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

-- Third quarter 2013 Net revenue was $498.9 million, an increase of 5.7% from the third quarter 2012 Net revenue of $471.9 million.

-- Third quarter 2013 Net income was $66.0 million, or $0.37 per diluted share, versus third quarter 2012 Net income of $41.5 million, or $0.23 per diluted share.

-- Third quarter 2013 Adjusted net income1 was $97.9 million, or $0.55 per diluted share, versus third quarter 2012 Adjusted net income1 of $84.7 million, or $0.47 per diluted share.

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ALMELO, Netherlands, Oct. 29, 2013 /PRNewswire/ -- Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the three and nine months ended September 30, 2013.

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

Highlights of the Three and Nine Months ended September 30, 2013

Net revenue for the third quarter 2013 was $498.9 million, an increase of $27.0 million, or 5.7%, from Net revenue for the third quarter 2012 of $471.9 million. Net income for the third quarter 2013 was $66.0 million, or $0.37 per diluted share.  This compares to Net income for the third quarter 2012 of $41.5 million, or $0.23 per diluted share. Adjusted net income1 for the third quarter 2013 was $97.9 million, or $0.55 per diluted share, which was 19.6% of Net revenue.  This was an increase of 15.5% compared to Adjusted net income1 for the third quarter 2012 of $84.7 million, or $0.47 per diluted share, which was 18.0% of Net revenue.

Net revenue for the nine months ended September 30, 2013 was $1,475.7 million, an increase of $7.2 million, or 0.5%, from $1,468.6 million for the nine months ended September 30, 2012. Net income for the nine months ended September 30, 2013 was $121.1 million, or $0.67 per diluted share. This compares to Net income for the nine months ended September 30, 2012 of $106.5 million, or $0.59 per diluted share. Adjusted net income1 for the nine months ended September 30, 2013 was $280.3 million, or $1.56 per diluted share, which was 19.0% of Net revenue. This was an increase of 3.3% compared to Adjusted net income1 for the nine months ended September 30, 2012 of $271.2 million, or $1.49 per diluted share, which was 18.5% of Net revenue.

"We are pleased with our results for the third quarter which came in slightly better than expected with earnings growing at over twice the pace of Net revenue," said Martha Sullivan, President and Chief Executive Officer.  "The balance of the year looks in line with our expectations for improved Net revenue growth over last year."

The Company spent $30.6 million, or 6.1% of Net revenue, on research, development and engineering related costs in the third 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 September 30, 2013 was $348.2 million.  During the first nine months, the Company generated cash of $308.8 million from operations, used cash of $49.2 million in investing activities and used cash of $324.9 million in financing activities.

The Company recorded an income tax provision of $20.2 million for the third quarter 2013.  Approximately $7.6 million of the provision, or 6.0% of Adjusted EBIT, related to taxes that are payable in cash and approximately $12.6 million related to deferred income tax expense and other income tax expense.

The Company's total indebtedness at September 30, 2013 was $1.6 billion.  The Company's Net debt2 was $1.3 billion resulting in a Net leverage ratio2 of 2.4X. 

In October 2012, our Board of Directors authorized a $250.0 million share buyback program. Since the share buyback program was authorized, we have repurchased 4.4 million ordinary shares under this program for an aggregate purchase price of approximately $141.3 million.  On October 28, 2013, the Board of Directors amended the terms of the share buyback program, and reset the amount available for share repurchases to $250.0 million.  Under the amended program, the Company may repurchase ordinary shares from time to time, at such times and in amounts to be determined by Company management, based on market conditions, legal requirements and other corporate considerations, in the open market or in privately negotiated transactions. The Company expects that any repurchase of shares will be funded by cash from operations.

Segment Performance



Three months ended


Nine months ended

$ in 000s


September 30, 2013


September 30, 2012


September 30, 2013


September 30, 2012

Sensors net revenue


$

358,159



$

339,845



$

1,052,124



$

1,059,533


Sensors profit from operations


$

109,918



$

94,843



$

311,948



$

293,639


% of Sensors net revenue


30.7

%


27.9

%


29.6

%


27.7

%










Controls net revenue


$

140,727



$

132,084



$

423,593



$

409,021


Controls profit from operations


$

41,638



$

39,623



$

130,708



$

129,410


% of Controls net revenue


29.6

%


30.0

%


30.9

%


31.6

%

Guidance

The Company anticipates net revenue of $485 million to $505 million for the fourth quarter 2013, which, at the midpoint, is 11.1% higher than fourth quarter 2012 Net revenue of $445.4 million.  The Company also expects Adjusted net income1 of $0.53 to $0.57 per diluted share for the fourth quarter 2013.  At the midpoint, this represents 17.0% growth compared to fourth quarter 2012 Adjusted net income per diluted share of $0.47.  This guidance assumes a diluted share count of 178.7 million for the fourth 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 third quarter ended September 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 74857638.  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 74857638.  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 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 fourth quarter 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; litigation and disputes involving the Company, including the extent of product liability and warranty claims asserted against the Company; non-performance by suppliers; integration of acquired companies; 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 nine months ended



September 30, 2013


September 30, 2012


September 30, 2013


September 30, 2012

Net revenue


$

498,886



$

471,929



$

1,475,717



$

1,468,554


Operating costs and expenses:









Cost of revenue


309,061



308,639



940,442



960,046


Research and development


15,189



13,395



43,113



39,149


Selling, general and administrative


40,355



36,085



121,430



110,194


Amortization of intangible assets


33,670



36,082



100,706



108,407


Restructuring and special charges


512



6,487



4,538



14,937


Total operating costs and expenses


398,787



400,688



1,210,229



1,232,733


Profit from operations


100,099



71,241



265,488



235,821


Interest expense


(23,476)



(24,967)



(71,573)



(75,110)


Interest income


232



243



780



669


Other, net


9,390



10,827



(25,411)



4,239


Income before taxes


86,245



57,344



169,284



165,619


Provision for income taxes


20,223



15,838



48,226



59,079


Net income


$

66,022



$

41,506



$

121,058



$

106,540











Net income per share:









Basic


$

0.38



$

0.23



$

0.69



$

0.60


Diluted


$

0.37



$

0.23



$

0.67



$

0.59











Weighted-average ordinary shares outstanding:







Basic


175,941



177,761



176,362



177,328


Diluted


178,629



181,654



179,519



181,647


 

 

SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)










($ in 000s)











For the three months ended


For the nine months ended



September 30, 2013


September 30, 2012


September 30, 2013


September 30, 2012

Net income


$

66,022



$

41,506



$

121,058



$

106,540


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









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


(7,892)



(1,847)



(1,044)



(1,471)


Amortization of net loss and prior
         service cost on defined benefit and
         retiree healthcare plans


434



59



1,306



309


Other comprehensive (loss)/income


(7,458)



(1,788)



262



(1,162)


Comprehensive income


$

58,564



$

39,718



$

121,320



$

105,378


 

 


SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Balance Sheets
(Unaudited)






($ in 000s)







September 30, 2013


December 31, 2012

Assets





Current assets:





Cash and cash equivalents


$

348,199



$

413,539


Accounts receivable, net of allowances


303,739



258,114


Inventories


181,605



176,233


Deferred income tax assets


12,655



12,871


Prepaid expenses and other current assets


33,888



33,923


Total current assets


880,086



894,680


Property, plant and equipment, net


336,224



328,199


Goodwill


1,754,385



1,754,107


Other intangible assets, net


521,537



603,883


Deferred income tax assets


39,919



38,971


Deferred financing costs


20,084



22,119


Other assets


6,739



6,432


Total assets


$

3,558,974



$

3,648,391







Liabilities and shareholders' equity





Current liabilities:





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


$

14,078



$

12,878


Accounts payable


177,607



152,964


Income taxes payable


12,189



8,884


Accrued expenses and other current liabilities


140,439



100,112


Deferred income tax liabilities


3,525



3,525


Total current liabilities


347,838



278,363


Deferred income tax liabilities


296,971



271,902


Pension and post-retirement benefit obligations


26,417



32,747


Capital lease and other financing obligations, less current portion


49,747



43,425


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


1,561,835



1,768,352


Other long-term liabilities


33,472



31,308


Total liabilities


2,316,280



2,426,097


Total shareholders' equity


1,242,694



1,222,294


Total liabilities and shareholders' equity


$

3,558,974



$

3,648,391


 

 

SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Cash Flows
(Unaudited)






($ in 000s)







For the nine months ended



September 30, 2013


September 30, 2012

Cash flows from operating activities:





Net income


$

121,058



$

106,540


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





Depreciation


38,034



40,792


Amortization of deferred financing costs and original
                issue discounts


3,291



3,861


Currency remeasurement (gain)/loss on debt


(354)



382


Share-based compensation


7,358



7,250


Loss on debt refinancing


7,111




Amortization of intangible assets


100,706



108,407


Loss/(gain) on disposition of assets


946



(3,556)


Deferred income taxes


24,598



42,765


Insurance proceeds


(5,000)




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


12,203



(9,209)


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


(1,185)



(12,574)


Net cash provided by operating activities


308,766



284,658







Cash flows from investing activities:





Additions to property, plant and equipment and capitalized
    software


(55,523)



(36,576)


Insurance proceeds


6,400




Proceeds from sale of assets


326



5,316


Acquisition payments


(411)




Net cash used in investing activities


(49,208)



(31,260)







Cash flows from financing activities:





Proceeds from exercise of stock options and issuance of
    ordinary shares


17,229



12,601


Proceeds from issuance of debt


500,000




Payments on debt


(709,816)



(9,753)


Payments to repurchase ordinary shares


(126,155)




Payments of debt issuance costs


(6,156)



(209)


Net cash (used in)/provided by financing activities


(324,898)



2,639


Net change in cash and cash equivalents


(65,340)



256,037


Cash and cash equivalents, beginning of period


413,539



92,127


Cash and cash equivalents, end of period


$

348,199



$

348,164


Net Revenue by Business, Geography and End Market

(% of total net revenue)


Three months ended
September 30,



Nine months ended
September 30,




2013


2012


2013


2012

Sensors


71.8

%


72.0

%


71.3

%


72.1

%

Controls


28.2

%


28.0

%


28.7

%


27.9

%

Total


100.0

%


100.0

%


100.0

%


100.0

%

 

 

(% of total net revenue)


Three months ended
September 30,



Nine months ended
September 30,




2013


2012


2013


2012

Americas


37.8

%


37.7

%


37.9

%


37.5

%

Europe


29.0

%


27.4

%


29.6

%


29.1

%

Asia


33.2

%


34.9

%


32.5

%


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,




2013


2012


2013


2012

European automotive


22.8

%


23.2

%


23.8

%


24.7

%

North American automotive


16.8

%


17.2

%


16.1

%


16.8

%

Asian automotive


20.0

%


22.3

%


19.9

%


21.0

%

Rest of world automotive


0.6

%


0.9

%


0.9

%


0.8

%

Heavy vehicle off-road


10.6

%


7.4

%


9.6

%


7.8

%

Appliance and heating, ventilation and air-conditioning


9.3

%


9.9

%


10.1

%


10.1

%

Industrial


9.2

%


9.4

%


9.2

%


9.0

%

All other


10.7

%


9.7

%


10.4

%


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 nine months ended September 30, 2013 and 2012.

(In 000s, except per share amounts)


Three months ended
September 30,


Nine months ended
September 30,



2013


2012


2013


2012

Net income


$

66,022



$

41,506



$

121,058



$

106,540


Debt refinancing costs and other financing transactions






9,179




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


(12,723)



(17,675)



13,595



(15,475)


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


34,130



36,720



101,997



113,863


Deferred income tax and other tax expense


12,594



11,673



25,560



44,685


Amortization of deferred financing costs


1,028



1,253



3,291



3,861


Restructuring and special charges


(3,188)



11,270



5,605



17,738


Total adjustments


$

31,841



$

43,241



$

159,227



$

164,672


Adjusted net income


$

97,863



$

84,747



$

280,285



$

271,212


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


178,629



181,654



179,519



181,647


Adjusted net income per diluted share


$

0.55



$

0.47



$

1.56



$

1.49


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:  Amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets:  $0.3 million and $0.3 million for the three months ended September 30, 2013 and 2012, respectively, and $0.8 million and $0.8 million for the nine months ended September 30, 2013 and 2012, respectively; Restructuring and special charges:  ($1.0) million and $1.2 million for the three months ended September 30, 2013 and 2012, respectively, and $0.9 million and $1.4 million for the nine months ended September 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 nine months ended September 30, 2013 and 2012.

 

($ in 000s)


Three months ended
September 30,


Nine months ended
September 30,



2013


2012


2013


2012

Cost of revenue


$

(2,841)



$

1,759



$

3,156



$

7,560


Selling, general and administrative






971




Amortization of intangible assets


33,327



35,670



99,657



107,012


Restructuring and special charges


456



5,988



4,789



12,456


Interest expense


1,028



1,253



3,291



3,861


Other, net


(12,723)



(13,102)



21,803



(10,584)


Provision for income taxes


12,594



11,673



25,560



44,367


Total adjustments


$

31,841



$

43,241



$

159,227



$

164,672


The following unaudited table reconciles the Company's Projected GAAP earnings per share to Projected Adjusted net income per diluted share for the fourth quarter and full year ended December 31, 2013.  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

December 31, 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



$

0.97



$

1.01


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






0.08



0.08


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


0.19



0.19



0.77



0.77


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


(0.02)



(0.02)



0.01



0.01


Projected Adjusted net income per diluted share


$

0.53



$

0.57



$

2.10



$

2.14


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


178,700



178,700



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 June 30, 2013.  U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements.  Estimates used may change as new events occur or additional information is obtained.  Actual results could differ from those estimates.  




Contact:






Investors


News Media

Jacob Sayer


Linda Megathlin

(508) 236-3800


(508) 236-1761

investors@sensata.com


lmegathlin@sensata.com

SOURCE Sensata Technologies Holding N.V.



RELATED LINKS
http://www.sensata.com

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