- First quarter 2016 Net revenue was
$796.5 million .- First quarter 2016 Net income was
$60.6 million , or$0.35 per diluted share.- First quarter 2016 Adjusted net income1 was
$113.2 million , or$0.66 per diluted share.
ALMELO,
Highlights of the Three Months ended March 31, 2016
Net revenue for the first quarter 2016 was
"
The Company spent
The Company’s ending cash balance at March 31, 2016 was
The Company recorded a provision for income taxes of
The Company’s total indebtedness at March 31, 2016 was
Segment Performance
| Three months ended | ||||||||
| $ in 000s | March 31, 2016 | March 31, 2015 | ||||||
| Performance Sensing net revenue | $597,175 | $591,252 | ||||||
| Performance Sensing profit from operations | 145,787 | 143,872 | ||||||
| % of Performance Sensing net revenue | 24.4 % | 24.3 % | ||||||
| Sensing Solutions net revenue | $199,374 | $159,433 | ||||||
| Sensing Solutions profit from operations | 63,248 | 49,218 | ||||||
| % of Sensing Solutions net revenue | 31.7 % | 30.9 % | ||||||
Guidance
The Company anticipates Net revenue of
For the full year 2016, the Company anticipates net revenue of
Company Earnings Conference Call
The Company will conduct a conference call today at
1Net debt represents total indebtedness (including Capital lease and other financing obligations but excluding discounts and deferred financing costs) less Cash and cash equivalents. The Net leverage ratio represents Net debt divided by Adjusted EBITDA for the last twelve months. The Company defines Adjusted EBITDA as Adjusted net income excluding cash interest expense, cash tax expense, depreciation expense (excluding step-up depreciation expense related to acquisitions) and amortization expense (excluding amortization expense on acquisition related intangibles).
2See Non-GAAP Measures for discussion of Adjusted net income which includes a reconciliation of this measure to Net income.
About
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 strategies. Such forward-looking statements include, among other things, our anticipated results for the second quarter and full year 2016. Such statements involve risks and 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: adverse conditions in the automotive industry; competitive pressures that could require us to lower prices or could result in reduced demand for our products; integration of acquired companies, including CST and Schrader; the assumption of known and unknown liabilities in the acquisition of CST and Schrader; risks associated with our non-US operations and international business; litigation and disputes involving us, including the extent of intellectual property, product liability, warranty, and recall claims asserted against us; risks associated with our historical and future tax positions; risks associated with labor disruptions or increased labor costs; risks associated with our substantial indebtedness; and risks associated with breaches and other disruptions to our information technology infrastructure. 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 we undertake 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 our
| SENSATA TECHNOLOGIES HOLDING N.V. | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| (Unaudited) | ||||||||
| (In 000s, except per share amounts) | ||||||||
| For the three months ended | ||||||||
| March 31, 2016 |
March 31, 2015 |
|||||||
| Net revenue | $ | 796,549 | $ | 750,685 | ||||
| Operating costs and expenses: | ||||||||
| Cost of revenue | 528,378 | 506,633 | ||||||
| Research and development | 31,351 | 30,736 | ||||||
| Selling, general and administrative | 71,931 | 64,396 | ||||||
| Amortization of intangible assets | 50,447 | 45,809 | ||||||
| Restructuring and special charges | 855 | 720 | ||||||
| Total operating costs and expenses | 682,962 | 648,294 | ||||||
| Profit from operations | 113,587 | 102,391 | ||||||
| Interest expense, net | (42,268) | (34,761) | ||||||
| Other, net | 5,488 | (21,757) | ||||||
| Income before taxes | 76,807 | 45,873 | ||||||
| Provision for income taxes | 16,195 | 10,518 | ||||||
| Net income | $ | 60,612 | $ | 35,355 | ||||
| Net income per share: | ||||||||
| Basic | $ | 0.36 | $ | 0.21 | ||||
| Diluted | $ | 0.35 | $ | 0.21 | ||||
| Weighted-average ordinary shares outstanding: | ||||||||
| Basic | 170,404 | 169,487 | ||||||
| Diluted | 171,257 | 171,262 | ||||||
| SENSATA TECHNOLOGIES HOLDING N.V. | ||||||||
| Condensed Consolidated Statements of Comprehensive Income | ||||||||
| (Unaudited) | ||||||||
| ($ in 000s) | ||||||||
| For the three months ended | ||||||||
| March 31, 2016 |
March 31, 2015 |
|||||||
| Net income | $ | 60,612 | $ | 35,355 | ||||
| Other comprehensive (loss)/income, net of tax: | ||||||||
| Deferred (loss)/gain on derivative instruments, net of reclassifications | (16,703) | 21,504 | ||||||
| Defined benefit and retiree healthcare plans | 208 | (389) | ||||||
| Other comprehensive (loss)/income | (16,495) | 21,115 | ||||||
| Comprehensive income | $ | 44,117 | $ | 56,470 | ||||
| SENSATA TECHNOLOGIES HOLDING N.V. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| ($ in 000s) | ||||||||
| March 31, 2016 |
December 31, 2015 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $347,987 | $342,263 | ||||||
| Accounts receivable, net of allowances | 525,684 | 467,567 | ||||||
| Inventories | 344,251 | 358,701 | ||||||
| Prepaid expenses and other current assets | 113,314 | 109,392 | ||||||
| Total current assets | 1,331,236 | 1,277,923 | ||||||
| Property, plant and equipment, net | 699,298 | 694,155 | ||||||
| Goodwill | 3,014,927 | 3,019,743 | ||||||
| Other intangible assets, net | 1,217,720 | 1,262,572 | ||||||
| Deferred income tax assets | 31,840 | 26,417 | ||||||
| Other assets | 66,254 | 18,100 | ||||||
| Total assets | $ | 6,361,275 | $ | 6,298,910 | ||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt, capital lease and other financing obligations | $ | 263,898 | $ | 300,439 | ||||
| Accounts payable | 323,214 | 290,779 | ||||||
| Income taxes payable | 18,279 | 21,968 | ||||||
| Accrued expenses and other current liabilities | 271,498 | 251,989 | ||||||
| Total current liabilities | 876,889 | 865,175 | ||||||
| Deferred income tax liabilities | 395,935 | 390,490 | ||||||
| Pension and post-retirement benefit obligations | 35,414 | 34,314 | ||||||
| Capital lease and other financing obligations, less current portion | 35,282 | 36,219 | ||||||
| Long-term debt, net of discount and deferred financing costs, less current portion | 3,263,693 | 3,264,333 | ||||||
| Other long-term liabilities | 37,773 | 39,803 | ||||||
| Total liabilities | 4,644,986 | 4,630,334 | ||||||
| Total shareholders’ equity | 1,716,289 | 1,668,576 | ||||||
| Total liabilities and shareholders’ equity | $ | 6,361,275 | $ | 6,298,910 | ||||
| SENSATA TECHNOLOGIES HOLDING N.V. | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| ($ in 000s) | For the three months ended | |||||||
| March 31, 2016 |
March 31, 2015 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 60,612 | $ | 35,355 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 25,999 | 21,842 | ||||||
| Amortization of deferred financing costs and discounts | 1,844 | 1,653 | ||||||
| Currency remeasurement loss/(gain) on debt | 128 | (570 | ) | |||||
| Share-based compensation | 3,516 | 3,187 | ||||||
| Loss on debt financing | — | 19,564 | ||||||
| Amortization of inventory step-up to fair value | 2,319 | — | ||||||
| Amortization of intangible assets | 50,447 | 45,809 | ||||||
| Deferred income taxes | 5,547 | 1,357 | ||||||
| Unrealized (gain)/loss on hedges and other non-cash items | (3,974 | ) | 879 | |||||
| Changes in operating assets and liabilities, net of effects of acquisitions | (10,236 | ) | (25,966 | ) | ||||
| Net cash provided by operating activities | 136,202 | 103,110 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of CST, net of cash received | (3,360 | ) | — | |||||
| Acquisition of Schrader, net of cash received | — | (958 | ) | |||||
| Other acquisitions, net of cash received | — | 3,881 | ||||||
| Additions to property, plant and equipment and capitalized software | (34,235 | ) | (37,878 | ) | ||||
| Investment in equity securities | (50,000 | ) | — | |||||
| Net cash used in investing activities | (87,595 | ) | (34,955 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options and issuance of ordinary shares | 128 | 4,902 | ||||||
| Proceeds from issuance of debt | — | 700,000 | ||||||
| Payments on debt | (40,308 | ) | (768,568 | ) | ||||
| Payments to repurchase ordinary shares | (2,494 | ) | — | |||||
| Payments of debt issuance costs | (209 | ) | (20,237 | ) | ||||
| Net cash used in financing activities | (42,883 | ) | (83,903 | ) | ||||
| Net change in cash and cash equivalents | 5,724 | (15,748 | ) | |||||
| Cash and cash equivalents, beginning of period | 342,263 | 211,329 | ||||||
| Cash and cash equivalents, end of period | $ | 347,987 | $ | 195,581 | ||||
| Net Revenue by Business, Geography and End Market | ||||||
| (% of total net revenue) | Three months ended March 31, | |||||
| 2016 | 2015 | |||||
| Performance Sensing | 75.0 | % | 78.8 | % | ||
| Sensing Solutions | 25.0 | % | 21.2 | % | ||
| Total | 100.0 | % | 100.0 | % | ||
| (% of total net revenue) | Three months ended March 31, | |||||
| 2016 | 2015 | |||||
| Americas | 43.5 | % | 40.8 | % | ||
| Europe | 33.4 | % | 33.2 | % | ||
| Asia | 23.1 | % | 26.0 | % | ||
| Total | 100.0 | % | 100.0 | % | ||
| (% of total net revenue) | Three months ended March 31, |
|||||
| 2016 | 2015 | |||||
| European automotive | 25.5 | % | 27.7 | % | ||
| North American automotive | 19.9 | % | 21.2 | % | ||
| Asian automotive | 16.1 | % | 17.2 | % | ||
| Rest of world automotive | 0.2 | % | 1.0 | % | ||
| Heavy vehicle off-road | 14.7 | % | 12.7 | % | ||
| Appliance and heating, ventilation and air-conditioning | 5.7 | % | 6.1 | % | ||
| Industrial | 10.1 | % | 6.0 | % | ||
| All other | 7.8 | % | 8.1 | % | ||
| Total | 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 certain restructuring and special charges, costs associated with financing and other transactions, deferred (gain)/loss on other hedges, 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, and other costs. The Company believes Adjusted net income provides investors with helpful information with respect to the Company’s operating performance, 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 months ended March 31, 2016 and 2015.
| (In 000s, except per share amounts) | Three months ended March 31, | |||||||
| 2016 | 2015 | |||||||
| Net income | $ | 60,612 | $ | 35,355 | ||||
| Restructuring and special charges | 3,639 | 1,156 | ||||||
| Financing and other transaction costs | 781 | 19,822 | ||||||
| Deferred (gain)/loss on other hedges | (13,273 | ) | 4,038 | |||||
| Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory | 53,866 | 47,346 | ||||||
| Deferred income tax and other tax expense | 5,757 | 1,486 | ||||||
| Amortization of deferred financing costs | 1,844 | 1,653 | ||||||
| Total adjustments | $ | 52,614 | $ | 75,501 | ||||
| Adjusted net income | $ | 113,226 | $ | 110,856 | ||||
| Weighted average diluted shares outstanding used in Adjusted net income per share calculation | 171,257 | 171,262 | ||||||
| Adjusted net income per diluted share | $ | 0.66 | $ | 0.65 | ||||
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/(benefit). As the Company treats deferred income tax and other tax expense/(benefit) 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 any 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:
The following unaudited table identifies where in the Condensed Consolidated Statements of Operations the adjustments to reconcile Net income to Adjusted net income were recorded for the three months ended March 31, 2016 and 2015.
| ($ in 000s) | Three months ended March 31, |
|||||||
| 2016 | 2015 | |||||||
| Cost of revenue | $ | 3,373 | $ | 9,205 | ||||
| Selling, general and administrative | 1,645 | 258 | ||||||
| Amortization of intangible assets | 49,068 | 44,616 | ||||||
| Restructuring and special charges | 800 | 98 | ||||||
| Interest expense, net | 1,844 | 1,653 | ||||||
| Other, net | (9,873 | ) | 18,185 | |||||
| Provision for income taxes | 5,757 | 1,486 | ||||||
| Total adjustments | $ | 52,614 | $ | 75,501 | ||||
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
| Three months ended June 30, 2016 |
Full year ended December 31, 2016 |
|||||||||||||||
| Low End | High End | Low End | High End | |||||||||||||
| Projected GAAP earnings per diluted share | $ | 0.30 | $ | 0.36 | $ | 1.31 | $ | 1.57 | ||||||||
| Restructuring and special charges | 0.01 | 0.01 | 0.03 | 0.03 | ||||||||||||
| Financing and other transaction costs | — | — | 0.01 | 0.01 | ||||||||||||
| Deferred (gain)/loss on other hedges | — | — | (0.08 | ) | (0.08 | ) | ||||||||||
| Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory | 0.30 | 0.30 | 1.21 | 1.21 | ||||||||||||
| Deferred income tax and other tax expense/(benefit) | 0.06 | 0.06 | 0.21 | 0.21 | ||||||||||||
| Amortization of deferred financing costs | 0.01 | 0.01 | 0.05 | 0.05 | ||||||||||||
| Projected Adjusted net income per diluted share | $ | 0.68 | $ | 0.74 | $ | 2.74 | $ | 3.00 | ||||||||
| Weighted average diluted shares outstanding used in Adjusted net income per share calculation (in 000s) | 171,600 | 171,600 | 171,700 | 171,700 | ||||||||||||
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
Contacts:
Investors:
Jacob Sayer
(508) 236-3800
[email protected]
News Media:
Alexia Taxiarchos
(508) 236-1761
[email protected]