News Releases

SWINDON, United Kingdom, July 30, 2019 (GLOBE NEWSWIRE) -- Sensata Technologies (NYSE: ST), a global industrial technology company and a leading provider of sensors, today announced financial results for its second quarter ended June 30, 2019.

Operating results for the second quarter of 2019 compared to the second quarter of 2018 are summarized below.

Revenue:

• Revenue was $883.7 million, a decrease of ($30.1) million, or (3.3%), compared to $913.9 million in the second quarter of 2018.
• Revenue declined 1.6% on an organic basis, which excludes the effects of the following:
  • Foreign currency exchange rates - (1.0%) change versus the prior year period.
  • Acquisitions and divestitures, net - (0.7%) change versus the prior year period.

Operating income:

• Operating income was $147.4 million (16.7% of revenue), a decrease of ($30.6) million or (17.2%) compared to $178.1 million (19.5% of revenue) in the second quarter of 2018.
• Adjusted operating income was $205.1 million (23.2% of revenue), a decrease of ($14.3) million or (6.5%) compared to $219.4 million (24.0% of revenue) in the second quarter of 2018.

Earnings per share:

• Earnings per share were $0.45, a decrease of (26.2%) compared to $0.61 per share in the second quarter of 2018.
• Adjusted earnings per share were $0.93, which were flat with adjusted earnings per share in the second quarter of 2018 despite a ($30.1) million decrease in revenue.

Changes in foreign currency exchange rates increased Sensata's adjusted earnings per share by $0.07 in the second quarter of 2019 compared to the prior year period. The net effect of acquisitions and divestitures reduced Sensata's adjusted earnings per share by ($0.06) in the second quarter of 2019 compared to the prior year period.

“Despite lower volume due to declining end markets, we maintained our adjusted EPS year-over-year, which demonstrates the resiliency of our business model in weaker market cycles and the positive effects of our capital deployment strategy," said Martha Sullivan, Chief Executive Officer of Sensata. "Our performance was driven by strong secular growth across all of our businesses, including an acceleration of content growth in automotive, which outgrew its end market by 650 basis points in the second quarter. As we look ahead this year, we expect our end markets will decline below the projections we contemplated in our most recent full year 2019 guidance, and are implementing additional initiatives to further align our costs with the lower volumes we are now anticipating."

"Looking beyond current end market conditions, we have identified long-term secular growth opportunities in these markets and we are making investments to drive future growth. During the quarter, we advanced our Electrification initiative by partnering with Lithium Balance to bring battery management subsystems to the industrial, material handling, and heavy vehicle & off road markets as well as complement our wireless battery management initiative in our automotive business.”

During the second quarter of 2019, Sensata repurchased approximately 379,000 shares of common stock for total consideration of $17.4 million. The Board of Directors has approved the repurchase of additional shares valued up to an aggregate of $500 million, which the Company expects to use over the next 12 to 24 months.

Six Months ended June 30, 2019

Operating results for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 are summarized below. These results include non-GAAP financial measures, which are reconciled later in this press release.

Revenue:

• Revenue was $1,754.2 million, a decrease of ($45.9) million, or (2.6%), compared to $1,800.2 million in the six months ended June 30, 2018.
• Revenue declined (0.4%) on an organic basis, which excludes the effects of the following:
  • Foreign currency exchange rates - (1.2%) change versus the prior year period.
  • Acquisitions and divestitures, net - (1.0%) change versus the prior year period.

Operating income:

• Operating income was $290.0 million (16.5% of revenue), a decrease of ($35.7) million or (11.0%) compared to $325.7 million, (18.1% of revenue), in the six months ended June 30, 2018.
• Adjusted operating income was $393.7 million (22.4% of revenue), a decrease of ($20.5) million or (5.0%) compared to $414.2 million (23.0% of revenue) in the six months ended June 30, 2018.

Earnings per share:

• Earnings per share were $0.97, a decrease of (14.2%) compared to $1.13 per share in the six months ended June 30, 2018.
• Adjusted earnings per share were $1.77, a decrease of (0.6%) compared to $1.78 per share in the six months ended June 30, 2018.
  

Segment Performance

Performance Sensing's operating income as a percentage of revenue totaled 26.1% in the second quarter of 2019. Excluding the impact of changes in foreign currency exchange rates, Performance Sensing’s operating income as a percentage of revenue was 25.4%. Sensing Solutions’ operating income as a percentage of revenue totaled 32.2% in the second quarter of 2019. Excluding the impact of changes in foreign exchange rates, Sensing Solutions’ operating income as a percentage of revenue was 31.8%.

Performance Sensing’s operating income as a percentage of revenue totaled 24.8% in the six months ended June 30, 2019. Excluding the impact of changes in foreign currency exchange rates, Performance Sensing’s operating income as a percentage of revenue was 23.9%. Sensing Solutions’ operating income as a percentage of revenue totaled 32.4% in the six months ended June 30, 2019. Excluding the impact of changes in foreign exchange rates, Sensing Solutions’ operating income as a percentage of revenue was 32.7%.

Guidance

For the full year 2019, the Company anticipates revenue to be between $3.461 and $3.523 billion, representing a year-over-year revenue decline between 0 percent and 2 percent. Excluding changes in foreign currency exchange rates and the net effect of acquisitions and divestitures, Sensata expects to report organic revenue of approximately a 1 percent decline to growth of 1 percent for the full year 2019. For full year 2019, Sensata expects adjusted operating income to be between $807 and $823 million. Additionally, the Company expects adjusted net income to be between $596 and $612 million and adjusted earnings per share to be between $3.67 and $3.77 for full year 2019, representing growth of 1 percent to 3 percent. Sensata expects that changes in foreign currency exchange rates will decrease revenues between $11 and $19 million and will increase adjusted earnings per share by $0.17 to $0.19 for full year 2019.

For the third quarter of 2019, Sensata anticipates revenue to be between $847 and $871 million compared to $873.6 million in the third quarter of 2018, representing a revenue decline between 0 percent and 3 percent. Excluding changes in foreign currency exchange rates and the net effect of acquisitions and divestitures, Sensata expects to report an organic revenue decline between 1 percent and 4 percent in the third quarter. Additionally, the Company expects adjusted net income to be between $143 and $149 million and adjusted earnings per share to be between $0.88 and $0.92 in the third quarter of 2019, representing adjusted EPS of between a decline of 3 percent and growth of 1 percent.

Conference Call & Webcast

Sensata will conduct a conference call today at 8:00 AM eastern time to discuss its second quarter financial results and its outlook for the third quarter and full year 2019. The dial-in numbers for the call are 1-844-784-1726 or +1-412-380-7411 and callers can reference the Sensata second quarter 2019 earnings call. A live webcast and a replay of the conference call will also be available on the investor relations page of Sensata’s website at http://investors.sensata.com. Additionally, a replay of the call will be available until August 6, 2019. To access the replay dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 10132787.

About Sensata Technologies

Sensata Technologies is one of the world's leading suppliers of sensing, electrical protection, control and power management solutions with operations and business centers in 11 countries. Sensata's products improve safety, efficiency, and comfort for millions of people every day in automotive, appliance, aircraft, industrial, military, heavy vehicle, heating, ventilation and air conditioning, data, telecommunications, recreational vehicle, and marine applications. For more information, please visit Sensata's website at www.sensata.com.

Non-GAAP Financial Measures

We supplement the reporting of our financial information determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures. We use these non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance, and as a factor in determining compensation for certain employees. We believe presenting non-GAAP financial measures is useful for period-over-period comparisons of underlying business trends and our ongoing business performance. We also believe presenting these non-GAAP measures provides additional transparency into how management evaluates the business.

Non-GAAP financial measures should be considered as supplemental in nature and are not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, our non-GAAP financial measures may not be the same as, or comparable to, similar non-GAAP measures presented by other companies.

The non-GAAP financial measures referenced by Sensata in this release include: adjusted net income, adjusted earnings per share (“EPS”), adjusted operating income, adjusted operating margin, free cash flow, organic revenue growth, and segment profit margin measured on a constant currency basis. We also refer to changes in certain non-GAAP measures, usually reported either as a percentage or number of basis points, between two periods and measured on either a reported, constant currency, or an organic basis, the latter of which excludes the net impact of acquisitions and divestitures for the 12-month period following the respective transaction date(s) and the effect of foreign currency exchange rate differences between the comparative periods. Such changes are also considered non-GAAP measures.

Adjusted net income is defined as net income, determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted EPS is calculated by dividing adjusted net income by the number of diluted weighted-average ordinary shares outstanding in the period. We believe that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Adjusted operating income is defined as operating income, determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted operating margin is calculated by dividing adjusted operating income by net revenue. We believe that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Free cash flow is defined as net cash provided by operating activities, determined in accordance with U.S. GAAP, less additions to property, plant and equipment and capitalized software. We believe that this measure is useful to investors and management as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to fund acquisitions, repurchase ordinary shares, or for the repayment of debt obligations.

Organic revenue growth is defined as the reported percentage change in net revenue, calculated in accordance with U.S. GAAP, excluding the period-over-period impact of foreign exchange rate differences as well as the net impact of acquisitions and divestitures for the 12-month period following the respective transaction date(s). We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Safe Harbor Statement

This earnings release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Sensata believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this earnings release, including, without limitation, risks associated with regulatory, legal, governmental, political, economic, and military matters; adverse conditions in the automotive industry; competition in our industry, including pressure from customers to reduce prices; supplier interruptions, which could limit access to manufactured components or raw materials; business disruptions due to natural disasters; labor disruptions; difficulties with or failures integrating acquired businesses; market acceptance of new products; fluctuations in foreign exchange rates; and our level of 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 we undertake no obligation to publicly update or revise any forward-looking statements, whether to reflect any future events or circumstances or otherwise. See "Risk Factors" in the Company's 2018 Annual Report on Form 10-K and other public filings and press releases. Copies of our filings are available from our Investor Relations department or from the SEC website, www.sec.gov.

Revenue by Business, Geography, and End Market (Unaudited)

* Includes amounts reflected in the Sensing Solutions segment as follows: $10.7 million and $13.0 million of revenue in three months ended June 30, 2019 and 2018, respectively, and $22.1 million and $26.9 million of revenue in six months ended June 30, 2019 and 2018, respectively.

End Market Growth (Unaudited)

* Excludes Toyota, adjusted for Sensata's geographic mix.

The following unaudited tables reconcile Sensata’s GAAP to non-GAAP financial measures for the three and six months ended June 30, 2019 and 2018. Amounts presented in these tables may not sum due to the effect of rounding.

Non-GAAP Reconciliation - Second Quarter 2019 and 2018

We treat deferred taxes as a non-GAAP adjustment. Accordingly, the tax effect of the non-GAAP adjustments above refers only to the current tax effect, if applicable. With respect to the three months ended June 30, 2018, the current tax effect of the related non-GAAP adjustments was not material.

Non-GAAP Reconciliation - Six months ended June 30, 2019 and 2018

We treat deferred taxes as a non-GAAP adjustment. Accordingly, the tax effect of the non-GAAP adjustments above refers only to the current tax effect, if applicable. With respect to the six months ended June 30, 2018, the current tax effect of the related non-GAAP adjustments was not material.

The following unaudited table identifies where in the Condensed Consolidated Statements of Operations the adjustments to reconcile operating income and net income to adjusted operating income and adjusted net income were recorded for the three and six months ended June 30, 2019 and 2018:

Free Cash Flow Reconciliation

Reconciliation of Net Cash Provided by Operations to Free Cash Flow.

The following unaudited table reconciles Sensata’s projected (GAAP) diluted EPS per share to its projected adjusted EPS for the three months ending September 30, 2019 and the full year ending December 31, 2019. The amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding.

Non-GAAP Reconciliation of EPS Guidance

* We are unable to predict movements in commodity prices and, therefore, the impact of mark-to-market adjustments on our commodity forward contracts to our projected 2019 diluted net income per share. In prior periods, such adjustments have been significant to our reported GAAP earnings.

Source: Sensata Technologies