- First quarter 2010 net revenue was $377.1 million, an increase of 57.8% from the first quarter 2009 net revenue of $239.0 million. - First quarter 2010 Adjusted Net Income(1) was $69.2 million, or $0.44 per diluted share, versus first quarter 2009 Adjusted Net Income(1) of $5.7 million, or $0.04 per diluted share. - First quarter 2010 net income was $27.3 million, or $0.17 per diluted share, versus first quarter 2009 net loss of $10.2 million, or ($0.07) per diluted share. - March 31, 2010 cash balance was $508.2 million, an increase of $359.8 million from December 31, 2009 cash balance of $148.5 million.
ALMELO, Netherlands, April 21, 2010 /PRNewswire via COMTEX/ --Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the first quarter 2010.
Highlights of the Quarter Ended March 31, 2010
First quarter 2010 net revenue was $377.1 million, an increase of $138.1 million, or 57.8%, from the first quarter 2009 net revenue of $239.0 million.
Tom Wroe, Chairman and Chief Executive Officer, said, "We had a very strong first quarter. We saw our fourth consecutive quarter of growth in net revenue and our second quarter of year over year growth. We had momentum coming into 2010 and we feel our first quarter results reflect this momentum." Mr. Wroe added, "The growth in our business during the first quarter compared to the first quarter of 2009 came from increased content in the applications we serve (13%), mature market growth (14%), emerging market opportunities (14%), inventory replenishment (16%), and the remainder in pricing, foreign exchange and other variables."
First quarter 2010 Adjusted Net Income(1) was $69.2 million, or $0.44 per diluted share, which is 18.3% of net revenue, versus the first quarter 2009 Adjusted Net Income(1) of $5.7 million, or $0.04 per diluted share, which is 2.4% of net revenue.
First quarter 2010 net income was $27.3 million, or $0.17 per diluted share, versus a net loss of $10.2 million, or ($0.07) per diluted share, for the same period in 2009.
The Company spent $20.5 million, or 5.4% of net revenue, on research, development and engineering related costs in the first quarter of 2010. These costs reside in both the cost of revenue and the research and development lines of our Statement of Operations and drive our future growth.
Quarter ending cash balance of $508.2 million is significantly higher than the fourth quarter 2009 ending cash balance of $148.5 million as a result of the net proceeds from our recent initial public offering and due to cash generated from operations during the quarter. The Company generated cash of $35.6 million from operations, used cash of $5.5 million in investing activities and generated cash of $329.6 million from financing activities.
The Company's cash conversion cycle, which is defined as days sales outstanding (DSO) plus days on hand inventory (DOH) less days payable outstanding (DPO), was 47.0 days at the end of the first quarter compared to 47.4 days at December 31, 2009.
The Company recorded a tax provision of $11.2 million for the first quarter 2010. Of the $11.2 million, approximately $2.6 million, or 3.8% of Adjusted Net Income(1), relates to taxes that are payable in cash and the remaining tax provision relates primarily to deferred tax expense attributable to amortization of tax deductible goodwill.
The Company's indebtedness at March 31, 2010 was $2.1 billion, excluding capital leases. The Company's net debt was $1.6 billion resulting in a leverage ratio of 4.2x. As of March 31, 2010, the Company was in compliance with all of its financial ratios and reporting covenants included in its debt agreements related to its primary operating subsidiary, Sensata Technologies B.V.
Jeff Cote, Chief Financial Officer, said, "We continue to focus on our margin, cash management and capital structure. We will continue to see Adjusted Net Income margin expansion as the full impact of the reduction of debt resulting from the use of a portion of the IPO proceeds translates to a reduction of interest expense."
Recent Developments
On April 1, 2010, Sensata Technologies B.V. ("ST B.V."), a wholly-owned subsidiary of the Company, announced the issuance of redemption notices with respect to a portion of its 8% Senior Notes and all of its 11.25% Senior Subordinated Notes. A total of $138.6 million of the 8% Senior Notes, on a pro-rata basis, and all of the outstanding 11.25% Senior Subordinated Notes, were called. The redemption date for both series of notes is May 1, 2010.
On March 10, 2010, the Company announced the pricing of its initial public offering at a price to the public of $18.00 per share. The Company's ordinary shares began trading on the New York Stock Exchange under the ticker symbol "ST" on March 11, 2010 and the IPO closed on March 16, 2010. The over-allotment of 4,740,000 ordinary shares was fully exercised by the underwriters and closed on April 14, 2010.
On February 26, 2010, ST B.V. announced a modified Dutch auction tender offer for its 8% Senior Notes, 9% Senior Subordinated Notes and 11.25% Senior Subordinated Notes. On March 26, the results were announced. The aggregate principal amount tendered of the notes on the settlement date of March 29was approximately $96.7 million.
Guidance
The Company said it anticipates net revenue of $370 to $390 million for the second quarter 2010, which represents a 45 to 53% growth over the second quarter 2009 net revenue of $255.4 million. Excluding the impact of inventory replenishment in the first quarter 2010 of approximately $13 million, the second quarter 2010 guidance implies net revenue growth of 2 to 7% sequentially. The Company also said it expects to achieve net income of $7 to $13 million, or earnings per share calculated in accordance with generally accepted accounting principles of $0.04-$0.07 per diluted share in the second quarter 2010. In addition, the Company expects Adjusted Net Income(1) of $72 to $79 million, or $0.41-$0.44 per diluted share for the second quarter 2010. This guidance assumes a sharecount of 177.7 million for the second quarter 2010, which is up from our Q1 sharecount of 156.7 million.
The earnings per share guidance in accordance with generally accepted accounting principles excludes any potential gain or loss resulting from the movement of the Euro to U.S. dollar exchange rate and the impact on our Euro denominated debt.
(1) See Non-GAAP Measure for discussion of Adjusted Net Income which includes a reconciliation of this measure to Net Income/(Loss).
Company Earnings Conference Call
The Company will conduct a conference call today at 8:00 AM eastern time to discuss the financial results for its first quarter 2010. The U.S. dial in number is 888-812-8595 and the non-U.S. number is 913-312-0722. The passcode is 5804924. A live webcast of the conference call will also be available on the investor relations page of the Company's web site, at http://investors.sensata.com. For those unable to participate in the conference call, a replay will be available for one week following the call. To access the replay, the U.S. dial in number is 888-203-1112 and the non-U.S. dial in number is 719-457-0820. The replay passcode is 5804924. Replays of the call will be available by webcast for an extended period of time at the company's website, at http://investors.sensata.com.
About Sensata Technologies Holding N.V.
Sensata Technologies Holding N.V. is one of the world's leading suppliers of sensing, electrical protection, control and power management solutions. Majority-owned by affiliates of Bain Capital Partners, LLC, a leading global private investment firm, and its co-investors, Sensata employs approximately 9,500 people in nine countries. Sensata's products improve safety, efficiency and comfort for millions of people every day in automotive, appliance, aircraft, industrial, military, heavy vehicle, heating, air-conditioning, data, telecommunications, recreational vehicle and marine applications. For more information, please visit Sensata's web site at www.sensata.com.
Safe Harbor Statement
This earnings release contains forward-looking statements which may involve risks or uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Such forward-looking statements include, among other things, our anticipated results for the second quarter of 2010. Factors that might cause these differences include, but are not limited to, risks associated with: worldwide economic conditions; competitive pressures; adverse developments in the automotive industry; fundamental changes in the industries in which the Company operates; continued pricing and other pressures from our customers; the loss of one or more suppliers of raw materials; non-performance by suppliers; pricing and other pressures from customers; the Company's ability to protect its intellectual property; litigation and disputes involving the Company, including the extent of product liability and warranty claims asserted against the Company; labor disruptions and increased labor costs; the Company's dependence on third parties for transportation, warehousing and logistics services; compliance with Section 404 of the Sarbanes-Oxley Act of 2002; environmental, safety and governance regulations or concerns; changes in existing environmental and/or safety laws, regulations and programs; integration of acquired companies; unfunded benefit obligations; the Company's failure to comply with the covenants contained in the credit agreement governing its subsidiary's senior secured credit facility or its other debt agreements; the Company's ability to secure financing to operate and grow its business or to explore opportunities; and fluctuations in foreign currency exchange, commodity and interest rates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date the statements were made; and we undertake no obligation to publicly update or revise any forward-looking statements, whether to reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in our SEC filings. Copies of our filings are available from our Investor Relations department or from the SEC website, www.sec.gov.
Non-GAAP Measure
Adjusted Net Income is a non-GAAP financial measure. We calculate Adjusted Net Income by adjusting GAAP Net Income/(Loss) to exclude charges associated with becoming a stand-alone company and an SEC registrant following the April 27, 2006 sale of the sensors and controls business of Texas Instruments Incorporated to affiliates of Bain Capital Partners LLP, gains and losses on currency translation on debt, expenses incurred in connection with acquisitions, other significant items, noncash interest, deferred income taxes and depreciation and amortization expense related to asset step-up and intangible assets. We believe Adjusted Net Income provides investors with helpful information with respect to the performance of our operations and management uses Adjusted Net Income to evaluate its ongoing operations and for internal planning and forecasting purposes. Adjusted Net Income is not a measure of liquidity. See the tables below which reconcile Net Income/(Loss) to Adjusted Net Income, Net Income/(Loss) per share to Adjusted Net Income per share and Projected GAAP Earnings per share to Projected Adjusted Net Income per share.
Contact:
Investors News Media
Maggie Morris Linda Megathlin
(508)236-1069 (508)236-1761
mmorris2@sensata.com lmegathlin@sensata.com
The following (unaudited) table reconciles Sensata Technologies Holding N.V.'s Net Income/(Loss) to Adjusted Net Income and Net Income/(Loss) per share to Adjusted Net Income per share for the first quarter 2010 and 2009:
($ in 000s) Three Months Ended Three Months Ended
March 31, 2010 March 31, 2009
-------------- --------------
Net Income/(Loss) $27,310 $0.17 $(10,199) ($0.07)
Acquisition,
integration &
financing costs and
other significant
items - - 4,058 0.03
Impairment of
goodwill and
intangible assets - - 19,867 0.14
Restructuring
associated with
downsizing - - 10,776 0.07
Stock compensation
and management fees - - 1,202 0.01
IPO related costs 51,306 0.33 - -
(Gain)/loss on
currency translation
on debt and other
hedges (57,648) (0.37) (69,584) (0.48)
Asset step-up and
intangible asset
depreciation and
amortization expense 37,032 0.24 40,010 0.27
Deferred income tax
and other tax
expense 8,556 0.05 6,888 0.05
Non-cash interest
expense 2,623 0.02 2,635 0.02
----- ---- ----- ----
Adjusted Net Income $69,179 $0.44 $5,653 $0.04
------- ----- ------ -----
Weighted average
shares outstanding
used in adjusted net
income per share
calculation 156,696 144,057
The following (unaudited) table reconciles Sensata Technologies Holding N.V.'s projected GAAP earnings per share to projected Adjusted Net Income per share for the second quarter 2010:
Three Months Ended
June 30, 2010
-------------
Low End High End
------- --------
Projected GAAP earnings per share $0.04 $0.07
IPO related costs 0.09 0.09
(Gain)/loss on currency translation on
debt and other hedges* - -
Asset step-up and intangible asset
depreciation and amortization expense 0.21 0.21
Deferred income tax and other tax expense 0.06 0.06
Non-cash interest expense 0.01 0.01
--- ---
Total adjustments 0.37 0.37
---- ----
Projected Adjusted Net Income earnings
per share $0.41 $0.44
===== =====
Weighted average shares outstanding used
in adjusted net income per share
calculation 177,700 177,700
*The earnings per share guidance in accordance with GAAP excludes any
potential gain or loss resulting from the movement of the Euro to
U.S. dollar exchange rate and the impact on our Euro denominated
debt.
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Operations
(Unaudited)
($ in 000s)
Three Months Three Months
Ended Ended
March 31, 2010 March 31, 2009
-------------- --------------
Net revenue $377,137 $239,016
Operating costs and expenses:
Cost of revenue 232,783 161,344
Research and development 4,930 5,163
Selling, general and administrative 77,891 31,629
Amortization of intangible assets &
capitalized software 36,136 38,804
Impairment of goodwill and
intangible assets - 19,867
Restructuring 699 11,488
--- ------
Total operating costs and expenses 352,439 268,295
------- -------
Profit/(loss) from operations 24,698 (29,279)
Interest expense, net (33,377) (42,160)
Currency translation gain and
other, net 47,185 69,142
------ ------
Income/(loss) from continuing
operations before taxes 38,506 (2,297)
Provision for income taxes 11,196 7,641
------ -----
Income/(loss) from continuing
operations, net of taxes 27,310 (9,938)
Loss from discontinued operations,
net of taxes - (261)
--- ----
Net income/(loss) $27,310 $(10,199)
======= ========
Net income/(loss) per share:
Basic $0.18 ($0.07)
Diluted $0.17 ($0.07)
Weighted-average common shares
outstanding
Basic 150,211 144,057
Diluted 156,696 144,057
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Balance Sheets
(Unaudited)
($ in 000s)
March 31, December 31,
2010 2009
Assets
Current assets:
Cash and cash equivalents $508,247 $148,468
Accounts receivable, net of allowances 208,347 180,839
Inventories 132,849 125,375
Deferred income tax assets 12,458 12,419
Prepaid expenses and other current assets 22,231 19,627
Assets held for sale 238 238
--- ---
Total current assets 884,370 486,966
Property, plant and equipment, net 213,366 219,938
Goodwill 1,530,506 1,530,570
Other intangible assets, net 830,521 865,531
Deferred income tax asset 5,573 5,543
Deferred financing costs 36,973 41,147
Other assets 18,922 17,175
------ ------
Total assets $3,520,231 $3,166,870
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt, capital
lease and other financing options $245,709 $17,139
Accounts payable 131,328 122,834
Income taxes payable 7,177 8,384
Accrued expenses and other current
liabilities 105,948 91,741
Accrued profit sharing 596 600
Deferred income taxes 739 823
--- ---
Total current liabilities 491,497 241,521
Deferred income tax liabilities 173,139 165,477
Pension and post-retirement benefit
obligations 48,786 49,525
Capital lease and other financing
obligations, less current portion 39,981 40,001
Long-term debt, less current portion 1,856,595 2,243,686
Other long-term liabilities 38,378 39,502
------ ------
Total liabilities 2,648,376 2,779,712
Shareholders' equity
Shareholders' equity 871,855 387,158
------- -------
Total liabilities and shareholders' equity $3,520,231 $3,166,870
========== ==========
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in 000s)
Three Three
Months Months
Ended Ended
March 31, March 31,
2010 2009
Cash flows from operating activities:
Net income/(loss) $27,310 $(10,199)
Net loss from discontinued operations - (261)
--- ----
Net income/(loss) from continuing
operations 27,310 (9,938)
Adjustments to reconcile net income/
(loss) to net cash provided by operating
activities:
Depreciation 10,804 11,072
Amortization of deferred financing costs 2,293 2,383
Currency translation gain on debt (60,116) (68,955)
Loss on repurchase of outstanding Senior
and Senior Subordinated Notes 8,098 -
Share-based compensation 20,064 201
Amortization of intangible assets and
capitalized software 36,136 38,804
(Gain)/loss on disposition of assets (135) 83
Deferred income taxes 7,509 7,017
Impairment of goodwill and intangible
assets - 19,867
Increase/(decrease) from changes in
operating assets and liabilities (16,368) 62,451
------- ------
Net cash provided by operating activities
from continuing operations 35,595 62,985
Net cash used in operating activities from
discontinued operations - (233)
--- ----
Net cash provided by operating activities 35,595 62,752
Cash flows from investing activities:
Additions to property, plant and equipment
and capitalized software (5,684) (4,319)
Proceeds from sale of assets 232 -
Net cash used in investing activities (5,452) (4,319)
Cash flows from financing activities:
Proceeds from issuance of ordinary shares 433,423 -
Proceeds from exercise of stock options 2,514 -
Proceeds from revolving credit facility - 48,250
Advances to shareholder - (19)
Payments on U.S. and Euro term loan
facility (3,717) (3,688)
Payments on capitalized lease and other
financing obligations (479) (408)
Payments for repurchase of outstanding
Senior and Senior Subordinated Notes (102,105) -
-------- ---
Net cash provided by financing activities 329,636 44,135
------- ------
Net change in cash and cash equivalents 359,779 102,568
Cash and cash equivalents, beginning of
period 148,468 77,716
------- ------
Cash and cash equivalents, end of period $508,247 $180,284
======== ========
SENSATA TECHNOLOGIES HOLDING N.V.
Notes to (unaudited) Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows
Basis of Presentation
The accompanying (unaudited) CondensedConsolidated Statements of Operations, Condensed Balance Sheets and Condensed Statements of Cash Flows do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying financial information reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results of our operations for the interim periods presented. This information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's registration statement on our Form S-1 and the interim financial statements included in the Company's Form 10-Q that will be filed for the period ended March 31, 2010.
U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Estimates used will change as new events occur or additional information is obtained. Actual results could differ from those estimates.
SOURCE Sensata Technologies Holding N.V.