsheimer next ahead. will from Genuity. Jed

Jed Dorsheimer

current levels question levels, believe so in markets. is, we kind inventory these you look to my inventory we of have Hi, terms of guess to bloated I particular; go pre-crisis the and to to of first thanks. back autos, I if levels same in in XXXX, the at get Martha mentioned

job And about if production framing and to you've saw we XX% the gone a about nice in at to from more from cost what cost. 'XX done kind we of shifting happened variable look levels fixed and/or business, 'XX, you've talking of reduction so a how

look and I frame you share wondering the a X help million new about $XX percentages, in from flat if in it like could was is just which at auto units remove you're the if FX million lower buyback; looks guide of and I EPS. production So,

you're lower, manage million to the able EPS $XX on So a flat for year.

now, a So you're right if X could not forecasting what I should be maybe see what we wondering than greater if frame there would you waterfall whether production or was units every we auto for cuts expect? million Thanks.

Martha Sullivan

I good expect Jed, you. which from it's analytical question a would

matters some that softness drop content is of well the Also, market have downside in isn't a makes out we're sort we all Industrial worsened in our of a think is couple of million now really in overall to the well, been mind. in biased our where growing at that's lower which a than look view in in towards it and that the piece challenging end while per keep big tie seeing Europe, we're our of coming vehicle mature HVOR still when I overall as little all our of of vehicle, content it It's it market worse the China you auto. out. dropout China, expectations lot and overall per But China. to the particularly, end-market. incrementally The business so $XX recognize things in

in of try sure ways helpful, think further where understand to be we'll folks impact to end make overall changes to may top the line. So market our

actions I that ensuring with very are call, that. our we come about costs are simply line the think thing and cost where not is, the top aligned there is market to going; independent it's that key are so recognize deliberate with an

end-market continuing reposition of are we We locations, terms see what to some given softness. costs coming overall in in our

of So terms of of that comes be confident out can that's minimizing very margins very, any the piece and preserving revenue you fall-through declines. in our

Jed Dorsheimer

helpful. That's

could gears you a got for the it just be as - trucking over that was Martha provide you shifting to win followup, a wondering additional growth in gateway. Just color if the the as of I maybe to content story would with just auto little respect and any content clearly and color as seems it's bit like both, on well I that HVOR, as Thanks. a with helpful?

Martha Sullivan

excited Sure. one. about this We're really

in across the and given That commercial take wireless well. - ability to I a very of we're sensors to trailer we think frankly look about, information the way think the as there is quite has sensors. consolidation truck us strong the input it talked that of an at about as

providing the mind allows bringing beyond that do So there just optionality to brand to the commercial of quite you service given ahead, in particular vehicle. content of that talking But a we're frankly, an chooses. I kind element itself, ASPs importantly, double-digit look functionality. ranging then is even this. new the the of high also that Keep on more can hardware that that of of overall about network OEM much the function as And be of range gateway this as would opportunities fleet we're and truck are can but owning that for from, enhance it content. trailer. there The there's to we're look very with really But us our piece the the overall retrofit on move we area sensor comes say at think ASP, that added manager a that gateway. Software-as-a-Service piece range or what What

about it. excited really really, we're So


Steven Research. be go Fox ahead. Cross question Please The next will of from

Steven Fox

Thanks, good morning.

sort margin those ramped sort ramps. we new of First QX you basically to specific just pressures just in more I or and the little in it some percentage was pressures mean, math to product pressure any margin question, the or understand whether the others relative I'm of quarter describe put next bit related there the overall than how see ramps there that margin to trying ramps slower the of is more just was on or of can more. a a it two? the quantity on from there here and the

Martha Sullivan

Yes. you in and happening of consequence ramp. that the the quantity cited. it's factors product that wins the a in It's of moving And growth market. marketplace. It's that really latter with expected it's are are Again, secular that volumes the more the X at down stronger overall the fact areas is overall time where

ramps in So and overall lower mix at to is business. X And the those of quantity combination of and quite large then look rate of overall the we remedy things: a as very the impact familiar it's that straightforward for ahead, Sensata.

We X have to do things.

that overall part new the a overall to those to get is task then the of that quickly products designed their our cost strategy. challenge. for also unusual, repositioning doing is secondly, we have track to are that we not is volume This margins we We that have record where and margins, constantly of down, up unusual that make And launch got great an we've challenge effectively. Sensata, and not of see a sure

Steven Fox

could do in the aggregate, thinking second bit of incremental you just based helpful. you're Thanks. get what end the we are followup, in of down - should type it's markets very That's does back-end sales now more your then as markets? end year? comparisons little what sort a how on the of you And the Obviously, think slope be easier. But about the loaded a - expectations, for to affect half Great. seeing that your cuts given

Martha Sullivan

the from quarter. loaded. they moved end-market for that just quarter, overall first keep in end-market say so dynamics playing down the see the example, I'd moved in way out. back-end Couple Again, mind; really China we in we the are of things quarter, given a Yes, somewhat to fourth sideways into

expecting better overall a lot have doesn't a it to to but perspective, achieve year-over-year get that second So market get half. us are to from our for better we

Paul Vasington

we would so I the low QX the improvement growth - to QX, we from full and say, improving improved to then growth to single-digit organic expect QX, guidance. the get in organic year to in in somewhere see QX in

and last how improvement gradual in from many our QX benefiting end-markets, year's year-over-year the given China. low that's not just comps also So favorable of was


Please Shawn Harrison question be from next The will Longbow Research. go of ahead. Instructions] [Operator

Shawn Harrison

us now and final and appliance good all? Hi, Sensing you kind markets; particularly that in the an at a sense of I inventory product much product - Industrial of your if business, everybody. morning the just you're China of how Martha, the HVAC on right inventory in could within was hoping give Solutions overhang or is and

Martha Sullivan

We market us. in keep for - space diversified end indicators. a That's our do that's on keep eye Yes. mind really

move and we second were so of We some through as levels get inventory part come can overall industry of down year. production then high of overall look guide improvement down balance the year. to And we For that the market. the year. information the as example, that we our the come with what's inventories we informed that that, to half see expect online some that's that that into in seen rate coming on recognize We've

Shawn Harrison

the because lower on products touched much you. brief there was that And just was back to margin how of bounce XXX you GIGAVAC cost year-over-year. everyone's of sales/the way an back to from the that expect? versus a a volume the new of followup, business idea on is Thank bucket Is valves legacy corporate get we those of, acquisition have gross products the kind versus this to as down launching products new should points basis average,

Paul Vasington

every think the make in That's drivers I up happens launches product probably the of beginning the And customer at two rest. the pricing be would big new of change that that. half the year the year. then

Martha Sullivan

we in acquisitions one second half also diminishes the into headwind mind, that, valves thing to quarter. of divested get the - because the keep as third too, in we The the that year, Yes.

That we move a been through of year. that's piece it. the as So diminishes


And ahead. the next of Please Christopher will go Glynn question Oppenheimer. be from

Christopher Glynn

morning. Thank good you,

Paul Vasington

morning. Good

Christopher Glynn

how And curious new have some of question about because you tariff for the a and about automotive major local customers. OEMs by not, production, the uncertainty decide local, think allocate global had they production. I OEM have to some how to impact product and launches trade

wondering So that if dynamic you could exists? if on comment think you it

Martha Sullivan

their overall up would dynamic seeing would Sensata, whether demand all, -- that the those be down. from come if end Well, customers at impact way

be pretty for We region. region effectively have positioned to

we're Europe, from from in Mexico. providing China. In North America, for So China Bulgaria. it's

more into our in impact for difficult to Europe if, is eye are chain direct What because OEM So We're inside that agnostic across bring that well becomes to generally the then we're keeping produced will less overall North an shift a movement. OEM change. has represented it on mix pretty supply overall America, how vehicle on space. share example, - we're region OEM

position the on customer have that been always Toyota. about think is I one we great don't we've transparent really

we look end So overall to impact I'd it's But more Chris, to the these not really respond see or what of has markets. on the it in demand they're to whether say changes. that, any given advantaged

Christopher Glynn

causing you any deferrals see push-outs launch or don't cadence? platform uncertainty that So, trade in new

Martha Sullivan

We have not not. seen that. No, absolutely

Christopher Glynn

$XXX Okay. sales And you then a million pipeline. a question about on talked GIGAVAC,

Just to competitively? capture put into context, perspective rates about you're that thinking how wondering

Martha Sullivan

what and, been market, Yes. we encouraged. about at ratios, did success good our our the had in they're our our But that feeling We're would great we look market. with in that's well really say, days. that Sensata's very in I hit And or high, as when early It's a when even we our the position expectations overall above line win comes of so diligence. really rate a from GIGAVAC overall have as strong function technology ratios


go Please question Barclays. ahead. of And the will Johnson be next from Brian

Brian Johnson

Yes, Martha. Several questions.

just plan. repurchase touching share First, the upon

months. - mentioned last it. $XXX May you did million you million over a pulling But can $XXX I $XXX million to authorization. You know XX

but have remaining. upcoming forward going year? it, what thinking to about as been must haven't bringing have shareholders you there seen I So might presented or you the Board some How already and shareholders, are for the a to pace be

Paul Vasington

Brian, Hey it's Paul.

deployment, M&A of and we come repurchases. share weighing balanced back around the our to capital So strategy benefit

year, of U.K. the redomiciled last since of bought to middle shares, in GIGAVAC. $XXX million back So - we end springtime, acquired we've back we the

returns the likely the complete left interact we months as X authorization $XXX we our And million but shareholders. to back that we're on Depending forward, and next to $XXX for around us, Board who the on may million X of a to deployment. going for in fairly increase, the capital to so continue and balanced authorization. regularly it's have greatest we're go with opportunities in going spend the Board And over at that go other to we front we are way for look what company the drives to

Brian Johnson

industry. anything more this second strategic a calendar margins the The thinking in one. question on or more of quarter? particular and at I'm downs that first question in And the terms across OEM in mentioned pressures price annual given the year housekeeping housekeeping pressure unusual greater automotive Okay. you question, the side

Martha Sullivan

And unusual. historically. nothing we're downs, we giveaway in No, have less than price our fact, we when at price look at running overall

volume's were delivered, at opportunity when quite it's particular revisit given down, So an a less to to increase downs expected and volume price volumes where being level, the renegotiate conversation, frankly.

Brian Johnson

Okay. margins future well, growth that in phase and - it's question, markets But that your do And gets end help it will industrial as then more automotive and growth of your - mature? overall in certainly and HVOR final terms more and both both automotive, probably regular substantial the platform. something more sensing, in and think about strategic. as is This wireless when shift ROIC the how of secular market you

Martha Sullivan

that where to would investing expect we It's be accretive to At growth overall area R&D. perspective, a our an margin margins. gross we're in heavily

I or So margin it think when comes EBIT line. about to PFO accretive would at but company probably about average the gross on


Stifel. of Sheerin question next Matthew from ahead. The will be Please go

Alvin Park

auto X% little This auto what global Could was X% for to a I taking for Europe China X% behalf - you with believe at production Matt your and is what the you at we X%. of thank is you're demand? Hi, more production Alvin elaborate bit decline expectation Sheerin. on Park to could question. seeing on - X%

year comps? you're North and in a it, relation gauge what's the markets to of half, So cadence the second in especially how of seeing America prior

Martha Sullivan

And market. North again, overall year. it to then Yes. in a America is with out our we we expected be down expectations into line coming playing the

customer at it's think overall in expectations. base, I we When with the in happening behaving our called look around line we X%. it what's

Alvin Park

you very much. Thank


Giordano Cowen. question next from be of Joseph will The Please go ahead.

Unidentified Analyst

asked would Battery this color I you wonder a that I give Management agreement is Wireless earlier. Joe. could had follow-up just mentioned, us you for Good in on to some quick the the question Rob just morning, if But what like gone then be. also, there helpful. kind the that have of industry be excitement you would technologies around that? how how regarding content provide is much anything And like just could in that, Just discussions

Martha Sullivan

can what in the again look much Sure. optionality products, we these When deliver more to have customer. given they critical, terms at we the mission content, and are complex of

ASPs But the of are the ASPs talking we're move in bit. hundreds So around that dollars. about a here

So significant adder.

of probably provided I something per content hundred, the on call and in think vehicle. case a earnings base to point, was EV, per that couple we like at one an our our trajectory up $XXX,

things. two quite really sure because significant, it's well, doing is So make to that important we're

First those. wired seeing benefits better providing or of in And to solutions from our customers, at are place. performance on delivering and current really incremental that the then all, secondly, they're

ability So notion throughout this information one. excitement of the increase well of through the to able to actually as lot overall cell being of manufacturing overall density monitor life as now well. the is as big that energy a around battery a vehicle, The process

we days, it's to a see the to So significant still but say early now able we and I where are enough overall developed sight engagements we're of consider first enough line - revenue.


ahead. of be Please Goldman The from will Delaney next Mark Sachs. question go

Mark Delaney

trying you Martha, HVOR can occur talked of about or and And the lumpiness products rate morning. cyclicality Thanks highlighted elaborate can was I the a expecting about has general? gains helping balance question. can is you that what are that variability quarter-to-quarter. talk with was on seen you for that hoping market. the the in on signal market. maybe about the bit of that company this should taking for I investors anything be content to year talking Yes, with content gain. normal hoping in more you the you growth content the specific just more the Were content good

Martha Sullivan

just quarter-to-quarter. recognizing content the latter, the It's that the really piece - moves around

the about strong the expect there. things about. we've driven And that it's growth the in back when talked see on by - of XXXX, look we'll performance overall HVOR many so really We overall happy content we

equipment. a electrifying the cabin of off-road continue towards We to see move

hydraulic need We're mechanical, that early segment, solutions. so very as we're our products from medium-duty in commercial moving we But their process. beginning those then in opportunity bring terms into the see and cleaner So cabin that to days at And you our to to you to problems trucks that's market, overall solutions. continue the finally, and the to subsystem as to Electrification What work content well. solve when we we're focus, lots truck continue on so for buses, conventional engaged look overall helping now of broadly and closely RFPs We of seeing functionality. per customers to overall very to that continues electronic when overall controls look early we're powertrains customers, commercial see at electric, challenge the those bringing with for respond we add opportunity. very, increase some

Mark Delaney

follow-up those along a so lines. And same

remind with truck wins initial highlighted Can what steer-by-wire? and steer-by-wire. some I is from you go was think start it those summer production the when last us to per opportunity into content you

Martha Sullivan

Steer-by-wire be quite recollection as on X out. ways to a we a the that. Yes. is my see Content we're - in and when The that meaningful X-year revenue can high. horizon is

in using we overall doing be HVOR in gateway, is subsystems other this overall to Our success as basis high TPMS TPMS look that I overall what triple forgot functionality is. content should well, on opportunity are we're digits for those launching the and mention up-selling and at really One the you to as to in mention having that. we're tends anyway, I thing when


Suva The question next Please from Citi. ahead. will of go be Jim

Jim Suva

of the line, steer-by-wire, setting way time like your and content. correct we're should step-up. me, if all getting recent meaningful a the or production design the the your materials? the years, in Thank of you far. think battery my hedged? about of. we more could that and Martha, now And cycle about auto oil, wins so then you materials, of fluctuations So X-ish you headwinds, sounds a can very Is optimization and that on about happening fluctuations thus at point near plastics, some term. think gave kind of second is in that's can to looking resins, should and raw much. near-term and that the a lot The be a if aluminum, in Setting raw - maybe we that in step-up think X-ish line up How it, meaningful And from it few in years? time the announcements details the you clarify potential are guys And the my copper, aside like benefits you for maybe

Martha Sullivan


Let on me question, first Jim. let your the I'll in Paul address going what's chime in in business. on commodities

continuing are on frankly, We much focused to and, very growth extend our certainly inflect quite secular overall it.

at to we're you so the important look And value the the to Having ASPs, positioning said at Battery penetration be inflect our that, electric things say it, of is like new growth in also sensing, higher per early of I it's element fleet. And an when much growth. overall the bringing, that's able overall solutions Management, the of happen in would to still vehicle really days. Wireless going it's rate

intention overall impact secular strong is, the a to today much from is very stronger. to rate that that's externalities what growth. some are But out and there impact inflect play how think, one these will So growth even Sensata's I

Paul Vasington

currencies. piece Jim, that the we on the way commodity hedge our sorry, currency the we commodities do on piece, -

forward XX out So months. about we hedge

it our million, per $XX doesn't XXXX, around impact probably on million and a $XX And year. so our have in is spend financials meaningful commodity

Martha Sullivan

of piece what procure is commodity Jim. true the small, So pretty we


Hettenbach question next Please Morgan go of Stanley. be The ahead. will from Craig

Craig Hettenbach


gross year. understanding there is question you long margin how the course out, it's margin the you what the and to for improve on about of gross would settle follow-up your term, a the Is mix expected to range level of how of think a business? think Just a through

Paul Vasington

is or the offset to Craig, we term, and business, contractual the go suppliers productivity our whether to with doing that we to side that to out the price can or of the rich which year, design-driven into managing look driving the had working be price product of side. history activities comes auto we be. that, particularly be costs it nature and cost automotive of increasing the network that down, we've material for on costs business, reducing work see every downs the productivity Longer more our the continue in through All a more the optimized, efficient most or long-term it's than savings than those

as the day quarter-to-quarter. always We've in terms we you look few. we improve, to seen do The the day to of continue new challenges we to the to expect last you'll margins in grow year, products grow quarter, created see we So margin trend certainly that do has gross launch over of to out. - if margins gross And that trends profile at year-over-year. continue every in past, expect and continue our some the but in first

So the be I confident that expectations for year feel forward. the that able have we'll to achieve we and going


conference turn time today. for the over Young his the And like to ladies for remarks. back allotted to all would closing Josh and that's I gentlemen, the call

Joshua Young

Conference. to We Massachusetts. day. at see the good us Insight joining investor and in our you, Conference, call hope be Conference, visit attending We everybody the in Stifel the to two and next these Sensata Tech invite Thank appreciate your at the like the Sector months; I'd Melius you. the for will you and Robert JPMorgan Cross conferences, Conference Baird Thank to thank the in following Attleboro, we Industrials you headquarters morning. interest conferences Technology this Sensata.


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

your You disconnect lines. now may