ST Sensata Technologies Holding PLC

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 to help its customers address increasingly complex engineering and operating performance requirements, today announced financial results for its third quarter ended September 30, 2024.

“Our third quarter core operating results demonstrate early positive returns from our strategic efforts to improve operational efficiency, drive execution, and expand margins," said Martha Sullivan, Interim President and CEO of Sensata. “We are confident that our continued efforts to streamline processes and improve manufacturing productivity will position us to deliver on our commitment to further increase adjusted operating margins in the fourth quarter."

Operating Results - Third Quarter

Operating results for the third quarter of 2024 compared to the third quarter of 2023 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 $982.8 million, a decrease of $18.5 million, or 1.8%, compared to $1,001.3 million in the third quarter of 2023.

Operating loss / income:

• Operating loss of $199.2 million, or 20.3% of revenue, decreased by $315.5 million, or 271.4%, compared to operating income of $116.3 million, or 11.6% of revenue, in the third quarter of 2023.
• The third quarter 2024 operating loss reflects certain charges, including: approximately $150 million in goodwill impairment related to the Dynapower business; approximately $141 million reflected in restructuring and other in connection with the loss on the sale of the Insights business and additional product lifecycle management related exits; and approximately $27 million in expenses related to product lifecycle management related exits reflected in cost of revenue.
• Adjusted operating income was $188.4 million, or 19.2% of revenue, a decrease of $3.2 million, or 1.7%, compared to adjusted operating income of $191.6 million, or 19.1% of revenue, in the third quarter of 2023.

Loss / earnings per share:

• Loss per share was $0.17, a decrease of $0.58, or 141.5%, compared to earnings per share of $0.41 in the third quarter of 2023. The loss per share includes the release of a tax valuation allowance related to certain intellectual property assets resulting in a $258 million tax benefit.
• Adjusted earnings per share was $0.86, a decrease of $0.05, or 5.5%, compared to adjusted earnings per share of $0.91 in the third quarter of 2023.

Sensata generated free cash flow of $91.3 million in the third quarter of 2024, and ended the quarter with $506.2 million of cash on hand.

In July 2024, Sensata redeemed $700 million of bonds that were scheduled to mature in October 2025. The redemption was funded by proceeds from the $500 million senior notes issuance in June 2024 and approximately $200 million of cash on hand.

During the third quarter of 2024, Sensata returned approximately $55.4 million to shareholders, including $37.2 million of share repurchases and $18.1 million in quarterly dividends of $0.12 per share paid on August 28, 2024.

Operating Results - Nine Months

Operating results for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 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 $3,025.1 million, a decrease of $36.5 million, or 1.2%, compared to $3,061.6 million in the nine months ended September 30, 2023.

Operating income:

• Operating income was $75.5 million, or 2.5% of revenue, a decrease of $307.6 million, or 80.3%, compared to operating income of $383.1 million, or 12.5% of revenue, in the nine months ended September 30, 2023.
• Operating income for the nine month period includes the third quarter 2024 charges noted above, which were: approximately $150 million in goodwill impairment related to the Dynapower business; approximately $141 million reflected in restructuring and other in connection with the loss on the sale of the Insights business and additional product lifecycle management related exits; and approximately $27 million in expenses related to product lifecycle management related exits reflected in cost of revenue.
• Adjusted operating income was $573.6 million, or 19.0% of revenue, a decrease of $16.7 million, or 2.8%, compared to adjusted operating income of $590.3 million, or 19.3% of revenue, in the nine months ended September 30, 2023.

Earnings per share:

• Earnings per share was $0.81, a decrease of $0.49, or 37.7%, compared to earnings per share of $1.30 in the nine months ended September 30, 2023. Earnings per share in the 2024 period includes the release of a tax valuation allowance related to certain intellectual property assets resulting in a $258 million tax benefit.
• Adjusted earnings per share was $2.68, a decrease of $0.12, or 4.3%, compared to adjusted earnings per share of $2.80 in the nine months ended September 30, 2023.

Sensata generated free cash flow of $254.1 million in the nine months ended September 30, 2024.

During the first nine months of 2024, Sensata returned approximately $101.6 million to shareholders including $54.3 million through its quarterly dividend, and $47.3 million of repurchased shares.

Guidance

For the fourth quarter of 2024, Sensata expects revenue of $870 to $900 million and adjusted EPS of $0.71 to $0.76.

Q4-2024 Guidance

 

 

 

$ in millions, except EPS

Q4-24 Guidance

Q3-24

Q/Q Change

Revenue

$870 - $900

$982.8

(11%) - (8%)

Adjusted Operating Income

$167.2 - $175.2

$188.4

(11%) - (7%)

Adj. Operating Margin

19.2% - 19.5%

19.2%

0 bps - 30 bps

Adjusted Net Income

$107 - $115

$130.1

(18%) - (12%)

Adjusted EPS

$0.71 - $0.76

$0.86

(17%) - (12%)

The decrease in revenue from the third quarter of 2024 to the fourth quarter of 2024 is primarily attributable to the following factors:

• Sale of Insights business in the third quarter of 2024 (approximately $50 million)
• Incremental exits of underperforming products (approximately $20 million)
• Reduced production expectations in automotive and heavy vehicle (approximately $30 million)

Conference Call and Webcast

Sensata will conduct a conference call today at 4:30 p.m. Eastern Time to discuss its third quarter 2024 financial results and its outlook for the fourth quarter of 2024. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Technologies Q3 2024 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 November 11, 2024. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 1693084.

About Sensata Technologies

Sensata Technologies is a global industrial technology company striving to create a safer, cleaner, more efficient and electrified world. Through its broad portfolio of mission-critical sensors, electrical protection components and sensor-rich solutions, Sensata helps its customers address increasingly complex engineering and operating performance requirements. With more than 19,000 employees and global operations in 15 countries, Sensata serves customers in the automotive, heavy vehicle & off-road, industrial, and aerospace markets. Learn more at www.sensata.com and follow Sensata on LinkedIn, Facebook, X and Instagram.

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.

Gross leverage ratio is defined as gross debt divided by last twelve months (LTM) adjusted EBITDA. We believe that gross leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.

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 September 30,

 

For the nine months ended September 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net revenue

 

$

982,830

 

 

$

1,001,302

 

 

$

3,025,074

 

 

$

3,061,589

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of revenue

 

 

701,463

 

 

 

687,959

 

 

 

2,115,137

 

 

 

2,090,538

 

Research and development

 

 

42,685

 

 

 

45,448

 

 

 

133,324

 

 

 

136,244

 

Selling, general and administrative

 

 

102,453

 

 

 

85,661

 

 

 

283,772

 

 

 

263,123

 

Amortization of intangible assets

 

 

44,732

 

 

 

39,970

 

 

 

122,332

 

 

 

135,307

 

Goodwill impairment charge

 

 

150,100

 

 

 

—

 

 

 

150,100

 

 

 

—

 

Restructuring and other charges, net

 

 

140,624

 

 

 

26,004

 

 

 

144,897

 

 

 

53,262

 

Total operating costs and expenses

 

 

1,182,057

 

 

 

885,042

 

 

 

2,949,562

 

 

 

2,678,474

 

Operating (loss)/income

 

 

(199,227

)

 

 

116,260

 

 

 

75,512

 

 

 

383,115

 

Interest expense

 

 

(38,942

)

 

 

(44,306

)

 

 

(118,200

)

 

 

(138,856

)

Interest income

 

 

5,857

 

 

 

7,398

 

 

 

15,397

 

 

 

23,752

 

Other, net

 

 

(12,294

)

 

 

1,317

 

 

 

(19,741

)

 

 

(8,215

)

Loss/(income) before taxes

 

 

(244,606

)

 

 

80,669

 

 

 

(47,032

)

 

 

259,796

 

(Benefit from)/provision for income taxes

 

 

(219,572

)

 

 

17,868

 

 

 

(169,722

)

 

 

61,467

 

Net (loss)/income

 

$

(25,034

)

 

$

62,801

 

 

$

122,690

 

 

$

198,329

 

 

 

 

 

 

 

 

 

 

Net (loss)/income per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.17

)

 

$

0.41

 

 

$

0.81

 

 

$

1.30

 

Diluted

 

$

(0.17

)

 

$

0.41

 

 

$

0.81

 

 

$

1.30

 

 

 

 

 

 

 

 

 

 

Weighted-average ordinary shares outstanding:

 

 

 

 

 

 

Basic

 

 

150,717

 

 

 

152,046

 

 

 

150,681

 

 

 

152,421

 

Diluted

150,717

152,379

151,030

152,922

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

September 30, 2024

 

December 31, 2023

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

506,215

 

$

508,104

Accounts receivable, net of allowances

 

 

753,735

 

 

744,129

Inventories

 

 

673,506

 

 

713,485

Prepaid expenses and other current assets

 

 

161,853

 

 

136,686

Total current assets

 

 

2,095,309

 

 

2,102,404

Property, plant and equipment, net

 

 

893,722

 

 

886,010

Goodwill

 

 

3,392,704

 

 

3,542,770

Other intangible assets, net

 

 

515,733

 

 

883,671

Deferred income tax assets

 

 

295,561

 

 

131,527

Other assets

 

 

121,301

 

 

134,605

Total assets

 

$

7,314,330

 

$

7,680,987

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt and finance lease obligations

 

$

2,076

 

$

2,276

Accounts payable

 

 

459,710

 

 

482,301

Income taxes payable

 

 

23,909

 

 

32,139

Accrued expenses and other current liabilities

 

 

321,187

 

 

307,002

Total current liabilities

 

 

806,882

 

 

823,718

Deferred income tax liabilities

 

 

246,493

 

 

359,073

Pension and other post-retirement benefit obligations

 

 

32,196

 

 

38,178

Finance lease obligations, less current portion

 

 

21,702

 

 

22,949

Long-term debt, net

 

 

3,174,354

 

 

3,373,988

Other long-term liabilities

 

 

74,935

 

 

66,805

Total liabilities

 

 

4,356,562

 

 

4,684,711

Total shareholders' equity

 

 

2,957,768

 

 

2,996,276

Total liabilities and shareholders' equity

 

$

7,314,330

 

$

7,680,987

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

For the nine months ended September 30,

 

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

122,690

 

 

$

198,329

 

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

 

 

 

 

Depreciation

 

 

100,712

 

 

 

96,877

 

Amortization of debt issuance costs

 

 

4,510

 

 

 

5,110

 

Goodwill impairment charge

 

 

150,100

 

 

 

—

 

Loss/(gain) on sale of business

 

 

110,111

 

 

 

(5,877

)

Share-based compensation

 

 

27,393

 

 

 

24,454

 

Loss on debt financing

 

 

9,235

 

 

 

857

 

Amortization of intangible assets

 

 

122,332

 

 

 

135,307

 

Deferred income taxes

 

 

(235,943

)

 

 

12,323

 

Loss on equity investments, net

 

 

13,164

 

 

 

678

 

Unrealized (gain)/loss on derivative instruments and other

 

 

(991

)

 

 

15,712

 

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

 

 

(37,247

)

 

 

(109,573

)

Acquisition-related compensation payments

 

 

(5,232

)

 

 

(22,620

)

Net cash provided by operating activities

 

 

380,834

 

 

 

351,577

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Additions to property, plant and equipment and capitalized software

 

 

(126,759

)

 

 

(136,224

)

Investment in debt and equity securities

 

 

3,681

 

 

 

(390

)

Proceeds from the sale of business, net of cash sold

 

 

138,312

 

 

 

19,000

 

Net cash provided by/(used in) investing activities

 

 

15,234

 

 

 

(117,614

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from exercise of stock options and issuance of ordinary shares

 

 

4,605

 

 

 

5,346

 

Payment of employee restricted stock tax withholdings

 

 

(9,746

)

 

 

(12,067

)

Proceeds from borrowings on debt

 

 

500,000

 

 

 

—

 

Payments on debt

 

 

(700,855

)

 

 

(448,640

)

Dividends paid

 

 

(54,266

)

 

 

(53,380

)

Payments to repurchase ordinary shares

 

 

(47,299

)

 

 

(60,290

)

Purchase of noncontrolling interest in joint venture

 

 

(79,393

)

 

 

—

 

Payments of debt financing costs

 

 

(13,379

)

 

 

(747

)

Net cash used in financing activities

 

 

(400,333

)

 

 

(569,778

)

Effect of exchange rate changes on cash and cash equivalents

 

 

2,376

 

 

 

—

 

Net change in cash and cash equivalents

 

 

(1,889

)

 

 

(335,815

)

Cash and cash equivalents, beginning of year

 

 

508,104

 

 

 

1,225,518

 

Cash and cash equivalents, end of period

 

$

506,215

 

 

$

889,703

 

Segment Performance

 

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

$ in 000s

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Performance Sensing (1)

 

 

 

 

 

 

 

 

Revenue

 

$

659,650

 

 

$

696,847

 

 

$

2,096,889

 

 

$

2,058,172

 

Operating income

 

$

161,902

 

 

$

177,599

 

 

$

524,067

 

 

$

527,072

 

% of Performance Sensing revenue

 

 

24.5

%

 

 

25.5

%

 

 

25.0

%

 

 

25.6

%

 

 

 

 

 

 

 

 

 

Sensing Solutions

 

 

 

 

 

 

 

 

Revenue

 

$

274,386

 

 

$

275,139

 

 

$

800,296

 

 

$

889,649

 

Operating income

 

$

80,967

 

 

$

80,717

 

 

$

233,285

 

 

$

258,891

 

% of Sensing Solutions revenue

 

 

29.5

%

 

 

29.3

%

 

 

29.1

%

 

 

29.1

%

 

 

 

 

 

 

 

 

 

Other (1)

 

 

 

 

 

 

 

 

Revenue

 

$

48,794

 

 

$

29,316

 

 

$

127,889

 

 

$

113,768

 

Operating income

 

$

12,069

 

 

$

(965

)

 

$

28,054

 

 

$

4,743

 

% of Other revenue

 

 

24.7

%

 

 

-3.3

%

 

 

21.9

%

 

 

4.2

%

(1)

Effective January 1, 2024, we moved Insights from Performance Sensing, creating another operating segment, which is reported in "Other". We recast Performance Sensing to exclude Insights. Prior period amounts in the above table have been recast to reflect this realignment.

Revenue by Business, Geography, and End Market (Unaudited)

 

(percent of total revenue)

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Performance Sensing (1)

 

67.1

%

 

69.6

%

 

69.3

%

 

67.2

%

Sensing Solutions

 

27.9

%

 

27.5

%

 

26.5

%

 

29.1

%

Other (1)

 

5.0

%

 

2.9

%

 

4.2

%

 

3.7

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

(percent of total revenue)

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Americas

 

46.7

%

 

45.3

%

 

44.5

%

 

45.6

%

Europe

 

26.2

%

 

25.6

%

 

27.1

%

 

26.5

%

Asia/Rest of World

 

27.1

%

 

29.1

%

 

28.4

%

 

27.9

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

(percent of total revenue)

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Automotive

 

54.0

%

 

55.8

%

 

55.2

%

 

53.1

%

Heavy vehicle and off-road (1)

 

17.2

%

 

17.6

%

 

18.1

%

 

17.6

%

Industrial, Appliance, HVAC(2), & other

 

18.7

%

 

18.8

%

 

17.8

%

 

21.0

%

Aerospace

 

5.1

%

 

4.9

%

 

4.7

%

 

4.6

%

All other (1)

 

5.0

%

 

2.9

%

 

4.2

%

 

3.7

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

(1)

Effective January 1, 2024 we moved Insights from the Heavy vehicle and off-road operating segment within Performance Sensing, creating another operating segment, which is reported in "Other". Additionally, we moved the Insights business to the "other" end market. Prior period information in the tables above has been recast to reflect this realignment.  

(2)

 

Heating, ventilation and air conditioning.

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 September 30, 2024

 

Operating (Loss)/Income

 

Operating Margin

 

Income Taxes

 

Net (Loss)/Income

 

Diluted EPS

Reported (GAAP)

$

(199,227

)

 

(20.3

%)

 

$

(219,572

)

 

$

(25,034

)

 

$

(0.17

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other (1)

 

210,180

 

 

21.4

%

 

 

(851

)

 

 

209,329

 

 

 

1.39

 

Financing and other transaction costs (2)

 

131,913

 

 

13.4

%

 

 

(512

)

 

 

139,494

 

 

 

0.92

 

Step-up depreciation and amortization

 

43,779

 

 

4.5

%

 

 

—

 

 

 

43,779

 

 

 

0.29

 

Deferred loss on derivative instruments

 

1,739

 

 

0.2

%

 

 

(111

)

 

 

427

 

 

 

0.00

 

Amortization of debt issuance costs

 

—

 

 

—

%

 

 

—

 

 

 

1,316

 

 

 

0.01

 

Deferred taxes and other tax related (3)

 

—

 

 

—

%

 

 

(239,221

)

 

 

(239,221

)

 

 

(1.58

)

Total adjustments

 

387,611

 

 

39.4

%

 

 

(240,695

)

 

 

155,124

 

 

 

1.03

 

Adjusted (non-GAAP)

$

188,384

 

 

19.2

%

 

$

21,123

 

 

$

130,090

 

 

$

0.86

 

(1)

Includes a $150.1 million non-cash goodwill impairment charge related to Dynapower recorded in the third quarter of 2024, $32.5 million of charges associated with certain actions to restructure our IT operations and product lifecycle management including product line discontinuations, and $16.0 million of charges related to our entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. Refer to the Quarterly Report on Form 10-Q for additional information on these charges.  

(2)

Includes $110.1 million loss on sale of Insights in the third quarter of 2024. Refer to the Quarterly Report on Form 10-Q for additional information.  

(3)

Includes $257.7 million of deferred tax benefit due to the release of a valuation allowance in connection with a tax strategy in the third quarter of 2024.

($ in thousands, except per share amounts)

For the three months ended September 30, 2023

 

Operating Income

 

Operating Margin

 

Income Tax

 

Net Income

 

Diluted EPS

Reported (GAAP)

$

116,260

 

 

11.6

%

 

$

17,868

 

 

$

62,801

 

 

$

0.41

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other (1)

 

31,549

 

 

3.2

%

 

 

(1,363

)

 

 

30,186

 

 

 

0.20

 

Financing and other transaction costs

 

5,662

 

 

0.6

%

 

 

—

 

 

 

6,038

 

 

 

0.04

 

Step-up depreciation and amortization

 

38,825

 

 

3.9

%

 

 

—

 

 

 

38,825

 

 

 

0.25

 

Deferred gain on derivative instruments

 

(663

)

 

(0.1

%)

 

 

39

 

 

 

(148

)

 

 

0.00

 

Amortization of debt issuance costs

 

—

 

 

—

%

 

 

—

 

 

 

1,688

 

 

 

0.01

 

Deferred taxes and other tax related

 

—

 

 

—

%

 

 

(1,122

)

 

 

(1,122

)

 

 

(0.01

)

Total adjustments

 

75,373

 

 

7.5

%

 

 

(2,446

)

 

 

75,467

 

 

 

0.50

 

Adjusted (non-GAAP)

$

191,633

 

 

19.1

%

 

$

20,314

 

 

$

138,268

 

 

$

0.91

 

(1)

Includes $28.9 million of charges related to the Q3 2023 Plan incurred in the third quarter of 2023, $21.4 million of which was recorded in restructuring and other charges, net. Refer to our 2023 Annual Report on Form 10-K for additional information on the Q3 2023 Plan.

($ in thousands, except per share amounts)

For the nine months ended September 30, 2024

 

Operating Income

 

Operating Margin

 

Income Tax

 

Net Income

 

Diluted EPS

Reported (GAAP)

$

75,512

 

2.5

%

 

$

(169,722

)

 

$

122,690

 

 

$

0.81

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other (1)

 

239,378

 

7.9

%

 

 

(2,235

)

 

 

237,143

 

 

 

1.57

 

Financing and other transaction costs (2)

 

138,726

 

4.6

%

 

 

(1,373

)

 

 

159,752

 

 

 

1.06

 

Step-up depreciation and amortization

 

118,718

 

3.9

%

 

 

—

 

 

 

118,718

 

 

 

0.79

 

Deferred loss/(gain) on derivative instruments

 

1,262

 

0.0

%

 

 

1,577

 

 

 

(4,438

)

 

 

(0.03

)

Amortization of debt issuance costs

 

—

 

—

%

 

 

—

 

 

 

4,509

 

 

 

0.03

 

Deferred taxes and other tax related (3)

 

—

 

—

%

 

 

(233,775

)

 

 

(233,775

)

 

 

(1.55

)

Total adjustments

 

498,084

 

16.5

%

 

 

(235,806

)

 

 

281,909

 

 

 

1.87

 

Adjusted (non-GAAP)

$

573,596

 

19.0

%

 

$

66,084

 

 

$

404,599

 

 

$

2.68

 

(1)

Includes a $150.1 million non-cash goodwill impairment charge related to Dynapower recorded in the third quarter of 2024, $48.4 million of charges associated with certain actions to restructure our IT operations and product lifecycle management including product line discontinuations, and $16.0 million of charges related to our entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. Refer to the Quarterly Report on Form 10-Q for additional information on these charges.  

(2)

Includes a $110.1 million loss on sale of Insights in the third quarter of 2024 and a $14.8 million mark-to-market loss on an equity investment held under the measurement alternative due to an observable marketplace transaction in the first quarter of 2024. This loss is presented in other, net on the condensed consolidated statement of operations.  

(3)

Includes $257.7 million of deferred tax benefit due to the release of a valuation allowance in connection with a tax strategy in the third quarter of 2024.

($ in thousands, except per share amounts)

For the nine months ended September 30, 2023

 

Operating Income

 

Operating Margin

 

Income Tax

 

Net Income

 

Diluted EPS

Reported (GAAP)

$

383,115

 

 

12.5

%

 

$

61,467

 

 

$

198,329

 

$

1.30

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other (1)

 

65,568

 

 

2.1

%

 

 

(2,667

)

 

 

62,901

 

 

0.41

Financing and other transaction costs

 

14,175

 

 

0.5

%

 

 

2,776

 

 

 

17,568

 

 

0.11

Step-up depreciation and amortization (2)

 

131,281

 

 

4.3

%

 

 

—

 

 

 

131,281

 

 

0.86

Deferred (gain)/loss on derivative instruments

 

(3,860

)

 

(0.1

%)

 

 

(198

)

 

 

788

 

 

0.01

Amortization of debt issuance costs

 

—

 

 

—

%

 

 

—

 

 

 

5,107

 

 

0.03

Deferred taxes and other tax related

 

—

 

 

—

%

 

 

12,102

 

 

 

12,102

 

 

0.08

Total adjustments

 

207,164

 

 

6.8

%

 

 

12,013

 

 

 

229,747

 

 

1.50

Adjusted (non-GAAP)

$

590,279

 

 

19.3

%

 

$

49,454

 

 

$

428,076

 

$

2.80

(1)

Includes $28.9 million of charges related to the Q3 2023 Plan incurred in the third quarter of 2023, $21.4 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue. Also includes $25.7 million of charges related to the exit of the Spear Marine Business in the second quarter of 2023, $15.2 million of which was recorded in restructuring and other charges, net, with the remainder primarily in cost of revenue. Refer to our Quarterly Report on Form 10-Q for additional information on the Q3 2023 Plan and the exit of the Spear Marine Business.  

(2)

Includes $13.5 million of accelerated amortization related to the exit of the Spear Marine Business in the second quarter of 2023.

Non-GAAP adjustments by location in statements of operations

 

(in thousands)

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2024

 

 

 

 

2023

 

 

 

2024

 

 

 

 

2023

Cost of revenue (1)

$

30,770

 

 

 

$

7,208

 

 

$

46,744

 

 

 

$

15,572

Selling, general and administrative

 

22,584

 

 

 

 

3,727

 

 

 

38,375

 

 

 

 

7,749

Amortization of intangible assets (2)

 

43,533

 

 

 

 

38,434

 

 

 

117,968

 

 

 

 

130,581

Goodwill impairment charge (3)

 

150,100

 

 

 

 

—

 

 

 

150,100

 

 

 

 

—

Restructuring and other charges, net (4)

 

140,624

 

 

 

 

26,004

 

 

 

144,897

 

 

 

 

53,262

Operating income adjustments

 

387,611

 

 

 

 

75,373

 

 

 

498,084

 

 

 

 

207,164

Interest expense, net

 

1,316

 

 

 

 

1,688

 

 

 

4,509

 

 

 

 

5,107

Other, net (5)

 

6,892

 

 

 

 

852

 

 

 

15,122

 

 

 

 

5,463

Provision for income taxes (6)

 

(240,695

)

 

 

 

(2,446

)

 

 

(235,806

)

 

 

 

12,013

Net income adjustments

$

155,124

 

 

 

$

75,467

 

 

$

281,909

 

 

 

$

229,747

(1)

The three and nine months ended September 30, 2024 include charges of $27.3 million and $40.5 million, respectively, of charges associated with certain actions to restructure our IT operations and product lifecycle management including product line discontinuations. The three and nine months ended September 30, 2023 include a charge of $7.0 million to write down inventory in the third quarter of 2023 as a result of business reorganization decisions made as part of the Q3 2023 Plan. The nine months ended September 30, 2023 includes 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 nine months ended September 30, 2024 include accelerated amortization of $9.6 million related to the entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. The nine months ended September 30, 2023 includes accelerated amortization of $13.5 million related to intangible assets assigned to the Spear Marine Business, which was exited in the second quarter of 2023.

 

(3)

The three and nine months ended September 30, 2024 include a $150.1 million non-cash goodwill impairment charge related to Dynapower recorded in the third quarter of 2024.

 

(4)

The three and nine months ended September 30, 2024 include a $110.1 million loss on sale of Insights in the third quarter of 2024 and $14.5 million of charges related to our entry into an asset purchase agreement to sell the Spear aerospace and defense business in the third quarter of 2024. The three and nine months ended September 30, 2023 include $21.4 million of charges related to the Q3 2023 Plan incurred in the third quarter of 2023. The nine months ended September 30, 2023 includes certain charges related to the exit of the Spear Marine Business in the second quarter of 2023 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, and $12.3 million of other charges, including contract termination costs. The three and nine months ended September 30, 2023 include $3.8 million and $14.4 million, respectively, of expense related to compensation arrangements entered into concurrent with the closing of certain acquisitions.

 

(5)

The nine months ended September 30, 2024 includes a $14.8 million mark-to-market loss on an equity investment held under the measurement alternative due to an observable marketplace transactions.

 

(6)

Includes $257.7 million of deferred tax benefit due to the release of a valuation allowance in connection with a tax strategy in the third quarter of 2024.

Free cash flow

 

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

($ in thousands)

 

 

2024

 

 

 

2023

 

 

% △

 

 

2024

 

 

 

2023

 

 

% △

Net cash provided by operating activities

 

$

130,891

 

 

$

138,935

 

 

(5.8

%)

 

$

380,834

 

 

$

351,577

 

 

8.3

%

Additions to property, plant and equipment and capitalized software

 

 

(39,571

)

 

 

(51,780

)

 

23.6

%

 

 

(126,759

)

 

 

(136,224

)

 

6.9

%

Free cash flow

 

$

91,320

 

 

$

87,155

 

 

4.8

%

 

$

254,075

 

 

$

215,353

 

 

18.0

%

Adjusted corporate and other expenses

 

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

(in thousands)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Corporate and other expenses (GAAP)

 

$

(268,809

)

 

$

(75,117

)

 

$

(442,665

)

 

$

(219,022

)

Restructuring related and other

 

 

182,528

 

 

 

9,234

 

 

 

209,363

 

 

 

20,915

 

Financing and other transaction costs

 

 

18,941

 

 

 

1,973

 

 

 

23,844

 

 

 

5,566

 

Step-up depreciation and amortization

 

 

246

 

 

 

391

 

 

 

750

 

 

 

700

 

Deferred loss/(gain) on derivative instruments

 

 

1,739

 

 

 

(663

)

 

 

1,262

 

 

 

(3,860

)

Total adjustments

 

 

203,454

 

 

 

10,935

 

 

 

235,219

 

 

 

23,321

 

Adjusted corporate and other expenses (non-GAAP)

 

$

(65,355

)

 

$

(64,182

)

 

$

(207,446

)

 

$

(195,701

)

Adjusted EBITDA

 

 

 

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

(in thousands)

 

LTM

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

Net (loss)/income

 

$

(79,548

)

 

$

(25,034

)

 

$

62,801

 

 

$

122,690

 

 

$

198,329

Interest expense, net

 

 

138,559

 

 

 

33,085

 

 

 

36,908

 

 

 

102,803

 

 

 

115,104

(Benefit from)/provision for income taxes

 

 

(209,438

)

 

 

(219,572

)

 

 

17,868

 

 

 

(169,722

)

 

 

61,467

Depreciation expense

 

 

136,940

 

 

 

33,696

 

 

 

33,317

 

 

 

100,712

 

 

 

96,877

Amortization of intangible assets

 

 

160,885

 

 

 

44,732

 

 

 

39,970

 

 

 

122,332

 

 

 

135,307

EBITDA

 

 

147,398

 

 

 

(133,093

)

 

 

190,864

 

 

 

278,815

 

 

 

607,084

Non-GAAP Adjustments

 

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

 

585,304

 

 

 

210,180

 

 

 

31,549

 

 

 

239,378

 

 

 

65,568

Financing and other transaction costs

 

 

167,825

 

 

 

140,006

 

 

 

6,038

 

 

 

161,125

 

 

 

14,792

Deferred (gain)/loss on derivative instruments

 

 

(9,007

)

 

 

538

 

 

 

(187

)

 

 

(6,015

)

 

 

986

Adjusted EBITDA

 

$

891,520

 

 

$

217,631

 

 

$

228,264

 

 

$

673,303

 

 

$

688,430

Gross and net debt and leverage

 

 

 

As of

($ in thousands)

 

September 30, 2024

 

December 31, 2023

Current portion of long-term debt and finance lease obligations

 

$

2,076

 

 

$

2,276

 

Finance lease obligations, less current portion

 

 

21,702

 

 

 

22,949

 

Long-term debt, net

 

 

3,174,354

 

 

 

3,373,988

 

Total debt and finance lease obligations

 

 

3,198,132

 

 

 

3,399,213

 

Less: discount, net of premium

 

 

797

 

 

 

(1,568

)

Less: deferred financing costs

 

 

(26,443

)

 

 

(24,444

)

Total gross indebtedness

 

 

3,223,778

 

 

 

3,425,225

 

 

 

 

 

 

Adjusted EBITDA (LTM)

 

$

891,520

 

 

$

906,647

 

Gross leverage ratio

 

 

3.6

 

 

 

3.8

 

 

 

 

 

 

Total gross indebtedness

 

 

3,223,778

 

 

 

3,425,225

 

Less: cash and cash equivalents

 

 

506,215

 

 

 

508,104

 

Net debt

 

$

2,717,563

 

 

$

2,917,121

 

 

 

 

 

 

Adjusted EBITDA (LTM)

 

$

891,520

 

 

$

906,647

 

Net leverage ratio

 

 

3.0

 

 

 

3.2

 

Guidance

 

 

For the three months ending December 31, 2024

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$

121.8

 

$

122.3

 

$

56.3

 

$

56.2

 

$

0.36

 

$

0.38

Restructuring related and other

 

18.9

 

 

24.9

 

 

18.9

 

 

24.9

 

 

0.13

 

 

0.16

Financing and other transaction costs

 

1.0

 

 

2.0

 

 

1.0

 

 

2.0

 

 

0.01

 

 

0.01

Step-up depreciation and amortization

 

25.5

 

 

26.0

 

 

25.5

 

 

26.0

 

 

0.17

 

 

0.17

Deferred (gain)/loss on derivative instruments(1)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

Amortization of debt issuance costs

 

—

 

 

—

 

 

1.3

 

 

1.4

 

 

0.01

 

 

0.01

Deferred taxes and other tax related

 

—

 

 

—

 

 

4.0

 

 

4.5

 

 

0.03

 

 

0.03

Non-GAAP

$

167.2

 

$

175.2

 

$

107.0

 

$

115.0

 

$

0.71

 

$

0.76

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

 

151.0

 

 

151.0

(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/20241104660787/en/

Media & Investors: James Entwistle +1(508) 954-1561 jentwistle@sensata.com investors@sensata.com