On this page of StockholderLetter.com we present the 4/23/2024 shareholder letter from Sensata Technologies Holding plc — ticker symbol ST. Reading current and past ST letters to shareholders can bring important insights into the investment thesis.
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4/23/2024 Letter Continued (Full PDF)
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4/28/2025 ST Stockholder Letter
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ST Benford's Law Stock Score = 99
4/23/2024 Letter Continued (Full PDF)
•
4/28/2025 ST Stockholder Letter•
More "Electronic Equipment & Products" Category Stockholder Letters•
ST Benford's Law Stock Score = 99ST 4/23/2024 Shareholder/Stockholder Letter Transcript:
2023 ANNUAL REPORT We're the driving force toward an electrified world and a sustainable future. Letter to our Shareholders Sensata once again delivered record annual revenue and strong new business wins in 2023. Despite broader economic challenges and volatile markets, we also maintained our adjusted operating margins through a yearlong focus on pricing and productivity improvement. Finally, we achieved our greenhouse gas emissions intensity target reductions earlier than planned and set new emissions targets reflecting our continued commitment for a more sustainable future. The bright spot of the year was our Electrification-related growth, with revenue up 50% year-over-year to $700 million. This represents 17% of total revenue, up from less than 3% of total revenues in four years, demonstrating our innovation and response to customer opportunities. Our vision throughout 2023 and into the future remains clear: to help our customers and business partners safely deliver a cleaner, more efficient, and electrified world. SENSATA CHIEF EXECUTIVE OFFICER, JEFFREY J. COTE NET REVENUE $4,029M $4,054M $3,821M 2021 2022 2023 2023 FINANCIAL RESULTS in 2023, a 14% increase on a constant currency basis. Free cash flow generation was $272 million and adjusted EBITDA grew slightly to $907 million, while cash generation lowered our net leverage ratio to 3.2x at year-end 2023. In 2023, Sensata reported a record $4.05 billion in revenue, a 0.6% increase from 2022, and a 2% increase on a constant currency basis. Across our business, we continued to innovate and address our customers needs for missioncritical sensors in large and growing markets. Our secure financial position enabled continued capital returns to shareholders in 2023; we repaid $850 million of outstanding debt, we repurchased shares with a cumulative value of $88 million, and we paid dividends of $72 million, each demonstrating confidence in our future financial performance. Altogether, our new capital allocation strategy had positive early results, as our return on invested capital rose 40 basis points to 9.7% in 2023. Despite revenue growth and new business wins in 2023, inflation, foreign currency exchange rates, and end-market mix weighed on operating performance, resulting in an adjusted operating margin of 19.1%, falling short of our projections for the year. Even with that level of adjusted operating margin, adjusted earnings per share rose 6% to $3.61 FULL ELECTRIFICATION ECOSYSTEM We offer components and solutions across the complete electrification ecosystem, bringing the innovation, expertise, and scale that empowers our customers to reach their goals. Renewable Energy e-Mobility SAM* $18B By 2028 Infrastructure * Serviceable Addressable Market Industrial SENSATA TECHNOLOGIES FOUNDATION Since 2017, the Sensata Technologies Foundation has provided financial assistance to nonprofits that promote STEM education for youth in underserved communities, support local community issues, and align with employee interests. EVOLUTION OF OUR STRATEGIC BLUEPRINT: REALIZING OUR POTENTIAL Due in large part to our strategic focus since 2020, today we are achieving robust commercial success in Electrification, as we expand our capabilities and innovate for our customers. Since 2020, we have recorded more than $1.4 billion in new Electrification business wins and this business has become a key pillar of our growth strategy. Rising adoption of electric vehicles worldwide remains a large opportunity for Sensata, and we expect our content per vehicle on EVs to outpace Sensata content in combustion engine vehicles. Electrification today is broad and offers us a wealth of large and growing markets, from Electrification components to energy storage systems and industrial power conversion. We continue to expect these combined areas of Electrification to represent ~$2 billion in revenue for Sensata by 2026. As we achieved greater success in Electrification during 2023, we narrowed our investment focus on Electrification initiatives, which in turn led to the review of strategic alternatives for our INSIGHTS business. While we are confident in INSIGHT s future and believe in its market opportunity, our focus must be to invest where we see the most potential to improve Sensata s financial performance, including lowering our leverage. Sensata Technologies provides most of the Foundation s funding, along with contributions from employees, including all Sensata s U.S. Vice Presidents and Strategy Leadership Team. The Sensata Foundation granted $375,000 to 41 separate organizations to be distributed in 2024, in addition to more than $155,000 given out through the Foundation s other charitable initiatives (including Matching Gifts Program and Emergency Response funding). In 2023, ~45% of Sensata s U.S. employees dedicated more than 6,550 hours to volunteer with nonprofit organizations. In the U.S., we repeated our Day of Service on May 11 with more than 530 Sensata employees volunteering at 33 nonprofits. Team Sensata s engagement in the communities where we live and work powerfully displays the value of the Foundation and our Company.