ST Sensata Technologies Holding

Jacob Sayer VP, Finance & CFO, Performance Sensing Gbu
Jeffrey Cote President, CEO & Director
Paul Vasington EVP & CFO
Wamsi Mohan Bank of America Merrill Lynch
Samik Chatterjee JPMorgan Chase & Co.
Luke Junk Robert W. Baird & Co.
Joseph Spak RBC Capital Markets
Matt Sheerin Stifel, Nicolaus & Company
Amit Daryanani Evercore ISI
Brian Johnson Barclays Bank
David Kelley Jefferies
Joseph Giordano Cowen and Company
William Stein Truist Securities
Shreyas Patil Wolfe Research
Nikolay Todorov Longbow Research
Michael Filatov Berenberg Capital Markets
Call transcript
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Good day, and welcome to Sensata Technologies Second Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Mr. Jacob Sayer, Vice President of Finance. Please go ahead, sir.

Jacob Sayer

Keith. you, Thank everyone. Good morning, to Earnings welcome Second like to you Call. XXXX Conference Quarter I'd Sensata's

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

webcast is results call. post Sensata's In addition we our be the This Investor on presentation The Relations a referencing can release a call. call issued presentation today's of of earlier website. will conclusion during website press being slide PDF Relations to we'll shortly today, we be replay recorded, financial and the this Investor downloaded conference from after today's

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

XX uncertainties. the growth performance Electrification as Sensata's segment SEC. During the to today areas. limited we to -- management its XX-Q our XXXX. call with from that or this detailed our performance but other that begin and to Slides statements might in and of The projections XXXX. make discuss of forward-looking call, our primary addition and X, financial our business the encourage year outgrowth update the second the presentation Most for results are presentation. quarter relate segment you will unit, will during well Slide presentation, financials our the the that our non-GAAP include, company quarter of of not will will company for He quarter described We business. which market discussed Factors and our GAAP second earnings the XX-K company's full differ Paul GAAP may details On of uses in measures second the those statements release of financial The regarding are XXXX. the with third GAAP guidance Reconciliations and Jeff and and organic results for such materials. in to actual on GAAP the to of reporting non-GAAP financial materially Sensata's operating financial XX cause in we future highlights income then evaluate recent statements. show Forms subsequent the review differences today's we the information our included measures. cover today's in provides of filings events subsequent will on of risks are measures Insights during to, financial as the such business conference including financial guidance progress the updated strategic by key provide an provide for XXXX, quarter will and in of our involves

then after remarks. will take your prepared our We questions

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

Jeffrey Cote

April. midyear million, We and effectively strong XXXX the year we Jacob, we beginning have the provided summary continued record quarter outlined XXXX, you, during slightly prior welcome, Slide customer as revenue on which to from above guidance increased with of everyone. in performance a to the during XX% on the experienced start in some I'd Thank drove quarter. our demand, responded The comments like $XXX X. second growth business range to second recovery

was While lower of shortage, in came because for the automotive vehicle somewhat expectations industrial semiconductor the heavy and than the production chip business period stronger.

and to the results in success and quarter. recognize growth the This our positions, $XXX work during strong we factors representing and the strength replenish million to and the industry the of achieving substantially well operating addition, during margin, than higher inventories. period. sequentially as quarter, adjusted OEM during channel In team year second I'd underscores from efforts pursuing these leading strategic income hard innovation in model. commercial flexibility manufacturing of benefited as from prior quarter XX.X% operating second -- entire higher in the like delivered our our We

at our above target Looking we ranges. performance delivered year-over-year, well again outgrowth, once market strong our

in of past of our heavy we Since basis performance beginning the estimated we X,XXX our is in produced business, and position, in in have outgrowth Sensata inventory average of XXXX, basis because our in will XXX of year. basis automotive of business outgrowth our XXXX, off-road vehicle heavy our revenue today on of Paul vehicle stronger discuss substantially financial the second excluding a XXX automotive produced of our off-road quarter over in points growth. outgrowth excellent For points the average in points outgrowth business. XXX detail. basis business part points outgrowth on more and

For quarter. cash the example, free $XXX million we flow second in in generated

robust Our to growth where vectors in year's in current important strong success. the Electrification, and critical XXXX business coming business new presence ability outgrowth These well $XXX forward businesses of pipeline, cash our our the that on the acquire to customer will strong we balance in of our of deliver Sensata and exceed will last shown continue confidence initial year already wins wins in have half of this level Sensata confident fuel our in years. the $X.X wins demonstrates that to Insights we and Based billion million. business are first expand positions new

strategy this The Insights and we that of and in the and Sensata replay various us in early that sectors. customers and large $XX We quarter investments an is on last in in across million fast-growing we growth driven progress by and I'll update are in in continue gaining quarter pleased increased X, initiatives These high-growth invest meaningful our portfolio million traction on of I product our with $X our and expand to provided A June. remains new allow both to in our On Insights. to the you share website. in presentation on initiative by our significant that organic market Slide second megatrends addresses a remind already current year. are areas. we area teach-in second from a areas the positioning pursue underlying investment our opportunities

in to of annualized excess million pace next is XXXX $XXX several achieve in grow per and revenue years. XX% over the year Our on

that million are substantial We been a growth. of And working fuel have opportunities have identified. opportunities these diligently pipeline over we close business to to of $XXX

Our million large it enabled average out. Included of rolls refrigerated efforts $XX per a very revenue awards. a this worth our million backlog the value track committed to business representing in with we XXX% over containers. have At demonstrate business $XX is alone area win accomplishments strong of new from generate for the customers. transportation we wins orders, balance services is recent in the global a These XXXX. business of generate in their expect this we close to to point, us new of revenue win those This as year on for Insights

order displaced large supplier. example, from yet trailer their solution insurance we were carrier a out revenue an to from North over where as and annual inflation contract American recently fan usage-based growth our leading tire launches. and offering. our set. recurring our a In important that wins This time, instance worth business of monitoring manufacturer enable business addition, $X drive will another awarded adopt Sensata $X to heavy-duty These incumbent gateway In program an million we win insurance wireless sensor over in suspension won a generating a in revenue for once customers Insights represents wheel-end million

take business growing Electrification, in is segments holistic Slide X. electrification in excellent Sensata we view new in and on all we progress winning to a because the making serve. impact part Moving of its

on support light to and vehicles us, ecosystem. this While the necessary already leading and electrification EVs attention, is of electric heavy electrified infrastructure. capture charging lot provider a infrastructure high-voltage vehicles a charging protection to also of includes Sensata

X to the our past businesses, in in are a key $XXX expected development cultivating. are industries teams and incremental generated are $XXX than pipeline be supporting new to phase we the opportunities more have that customers. wins has developed more engineering widespread, from As in over substantial our electrification $XXX of design be pipeline coming our to over revenue our that participant, Electrification base in million sales In intend years growing underlying solutions Across XXXX. the in estimated that of years, become million enable in that and electrification we business million the a

We at new Electrification continue pace. accelerated an business to win

premier electric worth management systems, battery awarded for help unit the During to their by Sensata a distribution win fuses it design large, million provided revenue over commercial European OEM vehicles. launches. is future in Power strategically the This and heavy contactors, business vehicle a all distribution power power quarter, annualized Sensata. once combine units important $XX

produce annual business protection EVs announced medium-voltage new million being Electronics quarter battery JV protection market last electrical and design our revenue. European vehicles to of protection. China extends $X equipment Our large requiring intending other mass awarded with worth the over OEM to already contactor is electrified This in market capabilities a joint for including electrical the wins, Churod venture

a secular large, addition, driven this using in covering and In we gain teach-in voltage can from the initiatives go-to-market listeners in offerings with to supports progress more I'm recently trends. sum, end, key we our these for strategies webcast which initiatives in the North solution. Later in growth design fast-growing worth higher for this the that robust increased the evolving at million space, annual American our pickup our than contactor year, pleased awarded revenue. these trucks vector so electrified OEM, these In better their utilizes This Sensata. our investment our $XX market GIGAVAC were pursue a markets will by a understanding against of electrification contactors a

customer I've markets our over as our megatrends. addressable Paul. like engineering and and chain partnerships these now opportunities numerous within enlarge acquisitions before, I'd relationships we turn organic capabilities, efforts call position, financial see the to supply meaningfully as to As well strong our to said bolt-on through utilize to

Paul Vasington

Organic Adjusted for increase highlights XX.X%. costs support million, second compensation offset include quarter increased in chip And to megatrend shortage, $XXX.X increase revenue operating revenue semiconductor foreign increased aligned quarter higher to income shown XX.X% incentive second growth Thank higher XXXX, Xirgo initiatives and related the financial the elevated million, of currency to revenue partially acquisition due compared Jeff. of by Slide spend to revenues, quarter, XXX% X, increased of record of $XXX.X industry-wide changes revenue an primarily X.X%. an you, second of performance. to higher the XXXX. of X.X%. was as improve for The by by Key on the

quarter, operating our an to the million the million, XXX% EPS temporary of prior an quarter, to in increase to net included due year of quarter Adjusted XXXX, $XXX.X compared was increase second markets of and to response $XX.X second prior of compared significant comparison Adjusted COVID-XX in increase the and income. $X.XX quarter. quarter largely in in negative furloughs impact the related XXX% savings salary to income the was year of Second reductions business. the on XXXX,

in market second quarter end Now of I as the by will discuss X. Slide on XXXX, our performance outlined

year-on-year X,XXX market growth Our points end increase comprised estimated organic overall of is outgrowth customer inventory revenue restocking basis X.X% for XX.X% Sensata. of of market XX.X%, approximately of and of

posted business XX.X%, off-road basis X,XXX vehicle customer end an organic points inventory heavy estimated due market of revenue of and Our X.X% growth of of growth outgrowth. XX.X%, increase restocking to market representing

continued wave being of electromechanical China truck. growth the adoption Our substantially installations we radar post the off-road the stages to our to early regulations. emissions remain accelerated from for heavy new NS balance VI And expect from operating feature. increased better-than-expected outgrowth business in controls on-road safety content We as in vehicles on truck VI of a heavy are NS installed business vehicle the benefiting regulations market equipment to as and of have of per do a for China led year both high

posted of and of of growth restocking estimated XXX due end revenue growth to X.X% inventory automotive points increase market XX.X%, market representing organic Our outgrowth. an XX.X%, business basis of customer

lows, electrification-related in inventories, Our to emissions, Vehicle new foreseeable tailwind America, future. automotive growth product safety, automotive in systems. signaling benefited North business in for from remain historic the especially applications market in and launches a powertrain and

recover and conditioning, industrial chain business industrial launches continued supply business. Our end in in air new XX.X% our heating, quarter. industrial and global benefited restocking increased the growth as markets organically electrification ventilation to Strong

improved OEM which somewhat aerospace Our in drives increased air traffic, XX.X% business. aftermarket aerospace production business reflecting organically, our

primarily in our faster improvements launches, and than market product defense, enabled in quarter. business this to New aerospace grow aftermarket,

if well this plant reflecting unusually high outbreak. basis above resulting this vehicle in the One the points on are normalized quarterly compare automotive still Slide of dynamic of this is for to revenue comparison other XXXX basis XXXX. widespread to XX showing COVID-XX these quarter quarters instead we stand-alone a appropriate XXX is revenue of numbers low of what in the point our reasons are our was to our that figure the in points for adjusted basis. happen so The outgrowth to response and outgrowth and off-road for closures quarter's you, low, compare target X,XXX market heavy to deconstruct ranges, second figures outgrowth would quarter more

Now on Slide X business comment the to performance of Sensing the with I'd second segments Performance like of XXXX, quarter on XX. our in starting

Our million, XX.X% Performance $XXX.X of an Sensing business increase reported last the record same compared revenues to year. quarter of

of foreign XX.X% X.X%, acquisition organic of XX.X%. on prior quarter quarter million, furloughs salary of Excluding increase The somewhat X.X% costs generated of Performance The revenue of and the as positive last revenues, Sensing the same an the in income semiconductor the operating positive and segment compared to organic from Xirgo offset to with the delivered impact increase compared currency was revenue was by Sensing operating related to due margins higher temporary income year, to $XXX.X to impact related second Performance incremental XXX.X% quarter operating as growth. industry-wide margin the reductions. shortage. savings Performance Sensing year XX% included and elevated prior period. chip primarily year in the higher

on million the $XXX.X XXXX, of in last shown Slide the to XX.X% same reported an as compared quarter Sensing of of quarter increase year. revenues As Solutions XX, second

million, last revenues and again, and year the Slide impact offset positive Performance operating in delivered higher And from incremental to year in compared growth. from prior year, were in higher furloughs the generated Sensing primarily the On was Solutions XXXX. revenue Sensing included income of due XX.X%. semiconductor margins temporary costs was income operating the shortage. of Excluding included related XX% to an to the second with the revenue the foreign segment quarter Like $XX $XX.X segment of Sensing, not period. expenses prior organic X.X%, chip salary Corporate elevated operating currency somewhat by quarter Sensing reductions. of operating quarter income same XX.X% of increase operating savings increase Solutions industry-wide the Solutions as XX, in and XX% million quarter second in other organic margin

second gross adjusted last revenue We compared both margin in levels non-GAAP largely megatrends adjusted rapid from quarter during of invest and the margin continuing results. reduce shaping to operating back We margin COVID-XX long-term year million and costs increased pandemic for reflects from year improving from differentiated, year, in we to to second in $XX.X quarter to charges savings an and XX enable temporary to Sensata reflecting non-GAAP XX.X%. end prior income to year are last included primarily Adjusted early other operating the development quarter aligned of reductions. XXXX sensor-rich to the and in XXXX, and performance. quarter approximately our sustainable The the to of the spend operating research results, our from fast-growing growth depressed expect megatrend margin while million, operating to higher and spend transactors The $XX increase income furloughs $XX.X will same costs incentive included up added the initiatives $XX million to to solutions XXX.X% data shows million and experienced in growth. XXX due development corporate the support adjusted Slide on pandemic. Excluding increase were to megatrend-related that financial salary market We've second structure an our and acted transformational basis currently points XX% cost Insights. quarter, business and increased XXXX, of walk increase quarter our adjusted compensation slide. that and higher mega the global develop design XXXX us our believe and in XXXX Sensata's connected Electrification and prior deliver

$XXX the of As Slide during shown rate income. representing second million XX, net on quarter, an free we generated of cash conversion flow adjusted XX%

full be the free XX% year, For flow income. we cash net to conversion adjusted expect approximately of

of be June net at the million. the end $XXX ratio XXXX. earnings For in X.Xx expenditures full to capital was expect XXXX, range to $XXX increasing Through near and million of absent year ratio debt-to-EBITDA we target acquisitions. of this of we bottom our X.Xx free by of X.Xx to generation, the further operating year, expect be our cash to end leverage the net flow range Sensata's

guidance financial XX. on Slide of provided as for third have shown We the quarter XXXX,

to between a and quarter representing and expect XXXX, of of generate million $XXX reported for quarter revenues We the increase million third $XXX XX% between to compared the revenue XX% third XXXX.

in an Excluding organic revenue the XX% foreign the of impact expect XX% of quarter. we third Xirgo to the in acquisition, increase currency

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

China their customers periods. by as fill to the to raises appears current our compared in ensure this transportation previous estimate as some X% to in quarters lead better extended stronger industries rate compared other Our extended industrial, We times fill supply. have order ordering approximately and

$XXX adjusted shortage, to is operating report costs points XXX customer includes expected million. XX.X%, We net of At the of operating basis and expect with income associated global margin $XXX increased million operating adjusted midpoint, actions. recovery between chip the to semiconductor which income be

bottom of line, $XXX margin foreign adjusted at from income operating net million walk guidance quarter the adjusted between EPS At report XXXX bottom a we slide, $X.XX, to the On from and an XXXX. and between provided to the adjusted income the of we increase $XXX have of which currency $X.XX the the includes third million $X.XX third midpoint. quarter and expect

financial full guidance shown We are the on year the XX. tightening as Slide raising midpoint and XXXX of for range the

a the of are business of and shortage, in continuation while more improved year uncertainty market remains, and stable of semiconductor For impact chip economic we conditions. the the a the degree anticipating full XXXX, particular from

$X.XX lower billion year year-on-year. $X.XX sequentially flat generate and as between fourth now as includes third we which third second quarter revenue and seasonality, revenue the normal of quarter. between return a quarter the XX% to to anticipating roughly Accordingly, a reported for compared compared in also quarter revenues to and revenue increase are billion XXXX, representing expect the the XX% We full

Excluding Xirgo of and acquisition, the to XXXX. expect impact of the XX% in revenue an increase XX% currency foreign we organic

$XXX to million inflationary actions and by expectation and report with higher adjusted shortage between for which is At XX%. We our pursuing recovery semiconductor global margin chip the expect somewhat operating are offset impacts, expectations customers. the our million, adjusted other $XXX income income midpoint, reflects we from for operating costs

million pieces impacting We $X.XX, the adjusted for $XXX provide at the year benefit margins. report a 'XX expect given shared we XXXX our expectations we walk we $X.XX to On currency the of OEM last to global shortage. further $X.XX provided moving for On April an currently EPS includes a lower to which expected to chip in from growth but and late than Slide of in semiconductor caused XXXX to have estimates between XX, and from income we compared pace the production production April. rebound the automotive foreign slowdowns slide, the bottom revised between line, the adjusted and $XXX expect At show million guidance. income this midpoint net margin production operating year, at adjusted from as by bottom

are conservative the IHS. July grow as production update. forecast that for their global IHS to production year to for is diverging with in than more from currently We year We X% a X% expect the for at compared estimates IHS production auto automotive

year. be markets quarter third quarter reported about production of we the in this expecting to our with production automotive for In addition, flat are second

off-road outlook our in to with lower our expect we hand, XXXX grow normal industrial record second half chain half Sensata heavy faster business And pattern, seasonally underpin XXXX. industrial line assumptions excellent earnings first are revenue sum, in an this disruptions. expected our we as In now of with other delivered be the and its despite year. supply quarter in current markets than revenue April. vehicle end the On shared in second and for broad These the to to compared

guidance solid this providing expect continue financial XXXX demonstrated by as we're today. throughout to performance We the

over turn back the Jeff call comments. to Now for let me closing

Jeffrey Cote

Paul. Thanks,

the messages in end of few model. Let to end key XX. demand in outlined Slide rapid to recovery market flexibility deliver the our with organizational and the our business responded orders. improvements many and well and a strength, the me wrap of has quickly It's reliability Sensata us very up as customer demonstrating on enabled markets, capitalize on on

as Our quick demand positions trusted our to well resource us response customers. a shifting for

delivering expanding our market ability into in end our consistently attractive new to of strong are awards and We based opportunities. pipeline sustain end We new confident robust upon outgrowth. the this our and future market business outgrowth levels remain of large

our markets. large opportunities invest to end of continue that across all growing Sensata opening in growth our for are and initiatives We rapidly megatrend-driven

making as well excellent as Electrification, in Insights progress both business as are year new evidenced by far We results in areas. wins so and Sensata the our this

through important, the further that believe to interesting strategically provides acquisitions ventures. or continue environment our to We overall joint business value-creating opportunities strengthen portfolio

megatrend addition, our technology In to are third and with partnerships new pursuing parties capabilities and collaborations expand growth. our we accelerate

to people. create We world, in to are while products, just I'm our our help world. deliver to connected opportunities operations. our meaningfully through customers' and a contributing safer to believe also continue expect cleaner, investments industry-leading growth about but our margins better also Sensata's for own not more We mission shareholders long-standing for and we excited a And our increasing finally,

success all on to ESG topic. of to its in reporting sustainability considerations stakeholders. incorporating into for bolster the of and strategy our long-term future company more are look the forward this We our We

Now to I'd call Jacob. to turn back like the

Jacob Sayer

please Jeff. Operator, you, Thank roster. Instructions]. Q&A the assemble [Operator


[Operator Instructions]. Mohan And Bank the first Wamsi America. with of comes from question

Wamsi Mohan

of wondering inventory? that, which is guide a building? XQ? some you could on does further you follow-up into just have do And was you do this And is if a calendar assessment incremental I gets think that that Where results. solid very helpful. the that. Or think absorbed include buildup in the inventory on your deeper Congrats out, bit inventory you delve broken

for given Is the auto has that more of production that constraints? purely rest the materially does And auto the come noted better 'XX 'XX? just on based You supply your outlook conservative fact view down that of IHS. versus set a up sort for

Paul Vasington

both and Sure, that. take Jeff and Wamsi, I'll

the that we of into have number estimate, the market do certain we In that that amount in ship our customer we how are centers to And on we the on that inventory share. versus we versus production, of some a vehicles. have very ship triangulate inventory is high based going going produce parts terms of units those

it's estimate. is automotive. that pretty we And customers And and do some good think VI-compliant we inventory our provisioning estimate, that's in their stay an heavy in So for a the stick of will that having vehicle, it and are NS platforms initial know their inventory level.

a It's So for it's good pretty perfect answer, estimate. we have feel good it. a not but a

we -- customers. inventory we think, then see in the the some building did did at we'll second terms third were of Then depleting inventory, around second year, it back first what of In they were the unwind. inventory year do see fourth half. XXXX, of our We to we of the bring unwind. we're And of last this seeing half some believe this quarter levels will we year, quarter, this in think half

So our having in an automotive it business. is on the sequentially somewhat revenue of impact

Jeffrey Cote

And question, Wamsi, on automotive the outlook. your second on the part of

our I it. right, primary publicized. significant think more challenges chain conservative It's constraints. of supply are that's There associated been with you're well outlook, some driver the

it times in for lead of see vehicles, in at North consumers, of America number as all-time an inventory You low. terms days

added regarding comment challenges last taking for year-over-year, outlook the a view of associated peak see globally been X% the year, And experienced where through lived of auto your having the with this conservative think, a the we that we're more So year, in the year. it, over historically. have auto right. Even recovery of -- is next I the for substantially for absolutely markets with below balance

growth of in for we're the that automotive a seeing still XXXX. there's So lot markets tailwind of


Chatterjee Samik the comes And next from JPMorgan. question with

Samik Chatterjee

kind lot wanted on? you the more a of areas the Jeff, Electrification, looking about What kind are leverage pillars you're us to the that acquisitions. had. of to also and focused aggressive more success you and the that Can of you pipeline opportunities you're full-swing looking kind is the in? give comment of given of ask of you like I you any more having, at. kind about on And you at sounds And some besides where invest given just it color I acquisition are like other kind think Insights want growth you of sounded

Jeffrey Cote

Great. Yes.

aggressive So a stance M&A. I'm not sure more it's on

We have a good Churod M&A on this with and strong joint venture. already the some Xirgo, execution pipeline. joint year Lithium activity We've had venture-related Balance,

really So feel good that got we've we momentum. some

will very stay around areas disciplined. focus We megatrends. are The

exclusive of the bolt-on more and focus activity. that's M&A-related So venture-related our joint cereal. be There'll

we'll markets in goal the growth our every margins. M&A more year be is the And growth, to revenue will And growth. accretive lumpy differentiated create than M&A So for making of criteria for M&A terms rather these we're we'll presence evaluating pursuing. opportunities maintain highly discipline and as that's that generate returns be to confident our able in well expanding sure Hopefully, we're as shareholders helpful. again,


comes And Junk with Luke the from next Baird. question

Luke Junk

seeing would heavy revenue that if qualitatively. had it be you're the the least break year at relative this those XXXX vehicle. the between as major deck in growth million if rates and Electrification X just $XXX in well industrial to auto, out to possible speak And so also end Jeff, you these markets, forecast could wondering you maybe by

Jeffrey Cote


where to that's it's of the revenue. toward be So going in the auto is weighted business our more terms given ratio overall disproportionately focused of company

we say seeing very of We've that you would quoted last we year, I see Electrification million growth. so $XXX market exposure. it's there. about broadly, substantial same the can business, So end -- growth apply substantial We're had

for that internal units So talk opportunity shift the talked as of that. per content opportunities, fact combustion significant tailwind coming content transition us to charging vehicles, electrified we and that to plays you outside when in also infrastructure And of even stations, about about growth of broad but for electrified, occasions of we vehicle from engines many more lot light commercial of a we've the distribution auto, the amount a is result terms vehicle as Now of being of right? of to content other power is have regarding equipment. platforms there. them see the a some the in see piece we We've serve per terms in talked

we pretty this for company. a being opportunity in terms So play of a as as broad-based growth see us


comes Capital Markets. Spak The from question with next Joe RBC

Joseph Spak

and get just auto to to the Maybe restock. back

last think year and I million. seems million you talked now $XX another maybe it restock about $XX million like of $XX like to

to So as that to product think to they build? from automakers, then the get want modules. guess related, they sounds make unwound? can impact the us about we did year doesn't inventory when is because to that of vehicles And already right really it Or way like stop I missing they're that last of taking receive already the the sure -- -- the complete some cumulative to talk when they like going stuff

if think I'm wondering you time? can inventory is slowly this that build just or if over So unwind actually and out maybe bleeds play conservatism, unwinds this out your differently is, again,

Paul Vasington

rebuild impact if being levels a into market higher on sensors we we inventories the like marketplace last about that talked the third very and Joe, And shipment in production. shipping depleted inventories with said, year, I I'm triangulate correct, that share -- that the And based and year. at a this those in of I high on think use we're are fourth then we half quarter of in first

when cars. been as seems last they there our module So warehouses have and best the release do We've sure able that to we be But they're to some half. our is forecast up are because much it in can if a plays to it think seeing in in we'll if unwinds, possibly make ending actually the see how parts it this stronger second it quarter. inventory to trajectory to growth this third again, of of unwinds growth and get

Jeffrey Cote

we're experiencing not we make are end because what vehicle there customer. it help can we regarding produced inventory on that build really color to coordinated customers are think this are conversations going sure deep add that We're on the Because possibly and of doesn't day, front, your multi-party observations Joe, to some what absolutely can't sure supplier. our as we I accurate, to to we're of the can are this. be make the parts as the being at if another having in that serve that

So deliver revenue activity occurring lot coordinating record sure what was there's to of we that on that's quarter. that make can a a front

is being lot a process. So that of done to manage work


next Stifel. Sheerin with comes the question And from Matt

Matt Sheerin

conditions to any how wanted or or to in costs, terms pass discussions cost going? are semiconductor and do with when along. for those Have ability those your picks costs, the up? your supply commentary then input them the customers ask through passing maintained And about And about inability own worsened? you particularly into have same your of I you visibility

Paul Vasington

supplier as a difficult but to The going conversation them. partner a It's we're strong with are expected. and customers along conversation,

the had can to extent so that to some and do we costs, we've share willing success. those they're And

So in gross the second half, recoveries the that. actual are but the up, costs offsetting underlying are going

impact the there, hasn't much good what in net from communicated So April. that so changed progress we back

strong gone here, second you would we to -- here Jeff, supplier want secure inventory have in particularly, side, to that make position and very the On we're say, sure we that add the and into feel an I quarter to demand in continue well We've we're our to we're aggressive being supply. material terms from the to like of the in second able positioned inventory to ensuring perspective buy spot pretty seeing be half. markets serve in to

Our the just a comfortable given little it supply in we're about today. is higher, the inventory disruption chain bit but is that level


ISI. And from the from question comes Amit next Daryanani Evercore

Amit Daryanani

I if have, estimate XX had production auto guess down guide. And I the points think I you by XXX basis ago. 'XX be versus think it around my calendar that taking about will you're what questions days you the

is a, be, will number ecosystem assumption. parts auto lowest a company? your X your top auto and big line think the the such I overall any you changed guess numbers, secondly, But for estimate in from really I haven't driving reduction production So what

auto had is to basis the XXX offset down well. days production coming pretty you the up But points top what versus XX line So seems to hold what ago? overall

Paul Vasington

for supply trying issues see production were we auto chain of is don't lay the with So we numbers to for the change that you industry QX the dealing meaningful flat any because real in we that is QX, out with. terms that see

the up, that fast coming QX the down forecasts as as projecting. the it's quarter. would evidence to in forecast, much happens improves I in think reflect QX. QX, down, coming So moves the are while what suggest what then but enough flat third-party to And not it third-party actually And not are

the and the think there. we of is in get production what some our chain terms a customers aligned of up at It's we're good and So level given think supply automotive our projection capacity. in from point, we'll But we seeing an one. ramping estimate appropriate hearing we're what their about struggles

industrial business business. As well as continues relates perform what's as heavy to to it our vehicle better the offsetting,

And offsetting in seeing that so are decline actually we're offsetting decline more the seeing, automotive. the the we're than -- they


Johnson comes next The question Barclays. with from Brian

Brian Johnson

sense, into are then versus to the the pipeline, this secure the around this the formula given, Insights, go that you that million and teach-in for $XXX the for translating as on update pointed a bookings. want and finding a to is just thank is on fragmented telematics, of Sensata both going of winning you timetable teach-in, what out And how ones kind market on after bids get to at you're competitors? kind you Yes, the deck

Jeffrey Cote


question. great So

let start So the value. referred rather is value typical -- than me to or pipeline sales be contract what as would with

So a to pipeline that from see. refer company, bit as would, is little normally that of a we opportunity a how departure the we

the telematics and a broad-based get would Sensata, of insights cloud or experiencing ability that's the it Smart those that, cloud we're equipment that to and customers, at we valuable. a telematics it piece the in brought It's to much as piece, be the terms the But aftermarket to to to or of sensing device. types subscription-based capability. information off what right? teach-in, was with & engagement Sensata ability our remember ability a and the the than an information So value revenue-based is offering of to in and more Xirgo Connected a way get of the you vehicle from brings if broader refer just the these, combine form proposition, the what recurring take internal right? off -- of then offering more data accumulate is telematics, and our tend sort that So provide information of through Xirgo get core than analyze models So to the things. more very And

is provided that's the real with it. that's around telematics, of But OBD once value leaders translation terms in gets are And creation and port the proposition. so what forth. investment, set. cloud portfolio about The combining of really information as Clearly, nicely. the do but the to quite the Sensata it they thesis to and information that building that's early And sticky we're longer-term More so of value out something can we're from experiencing, we working nicely. the is customers more have opportunity a really there. it's And the with they sort broader pull come, still, excited days solution


And the with Jefferies. David question Kelley comes next from

David Kelley

step-up and autos second versus And sense that continued of about you Just in of longer-term you're proves in points? continued forward. specifically do basis an is more there outgrowth hoping of And we XXX -- you to could targets give autos, structural? half a going see continued maybe see XXX specifically think opportunity this should outgrowth step-up expect thinking those in your how to drivers, or as about us a kind outgrowth we the a

Jeffrey Cote


it's great So a question.

to targets. slightly about exceeding But in was excited comments, we're just fact higher. years, the note spoke in prepared you above HVOR, the we're over Let the auto it last basis considerably really which that outgrowth X.X the we In our XXX that might was start with me the points.

there's be driving to requires digging that we'll broad above that a in in and X We'll range those rolled strong of one, update by what's feel at driven being in guidance. where XXX great because in being there the a about is be large the that outgrowth opportunities are -- the of more a relates rollout out. are us pipeline, average continue of auto. we'll there little lot it of fully to are pretty lot -- confidence the quite But until that won give driving to me NS that we've a of quite the but has to let the The range. to to HVOR months bit China, into So it's to X evaluate terms end opportunities in continue which opportunities, that about we speak year auto specifically of another high XXX, The VI a HVOR.

So a drive, expect There that would will areas driving but big other that. are always one bit. continue VI we a to regulatory that was little to NS normalize

seeing electro and with pull in we're America pretty to now We spike little in had well. from So China is And controls. XXX North as that the a seen associated XXX to the the reluctant Europe. to hydraulic hydraulic and conversion HVOR. change second significant we're mechanical And a

driving content the HVOR that's higher And values outgrowth so in than business.

business, So as the thinking. to we're give updates at We'll ranges. day, about listen, continue And the we'll being we at the end as we're win go monitor happy of forward above or it. and to new what


And with question from Cowen. the next Joe Giordano comes

Joseph Giordano

talk each like models positioned with how like models of about just requirements within Sensata's types products of different on you Can power your versus platforms, higher-end EVs how those? lower-end in your are and the relative -- positioning different

Jeffrey Cote


there and and customer that is vehicles. be So EV to we luxury they way, where the think it's to a positions underserved that charge necessarily was highest be you'll having the the in direction bear of to vehicles. sure help higher-end are was charge of talk time the because And It's everybody going they premier pulling. broad recall consumers most to will that by EV challenge, that, that those the acquisition, had just ranges we a and At we back what about that we're capabilities. when still did make solve going. premier the when lot the of market range, sort had we that we be acquired shorter was vehicles, the around that's longer more when bring space, We the the But in which that XXXX, time are GIGAVAC about talking not market technology have vehicles need times. In to going middle understands, without the belief market, to case.

the So we to mix venture have able us broader allow be to added Churod to portfolio. joint to the a

done make yet, we're and to those JVs, we're not much XX-year XX-, represented of of right? next able of I in though adopt they these to models build more acquisitions all strategy feel partnerships, will vehicle bring their electric of organic categories these that product capability be we now customers So across terms And continue investments So platforms X-, vehicles. serve as for all better to look and new portfolio. out as

So really covered well though keep we'll models, feel only And it. well. success. we're but We as as on across good working geographically now, not


from question William Securities. Stein comes with next And our Truist

William Stein

industry customers to and shipped I'm and One recently order sort decontenting and trend, to the the learned order semi our whether from customers, builds. of innovation of the suppliers some complete of hearing observing business kits in opportunistic it's in guidance. to wondering is essentially in contacts if you're about the things in some OE this complete fashion you're we're your we've cars auto back rolling get contemplating this if that affecting

Jeffrey Cote


the it's more OEMs they're interesting Obviously, vehicles So they can to one. of get tactics are That an using. doing everything is one possibly out.

that. back availability the ASIC with with next-generation to time, we to If is necessarily prior-generation the the a for take but willing So to there. to let OEM had faster cost tighter are there in response them the sensor if reasons a doesn't you are OEMs change me the sensor example. -- whatever, regulation, that due meet tolerances or It or give instances, associated to some an ability cost of go implications migrated step there to

of be product product mapping, road forward. our designed a new going our to purposefully product part cost able we as them So give to lower

And goal more vehicles more vehicles. produced we're having back, But the the to get we're taking can that. day, the end our sometimes of they so at customers discussion commercial step so that sell regarding a help is the

figure cars. that lot And able to technique they're try set to looking to of different -- a so complete to at a using, ways how they're and to get make chipset out the that's be one


Longbow from comes question with next Research. Nik Todorov the And

Nikolay Todorov

is product talked a that vehicles much be or relate And now? light destocking be inventory heavy I could partially question, should but that of your understand to that sense right you about? the hard-to-answer at what built vehicles could how how your sitting

Paul Vasington

that their build it I $XX is visibility to we of where were have Things it in in didn't about don't into -- estimated that supply quarter. go this vehicle. think we we produced a million some shipped chain, but

Jeffrey Cote


inclusive, that's to including we we revenue math back million of our for gauge on $XX we quarter. build hard where the know, in production right? growth inventory Hopefully, helpful. all the sits. of sort really It's factors But get do and when it into us the numbers, So we about that's


And the Wolfe Research. next question Lache Rod comes from with

Shreyas Patil

Shreyas for on is Patil This Rod.

is implying guidance you for could you the the but if about think conversion a should and of then half production expectations, and Just in hydraulics help bridging should about an production in industrial we And be market market revenue. higher that End from automotive HVOR. and question, benefit decline the just how first HVOR year? the electronic to second X% you mentioned half to quickly, this frame content the from raising are

Paul Vasington

it's guided being same like we improvement offset in improvements it's least I piece, the reduction time. industrial I more revenue and industrial in sequential by last is of in both what the or the mean step-up on to HVOR the and at HVOR. automotive said about than the in relative Yes, terms -- earlier, are --

Jeffrey Cote

of from part that your what your Is are On sure second a just this hydraulic mechanical for understand I to to more is? conversion the nature of make question, it, little bit visibility hydraulic you into looking the electronic question?

Shreyas Patil

I achieving that that. just frame what you're either to reasons the benefit basis a to per the some the above -- Sensata understand of outgrowth. way one is your to target of want was or just on in like prior vehicle terms It

Jeffrey Cote

Yes, got you.


me electronic or the or in piece So integrated of agricultural equipment. application so an construction equipment armrest material agriculture is handling an -- equipment joystick or let

complexity it's $X depending So $XXX, to a Joysticks of not ASPs can up or from have $XX anywhere item. the integrated content design. armrest on the

see in it's are helpful. that's that would quite significant obviously, lower ASPs what than light high volumes, drive as Hopefully, vehicle but content the market, are pans they and content. out. The a considerably significant So we

Paul Vasington

seasonal first industrial be talk the second mean, coming And our Shreyas. I its versus crystal the clear, pattern, half you, about in Thank just business normal back to half, did to we the fourth is which than lighter it's quarter half. in first is outgrowth experiencing typically heavy a business, vehicle the bit a the little in seasonally. And weaker second while half great

So levels. and that bit second accounts business half due of kind the production low also the then half first a to the for declining and automotive


And Filatov the Berenberg Michael Markets. comes next question with Capital from

Michael Filatov

a market that quick indicators the I Just like that question slightly. market the looks maintaining around aerospace. But think It backdrop some expectation growth is are aerospace. for improving suggest there you're

potential second So growth business. in there's just half because particularly the aerospace highest-margin if upside, any market for commentary it's your and around

Paul Vasington

Yes. said, that's air But production It is -- aligned is small the and business. pretty It's better. largely largely is Sensata. to, the we a a this demand long-cycle OEM traffic. business is as of rest It to relative getting

of improvement, we'd signs needle major versus expect profitable. year, million the the which second it's improved revenue, few going is not see half But first mover and is it to very news. a in a this to So is great half be but it showing of


at Thank Mr. to no to closing the you. as floor return time, there would I comments. this questions, are like Jacob for any And more Sayer

Jacob Sayer

to upcoming conferences Conference Industrial thank including this Conference quarter, participating like RBC I'd upcoming will in during this Keith. Global you, be quarter. and virtual joining Sensata everyone morning. the investor us Jefferies Thank the Technology for

us seeing October. in share for now morning you on you call. earnings to happen call, quarter this at that which end in year, we'll our Electrification time. As of of a of or and you your for Sensata. events the Keith, Thank in those may details third will our event joining interest Jeff late look also ahead the forward mentioned, later we're planning teach-in We initiatives and about one


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

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