Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Sensata Technologies Fourth Quarter 2022 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please

like Jacob Sayer, now to go turn Mr. to over conference Vice the ahead. I'd President, Please Finance.

Jacob Sayer

welcome and I'd quarter Thank morning, earnings you to XXXX Jason, fourth to call. you, conference Sensata's good like everyone.

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

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

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

make differ call, uncertainties. statements projections from the that conference events or the will may performance and described involve such risks this results future materially we financial actual regarding of company statements. the in company's forward-looking The During

might of cause Forms XX-Q relate Factors GAAP in measures. our we to today's are subsequent as review as well you We to, XX-K discuss filings call that Most to addition in these other limited today's statements encourage but that presentation. will our the discussed and the SEC. those differences information financial include, with will to not during financial non-GAAP

company. management included evaluate materials. on earnings release the XX performance our income measures uses appendices presentation and the reconciliations and in segment our provides the The the company which Our of are GAAP details including to are X of non-GAAP to the of of primary Slides financials, presentation, operating in its

take will will will your guidance the new then our our Paul of XXXX. our Jeff he growth first and XXXX. prepared detailed for remarks. will and for on our We'll during also with updates full-year provide quarter, provide cover fourth results and the begin fourth initiatives. quarter then key today quarter financials questions the business after wins business highlights He financial

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

Jeff Cote

everyone. and you, Thank Jacob, welcome,

like fourth as start on thoughts some our I'd and full-year Slide during X. on the with outlined summary to performance quarter

the million from margins year currency. in on margins from XXX $X,XXX basis despite prior basis X.X% continue foreign by the period, we target of During level headwind XX.X%, XX focus moved to a our Adjusted to we quarter, revenue, point points higher fourth produced up to our improving as XX%. operating sequentially

is XXXX, million X.X% full-year For we revenue, which from $X,XXX in the record produced up prior year. a the

and disruptions dedication by last the results. target performance points basis we Sensata team outgrowth, who of foreign pressured experienced underlying and full-year, we basis headwind for our appreciate contributed to continuing consecutive a market of point chain year. for supply were Our members currency. We markets XXX XXX continued third produced our with year Nevertheless, the the above associated expertise these

for activity business year. awards active was extremely new the Quoting during

of And As second XXXX, achieved million. they a $X exceeded achieved In wins. of record than record year result, $XXX XXXX, consecutive wins new business in we billion. a more we

drive approximately incremental past that we made have revenue which in investments to directly are these XX% is the notable electrification of years. factor, the growth Sensata's due more Even will wins several over and are our outgrowth future

XXXX than greenhouse than earlier reaching substantial governance made our During XXXX, intensity our reduced environmental, emissions We year, we target gas XX% also progress years last four our social more and goals. toward by anticipated.

technology overall in named Responsible of and as Newsweek in XXXX, Most first for sector the addition, hardware ninth Companies one Sensata In Massachusetts. America's XXXX

than equipment as we the to thus It have to decarbonization and to and of infrastructure as are our over Many this our accomplishment is to their electrifying with are product this past strategic anticipate strategy. we XX and more imperative transformed All a customers, change serves pleased trend. and support significant far customer enable in for very portfolios the being execute XX global we in investment trends. the next end made transformation this business is us adjust markets our Sensata seen categories years on

Slide substantial investments their years, businesses. win on The largest internal commercial including in success included shown X, As the the efforts the over capabilities and and need develop technology clear. we represented made as awards customers have our products, development single company's three toward Last and electrification business acquisitions business related they resulting both past a is investments significant to from shift these in history our areas. year's our transform

cycle benefit and going, our long investors' to where secure investment serves to patience bright future. cycle our the the largely which end this of we appreciate is pivoting underscores markets, Sensata market through

The from we success demonstrates built future organic the to-date inorganic investments sectors achieved we have growth have our and foundation in strong that growth. a that for

on maximize growth having the are businesses integration where focused benefits of includes acquired we've areas greatest to leveraging in investments organic focusing we Now and This we P&L of the success. completing these are the investments. the

as flow. Consequently, increasing look operating organic and conversion improving and focusing are adjusted growth, earnings we of on XXXX to we margins beyond, to cash

to and later. continue we to to targets and improve our capital returns time. shareholders on opportunistic will Paul return through dividend flow specific free naturally allocation leverage improving share capital the will allow While to over invested will cash speak repurchases, to decline capital

automotive XXXX, industrial year, in XXXX. revenue During last up XXX% areas, revenues Insights million and $XXX $XXX from approximately in in posted million from up XXXX. we posted electrification XX%

would double Sensata combustion light teach-in a $X vehicle comparable electrification XXXX. by in grow that internal February, battery would Sensata than content revenue forecasted our in light produce During billion more electrification we current electric that in to and last vehicles content

vision We our to life. are way bringing on well to this

designs business growth revenue years, existing still on to deliver coming need now over in awards hand, market coupled on sufficient product deliver target. three the these is underlying we the business While wins our our to and expected with electrification

customers our in assist transformational and their The demonstrated to realize to our investments commercial exciting establishes success well Sensata potential. from our journeys very own

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

Paul Vasington

Jeff. you, Thank

the XXXX. strong reflected X for an points shown by as fourth outgrowth of on contraction. the company Slide across partially $X,XXX million, as the quarter, increase basis growth fourth quarter market highlights overall offset X.X% currency foreign Revenue in revenue as of quarter, well headwinds the X,XXX from include and Key acquisitions, of

an in productivity income is increase X.X% was of to $XXX.X the operating higher unfavorable by increase movements somewhat foreign Adjusted to due compared million, primarily and offset This of fourth volumes, quarter pricing, currency. XXXX. improvements

of fact, thermal connect business in Insights factors Electrification a and test year. our divesture the in from semiconductor In and of investments growth last

sequentially operating improved XX.X%. points to Adjusted XX margins basis

quarter quarter decline we from saw and in in $X the year revenue. million per share XX.X% fourth than grew inventory same this a did Adjusted We quarter earnings the channel approximately faster prior the year ago. as

fourth in outgrowth So had no channel basis. inventory quarter on year-over-year a impact on movements our the

to Turning X. Slide

pricing delivered in This entered the in we productivity inflation that also vectors. our offset chains Substantial and impacted material growth improvements increase availability XX% better have through costs, when cost a margins operating were down As adjusted our we the significantly in during a level time increasing increased margin steady significantly to we driven control component from adjusting leading improved, to improvements investments XXXX, margin operating logistics and costs impacted XXXX. at supply decrease year. and slowly

rate these for a quickly quarter our guidance volumes, efforts target decline lower return XX% margin the XX.X% as to of financial to to includes in sequential possible. we on first as our continue While intend

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

year. partially quarter acquisitions XX.X% market Our offset last unfavorable unfavorable Insights, to strong increase growth, business foreign declining an Automotive heavy-vehicle revenue growth, revenues revenue content by and of strong partially in offset outgrowth of by reported Performance the currency. compared higher Sensing markets in of impact foreign in off-road same million, Growth currency. increased from the $XXX.X reflects and pricing

to operating operating Sensing margins year-over-year was acquisitions dilutive with declined XX%. Segment currency, mix. foreign of Performance impact and million, product unfavorable operating income margins of due $XXX.X

on strong Slide quarter appliance compared markets, fourth to from of same and the Sensing shown strongly reported $XXX an increased especially and pricing. increase to content Industrial quarter growth, revenue unfavorable X% in quarter, in Aerospace the year. As weaker due currency. Solutions last market and as HVAC million in the foreign revenues of XX, revenue decreased

with clean decrease segment impact to margin was margins in acquisitions operating was due income operating million energy. the The operating and Solutions Sensing of of XX.X%. primarily $XX.X

development lower compensation, $XX.X to corporate and On an reflecting incentive Slide year offset expenses in charges for and the were XX, partially research Adjusted development megatrend spend exchange. quarter costs foreign XXXX. growth other and results million by fourth compensation support the operating quarter and initiatives, of and higher increase our $XX.X income favorable corporate were business segment non-GAAP in not other million, from from prior primarily operating included excluded our

develop and million $XX impacting the to XXXX and spend our spend the megatrend-related differentiated growing for expect engineering design in trends fast customers, level same invested solutions to in XXXX. we in about We

of $XXX in areas, in than to wins million revenue business more XXXX, market our with new clearly more growth record in XXXX, $X how are in appealing customers rapid demonstrates than expanding billion these our along capabilities Sensata's driving The outgrowth. and

flow We XX. compensation negatively revenues from and the cash Free million markets $XXX our in of supply to to impacted flow grew by million was this ensure levels higher free carry business $XXX of Slide acquisition-related the during continuity in cash inventory cash during our as increases uncertain in receivables decision and payments. flow generated to Moving year. fourth and free quarter year

XXXX, long-term For cash the approximately income, expect of average. XX% Sensata's we free be full-year net to conversion flow reflecting adjusted

of be XXXX. are $XXX in million range to $XXX expenditures the for to Capital million

to leadership areas cash positions Consequently, us margins to net and mentioned over will investments leverage time. Jeff organic with previously, have Insights. As acquisitions we capabilities in which improve lead strong assets free grow, provided naturally operating to and and achieve the of lower needed Electrification growth flow and to and expect the

are years three net likely As to updating attain. will our take which range X.Xx two to a target years X.Xx, result, to debt-to-EBITDA we to

the leverage ratio was net of at X.Xx XXXX. December end Our

capital and expected per that $XX of from be paid XX returned we recently during February quarter, is fourth repurchasing million record to to reduction the X. dividend shareholders quarter, announced a third of February our authorization, on our existing a to on We under of repurchase shares stock the $X.XX share shareholders quarterly

will in net to term to capital the first company's which structure we quarter, the In outstanding the to currently target the our continue liquidity capital debt new evaluate loan leverage is of structure. piece rate range. addition, according we variable needs million during expensive most intend Moreover, manage and our down $XXX of our pay

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

the Our risks. expectations and than production are the estimates IHS because automotive growth shown We remain based macroeconomic on quarter upon COVID-related the of for China on side page. outlook the of right end fourth more market conservative broad

an represents to exchange $XX headwind expected Foreign quarter. million first the in revenue

revenue, first the be for rate is adjusted sequential At fill is quarter. the first of fourth increase also the largely current year-over-year revenue the mid-point decline expected Our basis XXXX, This flat XX% to due XX.X%, margin to an income reflecting quarter improved the of and volumes. approximately represents productivity on lower a primarily mid-point, guidance operating from pricing. quarter, XX point from

that and the operating guide at our XX% the revenue income share per than quarter anticipates rate first year growth. at increases faster at earnings grows quarter, anticipated Our prior X% mid-point the of from

Looking to expect balance to earnings we exchange foreign an headwind per XXXX, $X.XX be rates. to given share, X.X% revenue and current to exchange a the of headwind

upcoming in market facing full-year the are Sensata to instead discontinuing quarter. guidance, practice choosing the and our other and guide providing Given our only of we for companies macroeconomic sector, uncertainties

and months, forecasters while economic believe next the future accurate customers market We less is from quarters that data such currently into broader concerns. forecast is given third-party visibility few the can our we clear, reasonably

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

Jeff Cote

Thanks, Paul.

outlined our resilient highly and with key we up required as organizational are by few solutions business and model a reliable, we Let strategy engineered deliver XX. wrap strong, on as messages Sensata's me Slide growth mission-critical, customers.

markets to risk strong various markets. near-term experience navigating to volatile continue rising proven geographies, we the a team choppy interest in end be management recession inflation, expect of the and rates, to we events, in with in have While due geopolitical

outgrowth for another We XXXX be above to market Sensata. also of year target expect

our focus initiatives transform on across serve. rapid these growth continue growth end the invest to as we We to all markets the opportunities business in we

significant and over Part focus free are progress capital. growth, success cash margins, through targeting in stronger business growth. of us strengthening allows -- two making to We improved new of as financial by This to return range flow organic returns X.Xx wins excellent demonstrated strong new on a on leverage our to is this and years. net returns next increase X.Xx the three revenue

of differentiated their We and continue on broader and our to customers, product an engineering set capabilities. providing array challenges ever of customers, while leveraging innovate solutions expanded behalf solving to hard-to-do our

customer shareholders. margins Solving deliver and long-term industry-leading Sensata for mission-critical enable challenges enhance retention to

And finally, and Sensata's meaningfully a help for product we own long-standing our just We operations. delivering contributing cleaner, more to on world, also pleased to customers' world. results in vision our about better through not believe I'm electrified create connected our safer, but are a

good and on making our its our targets, success all of for achieving we'll look are progress company long-term sustainability the to update Sustainability of bolstering upcoming stakeholders. in them We and ESG Report, the

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

Jacob Sayer

you, Thank Jeff.

We'll now move to Q&A.

the the number first the question one large on limit to introduce Jason, Given go listeners please call, of each. question. ahead yourself and

Operator

comes Mohan Please America. from first Wamsi Our from go of question Bank ahead.

Wamsi Mohan

Thank morning. you. Good

Jeff Cote

morning. Good

Wamsi Mohan

announced price guess, of How in EV you million appreciate I you viewing a did just are that by Sensata have billion the the for been face your two-fold. I $XXX it's the And and opportunity target So Electrification the cuts here. makers? $X in

your change get on pricing? does your positive in anticipate that you adoption And your or to you own you Thank XXXX? the Firstly, of it do $X trajectory secondarily, how a lever net price mind still you. billion? either see as Or do in pressure

Jeff Cote

a there to OEMs. OEM view unpack let be more start a experienced, we've but electrification of given Wamsi. also the on what competitive me of but recent to trend A Thanks, more lot cuts price with

trend years, that, future Listen, up. accelerating. this do EV at And penetration, associated investing in that the looked five and it's because the been heavily why with we've last every space we've is years is as that's three believe to we that year, gone forecasts

So would that we trend that, would continue likely go as say I forward.

made were so right the we investments the that And ones.

where for Now, on activity There our quotes a win focus we're trend. for winning this organic targets opportunities. that achieving, has M&A we're in up transition. this of investment have and around aiming our had disproportionately electrification prepare areas as where we've our the lot The success that's that's new great has in that's these success been where support the been customers business quoting our and gear that's been, to

to pricing were with to bit around that. And with associated On think But early XXXX, productivity trading not customers is were back pricing, a always associated part in in winning our understand normal address point. continue succeed that point last that the your be a marketplace. I mode as the where They new to with but would lagged our the because expect as partner. will long-term a knows go deliver expect we the dialogue us that can everyone our to off business need for little customers we'll more customers I we there, in with we we XXXX, us inflation of eases this forward, of question the customers. year-over-year and of the the get make into helping model And we able sure be more difficult business the

Jacob Sayer

Thanks, the Wamsi for question.

Operator

Our next from ahead. go Research. Melius Davis comes from question Please Scott

Scott Davis

just algorithm? and impacts you -- as M&A how part growth new about think of the rates how Can about leverage the we how really talk that

Jeff Cote

enormous fact capabilities guess amount the start And standpoint, been what what marketplace believe in two-and-a-half from made over be future. I customers strategic solutions would I be the we've bring and our hearing we able from we've investing that trend Yes. to last based the been the progress. an to in to a we've years, the will upon the with of

achieved our million I XXXX alone so think wins wins demonstrate associated with stand And and of that in $XXX from the Electrification. we've that.

we strategy. of reap we as those that associated investments start pieces being The need and And we now with the all the have need made. conclusion we've benefits I to conclusion delever wanted so all with that we to was that wouldn't the the

naturally time associated delevering as more customer that us and result in will relationships, And that. current of on the the the our organic growth and spend will with result of a acquisitions margins happen improving

done. work And that. is a on new a there associated that new set So a realize sure we've leverage we've target we with here the associated benefits focus those we'll -- with set making

Jacob Sayer

Scott for Thanks, question. the

Operator

from Please next The J.P. ahead. go Morgan. comes Samik question from Chatterjee

Samik Chatterjee

if question. guidance one the can for guess have my Thanks spend of talking the you bit we a of XX% morning. for I And time margin good that for about Hi, taking FYXXXX. getting of this number that that some on has margin have the revenue we're to with into morning if questions reaching year. visibility be predicated the is, you the through visibility level trajectory

environment, So macro higher to know fill your what I just on think autos driving predicated called that of or uncertainty how Thank you. well macro what's as out business? on that from of wondering of about the revenues as environment rates sort you're impact -- sort what sort will and be but in what's you seeing

Paul Vasington

couldn't the question. I hear mean, quite I

Jeff Cote

Yes.

our So our was margin to target. I XX% market around think will Clearly, margin achieve given the XX% comfort the volume us the help question get dynamic. to

guidance, So toward over intent time. to outgrowth quarter, we will form headwind the FX the XXXX, headwinds. we're more a marching management market we not of decline help. Volume market giving have either we but And exchange full-year into as tailwind associated with into growth. will versus that have foreign first market, least and go in have help we at target

on incremental we to and a to harder I profile that what that helping is, and market time, associated So that at with so will the think profile. it's get to over get time. point little other in that things bit question The get there to forces are tailwinds margin will margin and depend

Jacob Sayer

for Samik the Thanks, question.

Operator

Please ahead. comes from question from next Stifel. The go Sheerin Matt

Matt Sheerin

visibility quarter you in see do in about inventory. -- on looks Sensing market that going when wanted to know it been the year-over-year a Thanks be you could there? I applying fifth you're talk And row like Solutions, good But here. morning. question weakness post-pandemic, I to HVAC there to the market, there's Yes. and bottoming? ask within for a your down

Jeff Cote

Yes.

For market a anticipating the a and seen impacts market couple we of decline. our industrial the first other associated now HVAC which down take and market, destocking go as hold. our lives real we've to where quarter, quarters But -- occurs are estate the to continue so is forth, with

need one And market rather with that's and as the it's the question OEM me, so level hard the predict our with to lots transition have dramatically. levels the markets. near-term, where focused does through of the last and the really manage to there with been channel that will It's it, in excuse revert more when associated more to market content down that of quarters for recover. inventory other industrial normal the zero we're going we're our happening just start HVAC the because we're for associated associated sensing to refrigerant, that excited have be, there than feel equipment In there's business pretty about a the seeing is success. given to I long-term couple change the -- opportunity But though end but

Jacob Sayer

the Thanks, Matt for question.

Operator

comes Luke go question from Please next Junk Baird. from The ahead.

Luke Junk

remarks taking this Good for you question. Samik, future up built your followed morning. may Thanks for just, has stated growth. and foundation you've strong prepared my you Jeff, in

the you're benefits those leveraging that. point Now of of M&A on a on focused investments. piece the Want put finer

vision year XXX how you a of pulling at should about ago go and think are you today annual out what versus of time, squaring points what basis to today? you M&A growth vision back laid Thank has basis changed Just that this specifically? seeing laid the you're XXX you. we You a points, out

Jeff Cote

Yes.

are. we yes, So

in engagement then supports that, now well our make And that we and with very dividend clear are with pay were the past, allocation as customer to future and to prepared NBO support customers. we sure been we've for to ensure was that. feel we we though the won that the do the M&A the prepared opportunity that capital our we've to So the

market And potential with said those also now investment to the bring million continue associated stay realize that organically. that this. to to we $XX really we'll invest level to at million the believe products is to time And we've to $XX organic

level organic We're for So continue done point. the opportunities to that to in business the that that to the growth drive to a question. in at M&A focus this is away commensurate M&A-related see activity the is we going go and the with digest going Thanks market. we've the

Jacob Sayer

Thanks, Luke.

Operator

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

Mark Delaney

is see taking you of good entirely set higher expand pricing for think that? achieve you needed guys, mostly margin secure morning. to the point? how at need still the XXXX, and or When Hi to to about margins Thanks nice EBIT do question And accept the expansion. course the is several plan pricing Or over this the OEMs to the pricing?

Paul Vasington

I can take it.

different last But the pricing markets. XXXX XXXX. many it depending in So the have secured pricing much on And end we continues pricing. forms, behaviors over was into They in expect all of that do different elevated around comes XXXX. year

to that with or process as costs around have the so to cost a secure very have seeing to to our with conversations But have we'll we're in we customers. now them track we them. on work up, and that the Now, those pricing cost to with pass continue inflation to and a record new we good customers continue other to drive engage want

Jacob Sayer

Thanks Mark.

Operator

comes Our from Please ahead. Christopher next from question Oppenheimer. go Glynn

Christopher Glynn

Good Thanks. morning.

interim on replicate XXXX? So cycles? XXXX notable In of new you naturally that for the business wins. should can peak and put XXXX, do up you on think think curious we design as level Or you pretty

Jeff Cote

Great, XXXX opportunities of what our at robust a in customers. question, Chris. was Yes. based great The very pipeline upon are sourcing opportunities

As when it's the quite but we it entered it's at into look we not still XXXX. robust, XXXX, was level that

is you point, toward now, new billion out in that. $X.XXX of there look keep right we great will sourcing we pipeline that that there charging what at out but driving to yet. it. a year the another come during that And it's XXXX. opportunities be are be wanted opportunities the don't know business going when billion We'll opportunities keep So getting $X about is to challenging, toward we'll candidly, But

feel to in we business that on the billion. key get our think the we very to comfortable that we all I is third here and upon expectations $X business, parties So that in need we based growth hand have market that point current wins have have

is, increase keep the we're make revenue that And know following business. when you full with the we to beyond are But the future it Chris. billion? for base I going appreciate realize clearly, the question potential the at I that it $X driving okay, to sure question, going associated to

Jacob Sayer

Yes. Thanks.

Operator

Amit ahead. The from Evercore. Daryanani go Please next from comes question

Amit Daryanani

for morning. on guess I just my to the but outgrowth question. XXXX. full-year maybe for taking provide I understand Thanks Good a hesitation your expectations touch not in guide,

think I Would an sort the first outgrowth think to talk about talked update be you is can on much points last XXX versus to high-end you you. you well? content basis And quarter; to pricing that, of XXX the you as get about XXXX. could? of do range in love maybe if how calendar Thank that of

Paul Vasington

So outcome. developed last delivered greater been three over has much outgrowth the which that our the years, targets than we set great a we have

range year, high-end next or slightly based target be which XXXX to visibility to, the would for on we is our For a what of or have we bit our pretty outgrowth in high, above. expect

Amit Daryanani

pricing split content it a I on that all guess, be Paul, there would is between Or content? versus number?

Paul Vasington

is to more pricing than XXXX. content going It in be

Jeff Cote

XXXX. that of part is pricing The for

Paul Vasington

of The to the of be but the that that. going is earlier, outgrowth. said pricing elevated is it's part biggest Like driver certainly year-over-year, content is I

Jacob Sayer

the Amit for Thanks, question.

Operator

question go from Wolfe Shreyas Research. ahead. next The Patil from comes Please

Shreyas Patil

taking Hey, thanks lot question. for my a

that. looked It -- -- inventory. like question QX. it quarter; to mentioned was back like was circle associated to the with flat in a to I last you comment on believe it channel million $XX wanted the sounded headwind Just

inventory destocking we XXXX? think get as channel to how about just So into

Paul Vasington

be million. would in contraction So a we be the There in I there'd comment guess saw $XX first contraction was thought QX. We that million about $X QX.

growth year. it's had on because impact contraction last million $X So we year-over-year, no

as So market have and in good might both as or been. business, high very in growth quarter, wasn't as thought it significant outgrowth. But growth bad auto the we a we performance from it saw as low the delivered

executed really a well, outcome. really So good delivered

about, guess thought back As in was XXXX; we it be we terms we've in XXXX. would We've But I in when that so in some inventory. year, levels depletion build know unwind inventory could of And wholesale inventory about in a channel that we in of increase $XX year. looked was unwind. This million a there have seen we to next unwind. was seeing to are look forward, more It some market. the or the there

So maybe an the we're more occur. that going it It's because difficult should know end, to be that. that watch to to on of based but there an still math carefully it has the to of unwind come to need appears timing

Jacob Sayer

Thanks, Shreyas for question. the

Operator

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

Chris Snyder

pace the trough margins. target. Does that Thank you. for XXXX margins. the back in be to year through just off When margins always will is XX% this XX% will the I seasonal wanted grow ask the because, XX.X% or margin says company half operating of the improve towards mean I QX? can on in hit the And the that ask historically, QX

of more that? you. typical a should we substantial build seasonality? kind than that is expect Thank just Or So

Paul Vasington

to XX% expectation sequentially annual striving for. margins is we're The an level target XX.X% from for that Yes. grow The the is upward.

talking to as that going likely work But to XX% quickly about us We're to move year? would can to to have up possible. But is quarter. as expect a I So expansion. Jeff the really get to the we're deliver that continue for margin contributor be big in we said, XX% and margins as to a volume very

into to a quickly. get with number more better that volumes, chance have obviously better So we

Jeff Cote

work it. And saw that we'll improvement to we you. from it's to worth as point basis QX said, continue Paul noting toward in focus. that Thank XXX And margins, given during QX, XXXX

Jacob Sayer

Thanks, Chris.

Operator

Jim Our comes question from ahead. Please from next Citigroup. go Suva

Jim Suva

like color starting wins gain Jeff, Thank much. new give your more and new you success really with business you're a so and a I'm us where this. battery about little visualize to trying in car, traction? the exterior interior, prepared Thank the heating seeing car, stations and controls are great lot those Can cars? Are they charge for for the mentioned management, comments, business you you. picture wins? to you just where more

Jeff Cote

Yes, absolutely.

it's serve. that markets it's So distributed across the -- end we based obviously,

that market wins, have, automotive biggest this biggest biggest we So the of it's the $X business all billion. revenue about portion portion isn't our but the of new end it's the and it's

are great we battery those big environmental in, efficient. be winning. sockets of tire that to finely systems so really more Because management, bunch we're a that There electric two pressure, in forward. control had areas long-term and There's and going environment, need more continue grow tuned positions a that

see opportunity in for outgrowth we more areas. So those

are acquired of talking And been be it's the in isolation areas We've developed it's lot so just it's process, around battery stationary, in powertrain. industrial it's progress. light and about both these contactors, It's the battery in fuses, systems; vehicle, battery applications. The we're capabilities a seeing HVOR; new and incredible what management monitoring, charging not it's we in will that disconnects.

all electrification. markets. And of our of $XXX of $X play sets and the in that built across So last NBOs solution billion were million year, of we've area these products those

that So those areas we've about talked there.

Jacob Sayer

Thanks, Jim.

Operator

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

David Kelley

guys. my good your hoping Hi, supply ramp logistics component in a give in availability you from end. XXXX? morning, sense us margin about of thinking you're own I into some And you on view even and how one material cost inflation maybe embedded and electronics give a discussion can maybe follow-up the that us chain? the targeted margin Maybe more was could of

Paul Vasington

So can both guess, it. Jeff, I take we

mean, this I the side do a improvement more terms inflation rate strongly terms see chain, side. inflation a year. little been in availability the year -- seeing what the slowly material probably of improving. And it Still continuing the industrial supply bit we In of what to supply similar electronics. on we of has automotive We're experienced -- at next and chain we and on

was be chain, of to the to in challenge. So and to disruption But supply rate that. of of a the going is headwind pricing in Logistics both it's mitigate material. XXXX again, the the terms there still expedite a need because

see in We as way the of more come us the cost manage start down logistics the of and the to other that turning much factories material supply come becoming efficiently. and continue to to down allow a in favorable chain movement rates more stable out

was be in it that be headwind -- that was So what -- should should the XXXX. it not

for us. fact, could be In tailwind it a

Jacob Sayer

Thanks, David.

Operator

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

Joe Giordano

clarify are ICE? that in like just on Xx And that to that the Xx the all And on well target to considering clarify, itself? XXXX? journey charging equipment exiting battery of are is stuff in calculation? car Or like linear you Where is just content as you Can how XXXX? the versus peripheral you

Jeff Cote

Yes. Joe, thanks.

Suva light a of question with company, billion is Jim markets that progress So in broader we to but light is not about that get on also across the internal CAGR that very the from, in similar in on areas $X very areas to we're with to hand, electric asked to the legacy And coming billion in opportunities to customers, seeing all the of good and that in platforms $X and the increasing market. electric. really And our confidence a we've battery Electrification to company vehicle get the end we electrification, being double Xx lot combustion making as The talked light content to vehicle. It's than target feel great is the are specific the I've after our electrification in where important around revenue revenue about the target vehicles. opportunities the serve. sockets content get only that in able gone

about great we the feel the frame. by Xx for time question. So Thanks the same content

Jacob Sayer

Joe. Thanks,

Operator

Travis Truist Our next question go comes from Please from Securities. Bucknall ahead.

Travis Bucknall

my and wondering if we're specifically, in chain that a this More on Stein Will question. by had on Thank you lockdowns having I'm you market. China if We're ended. for behalf taking you of they've on update morning. what you're an the give recent Good supply also each us from wondering impact calling update observing the could can morning. based end

Jeff Cote

Yes.

to question we're elaborate Paul of the perspective I'll terms think a provide a which supply will around we're part, impact in China. the chain. think more. the little in the I chain, was seeing bit parts as around And two what supply I of on So second what seeing

working do gone would seeing to upside keep what but the challenge where would abating associated Paul some see parts, able inflation model a it's its some on away. environment, it question, we'll be echo in we So raw it's abate, still normal We is not of still supply still what do of We But normal see our of across that. operate but shortage chain I right? of material where it's peak. pockets clearly categories. business away said, that down and a was at from at from with We're

at getting better that challenges has job, been outstanding done an the of of team completely not experiencing. managing lot supply we've a we're out The that. in Obviously, through but we're the woods chain terms

in was think overall quarter; be that going be to again, in the first economy. Chinese the disappointment. terms as hopefully, government throughout of negative we'll some progress little expectation there we zero in of going bit the see the fourth quarter COVID of as a is China. it's balance a getting would things a put stimulate would China markets the serve. unfortunately, get back more to away rebound in end into I market improvement market to important serve things in year, incentives would steady a But the market, the impact because I fourth we normal environment choppy quarter out more takes geographic global a the for China and moving It's and of an and infections and policy just inherently country. we But in Clearly, to have at from having China puts of markets be in candidly, a in again, bit terms and that state. in markets across to expected place a there things that terms us. continue On the believe move I in recovery the least question, death But the

Jacob Sayer

for question. Thanks, Travis the

Operator

session. remarks. for would more This conference turn Jacob Sayer in questions our queue. closing concludes to question-and-answer back any like no the the I There over are to

Jacob Sayer

to the on for Thank Morgan look of morning. the call you thank I'd first will We April. seeing you, to Sensata Jason. be our Francisco us in at that March. San like forward participating event at earnings Investor joining this end early or in quarter in Conference everyone Technology Stanley

your now this end for joining morning and call. us the you for Thank interest can in Sensata. Jason, you

Operator

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

You may now disconnect.

Sensata Technologies Holding (ST) 31 Jan 232022 Q4 Earnings call transcript