Sensata Technologies Holding N.V. Announces First Quarter 2014 Results

By PR Newswire,  April 29, 2014, 06:00:00 AM EDT


- First quarter 2014 Net revenue was $551.6 million, an increase of 17.3% from the first quarter 2013.

- First quarter 2014 Net income was $68.4 million, or $0.39 per diluted share.

- First quarter 2014 Adjusted net income(1) was $98.1 million, or $0.56 per diluted share.

ALMELO, Netherlands, April 29, 2014 /PRNewswire/ -- Sensata Technologies Holding N.V. (NYSE:ST) (the "Company") announces results of its operations for the first quarter ended March 31, 2014.

Highlights of the First Quarter ended March 31, 2014

Net revenue for the first quarter 2014 was $551.6 million, an increase of $81.2 million, or 17.3%, from Net revenue for the first quarter 2013 of $470.4 million.

Net income for the first quarter 2014 was $68.4 million, or $0.39 per diluted share including acquisition integration costs of $2.7 million. This compares to Net income of $34.7 million, or $0.19 per diluted share, for the first quarter of 2013.

Adjusted net income1 for the first quarter 2014 was $98.1 million, or $0.56 per diluted share, which was 17.8% of Net revenue.  This compares to Adjusted net income1 for the first quarter 2013 of  $86.7 million, or $0.48 per diluted share, which was 18.4% of Net revenue.

"We are off to a good start in 2014 as the team's execution drove better-than-expected net revenue growth and solid earnings performance," said Martha Sullivan, President and Chief Executive Officer.  "For the balance of the year we believe Sensata can achieve double-digit Net revenue growth."

The Company spent $36.2 million, or 6.5% of Net revenue, on research, development and engineering related costs in the first quarter of 2014, an increase of 22.3% over the first quarter of 2013 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 March 31, 2014 was $334.1 million.  During the first quarter, the Company generated cash of $105.4 million from operations, used cash of $83.2 million in investing activities and used cash of $6.1 million in financing activities.

The Company recorded an income tax provision of $8.1 million for the first quarter 2014.  Approximately $7.5 million of the provision, or 5.9% of Adjusted EBIT, related to taxes that are payable in cash and approximately $0.6 million related to deferred income tax expense and other income tax expense.

The Company's total indebtedness at March 31, 2014 was $1.7 billion.  The Company's Net debt2 was $1.4 billion resulting in a Net leverage ratio2 of 2.5X.  Standard and Poor's recently upgraded its corporate rating on the Company and the ratings on the Company's outstanding bond issues to BB+ and the rating on the Company's outstanding term loan to BBB.

In February 2014, our Board of Directors authorized a $250.0 million share buyback program. During the first quarter, we repurchased 0.3 million ordinary shares under this and its predecessor program for an aggregate purchase price of approximately $11.3 million.

Segment Performance





Three months ended

$ in 000s



March 31, 2014



March 31, 2013

Sensors net revenue



$

412,740





$

332,633



Sensors profit from operations



$

116,616





$

93,192



% of Sensors net revenue



28.3

%



28.0

%















Controls net revenue



$

138,854





$

137,780



Controls profit from operations



$

40,751





$

43,354



% of Controls net revenue



29.3

%



31.5

%

Guidance

The Company anticipates net revenue of $555 million to $575 million for the second quarter 2014, which, at the midpoint, is 11.6% higher than second quarter 2013 Net revenue of $506.4 million.  The Company further anticipates Adjusted EBITDA of $147 million to $153 million for the second quarter 2014.  The Company also expects Adjusted net income1 of $103 million to $108 million, or $0.59 to $0.62 per diluted share for the second quarter 2014.  At the midpoint, this represents 12.0% growth compared to second quarter 2013 Adjusted net income per diluted share of $0.54.  This guidance assumes a diluted share count of 174.5 million for the second quarter 2014.

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

2 Net 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 first quarter ended March 31, 2014.  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 14319869.  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 14319869.  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 second quarter and full year 2014.  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; adverse developments in the automotive industry; competitive pressures; pricing and other pressures from customers; fluctuations in foreign currency exchange, commodity and interest rates; governmental regulations, policies, and practices relating to the Company's non-US operations and international business; integration of acquired companies; litigation and disputes involving the Company, including the extent of product liability and warranty claims asserted against the Company; non-performance by suppliers; the loss of one or more suppliers of raw materials; fundamental changes in the industries in which the Company operates; 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





March 31,

2014



March 31,

2013

Net revenue



$

551,594





$

470,413



Operating costs and expenses:













Cost of revenue



357,199





308,682



Research and development



17,664





13,616



Selling, general and administrative



44,672





38,254



Amortization of intangible assets



32,016





33,386



Restructuring and special charges



865





1,676



Total operating costs and expenses



452,416





395,614



Profit from operations



99,178





74,799



Interest expense



(23,512)





(24,135)



Interest income



308





148



Other, net



538





(2,601)



Income before taxes



76,512





48,211



Provision for income taxes



8,139





13,546



Net income



$

68,373





$

34,665

















Net income per share:













Basic



$

0.40





$

0.19



Diluted



$

0.39





$

0.19

















Weighted-average ordinary shares outstanding:







Basic



172,085





177,936



Diluted



174,151





181,522



 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



($ in 000s)

















For the three months ended





March 31,

2014



March 31,

2013

Net income



$

68,373





$

34,665



Other comprehensive income, net of tax:













Net unrealized gain on derivative instruments

designated and qualifying as cash flow hedges



2,165





8,607



Amortization of net loss and prior service (credit)/cost

on defined benefit and retiree healthcare plans



(71)





454



Other comprehensive income



2,094





9,061



Comprehensive income



$

70,467





$

43,726



 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Balance Sheets

(Unaudited)



($ in 000s)

















March 31, 2014



December 31, 2013

Assets













Current assets:













Cash and cash equivalents



$

334,064





$

317,896



Accounts receivable, net of allowances



352,998





291,723



Inventories



199,135





183,395



Deferred income tax assets



21,817





20,975



Prepaid expenses and other current assets



42,034





41,642



Total current assets



950,048





855,631



Property, plant and equipment, net



368,598





344,657



Goodwill



1,774,346





1,756,049



Other intangible assets, net



498,442





502,388



Deferred income tax assets



10,623





10,623



Deferred financing costs



18,231





19,132



Other assets



11,109





10,344



Total assets



$

3,631,397





$

3,498,824

















Liabilities and shareholders' equity













Current liabilities:













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

   financing obligations



$

7,475





$

8,100



Accounts payable



209,549





177,539



Income taxes payable



8,174





5,785



Accrued expenses and other current liabilities



152,355





123,239



Deferred income tax liabilities



3,742





3,829



Total current liabilities



381,295





318,492



Deferred income tax liabilities



295,531





281,364



Pension and post-retirement benefit obligations



19,234





19,508



Capital lease and other financing obligations, less current portion



48,089





48,845



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



1,665,917





1,667,021



Other long-term liabilities



10,165





22,006



Total liabilities



2,420,231





2,357,236



Total shareholders' equity



1,211,166





1,141,588



Total liabilities and shareholders' equity



$

3,631,397





$

3,498,824



 

SENSATA TECHNOLOGIES HOLDING N.V.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



($ in 000s)

















For the three months

ended





March 31,

2014



March 31,

2013

Cash flows from operating activities:













Net income



$

68,373





$

34,665



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













Depreciation



15,603





13,044



Amortization of deferred financing costs and

  original issue discounts



986





1,237



Currency remeasurement gain on debt



(122)





(77)



Share-based compensation



2,585





1,949



Amortization of inventory step-up to fair value



683







Amortization of intangible assets



32,016





33,386



Loss on disposition of assets



34





656



Deferred income taxes



4,478





7,147



Gains from insurance proceeds



(2,417)







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

   items



(2,824)





2,157



Changes in operating assets and liabilities, net of effects

   of acquisitions



(13,999)





(9,342)



Net cash provided by operating activities



105,396





84,822

















Cash flows from investing activities:













Additions to property, plant and equipment and capitalized software



(27,308)





(14,256)



Insurance proceeds



2,417





1,400



Acquisition payments, net of cash received



(58,281)





(411)



Net cash used in investing activities



(83,172)





(13,267)

















Cash flows from financing activities:













Proceeds from exercise of stock options and issuance of ordinary shares



7,836





4,320



Payments on debt



(2,582)





(3,296)



Payments to repurchase ordinary shares



(11,310)





(55,093)



Net cash used in financing activities



(6,056)





(54,069)



Net change in cash and cash equivalents



16,168





17,486



Cash and cash equivalents, beginning of period



317,896





413,539



Cash and cash equivalents, end of period



$

334,064





$

431,025



 

Net Revenue by Business, Geography and End Market



(% of total net revenue)



Three months ended

March 31,





2014



2013

Sensors



74.8

%



70.7

%

Controls



25.2

%



29.3

%

Total



100.0

%



100.0

%





(% of total net revenue)



Three months ended

March 31,





2014



2013

Americas



39.2

%



37.4

%

Europe



29.2

%



29.8

%

Asia



31.6

%



32.8

%

Total



100.0

%



100.0

%





(% of total net revenue)



Three months ended

March 31,





2014



2013

European automotive



25.0

%



24.4

%

North American automotive



17.2

%



15.6

%

Asian automotive



20.0

%



20.4

%

Rest of world automotive



0.6

%



1.0

%

Heavy vehicle off-road



11.3

%



8.7

%

Appliance and heating, ventilation and air-conditioning



8.9

%



10.6

%

Industrial



7.5

%



9.0

%

All other



9.5

%



10.3

%

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 costs associated with debt refinancing and other financing activities, unrealized (gain)/loss on other hedges and (gain)/loss on currency remeasurement on debt, 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, 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 first quarter ended March 31, 2014 and 2013.

(In 000s, except per share amounts)



Three months ended

March 31,





2014



2013

Net income



$

68,373





$

34,665



Financing and other transaction costs



68





602



Deferred (gain)/loss on other hedges and (gain)/loss on

  currency remeasurement on debt, net



(4,194)





3,229



Depreciation and amortization expense related to the step-up

  in fair value of fixed and intangible assets and inventory



34,622





33,912



Deferred income tax and other tax expense



613





7,672



Amortization of deferred financing costs



986





1,237



Restructuring and special charges



(2,417)





5,382



Total adjustments



$

29,678





$

52,034



Adjusted net income



$

98,051





$

86,699



Weighted average diluted shares outstanding used in

  Adjusted net income per share calculation



174,151





181,522



Adjusted net income per diluted share



$

0.56





$

0.48



 

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 and inventory:  $0.6 million and $0.3 million for the three months ended March 31, 2014 and 2013, respectively; Restructuring and special charges:  $0.0 million and $1.3 million for the three months ended March 31, 2014 and 2013, 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 first quarter ended March 31, 2014 and 2013.

($ in 000s)



Three months ended

March 31,





2014



2013

Cost of revenue



$

557





$

4,275



Selling, general and administrative



68





602



Amortization of intangible assets



31,648





33,004



Restructuring and special charges







2,015



Interest expense



986





1,237



Other, net



(4,194)





3,229



Provision for income taxes



613





7,672



Total adjustments



$

29,678





$

52,034



 

The following unaudited table reconciles the Company's Projected GAAP earnings per share to Projected Adjusted net income per diluted share for the second quarter ended June 30, 2014 and full year ended December 31, 2014.  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

June 30, 2014



Full year ended

December 31, 2014



Low End



High End



Low End



High End

























Projected GAAP earnings per diluted share

$

0.36





$

0.39





$

1.38





$

1.58



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









(0.02)





(0.02)



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

0.18





0.18





0.74





0.74



Deferred income tax and other tax expense

0.06





0.06





0.18





0.18



Amortization of deferred financing costs

0.01





0.01





0.03





0.03



Restructuring and special charges

(0.02)





(0.02)





(0.03)





(0.03)



Projected Adjusted net income per diluted share

$

0.59





$

0.62





$

2.28





$

2.48



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

174,500





174,500





175,000





175,000



 

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, 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

Logo - http://photos.prnewswire.com/prnh/20070227/CLTU192LOGO

SOURCE Sensata Technologies Holding N.V.



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