Sensata Technologies (ST) Q4 2023 earnings summary

Executive summary

• FY2023 revenue reached a record $4,054.1M, up 0.6%; adjusted EPS rose 6.2% to $3.61, while adjusted operating income declined 0.5% to $774.0M.

• Electrification revenue grew nearly 50% to ~$700M; 2023 new-business awards totaled $660M, with over half in Electrification, and three-year awards totaled $2.35B.

Financial highlights

• Q4 revenue was $992.5M, down 2.2% YoY; organic revenue declined 1.3%, excluding a 0.9% FX headwind.

• Q4 adjusted operating income was $183.7M, down 10.1%, with an 18.5% margin; adjusted EPS was $0.81, down 15.6%.

• FY adjusted net income increased 3.9% to $551.4M; adjusted operating margin was 19.1%, versus 19.3% in FY2022.

• FY organic revenue increased 1.5%; FX reduced reported growth by 1.4%, while acquisitions net of divestitures contributed 0.5%.

• Q4 GAAP net loss was $202.2M, including a $321.7M non-cash goodwill impairment; FY GAAP net loss was $3.9M.

Outlook and guidance

• FY2024 revenue growth expected at 2%-3%, with a stronger second half; revenue was expected flat to slightly down in Q1 and Q2 before a second-half rebound.

• Q1 2024 guidance: revenue $970M-$1,010M; adjusted operating income $178M-$190M; adjusted net income $124M-$134M; adjusted EPS $0.82-$0.88.

• Adjusted operating margin expected flat in Q1, then to improve sequentially by 20-30 bps per quarter.

• Q1 FX expected to reduce revenue by $7M and adjusted EPS by $0.05; FY FX expected to have negligible revenue impact and reduce adjusted operating margin by ~30 bps.

• 2024 free-cash-flow conversion target was 65%-75%; net leverage below 2.0x targeted by FY-end 2026.