- Second quarter 2015 Net revenue was $770.4 million.
- Second quarter 2015 Net income was $40.9 million, or $0.24 per diluted share.
- Second quarter 2015 Adjusted net income(1) was $124.6 million, or $0.73 per diluted share.

ALMELO, Netherlands, July 28, 2015 /PRNewswire/ -- Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the second quarter ended June 30, 2015.

Sensata Technologies Logo. (PRNewsFoto/Sensata Technologies)

Highlights of the Three and Six Months ended June 30, 2015

Net revenue for the second quarter 2015 was $770.4 million, an increase of $194.6 million, or 33.8%, from $575.9 million for the second quarter 2014. Net income for the second quarter 2015 was $40.9 million, or $0.24 per diluted share. This compares to Net income for the second quarter 2014 of $63.9 million, or $0.37 per diluted share. Adjusted net income1 for the second quarter 2015 was $124.6 million which was 16.2% of Net revenue, or $0.73 per diluted share.  This was an increase of 16.6% compared to Adjusted net income1 for the second quarter 2014 of $106.8 million which was 18.6% of Net revenue, or $0.62 per diluted share.  Integration charges related to acquisitions were $4.2 million for the second quarter of 2015.

Net revenue for the six months ended June 30, 2015 was $1,521.1 million, an increase of $393.7 million, or 34.9% from $1,127.4 million for the six months ended June 30, 2014.  Net income for the six months ended June 30, 2015 was $76.3 million, or $0.44 per diluted share. This compares to Net income for the six months ended June 30, 2014 of $132.3 million, or $0.76 per diluted share. Adjusted net income1 for the six months ended June 30, 2015 was $235.4 million which was 15.5% of Net revenue, or $1.37 per diluted share.  This was an increase of 14.9% compared to Adjusted net income1 for the six months ended June 30, 2014 of $204.9 million which was 18.2% of Net revenue, or $1.18 per diluted share.

"Despite increased headwinds in certain of our end-markets, we delivered Adjusted net income for the second quarter in line with our expectations," said Martha Sullivan, President and Chief Executive Officer.  "We remain on-track for 2015 to be a year of strong double-digit growth and we are undertaking certain cost-containment activities to ensure profitability remains high for the balance of the year."

The Company spent $56.1 million, or 7.3% of Net revenue, on research, development and engineering related costs in the second quarter of 2015 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, 2015 was $226.8 million.  During the first six months of 2015, the Company generated cash of $212.2 million from operations, used cash of $83.9 million in investing activities and used cash of $112.9 million in financing activities.

The Company recorded a provision for income taxes of $8.6 million for the second quarter 2015.  Approximately $8.2 million of the provision, or 5.1% of Adjusted EBIT, related to taxes that are payable in cash and approximately $0.4 million related to deferred and other income tax expense.

The Company's total indebtedness at June 30, 2015 was $2.7 billion.  The Company's Net debt2 was $2.5 billion, resulting in a Net leverage ratio2 of 3.8x as of June 30, 2015.

Segment Performance

   

Three months ended

 

Six months ended

$ in 000s

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2014

Performance Sensing net revenue

 

$

606,353

   

$

400,847

   

$

1,197,605

   

$

795,473

 

Performance Sensing profit from operations

 

153,008

   

112,707

   

296,880

   

222,051

 

% of Performance Sensing net revenue

 

25.2

%

 

28.1

%

 

24.8

%

 

27.9

%

                 

Sensing Solutions net revenue

 

$

164,092

   

$

175,006

   

$

323,525

   

$

331,974

 

Sensing Solutions profit from operations

 

52,117

   

53,945

   

101,335

   

101,968

 

% of Sensing Solutions net revenue

 

31.8

%

 

30.8

%

 

31.3

%

 

30.7

%

Guidance

The Company anticipates Net revenue of $715 to $755 million for the third quarter 2015 which, at the midpoint, is 27% higher than third quarter 2014 Net revenue of $577.1 million.  The Company further anticipates Adjusted EBITDA3 of $176 to $188 million for the third quarter 2015.  In addition, the Company expects Adjusted net income1 of $117 to $127 million, or $0.68 to $0.74 per diluted share for the third quarter 2015.  This guidance assumes a diluted share count of 171.8 million for the third quarter 2015.

For the full year 2015, the Company anticipates Net revenue of $2.99 to $3.07 billion which, at the midpoint, is 26% higher than the full year 2014 net revenue of $2.41 billion.  The Company further anticipates Adjusted EBITDA3 of $735 to $765 million for the full year 2015.  In addition, the Company expects Adjusted net income1 of $491 to $511 million, or $2.86 to $2.98 per diluted share for the full year 2015.  At the midpoint, this represents 23% growth compared to full year 2014 Adjusted net income1 per diluted share of $2.38.  This guidance assumes a diluted share count of 171.7 million for the full year 2015.

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.

3The 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).

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, 2015.  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 76625944.  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 https://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 fifteen 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 the Company's 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 2015.  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: adverse developments in the automotive industry; competitive pressures that could require the Company to lower prices or result in reduced demand for the Company's products; integration of acquired companies, including Schrader; the assumption of known and unknown liabilities in the acquisition of Schrader; risks associated with the Company's non-US operations and international business; litigation and disputes involving the Company, including the extent of intellectual property, product liability, and warranty claims asserted against the Company; risks associated with the Company's historical and future tax positions; risks related to labor disruptions or costs; and risks associated with the Company's substantial indebtedness.  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.

 

Contact:

   
     

Investors

 

News Media

Jacob Sayer

 

Linda Megathlin

(508) 236-3800

 

(508) 236-1761

[email protected]

 

[email protected]

 

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, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2014

Net revenue

 

$

770,445

   

$

575,853

   

$

1,521,130

   

$

1,127,447

 

Operating costs and expenses:

               

Cost of revenue

 

517,875

   

368,446

   

1,024,508

   

725,645

 

Research and development

 

31,242

   

18,492

   

61,978

   

36,156

 

Selling, general and administrative

 

73,008

   

50,638

   

137,404

   

95,310

 

Amortization of intangible assets

 

45,075

   

32,561

   

90,884

   

64,577

 

Restructuring and special charges

 

10,089

   

1,740

   

10,809

   

2,605

 

Total operating costs and expenses

 

677,289

   

471,877

   

1,325,583

   

924,293

 

Profit from operations

 

93,156

   

103,976

   

195,547

   

203,154

 

Interest expense, net

 

(31,562)

   

(23,306)

   

(66,323)

   

(46,510)

 

Other, net

 

(12,085)

   

3,932

   

(33,842)

   

4,470

 

Income before taxes

 

49,509

   

84,602

   

95,382

   

161,114

 

Provision for income taxes

 

8,609

   

20,709

   

19,127

   

28,848

 

Net income

 

$

40,900

   

$

63,893

   

$

76,255

   

$

132,266

 
                 

Net income per share:

               

Basic

 

$

0.24

   

$

0.37

   

$

0.45

   

$

0.77

 

Diluted

 

$

0.24

   

$

0.37

   

$

0.44

   

$

0.76

 
                 

Weighted-average ordinary shares outstanding:

           

Basic

 

170,007

   

170,748

   

169,747

   

171,413

 

Diluted

 

171,667

   

172,918

   

171,464

   

173,531

 

 

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, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2014

Net income

 

$

40,900

   

$

63,893

   

$

76,255

   

$

132,266

 

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

               

Deferred (loss)/gain on derivative instruments, net of reclassifications

 

(17,132)

   

1,888

   

4,372

   

4,053

 

Defined benefit and retiree healthcare plans

 

407

   

(129)

   

18

   

(200)

 

Other comprehensive (loss)/income

 

(16,725)

   

1,759

   

4,390

   

3,853

 

Comprehensive income

 

$

24,175

   

$

65,652

   

$

80,645

   

$

136,119

 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Balance Sheets

(Unaudited)

 

($ in 000s)

       
   

June 30,
2015

 

December 31,

2014

Assets

       

Current assets:

       

Cash and cash equivalents

 

$

226,795

   

$

211,329

 

Accounts receivable, net of allowances

 

499,101

   

444,852

 

Inventories

 

332,648

   

356,364

 

Deferred income tax assets

 

17,110

   

15,301

 

Prepaid expenses and other current assets

 

116,813

   

90,918

 

Total current assets

 

1,192,467

   

1,118,764

 

Property, plant and equipment, net

 

629,104

   

589,484

 

Goodwill

 

2,429,537

   

2,424,795

 

Other intangible assets, net

 

823,673

   

910,774

 

Deferred income tax assets

 

14,939

   

16,750

 

Deferred financing costs

 

27,733

   

29,102

 

Other assets

 

19,522

   

26,940

 

Total assets

 

$

5,136,975

   

$

5,116,609

 
         

Liabilities and shareholders' equity

       

Current liabilities:

       

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

 

$

144,532

   

$

145,979

 

Accounts payable

 

297,356

   

287,800

 

Income taxes payable

 

13,878

   

7,516

 

Accrued expenses and other current liabilities

 

226,712

   

222,781

 

Deferred income tax liabilities

 

12,546

   

13,430

 

Total current liabilities

 

695,024

   

677,506

 

Deferred income tax liabilities

 

371,961

   

362,738

 

Pension and post-retirement benefit obligations

 

33,157

   

35,799

 

Capital lease and other financing obligations, less current portion

 

46,100

   

45,113

 

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

 

2,556,397

   

2,650,744

 

Other long-term liabilities

 

30,009

   

41,817

 

Total liabilities

 

3,732,648

   

3,813,717

 

Total shareholders' equity

 

1,404,327

   

1,302,892

 

Total liabilities and shareholders' equity

 

$

5,136,975

   

$

5,116,609

 

 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

($ in 000s)

 

For the six months ended

   

June 30, 2015

 

June 30, 2014

Cash flows from operating activities:

       

Net income

 

$

76,255

   

$

132,266

 

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

       

Depreciation

 

48,808

   

30,209

 

Amortization of deferred financing costs and discounts

 

3,231

   

2,386

 

Currency remeasurement (gain)/loss on debt

 

(654)

   

49

 

Share-based compensation

 

7,581

   

6,351

 

Loss on debt financing

 

25,538

   

 

Amortization of inventory step-up to fair value

 

   

907

 

Amortization of intangible assets

 

90,884

   

64,577

 

Deferred income taxes

 

6,844

   

16,695

 

Gains from insurance proceeds

 

   

(2,417)

 

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

 

2,335

   

(4,053)

 

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

 

(48,623)

   

(29,595)

 

Net cash provided by operating activities

 

212,199

   

217,375

 
         

Cash flows from investing activities:

       

Acquisition of Schrader, net of cash received

 

(958)

   

 

Other acquisitions, net of cash received

 

3,881

   

(117,085)

 

Additions to property, plant and equipment and capitalized software

 

(86,801)

   

(67,199)

 

Insurance proceeds

 

   

2,417

 

Proceeds from the sale of assets

 

   

5,467

 

Net cash used in investing activities

 

(83,878)

   

(176,400)

 
         

Cash flows from financing activities:

       

Proceeds from exercise of stock options and issuance of ordinary shares

 

13,266

   

11,197

 

Proceeds from issuance of debt

 

1,795,120

   

35,000

 

Payments on debt

 

(1,892,263)

   

(39,291)

 

Repurchase of ordinary shares from SCA

 

   

(169,680)

 

Payments to repurchase ordinary shares

 

(50)

   

(11,459)

 

Payments of debt issuance costs

 

(28,928)

   

 

Net cash used in financing activities

 

(112,855)

   

(174,233)

 

Net change in cash and cash equivalents

 

15,466

   

(133,258)

 

Cash and cash equivalents, beginning of period

 

211,329

   

317,896

 

Cash and cash equivalents, end of period

 

$

226,795

   

$

184,638

 

 

Net Revenue by Business, Geography and End Market

 

(% of total net revenue)

 

Three months ended

June 30,

 

Six months ended

June 30,

   

2015

 

2014

 

2015

 

2014

Performance Sensing

 

78.7

%

 

69.6

%

 

78.7

%

 

70.6

%

Sensing Solutions

 

21.3

%

 

30.4

%

 

21.3

%

 

29.4

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

(% of total net revenue)

 

Three months ended

June 30,

 

Six months ended

June 30,

   

2015

 

2014

 

2015

 

2014

Americas

 

41.2

%

 

38.2

%

 

41.0

%

 

38.7

%

Europe

 

33.1

%

 

29.0

%

 

33.1

%

 

29.1

%

Asia

 

25.7

%

 

32.8

%

 

25.9

%

 

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,

   

2015

 

2014

 

2015

 

2014

European automotive

 

27.4

%

 

24.1

%

 

27.5

%

 

24.6

%

North American automotive

 

21.3

%

 

16.2

%

 

21.2

%

 

16.7

%

Asian automotive

 

17.3

%

 

20.1

%

 

17.3

%

 

20.1

%

Rest of world automotive

 

0.9

%

 

0.5

%

 

0.9

%

 

0.5

%

Heavy vehicle off-road

 

12.5

%

 

11.3

%

 

12.6

%

 

11.3

%

Appliance and heating,

ventilation and air-conditioning

 

6.2

%

 

9.1

%

 

6.2

%

 

8.9

%

Industrial

 

6.5

%

 

8.0

%

 

6.3

%

 

7.8

%

All other

 

7.9

%

 

10.7

%

 

8.0

%

 

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 certain restructuring and special charges, costs associated with financing and other transactions, deferred loss/(gain) 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 and six months ended June 30, 2015 and 2014.

 

(In 000s, except per share amounts)

 

Three months ended

June 30,

 

Six months ended

June 30,

   

2015

 

2014

 

2015

 

2014

Net income

 

$

40,900

   

$

63,893

   

$

76,255

   

$

132,266

 

Restructuring and special charges

 

22,023

   

921

   

23,179

   

(1,496)

 

Financing and other transaction costs

 

5,974

   

1,190

   

25,796

   

1,258

 

Deferred loss/(gain) on other hedges

 

2,424

   

(6,430)

   

6,462

   

(10,624)

 

Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory

 

46,308

   

33,428

   

93,654

   

68,050

 

Deferred income tax and other tax expense

 

5,368

   

12,430

   

6,854

   

13,043

 

Amortization of deferred financing costs

 

1,578

   

1,400

   

3,231

   

2,386

 

Total adjustments

 

$

83,675

   

$

42,939

   

$

159,176

   

$

72,617

 

Adjusted net income

 

$

124,575

   

$

106,832

   

$

235,431

   

$

204,883

 

Weighted average diluted shares

outstanding used in Adjusted net

income per share calculation

 

171,667

   

172,918

   

171,464

   

173,531

 

Adjusted net income per diluted share

 

$

0.73

   

$

0.62

   

$

1.37

   

$

1.18

 

 

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:  $0.2 million and $0.2 million for the three months ended June 30, 2015 and 2014, respectively, and $0.3 million and $0.8 million for the six months ended June 30, 2015 and 2014, respectively; Restructuring and special charges:  $1.0 million and $0.0 million for the three months ended June 30, 2015 and 2014, respectively, and $1.1 million and $0.0 million for the six months ended June 30, 2015 and 2014, respectively.

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 and six months ended June 30, 2015 and 2014.

($ in 000s)

 

Three months ended

June 30,

 

Six months ended

June 30,

   

2015

 

2014

 

2015

 

2014

Cost of revenue

 

$

14,121

   

$

1,228

   

$

23,326

   

$

1,785

 

Selling, general and administrative

 

5,644

   

1,190

   

5,902

   

1,258

 

Amortization of intangible assets

 

43,719

   

32,200

   

88,335

   

63,848

 

Restructuring and special charges

 

9,847

   

921

   

9,945

   

921

 

Interest expense

 

1,578

   

1,400

   

3,231

   

2,386

 

Other, net

 

8,398

   

(6,430)

   

26,583

   

(10,624)

 

Provision for income taxes

 

368

   

12,430

   

1,854

   

13,043

 

Total adjustments

 

$

83,675

   

$

42,939

   

$

159,176

   

$

72,617

 

 

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, 2015 and full year ended December 31, 2015.  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, 2015

 

Full year ended

December 31, 2015

   

Low End

 

High End

 

Low End

 

High End

                 

Projected GAAP earnings per diluted share

 

$

0.35

   

$

0.41

   

$

1.27

   

$

1.39

 

Restructuring and special charges

 

   

   

0.13

   

0.13

 

Financing and other transaction costs

 

   

   

0.15

   

0.15

 

Deferred (gain)/loss on other hedges

 

   

   

0.04

   

0.04

 

Depreciation and amortization expense

related to the step-up in fair value of fixed

and intangible assets and inventory

 

0.26

   

0.26

   

1.07

   

1.07

 

Deferred income tax and other tax (benefit)/expense

 

0.06

   

0.06

   

0.16

   

0.16

 

Amortization of deferred financing costs

 

0.01

   

0.01

   

0.04

   

0.04

 

Projected Adjusted net income per diluted share

 

$

0.68

   

$

0.74

   

$

2.86

   

$

2.98

 

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

 

171,800

   

171,800

   

171,700

   

171,700

 

 

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, 2014 and the interim condensed consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015. 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.

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SOURCE Sensata Technologies Holding N.V.