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.

29 Oct, 2013, 06:00 ET from Sensata Technologies Holding N.V.

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.



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