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.

Jul 29, 2014, 06:00 ET from Sensata Technologies Holding N.V.

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.



RELATED LINKS

http://www.sensata.com