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Sensata Technologies Holding N.V. Announces First Quarter RESULTS

The following excerpt is from the company's SEC filing.

quarter

Net revenue was

$796.5 million

Net income was

$60.6 million

per diluted share.

Adjusted net income

$113.2 million

Almelo, the Netherlands – April 26, 2016 - Sensata Technologies Holding N.V. (NYSE: ST) (the “Company”) announces results of its operations for the

quarter ended

March 31, 2016

Highlights of the

Months ended

Net revenue for the

, an increase of

$45.9 million

, from

$750.7 million

. Net income for the

per diluted share. This compares to Net incom e for the

$35.4 million

per diluted share. Adjusted net income

which was

of Net revenue, or

per diluted share. This was an increase of

compared to Adjusted net income

$110.9 million

per diluted share. Integration charges related to acquisitions were $3.5 million for the

quarter of 2016.

"Sensata delivered solid financial performance in the first quarter with Adjusted EPS up 8% year over year on a constant currency basis. This was in line with our expectations", said Martha Sullivan, President and Chief Executive Officer. "Sensata remains on track for margin expansion through organic activities and successful acquisition integration. We are also very excited about our strategic partnership with Quanergy in LiDAR sensing, a key enabling technology for autonomous driving."

The Company spent $61.6 million, or 7.7% of Net revenue, on research, development and engineering

d costs in the

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

$348.0 million

. During the first three months of 2016, the Company generated cash of

$136.2 million

from operations, used cash of

$87.6 million

in investing activities and used cash of

$42.9 million

in financing activities.

The Company recorded a provision for income taxes of

$16.2 million

. Approximately

$10.4 million

of the provision, or

of Adjusted EBIT, related to taxes that are payable in cash and approximately

$5.8 million

related to deferred and other income tax expense.

The Company’s total indebtedness at

$3.6 billion

, a reduction of $40.0 million from December 31, 2015 as a result of debt repayment. The Company’s Net debt

$3.3 billion

, resulting in a Net leverage ratio

of 4.5x as of

Segment Performance

Three months ended

$ in 000s

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

Sensing Solutions net revenue

199,374

159,433

Sensing Solutions profit from operations

63,248

49,218

% of Sensing Solutions net revenue

Guidance

The Company anticipates Net revenue of $800 to $840 million for the second quarter 2016 as compared to second quarter 2015 Net revenue of $770 million. In addition, the Company expects Adjusted net income

of $117 to $127 million, or $0.68 to $0.74 per diluted share for the second quarter 2016, as compared to $0.73 during the second quarter 2015. This guidance assumes a diluted share count of 171.6 million for the second quarter 2016.

For the full year 2016, the Company anticipates net revenue of $3.140 to $3.280 billion which, at the midpoint, represents growth of 7.9% compared to the full year 2015 net revenue of $2.975 billion. In addition, the Company expects Adjusted net income

of $470 million to $515 million, or $2.74 to $3.00 per diluted share for the full year 2016. At the midpoint, this represents 4.4% growth compared to full year 2015 Adjusted net income

per diluted share of $2.75. This guidance assumes a diluted share count of 171.7 million for the full year 2016.

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

. The toll-free dial-in number is 877-486-0682 and the Conference ID is 90651216. 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

http://investors.sensata.com

Net 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).

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

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 fourteen 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 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 SEC filings. Copies of our filings are available from our Investor Relations department or from the SEC website,

SENSATA TECHNOLOGIES HOLDING N.V.

(Unaudited)

(In 000s, except per share amounts)

For the three months ended

796,549

750,685

Operating costs and expenses:

528,378

506,633

31,351

30,736

Selling, general and administrative

71,931

64,396

Amortization of intangible assets

50,447

45,809

Restructuring and special charges

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

(21,757

Income before taxes

76,807

45,873

Provision for income taxes

16,195

10,518

60,612

35,355

Net income per share:

Diluted

Weighted-average ordinary shares outstanding:

170,404

169,487

171,257

171,262

Condensed Consolidated Statements of Comprehensive Income

($ in 000s)

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

(16,495

21,115

Comprehensive income

44,117

56,470

Condensed Consolidated Balance Sheets

December 31, 2015

Assets

Current assets:

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

Condensed Consolidated Statements of Cash Flows

Cash flows from operating activities:

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

Depreciation

25,999

21,842

Amortization of deferred financing costs and discounts

Currency remeasurement loss/(gain) on debt

Share-based compensation

Loss on debt financing

19,564

Amortization of inventory step-up to fair value

Deferred income taxes

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

(3,974

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

Other acquisitions, net of cash received

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

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

(20,237

Net cash used in financing activities

(42,883

(83,903

Net change in cash and cash equivalents

(15,748

Cash and cash equivalents, beginning of period

211,329

Cash and cash equivalents, end of period

195,581

Net Revenue by Business, Geography and End Market

(% of total net revenue)

Three months ended March 31,

Americas

Europe

European automotive

North American automotive

Asian automotive

Rest of world automotive

Heavy vehicle off-road

Appliance and heating, ventilation and air-conditioning

Industrial

All other

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

Financing and other transaction costs

19,822

Deferred (gain)/loss on other hedges

(13,273

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

Total adjustments

52,614

75,501

113,226

110,856

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

Adjusted net income per diluted share

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: $0.0 million and $0.1 million for the three months ended

, respectively; and Restructuring and special charges: $0.1 million and $0.1 million for the three months ended

, 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

49,068

44,616

(9,873

18,185

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 June 30, 2016 and full year ended

December 31, 2016

. 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.

Full year ended

December 31, 2016

Low End

High End

Projected GAAP earnings per diluted share

Deferred income tax and other tax expense/(benefit)

Projected Adjusted net income per diluted share

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

171,600

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, 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.

Contacts:

Investors:

News Media:

Jacob Sayer

Alexia Taxiarchos

(508) 236-3800

(508) 236-1761

investors@sensata.com

ataxiarchos@sensata.com

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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