Sensata Technologies Holding N.V. Announces Second Quarter 2014 Results - Second quarter 2014 Net revenue was $575.9 million.

- Second quarter 2014 Net income was $63.9 million, or $0.37 per diluted share.

- Second quarter 2014 Adjusted net income1 was $106.8 million, or $0.62 per diluted share.

ALMELO, the Netherlands, July 29, 2014 /PRNewswire/ -- Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the three and six months ended June 30, 2014.

Highlights of the Three and Six Months ended June 30, 2014

Net revenue for the second quarter 2014 was $575.9 million, an increase of $69.4 million, or 13.7%, from $506.4 million for the second quarter 2013. Net income for the second quarter 2014 was $63.9 million, or $0.37 per diluted share. This compares to Net income for the second quarter 2013 of $20.4 million, or $0.11 per diluted share. Adjusted net income1 for the second quarter 2014 was $106.8 million, or $0.62 per diluted share, which was 18.6% of Net revenue.  This was an increase of 11.6% compared to Adjusted net income1 for the second quarter 2013 of $95.7 million, or $0.54 per diluted share, which was 18.9% of Net revenue.

Net revenue for the six months ended June 30, 2014 was $1,127 million, an increase of $150.6 million, or 15.4%, from $976.8 million for the six months ended June 30, 2013. Net income for the six months ended June 30, 2014 was $132.3 million, or $0.76 per diluted share. This compares to Net income for the six months ended June 30, 2013 of $55.0 million, or $0.31 per diluted share. Adjusted net income1 for the six months ended June 30, 2014 was $204.9 million, or $1.18 per diluted share, which was 18.2% of Net revenue. This was an increase of 12.3% compared to Adjusted net income1 for the six months ended June 30, 2013 of $182.4 million, or $1.01 per diluted share, which was 18.7% of Net revenue.

"We are pleased with our results for the second quarter with Net revenue and earnings near the top end of expectations thanks in part to strong organic growth in the business," said Martha Sullivan, President and Chief Executive Officer. "We are also raising Net revenue guidance for the full year based on growth in acquired businesses."

The Company spent $37.1 million, or 6.4% of Net revenue, on research, development and engineering related costs in the second quarter of 2014 to fund growth initiatives.  These costs reside in both the Cost of revenue and the Research and development lines of the Condensed Consolidated Statements of Operations. 

The Company's ending cash balance at June 30, 2014 was $184.6 million.  During the first half of 2014, the Company generated cash of $217.4 million from operations, used cash of $176.4 million in investing activities and used cash of $174.2 million in financing activities.

The Company recorded an income tax provision of $20.7 million for the second quarter 2014.  Approximately $8.3 million of the provision, or 6.0% of Adjusted EBIT, related to taxes that are payable in cash and approximately $12.4 million related to deferred income tax expense and other income tax expense.

The Company's total indebtedness at June 30, 2014 was $1.7 billion.  The Company's Net debt2 was $1.5 billion, resulting in a Net leverage ratio2 of 2.7x.

In February 2014, our Board of Directors authorized a $250 million share buyback program. During the second quarter, we repurchased 4.0 million ordinary shares under this program for an aggregate purchase price of approximately $170 million.

Segment Performance



Three months ended


Six months ended

$ in 000s


June 30, 2014


June 30, 2013


June 30, 2014


June 30, 2013

Sensors net revenue


$

419,976



$

361,332



$

832,716



$

693,965


Sensors profit from operations


119,714



108,838



236,330



202,030


% of Sensors net revenue


28.5

%


30.1

%


28.4

%


29.1

%














Controls net revenue


$

155,877



$

145,086



$

294,731



$

282,866


Controls profit from operations


46,938



45,716



87,689



89,070


% of Controls net revenue


30.1

%


31.5

%


29.8

%


31.5

%

Guidance

The Company anticipates Net revenue of $535 to $555 million for the third quarter 2014, which, at the midpoint, is 9.2% higher than third quarter 2013 Net revenue of $498.9 million.  The Company further anticipates Adjusted EBITDA of $147 to $154 million for the third quarter 2014.  The Company also expects Adjusted net income1 of $102 to $108 million, or $0.60 to $0.63 per diluted share for the third quarter 2014.  This guidance assumes a diluted share count of 170.7 million for the third quarter 2014.

For the full year 2014, the Company anticipates Net revenue of $2.18 to $2.23 billion which, at the midpoint, represents growth of 11.3% compared to the full year 2013 Net revenue of $1.98 billion.  The Company expects to achieve Adjusted EBITDA of $590 to $602 million for the full year 2014. In addition, the Company expects Adjusted net income1 of $412 to $422 million, or $2.39 to $2.45 per diluted share for the full year 2014.  This guidance assumes a diluted share count of 172.2 million for the full year 2014.  Third quarter and full year guidance excludes the pending acquisition of DeltaTech Controls.

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, 2014.  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 71754111.  A live webcast and a replay of the conference call will also be available on the investor relations page of the Company's website at http://investors.sensata.com.

About Sensata Technologies Holding N.V.

Sensata Technologies Holding N.V. is one of the world's leading suppliers of sensing, electrical protection, control and power management solutions with operations and business centers in ten 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 2014.  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; general conditions in the automotive industry; continued fundamental changes in the industries in which the Company operates; the Company's ability to maintain existing relationships with customers and its exposure to industry and customer-specific demand fluctuations; pricing and other pressures from customers; resources required to integrate acquired companies; risks associated with the Company's non-US operations; the Company's ability to attract and retain key personnel; competitive pressures in the markets in which the Company competes, which could require the Company to lower its prices or result in reduced demand for its products; 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, 2014


June 30, 2013


June 30, 2014


June 30, 2013

Net revenue


$

575,853



$

506,418



$

1,127,447



$

976,831


Operating costs and expenses:













Cost of revenue


368,446



322,699



725,645



631,381


Research and development


18,492



14,308



36,156



27,924


Selling, general and administrative


50,638



42,821



95,310



81,075


Amortization of intangible assets


32,561



33,650



64,577



67,036


Restructuring and special charges


1,740



2,350



2,605



4,026


Total operating costs and expenses


471,877



415,828



924,293



811,442


Profit from operations


103,976



90,590



203,154



165,389


Interest expense


(23,587)



(23,962)



(47,099)



(48,097)


Interest income


281



400



589



548


Other, net


3,932



(32,200)



4,470



(34,801)


Income before taxes


84,602



34,828



161,114



83,039


Provision for income taxes


20,709



14,457



28,848



28,003


Net income


$

63,893



$

20,371



$

132,266



$

55,036















Net income per share:













Basic


$

0.37



$

0.12



$

0.77



$

0.31


Diluted


$

0.37



$

0.11



$

0.76



$

0.31















Weighted-average ordinary shares outstanding:










Basic


170,748



175,210



171,413



176,573


Diluted


172,918



178,407



173,531



179,965


 

 

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,

2014


June 30,
2013


June 30,
2014


June 30,
2013

Net income


$

63,893



$

20,371



$

132,266



$

55,036


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













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


1,888



(1,759)



4,053



6,848


Amortization of net loss and prior service (credit)/cost on defined benefit and retiree healthcare plans


(129)



418



(200)



872


Other comprehensive income/(loss)


1,759



(1,341)



3,853



7,720


Comprehensive income


$

65,652



$

19,030



$

136,119



$

62,756


 

 

SENSATA TECHNOLOGIES HOLDING N.V.


Condensed Consolidated Balance Sheets


(Unaudited)




($ in 000s)









June 30, 2014


December 31, 2013

Assets







Current assets:







Cash and cash equivalents


$

184,638



$

317,896


Accounts receivable, net of allowances


352,623



291,723


Inventories


226,058



183,395


Deferred income tax assets


21,817



20,975


Prepaid expenses and other current assets


33,051



41,642


Total current assets


818,187



855,631


Property, plant and equipment, net


392,470



344,657


Goodwill


1,787,224



1,756,049


Other intangible assets, net


513,427



502,388


Deferred income tax assets


9,992



10,623


Deferred financing costs


17,329



19,132


Other assets


11,595



10,344


Total assets


$

3,550,224



$

3,498,824









Liabilities and shareholders' equity







Current liabilities:







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


$

7,984



$

8,100


Accounts payable


223,163



177,539


Income taxes payable


7,679



5,785


Accrued expenses and other current liabilities


135,929



123,239


Deferred income tax liabilities


3,859



3,829


Total current liabilities


378,614



318,492


Deferred income tax liabilities


307,653



281,364


Pension and post-retirement benefit obligations


19,568



19,508


Capital lease and other financing obligations, less current portion


47,359



48,845


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


1,664,812



1,667,021


Other long-term liabilities


18,102



22,006


Total liabilities


2,436,108



2,357,236


Total shareholders' equity


1,114,116



1,141,588


Total liabilities and shareholders' equity


$

3,550,224



$

3,498,824


 

SENSATA TECHNOLOGIES HOLDING N.V.


Condensed Consolidated Statements of Cash Flows


(Unaudited)


($ in 000s)




For the six months ended



June 30, 2014


June 30, 2013

Cash flows from operating activities:







Net income


$

132,266



$

55,036


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







Depreciation


30,209



25,361


Amortization of deferred financing costs and original issue discounts


2,386



2,263


Currency remeasurement loss/(gain) on debt


49



(185)


Share-based compensation


6,351



4,602


Loss on debt refinancing




7,111


Amortization of inventory step-up to fair value


907




Amortization of intangible assets


64,577



67,036


(Gain)/loss on disposition of assets


(578)



806


Deferred income taxes


16,695



12,621


Gains from insurance proceeds


(2,417)




Unrealized (gain)/loss on hedges and other non-cash items


(3,475)



24,037


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


(29,595)



(18,562)


Net cash provided by operating activities


217,375



180,126









Cash flows from investing activities:







Additions to property, plant and equipment and capitalized software


(67,199)



(33,853)


Insurance proceeds


2,417



1,400


Proceeds from the sale of assets


5,467




Acquisition payments, net of cash received


(117,085)



(411)


Net cash used in investing activities


(176,400)



(32,864)









Cash flows from financing activities:







Proceeds from exercise of stock options and issuance of ordinary shares


11,197



11,163


Proceeds from issuance of debt


35,000



500,000


Payments on debt


(39,291)



(706,658)


Repurchase of ordinary shares from SCA


(169,680)




Payments to repurchase ordinary shares


(11,459)



(125,218)


Payments of debt issuance costs




(5,741)


Net cash used in financing activities


(174,233)



(326,454)


Net change in cash and cash equivalents


(133,258)



(179,192)


Cash and cash equivalents, beginning of period


317,896



413,539


Cash and cash equivalents, end of period


$

184,638



$

234,347












 

Net Revenue by Business, Geography and End Market


(% of total net revenue)


Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013

Sensors


72.9

%


71.4

%


73.9

%


71.0

%

Controls


27.1

%


28.6

%


26.1

%


29.0

%

Total


100.0

%


100.0

%


100.0

%


100.0

%











(% of total net revenue)


Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013

Americas


38.2

%


38.5

%


38.7

%


37.9

%

Europe


29.0

%


29.9

%


29.1

%


29.9

%

Asia


32.8

%


31.6

%


32.2

%


32.2

%

Total


100.0

%


100.0

%


100.0

%


100.0

%











(% of total net revenue)


Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013

European automotive


24.1

%


24.3

%


24.6

%


24.3

%

North American automotive


16.2

%


15.9

%


16.7

%


15.8

%

Asian automotive


20.1

%


19.5

%


20.1

%


19.9

%

Rest of world automotive


0.5

%


0.9

%


0.5

%


1.0

%

Heavy vehicle off-road


11.3

%


9.4

%


11.3

%


9.0

%

Appliance and heating, ventilation and air-conditioning


9.1

%


10.4

%


8.9

%


10.6

%

Industrial


8.0

%


9.4

%


7.8

%


9.2

%

All other


10.7

%


10.2

%


10.1

%


10.2

%

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 costs associated with debt refinancing and other financing activities, unrealized (gain)/loss on other hedges and (gain)/loss on currency remeasurement on debt, depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory, deferred income tax and other tax expense, amortization of deferred financing costs, 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, 2014 and 2013.

(In 000s, except per share amounts)


Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013

Net income


$

63,893



$

20,371



$

132,266



$

55,036


Financing and other transaction costs


1,190



8,577



1,258



9,179


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


(6,430)



23,089



(10,624)



26,318


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


33,428



33,955



68,050



67,867


Deferred income tax and other tax expense


12,430



5,294



13,043



12,966


Amortization of deferred financing costs


1,400



1,026



2,386



2,263


Restructuring and special charges


921



3,411



(1,496)



8,793


Total adjustments


$

42,939



$

75,352



$

72,617



$

127,386


Adjusted net income


$

106,832



$

95,723



$

204,883



$

182,422


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


172,918



178,407



173,531



179,965


Adjusted net income per diluted share


$

0.62



$

0.54



$

1.18



$

1.01


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 expense/(benefit)associated with the reconciling items above would be as follows: Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory:  $0.2 million and $0.2 million for the three months ended June 30, 2014 and 2013, respectively, and $0.8 million and $0.5 million for the six months ended June 30, 2014 and 2013, respectively; Restructuring and special charges:  $0.0 million and $0.6 million for the three months ended June 30, 2014 and 2013, respectively, and $0.0 million and $1.9 million for the six months ended June 30, 2014 and 2013, 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, 2014 and 2013.

($ in 000s)


Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013

Cost of revenue


$

1,228



$

1,722



$

1,785



$

5,997


Selling, general and administrative


1,190



369



1,258



971


Amortization of intangible assets


32,200



33,326



63,848



66,330


Restructuring and special charges


921



2,318



921



4,333


Interest expense


1,400



1,026



2,386



2,263


Other, net


(6,430)



31,297



(10,624)



34,526


Provision for income taxes


12,430



5,294



13,043



12,966


Total adjustments


$

42,939



$

75,352



$

72,617



$

127,386


The following unaudited table reconciles the Company's projected GAAP earnings per share to projected Adjusted net income per diluted share for the three months ended September 30, 2014 and full year ended December 31, 2014.  The amounts in the table below have been calculated based on unrounded numbers.  Accordingly, certain amounts may not add due to the effect of rounding.



Three months ended

September 30, 2014


Full year ended

December 31, 2014



Low End


High End


Low End


High End














Projected GAAP earnings per diluted share


$

0.35



$

0.38



$

1.47



$

1.53


Financing and other transaction costs






0.01



0.01


Deferred gain on other hedges and gain on currency remeasurement on debt, net






(0.06)



(0.06)


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


0.18



0.18



0.76



0.76


Deferred income tax and other tax expense


0.06



0.06



0.19



0.19


Amortization of deferred financing costs


0.01



0.01



0.03



0.03


Restructuring and special charges






(0.01)



(0.01)


Projected Adjusted net income per diluted share


$

0.60



$

0.63



$

2.39



$

2.45


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


170,700



170,700



172,200



172,200


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, 2013 and the interim condensed consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2014.  U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements.  Estimates used may change as new events occur or additional information is obtained.  Actual results could differ from those estimates.

Contact:






Investors


News Media

Jacob Sayer


Linda Megathlin

(508) 236-3800


(508) 236-1761

investors@sensata.com


lmegathlin@sensata.com

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

SOURCE Sensata Technologies Holding N.V.



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