Record Quarterly Revenue of $1,062
Million
Sensata Technologies (NYSE: ST), a global industrial technology
company and leading provider of sensors, sensor-rich solutions and
electrical protection devices used in mission-critical systems that
create valuable business insights for customers, today announced
financial results for its second quarter ended June 30, 2023.
"Sensata delivered robust results in the second quarter with
record revenues for the quarter. The sustained performance we are
generating demonstrates that Sensata remains on track to achieve
its long-term growth goals, including scaling its Electrification
business to $2 billion in revenue by 2026,” said Jeff Cote, CEO and
President of Sensata. "During the second quarter, the Company
repaid its outstanding Term Loan, removing variable rate debt from
our balance sheet at a time of rising rates, with the effect of
lowering interest expense and amplifying earnings per share
growth.”
Investor Event on Sensata's Innovation
Sensata plans to host an investor event in New York City on
September 27, 2023 from 9am to noon EST to highlight Sensata's rich
history of innovation on behalf of customers and how that
innovation drives its transition to providing solutions for an
Electrified World. The event will be in-person and virtual;
registration details are now available on Sensata's Investor
Relations website.
Operating Results
Operating results for the second quarter of 2023 compared to the
second quarter of 2022 are summarized below. These results include
non-GAAP financial measures, each of which is defined and
reconciled to the most directly comparable GAAP measure later in
this press release.
Revenue:
- Revenue was a record $1,062.1 million, an increase of $41.6
million, or 4.1%, compared to $1,020.5 million in the second
quarter of 2022.
- Revenue increased 3.4% on an organic basis, which excludes a
decrease of (1.4%) from foreign currency exchange rates and an
increase of 2.1% from acquisitions, net of divestitures, each
versus the prior year period.
Operating income:
- Operating income was $118.0 million, or 11.1% of revenue, a
decrease of $20.9 million, or (15.1%), compared to operating income
of $138.9 million, or 13.6% of revenue, in the second quarter of
2022.
- Adjusted operating income was $205.7 million, or 19.4% of
revenue (20.1% on a constant currency basis), an increase of $12.0
million, or 6.2%, compared to adjusted operating income of $193.8
million, or 19.0% of revenue, in the second quarter of 2022.
Earnings per share:
- Earnings per share was $0.32, an increase of $0.10, or 45.5%,
compared to earnings per share of $0.22 in the second quarter of
2022.
- Adjusted earnings per share was a record $0.97, an increase of
$0.14, or 16.9% ($1.02 or an increase of 22.9% on a constant
currency basis), compared to adjusted earnings per share of $0.83
in the second quarter of 2022.
Sensata generated $115.8 million of operating cash flow in the
second quarter of 2023, compared to $94.5 million in the prior year
period. Sensata's free cash flow totaled $68.2 million in the
second quarter of 2023 compared to $56.2 million in the prior year
period.
During the second quarter of 2023, Sensata repaid its variable
rate Term Loan, returned approximately $18.3 million to
shareholders through its quarterly dividend of $0.12 per share paid
on May 24, 2023, and repurchased approximately $25.1 million of its
shares.
Operating results for the six months ended June 30, 2023
compared to the six months ended June 30, 2022 are summarized
below. These results include non-GAAP financial measures, each of
which is defined and reconciled to the most directly comparable
GAAP measure later in this press release.
Revenue:
- Revenue was $2,060.3 million, an increase of $64.0 million, or
3.2%, compared to $1,996.3 million in the six months ended June 30,
2022.
- Revenue increased 4.0% on an organic basis, which excludes a
decrease of (1.9%) from foreign currency exchange rates and an
increase of 1.1% from acquisitions, net of divestitures, each
versus the prior year.
Operating income:
- Operating income was $266.9 million, or 13.0% of revenue, an
increase of $2.0 million, or 0.7%, compared to operating income of
$264.9 million, or 13.3% of revenue, in the six months ended June
30, 2022.
- Adjusted operating income was $398.6 million, or 19.3% of
revenue (19.8% on a constant currency basis), an increase of $22.4
million, or 5.9%, compared to adjusted operating income of $376.3
million, or 18.8% of revenue, in the six months ended June 30,
2022.
Earnings per share:
- Earnings per share was $0.88, an increase of $0.52, or 144%,
compared to earnings per share of $0.36 in the six months ended
June 30, 2022.
- Adjusted earnings per share was $1.89, an increase of $0.29, or
18.1% ($1.98 or an increase of 23.8% on a constant currency basis),
compared to adjusted earnings per share of $1.60 in the six months
ended June 30, 2022.
Sensata generated $212.6 million of operating cash flow in the
six months ended June 30, 2023, compared to $141.9 million in the
prior year period. Sensata's free cash flow totaled $128.2 million
in the six months ended June 30, 2023 compared to $67.8 million in
the prior year period.
During the first six months of 2023, Sensata repaid its variable
rate Term Loan, returned approximately $35.1 million to
shareholders through its quarterly dividend, and repurchased
approximately $25.1 million of its shares.
Segment Performance
For the three months ended
June 30,
For the six months ended June
30,
$ in 000s
2023
2022
2023
2022
Performance Sensing (1)
Revenue
$
757,444
$
731,645
$
1,495,712
$
1,434,340
Operating income
$
191,147
$
179,293
$
373,887
$
353,507
% of Performance Sensing revenue
25.2 %
24.5 %
25.0 %
24.6 %
Sensing Solutions (1)
Revenue
$
304,668
$
288,903
$
564,575
$
561,978
Operating income
$
84,152
$
85,714
$
159,468
$
164,653
% of Sensing Solutions revenue
27.6 %
29.7 %
28.2 %
29.3 %
(1) Effective April 1, 2023, we
reorganized our reportable segments to move material handling
products from Performance Sensing to Sensing Solutions to align
with new management reporting. Prior year amounts have been
reclassified.
Insights Reporting Segment
During its first quarter earnings conference call, Sensata
discussed the creation of a new Insights reporting segment to align
with new management reporting. During the second quarter, reporting
lines reverted back to prior practices. Consequently, Sensata is
continuing to report results in two business segments, and
Insights' financial results will continue to be reported as part of
the Performance Sensing Segment.
Guidance
"In the second quarter, Sensata once again grew earnings faster
than revenue, delivering 4.1% revenue growth, as well as 6.2%
adjusted operating income growth (11.5% on a constant currency
basis), and record adjusted earnings per share of $0.97 that grew
16.9% (22.9% on a constant currency basis) compared to the prior
year period," said Paul Vasington, EVP and CFO of Sensata. "For the
third quarter of 2023, we expect revenue of $980 to $1,020 million
and adjusted EPS of $0.84 to $0.94."
Q3-2023 Guidance
$ in millions, except EPS
Q3-23 Guidance
Q3-22
Y/Y Change
Revenue
$980 - $1,020
$1,018.3
(4%) - 0%
organic growth
(3%) - 1%
Adjusted Operating Income
$183 - $199
$197.3
(7%) - 1%
Adjusted Net Income
$129 - $143
$131.0
(2%) - 9%
Adjusted EPS
$0.84 - $0.94
$0.85
(1%) - 11%
Versus the prior year period, Sensata expects that changes in
foreign currency exchange rates will decrease revenue by
approximately ($6) million at the midpoint and decrease adjusted
EPS by approximately ($0.03) at the midpoint in the third quarter
of 2023.
Conference Call and Webcast
Sensata will conduct a conference call today at 8:00 a.m.
Eastern Time to discuss its second quarter 2023 financial results
and its outlook for the third quarter of 2023. The dial-in numbers
for the call are 1-844-784-1726 or 1-412-380-7411. Callers should
reference the "Sensata Q2 2023 Financial Results Conference Call."
A live webcast of the conference call will also be available on the
investor relations page of Sensata’s website at http://investors.sensata.com. Additionally, a
replay of the call will be available until August 2, 2023. To
access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter
confirmation code: 7268997.
About Sensata Technologies
Sensata Technologies is a leading industrial technology company
that develops sensors, sensor-based solutions, including
controllers and software, and other mission-critical products to
create valuable business insights for customers and end users. For
more than 100 years, Sensata has provided a wide range of
customized, sensor-rich solutions that address complex engineering
requirements to help customers solve difficult challenges in the
automotive, heavy vehicle & off-road, industrial, and aerospace
industries. With approximately 21,000 employees and operations in
16 countries, Sensata’s solutions help to make products safer,
cleaner and more efficient, more electrified, and more connected.
For more information, please visit Sensata’s website at
www.sensata.com.
Non-GAAP Financial Measures
We supplement the reporting of our financial information
determined in accordance with U.S. generally accepted accounting
principles (“GAAP”) with certain non-GAAP financial measures. We
use these non-GAAP financial measures internally to make operating
and strategic decisions, including the preparation of our annual
operating plan, evaluation of our overall business performance, and
as a factor in determining compensation for certain employees. We
believe presenting non-GAAP financial measures is useful for
period-over-period comparisons of underlying business trends and
our ongoing business performance. We also believe presenting these
non-GAAP measures provides additional transparency into how
management evaluates the business.
Non-GAAP financial measures should be considered as supplemental
in nature and are not meant to be considered in isolation or as a
substitute for the related financial information prepared in
accordance with U.S. GAAP. In addition, our non-GAAP financial
measures may not be the same as, or comparable to, similar non-GAAP
measures presented by other companies.
The non-GAAP financial measures referenced by Sensata in this
release include: adjusted net income, adjusted earnings per share
(“EPS”), adjusted operating income, adjusted operating margin, free
cash flow, organic revenue growth, market outgrowth, adjusted
earnings before interest, taxes, depreciation and amortization
("EBITDA"), net debt, and net leverage ratio. We also refer to
changes in certain non-GAAP measures, usually reported either as a
percentage or number of basis points, between two periods. Such
changes are also considered non-GAAP measures.
Adjusted net income (or loss) is defined as net income
(or loss), determined in accordance with U.S. GAAP, excluding
certain non-GAAP adjustments which are detailed in the accompanying
reconciliation tables. Adjusted EPS is calculated by
dividing adjusted net income (or loss) by the number of diluted
weighted-average ordinary shares outstanding in the period. We
believe that these measures are useful to investors and management
in understanding our ongoing operations and in analysis of ongoing
operating trends.
Adjusted operating income (or loss) is defined as
operating income (or loss), determined in accordance with U.S.
GAAP, excluding certain non-GAAP adjustments which are detailed in
the accompanying reconciliation tables. Adjusted operating
margin is calculated by dividing adjusted operating income (or
loss) by net revenue. We believe that these measures are useful to
investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends.
Free cash flow is defined as net cash provided by/(used
in) operating activities less additions to property, plant and
equipment and capitalized software. We believe that this measure is
useful to investors and management as a measure of cash generated
by business operations that will be used to repay scheduled debt
maturities and can be used to fund acquisitions, repurchase
ordinary shares, or for the accelerated repayment of debt
obligations.
Organic revenue growth (or decline) is defined as the
reported percentage change in net revenue calculated in accordance
with U.S. GAAP, excluding the period-over-period impact of foreign
exchange rate differences as well as the net impact of material
acquisitions and divestitures for the 12-month period following the
respective transaction date(s). We believe that this measure is
useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends.
Adjusted EBITDA is defined as net income (or loss),
determined in accordance with U.S. GAAP, excluding interest
expense, net, provision for (or benefit from) income taxes,
depreciation expense, amortization of intangible assets, and the
following non-GAAP adjustments, if applicable: (1) restructuring
related and other, (2) financing and other transaction costs, and
(3) deferred gain or loss on derivative instruments. We believe
that this measure is useful to investors and management in
understanding our ongoing operations and in analysis of ongoing
operating trends.
Net debt is defined as total debt, finance lease, and
other financing obligations less cash and cash equivalents. We
believe net debt is a useful measure to management and investors in
understanding trends in our overall financial condition.
Net leverage ratio is defined as net debt divided by last
twelve months (LTM) adjusted EBITDA. We believe the net leverage
ratio is a useful measure to management and investors in
understanding trends in our overall financial condition.
In discussing trends in our performance, we may refer to certain
non-GAAP financial measures or the percentage change of certain
non-GAAP financial measures in one period versus another,
calculated on a constant currency basis. Constant currency
is determined by stating revenues and expenses at prior period
foreign currency exchange rates and excludes the impact of foreign
currency exchange rates on all hedges and, as applicable, net
monetary assets. We believe these measures are useful to investors
and management in understanding our ongoing operations and in
analysis of ongoing operating trends.
Safe Harbor Statement
This earnings release includes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements may be identified by
terminology such as "may," "will," "could," "should," "expect,"
"anticipate," "believe," "estimate," "predict," "project,"
"forecast," "continue," "intend," "plan," "potential,"
"opportunity," "guidance," and similar terms or phrases.
Forward-looking statements involve, among other things,
expectations, projections, and assumptions about future financial
and operating results, objectives, business and market outlook,
megatrends, priorities, growth, shareholder value, capital
expenditures, cash flows, demand for products and services, share
repurchases, and Sensata’s strategic initiatives, including those
relating to acquisitions and dispositions and the impact of such
transactions on our strategic and operational plans and financial
results. These statements are subject to risks, uncertainties, and
other important factors relating to our operations and business
environment, and we can give no assurances that these
forward-looking statements will prove to be correct.
A wide variety of potential risks, uncertainties, and other
factors could materially affect our ability to achieve the results
either expressed or implied by these forward-looking statements,
including, but not limited to, risks related to public health
crises, instability and changes in the global markets, supplier
interruption or non-performance, the acquisition or disposition of
businesses, adverse conditions or competition in the industries
upon which we are dependent, intellectual property, product
liability, warranty, and recall claims, market acceptance of new
product introductions and product innovations, labor disruptions or
increased labor costs, and changes in existing environmental or
safety laws, regulations, and programs.
Investors and others should carefully consider the foregoing
factors and other uncertainties, risks, and potential events
including, but not limited to, those described in Item 1A: Risk
Factors in our most recent Annual Report on Form 10-K and as may be
updated from time to time in Item 1A: Risk Factors in our quarterly
reports on Form 10-Q or other subsequent filings with the United
States Securities and Exchange Commission. All such forward-looking
statements speak only as of the date they are made, and we do not
undertake any obligation to update these statements other than as
required by law.
SENSATA TECHNOLOGIES HOLDING
PLC
Condensed Consolidated
Statements of Operations
(In thousands, except per share
amounts)
(Unaudited)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Net revenue
$
1,062,112
$
1,020,548
$
2,060,287
$
1,996,318
Operating costs and expenses:
Cost of revenue
732,108
686,603
1,402,579
1,343,683
Research and development
44,857
47,971
90,796
93,951
Selling, general and administrative
91,312
97,329
177,462
193,009
Amortization of intangible assets
54,563
36,805
95,337
74,172
Restructuring and other charges, net
21,259
12,897
27,258
26,630
Total operating costs and expenses
944,099
881,605
1,793,432
1,731,445
Operating income
118,013
138,943
266,855
264,873
Interest expense, net
(38,105)
(44,842)
(78,196)
(90,287)
Other, net
(10,924)
(39,240)
(9,532)
(89,696)
Income before taxes
68,984
54,861
179,127
84,890
Provision for income taxes
19,873
20,020
43,599
27,608
Net income
$
49,111
$
34,841
$
135,528
$
57,282
Net income per share:
Basic
$
0.32
$
0.22
$
0.89
$
0.36
Diluted
$
0.32
$
0.22
$
0.88
$
0.36
Weighted-average ordinary shares
outstanding:
Basic
152,700
156,477
152,609
156,950
Diluted
153,064
156,994
153,194
157,812
SENSATA TECHNOLOGIES HOLDING
PLC
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
857,312
$
1,225,518
Accounts receivable, net of allowances
772,427
742,382
Inventories
660,082
644,875
Prepaid expenses and other current
assets
186,807
162,268
Total current assets
2,476,628
2,775,043
Property, plant and equipment, net
858,760
840,819
Goodwill
3,861,872
3,911,224
Other intangible assets, net
961,180
999,722
Deferred income tax assets
93,782
100,539
Other assets
140,378
128,873
Total assets
$
8,392,600
$
8,756,220
Liabilities and shareholders'
equity
Current liabilities:
Current portion of long-term debt, finance
lease and other financing obligations
$
1,809
$
256,471
Accounts payable
523,968
531,572
Income taxes payable
31,920
43,987
Accrued expenses and other current
liabilities
323,201
346,942
Total current liabilities
880,898
1,178,972
Deferred income tax liabilities
390,743
364,593
Pension and other post-retirement benefit
obligations
38,960
36,086
Finance lease and other financing
obligations, less current portion
23,771
24,742
Long-term debt, net
3,770,507
3,958,928
Other long-term liabilities
77,949
82,092
Total liabilities
5,182,828
5,645,413
Total shareholders' equity
3,209,772
3,110,807
Total liabilities and shareholders'
equity
$
8,392,600
$
8,756,220
SENSATA TECHNOLOGIES HOLDING
PLC
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
For the six months ended June
30,
2023
2022
Cash flows from operating
activities:
Net income
$
135,528
$
57,282
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
63,560
62,882
Amortization of debt issuance costs
3,421
3,433
Gain on sale of business
(5,877)
—
Share-based compensation
17,607
15,739
Loss on debt financing
857
—
Amortization of intangible assets
95,337
74,172
Deferred income taxes
13,449
(5,211)
Mark-to-market loss on equity investments,
net
302
71,100
Unrealized loss on derivative instruments
and other
14,674
20,669
Changes in operating assets and
liabilities, net of effects of acquisitions
(117,836)
(143,178)
Acquisition-related compensation
payments
(8,380)
(15,000)
Net cash provided by operating
activities
212,642
141,888
Cash flows from investing
activities:
Acquisitions, net of cash received
—
(48,989)
Additions to property, plant and equipment
and capitalized software
(84,444)
(74,069)
Investment in debt and equity
securities
(390)
(6,878)
Proceeds from the sale of business, net of
cash sold
19,000
—
Other
—
152
Net cash used in investing activities
(65,834)
(129,784)
Cash flows from financing
activities:
Proceeds from exercise of stock options
and issuance of ordinary shares
5,346
14,577
Payment of employee restricted stock tax
withholdings
(11,470)
(7,577)
Payments on debt
(448,390)
(5,664)
Dividends paid
(35,113)
(17,225)
Payments to repurchase ordinary shares
(25,076)
(144,279)
Payments of debt financing costs
(311)
(2,313)
Net cash used in financing activities
(515,014)
(162,481)
Net change in cash and cash
equivalents
(368,206)
(150,377)
Cash and cash equivalents, beginning of
period
1,225,518
1,708,955
Cash and cash equivalents, end of
period
$
857,312
$
1,558,578
Revenue by Business, Geography, and End
Market (Unaudited)
(percent of total revenue)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Performance Sensing (1)
71.3 %
71.7 %
72.6 %
71.8 %
Sensing Solutions (1)
28.7 %
28.3 %
27.4 %
28.2 %
Total
100.0 %
100.0 %
100.0 %
100.0 %
(percent of total revenue)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Americas
46.2 %
42.1 %
45.7 %
41.0 %
Europe
26.7 %
26.0 %
26.9 %
26.1 %
Asia/Rest of World
27.1 %
31.9 %
27.4 %
32.9 %
Total
100.0 %
100.0 %
100.0 %
100.0 %
(percent of total revenue)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Automotive (2)
50.8 %
50.6 %
51.7 %
51.5 %
Heavy vehicle and off-road (1)
21.4 %
22.1 %
21.8 %
21.3 %
Industrial (1)
17.4 %
13.5 %
16.2 %
13.4 %
Appliance and HVAC
4.8 %
5.7 %
4.8 %
5.8 %
Aerospace
4.4 %
3.8 %
4.4 %
3.6 %
All other
1.2 %
4.3 %
1.1 %
4.4 %
Total
100.0 %
100.0 %
100.0 %
100.0 %
(1) Effective April 1, 2023, we
reorganized our structure to move material handling products from
the Performance Sensing reportable segment to the Sensing Solutions
reportable segment to align with new management reporting.
Accordingly, material handling revenue, which has historically been
presented in the HVOR end-market, is now presented in the
Industrial end-market. Prior period amounts for revenue by business
and end market have been reclassified above.
(2) Includes amounts reflected in the
Sensing Solutions segment as follows: $9.6 million and $9.9 million
of revenue in the three months ended June 30, 2023 and 2022,
respectively, and $17.7 million and $19.2 million of revenue in the
six months ended June 30, 2023 and 2022, respectively.
Market Outgrowth (Unaudited)
For the three months ended
June 30, 2023
For the six months ended June
30, 2023
Reported Growth
Organic Growth
End Market Growth
Reported Growth
Organic Growth
End Market Growth
Sensata
4.1%
3.4%
2.5%
3.2%
4.0%
3.4%
Market outgrowth, or organic revenue growth less end market
growth, can be lumpy during individual quarters due to timing of
customer production launches, channel inventory, customer or
platform mix, and changes in market share. For the last twelve
months, market outgrowth is estimated to have been 535 bps and 735
bps since the beginning of 2020.
GAAP to Non-GAAP Reconciliations
The following unaudited tables provide a reconciliation of the
difference between each of the non-GAAP financial measures
referenced herein and the most directly comparable U.S. GAAP
financial measure. Amounts presented in these tables may not appear
to recalculate due to the effect of rounding.
Operating income and
margin, income tax, net income, and earnings per share
($ in thousands, except per share
amounts)
For the three months ended
June 30, 2023
Operating Income
Operating Margin
Income Taxes
Net Income
Diluted EPS
Reported (GAAP)
$
118,013
11.1%
$
19,873
$
49,111
$
0.32
Non-GAAP adjustments:
Restructuring related and other (1)
31,078
2.9%
(632)
30,446
0.20
Financing and other transaction costs
4,265
0.4%
(98)
3,923
0.03
Step-up depreciation and amortization
(2)
53,326
5.0%
—
53,326
0.35
Deferred (gain)/loss on derivative
instruments
(947)
(0.1%)
(1,090)
4,232
0.03
Amortization of debt issuance costs
—
—%
—
1,685
0.01
Deferred taxes and other tax related
—
—%
6,433
6,433
0.04
Total adjustments
87,722
8.3%
4,613
100,045
0.65
Adjusted (non-GAAP)
$
205,735
19.4%
$
15,260
$
149,156
$
0.97
(1) Includes $26.6 million of charges
related to the exit of the Spear Marine Business in the second
quarter of 2023. Refer to our Quarterly Report on Form 10-Q for
additional information.
(2) Includes $13.5 million of accelerated
amortization related to the exit of the Spear Marine Business in
the second quarter of 2023.
($ in thousands, except per share
amounts)
For the three months ended
June 30, 2022
Operating Income
Operating Margin
Income Tax
Net Income
Diluted EPS
Reported (GAAP)
$
138,943
13.6%
$
20,020
$
34,841
$
0.22
Non-GAAP adjustments:
Restructuring related and other
3,888
0.4%
(36)
4,294
0.03
Financing and other transaction costs
(1)
14,434
1.4%
(450)
28,277
0.18
Step-up depreciation and amortization
35,318
3.5%
—
35,318
0.22
Deferred loss on derivative
instruments
1,190
0.1%
(4,013)
15,431
0.10
Amortization of debt issuance costs
—
—%
—
1,717
0.01
Deferred taxes and other tax related
(2)
—
—%
9,669
9,669
0.06
Total adjustments
54,830
5.4%
5,170
94,706
0.60
Adjusted (non-GAAP)
$
193,773
19.0%
$
14,850
$
129,547
$
0.83
(1) Includes a mark-to-market loss on our investment in Quanergy
Systems, Inc of $11.8 million, recorded in other, net. Also
includes $12.8 million of expense related to compensation
arrangements entered into concurrent with the closing of an
acquisition, partially offset by $3.3 million of gains, which
relate to changes in the fair value of acquisition-related
contingent consideration amounts, each recorded in restructuring
and other charges, net.
(2) Includes $11.4 million of current tax expense related to the
repatriation of profit from certain Asian subsidiaries to their
parent company in the Netherlands. The decision to repatriate these
profits was the result of our goal to reduce our balance sheet
exposure and corresponding earnings volatility related to changes
in foreign currency exchange rates as well as to fund our
deployment of capital.
($ in thousands, except per share
amounts)
For the six months ended June
30, 2023
Operating Income
Operating Margin
Income Tax
Net Income
Diluted EPS
Reported (GAAP)
$
266,855
13.0%
$
43,599
$
135,528
$
0.88
Non-GAAP adjustments:
Restructuring related and other (1)
34,019
1.7%
(1,304)
32,715
0.21
Financing and other transaction costs
8,513
0.4%
2,776
11,530
0.08
Step-up depreciation and amortization
(2)
92,456
4.5%
—
92,456
0.60
Deferred (gain)/loss on derivative
instruments
(3,197)
(0.2%)
(237)
936
0.01
Amortization of debt issuance costs
—
—%
—
3,419
0.02
Deferred taxes and other tax related
—
—%
13,224
13,224
0.09
Total adjustments
131,791
6.4%
14,459
154,280
1.01
Adjusted (non-GAAP)
$
398,646
19.3%
$
29,140
$
289,808
$
1.89
(1) Includes $26.6 million of charges
related to the exit of the Spear Marine Business in the second
quarter of 2023. Refer to our Quarterly Report on Form 10-Q for
additional information.
(2) Includes $13.5 million of accelerated
amortization related to the exit of the Spear Marine Business in
the second quarter of 2023.
($ in thousands, except per share
amounts)
For the six months ended June
30, 2022
Operating Income
Operating Margin
Income Tax
Net Income
Diluted EPS
Reported (GAAP)
$
264,873
13.3%
$
27,608
$
57,282
$
0.36
Non-GAAP adjustments:
Restructuring related and other
8,037
0.4%
(136)
8,343
0.05
Financing and other transaction costs
(1)
30,259
1.5%
(994)
102,837
0.65
Step-up depreciation and amortization
71,263
3.6%
—
71,263
0.45
Deferred loss on derivative
instruments
1,842
0.1%
(2,202)
8,470
0.05
Amortization of debt issuance costs
—
—%
—
3,433
0.02
Deferred taxes and other tax related
(2)
—
—%
1,334
1,334
0.01
Total adjustments
111,401
5.6%
(1,998)
195,680
1.24
Adjusted (non-GAAP)
$
376,274
18.8%
$
29,606
$
252,962
$
1.60
(1) Includes $71.7 million of
mark-to-market losses on our investment in Quanergy Systems, Inc,
presented in other, net of our condensed consolidated statements of
operations. Also includes $31.1 million of expense related to
compensation arrangements entered into concurrent with the closing
of certain acquisitions, partially offset by gains of $9.4 million
related to changes in the fair value of acquisition-related
contingent consideration, each presented in restructuring and other
charges, net of our condensed consolidated statements of
operations.
(2) Includes $11.4 million of current tax
expense related to the repatriation of profit from certain Asian
subsidiaries to their parent companies in the Netherlands and the
United States. The decision to repatriate these profits was the
result of our goal to reduce our balance sheet exposure and
corresponding earnings volatility related to changes in foreign
currency exchange rates as well as to fund our deployment of
capital.
Non-GAAP adjustments
by location in statements of operations
(in thousands)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Cost of revenue (1)
$
11,142
$
1,215
$
8,364
$
3,375
Selling, general and administrative
2,250
5,699
4,022
10,730
Amortization of intangible assets (2)
53,071
35,019
92,147
70,666
Restructuring and other charges, net
(3)
21,259
12,897
27,258
26,630
Operating income adjustments
87,722
54,830
131,791
111,401
Interest expense, net
1,685
1,717
3,419
3,433
Other, net (4)
6,025
32,989
4,611
82,844
Provision for income taxes (5)
4,613
5,170
14,459
(1,998)
Net income adjustments
$
100,045
$
94,706
$
154,280
$
195,680
(1) The three and six months ended June
30, 2023 include a charge of $10.5 million to write down inventory
related to the exit of the Spear Marine Business in the second
quarter of 2023.
(2) The three and six months ended June
30, 2023 include accelerated amortization of $13.5 million related
to intangible assets assigned to the Spear Marine Business.
(3) The three and six months ended June
30, 2023 include certain charges related to the exit of the Spear
Marine Business and recorded in restructuring and other charges,
net, including $1.2 million of severance costs, $1.7 million
related to the write-down of property, plant, and equipment, $2.3
million related to the write-down of accounts receivables, and $9.1
million of other charges, including contract termination costs. The
three and six months ended June 30, 2023 and 2022 include $3.3
million, $10.6 million, $12.8 million and $31.1 million,
respectively, of expense related to compensation arrangements
entered into concurrent with the closing of certain acquisitions.
The six months ended June 30, 2022 also includes $9.4 million of
gains related to changes in the fair value of acquisition-related
contingent consideration amounts.
(4) The three and six months ended June
30, 2022 include a mark-to-market loss on our investment in
Quanergy Systems, Inc of $11.8 million and $71.7 million,
respectively.
(5) The three and six months ended June
30, 2022 include $11.4 million of current tax expense related to
the repatriation of profit from certain Asian subsidiaries to their
parent company in the Netherlands. The decision to repatriate these
profits was the result of our goal to reduce our balance sheet
exposure and corresponding earnings volatility related to changes
in foreign currency exchange rates as well as to fund our
deployment of capital.
Free cash
flow
For the three months ended
June 30,
For the six months ended
June 30,
($ in thousands)
2023
2022
% △
2023
2022
% △
Net cash provided by operating
activities
$
115,754
$
94,533
22.4%
$
212,642
$
141,888
49.9%
Additions to property, plant and equipment
and capitalized software
(47,562)
(38,358)
(24.0%)
(84,444)
(74,069)
(14.0%)
Free cash flow
$
68,192
$
56,175
21.4%
$
128,198
$
67,819
89.0%
Adjusted corporate
and other expenses
For the three months ended
June 30,
For the six months ended June
30,
(in thousands)
2023
2022
2023
2022
Corporate and other expenses (GAAP)
$
(81,464)
$
(76,362)
$
(143,905)
$
(152,485)
Restructuring related and other
13,110
2,647
11,681
5,161
Financing and other transaction costs
974
2,778
3,593
6,505
Step-up depreciation and amortization
255
299
309
597
Deferred (gain)/loss on derivative
instruments
(947)
1,190
(3,197)
1,842
Total adjustments
13,392
6,914
12,386
14,105
Adjusted corporate and other expenses
(non-GAAP)
$
(68,072)
$
(69,448)
$
(131,519)
$
(138,380)
Adjusted
EBITDA
For the three months ended
June 30,
For the six months ended June
30,
(in thousands)
LTM
2023
2022
2023
2022
Net income
$
388,931
$
49,111
$
34,841
$
135,528
$
57,282
Interest expense, net
166,728
38,105
44,842
78,196
90,287
Provision for income taxes
102,008
19,873
20,020
43,599
27,608
Depreciation expense
127,862
32,612
31,351
63,560
62,882
Amortization of intangible assets
174,952
54,563
36,805
95,337
74,172
EBITDA
960,481
194,264
167,859
416,220
312,231
Non-GAAP Adjustments
Restructuring related and other
63,553
31,078
4,330
34,019
8,479
Financing and other transaction costs
(87,573)
4,021
28,727
8,754
103,831
Deferred (gain)/loss on derivative
instruments
(7,622)
5,322
19,444
1,173
10,672
Adjusted EBITDA
$
928,839
$
234,685
$
220,360
$
460,166
$
435,213
Net debt and
leverage
As of
($ in thousands)
June 30, 2023
December 31, 2022
Current portion of long-term debt, finance
lease and other financing obligations
$
1,809
$
256,471
Finance lease and other financing
obligations, less current portion
23,771
24,742
Long-term debt, net
3,770,507
3,958,928
Total debt, finance lease, and other
financing obligations
3,796,087
4,240,141
Less: discount, net of premium
(2,355)
(3,360)
Less: deferred financing costs
(27,138)
(29,916)
Total gross indebtedness
3,825,580
4,273,417
Less: cash and cash equivalents
857,312
1,225,518
Net debt
$
2,968,268
$
3,047,899
Adjusted EBITDA (LTM)
$
928,839
$
903,886
Net leverage ratio
3.2
3.4
Guidance
For the three months ending
September 30, 2023
($ in millions, except per share
amounts)
Operating Income
Net Income
EPS
Low
High
Low
High
Low
High
GAAP
$
140.1
$
153.0
$
74.1
$
83.9
$
0.47
$
0.56
Restructuring related and other
2.4
3.5
2.4
3.5
0.02
0.02
Financing and other transaction costs
2.5
3.5
2.5
3.5
0.02
0.02
Step-up depreciation and amortization
38.0
39.0
38.0
39.0
0.25
0.25
Deferred (gain)/loss on derivative
instruments(1)
—
—
—
—
—
—
Amortization of debt issuance costs
—
—
1.5
1.5
0.01
0.01
Deferred taxes and other tax related
—
—
10.5
11.6
0.07
0.08
Non-GAAP
$
183.0
$
199.0
$
129.0
$
143.0
$
0.84
$
0.94
Weighted-average diluted shares
outstanding (in millions)
153.4
153.4
(1) We are unable to predict movements in
commodity prices and, therefore, the impact of mark-to-market
adjustments on our commodity forward contracts to our projected
operating results. In prior periods such adjustments have been
significant to our reported GAAP earnings.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230725138619/en/
Investors: Jacob Sayer (508) 236-1666 jsayer@sensata.com
Media: Alexia Taxiarchos (508) 236-1761
ataxiarchos@sensata.com
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