SENSATA TECHNOLOGIES HOLDING PLC 
By ALMELO, Netherlands, Jan. 24, 2011 /PRNewswire-FirstCall/ -- Sensata Technologies Holding N.V. (NYSE: ST) (the "Company") announces results of its operations for the fourth quarter and full year ended December 31, 2010.
(Logo: http://photos.prnewswire.com/prnh/20070227/CLTU192LOGO )
Highlights of the Fourth Quarter and Full Year Ended December 31, 2010
Fourth quarter 2010 net revenue was $387.8 million, an increase of $49.8 million, or 14.7%, from the fourth quarter 2009 net revenue of $338.1 million. Fourth quarter 2010 net income was $68.6 million, or $0.38 per diluted share, versus net income of $13.9 million or $0.10 per diluted share for the same time period in 2009. Fourth quarter Adjusted Net Income(1) was $80.6 million, or $0.45 per diluted share, which is 20.8% of net revenue, versus the fourth quarter 2009 Adjusted Net Income(1) of $50.3 million, or $0.34 per diluted share, which is 14.9% of net revenue.
For the full year ended December 31, 2010, net revenue was $1,540.1 million, which was an increase of $405.1 million, or 35.7%, from $1,134.9 million for the same time period in 2009. Net income was $130.1 million, or $0.75 per diluted share, versus a net loss of $27.7 million or $(0.19) per share for the full year ended December 31, 2009. Adjusted Net Income(1) was $306.4 million, or $1.77 per diluted share, which is 19.9% of net revenue versus Adjusted Net Income(1) of $124.1 million, or $0.86 per diluted share, which is 10.9% of net revenue for the same time period in 2009.
Tom Wroe, Chairman and Chief Executive Officer, said, "We believe that our strong fourth quarter and full year results demonstrate the success of our strategy, our business model and the strength of our execution." Mr. Wroe added, "For 2011, we will continue to execute on our objectives of maintaining Sensata's leadership position and growing revenues through increasing content, growth in both emerging and mature markets and identifying accretive acquisitions."
The Company spent $22.2 million, or 5.7% of net revenue, on research, development and engineering related costs in the fourth quarter of 2010. These costs reside in both the cost of revenue and the research and development lines of the Statement of Operations.
Ending cash balance at December 31, 2010 was $493.7 million. During the fourth quarter, the Company generated cash of $98.4 million from operations, used cash of $17.8 million in investing activities and generated cash of $10.2 million from financing activities.
The Company's cash conversion cycle, which is defined as days sales outstanding (DSO) plus days on hand inventory (DOH) less days payable outstanding (DPO), was 49.3 days at the end of the fourth quarter compared to 53.4 days at September 30, 2010.
The Company recorded an income tax provision of $2.3 million for the fourth quarter 2010. Approximately $4.9 million of the provision, or 6.1% of Adjusted Net Income(1), relates to taxes that are payable in cash, offset by a net tax benefit of approximately $2.6 million related to other tax expense and a net deferred tax benefit. During the fourth quarter, the Company recognized a deferred tax benefit of $18.5 million related to the release of a valuation allowance associated with deferred tax assets in its subsidiary in Japan including the deferred tax asset related to its net operating loss.
The Company's indebtedness at December 31, 2010 was $1.9 billion. The Company's net debt(2) was $1.4 billion resulting in a leverage ratio of 3.1x. As of December 31, 2010, the Company was in compliance with all of its financial ratios and reporting covenants included in its debt agreements related to its primary operating subsidiary, Sensata Technologies B.V.
Jeff Cote, Chief Administrative and Financial Officer, said "Sensata delivered a solid fourth quarter driven by continued growth in sensors and controls across geographies and product categories. Gross margin increased to a record 39.2%, while our robust cash generating capability allowed us to decrease our leverage in line with the targets we outlined earlier this year. We remain on track to further reduce leverage and drive profitable growth in 2011."
Guidance
For the full year 2011, the Company anticipates net revenue of $1.70 to $1.74 billion which represents 14 to 17% growth over the full year 2010 net revenue of $1.54 billion after adjusting for approximately $50 million of inventory replenishment which occurred during the first half of 2010. The Company also expects to achieve earnings per diluted share calculated in accordance with generally accepted accounting principles of $0.92 to $1.02 for the full year 2011. In addition, the Company expects Adjusted Net Income(1) of $372 to $390 million, or $2.05 to $2.15 per diluted share for the full year 2011. This guidance assumes a share count of 181.2 million for the full year 2011.
The Company anticipates net revenue of $410 to $430 million for the first quarter 2011, which represents growth of 18 to 24% over the first quarter 2010 net revenue of $377.1 million, adjusted for approximately $30 million of inventory replenishment which occurred during the first quarter of 2010. The Company also expects to achieve net income of $36 to $43 million, or earnings per share calculated in accordance with generally accepted accounting principles of $0.20 - $0.24 per diluted share in the first quarter 2011. In addition, the Company expects Adjusted Net Income(1) of $87 million to $94 million, or $0.48 - $0.52 per diluted share, for the first quarter 2011. This guidance assumes a share count of 180.9 million for the first quarter 2011.
The Company's guidance excludes the impact of acquired net revenue related to its previously announced acquisition of the Honeywell Automotive on Board business which would add $10 to $11 million per month to net revenue and would be breakeven at EBITDA and slightly dilutive to Adjusted Net Income(1) in 2011.
The earnings per share guidance in accordance with U.S. generally accepted accounting principles ("GAAP") excludes any potential gain or loss resulting from the movement of the Euro to U.S. dollar exchange rate and the impact on our Euro denominated debt.
(1) See Non-GAAP Measures for discussion of Adjusted Net Income which includes a reconciliation of this measure to Net Income/(Loss).
(2) Net debt represents total indebtedness including capital lease and other financing obligations, less cash and cash equivalents. The 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 fourth quarter and full year ended December 31, 2010. The U.S. dial in number is 877-486-0682 and the non-U.S. number is 706-634-5536. The passcode is 38106602. A live webcast of the conference call will also be available on the investor relations page of the Company's web site 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 800-642-1687 and the non-U.S. dial in number is 706-645-9291. The replay passcode is 38106602. A replay of the call will be 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. Majority-owned by affiliates of Bain Capital Partners, LLC, a leading global private investment firm, and its co-investors, Sensata employs approximately 10,000 people in nine 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 web site at www.sensata.com.
Safe Harbor Statement
This earnings release contains forward-looking statements which may involve risks or uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Such forward-looking statements include, among other things, our anticipated results for the first quarter and full year of 2011. Factors that might cause these differences include, but are not limited to, risks associated with: worldwide economic conditions; adverse developments in the automotive industry; governmental regulations, policies, and practices relating to our non-US operations and international business; fluctuations in foreign currency exchange, commodity and interest rates; competitive pressures; pricing and other pressures from customers; fundamental changes in the industries in which the Company operates; litigation and disputes involving the Company, including the extent of product liability and warranty claims asserted against the Company; the loss of one or more suppliers of raw materials; non-performance by suppliers; the Company's failure to comply with the covenants contained in the credit agreement governing its subsidiary's senior secured credit facility or its other debt agreements; integration of acquired companies; 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 we undertake no obligation to publicly update or revise any forward-looking statements, whether to reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in 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)
Three Months
($ in 000s) Ended Full Year Ended
----------- ------------ ---------------
December 31, December 31,
------------ ------------
2010 2009 2010 2009
---- ---- ---- ----
Net revenue $387,842 $338,089 $1,540,079 $1,134,944
Operating costs and
expenses:
Cost of revenue 236,051 220,926 948,070 742,080
Research and development 7,411 4,104 24,664 16,796
Selling, general and
administrative 38,610 31,651 194,623 126,952
Amortization of
intangible assets and
capitalized software 36,205 38,021 144,514 153,081
Impairment of goodwill
and intangible assets - - - 19,867
Restructuring (334) 53 (138) 18,086
Total operating costs
and expenses 317,943 294,755 1,311,733 1,076,862
------- ------- --------- ---------
Profit from operations 69,899 43,334 228,346 58,082
Interest expense, net (23,844) (35,114) (105,380) (150,016)
Currency translation
gain and other, net 24,863 13,594 45,388 107,695
------ ------ ------ -------
Income from continuing
operations before taxes 70,918 21,814 168,354 15,761
Provision for income
taxes 2,308 7,882 38,304 43,047
----- ----- ------ ------
Income /(loss) from
continuing operations,
net of taxes 68,610 13,932 130,050 (27,286)
Loss from discontinued
operations, net of
taxes - - - (395)
--- --- --- ----
Net income / (loss) $68,610 $13,932 $130,050 $(27,681)
======= ======= ======== ========
Net income /(loss) per
share:
Basic $0.40 $0.10 $0.78 $(0.19)
Diluted $0.38 $0.10 $0.75 $(0.19)
Weighed average shares
outstanding
Basic 172,745 144,057 166,278 144,057
Diluted 179,830 146,317 172,946 144,057
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Balance Sheets
(Unaudited)
($ in 000s)
December 31, December 31,
2010 2009
Assets
Current assets:
Cash and cash equivalents $493,662 $148,468
Accounts receivable, net of
allowances 198,245 180,839
Inventories 140,949 125,375
Deferred income tax assets 6,566 12,419
Prepaid expenses and other current
assets 25,006 19,627
Assets held for sale 559 559
--- ---
Total current assets 864,987 487,287
Property, plant and equipment, net 234,813 219,617
Goodwill 1,528,954 1,530,570
Other intangible assets, net 723,144 865,531
Deferred income tax asset 4,526 5,543
Deferred financing costs 25,742 41,147
Other assets 5,831 17,175
----- ------
Total assets $3,387,997 $3,166,870
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt,
capital lease and $16,779 $17,139
other financing obligations
Accounts payable 132,828 122,834
Income taxes payable 6,855 8,384
Accrued expenses and other current
liabilities 94,030 92,341
Deferred income tax liabilities 4,608 823
----- ---
Total current liabilities 255,100 241,521
Deferred income tax liabilities 179,089 165,477
Pension and post-retirement benefit
obligations 43,021 49,525
Capital lease and other financing
obligations, less current portion 39,544 40,001
Long-term debt, less current portion 1,833,370 2,243,686
Other long-term liabilities 30,092 39,502
------ ------
Total liabilities 2,380,216 2,779,712
Total shareholders' equity 1,007,781 387,158
--------- -------
Total liabilities and shareholders'
equity $3,387,997 $3,166,870
========== ==========
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in 000s)
For the full year ended
-----------------------
December 31, December 31,
------------ ------------
2010 2009
---- ----
Cash flows from operating
activities:
Net income / (loss) $130,050 $(27,681)
Net loss from discontinued
operations - (395)
--- ----
Net income /(loss) from
continuing operations 130,050 (27,286)
Adjustments to reconcile net
income /(loss) to net cash
provided by operating
activities:
Depreciation 38,628 48,427
Amortization of deferred
financing costs 8,564 9,055
Currency translation (gain) /
loss on debt (72,816) 13,559
Loss/(gain) on repurchase of
outstanding Senior and Senior
Subordinated Notes 23,474 (120,123)
Share-based compensation 25,421 2,233
Amortization of intangible assets
and capitalized software 144,514 153,081
Loss on sale and disposal of
assets 119 3,665
Deferred income taxes 24,267 25,763
Impairment of goodwill and
intangible assets - 19,867
(Decrease)/increase from changes
in operating assets and
liabilities (22,175) 59,739
------- ------
Net cash provided by operating
activities from continuing
operations 300,046 187,980
Net cash used in operating
activities from discontinued
operations - (403)
--- ----
Net cash provided by operating
activities 300,046 187,577
Cash flows from investing
activities:
Additions to property, plant and
equipment and capitalized
software (52,912) (14,959)
Proceeds from sale of assets 364 585
Payments on Euro call option - (1,075)
--- ------
Net cash provided by investing
activities from discontinued
operations - 372
--- ---
Net cash used in investing
activities (52,548) (15,077)
Cash flows from financing
activities:
Proceeds from issuance of
ordinary shares and restricted
securities 433,539 6
Proceeds from exercise of stock
options 21,855 -
Payments on U.S. and Euro term
loan facilities (14,717) (15,087)
Payments on capitalized lease and
other financing obligations (4,638) (4,159)
Payments for repurchase of
outstanding Senior and Senior
Subordinated Notes (338,343) (57,242)
Advance to shareholder - (266)
Payments on revolving credit
facility, net - (25,000)
Net cash provided by /(used in)
financing activities 97,696 (101,748)
------ --------
Net change in cash and cash
equivalents 345,194 70,752
Cash and cash equivalents,
beginning of period 148,468 77,716
------- ------
Cash and cash equivalents, end of
period $493,662 $148,468
======== ========
Non-GAAP Measures
Adjusted Net Income is a non-GAAP financial measure. We define Adjusted Net Income as follows: net income / (loss) before acquisition, integration and financing costs, impairment of goodwill and intangible assets, restructuring associated with downsizing, stock compensation and management fees, costs related to our initial public offering, gain on extinguishment of debt, currency translation (gain)/loss on debt and (gain)/loss on other hedges, asset step-up and intangible asset depreciation and amortization expenses, deferred income tax and other tax expense, amortization of deferred financing costs and interest expense associated with uncertain tax positions, and other costs. The Company believes Adjusted Net Income provides investors with helpful information with respect to the performance of the Company's operations and management uses Adjusted Net Income to evaluate its ongoing operations and for internal planning and forecasting purposes. Adjusted Net Income is not a measure of liquidity. See the tables below which reconcile Net Income / (Loss) to Adjusted Net Income and Projected GAAP Earnings per share to Projected Adjusted Net Income per share.
The following (unaudited) table reconciles the Company's Net Income / (Loss) to Adjusted Net Income for the fourth quarters and full years ended December 31, 2010 and 2009.
Three Months
($ in 000s) Ended Full Year Ended
December 31, December 31,
2010 2009 2010 2009
Net income / (loss) $68,610 $13,932 $130,050 $(27,681)
Acquisition, integration &
financing costs and other
significant items - 2,331 - 22,985
Impairment of goodwill and
intangible assets - - - 19,867
Restructuring associated
with downsizing - 155 - 12,276
Stock compensation and
management fees - 2,059 - 6,233
IPO related costs - - 66,772 -
Gain on extinguishment of
debt - - - (120,123)
(Gain)/loss on currency
translation on debt and
(gain) /loss on other
hedges (24,011) (12,021) (74,010) 15,867
Asset step-up and
intangible asset
depreciation and
amortization expense 35,904 40,120 145,184 157,797
Deferred income tax and
other tax expense (2,631) 1,303 28,863(1) 26,999
Amortization of deferred
financing costs and
interest expense
associated with uncertain
tax positions 2,684 2,439 9,548 9,878
----- ----- ----- -----
Total adjustments 11,946 36,386 176,357 151,779
------ ------ ------- -------
Adjusted net income $80,556 $50,318 $306,407 $124,098
------- ------- -------- --------
Weighted average diluted
shares outstanding used in
adjusted net income per
share calculation(2) 179,830 146,317 172,946 145,128
------- ------- ------- -------
Adjusted net income per
share $0.45 $0.34 $1.77 $0.86
----- ----- ----- -----
(1) Includes $5.2 million of tax related adjustments that appear on
the Currency translation gain and other, net line of the Condensed
Consolidated Statements of Operations.
(2) The following table reconciles diluted outstanding shares in
accordance with GAAP to diluted outstanding shares used in the
calculation of Adjusted Net Income per share. The GAAP diluted
outstanding shares number excludes certain shares due to their anti-
dilutive nature given the net loss. We believe that including these
shares in the diluted number for purposes of calculating Adjusted
Net Income per share is more meaningful to investors.
Three Months Full Year
Ended Ended
December 31, December 31,
2010 2009 2010 2009
GAAP - diluted shares 179,830 146,317 172,946 144,057
Shares excluded from calculation
due to net loss - - - 1,071
--- --- --- -----
Adjusted Net Income -diluted
shares 179,830 146,317 172,946 145,128
------- ------- ------- -------
Due to the nature of the Company's adjustments, the Company believes the following (unaudited) reconciliations of Net Income/(Loss) to Adjusted Net Income for the fourth quarters and full years ended December 31, 2010 and 2009 is meaningful to investors as it identifies where in the Condensed Consolidated Statements of Operations these items are classified.
($ in 000s) Three Months Ended
----------- ------------------
December 31, 2010
-----------------
GAAP P&L Adjustments Adjusted
-------- ----------- --------
P&L
---
Net Revenue $387,842 $- $387,842
Operating costs and
expenses:
Cost of revenue 236,051 (143) 235,908
Research and development 7,411 - 7,411
Selling, general and
administrative 38,610 - 38,610
Amortization of intangible
assets and capitalized
software 36,205 (35,761) 444
Restructuring (334) - (334)
Total operating costs and
expenses 317,943 (35,904) 282,039
------- ------- -------
Profit from operations 69,899 35,904 105,803
Interest expense, net (23,844) 2,684 (21,160)
Currency translation gain
and other, net 24,863 (24,011) 852
------ ------- ---
Income from operations
before taxes 70,918 14,577 85,495
Provision for income taxes 2,308 2,631 4,939
----- ----- -----
Net Income $68,610 $11,946 $80,556
($ in 000s) Full Year Ended
----------- ---------------
December 31, 2010
-----------------
GAAP P&L Adjustments Adjusted
-------- ----------- --------
P&L
---
Net Revenue $1,540,079 $- $1,540,079
Operating costs and
expenses:
Cost of revenue 948,070 (2,102) 945,968
Research and development 24,664 - 24,664
Selling, general and
administrative 194,623 (43,300) 151,323
Amortization of intangible
assets and capitalized
software 144,514 (143,082) 1,432
Restructuring (138) - (138)
Total operating costs and
expenses 1,311,733 (188,484) 1,123,249
--------- -------- ---------
Profit from operations 228,346 188,484 416,830
Interest expense, net (105,380) 9,548 (95,832)
Currency translation gain
and other, net 45,388 (45,317) 71
------ ------- ---
Income from operations
before taxes 168,354 152,715 321,069
Provision for income taxes 38,304 (23,642) 14,662
------ ------- ------
Net Income $130,050 $176,357 $306,407
Three Months Ended
------------------
December 31, 2009
-----------------
GAAP P&L Adjustments Adjusted
-------- ----------- --------
P&L
---
Net Revenue $338,089 $- $338,089
Operating costs and
expenses:
Cost of revenue 220,926 (3,744) 217,182
Research and development 4,104 - 4,104
Selling, general and
administrative 31,651 (3,623) 28,028
Amortization of intangible
assets and capitalized
software 38,021 (37,652) 369
Impairment of goodwill and
intangible assets - - -
Restructuring 53 (53) -
Total operating costs and
expenses 294,755 (45,072) 249,683
------- ------- -------
Profit from operations 43,334 45,072 88,406
Interest expense, net (35,114) 2,439 (32,675)
Currency translation gain
and other, net 13,594 (12,021) 1,573
------ ------- -----
Income from continuing
operations before taxes 21,814 35,490 57,304
Provision for income taxes 7,882 (896) 6,986
----- ---- -----
Income /(loss) from
continuing operations, net
of taxes 13,932 36,386 50,318
Loss from discontinued
operations, net of taxes - - -
--- --- ---
Net Income / (loss) $13,932 $36,386 $50,318
Full Year Ended
---------------
December 31, 2009
-----------------
GAAP P&L Adjustments Adjusted
-------- ----------- --------
P&L
---
Net Revenue $1,134,944 $- $1,134,944
Operating costs and
expenses:
Cost of revenue 742,080 (15,483) 726,597
Research and development 16,796 - 16,796
Selling, general and
administrative 126,952 (12,440) 114,512
Amortization of intangible
assets and capitalized
software 153,081 (151,426) 1,655
Impairment of goodwill and
intangible assets 19,867 (19,867) -
Restructuring 18,086 (18,086) -
Total operating costs and
expenses 1,076,862 (217,302) 859,560
--------- -------- -------
Profit from operations 58,082 217,302 275,384
Interest expense, net (150,016) 9,878 (140,138)
Currency translation gain
and other, net 107,695 (101,993) 5,702
------- -------- -----
Income from continuing
operations before taxes 15,761 125,187 140,948
Provision for income taxes 43,047 (26,592) 16,455
------ ------- ------
Income /(loss) from
continuing operations, net
of taxes (27,286) 151,779 124,493
Loss from discontinued
operations, net of taxes (395) - (395)
---- --- ----
Net Income / (loss) $(27,681) $151,779 $124,098
The following (unaudited) table reconciles the Company's projected GAAP earnings per share to projected Adjusted Net Income per share for the first quarter and full year of 2011:
Three Months
Ended Full Year Ended
------------ ---------------
December 31,
March 31, 2011 2011
-------------- -------------
Low End High End Low End High End
------- -------- ------- --------
Projected GAAP earnings
per share $0.20 $0.24 $0.92 $1.02
(Gain)/loss on currency
translation on debt
and unrealized
(gain)/loss on other
hedges* - - - -
Asset step-up and
intangible asset,
depreciation and
amortization expense 0.18 0.18 0.73 0.73
Deferred income tax and
other tax expense 0.09 0.09 0.35 0.35
Amortization of
deferred financing
costs and interest
expense associated
with uncertain tax
positions 0.01 0.01 0.05 0.05
---- ---- ---- ----
Projected Adjusted Net
Income per share $0.48 $0.52 $2.05 $2.15
===== ===== ===== =====
Weighted average shares
outstanding used in
adjusted net income
per share calculation 180,900 180,900 181,200 181,200
*The projected GAAP earnings per share guidance excludes any potential gain or loss resulting from the movement of the Euro to U.S. dollar exchange rate and the impact on our Euro denominated debt.
SENSATA TECHNOLOGIES HOLDING N.V.
Notes to (unaudited) Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows
Basis of Presentation
The accompanying (unaudited) Condensed Consolidated Statements of Operations, Condensed Balance Sheets and Condensed 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 registration statement on Form S-1 filed on November 9, 2010 and the interim financial statements included in the Company's Form 10-Q for the periods ended March 31, June 30, and September 30, 2010.
U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Estimates used will change as new events occur or additional information is obtained. Actual results could differ from those estimates.
Contact:
Investors News Media
Maggie Morris Linda Megathlin
(508)236-1069 (508)236-1761
mmorris2@sensata.com lmegathlin@sensata.com
SOURCE Sensata Technologies Holding N.V.
