Sensata Technologies Reports Fourth Quarter and Full Year 2022 Financial Results

January 31, 2023

Company achieved record new business wins of over $1 billion during 2022

Annual revenue exceeds $4 billion for the first time

Sensata Technologies (NYSE: ST), a global industrial technology company and leading provider of sensor-rich solutions that create insights for customers, today announced financial results for its fourth quarter and full year ended December 31, 2022.

"Sensata continued to execute its strategic growth plan and delivered 10.0% organic revenue growth in the fourth quarter and a record $4.0 billion in revenue for the full year, including revenue growth outpacing markets served by 820 basis points,” said Jeff Cote, CEO and President of Sensata. "During 2022, the Company was awarded over $1 billion in new business wins, a new record that demonstrates the value of Sensata’s investments in the growth vectors of electrification and data insights. The significant business wins in the past two years underpin the future market outgrowth of the Company and our strong long-term performance. Looking forward, given our established success in our Electrification and Insights businesses, Sensata will focus on integrating and growing these innovative platforms organically, and prioritize earnings growth and the resulting free cash flow toward strengthening the balance sheet and de-levering, including targeting a net leverage range of 1.5x to 2.5x within the next 2 to 3 years.”

Operating results for the fourth quarter of 2022 compared to the fourth quarter of 2021 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.

Revenue:

  • Revenue was $1,014.7 million, an increase of $80.1 million, or 8.6%, compared to $934.6 million in the fourth quarter of 2021.
  • Revenue increased 10.0% on an organic basis, which excludes a decrease of (3.6)% from foreign currency exchange rates and an increase of 2.2% from acquisitions, net of divestitures, each versus the prior year period.

Operating income:

  • Operating income was $152.4 million, or 15.0% of revenue, an increase of $2.7 million, or 1.8%, compared to operating income of $149.7 million, or 16.0% of revenue, in the fourth quarter of 2021.
  • Adjusted operating income was $204.3 million, or 20.1% of revenue, an increase of $6.7 million, or 3.4%, compared to adjusted operating income of $197.6 million, or 21.1% of revenue, in the fourth quarter of 2021.

Earnings per share:

  • Earnings per share was $0.74, an increase of $0.04, or 5.7%, compared to earnings per share of $0.70 in the fourth quarter of 2021.
  • Adjusted earnings per share was $0.96, an increase of $0.09, or 10.3%, compared to adjusted earnings per share of $0.87 in the fourth quarter of 2021.
  • Changes in foreign currency exchange rates decreased Sensata's adjusted earnings per share by $0.05 in the fourth quarter of 2022 compared to the prior year period.

Sensata generated $224.9 million of operating cash flow in the fourth quarter of 2022, compared to $160.9 million in the prior year period. Sensata's free cash flow totaled $185.2 million in the fourth quarter of 2022 compared to $116.9 million in the prior year period.

During the fourth quarter of 2022, Sensata repurchased approximately 1.2 million ordinary shares for total consideration of $50.4 million as part of its existing share repurchase program. Sensata also returned approximately $16.8 million to shareholders through its quarterly dividend of $0.11 per share paid on November 23, 2022.

Operating results for the year ended December 31, 2022 compared to the year ended December 31, 2021 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.

Revenue:

  • Revenue was a record $4,029.3 million, an increase of $208.5 million, or 5.5%, compared to $3,820.8 million in the year ended December 31, 2021.
  • Revenue increased 4.8% on an organic basis, which excludes a decrease of (2.4)% from foreign currency exchange rates and an increase of 3.1% from acquisitions, net of divestitures, each versus the prior year.

Operating income:

  • Operating income was $670.1 million, or 16.6% of revenue, an increase of $36.9 million, or 5.8%, compared to operating income of $633.2 million, or 16.6% of revenue, in the year ended December 31, 2021.
  • Adjusted operating income was $777.9 million, or 19.3% of revenue, a decrease of $(28.1) million, or (3.5)%, compared to adjusted operating income of $806.0 million, or 21.1% of revenue, in the year ended December 31, 2021.

Earnings per share:

  • Earnings per share was $1.99, a decrease of $(0.29), or (12.7)%, compared to earnings per share of $2.28 in the year ended December 31, 2021.
  • Adjusted earnings per share was $3.40, a decrease of $(0.16), or (4.5)%, compared to adjusted earnings per share of $3.56 in the year ended December 31, 2021.
  • Changes in foreign currency exchange rates decreased Sensata's adjusted earnings per share by $0.15 in the year ended December 31, 2022 compared to the prior year.

Sensata generated $460.6 million of operating cash flow in the year ended December 31, 2022, compared to $554.2 million in the prior year. Sensata's free cash flow totaled $310.5 million in the year ended December 31, 2022 compared to $409.7 million in the prior year.

During the year ended December 31, 2022, Sensata repurchased approximately 6.3 million ordinary shares for total consideration of $292.3 million as part of its existing share repurchase program. Sensata also returned approximately $51.1 million to shareholders through total dividends of $0.33 per share paid to shareholders during the year ended December 31, 2022.

Segment Performance

 

 

For the three months ended
December 31,

 

For the full year ended
December 31,

$ in 000s

 

 

2022

 

2021

 

 

2022

 

 

2021

Performance Sensing

 

 

 

 

 

 

 

Revenue

 

$

757,650

$

685,078

 

$

2,976,756

 

$

2,847,908

Operating income

 

$

196,923

$

185,587

 

$

751,640

 

$

777,237

% of Performance Sensing revenue

 

 

26.0 %

 

27.1 %

 

 

25.3 %

 

 

27.3 %

 

 

 

 

 

 

 

 

Sensing Solutions

 

 

 

 

 

 

 

Revenue

 

$

257,026

$

249,519

 

$

1,052,506

 

$

972,898

Operating income

 

$

74,390

$

74,480

 

$

300,015

 

$

293,185

% of Sensing Solutions revenue

 

 

28.9 %

 

29.8 %

 

 

28.5 %

 

 

30.1 %

Guidance

"In the fourth quarter, Sensata delivered 8.6% revenue growth, 3.4% adjusted operating income growth, and 10.3% adjusted earnings per share growth from the prior year period," said Paul Vasington, EVP and CFO of Sensata. "For the first quarter of 2023, we expect revenue of $950 to $1,000 million and adjusted EPS of $0.81 to $0.91."

Paul continued, "Given ongoing market and macroeconomic uncertainties, Sensata is discontinuing its practice of providing full year finance guidance. We intend to continue to provide investors with quarterly forward guidance to better align with peers and where information from third party market forecasters and from our customers is more reliable."

Q1 2023 Guidance

 

 

 

$ in millions, except EPS

Q1-23 Guidance

 

Q1-22

 

Y/Y Change

Revenue

$950 - $1,000

 

$975.8

 

(3%) - 3%

organic growth

 

 

 

 

1% - 6%

Adjusted Operating Income

$182 - $198

 

$182.5

 

0% - 8%

Adjusted Net Income

$125 - $139

 

$123.4

 

1% - 13%

Adjusted EPS

$0.81 - $0.91

 

$0.78

 

4% - 17%

Versus the prior year period, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $27 million at the midpoint and decrease adjusted EPS by approximately $0.05 at the midpoint in the first quarter of 2023.

Conference Call and Webcast

Sensata will conduct a conference call today at 8:00 a.m. Eastern Time to discuss its fourth quarter and full year 2022 financial results and its outlook for the first quarter of 2023. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Q4 2022 Financial Results Conference Call." A live webcast 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 February 7, 2023. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 4579813.

About Sensata Technologies

Sensata Technologies is a leading industrial technology company that develops sensors, sensor-based solutions, including controllers and software, and other mission-critical products to create valuable business insights for customers and end users. For more than 100 years, Sensata has provided a wide range of customized, sensor-rich solutions that address complex engineering requirements to help customers solve difficult challenges in the automotive, heavy vehicle & off-road, industrial, and aerospace industries. With approximately 21,000 employees and operations in 13 countries, Sensata’s solutions help to make products safer, cleaner and more efficient, more electrified, and more connected. 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, market outgrowth, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), net debt, and net leverage ratio. 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 (or loss) is defined as net income (or loss), 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 (or loss) 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 (or loss) is defined as operating income (or loss), 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 (or loss) 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/(used in) operating activities 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 accelerated repayment of debt obligations.

Organic revenue growth (or decline) 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 material 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.

Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, net, provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable: (1) restructuring related and other, (2) financing and other transaction costs, (3) deferred gain or loss on derivative instruments, and (4) step-up inventory amortization.

Net debt is defined as total debt, finance lease, and other financing obligations less cash and cash equivalents. We believe net debt is a useful measure to management and investors in understanding trends in our overall financial condition.

Net leverage ratio is defined as net debt divided by last twelve months (LTM) adjusted EBITDA. We believe the net leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.

Safe Harbor Statement

This earnings release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," "potential," "opportunity," "guidance," and similar terms or phrases. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives, business and market outlook, megatrends, priorities, growth, shareholder value, capital expenditures, cash flows, demand for products and services, share repurchases, and Sensata’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. These statements are subject to risks, uncertainties, and other important factors relating to our operations and business environment, and we can give no assurances that these forward-looking statements will prove to be correct.

A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements, including, but not limited to, risks related to public health crises, instability and changes in the global markets, supplier interruption or non-performance, the acquisition or disposition of businesses, adverse conditions or competition in the industries upon which we are dependent, intellectual property, product liability, warranty, and recall claims, market acceptance of new product introductions and product innovations, labor disruptions or increased labor costs, and changes in existing environmental or safety laws, regulations, and programs.

Investors and others should carefully consider the foregoing factors and other uncertainties, risks, and potential events including, but not limited to, those described in Item 1A: Risk Factors in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A: Risk Factors in our quarterly reports on Form 10-Q or other subsequent filings with the United States Securities and Exchange Commission. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

For the three months ended
December 31,

 

For the full year ended
December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Net revenue

 

$

1,014,676

 

$

934,597

 

$

4,029,262

 

$

3,820,806

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of revenue

 

 

673,830

 

 

619,878

 

 

2,712,048

 

 

2,542,434

Research and development

 

 

47,446

 

 

40,143

 

 

189,344

 

 

159,072

Selling, general and administrative

 

 

87,622

 

 

87,261

 

 

370,644

 

 

336,989

Amortization of intangible assets

 

 

39,302

 

 

32,637

 

 

153,787

 

 

134,129

Restructuring and other charges, net

 

 

14,111

 

 

4,986

 

 

(66,700)

 

 

14,942

Total operating costs and expenses

 

 

862,311

 

 

784,905

 

 

3,359,123

 

 

3,187,566

Operating income

 

 

152,365

 

 

149,692

 

 

670,139

 

 

633,240

Interest expense, net

 

 

(43,676)

 

 

(44,898)

 

 

(178,819)

 

 

(179,291)

Other, net

 

 

16,449

 

 

7,756

 

 

(94,618)

 

 

(40,032)

Income before taxes

 

 

125,138

 

 

112,550

 

 

396,702

 

 

413,917

Provision for income taxes

 

 

11,988

 

 

578

 

 

86,017

 

 

50,337

Net income

 

 

113,150

 

 

111,972

 

 

310,685

 

 

363,580

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.74

 

$

0.71

 

$

2.00

 

$

2.30

Diluted

 

$

0.74

 

$

0.70

 

$

1.99

 

$

2.28

 

 

 

 

 

 

 

 

 

Weighted-average ordinary shares outstanding:

 

 

 

 

 

 

Basic

 

 

152,639

 

 

158,299

 

 

155,253

 

 

158,166

Diluted

 

 

153,140

 

 

159,428

 

 

155,927

 

 

159,370

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

December 31,
2022

 

December 31,
2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,225,518

 

$

1,708,955

Accounts receivable, net of allowances

 

 

742,382

 

 

653,438

Inventories

 

 

644,875

 

 

588,231

Prepaid expenses and other current assets

 

 

162,268

 

 

126,370

Total current assets

 

 

2,775,043

 

 

3,076,994

Property, plant and equipment, net

 

 

840,819

 

 

820,933

Goodwill

 

 

3,911,224

 

 

3,502,063

Other intangible assets, net

 

 

999,722

 

 

946,731

Deferred income tax assets

 

 

100,539

 

 

105,028

Other assets

 

 

128,873

 

 

162,017

Total assets

 

$

8,756,220

 

$

8,613,766

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

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

 

$

256,471

 

$

6,833

Accounts payable

 

 

531,572

 

 

459,093

Income taxes payable

 

 

43,987

 

 

26,517

Accrued expenses and other current liabilities

 

 

346,942

 

 

343,816

Total current liabilities

 

 

1,178,972

 

 

836,259

Deferred income tax liabilities

 

 

364,593

 

 

339,273

Pension and other post-retirement benefit obligations

 

 

36,086

 

 

38,758

Finance lease and other financing obligations, less current portion

 

 

24,742

 

 

26,564

Long-term debt, net

 

 

3,958,928

 

 

4,214,946

Other long-term liabilities

 

 

82,092

 

 

63,232

Total liabilities

 

 

5,645,413

 

 

5,519,032

Total shareholders' equity

 

 

3,110,807

 

 

3,094,734

Total liabilities and shareholders' equity

 

$

8,756,220

 

$

8,613,766

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

For the year ended
December 31,

 

 

 

2022

 

 

2021

Cash flows from operating activities:

 

 

 

 

Net income

 

$

310,685

 

$

363,580

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

 

 

 

 

Depreciation

 

 

127,184

 

 

124,959

Amortization of debt issuance costs

 

 

6,969

 

 

6,858

Gain on sale of business

 

 

(135,112)

 

 

Share-based compensation

 

 

31,791

 

 

25,663

Loss on debt financing

 

 

5,468

 

 

30,066

Amortization of intangible assets

 

 

153,787

 

 

134,129

Deferred income taxes

 

 

(781)

 

 

(5,270)

Acquisition-related compensation payments

 

 

(23,500)

 

 

(15,630)

Mark-to-market loss on equity investments, net

 

 

75,569

 

 

Unrealized loss on derivative instruments and other

 

 

34,309

 

 

13,837

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

 

 

(125,776)

 

 

(124,041)

Net cash provided by operating activities

 

 

460,593

 

 

554,151

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisitions, net of cash received

 

 

(631,516)

 

 

(736,077)

Additions to property, plant and equipment and capitalized software

 

 

(150,064)

 

 

(144,403)

Investment in debt and equity securities

 

 

(7,983)

 

 

(5,533)

Proceeds from the sale of business, net of cash sold

 

 

198,841

 

 

Other

 

 

152

 

 

3,919

Net cash used in investing activities

 

 

(590,570)

 

 

(882,094)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from exercise of stock options and issuance of ordinary shares

 

 

22,803

 

 

26,290

Payment of employee restricted stock tax withholdings

 

 

(8,525)

 

 

(9,048)

Proceeds from borrowings on debt

 

 

500,000

 

 

1,001,875

Payments on debt

 

 

(510,701)

 

 

(763,263)

Dividends paid

 

 

(51,072)

 

 

Payments to repurchase ordinary shares

 

 

(292,274)

 

 

(47,843)

Payments of debt financing costs

 

 

(13,691)

 

 

(33,093)

Net cash (used in)/provided by financing activities

 

 

(353,460)

 

 

174,918

Net change in cash and cash equivalents

 

 

(483,437)

 

 

(153,025)

Cash and cash equivalents, beginning of year

 

 

1,708,955

 

 

1,861,980

Cash and cash equivalents, end of year

 

$

1,225,518

 

$

1,708,955

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

 

(percent of total revenue)

 

For the three months
e
nded December 31,

 

For the full year
ended December 31,

 

 

2022

 

2021

 

2022

 

2021

Performance Sensing

 

74.7 %

 

73.3 %

 

73.9 %

 

74.5 %

Sensing Solutions

 

25.3 %

 

26.7 %

 

26.1 %

 

25.5 %

Total

 

100.0 %

 

100.0 %

 

100.0 %

 

100.0 %

(percent of total revenue)

 

For the three months
e
nded December 31,

 

For the full year
e
nded December 31,

 

 

2022

 

2021

 

2022

 

2021

Americas

 

43.5 %

 

38.4 %

 

42.3 %

 

38.0 %

Europe

 

25.6 %

 

24.7 %

 

25.9 %

 

26.2 %

Asia/Rest of World

 

30.9 %

 

36.9 %

 

31.8 %

 

35.8 %

Total

 

100.0 %

 

100.0 %

 

100.0 %

 

100.0 %

(percent of total revenue)

 

For the three months
e
nded December 31,

 

For the full year
e
nded December 31,

 

 

2022

 

2021

 

2022

 

2021

Automotive (1)

 

53.8 %

 

52.0 %

 

52.3 %

 

54.0 %

Heavy vehicle and off-road

 

21.6 %

 

22.5 %

 

22.5 %

 

21.7 %

Industrial

 

13.8 %

 

11.9 %

 

13.0 %

 

10.8 %

Appliance and HVAC

 

4.9 %

 

6.2 %

 

5.4 %

 

6.4 %

Aerospace

 

4.3 %

 

3.7 %

 

3.8 %

 

3.5 %

All other

 

1.6 %

 

3.7 %

 

3.0 %

 

3.6 %

Total

 

100.0 %

 

100.0 %

 

100.0 %

 

100.0 %

(1) Includes amounts reflected in the Sensing Solutions segment as follows: $7.9 million and $11.3 million of revenue in the three months ended December 31, 2022 and 2021, respectively, and $35.8 million and $44.4 million of revenue in the years ended December 31, 2022 and 2021, respectively.

Market Outgrowth (Unaudited)

 

 

 

For the three months ended
December 31, 2022

 

For the full year ended
D
ecember 31, 2022

 

 

Reported
Growth

 

Organic
Growth

 

End
Market
Growth

 

Reported
Growth

 

Organic
Growth

 

End
Market
Growth (1)

Sensata

 

8.6%

 

10.0%

 

(1.8%)

 

5.5%

 

4.8%

 

0.5%

(1) End market growth excludes (3.9)% inventory movements between the periods presented and the prior periods.

GAAP to Non-GAAP Reconciliations

The following unaudited tables provide a reconciliation of the difference between each of the non-GAAP financial measures referenced herein and the most directly comparable U.S. GAAP financial measure. Amounts presented in these tables may not appear to recalculate due to the effect of rounding.

Operating income and margin, income tax, net income, and earnings per share

($ in thousands, except per share amounts)

For the three months ended December 31, 2022

 

Operating
Income

 

Operating
Margin

 

Income
Taxes

 

Net
Income

 

Diluted
EPS

Reported (GAAP)

$

152,365

 

15.0%

 

$

11,988

 

$

113,150

 

$

0.74

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

12,041

 

1.2%

 

 

(2,935)

 

 

10,205

 

 

0.07

Financing and other transaction costs

 

5,074

 

0.5%

 

 

 

 

5,508

 

 

0.04

Step-up depreciation and amortization

 

38,027

 

3.7%

 

 

 

 

38,027

 

 

0.25

Deferred gain on derivative instruments

 

(3,213)

 

(0.3%)

 

 

2,985

 

 

(11,481)

 

 

(0.07)

Amortization of debt issuance costs

 

 

—%

 

 

 

 

1,713

 

 

0.01

Deferred taxes and other tax related

 

 

—%

 

 

(10,627)

 

 

(10,627)

 

 

(0.07)

Total adjustments

 

51,929

 

5.1%

 

 

(10,577)

 

 

33,345

 

 

0.22

Adjusted (non-GAAP)

$

204,294

 

20.1%

 

$

22,565

 

$

146,495

 

$

0.96

($ in thousands, except per share amounts)

For the three months ended December 31, 2021

 

Operating
Income

 

Operating
Margin

 

Income
Tax

 

Net
Income

 

Diluted

EPS

Reported (GAAP)

$

149,692

 

16.0%

 

$

578

 

$

111,972

 

$

0.70

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

7,876

 

0.8%

 

 

(3,167)

 

 

1,760

 

 

0.01

Financing and other transaction costs

 

7,093

 

0.8%

 

 

(65)

 

 

5,182

 

 

0.03

Step-up depreciation and amortization

 

31,606

 

3.4%

 

 

 

 

31,606

 

 

0.20

Deferred loss/(gain) on derivative instruments

 

1,325

 

0.1%

 

 

 

 

(2,170)

 

 

(0.01)

Amortization of debt issuance costs

 

 

—%

 

 

 

 

1,716

 

 

0.01

Deferred taxes and other tax related

 

 

—%

 

 

(10,758)

 

 

(10,758)

 

 

(0.07)

Total adjustments

 

47,900

 

5.1%

 

 

(13,990)

 

 

27,336

 

 

0.17

Adjusted (non-GAAP)

$

197,592

 

21.1%

 

$

14,568

 

$

139,308

$

0.87

($ in thousands, except per share amounts)

For the full year ended December 31, 2022

 

Operating
Income

 

Operating
Margin

 

Income
Tax

 

Net
Income

 

Diluted
EPS

Reported (GAAP)

$

670,139

 

16.6%

 

$

86,017

 

$

310,685

 

$

1.99

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

36,472

 

0.9%

 

 

(3,498)

 

 

34,515

 

 

0.22

Financing and other transaction costs (1)

 

(75,550)

 

(1.9%)

 

 

2,767

 

 

10,726

 

 

0.07

Step-up depreciation and amortization

 

148,291

 

3.7%

 

 

 

 

148,291

 

 

0.95

Deferred (gain)/loss on derivative instruments

 

(1,473)

 

0.0%

 

 

(387)

 

 

1,490

 

 

0.01

Amortization of debt issuance costs

 

 

—%

 

 

 

 

6,969

 

 

0.04

Deferred taxes and other tax related (2)

 

 

—%

 

 

17,828

 

 

17,828

 

 

0.11

Total adjustments

 

107,740

 

2.7%

 

 

16,710

 

 

219,819

 

 

1.41

Adjusted (non-GAAP)

$

777,879

 

19.3%

 

$

69,307

 

$

530,504

 

$

3.40

(1) Includes gain on the sale of the Qinex Business in the third quarter of 2022 and changes in the fair value of acquisition-related contingent consideration amounts of $135.1 million and $9.4 million, respectively, partially offset by $48.9 million of expense related to compensation arrangements entered into concurrent with the closing of an acquisition, each of which were recorded in restructuring and other charges, net. Also includes $75.6 million of mark-to-market losses on our equity investments, primarily our investment in Quanergy Systems, Inc., which are presented in other, net in our consolidated statement of operations.

(2) Includes $14.7 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent companies in the Netherlands and the United States. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

($ in thousands, except per share amounts)

For the full year ended December 31, 2021

 

Operating
Income

 

Operating
Margin

 

Income
Tax

 

Net
Income

 

Diluted
EPS

Reported (GAAP)

$

663,240

 

16.6%

 

$

50,337

 

$

363,580

 

$

2.28

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

23,565

 

0.6%

 

 

(3,500)

 

 

21,356

 

 

0.13

Financing and other transaction costs (1)

 

13,236

 

0.3%

 

 

(65)

 

 

40,977

 

 

0.26

Step-up depreciation and amortization

 

127,642

 

3.3%

 

 

 

 

127,642

 

 

0.80

Deferred loss on derivative instruments

 

8,327

 

0.2%

 

 

 

 

11,294

 

 

0.07

Amortization of debt issuance costs

 

 

—%

 

 

 

 

6,858

 

 

0.04

Deferred taxes and other tax related (2)

 

 

—%

 

 

(4,865)

 

 

(4,865)

 

 

(0.03)

Total adjustments

 

172,770

 

4.5%

 

 

(8,430)

 

 

203,262

 

 

1.28

Adjusted (non-GAAP)

$

806,010

 

21.1%

 

$

58,767

 

$

566,842

 

$

3.56

(1) Includes a $30.1 million loss recognized in the first quarter of 2021 related to the early redemption of our 6.25% Senior Notes due 2026 at 103.125%. The loss primarily includes the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs. The loss is presented in other, net in our consolidated statement of operations.

(2) Includes $10.9 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

Non-GAAP adjustments by location in statements of operations

(in thousands)

For the three months
ended December 31,

 

 

For the full year
ended December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

(1,189)

 

 

$

7,060

 

 

$

10,873

 

 

$

16,525

Selling, general and administrative

 

1,266

 

 

 

4,657

 

 

 

16,457

 

 

 

15,321

Amortization of intangible assets

 

37,741

 

 

 

31,197

 

 

 

147,110

 

 

 

125,982

Restructuring and other charges, net (1)

 

14,111

 

 

 

4,986

 

 

 

(66,700)

 

 

 

14,942

Operating income adjustments

 

51,929

 

 

 

47,900

 

 

 

107,740

 

 

 

172,770

Interest expense, net

 

1,713

 

 

 

1,716

 

 

 

6,969

 

 

 

6,858

Other, net (2)

 

(9,720)

 

 

 

(8,290)

 

 

 

88,400

 

 

 

32,064

Provision for income taxes (3)

 

(10,577)

 

 

 

(13,990)

 

 

 

16,710

 

 

 

(8,430)

Net income adjustments

$

33,345

 

 

$

27,336

 

 

$

219,819

 

 

$

203,262

(1) The year ended December 31, 2022 includes gains of $135.1 million, related to the sale of the Qinex Business, and $9.4 million, related to changes in the fair values of acquisition-related contingent consideration amounts, partially offset by $48.9 million of expense related to compensation arrangements entered into concurrent with the closing of certain acquisitions, including $10.4 million recognized during the fourth quarter of 2022. Refer to our Annual Report on Form 10-K for additional information.

(2) The year ended December 31, 2022 includes mark-to-market losses on our equity investments, primarily in Quanergy Systems, Inc, of $75.6 million and a $5.5 million loss related to the redemption of the 4.875% Senior Notes in the third quarter of 2022. The year ended December 31, 2021 includes a $30.1 million loss recognized in the first quarter of 2021 related to the early redemption of our 6.25% Senior Notes due 2026 at 103.125%. The loss primarily includes the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs. Refer to our Annual Report on Form 10-K for additional information.

(3) The years ended December 31, 2022 and 2021 include current tax expense of $14.7 million and $10.9 million, respectively, related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

Free cash flow

($ in thousands)

 

Three months ended December 31,

 

Full year ended December 31,

 

 

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Net cash provided by operating activities

 

$ 224,860

 

$ 160,925

 

39.7%

 

$ 460,593

 

$ 554,151

 

(16.9%)

Additions to property, plant and equipment and capitalized software

 

(39,640)

 

(43,993)

 

9.9%

 

(150,064)

 

(144,403)

 

(3.9%)

Free cash flow

 

$ 185,220

 

$ 116,932

 

58.4%

 

$ 310,529

 

$ 409,748

 

(24.2%)

Adjusted corporate and other expenses

 

 

Three months ended
December 31,

 

Full year ended
December 31,

(in thousands)

 

2022

 

2021

 

2022

 

2021

Corporate and other expenses (GAAP)

 

$ (65,535)

 

$ (72,752)

 

$ (294,429)

 

$ (288,111)

Restructuring related and other

 

(1,229)

 

5,569

 

11,896

 

9,948

Financing and other transaction costs

 

4,233

 

4,414

 

15,726

 

11,911

Step-up depreciation and amortization

 

286

 

409

 

1,181

 

1,660

Deferred (gain)/loss on derivative instruments

 

(3,213)

 

1,325

 

(1,473)

 

8,327

Total Adjustments

 

77

 

11,717

 

27,330

 

31,846

Adjusted corporate and other expenses

 

$ (65,458)

 

$ (61,035)

 

$ (267,099)

 

$ (256,265)

Adjusted EBITDA

 

 

Three months ended
December 31,

 

Full year ended
December 31,

(in thousands)

 

 

2022

 

2021

 

 

2022

 

 

2021

Net income

 

$

113,150

$

111,972

 

$

310,685

 

$

363,580

Interest expense, net

 

 

43,676

 

44,898

 

 

178,819

 

 

179,291

Provision for income taxes

 

 

11,988

 

578

 

 

86,017

 

 

50,337

Depreciation expense

 

 

32,622

 

30,598

 

 

127,184

 

 

124,959

Amortization of intangible assets

 

 

39,302

 

32,637

 

 

153,787

 

 

134,129

EBITDA

 

 

240,738

 

220,683

 

 

856,492

 

 

852,296

Non-GAAP Adjustments

 

 

 

 

 

 

 

Restructuring related and other

 

 

13,140

 

4,927

 

 

38,013

 

 

23,644

Financing and other transaction costs

 

 

5,053

 

5,247

 

 

7,504

 

 

41,042

Deferred (gain)/loss on derivative instruments

 

 

(14,466)

 

(2,170)

 

 

1,877

 

 

11,294

Adjusted EBITDA

 

$

244,465

$

228,687

 

$

903,886

 

$

928,276

Net debt and leverage

 

 

As of

($ in thousands)

 

December 31,
2022

 

December 31,
2021

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

 

$

256,471

 

$

6,833

Finance lease and other financing obligations, less current portion

 

 

24,742

 

 

26,564

Long-term debt, net

 

 

3,958,928

 

 

4,214,946

Total debt, finance lease, and other financing obligations

 

 

4,240,141

 

 

4,248,343

Less: Discount, net of premium

 

 

(3,360)

 

 

(5,207)

Less: Deferred financing costs

 

 

(29,916)

 

 

(26,682)

Total Gross indebtedness

 

 

4,273,417

 

 

4,280,232

Less: Cash and cash equivalents

 

 

1,225,518

 

 

1,708,955

Net Debt

 

$

3,047,899

 

$

2,571,277

 

 

 

 

 

Adjusted EBITDA (LTM)

 

$

903,886

 

$

928,276

Net leverage ratio

 

 

3.4

 

 

2.8

Guidance

 

For the three months ending March 31, 2023

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$

134.5

 

$

147.0

 

$

75.0

 

$

84.5

 

$

0.48

 

$

0.56

Restructuring related and other

 

4.0

 

 

4.5

 

 

4.0

 

 

4.5

 

 

0.03

 

 

0.03

Financing and other transaction costs

 

6.5

 

 

7.5

 

 

6.0

 

 

7.0

 

 

0.04

 

 

0.05

Step-up depreciation and amortization

 

37.0

 

 

39.0

 

 

37.0

 

 

39.0

 

 

0.24

 

 

0.25

Deferred (gain)/loss on derivative instruments(1)

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

 

 

 

2.0

 

 

2.0

 

 

0.01

 

 

0.01

Deferred taxes and other tax related

 

 

 

 

 

1.0

 

 

2.0

 

 

0.01

 

 

0.01

Non-GAAP

$

182.0

 

$

198.0

 

$

125.0

 

$

139.0

 

$

0.81

 

$

0.91

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

 

153.6

 

 

153.6

(1) 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 operating results. In prior periods such adjustments have been significant to our reported GAAP earnings.

Investors:
Jacob Sayer
(508) 236-1666
jsayer@sensata.com

Media:
Alexia Taxiarchos
(508) 236-1761
ataxiarchos@sensata.com

Source: Sensata Technologies