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.

Jul 23, 2013, 06:00 ET from Sensata Technologies Holding N.V.

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

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