Sensata Technologies Reports Fourth Quarter and Full Year 2023 Financial Results

SWINDON, England–(BUSINESS WIRE)–Sensata Technologies (NYSE: ST), a global industrial technology company and leading provider of sensors, sensor-rich solutions, and electrical protection devices used in mission-critical systems that create valuable business insights for customers, today announced financial results for its fourth quarter and full year ended December 31, 2023.

“Our capital allocation strategy to reduce net leverage and return cash to shareholders is showing strong early returns as adjusted EPS of $3.61 in 2023 increased 6.2% year over year (14.4% on a constant-currency basis) and gross leverage declined to 3.8x from 4.7x,” said Jeff Cote, CEO and President of Sensata. “Our ability to deliver solutions for our customers in an increasingly electrified world represents an unprecedented opportunity for Sensata and we are well-positioned for success. In 2023, Sensata’s electrification revenue grew by nearly 50% to approximately $700 million. Over the last three years, we have won over $1.3 billion in electrification opportunities, much of it in our long-cycle businesses, giving me great confidence that electrification will drive Sensata’s growth in the coming years.”

Operating Results – Fourth Quarter

Operating results for the fourth quarter of 2023 compared to the fourth quarter of 2022 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.

Revenue:

• Revenue was $992.5 million, a decrease of ($22.2) million, or (2.2%), compared to $1,014.7 million in the fourth quarter of 2022.

• Revenue decreased (1.3%) on an organic basis, which excludes a decrease of (0.9%) from foreign currency exchange rates versus the prior year period.

Operating (loss)/income:

• Operating loss was ($201.4) million, or (20.3%) of revenue, a decrease of ($353.8) million compared to operating income of $152.4 million, or 15.0% of revenue, in the fourth quarter of 2022.

• Operating loss includes a $321.7 million non-cash goodwill impairment charge related to the Insights reporting unit.

• Adjusted operating income was $183.7 million, or 18.5% of revenue (19.1% on a constant currency basis), a decrease of ($20.6) million, or (10.1%), compared to adjusted operating income of $204.3 million, or 20.1% of revenue, in the fourth quarter of 2022.

(Loss)/earnings per share:

• Loss per share was ($1.34), a decrease of $(2.08) compared to earnings per share of $0.74 in the fourth quarter of 2022.

• Adjusted earnings per share was $0.81, a decrease of ($0.15), or (15.6%) (decrease of (4.2%) on a constant currency basis), compared to adjusted earnings per share of $0.96 in the fourth quarter of 2022.

Sensata generated $105.1 million of operating cash flow and $56.7 million of free cash flow in the fourth quarter of 2023. In the quarter, Sensata used cash to reduce debt by $400 million, repurchase shares valued at approximately $28.1 million, and paid $18.2 million in dividends to shareholders.

Operating Results – Full Year

Operating results for the year ended December 31, 2023 compared to the year ended December 31, 2022 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.

Revenue:

• Revenue was a record $4,054.1 million, an increase of $24.8 million, or 0.6%, compared to $4,029.3 million in the year ended December 31, 2022.

• Revenue increased 1.5% on an organic basis, which excludes a decrease of (1.4%) from foreign currency exchange rates and an increase of 0.5% from acquisitions, net of divestitures, each versus the prior year.

Operating income:

• Operating income was $181.7 million, or 4.5% of revenue, a decrease of ($488.5) million, or (72.9%), compared to operating income of $670.1 million, or 16.6% of revenue, in the year ended December 31, 2022.

• Operating income includes a non-cash goodwill impairment charge related to our Insights reporting unit, charges related to the Q3 2023 Restructuring Plan, and charges related to the exit of the Spear Marine Business.

• Adjusted operating income was $774.0 million, or 19.1% of revenue (19.7% on a constant currency basis), a decrease of ($3.9) million, or (0.5%), compared to adjusted operating income of $777.9 million, or 19.3% of revenue, in the year ended December 31, 2022.

(Loss)/earnings per share:

• Loss per share was ($0.03), a decrease of ($2.02), or (101.5%), compared to earnings per share of $1.99 in the year ended December 31, 2022.

• Adjusted earnings per share was $3.61, an increase of $0.21, or 6.2% (increase of 14.4% on a constant currency basis), compared to adjusted earnings per share of $3.40 in the year ended December 31, 2022.

Sensata generated $456.7 million of operating cash flow and $272.1 million of free cash flow in the year ended December 31, 2023. During 2023, Sensata reduced debt by $850 million, repurchased shares valued at approximately $88.4 million, and paid $71.5 million of dividends to shareholders.

Segment Performance

		For the three months ended December 31,								For the full year ended December 31,
$ in 000s			2023				2022				2023				2022
Performance Sensing (1)
Revenue		$	753,028			$	746,604			$	3,002,728			$	2,920,393
Operating income		$	184,353			$	192,870			$	744,246			$	728,308
% of Performance Sensing revenue			24.5	%			25.8	%			24.8	%			24.9	%
Sensing Solutions (1)
Revenue		$	239,466			$	268,072			$	1,051,355			$	1,108,869
Operating income		$	68,219			$	78,443			$	299,032			$	323,347
% of Sensing Solutions revenue			28.5	%			29.3	%			28.4	%			29.2	%

(1)		Effective April 1, 2023, we reorganized our reportable segments to move material handling products from Performance Sensing to Sensing Solutions to align with new management reporting. Prior year amounts have been reclassified.

Guidance

“We anticipate our end markets to be relatively flat year over year given the current IHS automotive outlook, weakness in Europe and North America heavy vehicle and off road production, and continued destocking in industrials,” said Brian Roberts, EVP and CFO of Sensata. “Given that market backdrop, we expect revenue to be flat to down slightly in the first and second quarters of 2024 before rebounding in the second half of the year as new and ramping product launches drive growth. We expect adjusted operating margins to be flat in the first quarter and then increase sequentially by approximately 20 – 30 basis points per quarter.”

Q1 2024 Guidance
$ in millions, except EPS	Q1-24 Guidance	Q1-23	Y/Y Change
Revenue	$970 – $1,010	$998.2	(3%) – 1%
organic growth			(2%) – 2%
Adjusted Operating Income	$178 – $190	$192.9	(8%) – (2%)
Adjusted Net Income	$124 – $134	$140.7	(12%) – (5%)
Adjusted EPS	$0.82 – $0.88	$0.92	(11%) – (4%)

Versus the prior year period, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately ($7) million at the midpoint and decrease adjusted EPS by approximately ($0.05) at the midpoint in the first quarter of 2024.

Conference Call and Webcast

Sensata will conduct a conference call today at 8:00 a.m. Eastern Time to discuss its fourth quarter and full year 2023 financial results and its outlook for the first quarter of 2024. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the “Sensata Q4 2023 Financial Results Conference Call.” A live webcast of the conference call will also be available on the investor relations page of Sensata’s website at http://investors.sensata.com. Additionally, a replay of the call will be available until February 13, 2024. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 5379784.

About Sensata Technologies

Sensata Technologies is a leading industri