Sensata Technologies Holding N.V. Announces First Quarter 2010 Results

April 21, 2010
- 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.

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