- Second quarter 2010 net revenue was $391.8 million, an increase of 53.4% from the second quarter 2009 net revenue of $255.4 million.
- Second quarter 2010 net income was $82.5 million, or $0.46 per diluted share, versus second quarter 2009 net income of $22.6 million, or $0.16 per diluted share.
- Second quarter 2010 Adjusted Net Income(1) was $77.5 million, or $0.44 per diluted share, versus second quarter 2009 Adjusted Net Income(1) of $24.2 million, or $0.17 per diluted share.
- June 30, 2010 ending cash balance was $311.2 million.
ALMELO, Netherlands, July 21, 2010 /PRNewswire via COMTEX/ --
Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the second quarter and six months ended June 30, 2010.
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Highlights of the Second Quarter and Six Months Ended June 30, 2010
Second quarter 2010 net revenue was $391.8 million, an increase of $136.4 million, or 53.4%, from the second quarter 2009 net revenue of $255.4 million. Second quarter 2010 net income was $82.5 million, or $0.46 per diluted share, versus $22.6 million or $0.16 per diluted share for the same time period in 2009. Second quarter Adjusted Net Income(1) was $77.5 million, or $0.44 per diluted share, which is 19.8% of net revenue, versus the second quarter 2009 Adjusted Net Income(1) of $24.2 million, or $0.17 per diluted share, which is 9.5% of net revenue.
For the six months ended June 30, 2010, net revenue was $768.9 million, which was an increase of $274.6 million, or 55.5%, from $494.4 million from the same time period in 2009. Net income was $109.8 million, or $0.66 per diluted share, versus net income of $12.4 million or $0.09 per diluted share for the six months ended June 30, 2009. Adjusted Net Income(1) was $146.6 million, or $0.88 per diluted share, which is 19.1% of net revenue versus Adjusted Net Income(1) of $29.8 million, or $0.21 per diluted share, which is 6.0% of net revenue for the same time period in 2009.
Tom Wroe, Chairman and Chief Executive Officer, said, "We had a strong second quarter and we are pleased with our results for the first half of 2010. We continue to execute well by driving both growth and profitability against a backdrop of macro-economic indicators that continue to create uncertainty in the global markets. We are experiencing strong demand for our products and our business model provides good visibility." Mr. Wroe added, "Looking ahead to the third and fourth quarter, we expect to see our normal seasonality combined with growth in demand for our content and emerging market penetration that should enable us to achieve our targeted double-digit growth rate independent of demand levels in the mature markets."
The Company spent $20.3 million, or 5.2% of net revenue, on research, development and engineering related costs in the second quarter of 2010. These costs reside in both the cost of revenue and the research and development lines of the Statement of Operations.
Ending cash balance at June 30, 2010 was $311.2 million. This is significantly lower than the March 31, 2010 ending cash balance of $508.2 million as a result of our use of proceeds from the IPO to pay down debt. During the second quarter the Company generated cash of $53.2 million from operations, used cash of $12.1 million in investing activities and used cash of $238.1 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 50.7 days at the end of the second quarter compared to 47.0 days at March 31, 2010.
The Company recorded a tax provision of $14.8 million for the second quarter 2010. Of the $14.8 million, approximately $3.3 million, or 4.2% 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 June 30, 2010 was $1.8 billion, excluding capital leases. The Company's net debt(2) was $1.5 billion resulting in a leverage ratio of 3.5x. As of June 30, 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 are executing well, and I'm very pleased with our financial results. While we saw some impact to our business as the U.S. dollar strengthened against the Euro during the quarter, we were able to produce strong results. We believe we are very well positioned to stay on track for the remainder of the year and beyond."
Recent Developments
On May 1, 2010, Sensata Technologies B.V. ("ST B.V."), a wholly-owned subsidiary of the Company, completed the announced call of a portion of its 8% Senior Notes and all of its 11.25% Senior Subordinated Notes. The Company redeemed approximately $225 million of principal.
Guidance
The Company said it anticipates net revenue of $360 to $380 million for the third quarter 2010, which represents growth of 19 to 26% over the third quarter 2009 net revenue of $302.5 million. The Company also said it expects to achieve net income of $24 to $28 million, or earnings per share calculated in accordance with generally accepted accounting principles of $0.13 - $0.16 per diluted share in the third quarter 2010. In addition, the Company expects Adjusted Net Income(1) of $72 million to $76 million, or $0.40 - $0.43 per diluted share, for the third quarter 2010. This guidance assumes a share count of 177.8 million for the third quarter 2010. Given the Company's expectation of normal seasonality of a 2 to 4% increase sequentially in the fourth quarter, this translates to full year net revenue of $1.5 to $1.55 billion, which represents a 32 to 37 percent increase from 2009.
The earnings per share guidance in accordance with U.S. generally accepted accounting principles ("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.
(1) See Non-GAAP Measures for discussion of Adjusted Net Income which includes a reconciliation of this measure to Net Income.
(2) Net debt represents total indebtedness, excluding capital lease obligations and other financing arrangements, less cash and cash equivalents. The leverage ratio represents net debt divided by Adjusted EBITDA for the last twelve months.
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 second quarter 2010. The U.S. dial in number is 877-486-0682 and the non-U.S. number is 706-634-5536. The passcode is 85985691. 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 800-642-1687 and the non-U.S. dial in number is 706-645-9291. The replay passcode is 85985691. A replay 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 10,000 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 third quarter of 2010. Factors that might cause these differences include, but are not limited to, risks associated with: worldwide economic conditions; adverse developments in the automotive industry; fluctuations in foreign currency exchange, commodity and interest rates; competitive pressures; pricing and other pressures from customers; fundamental changes in the industries in which the Company operates; 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 loss of one or more suppliers of raw materials; non-performance by suppliers; the Company's ability to protect its intellectual property; 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 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; and the Company's ability to secure financing to operate and grow its business or to explore opportunities. 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 Measures
Adjusted Net Income is a non-GAAP financial measure. We calculate Adjusted Net Income by adjusting GAAP Net Income 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 and other hedges, expenses incurred in connection with acquisitions, other significant items, non-cash 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 to Adjusted Net Income and Projected GAAP Earnings per share to Projected Adjusted Net Income per share.
The following (unaudited) table reconciles the Company's Net Income to Adjusted Net Income for the second quarter and six months ended June 30, 2010 and 2009.
($ in 000s) Three Months Ended Six Months Ended
----------- June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Net Income $82,519 $22,621 $109,829 $12,422
Acquisition, integration
& financing costs and
other significant items - 9,016 - 13,074
Impairment of goodwill
and intangible assets - - - 19,867
Restructuring associated
with downsizing - 668 - 11,444
Stock compensation and
management fees - 1,492 - 2,694
IPO related costs 15,466 - 66,772 -
Gain on extinguishment of
debt - (120,123) - (120,123)
(Gain)/loss on currency
translation on debt and
other hedges (71,278) 62,347 (128,926) (7,237)
Asset step-up and
intangible asset
depreciation and
amortization expense 36,267 38,997 73,299 79,007
Deferred income tax and
other tax expense 11,550 6,823 20,106 13,711
Non-cash interest
expense 2,930 2,338 5,553 4,973
----- ----- ----- -----
Total Adjustments $(5,065) $1,558 $36,804 $17,410
------- ------ ------- -------
Adjusted Net Income $77,454 $24,179 $146,633 $29,832
------- ------- -------- -------
Weighted average diluted
shares outstanding used
in adjusted net income
per share calculation 177,804 144,526 167,194 144,898
------- ------- ------- -------
Adjusted Net Income per
share $0.44 $0.17 $0.88 $0.21
----- ----- ----- -----
Due to the nature of the Company's adjustments, the Company believes the following (unaudited) reconciliation of Net Income to Adjusted Net Income for the second quarter and six months ended June 30, 2010 and 2009 is meaningful to investors as it identifies where in the Statement of Operations these items are classified.
($ in 000s) Three Months Ended
----------- June 30, 2010
-------------
Adjusted
GAAP P&L Adjustments P&L
-------- ----------- ---------
Net Revenue $391,806 $- $391,806
Operating costs and
expenses:
Cost of revenue 240,590 (500) 240,090
Research and
development 6,211 - 6,211
Selling, general and
administrative 38,740 (92) 38,648
Amortization of
intangible assets &
capitalized software 36,078 (35,768) 310
Restructuring (490) - (490)
Total operating costs
and expenses 321,129 (36,360) 284,769
------- ------- -------
Profit from operations 70,677 36,360 107,037
Interest expense, net (25,151) 2,930 (22,221)
Currency translation
gain/(loss) and
other, net 51,796 (55,905) (4,109)
------ ------- ------
Income from operations
before taxes 97,322 (16,615) 80,707
Provision for income
taxes 14,803 (11,550) 3,253
------ ------- -----
Net Income $82,519 $(5,065) $77,454
---------- ------- ------- -------
($ in 000s) Six Months Ended
----------- June 30, 2010
-------------
Adjusted
GAAP P&L Adjustments P&L
-------- ----------- ---------
Net Revenue $768,943 $- $768,943
Operating costs and
expenses:
Cost of revenue 473,373 (1,764) 471,609
Research and
development 11,141 - 11,141
Selling, general and
administrative 116,631 (43,300) 73,331
Amortization of
intangible assets &
capitalized software 72,214 (71,536) 678
Restructuring 209 - 209
Total operating costs
and expenses 673,568 (116,600) 556,968
------- -------- -------
Profit from operations 95,375 116,600 211,975
Interest expense, net (58,528) 5,553 (52,975)
Currency translation
gain/(loss) and
other, net 98,981 (105,455) (6,474)
------ -------- ------
Income from operations
before taxes 135,828 16,698 152,526
Provision for income
taxes 25,999 (20,106) 5,893
------ ------- -----
Net Income $109,829 $36,804 $146,633
---------- -------- ------- --------
Three Months Ended
June 30, 2009
-------------
Adjusted
GAAP P&L Adjustments P&L
-------- ----------- ---------
Net Revenue $255,371 $- $255,371
Operating costs and
expenses:
Cost of revenue 168,902 (4,731) 164,171
Research and development 3,960 - 3,960
Selling, general and
administrative 30,482 (4,009) 26,473
Amortization of intangible
assets & capitalized
software 38,162 (37,706) 456
Impairment of goodwill and
intangible assets - - -
Restructuring 2,050 (2,050) -
Total operating costs and
expenses 243,556 (48,496) 195,060
------- ------- -------
Profit/(loss) from
operations 11,815 48,496 60,311
Interest expense, net (36,270) 2,338 (33,932)
Currency translation gain
and other, net 58,086 (56,099) 1,987
------ ------- -----
Income from continuing
operations before taxes 33,631 (5,265) 28,366
Provision for income taxes 10,876 (6,823) 4,053
------ ------ -----
Income from continuing
operations, net of taxes 22,755 1,558 24,313
Loss from discontinued
operations, net of taxes (134) - (134)
---- --- ----
Net Income $22,621 $1,558 $24,179
---------- ------- ------ -------
Six Months Ended
June 30, 2009
-------------
Adjusted
GAAP P&L Adjustments P&L
-------- ----------- ---------
Net Revenue $494,387 $- $494,387
Operating costs and
expenses:
Cost of revenue 330,246 (8,454) 321,792
Research and development 9,123 - 9,123
Selling, general and
administrative 62,111 (6,473) 55,638
Amortization of intangible
assets & capitalized
software 76,966 (76,077) 889
Impairment of goodwill and
intangible assets 19,867 (19,867) -
Restructuring 13,538 (13,538) -
Total operating costs and
expenses 511,851 (124,409) 387,442
------- -------- -------
Profit/(loss) from
operations (17,464) 124,409 106,945
Interest expense, net (78,430) 4,973 (73,457)
Currency translation gain
and other, net 127,228 (125,683) 1,545
------- -------- -----
Income from continuing
operations before taxes 31,334 3,699 35,033
Provision for income taxes 18,517 (13,711) 4,806
------ ------- -----
Income from continuing
operations, net of taxes 12,817 17,410 30,227
Loss from discontinued
operations, net of taxes (395) - (395)
---- --- ----
Net Income $12,422 $17,410 $29,832
---------- ------- ------- -------
The following (unaudited) table reconciles the Company's projected GAAP earnings per share to projected Adjusted Net Income per share for the third quarter 2010:
Three Months Ended
September 30, 2010
------------------
Low End High End
------- --------
Projected GAAP earnings per share $0.13 $0.16
(Gain)/loss on currency translation on debt
and other hedges* - -
Asset step-up and intangible asset
depreciation and amortization expense 0.20 0.20
Deferred income tax and other tax expense 0.06 0.06
Non-cash interest expense 0.01 0.01
--- ---
Projected Adjusted Net Income per share $0.40 $0.43
===== =====
Weighted average shares outstanding used in
adjusted net income per share calculation 177,800 177,800
*The earnings per share guidance in accordance with GAAP excludes any
potential gain or loss resulting from the movement of the Euro to
U.S. dollar exchange rate and the impact on our Euro denominated
debt.
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Operations
(Unaudited)
($ in 000s) Three Months Ended Six Months Ended
----------- June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Net Revenue $391,806 $255,371 $768,943 $494,387
Operating
costs and
expenses:
Cost of
revenue 240,590 168,902 473,373 330,246
Research and
development 6,211 3,960 11,141 9,123
Selling,
general and
administrative 38,740 30,482 116,631 62,111
Amortization
of
intangible
assets &
capitalized
software 36,078 38,162 72,214 76,966
Impairment of
goodwill and
intangible
assets - - - 19,867
Restructuring (490) 2,050 209 13,538
Total
operating
costs and
expenses 321,129 243,556 673,568 511,851
------- ------- ------- -------
Profit/
(loss) from
operations 70,677 11,815 95,375 (17,464)
Interest
expense, net (25,151) (36,270) (58,528) (78,430)
Currency
translation
gain and
other, net 51,796 58,086 98,981 127,228
------ ------ ------ -------
Income from
continuing
operations
before taxes 97,322 33,631 135,828 31,334
Provision for
income taxes 14,803 10,876 25,999 18,517
------ ------ ------ ------
Income from
continuing
operations,
net of taxes 82,519 22,755 109,829 12,817
Loss from
discontinued
operations,
net of taxes - (134) - (395)
--- ---- --- ----
Net Income $82,519 $22,621 $109,829 $12,422
======= ======= ======== =======
Net income
per share:
Basic $0.48 $0.16 $0.68 $0.09
Diluted $0.46 $0.16 $0.66 $0.09
Weighed
average
shares
outstanding
Basic 171,025,445 144,056,568 160,562,444 144,056,568
Diluted 177,803,885 144,526,094 167,194,121 144,898,357
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Balance Sheets
(Unaudited)
($ in 000s)
December 31,
June 30, 2010 2009
Assets
Current assets:
Cash and cash equivalents $311,247 $148,468
Accounts receivable, net of allowances 213,836 180,839
Inventories 141,627 125,375
Deferred income tax assets 12,332 12,419
Prepaid expenses and other current
assets 20,239 19,627
Assets held for sale 238 238
--- ---
Total current assets 699,519 486,966
Property, plant and equipment, net 216,184 219,938
Goodwill 1,528,954 1,530,570
Other intangible assets, net 794,805 865,531
Deferred income tax asset 5,502 5,543
Deferred financing costs 29,929 41,147
Other assets 19,929 17,175
------ ------
Total assets $3,294,822 $3,166,870
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt,
capital lease and other financing
obligations $17,621 $17,139
Accounts payable 134,522 122,834
Income taxes payable 9,051 8,384
Accrued expenses and other current
liabilities 86,193 91,741
Accrued profit sharing 326 600
Deferred income taxes 638 823
--- ---
Total current liabilities 248,351 241,521
Deferred income tax liabilities 184,437 165,477
Pension and post-retirement benefit
obligations 49,077 49,525
Capital lease and other financing
obligations, less current portion 39,593 40,001
Long-term debt, less current portion 1,781,424 2,243,686
Other long-term liabilities 29,321 39,502
------ ------
Total liabilities 2,332,203 2,779,712
Total shareholders' equity 962,619 387,158
------- -------
Total liabilities and shareholders'
equity $3,294,822 $3,166,870
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in 000s)
For the six months ended
------------------------
June 30, 2010 June 30, 2009
------------- -------------
Cash flows from operating
activities:
Net income $109,829 $12,422
Net loss from discontinued
operations - (395)
--- ----
Net income from continuing
operations 109,829 12,817
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 20,331 21,961
Amortization of deferred
financing costs 4,377 4,592
Currency translation gain on debt (133,826) (6,502)
Loss/(gain) on repurchase of
outstanding Senior and Senior
Subordinated Notes 22,867 (120,123)
Share-based compensation 21,869 694
Amortization of intangible assets
and capitalized software 72,214 76,966
(Gain)/loss on disposition of
assets (253) 358
Loss on assets held for sale - 1,678
Deferred income taxes 18,903 13,667
Impairment of goodwill and
intangible assets - 19,867
(Decrease)/increase from changes
in operating assets and
liabilities (47,557) 59,265
------- ------
Net cash provided by operating
activities from continuing
operations 88,754 85,240
Net cash used in operating
activities from discontinued
operations - (403)
--- ----
Net cash provided by operating
activities 88,754 84,837
Cash flows from investing
activities:
Additions to property, plant and
equipment and capitalized
software (17,902) (8,862)
Proceeds from sale of assets 364 -
Net cash provided by investing
activities from discontinued
operations - 372
--- ---
Net cash used in investing
activities (17,538) (8,490)
Cash flows from financing
activities:
Proceeds from issuance of
ordinary shares 433,621 -
Proceeds from exercise of stock
options 5,025 -
Proceeds from revolving credit
facility, net - 75,000
Advances to shareholder and
dividend to parent - (158)
Payments on U.S. and Euro term
loan facility (7,306) (7,462)
Payments on capitalized lease and
other financing obligations (2,260) (1,979)
Payments for repurchase of
outstanding Senior and Senior
Subordinated Notes (337,517) (57,242)
-------- -------
Net cash provided by financing
activities 91,563 8,159
------ -----
Net change in cash and cash
equivalents 162,779 84,506
Cash and cash equivalents,
beginning of period 148,468 77,716
------- ------
Cash and cash equivalents, end of
period $311,247 $162,222
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) Condensed Consolidated 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 for the period ended March 31, 2010 and the interim financial statements that will be filed for the period ended June 30, 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.
Contact:
Investors News Media
Maggie Morris Linda Megathlin
(508)236-1069 (508)236-1761
mmorris2@sensata.com lmegathlin@sensata.com
SOURCE Sensata Technologies Holding N.V.