ALMELO, the Netherlands, Oct. 25, 2016 (GLOBE NEWSWIRE) -- Sensata Technologies (NYSE:ST) today announced financial
results for its third quarter and nine months ended September 30, 2016.
Revenue was $789.8 million in the third quarter of 2016, an increase of $62.4 million, or 8.6%, from revenue of
$727.4 million in the third quarter of 2015. Excluding an 8.6% positive effect from acquisitions, net of exited businesses, and a
1.7% negative effect from changes in foreign exchange rates, Sensata reported organic revenue growth of 1.7% in the third quarter
of 2016.
Net income was $69.8 million in the third quarter 2016, which was 8.8% of revenue, or $0.41 per diluted share. This
compares to net income of $53.2 million in the third quarter 2015, which was 7.3% of revenue or $0.31 per diluted share. Adjusted
net income was $126.3 million in the third quarter of 2016 which was 16.0% of revenue or $0.74 per diluted share. This compares to
adjusted net income of $123.3 million in the third quarter of 2015, which was 17.0% of revenue, or $0.72 per diluted share.
Changes in foreign exchange rates reduced Sensata's earnings per share by ($0.05) in the third quarter of 2016 compared to the
prior year period.
On a sequential basis, Sensata's adjusted net income margin of 16.0% for the third quarter increased by 100 basis
points compared to an adjusted net income margin of 15.0% in the second quarter of 2016.
Revenue for the nine months ended September 30, 2016 was $2.41 billion, an increase of $165.4 million, or 7.4%
from $2.25 billion for the nine months ended September 30, 2015. Excluding an 8.7% positive effect from acquisitions, net of
exited businesses, and a 1.6% negative effect from changes in foreign exchange rates, Sensata reported flat organic revenue growth
in the first nine months of 2016.
Net income for the nine months ended September 30, 2016 was $195.9 million, which was 8.1% of revenue, or
$1.14 per diluted share. This compares to net income for the nine months ended September 30, 2015 of $129.4 million, which was
5.8% of revenue, or $0.75 per diluted share. Adjusted net income for the nine months ended September 30, 2016 was $363.9
million which was 15.1% of revenue, or $2.12 per diluted share. This was an increase of 1.4% compared to adjusted net income
for the nine months ended September 30, 2015 of $358.7 million which was 16.0% of revenue, or $2.09 per diluted share.
Changes in foreign exchange rates reduced Sensata's earnings per share by ($0.14) in the first nine months of 2016 compared to the
prior year period.
Sensata’s ending cash balance at September 30, 2016 was $299.9 million. During the first nine months of 2016,
operating cash flow grew 9 percent year over year totaling $396.4 million and free cash flow grew 29% year over year, totaling
$301.8 million. The Company’s total gross indebtedness at September 30, 2016 was $3.4 billion, a reduction of $296.4 million
from December 31, 2015 as a result of debt repayment.
"We delivered strong sequential margin expansion and eleven percent year over year organic earnings growth in the
third quarter despite sustained weakness in some of our markets," said Martha Sullivan, President and Chief Executive Officer. "Our
free cash flow has been strong, which has enabled us to pay down our debt and move closer toward achieving our targeted FY-16 net
leverage ratio. As we enter the fourth quarter, we are well-positioned to deliver on our full year 2016 earnings guidance and
continue our trend of margin expansion and strong free cash flow."
Segment Performance
| |
|
Three months
ended |
Nine months
ended |
| $ in 000s |
|
September
30, 2016 |
|
September
30, 2015 |
September
30, 2016 |
|
September
30, 2015 |
| Performance Sensing net revenue |
|
$ |
584,650 |
|
|
$ |
576,476 |
|
$ |
1,797,395 |
|
|
$ |
1,774,081 |
|
| Performance Sensing profit from operations |
|
155,228 |
|
|
150,782 |
|
453,540 |
|
|
447,662 |
|
| % of Performance Sensing revenue |
|
26.6 |
% |
|
26.2 |
% |
25.2 |
% |
|
25.2 |
% |
| |
|
|
|
|
|
|
|
| Sensing Solutions net revenue |
|
$ |
205,148 |
|
|
$ |
150,884 |
|
$ |
616,497 |
|
|
$ |
474,409 |
|
| Sensing Solutions profit from operations |
|
67,314 |
|
|
49,734 |
|
198,737 |
|
|
151,069 |
|
| % of Sensing Solutions revenue |
|
32.8 |
% |
|
33.0 |
% |
32.2 |
% |
|
31.8 |
% |
Performance Sensing’s profit from operations as a percentage of revenue totaled 26.6 percent in the third quarter
of 2016. Excluding the impact of changes in foreign exchange rates and the CST acquisition, Performance Sensing’s profit from
operations as a percentage of revenue was 27.6 percent in the third quarter of 2016, representing an increase of 140 basis points
from the third quarter of 2015. Sensing Solutions' profit from operations as a percentage of revenue totaled 32.8 percent in
the third quarter of 2016. Excluding the impact of changes in foreign exchange rates and the CST acquisition, Sensing
Solutions' profit from operations as a percentage of revenue was 33.8 percent in the third quarter of 2016, representing an
increase of 80 basis points compared to the third quarter of 2015.
Guidance
Sensata anticipates revenue to be between $765 and $805 million in the fourth quarter of 2016 compared to $726.5
million in the fourth quarter of 2015. Additionally, the Company expects adjusted net income to be between $123 and $133 million
and adjusted earnings per share to be between $0.71 and $0.77 in the fourth quarter of 2016.
For the full year 2016, the Company anticipates revenue to be between $3.18 and $3.22 billion compared to $2.98
billion in full year 2015. Additionally, the Company expects adjusted net income to be between $487 and $497 million and adjusted
earnings per share to be between $2.84 and $2.90 for the full year 2016. Changes in foreign exchange rates are expected to
reduce adjusted earnings per share by ($0.19) to ($0.20) in 2016, compared to the previous year.
Conference Call & Webcast
The Company will conduct a conference call today at 8:00 AM eastern time to discuss the financial results and its
outlook for the remainder of the year. The dial-in numbers for the call are 1-877-486-0682 (toll-free) or +1-706-634-5536
(international) and the Conference ID is 85372621. A live webcast and a replay of the conference call will also be available on the
investor relations page of the Company’s website at http://investors.sensata.com.
About Sensata
Technologies
Sensata Technologies is one of the world’s leading suppliers of sensing, electrical protection, control and power
management solutions with operations and business centers in thirteen countries. Sensata’s products improve safety,
efficiency and comfort for millions of people every day in automotive, appliance, aircraft, industrial, military, heavy vehicle,
heating, air-conditioning and ventilation, data, telecommunications, recreational vehicle and marine applications. For more
information, please visit Sensata’s website at www.sensata.com.
Use of Non-GAAP Financial
Measures
A definition of non-GAAP measures and a reconciliation of GAAP to non-GAAP financial measures is provided in the
financial tables accompanying this press release. The non-GAAP financial measures referenced by Sensata in this press release
include organic revenue growth; adjusted net income; adjusted net income margin; adjusted net income per diluted share; organic
earnings growth; and free cash flow.
Organic revenue growth is defined as the percentage change in net revenue calculated in accordance with U.S. GAAP,
excluding the impact of acquisitions, net of exited businesses that occurred in the previous twelve months, and the effects of
changes in foreign currency exchange rates.
Adjusted net income is defined as net income excluding certain non-GAAP adjustments which are described in the
accompanying reconciliation tables. Adjusted net income margin is calculated by dividing adjusted net income by net
revenue. Adjusted net income per share is calculated by dividing adjusted net income by the number of diluted weighted
average ordinary shares outstanding in the period.
We define organic earnings growth as the percentage change in adjusted net income per share, excluding the impact
of acquisitions, net of exited businesses that occurred within the previous 12 months, and the effects of changes in foreign
currency exchange rates. We define free cash flow as net cash provided by operating activities less additions to property,
plant, and equipment and capitalized software.
There are limitations in using non-GAAP financial measures as they are not prepared in accordance with U.S.
generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP
financial measures should be considered as supplemental in nature and are not intended to be considered in isolation or as a
substitute for financial measures prepared in accordance with US GAAP. We believe that the non-GAAP financial measures
provide useful and supplementary information to investors regarding our quarterly and annual performance. We regularly use
non-GAAP financial measures internally to understand, manage, and evaluate our business results and make operating decisions.
We also measure our employees and compensate them, in part, based on such non-GAAP measures. For the same reasons, we also
use this information for our forecasting activities.
Safe Harbor Statement
This earnings release contains forward-looking statements within the meaning of the federal securities laws. These
statements relate to analyses and other information, which are based on forecasts of future results and estimates of amounts not
yet determinable, and our future prospects, developments, and business strategies. Such forward-looking statements include, among
other things, our anticipated results for the fourth quarter and full year 2016. Such statements involve risks and uncertainties
that could cause actual results to differ materially from those expressed in the forward-looking statements. Factors that might
cause these differences include, but are not limited to, risks associated with: adverse conditions in the automotive industry;
competitive pressures that could require us to lower prices or could result in reduced demand for our products; integration of
acquired companies, including CST and Schrader; the assumption of known and unknown liabilities in the acquisition of CST and
Schrader; risks associated with our non-US operations and international business; litigation and disputes involving us, including
the extent of intellectual property, product liability, warranty, and recall claims asserted against us; risks associated with our
historical and future tax positions; risks associated with labor disruptions or increased labor costs; risks associated with our
substantial indebtedness; and risks associated with breaches and other disruptions to our information technology infrastructure.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date
the statements were made; and we undertake no obligation to publicly update or revise any forward-looking statements, whether to
reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the
risk factors listed in our SEC filings. Copies of our filings are available from our Investor Relations department or from
the SEC website, www.sec.gov.
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Operations
(Unaudited) |
| |
|
|
|
|
|
|
|
|
| (In 000s, except per share amounts) |
|
|
|
|
|
|
|
|
| |
|
For the three months
ended |
|
For the nine months
ended |
| |
|
September
30, 2016 |
|
September
30, 2015 |
|
September
30, 2016 |
|
September
30, 2015 |
| Net revenue |
|
$ |
789,798 |
|
|
$ |
727,360 |
|
|
$ |
2,413,892 |
|
|
$ |
2,248,490 |
|
| Operating costs and expenses: |
|
|
|
|
|
|
|
|
| Cost of revenue |
|
508,944 |
|
|
476,634 |
|
|
1,574,763 |
|
|
1,501,142 |
|
| Research and development |
|
31,601 |
|
|
30,816 |
|
|
95,240 |
|
|
92,794 |
|
| Selling, general and administrative |
|
75,046 |
|
|
66,233 |
|
|
224,637 |
|
|
203,637 |
|
| Amortization of intangible assets |
|
50,562 |
|
|
45,184 |
|
|
151,572 |
|
|
136,068 |
|
| Restructuring and special charges |
|
837 |
|
|
1,615 |
|
|
3,167 |
|
|
12,424 |
|
| Total operating costs and
expenses |
|
666,990 |
|
|
620,482 |
|
|
2,049,379 |
|
|
1,946,065 |
|
| Profit from operations |
|
122,808 |
|
|
106,878 |
|
|
364,513 |
|
|
302,425 |
|
| Interest expense, net |
|
(41,176 |
) |
|
(29,706 |
) |
|
(125,201 |
) |
|
(96,029 |
) |
| Other, net |
|
(726 |
) |
|
(10,805 |
) |
|
4,892 |
|
|
(44,647 |
) |
| Income before taxes |
|
80,906 |
|
|
66,367 |
|
|
244,204 |
|
|
161,749 |
|
| Provision for income taxes |
|
11,121 |
|
|
13,215 |
|
|
48,297 |
|
|
32,342 |
|
| Net income |
|
$ |
69,785 |
|
|
$ |
53,152 |
|
|
$ |
195,907 |
|
|
$ |
129,407 |
|
| |
|
|
|
|
|
|
|
|
| Net income per share: |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.41 |
|
|
$ |
0.31 |
|
|
$ |
1.15 |
|
|
$ |
0.76 |
|
| Diluted |
|
$ |
0.41 |
|
|
$ |
0.31 |
|
|
$ |
1.14 |
|
|
$ |
0.75 |
|
| |
|
|
|
|
|
|
|
|
| Weighted-average ordinary shares outstanding: |
|
|
|
|
|
|
| Basic |
|
170,840 |
|
|
170,147 |
|
|
170,656 |
|
|
169,880 |
|
| Diluted |
|
171,478 |
|
|
171,608 |
|
|
171,359 |
|
|
171,512 |
|
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
|
| |
|
|
|
|
|
|
|
|
| ($ in 000s) |
|
|
|
|
|
|
|
|
| |
|
For the three months
ended |
|
For the nine months
ended |
| |
|
September
30, 2016 |
|
September
30, 2015 |
|
September
30, 2016 |
|
September
30, 2015 |
| Net income |
|
$ |
69,785 |
|
|
$ |
53,152 |
|
|
$ |
195,907 |
|
|
$ |
129,407 |
|
| Other comprehensive loss, net of tax: |
|
|
|
|
|
|
|
|
| Deferred loss on derivative instruments, net of
reclassifications |
|
(8,485 |
) |
|
(17,430 |
) |
|
(25,010 |
) |
|
(13,058 |
) |
| Defined benefit and retiree healthcare plans |
|
24 |
|
|
742 |
|
|
291 |
|
|
760 |
|
| Other comprehensive loss |
|
(8,461 |
) |
|
(16,688 |
) |
|
(24,719 |
) |
|
(12,298 |
) |
| Comprehensive
income |
|
$ |
61,324 |
|
|
$ |
36,464 |
|
|
$ |
171,188 |
|
|
$ |
117,109 |
|
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Balance Sheets
(Unaudited) |
| |
|
|
|
|
| ($ in 000s) |
|
|
|
|
| |
|
September
30, 2016 |
|
December 31,
2015 |
| Assets |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
299,887 |
|
|
$ |
342,263 |
|
| Accounts receivable, net of allowances |
|
532,571 |
|
|
467,567 |
|
| Inventories |
|
372,968 |
|
|
358,701 |
|
| Prepaid expenses and other current assets |
|
90,901 |
|
|
109,392 |
|
| Total current assets |
|
1,296,327 |
|
|
1,277,923 |
|
| Property, plant and equipment, net |
|
722,429 |
|
|
694,155 |
|
| Goodwill |
|
3,008,894 |
|
|
3,019,743 |
|
| Other intangible assets, net |
|
1,118,861 |
|
|
1,262,572 |
|
| Deferred income tax assets |
|
34,102 |
|
|
26,417 |
|
| Other assets |
|
70,380 |
|
|
18,100 |
|
| Total assets |
|
$ |
6,250,993 |
|
|
$ |
6,298,910 |
|
| |
|
|
|
|
| Liabilities and shareholders’ equity |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Current portion of long-term debt, capital lease and other financing
obligations |
|
$ |
14,475 |
|
|
$ |
300,439 |
|
| Accounts payable |
|
324,273 |
|
|
290,779 |
|
| Income taxes payable |
|
17,566 |
|
|
21,968 |
|
| Accrued expenses and other current liabilities |
|
265,631 |
|
|
251,989 |
|
| Total current liabilities |
|
621,945 |
|
|
865,175 |
|
| Deferred income tax liabilities |
|
410,019 |
|
|
390,490 |
|
| Pension and other post-retirement benefit obligations |
|
34,518 |
|
|
34,314 |
|
| Capital lease and other financing obligations, less current portion |
|
33,255 |
|
|
36,219 |
|
| Long-term debt, net of discount and deferred financing costs, less current
portion |
|
3,262,409 |
|
|
3,264,333 |
|
| Other long-term liabilities |
|
34,610 |
|
|
39,803 |
|
| Total liabilities |
|
4,396,756 |
|
|
4,630,334 |
|
| Total shareholders’ equity |
|
1,854,237 |
|
|
1,668,576 |
|
| Total liabilities and
shareholders’ equity |
|
$ |
6,250,993 |
|
|
$ |
6,298,910 |
|
SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Cash Flows
(Unaudited) |
| |
| ($ in 000s) |
|
For the nine months
ended |
| |
|
September
30, 2016 |
|
September 30,
2015 |
| Cash flows from operating activities: |
|
|
|
|
| Net income |
|
$ |
195,907 |
|
|
$ |
129,407 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
| Depreciation |
|
77,649 |
|
|
71,162 |
|
| Amortization of deferred financing costs and original issue discounts |
|
5,501 |
|
|
4,755 |
|
| Currency remeasurement gain on debt |
|
(66 |
) |
|
(2,082 |
) |
| Share-based compensation |
|
13,279 |
|
|
11,093 |
|
| Loss on debt financing |
|
— |
|
|
25,538 |
|
| Amortization of inventory step-up to fair value |
|
2,319 |
|
|
— |
|
| Amortization of intangible assets |
|
151,572 |
|
|
136,068 |
|
| Deferred income taxes |
|
15,706 |
|
|
11,237 |
|
| Unrealized loss on hedges and other non-cash items |
|
726 |
|
|
13,541 |
|
| Changes in operating assets and liabilities, net of effects of
acquisitions |
|
(66,242 |
) |
|
(37,006 |
) |
| Net cash provided by operating activities |
|
396,351 |
|
|
363,713 |
|
| |
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
| Acquisition of CST, net of cash received |
|
4,688 |
|
|
— |
|
| Acquisition of Schrader, net of cash received |
|
— |
|
|
(958 |
) |
| Other acquisitions, net of cash received |
|
— |
|
|
3,881 |
|
| Additions to property, plant and equipment and capitalized software |
|
(94,584 |
) |
|
(130,243 |
) |
| Investment in equity securities |
|
(50,000 |
) |
|
— |
|
| Proceeds from the sale of assets |
|
751 |
|
|
102 |
|
| Net cash used in investing activities |
|
(139,145 |
) |
|
(127,218 |
) |
| |
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
| Proceeds from exercise of stock options and issuance of ordinary shares |
|
3,306 |
|
|
15,361 |
|
| Proceeds from issuance of debt |
|
— |
|
|
1,795,120 |
|
| Payments on debt |
|
(297,698 |
) |
|
(1,970,685 |
) |
| Payments to repurchase ordinary shares |
|
(4,672 |
) |
|
(50 |
) |
| Payments of debt issuance costs |
|
(518 |
) |
|
(29,361 |
) |
| Net cash used in financing
activities |
|
(299,582 |
) |
|
(189,615 |
) |
| Net change in cash and cash equivalents |
|
(42,376 |
) |
|
46,880 |
|
| Cash and cash equivalents, beginning of period |
|
342,263 |
|
|
211,329 |
|
| Cash and cash equivalents,
end of period |
|
$ |
299,887 |
|
|
$ |
258,209 |
|
| Revenue
by Business, Geography and End Market (Unaudited) |
| |
| (% of total net revenue) |
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| Performance Sensing
|
|
74.0 |
% |
|
79.3 |
% |
|
74.5 |
% |
|
78.9 |
% |
| Sensing Solutions |
|
26.0 |
% |
|
20.7 |
% |
|
25.5 |
% |
|
21.1 |
% |
| Total |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
| (% of total net revenue) |
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| Americas |
|
43.7 |
% |
|
42.7 |
% |
|
43.2 |
% |
|
41.1 |
% |
| Europe |
|
31.1 |
% |
|
33.3 |
% |
|
32.6 |
% |
|
33.6 |
% |
| Asia/Rest of World
|
|
25.2 |
% |
|
24.0 |
% |
|
24.2 |
% |
|
25.3 |
% |
| Total |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
| (% of total net revenue)1 |
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
|
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
| European automotive |
|
24.4 |
% |
|
29.3 |
% |
|
25.1 |
% |
|
28.6 |
% |
|
| North American automotive |
|
20.6 |
% |
|
22.5 |
% |
|
20.3 |
% |
|
21.7 |
% |
|
| Asian automotive |
|
17.5 |
% |
|
16.2 |
% |
|
16.7 |
% |
|
16.9 |
% |
|
| Rest of world automotive |
|
0.3 |
% |
|
0.9 |
% |
|
0.3 |
% |
|
0.9 |
% |
|
| Heavy vehicle off-road |
|
12.8 |
% |
|
12.1 |
% |
|
13.4 |
% |
|
12.6 |
% |
|
| Appliance and heating, ventilation and air-conditioning |
|
6.1 |
% |
|
5.8 |
% |
|
5.8 |
% |
|
6.0 |
% |
|
| Industrial |
|
9.1 |
% |
|
5.3 |
% |
|
9.4 |
% |
|
5.3 |
% |
|
| Aerospace |
|
4.6 |
% |
|
2.9 |
% |
|
4.6 |
% |
|
2.9 |
% |
|
| All other |
|
4.6 |
% |
|
5.0 |
% |
|
4.4 |
% |
|
5.1 |
% |
|
| Total |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 Reclassification of certain acquired product lines has led to retrospective
adjustments of certain of end-market percentages. |
|
| Revenues have shifted from Industrial into the European, North American and
Asian automotive end-markets. |
|
The following unaudited table reconciles the Company’s net income to adjusted net income for the three and nine
months ended September 30, 2016 and 2015.
| (In 000s, except per share amounts) |
|
Three months ended
September 30, |
|
Nine months
ended
September 30, |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| Net income |
|
$ |
69,785 |
|
|
$ |
53,152 |
|
|
$ |
195,907 |
|
|
$ |
129,407 |
|
| Restructuring and special charges |
|
4,197 |
|
|
8,502 |
|
|
10,997 |
|
|
31,681 |
|
| Financing and other transaction costs |
|
452 |
|
|
3,659 |
|
|
1,508 |
|
|
29,455 |
|
| Deferred (gain)/loss on other hedges |
|
(2,930 |
) |
|
5,576 |
|
|
(24,497 |
) |
|
12,038 |
|
| Depreciation and amortization expense related to the step-up in fair
value of fixed and intangible assets and inventory |
|
52,531 |
|
|
46,403 |
|
|
158,288 |
|
|
140,057 |
|
| Deferred income tax and other tax expense/(benefit) |
|
451 |
|
|
4,485 |
|
|
16,150 |
|
|
11,339 |
|
| Amortization of deferred financing costs |
|
1,823 |
|
|
1,524 |
|
|
5,501 |
|
|
4,755 |
|
| Total adjustments |
|
$ |
56,524 |
|
|
$ |
70,149 |
|
|
$ |
167,947 |
|
|
$ |
229,325 |
|
| Adjusted net income |
|
$ |
126,309 |
|
|
$ |
123,301 |
|
|
$ |
363,854 |
|
|
$ |
358,732 |
|
| Weighted average diluted shares outstanding |
|
171,478 |
|
|
171,608 |
|
|
171,359 |
|
|
171,512 |
|
| Adjusted net income per diluted share |
|
$ |
0.74 |
|
|
$ |
0.72 |
|
|
$ |
2.12 |
|
|
$ |
2.09 |
|
The Company’s definition of adjusted net income excludes the deferred provision for/(benefit from) income taxes and
other tax expense/(benefit). The Company’s deferred provision for/(benefit from) income taxes includes adjustments for book-to-tax
basis differences primarily related to the step-up in fair value of fixed and intangible assets and goodwill, utilization of net
operating losses and adjustments to our U.S. valuation allowance in connection with certain acquisitions. Other tax
expense/(benefit) includes certain adjustments to unrecognized tax positions.
As the Company treats deferred income tax and other tax expense/(benefit) as an adjustment to compute adjusted net
income, the deferred income tax effect associated with the reconciling items, above, would not change adjusted net income for any
period presented.
The current income tax (benefit)/expense associated with the reconciling items above, which is included in adjusted
net income, would be as follows: Depreciation and amortization expense related to the step-up in fair value of fixed and intangible
assets and inventory: ($0.0) million and ($0.1) million for the three months ended September 30, 2016 and 2015, respectively,
and ($0.1) million and ($0.4) million for the nine months ended September 30, 2016 and 2015, respectively; and Restructuring
and special charges ($0.1) million and ($0.9) million for the three months ended September 30, 2016 and 2015, respectively,
and ($0.4) million and ($2.0) million for the nine months ended September 30, 2016 and 2015, respectively.
The following unaudited table identifies where in the Condensed Consolidated Statements of Operations the
adjustments to reconcile Net income to adjusted net income were recorded for the three and nine months ended September 30,
2016 and 2015.
| ($ in 000s) |
|
Three months ended
September 30, |
Nine months ended
September 30, |
| |
|
2016 |
|
2015 |
2016 |
|
2015 |
| Cost of revenue |
|
$ |
5,938 |
|
|
$ |
8,654 |
|
$ |
12,862 |
|
|
$ |
31,980 |
|
| Selling, general and administrative |
|
1,158 |
|
|
5,420 |
|
3,878 |
|
|
11,322 |
|
| Amortization of intangible assets |
|
49,016 |
|
|
43,839 |
|
147,214 |
|
|
132,174 |
|
| Restructuring and special charges |
|
268 |
|
|
651 |
|
1,972 |
|
|
10,596 |
|
| Interest expense, net |
|
1,823 |
|
|
1,524 |
|
5,501 |
|
|
4,755 |
|
| Other, net |
|
(2,130 |
) |
|
5,576 |
|
(19,630 |
) |
|
32,159 |
|
| Provision for income taxes |
|
451 |
|
|
4,485 |
|
16,150 |
|
|
6,339 |
|
| Total adjustments |
|
$ |
56,524 |
|
|
$ |
70,149 |
|
$ |
167,947 |
|
|
$ |
229,325 |
|
The following unaudited table reconciles the Company’s net cash provided by operating activities to free cash
flow.
| ($ in 000s) |
|
Three months ended
September 30, |
Nine months ended
September 30, |
| |
|
2016 |
|
2015 |
2016 |
|
2015 |
| Net cash provided by operating activities |
|
$ |
149,720 |
|
|
$ |
151,514 |
|
$ |
396,351 |
|
|
$ |
363,713 |
|
| Additions to property, plant and equipment and capitalized software |
|
(30,118 |
) |
|
(43,442 |
) |
(94,584 |
) |
|
(130,243 |
) |
| Free cash flow |
|
$ |
119,602 |
|
|
$ |
108,072 |
|
$ |
301,767 |
|
|
$ |
233,470 |
|
The following unaudited table reconciles the Company’s diluted net income per share to organic earnings growth. The
amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not foot due to the
effects of rounding.
| |
|
Three months ended
September 30, |
| |
|
2016 |
|
2015 |
| |
|
|
|
|
| Diluted net income per share |
|
$ |
0.41 |
|
|
$ |
0.31 |
|
| Non-GAAP adjustments: |
|
|
|
|
| Restructuring and special charges |
|
0.02 |
|
|
0.05 |
|
| Financing and other transaction costs |
|
0.00 |
|
|
0.02 |
|
| Deferred (gain)/loss on other hedges |
|
(0.02 |
) |
|
0.03 |
|
| Depreciation and amortization expense related to the step-up in fair value of fixed and
intangible assets and inventory |
|
0.31 |
|
|
0.27 |
|
| Deferred income tax expense and other tax expense/(benefit) |
|
0.00 |
|
|
0.03 |
|
| Amortization of deferred financing costs |
|
0.01 |
|
|
0.01 |
|
| Adjusted net income per share |
|
0.74 |
|
|
0.72 |
|
| |
|
|
|
|
| Percentage change in adjusted earnings per share |
|
2.8 |
% |
|
|
| Non-GAAP adjustments: |
|
|
|
|
| Effects of foreign currency exchange movements |
|
(6.9 |
)% |
|
|
| Acquisitions, net of exited businesses that occurred within the previous 12 months |
|
(1.4 |
)% |
|
|
| Organic earnings
growth |
|
11.1 |
% |
|
|
The following unaudited table reconciles the Company’s projected GAAP earnings per diluted share to projected
adjusted net income per diluted share for the three months ended December 31, 2016 and full year ended December 31, 2016.
The amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not add due to the
effect of rounding.
| |
|
Three months ended
December 31, 2016 |
|
Full year ended
December 31, 2016 |
| |
|
Low End |
|
High End |
|
Low End |
|
High End |
| |
|
|
|
|
|
|
|
|
| Projected GAAP earnings per diluted share |
|
$ |
0.33 |
|
|
$ |
0.38 |
|
|
$ |
1.48 |
|
|
$ |
1.53 |
|
| Restructuring and special charges |
|
0.01 |
|
|
0.02 |
|
|
|
0.07 |
|
|
|
0.08 |
|
| Financing and other transaction costs |
|
— |
|
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
| Deferred (gain)/loss on other hedges |
|
— |
|
|
— |
|
|
|
(0.14 |
) |
|
|
(0.14 |
) |
| Depreciation and amortization expense related to the step-up in fair value of fixed and
intangible assets and inventory |
|
0.30 |
|
|
0.30 |
|
|
|
1.22 |
|
|
|
1.22 |
|
| Deferred income tax and other tax expense/(benefit) |
|
0.06 |
|
|
0.06 |
|
|
|
0.16 |
|
|
|
0.16 |
|
| Amortization of deferred financing costs |
|
0.01 |
|
|
0.01 |
|
|
|
0.04 |
|
|
|
0.04 |
|
| Projected Adjusted net income per
diluted share |
|
$ |
0.71 |
|
|
$ |
0.77 |
|
|
$ |
2.84 |
|
|
$ |
2.90 |
|
| Weighted average diluted shares outstanding |
|
171,600 |
|
|
171,600 |
|
|
|
171,400 |
|
|
|
171,400 |
|
Investors: Joshua Young (508) 236-2196 Joshua.young@sensata.com Media: Alexia Taxiarchos (508) 236-1761 ataxiarchos@sensata.com
