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Sensata Technologies Holding N.V. Announces Second Quarter 2013 Results

-- Second quarter 2013 net revenue was a record $506.4 million, an increase of 0.4% from the second quarter 2012 net revenue of $504.6 million.

-- Second quarter 2013 net income was $20.4 million, or $0.11 per diluted share, versus second quarter 2012 net income of $26.1 million, or $0.14 per diluted share.

-- Second quarter 2013 Adjusted net income(1) was $95.7 million, or $0.54 per diluted share, versus second quarter 2012 Adjusted net income(1) of $97.5 million, or $0.54 per diluted share.

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ALMELO, Netherlands, July 23, 2013 /PRNewswire/ -- Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the second quarter and six months ended June 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20070227/CLTU192LOGO )

Highlights of the Second Quarter and Six Months ended June 30, 2013

Net revenue for the second quarter 2013 was $506.4 million, an increase of $1.8 million, or 0.4%, from net revenue for the second quarter 2012 of $504.6 million. Net income for the second quarter 2013 was $20.4 million, or $0.11 per diluted share.  This compares to net income for the second quarter 2012 of $26.1 million, or $0.14 per diluted share. Adjusted net income1 for the second quarter 2013 was $95.7 million, or $0.54 per diluted share, which was 18.9% of net revenue.  This compares to Adjusted net income1 for the second quarter 2012 of $97.5 million, or $0.54 per diluted share, which was 19.3% of net revenue.

Net revenue for the six months ended June 30, 2013 was $976.8 million, a decrease of $(19.8) million, or (2.0)%, from $996.6 million for the six months ended June 30, 2012. Net income for the six months ended June 30, 2013 was $55.0 million, or $0.31 per diluted share. This compares to net income for the six months ended June 30, 2012 of $65.0 million, or $0.36 per diluted share. Adjusted net income1 for the six months ended June 30, 2013 was $182.4 million, or $1.01 per diluted share, which was 18.7% of net revenue. This compares to Adjusted net income1 for the six months ended June 30, 2012 of $186.5 million, or $1.03 per diluted share, which was 18.7% of net revenue.

"We are pleased with our results as we delivered record Net revenue for the second quarter and Adjusted net income1 per diluted share at the high end of our guidance," said Martha Sullivan, President and Chief Executive Officer.  "While markets continue to be dynamic, we expect to see improvement in the second half as compared to last year." 

The Company spent $29.8 million, or 5.9% of net revenue, on research, development and engineering related costs in the second quarter of 2013.  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 June 30, 2013 was $234.3 million.  During the first half, the Company generated cash of $180.1 million from operations, used cash of $32.9 million in investing activities and used cash of $326.5 million in financing activities.  Financing activities included net payments on debt of $206.7 million and $125.2 million used to repurchase ordinary shares.

The Company recorded an income tax provision of $14.5 million for the second quarter 2013.  Approximately $9.2 million of the provision, or 7.2% of Adjusted EBIT, related to taxes that are payable in cash and approximately $5.3 million related to deferred income tax expense and other income tax expense.

The Company's total indebtedness at June 30, 2013 was $1.6 billion.  The Company's Net debt2 was $1.4 billion resulting in a Net leverage ratio2 of 2.7X. 

During the second quarter, the Company acquired 2.2 million shares under a previously announced share repurchase plan at an average price of $32.21

Segment Performance



Three months ended



Six months ended


$ in 000s



June 30,

2013




June 30,

2012




June 30,

2013




June 30,

2012


Sensors net revenue


$

361,332



$

360,094



$

693,965



$

719,688


Sensors profit from operations


$

108,838



$

100,856



$

202,030



$

198,796


% of Sensors net revenue


30.1

%


28.0

%


29.1

%


27.6

%










Controls net revenue


$

145,086



$

144,523



$

282,866



$

276,937


Controls profit from operations


$

45,716



$

47,626



$

89,070



$

89,787


% of Controls net revenue


31.5

%


33.0

%


31.5

%


32.4

%

 

Guidance

For the full year 2013, the Company anticipates net revenue of $1.94 to $2.00 billion which, at the midpoint, represents growth of 2.9% compared to the full year 2012 net revenue of $1.91 billion.  The Company further expects Adjusted Net Income1 of $2.04 to $2.16 per diluted share, for the full year 2013.  At the midpoint, this represents 7.1% growth compared to the full year 2012 Adjusted net income1 per diluted share of $1.96.  This guidance assumes a diluted share count of 179.3 million for the full year 2013.

The Company anticipates net revenue of $485 million to $505 million for the third quarter 2013, which, at the midpoint, is 4.9% higher than third quarter 2012 net revenue of $471.9 million.  The Company also expects Adjusted net income1 of $0.52 to $0.56 per diluted share for the third quarter 2013.  At the midpoint, this represents 14.9% growth compared to third quarter 2012 Adjusted net income per diluted share of $0.47.  This guidance assumes a diluted share count of 178.6 million for the third quarter 2013.

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.

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 ended June 30, 2013.  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 14294455.  A live webcast of the conference call will also be available on the investor relations page of the Company's website 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 855-859-2056 and the non-U.S. dial in number is 404-537-3406.  The replay passcode is 14294455.  A replay of the call will be also 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 with operations and business centers in eleven 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 our future prospects, developments and business.  Such forward-looking statements include, among other things, the Company's anticipated results for the third quarter and full year of 2013.  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: worldwide economic conditions; governmental regulations, policies, and practices relating to the Company's non-US operations and international business; fluctuations in foreign currency exchange, commodity and interest rates; competitive pressures; pricing and other pressures from customers; adverse developments in the automotive industry; integration of acquired companies; litigation and disputes involving the Company, including the extent of product liability and warranty claims asserted against the Company; non-performance by suppliers; fundamental changes in the industries in which the Company operates; the loss of one or more suppliers of raw materials; 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 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 six months ended





June 30,

2013




June 30,

2012




June 30,

2013




June 30,

2012


Net revenue


$

506,418



$

504,617



$

976,831



$

996,625


Operating costs and expenses:









Cost of revenue


322,699



326,159



631,381



651,407


Research and development


14,308



12,460



27,924



25,754


Selling, general and administrative


42,821



35,530



81,075



74,109


Amortization of intangible assets


33,650



36,199



67,036



72,325


Restructuring and special charges


2,350



7,887



4,026



8,450


Total operating costs and expenses


415,828



418,235



811,442



832,045


Profit from operations


90,590



86,382



165,389



164,580


Interest expense


(23,962)



(24,928)



(48,097)



(50,143)


Interest income


400



185



548



426


Other, net


(32,200)



(10,761)



(34,801)



(6,588)


Income before taxes


34,828



50,878



83,039



108,275


Provision for income taxes


14,457



24,760



28,003



43,241


Net income


$

20,371



$

26,118



$

55,036



$

65,034











Net income per share:









Basic


$

0.12



$

0.15



$

0.31



$

0.37


Diluted


$

0.11



$

0.14



$

0.31



$

0.36











Weighted-average ordinary shares outstanding:







Basic


175,210



177,457



176,573



177,111


Diluted


178,407



181,781



179,965



181,643


 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


($ in 000s)



















For the three months ended


For the six months ended





June 30,

2013




June 30,

2012




June 30,

2013




June 30,

2012


Net income


$

20,371



$

26,118



$

55,036



$

65,034


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









Net unrealized (loss)/gain on derivative instruments designated and qualifying as cash flow hedges


(1,759)



536



6,848



376


Defined benefit and retiree healthcare plans


418



125



872



250


Other comprehensive (loss)/income


(1,341)



661



7,720



626


Comprehensive income


$

19,030



$

26,779



$

62,756



$

65,660


 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Balance Sheets

(Unaudited)


($ in 000s)







June 30,

2013


December 31,

2012

Assets





Current assets:





Cash and cash equivalents


$

234,347



$

413,539


Accounts receivable, net of allowances


310,136



258,114


Inventories


173,549



176,233


Deferred income tax assets


12,871



12,871


Prepaid expenses and other current assets


37,265



33,923


Total current assets


768,168



894,680


Property, plant and equipment, net


331,303



328,199


Goodwill


1,754,385



1,754,107


Other intangible assets, net


551,171



603,883


Deferred income tax assets


37,286



38,971


Deferred financing costs


21,014



22,119


Other assets


5,712



6,432


Total assets


$

3,469,039



$

3,648,391







Liabilities and shareholders' equity





Current liabilities:





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


$

13,775



$

12,878


Accounts payable


177,113



152,964


Income taxes payable


11,004



8,884


Accrued expenses and other current liabilities


123,383



100,112


Deferred income tax liabilities


3,525



3,525


Total current liabilities


328,800



278,363


Deferred income tax liabilities


285,182



271,902


Pension and post-retirement benefit obligations


26,433



32,747


Capital lease and other financing obligations, less current portion


50,562



43,425


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


1,564,487



1,768,352


Other long-term liabilities


37,944



31,308


Total liabilities


2,293,408



2,426,097


Total shareholders' equity


1,175,631



1,222,294


Total liabilities and shareholders' equity


$

3,469,039



$

3,648,391


 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


($ in 000s)







For the six months ended




June 30,

2013



June 30,

2012


Cash flows from operating activities:








Net income


$

55,036



$

65,034


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






Depreciation


25,361



27,712


Amortization of deferred financing costs and original issue discounts


2,263



2,608


Currency remeasurement gain on debt


(185)



(79)


Share-based compensation


4,602



4,698


Loss on debt refinancing


7,111




Amortization of intangible assets


67,036



72,325


Loss/(gain) on disposition of assets


806



(3,563)


Deferred income taxes


12,621



30,495


Unrealized loss on hedges and other non-cash items


24,037



2,581


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


(18,562)



(12,035)


Net cash provided by operating activities


180,126



189,776







Cash flows from investing activities:





Additions to property, plant and equipment and capitalized software


(33,853)



(27,481)


Insurance proceeds


1,400




Proceeds from sale of assets




4,216


Acquisition payments


(411)




Net cash used in investing activities


(32,864)



(23,265)







Cash flows from financing activities:





Proceeds from exercise of stock options and issuance of ordinary shares


11,163



8,909


Proceeds from issuance of debt


500,000




Payments on debt


(706,658)



(6,503)


Payments to repurchase ordinary shares


(125,218)




Payments of debt issuance costs


(5,741)



(209)


Net cash (used in)/provided by financing activities


(326,454)



2,197


Net change in cash and cash equivalents


(179,192)



168,708


Cash and cash equivalents, beginning of period


413,539



92,127


Cash and cash equivalents, end of period


$

234,347



$

260,835


 

Net Revenue by Business, Geography and End Market

(% of total net revenue)


Three months ended
June 30,


Six months ended
June 30,



2013


2012


2013


2012

Sensors


71.4

%


71.4

%


71.0

%


72.2

%

Controls


28.6

%


28.6

%


29.0

%


27.8

%

Total


100.0

%


100.0

%


100.0

%


100.0

%



(% of total net revenue)


Three months ended
June 30,


Six months ended
June 30,



2013


2012


 

2013


 

2012

Americas


38.5

%


38.1

%


 

37.9

%


 

37.5

%

Europe


29.9

%


28.8

%


 

29.9

%


 

29.9

%

Asia


31.6

%


33.1

%


 

32.2

%


 

32.6

%

Total


100.0

%


100.0

%


 

100.0

%


 

100.0

%

 

 

(% of total net revenue)


Three months ended
June 30,


Six months ended
June 30,



2013


2012


2013


2012

European automotive


24.3

%


24.1

%


24.3

%


25.5

%

North American automotive


15.9

%


16.7

%


15.8

%


16.6

%

Asian automotive


19.5

%


20.3

%


19.9

%


20.3

%

Rest of world automotive


0.9

%


0.8

%


1.0

%


0.8

%

Heavy vehicle off-road


9.4

%


8.1

%


9.0

%


7.9

%

Appliance and heating, ventilation and air-conditioning


10.4

%


10.9

%


10.6

%


10.2

%

Industrial


9.4

%


9.4

%


9.2

%


8.9

%

All other


10.2

%


9.7

%


10.2

%


9.8

%

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 debt refinancing costs and other financing transactions, deferred loss/(gain) on other hedges and loss/(gain) on currency remeasurement on debt, net, amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets, deferred income tax and other tax expense, amortization of deferred financing costs, restructuring and special charges, and other costs.  The Company believes Adjusted net income provides investors with helpful information with respect to the performance of the Company's 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 three and six months ended June 30, 2013 and 2012.

 

(In 000s, except per share amounts)


Three months ended

June 30,


Six months ended

June 30,




2013




2012




2013




2012


Net income


$

20,371



$

26,118



$

55,036



$

65,034


Debt refinancing costs and other financing transactions


8,577





9,179




Deferred loss/(gain) on other hedges and loss/(gain) on currency remeasurement on debt, net


23,089



6,816



26,318



2,200


Amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets


33,955



37,528



67,867



77,143


Deferred income tax and other tax expense


5,294



19,383



12,966



33,012


Amortization of deferred financing costs


1,026



1,252



2,263



2,608


Restructuring and special charges


3,411



6,387



8,793



6,468


Total adjustments


$

75,352



$

71,366



$

127,386



$

121,431


Adjusted net income


$

95,723



$

97,484



$

182,422



$

186,465


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


178,407



181,781



179,965



181,643


Adjusted net income per share


$

0.54



$

0.54



$

1.01



$

1.03


 

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.  As the Company treats deferred income tax and other tax expense 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 each period presented.  The theoretical current income tax associated with the reconciling items above would be as follows:  Amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets:  $0.2 million and $0.3 million for the three months ended June 30, 2013 and 2012, respectively, and $0.5 million and $0.5 million for the six months ended June 30, 2013 and 2012, respectively; Restructuring and special charges:  $0.6 million and $0.3 million for the three months ended June 30, 2013 and 2012, respectively, and $1.9 million and $0.3 million for the six months ended June 30, 2013 and 2012, respectively.

The following unaudited table identifies where in the Condensed Consolidated Statement of Operations the adjustments to reconcile Net income to Adjusted net income were recorded for the three and six months ended June 30, 2013 and 2012.

 

($ in 000s)


Three months ended

June 30,



Six months ended

June 30,





2013




2012




2013




2012


Cost of revenue


$

1,722



$

1,857



$

5,997



$

5,801


Selling, general and administrative


369





971




Amortization of intangible assets


33,326



35,671



66,330



71,342


Restructuring and special charges


2,318



6,387



4,333



6,468


Interest expense


1,026



1,252



2,263



2,608


Other, net


31,297



7,134



34,526



2,518


Provision for income taxes


5,294



19,065



12,966



32,694


Total adjustments


$

75,352



$

71,366



$

127,386



$

121,431


 

The following unaudited table reconciles the Company's Projected GAAP earnings per share to Projected Adjusted net income per diluted share for the third quarter ended September 30, 2013 and full year ended December 31, 2013.  The amounts in the tables below have been calculated based on unrounded numbers.  Accordingly, certain amounts may not add due to the effect of rounding.

 



Three months ended

September 30, 2013



Full year ended

December 31, 2013




Low End



High End



Low End



High End


Projected GAAP earnings per diluted share


$

0.30



$

0.34



$

0.87



$

0.99


Debt refinancing costs and other financing transactions






0.05



0.05


Deferred loss/(gain) on other hedges and loss/(gain) on currency remeasurement on debt, net






0.15



0.15


Amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets


0.19



0.19



0.76



0.76


Deferred income tax and other tax expense


0.06



0.06



0.18



0.18


Amortization of deferred financing costs


0.01



0.01



0.03



0.03


Restructuring and special charges


(0.03)



(0.03)






Projected Adjusted net income per diluted share


$

0.52



$

0.56



$

2.04



$

2.16


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


178,600



178,600



179,300



179,300


 

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, 2012 and the interim condensed consolidated financial statements included in the Company's Form 10-Q for the period ended March 31, 2013.  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

SOURCE Sensata Technologies Holding N.V.



RELATED LINKS
http://www.sensata.com

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