Sensata Technologies Holding N.V. Announces Third Quarter 2015 Results

Oct 27, 2015
- Third quarter 2015 Net revenue was $727.4 million.
- Third quarter 2015 Net income was $53.2 million, or $0.31 per diluted share.
- Third quarter 2015 Adjusted net income(1) was $123.3 million, or $0.72 per diluted share.

ALMELO, Netherlands, Oct. 27, 2015 /PRNewswire/ -- Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the third quarter ended September 30, 2015.

Sensata Technologies Logo.

Highlights of the Three and Nine Months ended September 30, 2015

Net revenue for the third quarter 2015 was $727.4 million, an increase of $150.3 million, or 26.0%, from $577.1 million for the third quarter 2014. Net income for the third quarter 2015 was $53.2 million, or $0.31 per diluted share. This compares to Net income for the third quarter 2014 of $82.0 million, or $0.48 per diluted share. Adjusted net income1 for the third quarter 2015 was $123.3 million which was 17.0% of Net revenue, or $0.72 per diluted share.  This was an increase of 14.5% compared to Adjusted net income1 for the third quarter 2014 of $107.7 million which was 18.7% of Net revenue, or $0.63 per diluted share.  Integration charges related to acquisitions were $4.1 million for the third quarter of 2015.

Net revenue for the nine months ended September 30, 2015 was $2,248.5 million, an increase of $543.9 million, or 31.9% from $1,704.5 million for the nine months ended September 30, 2014.  Net income for the nine months ended September 30, 2015 was $129.4 million, or $0.75 per diluted share. This compares to Net income for the nine months ended September 30, 2014 of $214.2 million, or $1.24 per diluted share. Adjusted net income1 for the nine months ended September 30, 2015 was $358.7 million which was 16.0% of Net revenue, or $2.09 per diluted share.  This was an increase of 14.8% compared to Adjusted net income1 for the nine months ended September 30, 2014 of $312.6 million which was 18.3% of Net revenue, or $1.81 per diluted share.

"We delivered strong free cash flow and Adjusted net income for the third quarter in line with our expectations, despite increased headwinds in our end-markets," said Martha Sullivan, President and Chief Executive Officer.  "We are undertaking certain cost-containment activities to ensure profitability remains high for the fourth quarter and into 2016."

The Company spent $54.7 million, or 7.5% of Net revenue, on research, development and engineering related costs in the third quarter of 2015 to fund growth initiatives.  These costs reside in both the Cost of revenue and the Research and development lines of the Condensed Consolidated Statements of Operations. 

The Company's ending cash balance at September 30, 2015 was $258.2 million.  During the first nine months of 2015, the Company generated cash of $363.7 million from operations, used cash of $127.2 million in investing activities and used cash of $189.6 million in financing activities.

The Company recorded a provision for income taxes of $13.2 million for the third quarter 2015.  Approximately $8.7 million of the provision, or 5.4% of Adjusted EBIT, related to taxes that are payable in cash and approximately $4.5 million related to deferred and other income tax expense.

The Company's total indebtedness at September 30, 2015 was $2.7 billion, a reduction of $174 million from December 31, 2014 as a result of debt repayment.  The Company's Net debt2 was $2.4 billion, resulting in a Net leverage ratio2 of 3.5x as of September 30, 2015.

Segment Performance



Three months ended


Nine months ended

$ in 000s


September 30,
2015


September 30,
2014


September 30,
2015


September 30,
2014

Performance Sensing net revenue


$

576,476



$

411,076



$

1,774,081



$

1,206,549


Performance Sensing profit from operations


150,782



111,220



447,662



333,271


% of Performance Sensing net revenue


26.2

%


27.1

%


25.2

%


27.6

%










Sensing Solutions net revenue


$

150,884



$

166,019



$

474,409



$

497,993


Sensing Solutions profit from operations


49,734



51,601



151,069



153,569


% of Sensing Solutions net revenue


33.0

%


31.1

%


31.8

%


30.8

%

Guidance

Inclusive of the assumed close of the acquisition of the sensing portfolio of Custom Sensors & Technologies, Inc. on December 1st, the Company anticipates Net revenue of $700 to $740 million for the fourth quarter 2015 as compared to fourth quarter 2014 Net revenue of $705.3 million.  The Company further anticipates Adjusted EBITDA3 of $176 to $188 million for the fourth quarter 2015.  In addition, the Company expects Adjusted net income1 of $106 to $118 million, or $0.62 to $0.69 per diluted share including anticipated dilution of approximately ($0.05) to ($0.06) per diluted share associated with the anticipated acquisition of the sensing portfolio of Custom Sensors & Technologies, Inc. for the fourth quarter 2015, which, at the midpoint, is 15% higher than fourth quarter 2014 Adjusted net income per diluted share of $0.57.  This guidance assumes a diluted share count of 171.7 million for the fourth quarter 2015.

1See Non-GAAP Measures for discussion of Adjusted net income which includes a reconciliation of this measure to Net income.


2Net debt represents total indebtedness including Capital lease and other financing obligations, less Cash and cash equivalents.  The Net leverage ratio represents Net debt divided by Adjusted EBITDA for the last twelve months.


3The Company defines Adjusted EBITDA as Adjusted net income excluding cash interest expense, cash tax expense, depreciation expense (excluding step-up depreciation expense related to acquisitions) and amortization expense (excluding amortization expense on acquisition related intangibles).

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 third quarter ended September 30, 2015.  The U.S. dial in number is 877-486-0682 and the non-U.S. dial in number is 706-634-5536.  The passcode is 60665779.  A live webcast and a replay of the conference call will also be available on the investor relations page of 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 with operations and business centers in fifteen 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 and ventilation, data, telecommunications, recreational vehicle and marine applications. For more information, please visit Sensata's website at www.sensata.com.

Safe Harbor Statement

This earnings release contains forward-looking statements within the meaning of the federal securities laws.  These statements relate to analyses and other information, which are based on forecasts of future results and estimates of amounts not yet determinable, and the Company's future prospects, developments and business.  Such forward-looking statements include, among other things, the Company's anticipated results for the fourth quarter 2015.  Such statements involve risks or uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.  Factors that might cause these differences include, but are not limited to, risks associated with: adverse developments in the automotive industry; competitive pressures that could require the Company to lower prices or result in reduced demand for the Company's products; integration of acquired companies, including Schrader; the assumption of known and unknown liabilities in the acquisition of Schrader; risks associated with the contemplated acquisition of the sensing portfolio of Custom Sensors & Technologies, Inc. and the related financing; risks associated with the Company's non-US operations and international business; litigation and disputes involving the Company, including the extent of intellectual property, product liability, and warranty claims asserted against the Company; risks associated with the Company's historical and future tax positions; risks related to labor disruptions or costs; and risks associated with the Company's substantial indebtedness.  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 the Company undertakes 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 the Company's SEC filings.  Copies of the Company's filings are available from its Investor Relations department or from the SEC website, www.sec.gov.

 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Operations

(Unaudited)


(In 000s, except per share amounts)











For the three months ended


For the nine months ended



September 30,
2015


September 30,
2014


September 30,
2015


September 30,
2014

Net revenue


$

727,360



$

577,095



$

2,248,490



$

1,704,542


Operating costs and expenses:









Cost of revenue


476,634



371,940



1,501,142



1,097,585


Research and development


30,816



19,525



92,794



55,681


Selling, general and administrative


66,233



52,985



203,637



148,295


Amortization of intangible assets


45,184



35,985



136,068



100,562


Restructuring and special charges


1,615



4,543



12,424



7,148


Total operating costs and expenses


620,482



484,978



1,946,065



1,409,271


Profit from operations


106,878



92,117



302,425



295,271


Interest expense, net


(29,706)



(23,553)



(96,029)



(70,063)


Other, net


(10,805)



(8,578)



(44,647)



(4,108)


Income before taxes


66,367



59,986



161,749



221,100


Provision for/(benefit from) income taxes


13,215



(21,977)



32,342



6,871


Net income


$

53,152



$

81,963



$

129,407



$

214,229











Net income per share:









Basic


$

0.31



$

0.49



$

0.76



$

1.26


Diluted


$

0.31



$

0.48



$

0.75



$

1.24











Weighted-average ordinary shares outstanding:







Basic


170,147



168,554



169,880



170,463


Diluted


171,608



170,765



171,512



172,611


 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


($ in 000s)











For the three months ended


For the nine months ended



September 30,

2015


September 30,
2014


September 30,
2015


September 30,
2014

Net income


$

53,152



$

81,963



$

129,407



$

214,229


Other comprehensive (loss)/income, net of tax:









Deferred (loss)/gain on derivative instruments, net of reclassifications


(17,430)



18,044



(13,058)



22,097


Defined benefit and retiree healthcare plans


742



(170)



760



(370)


Other comprehensive (loss)/income


(16,688)



17,874



(12,298)



21,727


Comprehensive income


$

36,464



$

99,837



$

117,109



$

235,956


 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Balance Sheets

(Unaudited)


($ in 000s)







September 30,
2015


December 31,
2014

Assets





Current assets:





Cash and cash equivalents


$

258,209



$

211,329


Accounts receivable, net of allowances


481,737



444,852


Inventories


341,361



356,364


Deferred income tax assets


17,066



15,301


Prepaid expenses and other current assets


112,039



90,918


Total current assets


1,210,412



1,118,764


Property, plant and equipment, net


651,020



589,484


Goodwill


2,429,158



2,424,795


Other intangible assets, net


779,317



910,774


Deferred income tax assets


20,102



16,750


Deferred financing costs


27,029



29,102


Other assets


19,565



26,940


Total assets


$

5,136,603



$

5,116,609







Liabilities and shareholders' equity





Current liabilities:





Current portion of long-term debt, capital lease and other financing obligations


$

69,557



$

145,979


Accounts payable


297,940



287,800


Income taxes payable


14,606



7,516


Accrued expenses and other current liabilities


256,940



222,781


Deferred income tax liabilities


12,236



13,430


Total current liabilities


651,279



677,506


Deferred income tax liabilities


374,246



362,738


Pension and post-retirement benefit obligations


33,086



35,799


Capital lease and other financing obligations, less current portion


43,814



45,113


Long-term debt, net of discount, less current portion


2,554,538



2,650,744


Other long-term liabilities


33,243



41,817


Total liabilities


3,690,206



3,813,717


Total shareholders' equity


1,446,397



1,302,892


Total liabilities and shareholders' equity


$

5,136,603



$

5,116,609


 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


($ in 000s)


For the nine months ended



September 30,
2015


September 30,
2014

Cash flows from operating activities:





Net income


$

129,407



$

214,229


Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation


71,162



45,161


Amortization of deferred financing costs and discounts


4,755



3,605


Currency remeasurement gain on debt


(2,082)



(2)


Share-based compensation


11,093



9,920


Loss on debt financing


25,538




Amortization of inventory step-up to fair value




1,658


Amortization of intangible assets


136,068



100,562


Deferred income taxes


11,237



(13,280)


Gains from insurance proceeds




(2,417)


Unrealized loss on hedges and other non-cash items


13,541



6,445


Changes in operating assets and liabilities, net of effects of acquisitions


(37,006)



(85,734)


Net cash provided by operating activities


363,713



280,147







Cash flows from investing activities:





Acquisition of Schrader, net of cash received


(958)




Other acquisitions, net of cash received


3,881



(298,525)


Additions to property, plant and equipment and capitalized software


(130,243)



(101,104)


Insurance proceeds




2,417


Proceeds from the sale of assets


102



5,467


Net cash used in investing activities


(127,218)



(391,745)







Cash flows from financing activities:





Proceeds from exercise of stock options and issuance of ordinary shares


15,361



18,083


Proceeds from issuance of debt


1,795,120



195,000


Payments on debt


(1,970,685)



(40,993)


Repurchase of ordinary shares from SCA




(169,680)


Payments to repurchase ordinary shares


(50)



(11,971)


Payments of debt issuance costs


(29,361)




Net cash used in financing activities


(189,615)



(9,561)


Net change in cash and cash equivalents


46,880



(121,159)


Cash and cash equivalents, beginning of period


211,329



317,896


Cash and cash equivalents, end of period


$

258,209



$

196,737


 

Net Revenue by Business, Geography and End Market

 

(% of total net revenue)


Three months ended September 30,


Nine months ended September 30,



2015


2014


2015


2014

Performance Sensing


79.3

%


71.2

%


78.9

%


70.8

%

Sensing Solutions


20.7

%


28.8

%


21.1

%


29.2

%

Total


100.0

%


100.0

%


100.0

%


100.0

%


(% of total net revenue)


Three months ended September 30,


Nine months ended September 30,



2015


2014


2015


2014

Americas


42.7

%


40.8

%


41.1

%


39.4

%

Europe


33.3

%


27.4

%


33.6

%


28.5

%

Asia


24.0

%


31.8

%


25.3

%


32.1

%

Total


100.0

%


100.0

%


100.0

%


100.0

%


(% of total net revenue)


Three months ended September 30,


Nine months ended September 30,



2015


2014


2015


2014

European automotive


28.2

%


22.4

%


27.8

%


23.8

%

North American automotive


22.5

%


15.9

%


21.7

%


16.4

%

Asian automotive


16.2

%


19.9

%


16.9

%


20.0

%

Rest of world automotive


0.9

%


0.5

%


0.9

%


0.5

%

Heavy vehicle off-road


12.0

%


14.9

%


12.4

%


12.5

%

Appliance and heating, ventilation and air-conditioning


5.8

%


8.0

%


6.0

%


8.7

%

Industrial


6.5

%


7.7

%


6.3

%


7.8

%

All other


7.9

%


10.7

%


8.0

%


10.3

%

Total


100.0

%


100.0

%


100.0

%


100.0

%

 

Non-GAAP Measures

Adjusted net income is a non-GAAP financial measure. The Company defines Adjusted net income as follows: Net income before certain restructuring and special charges, costs associated with financing and other transactions, deferred loss/(gain) on other hedges, depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory, deferred income tax and other tax expense, amortization of deferred financing costs, and other costs. The Company believes Adjusted net income provides investors with helpful information with respect to the Company's operating performance, 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 three and nine months ended September 30, 2015 and 2014.

(In 000s, except per share amounts)


Three months ended
September 30,


Nine months ended
September 30,



2015


2014


2015


2014

Net income


$

53,152



$

81,963



$

129,407



$

214,229


Restructuring and special charges


8,502



5,153



31,681



3,657


Financing and other transaction costs


3,659



4,242



29,455



5,500


Deferred loss/(gain) on other hedges


5,576



7,200



12,038



(3,424)


Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory


46,403



36,951



140,057



105,001


Deferred income tax and other tax expense


4,485



(29,008)



11,339



(15,965)


Amortization of deferred financing costs


1,524



1,219



4,755



3,605


Total adjustments


$

70,149



$

25,757



$

229,325



$

98,374


Adjusted net income


$

123,301



$

107,720



$

358,732



$

312,603


Weighted average diluted shares outstanding used in Adjusted net income per share calculation


171,608



170,765



171,512



172,611


Adjusted net income per diluted share


$

0.72



$

0.63



$

2.09



$

1.81


 

The Company's definition of Adjusted net income includes the current tax expense/(benefit) that will be payable/(realized) on the Company's income tax return and excludes deferred income tax and other tax expense/(benefit).  As the Company treats deferred income tax and other tax expense/(benefit) as an adjustment to compute Adjusted net income, the deferred income tax effect associated with the reconciling items would not change Adjusted net income for any period presented.  The theoretical current income tax expense/(benefit) associated with the reconciling items above would be as follows: Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory:  $0.1 million and $0.2 million for the three months ended September 30, 2015 and 2014, respectively, and $0.4 million and $1.0 million for the nine months ended September 30, 2015 and 2014, respectively; Restructuring and special charges:  $0.9 million and $0.3 million for the three months ended September 30, 2015 and 2014, respectively, and $2.0 million and $0.3 million for the nine months ended September 30, 2015 and 2014, respectively.

The following unaudited table identifies where in the Condensed Consolidated Statements of Operations the adjustments to reconcile Net income to Adjusted net income were recorded for the three and nine months ended September 30, 2015 and 2014.

($ in 000s)


Three months ended
September 30,


Nine months ended
September 30,



2015


2014


2015


2014

Cost of revenue


$

8,654



$

2,495



$

31,980



$

4,280


Selling, general and administrative


5,420



5,273



11,322



6,531


Amortization of intangible assets


43,839



35,095



132,174



98,943


Restructuring and special charges


651



3,483



10,596



4,404


Interest expense


1,524



1,219



4,755



3,605


Other, net


5,576



7,200



32,159



(3,424)


Provision for/(benefit from) income taxes


4,485



(29,008)



6,339



(15,965)


Total adjustments


$

70,149



$

25,757



$

229,325



$

98,374


 

The following unaudited table reconciles the Company's projected GAAP earnings per share to projected Adjusted net income per diluted share for the three months ended December 31, 2015 and full year ended December 31, 2015.  The amounts in the table below have been calculated based on unrounded numbers.  Accordingly, certain amounts may not add due to the effect of rounding.



Three months ended
December 31, 2015


Full year ended

December 31, 2015



Low End


High End


Low End


High End










Projected GAAP earnings per diluted share


$

0.21



$

0.28



$

0.97



$

1.04


Restructuring and special charges


---



---



0.18



0.18


Financing and other transaction costs


0.08



0.08



0.25



0.25


Deferred (gain)/loss on other hedges


---



---



0.07



0.07


Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory


0.26



0.26



1.08



1.08


Deferred income tax and other tax (benefit)/expense


0.06



0.06



0.12



0.12


Amortization of deferred financing costs


0.01



0.01



0.04



0.04


Projected Adjusted net income per diluted share


$

0.62



$

0.69



$

2.71



$

2.78


Weighted average diluted shares outstanding used in Adjusted net income per share calculation (in 000s)


171.7



171.7



171.6



171.6


 

SENSATA TECHNOLOGIES HOLDING N.V.

Notes to unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows

Basis of Presentation

The accompanying unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Balance Sheets and Condensed Consolidated 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. This information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and the interim condensed consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015. U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements.  Estimates used may change as new events occur or additional information is obtained.  Actual results could differ from those estimates.

 

Contact:






Investors


News Media

Jacob Sayer


Linda Megathlin

(508) 236-3800


(508) 236-1761

investors@sensata.com


lmegathlin@sensata.com

 

Logo - http://photos.prnewswire.com/prnh/20070227/CLTU192LOGO

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sensata-technologies-holding-nv-announces-third-quarter-2015-results-300166618.html

SOURCE Sensata Technologies Holding N.V.

Categories: Press Releases
View all news