Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Jeff, can you talk about the expectation for outgrowth this year in automotive? And how are you now thinking about the overall production and the EV mix, it feels like the EV mix kind of slowed in some areas.
A: Jeffrey J. Cote - Sensata Technologies Holding plc - President, CEO & Director: Yes, for the first quarter, automotive was quite strong at 700 basis points. Total company was about 300 basis points of outgrowth. We feel really good about that. The continued NBOs that we've won and the forecast that we see with customers would suggest that we'll continue to see in that range of 300 to 400 for the year.
Q: Jeff, why the change here in terms of the management change? And what should we expect in terms of new management as we go forward here?
A: Jeffrey J. Cote - Sensata Technologies Holding plc - President, CEO & Director: Based upon the capabilities that we see that we've developed, the new business wins that we've actually achieved, we feel as though we've gone through a real significant transformation here. We're very fortunate that Martha Sullivan was willing to step into the role on an interim basis as we perform a search.
Q: Jeff, can you update on how Sensata thinks is tracking to the 2026 target financial model, particularly how the automotive part is shaping up, especially as it relates to EV?
A: Jeffrey J. Cote - Sensata Technologies Holding plc - President, CEO & Director: We spoke to some of that in the first quarter of this year where you saw EV production rates drop. Speaking specifically to the electrification business, we left '23 with a $700 million business, that's 17% of the company. In '23, it grew by over 50%. We feel really good about the wins that we have in our long-cycle business.
Q: Can you describe the dynamic of taking share in the ICE vehicle market in more detail? And does the standard historical price down dynamic change at all for your ICE focused sales given the transition away from that technology?
A: Jeffrey J. Cote - Sensata Technologies Holding plc - President, CEO & Director: Every one of our customers wants to make sure that they're working with a partner that's going to be there for the whole time that they're producing internal combustion engines. As our customers look to narrow their supply base, where they're a key supplier for their legacy ICE engines and as other suppliers drop off, we'll naturally get more of that share.
Q: I wanted to dig in a little bit more into the ICE to BEV transition. Is there an opportunity for you to flex down that engineering spending if we are going to be in a period where EV adoption is slowing?
A: Brian K. Roberts - Sensata Technologies Holding plc - Executive VP, Principal Accounting Officer & CFO: A lot of these new business wins that we wind up receiving are long cycles, right? So we're typically doing -- we're helping them build the product that's going to be unique to whatever the platform is. We typically start that 3 to 5 years in advance of when the actual launch of the product is going to happen. So I don't expect a real change in our engineering spend.
Q: Can you elaborate on the low-margin onetime revenue that you had? And could you comment on booking trends in the quarter?
A: Brian K. Roberts - Sensata Technologies Holding plc - Executive VP, Principal Accounting Officer & CFO: The low-margin onetime revenue is effectively within the Industrials business, we wound up leveraging our supply chain to effectively buy some onetime product on behalf of a customer, which was associated with an installation that we were doing. So it's really almost -- think of it as almost like pass-through revenue that was kind of onetime in nature.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
