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Sensata Technologies Holding N.V. Announces Third Quarter 2012 Results

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ALMELO, Netherlands, Oct. 23, 2012 /PRNewswire-FirstCall/ --

  • Third quarter 2012 net revenue was $471.9 million, down $2.4 million from the third quarter 2011 net revenue of $474.3 million.
  • Third quarter 2012 net income was $41.5 million, or $0.23 per diluted share, versus third quarter 2011 net income of $26.2 million, or $0.14 per diluted share.
  • Third quarter 2012 Adjusted net income1 was $84.7 million, or $0.47 per diluted share, versus third quarter 2011 Adjusted net income1 of $90.3 million, or $0.50 per diluted share.
  • A $250 million share repurchase program has been approved by the Board of Directors.

Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the third quarter and nine months ended September 30, 2012.

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

Highlights of the Third Quarter and Nine Months Ended September 30, 2012

Net revenue for the third quarter 2012 was $471.9 million, a decrease of $2.4 million, or (0.5)%, from net revenue for the third quarter 2011 of $474.3 million.  Net income for the third quarter 2012 was $41.5 million, or $0.23 per diluted share.  This compares to net income for the third quarter 2011 of $26.2 million, or $0.14 per diluted share.  Adjusted net income1 for the third quarter 2012 was $84.7 million, or $0.47 per diluted share, which was 18.0% of net revenue.  This compares to Adjusted net income1 for the third quarter 2011 of $90.3 million, or $0.50 per diluted share, which was 19.0% of net revenue.

Net revenue for the nine months ended September 30, 2012 was $1,468.6 million, an increase of $95.0 million, or 6.9%, from $1,373.6 million for the nine months ended September 30, 2011.  Net income for the nine months ended September 30, 2012 was $106.5 million, or $0.59 per diluted share.  This compares to a net (loss) for the nine months ended September 30, 2011 of $(17.9) million, or $(0.10) per diluted share.  Adjusted net income1 for the nine months ended September 30, 2012 was $271.2 million, or $1.49 per diluted share, which was 18.5% of net revenue.  This compares to Adjusted net income1 for the nine months ended September 30, 2011 of $273.5 million, or $1.51 per diluted share, which was 19.9% of net revenue.

"We are satisfied by the performance of the business during a challenging third quarter of 2012," said Tom Wroe, Chief Executive Officer.  "While fourth quarter revenue and earnings will be weaker than expected, the fundamentals supporting Sensata's long-term growth model are intact."

The Company spent $27.8 million, or 5.9% of net revenue, on research, development and engineering related costs in the third quarter of 2012.  These costs reside in the Cost of revenue and the Research and development lines of the Condensed Consolidated Statements of Operations. 

The Company's ending cash balance at September 30, 2012 was $348.2 million.  During the first nine months of 2012, the Company generated cash of $284.7 million from operations, used cash of $31.3 million for investing activities and generated cash of $2.6 million from financing activities. 

The Company recorded an income tax provision of $15.8 million for the third quarter 2012.  Approximately $4.2 million of the provision, or 3.7% of Adjusted EBIT, related to taxes that are payable in cash and approximately $11.7 million related to deferred income tax expense and other income tax expense.

The Company's total indebtedness at September 30, 2012 was $1.83 billion.  The Company's Net debt2 was $1.48 billion resulting in a Net leverage ratio2 of 2.9X. 

Segment Performance


For the three months ended
September 30,

For the nine months ended
September 30,

$ in 000s

2012

2011

2012

2011

Sensors net revenue

$339,845

$344,138

$1,059,533

$952,770

Sensors profit from operations

$94,843

$101,364

$293,639

$292,988

% of Sensors net revenue

27.9%

29.5%

27.7%

30.8%






Controls net revenue

$132,084

$130,175

$409,021

$420,810

Controls profit from operations

$39,623

$43,627

$129,410

$143,942

% of Controls net revenue

30.0%

33.5%

31.6%

34.2%

Guidance

The Company anticipates net revenue of $435 million to $455 million for the fourth quarter 2012.  The Company expects Adjusted net income1 of $81 million to $89 million, or $0.45 to $0.49 per diluted share for the fourth quarter 2012.  This guidance assumes a diluted share count of 181.9 million for the fourth quarter 2012.  The Company is taking actions necessary to respond strategically to the current environment by cutting costs while maintaining investments in key growth programs.

1See Non-GAAP Measures for discussion of Adjusted net income which includes a reconciliation of this measure to Net income/(loss).


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.

Share Repurchase Authorization

In addition, the Company announced today that, under the share repurchase resolution approved at its shareholders' meeting in May 2012, the board of directors has approved a $250 million share repurchase program.  The timing, manner, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors considered appropriate by the Company.  The purchases will be funded by the Company's available cash and free cash flow.  The share repurchase program may be modified or terminated by the board of directors at any time.  "The primary goal of this program will be to offset the dilution associated with the Company's equity compensation programs," said Robert Hureau, Chief Financial Officer.  "Our strong free cash flow will allow us to execute this repurchase program as well as to continue to focus on acquisitions."

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 third quarter and nine months ended September 30, 2012.  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 39616790.  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 39616790.  A replay of the call will be 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 fourth quarter and full year of 2012 and any future actions relating to our share repurchase authorization.  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; adverse developments in the automotive industry; fluctuations in foreign currency exchange, commodity and interest rates; governmental regulations, policies, and practices relating to the Company's non-US operations and international business; competitive pressures; pricing and other pressures from customers; 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; 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 nine months ended







September

30, 2012

 September

30, 2011

September

30, 2012

 September

30, 2011

Net revenue

$471,929

$474,313

$1,468,554

$1,373,580

Operating costs and expenses:





Cost of revenue

308,639

306,286

960,046

868,280

Research and development

13,395

12,250

39,149

33,094

Selling, general and administrative

36,085

41,286

110,194

129,957

Amortization of intangible assets & capitalized software

36,082

35,986

108,407

104,947

Restructuring and special charges

6,487

1,097

14,937

2,830

Total operating costs and expenses

400,688

396,905

1,232,733

1,139,108

Profit from operations

71,241

77,408

235,821

234,472

Interest expense

(24,967)

(26,402)

(75,110)

(73,885)

Interest income

243

228

669

736

Currency translation gain/(loss) and other, net

10,827

(3,157)

4,239

(118,515)

Income before taxes

57,344

48,077

165,619

42,808

Provision for income taxes

15,838

21,830

59,079

60,713

Net income/(loss)

$41,506

$26,247

$106,540

$(17,905)






Net income/(loss) per share:





Basic

$0.23

$0.15

$0.60

$(0.10)

Diluted

$0.23

$0.14

$0.59

$(0.10)






Weighted-average ordinary shares outstanding:





Basic

177,761

175,984

177,328

174,957

Diluted

181,654

181,526

181,647

174,957







 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Comprehensive Income/(Loss)

(Unaudited)

 






($ in 000s)






For the three months ended

For the nine months ended







September

30, 2012

September

30, 2011

September

30, 2012

 September

30, 2011

Net income/(loss)

$41,506

$26,247

$106,540

$(17,905)

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





Net unrealized loss on derivative
            instruments designated and qualifying as
            cash flow hedges

(1,847)

(2,453)

(1,471)

(61)

Defined benefit and retiree healthcare plans

59

217

309

621

Other comprehensive (loss)/income

(1,788)

(2,236)

(1,162)

560

Comprehensive income/(loss)

$39,718

$24,011

$105,378

$(17,345)


 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Balance Sheets

(Unaudited)

 




($ in 000s)




September 30,

2012

December 31,

2011

Assets



Current assets:



     Cash and cash equivalents

$348,164

$92,127

     Accounts receivable, net of allowances

296,416

261,425

     Inventories

185,970

197,542

     Deferred income tax assets

10,067

9,989

     Prepaid expenses and other current assets

37,101

32,083

     Total current assets

877,718

593,166

Property, plant and equipment, net

330,103

338,923

Goodwill

1,752,141

1,746,821

Other intangible assets, net

630,154

737,560

Deferred income tax assets

4,010

4,086

Deferred financing costs

23,311

26,477

Other assets

10,104

9,618

Total assets

$3,627,541

$3,456,651




Liabilities and shareholders' equity



Current liabilities:



     Current portion of long-term debt, capital lease and

          other financing obligations

$13,533

$13,741

     Accounts payable

151,702

155,346

     Income taxes payable

6,682

6,012

     Accrued expenses and other current liabilities

114,680

100,674

     Deferred income tax liabilities

3,521

3,479

     Total current liabilities

290,118

279,252

Deferred income tax liabilities

304,702

262,091

Pension and post-retirement benefit obligations

22,506

22,287

Capital lease and other financing obligations, less current portion

42,565

43,478

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

1,770,830

1,778,491

Other long-term liabilities

26,640

26,101

Total liabilities

2,457,361

2,411,700

Total shareholders' equity

1,170,180

1,044,951

Total liabilities and shareholders' equity

$3,627,541

$3,456,651

 

 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 




 ($ in 000s)




For the nine months ended


September 30,
2012

September 30,
2011

Cash flows from operating activities:



Net income/(Ioss)  

$106,540

$(17,905)

Adjustments to reconcile net income/(loss) to net cash provided by
   operating activities:



Depreciation

40,792

32,835

Amortization of deferred financing costs and original issue discounts

3,861

5,393

Currency translation loss on debt

382

59,958

Loss on repurchase of debt

-

44,014

Share-based compensation

7,250

7,070

Amortization of inventory step-up to fair value

-

1,725

Amortization of intangible assets and capitalized software

108,407

104,947

Gain on disposition of assets

(3,556)

(62)

Deferred income taxes

42,765

45,568

Other non-cash items

(9,209)

9,872

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

(12,574)

(71,059)

Net cash provided by operating activities

284,658

222,356




Cash flows from investing activities:



Acquisition of Magnetic Speed and Position, net of cash received

-

(137,264)

Acquisition of High Temperature Sensing, net of cash received

-

(320,512)

Additions to property, plant and equipment and capitalized software

(36,576)

(64,037)

Proceeds from sale of assets

5,316

600

Net cash used in investing activities

(31,260)

(521,213)




Cash flows from financing activities:



Proceeds from exercise of stock options and issuance of ordinary shares

12,601

17,519

Proceeds from Revolving Credit Facility, net

-

35,000

Proceeds from issuance of debt

-

1,794,500

Payments of debt issuance costs

(209)

(34,223)

Payments on debt

(9,753)

(1,929,780)

Net cash provided by/(used in) financing activities

2,639

(116,984)

Net change in cash and cash equivalents

256,037

(415,841)

Cash and cash equivalents, beginning of period

92,127

493,662

Cash and cash equivalents, end of period

$348,164

$77,821


 

Net Revenue by Business, Geography and End Market




(% of total net revenue)

Three months ended
September 30,

Nine months ended
September 30,


2012

2011

2012

2011

Sensors

72.0%

72.6%

72.1%

69.4%

Controls

28.0%

27.4%

27.9%

30.6%

Total

100.0%

100.0%

100.0%

100.0%




(% of total net revenue)

Three months ended
September 30,

Nine months ended
September 30,


2012

2011

2012

2011

Americas

37.7%

36.2%

37.5%

38.3%

Europe

27.4%

31.0%

29.1%

28.3%

Asia

34.9%

32.8%

33.4%

33.4%

Total

100.0%

100.0%

100.0%

100.0%




(% of total net revenue)

Three months ended
September 30,

Nine months ended
September 30,


2012

2011

2012

2011

European automotive

23.2%

27.4%

24.7%

24.3%

North American automotive

17.2%

15.5%

16.8%

16.1%

Asian automotive

22.3%

20.7%

21.0%

19.7%

Rest of world automotive

0.9%

0.9%

0.8%

1.0%

Heavy vehicle off-road

7.4%

6.9%

7.8%

6.7%

Appliance and heating, 
  ventilation and air-conditioning

9.9%

9.4%

10.1%

11.5%

Industrial

9.4%

9.6%

9.0%

10.6%

All other

9.7%

9.6%

9.8%

10.1%

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 its debt refinancing, unrealized loss/(gain) on other hedges and loss/(gain) on currency translation on debt, amortization of inventory step-up to fair value, 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 costs, 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/(loss) 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/(loss) to Adjusted net income for the three and nine months ended September 30, 2012 and 2011.

 

(In 000s, except per share amounts)

Three months ended

September 30,

Nine months ended

September 30,


2012

2011

2012

2011






Net income/(loss)

$41,506

$26,247

$106,540

$(17,905)

  Debt refinancing costs

-

-

-

44,014

  Unrealized (gain)/loss on other hedges and loss on currency
    translation on debt, net

(17,675)

7,465

(15,475)

88,951

  Amortization of inventory step-up to fair value

-

1,201

-

1,725

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

36,720

36,441

113,863

105,652

  Deferred income tax and other tax expense

11,673

16,926

44,685

45,711

  Amortization of deferred financing costs

1,253

1,980

3,861

5,393

  Restructuring and special charges

11,270

-

17,738

-

Total adjustments

$43,241

$64,013

$164,672

$291,446

Adjusted net income

$84,747

$90,260

$271,212

$273,541

Weighted average diluted shares outstanding used in
  Adjusted net income per diluted share calculation3

 

181,654

181,526

 

181,647

181,187

Adjusted net income per diluted share

$0.47

$0.50

$1.49

$1.51

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:  $0.3 million and $0.8 million for the three and nine months ended September 30, 2012, respectively; Restructuring and special charges:  $1.2 million and $1.4 million for the three and nine months ended September 30, 2012, respectively.  Amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets:  $0.1 million and $0.4 million for the three and nine months ended September 30, 2011, respectively.

3The following unaudited table reconciles diluted outstanding shares in accordance with GAAP to diluted outstanding shares used in the calculation of Adjusted net income per share.  The nine months ended September 30, 2011 GAAP diluted outstanding shares excludes certain shares due to their anti-dilutive nature given the net loss.  The Company believes that including these shares in the diluted number for purposes of calculating Adjusted net income per share is more meaningful to investors.

(In 000s)

Three months ended

September 30,

Nine months ended

September 30,


2012

2011

2012

2011






GAAP – diluted shares

181,654

181,526

181,647

174,957

Shares excluded from calculation due to net loss

-

-

-

6,230

Adjusted net income – diluted shares

181,654

181,526

181,647

181,187

The following unaudited table identifies where in the Condensed Consolidated Statement of Operations the adjustments to reconcile Net income/(loss) to Adjusted net income were recorded for the three and nine months ended September 30, 2012 and 2011.

($ in 000s)

Three months ended

September 30,

Nine months ended

September 30,


2012

2011

2012

2011






Cost of revenue

$1,759

$2,097

$7,560

$3,744

Selling, general and administrative

-

-

-

596

Amortization of intangible assets and capitalized software

35,670

35,545

107,012

103,633

Restructuring and special charges

5,988

-

12,456

-

Interest expense

1,253

1,980

3,861

5,393

Currency translation gain/(loss) and other, net

(13,102)

7,465

(10,584)

132,965

Provision for income taxes

11,673

16,926

44,367

45,115

Total adjustments

$43,241

$64,013

$164,672

$291,446

The following unaudited table reconciles the Company's Projected GAAP earnings per diluted share to Projected Adjusted net income per diluted share for the fourth quarter and full year ended December 31, 2012.  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

December 30, 2012

Full year ended

December 31, 2012


Low End

High End

Low End

High End






Projected GAAP earnings per diluted share

$0.06

$0.08

$0.65

$0.67

  Unrealized (gain)/loss on other hedges and loss on currency
    translation on debt, net

-

-

(0.09)

(0.09)

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

0.20

0.20

0.83

0.83

  Deferred income tax and other tax expense

0.09

0.09

0.32

0.32

  Amortization of deferred financing costs

0.01

0.01

0.04

0.04

  Restructuring and special charges

0.09

0.12

0.18

0.21

Projected Adjusted net income per diluted share

$0.45

$0.49

$1.94

$1.98

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

181,882

181,882

181,705

181,705







SENSATA TECHNOLOGIES HOLDING N.V.

Notes to unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income/(Loss), 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/(Loss), 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, 2011 and the interim condensed consolidated financial statements included in the Company's Form 10-Q for the period ended June 30, 2012.  U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements.  Estimates used will change as new events occur or additional information is obtained.  Actual results could differ from those estimates.  Certain reclassifications have been made to prior periods to conform to current period presentation. 

Contact:




Investors

News Media

Maggie Morris

Linda Megathlin

(508)236-1069

(508)236-1761

mmorris2@sensata.com 

lmegathlin@sensata.com

SOURCE Sensata Technologies Holding N.V.



RELATED LINKS
http://www.sensata.com

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