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
Matt Sheerin Stifel, Nicolaus & Company
Amit Daryanani Evercore ISI
Mark Delaney Goldman Sachs
Luke Junk Robert W. Baird & Co.
Brian Johnson Barclays Bank
Samik Chatterjee JPMorgan Chase & Co.
Michael Filatov Berenberg Capital Markets
William Stein Truist Securities
Nikolay Todorov Longbow Research
Shreyas Patil Wolfe Research
Joseph Spak RBC Capital Markets
David Kelley Jefferies
Christopher Snyder UBS Investment Bank
Joseph Giordano Cowen and Company
Jim Suva Citigroup
Call transcript
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Good day, and welcome to the Sensata Technologies Q3 2021 Earnings Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Jacob Sayer, VP, Finance. ahead. go Please

Jacob Sayer

Good to Sara. I'd to like Thank third morning, quarter you Sensata's call. XXXX welcome you, everyone. earnings conference

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

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

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

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

our take We will after remarks. your then prepared questions

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

Jeffrey Cote

growth increased the We slightly from third you, this period we last demand and on welcome, year million, our everyone. responded provided Thank drove that recovery during July. prior continue revenue like Slide XX.X% began year effectively thoughts business above Jacob, outlined start performance the X. quarter to third the I'd strong which to range of The on quarter. time summary with in as XXXX, some $XXX to during the customer guidance

strong deliver shareholders. during shortages, constrained to was production orders able automotive customers were for due our financial While the results chain supply produce quarter we to and

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

during we company, basis a quarter. of points XX the As and X,XXX delivered outgrowth

a of provide we points vehicle, our to market in outgrowth our will driven megatrend company, outgrowth a more and role in of these in revenue that monitor our positioning something X,XXX discuss Sensata's we’ve for our areas. business our heavy in will driven outgrowth the This a vital be XXX in of we quarter. basis revenue markets. of basis detail. strong points produced outgrowth customers time automotive than average, over increasingly is by However, XXX longer since key Paul business. by XXXX outgrowth demonstrates points off-road And enhanced one period on basis as outgrowth

over equipment. support continue significant Sensata electrification have areas on infrastructure because revenue growth in $XXX both the excellent capabilities, only access Xirgo the from to past SmartWitness million organically With electrification Power a proliferation pivotal in product growth and acquisitions Already and today and to We coming these our continued strong also estimated expect than inorganically. portfolios over invest activities. by now we the our driven stationary trends, in of growth mobile in position, and the With is and expanding part financial these year. in this years, very coming our markets, megatrend the electrification seen our performance of to not revenue year, requirements IoT pending and strong Spear areas. end of we our initiatives Systems more but

have in our than more We presence cash $X And acquire enables our targeted in to will cash of past Sensata vectors. months. to continue innovative the our expand generated targeted, XX growth million flow that billion free over balance $XXX current businesses

navigate elevated Not During resilient, chain see landscape our the continue worldwide focused on to surprisingly, to related material deliver shortages benefited logistics quarter, cost needs. our we the customers' to and we ever the changing costs. organization third that and and flexible from successfully continues supply

the diligently adjusted approach a current higher operating in customers. circumstances. like hard We work XX.X% challenging different recognize commercial are achieving million elevated very effects, costs, and year with I'd these agility during the representing innovation, than quarter. under necessary team Despite delivered a This to working including is we of the our these strong third entire those our but in quarter, exercise, results the operating margin, the limit to prior period. $XXX substantially during income

cleaner, today and Sensata published report our Sensata first in safer areas. During efficient we're products and proud resulted of world. these progress quarter, sustainability every very the its in more Virtually makes

XXXX. own to very chain companies intensity our around supply carbon a from that And responsibility greenhouse seriously. line by have carbon established by to our and end, our operations take XX% we the world. reduction XXXX, leading To a are also targeting with neutral We be gas reduce we in our emissions the goal emissions in

addition, diversity, mission, and responsible that and In a company. or equity, inclusion to report Sensata's that core shareholders customers addresses including diverse We and provides benefits workforce our better employees, sustainability believe sourcing. makes us topics diversity our a

management our goals turnover, and development while roles diversity improving established leadership improve in representation reducing and We Sensata by U.S have reach at female XX% XXXX, and to roles internal to XX%, to management team for promotion rates. racial

meaningful and portion a and goals executives of important coming annual forward consequently are initiatives compensation achieving improvements. in updated to all about these other look short-term serious keeping against our these are on tying stakeholders the to years. senior We incentive ESG progress We

Moving that components, to growing electrification Slide and view in serve. holistic provides Sensata a components, on lot electrical business we light a X. of Sensata attention. impact advanced protection, and safe electric of tire highly not components vehicles also these its sensing. and with we our and braking, components with platforms, because enable operation also from temperature such excellent of the And current of EVs, EV sensitive next control. and specific capture sensing, developing we like Electric is vehicles, only of several many to Specific new segments motor provide environmental all take generation making differentiated in efficient high winning traditional part progress new and voltage position, electrified are and vehicles electrification innovative but the manufacturers as

position new third example, $X.X we during the e-motor awarded As quarter, business annual were European revenue. representing OEM in an a large with million

upgrading the from certain benefit of we EVs. in addition, In systems

when battery packages the upgraded leader. In and of of pack, Sensata example, the is well sensor to control upgraded a the Sensata to both pump, benefits. the For temperature cabin important global heat the system as as climate the is area a braking, manage

opportunities that business the million position as that XX Continental system won electric covering quarter, with new stability both well new combustion further significant. as internal on One extends brake in we greater engine for leader During vehicles vehicles in systems, leadership market. a our that were than two business control electronic traditional new

terms have based vehicle This is actual described on increase figure content production. received per compared in revenue combustion the uplift internal We EVs an and XX% vehicles, we demonstrated a vehicle. of from as revenues in that to average

rapidly. activity win has an saw electrification wins design Our growing XX% been We rise within year. in last electrification

approximately of automotive prior periods. this XX% are vehicles, design another our year, so electric from far uptick wins with And the dramatic

battery for Looking vehicle electric to products voltage engine in on design developing, is internal years. forward clean on the vehicle our storage path multitude is addressing gaining of average electrified even falling battery gas material based content by emissions within customers. to Sensata large of X, and are spacecraft we're wins tightening estimate and an high components how are upon their the taking electrified On equipment, passenger to the that into these energy systems we that not Manufacturers ever vessels double we we stack Electrification show customers bikes, with handling markets. customers provide energy combustion the subsystems Slide and business in resources expanding are full solutions, moving used up marine X advantage offerings from to a in heavy of happening and just and greenhouse regulations everywhere, is their vehicles. end trucks, aircraft solutions battery costs to

acquisition, in-house. can of design the the battery capabilities can Thanks reaching of customers expands by a energy subsystem customized solution a technology and have By electrification of we including form Spear in clean for via provide distribution using full unit, provide XX storage management dramatically, charging and assembled these of lithium or a energy our Sensata battery can Power, market all to manage now and battery addressable not components offerings, billion However, all the we either the serviceable aspects power XXXX. balance of solutions, system, pack. full suite added providing to electrified

its more to than current increase run once a solutions during important vehicle is content awarded large As vehicle. an average per the on megawatt premier our European business we rate. help electric power per X,XXX than a win we future strategically $XX means commercial to worth can more pivotal the it from Its of million revenue to XXX OEM for the in on the reaches charging vehicles. heavy heavy heavy example production annualized development, their This Sensata truck design unit quarter, expected electric size XXX offer,

provide the a through pending Spear of transportation markets. for storage Power, acquisition variety of can we specialty battery addition, full In systems

and are powering example, State electric these to the to back the in These clean Spear group upgrading we energy webcast -- safety to that ferry Similar early air system. components Washington a proprietary sea and of include in are electric other we Spear For the including covering playing and role Spear features is highly robust demanding for solutions ferries, what excited Insights about initiatives. June, and transportation our will solutions did markets. our is in land, [indiscernible] we electrification XXXX, very

markets for an Insights that gain pleased listeners a to about of Sensata continued these by X, on of are initiative both in customers Insights strategies we the growing go-to-market all traction and unable we a sectors. Insights. various current growth then. we're addresses these better progress and look more We we and share So can areas our Sensata. market on and forward ongoing demand. shortage with is across deliver The in widespread Slide the fast understanding to and semiconductor details evolving constraining and growing gaining The expanding new business, are offerings, evolving sharing rapidly key our On our vectors our update

providers You'll now global recall were more worth providers of our building together sticky, held for our are value innovator of than that for telematics SmartWitness expands insights by the their our providing acquisition heavy a I'm over offerings pleased pending in and the -- to are some, in hardware, initiatives. vehicles, safety I'm next contextually been that day. more than delivery data our stands the fleets, to business aware billing encouraged solutions evidenced capture privately comprised their large video really a that insurance and Insight traditional telematics and -- enhances to the megatrend of revenue information offering monitoring as delivery. shipping telematics with surroundings founding video added lower light future and the million, of $X purpose fit continued into nature pioneer by a and solutions. duty -- our cost are order with we awarded Once technology surroundings in logging also is of months. million We months with the new announce the million fleets. telematics for complimentary In growth Since are XX recently miles SmartWitness, our service fleets. large company, SmartWitness service -- progress over subside these so Insights XX book of a at include its on our orders increase next every systems in XX designed customers in shortages XX built has revenue Business. solutions the XXXX, proprietary software expansion for SmartWitness for

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

Paul Vasington

quarter. highlights the Thank in Key third you, Jeff.

X.X% The XX.X%. operating by foreign largely to $XXX.X compared million, third of changes of higher compensation XXXX, incentive elevated shown chain an in third quarter compared to align of the from supply include, As spend due of was higher to Organic EPS the quarter, increase net of the higher compared industry to on increase was quarter. and to XX.X% related an income. shortages, XX an to XXXX, the performance. increased prior increase Slide million, support offset Xirgo third XX.X% quarter Adjusted financial was of of XXXX. an to initiatives wide increase increase revenue of by increased in $XXX $X.XX income third significant revenue Adjusted XX.X% acquisition growth income in the operating Adjusted million, quarter primarily megatrend increased and of revenues, by $XXX to improve costs X.X%. the currency the XX.X% partially due revenue revenue

XX. again to of discuss basis ability XX.X% revenue markets. end of by growth its in will I includes Slide consistently Sensata's third of Organic performance points, X,XXX XXXX year-on-year of points, basis our the Now, outgrowth end market and outlined quarter market increase XXX demonstrating as outgrow on

points posted Vehicle in of XX.X% Heavy and organic the outgrowth Our basis off-road market increase growth quarter. of XX.X% third X,XXX revenue business representing end market of

VI truck on-road we China installed from from emission wave regulations. Our the business off-road of to growth controls operating NS in of electromechanical equipment. better-than-expected being post new continued And also benefiting adoption a are

and X.X%, revenue of representing posted Our contraction basis X,XXX of organic business market automotive points market an increase XX.X% end outgrowth. of

Our and approximate systems. as launches benefited production up the -- inventory related shutdowns Recall, from from million earlier we in automotive saw contraction ramped industry safety an applications and new business powertrain in year-ago XXXX. emissions, product $XX slowdowns and electrification a automotive

those In quarter component the the orders addition, were able the shipments we in to fulfill delays. customers exceeded production within to other current quarter due even if eventual

we Within customers. million quarter-over-quarter the of of $XX third build quarter of approximately incremental at inventory XXXX, our estimate an

end ventilation faster Our increased Strong industrial organically launches continued quarter. the quarter. growth industrial to in enabled markets conditioning as revenue air global heating, market new and this industrial business XX.X% and electrification grow to and recover business our than

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

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

to performance business Sensing in of with two the segments comment Performance quarter on Starting third the of I'd like XXXX. Slide on our Now XX.

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

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

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

Solutions last delivered in an segment increase operating $XX.X currency foreign operating XX.X%. quarter from X.X%, of million, of margins primarily Sensing operating organic impact year, XX.X% growth. positive with the the period. to increase margin due was of income to revenue The income from the the operating Sensing XX% Excluding Solutions XX.X% was included expenses higher XXXX. million organic revenue Sensing in and incremental and quarter, On other were prior Solutions third compared the revenues. $XX.X Slide segment in XX, in not generate higher operating of corporate as third of quarter same income

Excluding performance. to million, chain in to to quarter customers. the XXX our costs megatrend quarter quarter quarter, Adjusted $XX.X Slide the third from and these $XX.X s increase results. our last of of income to XX charges of spent basis XXXX and adjusted compared margin adjusted some higher net increase costs added non-GAAP offset to results, growth last from loss industry-wide largely increased rapid increased financial incentive COVID-XX to operating to levels shortages, from aligned million We've from pandemic, XXXX of and were the other The Sensata' income both costs operating corporate increased the our of operating business back points gross on depressed in to development the the higher experienced reflecting research operating XX.X%. margin initiatives XXXX. adjusted prior year and by improving somewhat revenue XX.X% support due included third slide increase related compensation third non-GAAP margin year of and reflects development and recovery margin supply quarter global costs adjusted an shows same an

purchases widespread early chain. parts flexibility, on cash order third Slide quarter production given Free maximize in raw during our in in to to our the supply $XX in material shortages the the in shown As quarter quarter. flow impacted cash was by flow the million XX, we free increase generate decision

approximately net result free adjusted of conversion to expect as currently flow be we year, inventory levels. income full cash XX% higher of the For a

of to net the will EBITDA million. businesses that debt of of we was electrification factors For of within and to year hand Sensata's to Insights. range be extend of September, cash the Sensata's growth key target acquire end in full XXXX, the million primary operating ratio range. at market expenditures $XXX net leverage end capital on is expect the $XXX to bottom X.Xx use our position our our

our fourth intend available we addition, within have share In repurchase purchase program current the authorization. as resume noted, on XXX And to we our million quarter.

for guidance shown financial providing are XXXX We fourth Slide as XX. of on the quarter

market are that will I based upon end discuss the Our outlook momentarily. expectations

million generate in fourth quarter fourth expect to We between and decline reported of quarter XXXX. revenues of between $XXX change revenue million $XXXX growth and to representing the the XXXX, compared X% a X%

foreign of of at million. guidance currency, impact midpoint increasing the With the about $X.X revenues by

expect the in Excluding the impact the from currency we of an quarter. foreign change to X% fourth Xirgo acquisition, revenue ranging decline a flat in organic

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

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

to XXXX X% caused shortages. automotive our expect the On as quarter the provided to year, approximately the compared quarter a to and adjusted fourth down expectations XXXX we includes at we We between production to of $X.XX, for given chain we’ve and from from from Slide income $X.XX slide, On report late guidance EPS supply and last by midpoint. the we the foreign line, of July. currency estimates XXXX. fourth production year operating slowdowns At expect be $XXX shared provided $XXX $X.XX bottom net an in the currently growth ongoing global walk adjusted this increase adjusted of OEM million bottom productions margin the revised income between for XX, million which

than the more lifting the see constraints is automotive not as from outlook global Our production IHS fourth for estimates near-term. do quarter, conservative shortages the we chain supply production in

for We growth automotive quarter considerably next early share yet, production intend to current we XXXX XXXX sharing be view the trends. we IHS expectations financial guidance While shortages suggest current will given of during do detailed our provide in year, earnings fourth XX% not global that are in chain supply a call February. specifics not

approximately at have expect to shared. company. our each align Sensata's by production markets framework However, Sensata's currently we points with grow consistent level, market a across growth high target growth XXX whole we XXX growth, previously end with plus the XXXX revenue basis should the outgrowth to in revenue for

aim material our addition, a serial activity our we approach our to to this position. In we to revenue continue to expand market M&A intend growth In further megatrend year. each amount have areas, at

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

Jeffrey Cote

Paul. Thanks,

the a this to organizational up our demand of wrap of rapid changes messages Slide model, me Sensata XX. demonstrating the outlined the customers. few in and key enabled deliver our with well many responded business in markets, on end capitalize very resiliency Let end and our as has for recovery on and which to market strength, reliability us

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

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

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

components, electrified business and both associated energy organically through through targeted are Insights, clean bolt-on acquisitions. with progress in inorganic excellent and Sensata solutions around We new activity making areas

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

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

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

areas company of illustrated reporting our its We for forward stakeholders. sustainability to in We our more look our are incorporating new success considerations in progress long-term the to about as all updates. report ESG these and bolster strategy, in the into future of sustainability

to Now, I'll turn the call back Jacob.

Jacob Sayer

now you, Jeff. We'll Q&A. Thank to move

question large on the listeners each. number please Q&A roster. and please ahead one of Sara, go yourself Given to assemble limit the the call,


Instructions] America. ahead. of comes Wamsi from Our Please [Operator first Bank Mohan question go with

Wamsi Mohan

color wondering about thank the maybe Yes, you. if broad into was we you quite talking units. of this know channel the give and a to how we're 'XX, on Jeff based too going content more is? are dynamics, I seems fill just could some use that, that us $XX vehicle, roughly million bit per $XX it optimistic. that But changes you production large IHS maybe is a If

guide all you're power So you around Or could that? XQ seeing from a I inventory rationalization of and quickly about into And encapsulating any if is the sort of persist channel think if maybe China could, also you XXXX? the both this resurgence talk the issues do so you impact just COVID, much. dynamics? Thank

Jeffrey Cote


So let on QX. touch me

than lower about So about it XX called forecasts We've million. XX.X. XX.X, automotive production at that IHS

know built we some in has bit that we depletion been part of that. a are given parts little addition, inventory, our In up -- there of on expecting

a guide, is inventory. all because it rather other address serve the it of just for and occurs customers of to that we're and to closely. we're I they beyond not sure it a bit watching think of but going little so above We that's make shortage our that the deliver want conservative could customers have end sit all markets. We'd customers, in and impacting as

to couple it is that traditionally, ahead like suppliers, look suggests When in news supply bad market, guidance from based be we good to we're upon in of it fourth The that levels quarter more specific their seeing has providing to of the news is low we into as I commit that ability may it look at point but the aggressive which the automotive think terms not we're terms will a As for Obviously, 'XX, challenges we're the of chain facing, right our the been as there. deliver. XXXX. a XXXX, everybody to the extend dynamics that bit IHS the little call. relates now, call relates does,

think So little comes the as there a some capacity it so of capacity from taper bit. start will increased fourth a be we mitigation that level, -- quarter online, to will

So and at that's mindful we'll also We're of days. monitoring that North that inventory been keep an vehicle inventory of the built. But We're very American all-time of we're a that. low is mindful the give fact mindful XX perspective.

to be replenished need to going at point. some that's So

everybody amazing has happening what's just terms in of around but in we so is been, So at is think overall And you moving in there and serve. that terms well have markets big It's been terms we there. and Automotive XXXX. how business QX serve. resilient lot that COVID for forth. the The China, operating parts quite in this. question a We of have -- mandates. When look as markets obviously, look there don't is in the also of with I've associated continuing others, there's continued we COVID, U.S., into vaccine order through those are I the see In to growth we're right a end with we're And go other we terms look. you at impact managing addressing the into of than executive any other now one opportunity lost the the on of protocols.

norm engagement a of through well. feel though become So we're question, we keep I little in that's there's new your happening bit Hopefully making with for as still very Wamsi. employees answers the lot our But of that sure and terms them of it's us, all that stuff a and safe. in, managing

Jacob Sayer

Wamsi. you, Thank


Stifel. Sheerin ahead. Please Our with Matt next comes question go from

Matt Sheerin

the coming? that comment I ask to would you're XX% about, at? years good just in there see morning. your portfolio Jeff, you looking that today. products incremental technologies? X existing incremental that Or your the next are content you Where of areas regarding I base EV and or product thank guess products in wanted about that Is from other and content light doubling Yes, vehicles from the in

Jeffrey Cote

of and went We we're dramatic the a we've We’ve other but components both, units We back that upon customers. I distribution with uplift now listeners digital feedback in talked be in OEMs, other We've that also electrified very demonstrated. around what think about with major and good, seen lot associated seen demonstrated with electrification. right had our done to is candidly, but automotive gone and XX% the power of wins no A vehicles. our upon going wins that appreciate the my But we've of that transition to not electrified exciting. okay, comments, back that be expect, going a it can migration to the perfectly little we uplift based is We've based would terms probably now. we said, a fairly hugely more to was get realize experiencing tend capability that, transition that know toward but right. we there's one's

we As with look that we at sight that, quote sold NBOs. doubling. The we've line of and we to is we see net at look what already, a also thing customers

the that's to engines, in there's socket internal able there's in application being that electric of partnerships when that as growth. well to on we it's pipeline. new our lot there a the wins, striking, have so vehicles the continued a trend, that per battery feel as that we're count wouldn't helpful. a So a combustion socket, toward evaluation NBO we're And that that said, content allow isn't trend Hopefully making, refill vehicle. -- as content in terms but applies But same confident in of double us to don't we've very new further vehicles more of investment

Jacob Sayer

Matt. you, Thank


go with Amit ahead. Our next Daryanani Please question Evercore. comes from

Amit Daryanani

Sensata how extra happen channel cash December narrative? does it about think flow does in remind long just sitting does Thanks I the Paul, much that is depletion you quarter if could to how trends just and conversion? more lot my take this undergo ask, in really, to and revert back could will as calendar there guide, 'XX to that And talk And that question. thanks your due Sensata's is that's fair when about to inventory think revenues December question in I Jeff, but of channel. production inventory of you, XX% -- you me of the implying a -- that you're way Is I normalize? out the a sort Yes. auto that’s my guess or a how the taking is auto to it for does

Jeffrey Cote

the QX I'll other then so topic. hit the Paul and hit can Yes,

are expecting deplete. of in the already actual quarter. we've fourth the production chain some less the units So in than million But stated terms supply of also about a we in to X.X inventory we IHS expect

that's So quarter. guide into we fourth provided the that the for baked

will call that's In North that million also that's $XXX terms the auto. been But built, focused to the out would last production American our of of just we inventory, occurs at vehicle I back as actually more normalized year, raw you that's to the their inventory that it as assuming also a inventory, in lot that of been amount the largely is for days, would that of XX, point been inventory look or absorb But quoted, that production across our exceed a see XX, of a XX largely normalize production company market. inventory replenishing $XXX of customers if million revenue.

makes sit they bit we inventory. right. make their expedite because customers, can little to that to the that more serving material it very customers. discussion them, builds, now, that it's in they're we Now, but having of And want with a we're to to higher and our we're their of again carry I willing product bit complexity make a the want get cost us to given for want sure parts logistics pay all these They for make all of that think, no raw sense sure customers a

to we'll ongoing give So we dialogue see and we're closely it and very it. manage continue you that that's an as updates having

Paul Vasington

the question able started originally to our build decision anticipated raw inventory, the to sure we conscious year that to the made conscious when So make think, we earlier It's [technical relates materials we we and lower than take were customers to version XXXX. XX% I a decision. is difficulty] serve

For good to we're next year, free a XXs. cash in been to mean, as [technical continue at looking conversion And that's going the rate mid performance difficulty]. I what we've target

Amit Daryanani


Jacob Sayer

Thank you, Amit.


ahead. Delaney comes Goldman Please Mark question from next Our with go Sachs.

Mark Delaney

much for the question. very thanks and taking morning good Yes,

but So is to chain also could elaborate supply will the it the that's added about can dynamic some next on What impacting most components is Sensata? providing that comments talk you're that you of when short any are you if of for as think supply and things some the for some for difficult it on more for And Sensata, think company thinks outlook customers underpinning XQ about of the most year. into seeing relates the maybe Any particular company. the what you as the I are shortages your Thanks. only well cautious not as color chain helpful. and be

Jeffrey Cote

Yes, sure.

issue. it's industry obviously, first, an So

not Sensata. it's I at level. specific to most in understands think acute It's the that everybody foundry electronics

these foundry takes So capacity well that get level, facts in of the put pretty and capacity to think at place. are while known a I sort

capacity XX needs. the months, serve been their over last around to have suppliers obviously, Now, that's as been moving our happening,

our in think getting fair we've allocation. of terms of that share I really well done

that's and very beyond only general of Everything Supply though. it issues, capacity unload every in finding challenged is I a day. a short, logistics just all right? positive but forth. very labor in thing. trucks container demand chain so mean, not electronics, question, So experience terms It's was we our to in

So to that it continues everyone is a problem experiencing. be

past, we customized. are talked our about of in the electronics As many

are our but solution into The the go off electronics. So we as impacted a areas a more. electronics Insights would customized, focus feel impacting lot Candidly, less business that, of shelf because cases and differentiated lot to we've as the that's on is more standard. it in though suppliers our those that result what's a more of are that standard as little opposed of a been

can would and of seeing last make first lot the a half with the shortage half of when I point And going a we've good XXXX, both costs, to material but that need with ones is want continue and conversations to to those there We costs we're them. success. customers be are we we're after. were conversations year, want continue, standard shareholders the some partners logistics crunch, going go costs not And customers second that to more in of had we bit recovery. a the we very deliver. So this of having our that this given the raw had with partners, here good during in take after is, sure direct cost little being and a are Sensata we deliver, more the share terms making and of associated to to make didn't ASICs But hit. 'XX, with we're we that We've sure

Jacob Sayer

you, Mark. Thank


Our Luke Robert. next question with Junk ahead. Please from go comes

Luke Junk

Yes, to content years. I double Sensata? is thanks talk directionally you're importance power that we about next best X levers of appreciated. for within on looking morning, that and a products was at at, Jeff. look there I that, Is And and further traditional could the if to maybe if hoping would hoping in view was some you growing could good the path particular, the any drivers color here look at on the comment specifically would be products be related see in -- versus sensing products. And this you. you we any Thank lens additional key

Jeffrey Cote

in and activity transparent engines. you to engineering that investment we clock been very Sure. can serve We've of components Yes, most our going to we've undergoing customers additional sure that years, obviously X, the so terms were forward. been combustion if about were the M&A our X activity largely make serving of rewind

that we the an individual temperature expertise example, right. it that's have modular It's say we not We've parameters. different electrified talked although those traditional in that the position, world. a thousands about in and parameters, take have technology as products the always We customers. of in the way So we backdrop, serves application we package that with pressure to -- fact lot sensing our sensing we bring a

or capability, the with you think capability capability, higher about the [indiscernible] GIGAVAC levitation. if contact have we we So have

from have that e-motor that position We we the have. we've transformed Sensors Position

temperature our environment pressure of platform. electric around terms in capability building current have We the an sensing. apply for and A of lot

a like as facing. to goal we've we're relying also [ph] have to the that to high the and able have ubiquitous not in We'll work portion lot to by to right. with things capabilities a that sure they're very platform. but one it, other working that as getting market bring And the over solutions more terms combination of has solutions make that sensing go product we're to there yet solve we're those pour that confidence significant And capability of created tailwind of we on portfolio and protection. and to EV a at customers. with our this really mean, are company. we're be got very It's to help real quickly. the an it's a been is good small growth associated fleet applications, built that on. the though to trend of development So of ability to continue our us customers around as challenges very being wins it's right to rapid them current And a We the now voltage a I in customers see bringing opportunities we're feel that

Jacob Sayer

you, Luke. Thank


Barclays. Brian Johnson next comes go ahead. from with Our Please question

Brian Johnson

you. Thank

auto of to suppliers flesh a question you factory tough and most want have have one in to the bit the customized more question. when of lot in the up, nature of production guess, I quarter. out one due do a does model, customers a pure from your little inventory not factory one is very work Is Just you is, to therefore first to the automotive severe and OEM end? allow smoother an decrementals catalogue on that down decrementals is

Jeffrey Cote

Yes, one definitely our not of every products.

the good. is give they we like the the being and would get I little They're bit We feedback we've not performance. take do they're will, lag a I okay to frequently we've some XX,XXX point in, very that make of problem. just want sure to with much that built say to hand sourced the different very to have get with of products -- bottleneck, We're we're But at come sole with inventory you, and and customers. application, I That's it problem to customized managed building customers, many talked we'll the our customers, eventually them and buffer, a not right them. to then the a not bring lot in our because dropped going think of But out customers. are through to with escalation we're tell if place inventory going a a that to out biggest with of be. this lot inventory that which is we've I've I'll I I you not around, biggest it's I'm doesn't nice better, right.

to performance tough So great result a in time in we during want long-term. negative the a don't

it. keeping we're on eye close So a

Jacob Sayer

Thanks, Brian.


question next go Our Chatterjee Please comes with JPMorgan. from ahead. Samik

Samik Chatterjee

points XXX outperformance XXXX basis than since Yes. narrative was previously and heavy that as Samik guess Jeff, in as vehicle. about and I outline content XXX both the I you Hey, to autos It's done outperformance consistently Chatterjee. think better Hi. when well you've the

you. pretty as hitting industry? to smooth about content concerns of happens it raising build from you are with in is So that battery vehicles, Thank air from on thinking and in the really any I'm performance when you pocket continue that the -- visibility taking that terms guide? -- it what are electric the that here level? is electrification outperformance much Or there sailing in start roadmap have transition just terms in of And should

Jeffrey Cote

Thanks, Yes. Samik.

So historically we referenced in and outgrowth HVOR. automotive

and in, a and why to it I the quoted for forth. pronounced. see and because and I industrial the the just aerospace that HVOR The to again, company XXX that we have off base And confidence of in that's are that the create in is in and XXX the with outgrowth fear points strong we've that complicated It's go-forward market. we but grows -- so really auto, way, into the and really in it that, over serve. as did have lot we the as end well our -- simpler you we the XXXX. driven across to but markets know a markets story. did more will near-term targets. we XXX to smaller what transparency, it's We It We call not by do to exceeding more a ebb how the XX, confidence outgrowth basis has we do the company. end day, that flow. as of might mix have nature At by just business and think make the story our sure goal outgrowth That's make

So once expect to would numbers bit. we a outgrowth normalize we those get into normalized environment, a more little

do raise. demonstrated a time target level ability the more we've we've share than before And to the where so demonstrated certainly of to what confidence in. what we better But we've We're high have said. we we going want just beating

of We’re -- X to the keep really XXX and the we'll in aim X then with comfortable to that, doing we forward. across going HVOR other auto feel to quotes to XXX the but company in and X X

helps. that hopefully So

Jacob Sayer

Samik. you, Thank


Berenberg. Our go Please Filatov ahead. next question with comes from Michael

Michael Filatov

Hi. Good morning, guys. Thanks for time. the

Just on there. the horse dead doubling a to content, of the not EV beat

profile you're more seeing attractive business that margin that margin how the content that'll on mix. of of content within where electric about impact sort because extra And the Just vehicles, maybe margin. maybe the electric is profile talk actual vehicle

Jeffrey Cote


we'll that on do applications will with -- hard differentiated to achieve we margins. exclusively focus that So we really get

probably always commoditized don't very steer are others use We them, environmental applications to right. and applications serve clear Where that's valuable of with of any that be bring really control focus that's They're environments. commoditized sophisticated that calibration, packaging, do packaging and we can harsh in lot applications for we capabilities. served require semiconductor on -- that a we well unfair can harsh where socket, in but And do hard that environments. them. is So

margins And that deviate. premier experience That a we so we're to going as generates not company.

new We've launches. are products product will to lower Now, let new transition margins. that how me speak on have always that volumes lower at seen

make absorption, margin a It's we sourcing factoring manufacturing, But differentiated to It's gaining sure doesn't profile your the we're cost organization, and factory It's to yield -- automated scale we'll engaging with we terms that that of do that. long-term start being profile sure out right. an making constantly ramp, scale. can capabilities margin see that of this materials, from standpoint. just profile make these drive right, differently you're don't sure getting products margin the to have that not we're of as your that continue as make they redesigning, our customers hugely your as disruptive, We happen, dramatically. As it of on worked kinks you're that in raw in. the the that we'll the on, transition a building to we're company. increase have sure we're you're And continue competitive we utilizing

Jacob Sayer

Thank you, Michael.


from ahead. question go with comes Securities. Truist Please next Our William Stein

William Stein

bit for question. I Thanks all one We inventory a it have levels. my looking distil to still into I'm spoken But question comment. quite taking a hopefully it. about about of

your that in the inventory us was quarter, last semiconductor a drop what that this you couple you in quarter, was is build if And then holding part planned. In a affect the quarter heard And XX% customers last but other -- degree numbers, again, in. that wasn't it. waiting I words, the about was the builds inventory excess missed might raw excess for remind can you depleted? we've for you do inventory form believe that park and dollar Does OEMs to [indiscernible] that Can want enough, components. timing, that strategic inventory maybe them? do to what have also talk expect they that planned be to that because your believe to cited that one us So you you you just also versus complete, in to were car your the remind inventory

Sorry question. long for the you. winded Thank

Jeffrey Cote

Yes, in try. Will, out I simple. will To something this spell

our and believe about we million built XX -- of both have inventory QX we in this So that quarter. XX customers

we would probably production. there's that released the in With that work said, progress lot above we're that that, no at of be them point. at some parts to good to that we're fact are sitting shipping our bottleneck, get that are support to the very we're this in the so assumption and market not facts a supplier, And will vehicles think given

that we're there's lot the were fact well, lots demands shipping meet of we're anxiety a of discussions supply the in chain. there Given having to

Paul Vasington

how But inventory the there's it to to in what's when stack point, going low. I up dealerships to in unwind. happening would Hard say a So Jeff's terms levels of very that's this it's of year. lot are

mitigating don't the right much but a something longer being some that's inventory to that that supply slightly going the that’s we're think built I been current -- to get chain positive. and likely, in a to factor it's It's that's to now. seen of channel what rebuilt term positive tailwind So will of change to that's constraints the need so the today. seeing,

Jacob Sayer

Thanks for question, the Will.


go Longbow. Nick with from question next comes ahead. Our Todorov Please

Nikolay Todorov

far Jeff, morning, And Maybe Yes. talk about a the direct can everyone. talked seen once or commercial are those I with those. how what far, different should year customers costs you investors customers? maybe doing of Hi, calendar direct through year? differentiated expand there, differently? much I in through terms thanks. to Good to how to you heard think about implementing this costs. you addressing installation new passing pass of you've about negotiate been so think start rising we you you the so able When approach Thanks. can And you've

Jeffrey Cote


Certainly, able forward. to those to been achieve So QX. going aim we've that recovered we've and And going we're we're get all XXXX, that we've about the incurred. cost of that of half given that to expecting in cost continue, to QX

I'd And the every held So size or year, we that mention sort not is be that it's on not different. offs of all, And one persistent. off until was we going customer to fits are the half of the whether unique. determine trade it first

but associated that. but -- customers, with the we available, that so have strategic to we're but sure engaging share to serve in we're optimize we cost all And it's making achieving the customers committed that with in of how very of we levers terms our that

Jacob Sayer

Thanks, Nick.


with go comes Our Please next Lache ahead. Rod question from Wolfe Research.

Shreyas Patil

Hey, for on thanks. is Shreyas This Rod.

So points. of just wanted to clarify a couple

million you million year. had this there about earlier -- inventory think so about were far experienced you've was $XXX I to $XXX So mentioned bill that of there

mentioned you're basically were So be And into in and you next you've costs this that that that go of in we supply recovery should year. then year. that see to embedded the kind QX probably as starting of is about inventory market incurring a X points of some you before. chain talking to then been And that that through over we growth unwinds assuming X

year suggest headwind you equal, else does likely receive to continue moderate would experiencing all the that if recoveries? So you're that those this that,

Paul Vasington

couple A Last Paul. it's there's so, taking consideration. contracting, a talked year impact into building. after year-over-year things. And year where We they're -- this that of [indiscernible]

So on than we this we It's whatever got last it basis. bigger a look contracting because year, had built at year. inventory year-on-year

production. so million above this As assuming it much year relates we're you a from But production. be delivering last where to shipping the want estimated QX, But QX, largely to contraction, think production we're QX going to we're the as about think we've going XX year-over-year is In pretty build, XX we're been quarter. it's to cars sequential. to that's in -- was just versus estimating what how of related to benefiting there fourth being serve,

Jeffrey Cote

thing market only we about material. the mentioned the think commented outgrowth that we when its from I I other And is exclude you [indiscernible]. Very end outgrowth, the inventory

Jacob Sayer

Thanks, Rod.

Jeffrey Cote

For [indiscernible] I guess.

Jacob Sayer

go comes RBC with question Capital ahead. Spak next Markets. Joseph Our Please

Joseph Spak

horse seems because And on below you and third you outlook total than sort production it to Xirgo sequentially. down and much. you're IHS not adjustments, some here, and about the it fourth flattish, we like so even et basis I higher at Thanks know do then of to I But make still a know mix your talking revenues not cetera. is exclude quarter, guiding if but you're dead quarter look that, at beat the your got least if

you're So happen back Paul, to it your inventory not be position situation. the the unwinds. seem I'm And like good a inventory of given mean, seems in understand amount you're that to I a to really near-term, that automakers comments. that going just have because like trying in it assuming dealer does might

want just square two those to I to try sentiments So

Paul Vasington

it benefited continue. In in But QX, That's we it I keep builds will simple. X% that not XX.X. try from mean, so and is million, build, businesses, about down. QX automotive production inventory the from inventory slightly we're was XX our difference with To production assuming right. our revenue

more not You're dynamics are being at what's to revenue OEM. expecting right. additional get than produced from that because the Those Sequentially. shipping we're the

Jeffrey Cote

auto, that's right. and Yes,

the into we're that's So HBO, as the a well QX QX, contract industrial But has QX, to other expecting QX, contract up QX. to market market to that QX little bit. seasonal, from QX aero is QX the bit a Yes, transition to factored we're be to on little tiny bit right. one, that expecting the to that's a

whole moving. it's just mix look whole guide business, the the at the lot look But makes it's a complicated. you when at sense So when you the mix, and of of

Paul Vasington

expecting of given shutdowns little that. In last a we're drop the the orders expecting fills in more quarter, out, less last But XX%, a little we're bit some than than less to quarter.

the Phil why appropriate It's we're with largely that's you think to saw midpoint forecasting a consistent the we QX. lower, So little being where guide. revenue what is at given be in of the

Jacob Sayer

Thanks, Joe.


with next ahead. question Our Please from go David comes Jefferies. Kelley

David Kelley

should step of the down. modeling? just morning this us on through quarter we about But down that sense for good guys you're and just Hey, could a you how sequential into guided be Maybe fourth related thinking of anything give QX, in the levers question related sequential stepped I'm question. a from thinking view assuming if some mix and thanks guidance to fourth the revenue my and input the margin there's sequential quarter taking cost part

Paul Vasington

from it got QX, QX on $XX revenue You coming bottom is in XX drop, The we the about to out right. about million-ish the are line. difference dropping

logistics of a bit convert just costs volume as conversion of drivers -- two channels. just the to would sequentially. it lose. it's be of rates leverage higher main So a lot or is given global logistics eke is the we constraints and a up logistics little continue There that Those expectation

Jacob Sayer

David. Thanks,


Our comes ahead. go UBS. Please from Snyder Chris question next with

Christopher Snyder

commentary plus kind the vehicle, the from to be in. within because is significant on double Thanks really can follow-up recent Also this IC X run the squeezing me for just on change want a years, rate. EV per XX% content of

I market accelerating M&A. that of So want super XX% X previously is me, this share delta seeing kind gains more, as clear guess on to does confirm include of thought? what that driving expectations incremental X not impact the relative Are just not months stronger it's what this opportunity is just you're is that ago. to kind on orders? And Is than I based to to

Jeffrey Cote

incremental not M&A. Yes, it does include

-- the automotive business, balance XXXX take revenue if vehicles it's in the uplift demonstrated produced the XXXX a XX% is capability and XX% electric from you so of right. divided total again, electric vehicles from And the by a

how But -- lot a There's lot a business platforms demonstrated. that a needs the of those it's vehicle So business the to of happen terms out. seeing one. roll is in

a have We long cycle business, right.

what finishing several the touches the their are years, on wins associated feel to quoted launch better on schedules or vehicles. really those. as for we that that customers have what a getting business had the electric we've So last new specifically we've the port right We're amount will focused that start platforms into put electrified products new our over of capability with

And more more It's is to going we're years equipment next just vehicles, is light answer see one where of what and in incremental the those we're X you that some to heavy transition. the we use just in continue visibility than content. obviously if accentuated vehicles vehicle sensor vehicle providing no years, but and And continue XX% on will we're grow, see going to in X even stationary content the into knows going how markets X but or park-in to many market, electric grow. electric to final the market vehicle to the content electric how -- that providing XX%, vehicles, so total

to area can reference you continues and provide exciting, that a really so points progress. that moving to data will So fast our it be points continue monitor

Jacob Sayer

Chris. Thanks,


next from Giordano Joe Cowen. ahead. question Please comes go Our with

Joseph Giordano

Hey, guys.

How that we've you think of megatrend of most on does difficulty] curious I the you're got with the you does as what like all kind these your contemplate then in terms of just things scale kind that? [technical things point, do next you at when that, ramp associated of going like years? the content, over megatrends particularly but and this see that, do couple bolt with -- number that of that

Jeffrey Cote

composition terms million is pivoting we of growth. I we to It next million, at range planning may the scaling end think model in greatest think spend year where success will current $XX $XX be of for may staying towards megatrends for our up spend. are The -- change. more that

for as number, So now to about level. our but million is aggregate right guide that more that develop next we keeping the the $XX on come target year, at

Jacob Sayer

Joe. Thanks,


with question next Please Our Jim from Suva go comes Citi. ahead.

Jim Suva

details things like and into I for your on all materials or your designs. wondering question visibility you I very issues. or protect starting consider additional indexing prolonged, going, like into long-term thus that. shipping or guess kind to if could having logistics Because the your know are the riders, you so I'm long contracts, how have or of the of Are you. Thank chain the things far. raw to to a supply these A somewhere. relationships with potentially just Thank you customers sight just I’m it because and it's wondering profitability put

Jeffrey Cote


So Jim. it's question, a great

in for them They the to Again, feel but them we're the will world contractual of understand terms it's is customers, into Our riders with unusual typical but have The of to contracts, do I relationships it's a is, the but it something everybody the our to side part, we're riders riders in. answer this not in us it's That's with agreements, have be But living with long never commodity in living or is we them. to metal the them. understand want having an long they We we navigating type in, that are discussion of it. commercial our partner. right was easy serve most -- legal with more inflation have And those exchange very rate conversations. we standing around challenge. a that of customers. how decades haven't get not dialogue customers through good. world But reality lot this that of clearly a seen that drive the able element, conversation to we'll

Jacob Sayer

Jim. Thanks,

Jeffrey Cote

Jim. Thanks,


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

Jacob Sayer

conferences investor this in like hanging participating including joining in us Conference in and morning to be during through Industrial those this Industrial Conference there New [indiscernible] questions. quarter. York will Sensata for thank and everyone the upcoming for Baird's quarter, I'd all

Operator, solutions you for on interest your call call. As offer early on initiatives in we look may one our earnings Jeff the Thank morning in to expect a clean of webinar year. energy to mentioned, also We in early those for next components electrification and this forward seeing our February. now quarter fourth end you joining us events Sensata. or you all at


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