8-K
Sensata Technologies Holding plc (ST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 1, 2020
__________________________________________
SENSATA TECHNOLOGIES HOLDING PLC
(Exact name of Registrant as specified in its charter)
__________________________________________
| England and Wales | 001-34652 | 98-1386780 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
529 Pleasant Street
Attleboro, Massachusetts 02703, United States
(Address of Principal executive offices, including Zip Code)
+1(508) 236 3800
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
__________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
|---|---|---|
| Ordinary Shares - nominal value €0.01 per share | ST | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
|---|
The information set forth below in Item 8.01 under the caption “Borrowing Under the Revolving Credit Facility” is hereby incorporated by reference into this Item 2.03.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
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To address the impacts of the novel coronavirus (“COVID-19”) pandemic, effective April 1, 2020 through June 30, 2020, Sensata Technologies Holding plc (the “Company”) decreased the base salary of its Chief Executive Officer & President, Jeffrey Cote, to $1.00. In addition, effective April 1, 2020 through June 30, 2020, the base salary of each of the following named executive officers has been reduced by 25%:
Paul Vasington, Executive Vice President & Chief Financial Officer
Steven Beringhause, Executive Vice President & Chief Technology Officer
Paul Chawla, Executive Vice President, Performance Sensing Auto
| Item 8.01 | Other Events. |
|---|
On April 2, 2020, the Company issued a press release announcing the following actions taken to provide additional liquidity and financial flexibility to mitigate the effect on its business from the international emergency that has arisen as a result of the COVID-19 pandemic.
Borrowing Under the Revolving Credit Facility
As previously disclosed, the Company maintains a revolving credit facility of $420 million (the “Revolving Credit Facility”) as part of its Credit Agreement, the material terms of which are described in the section titled “Credit Agreement” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 11, 2020 (the “Form 10-K”) and incorporated herein by reference.
On April 1, 2020, we executed a draw down of $400 million on the Revolving Credit Facility, resulting in approximately $404 million outstanding under the Revolving Credit Facility. The Revolving Credit Facility will mature on March 27, 2024. A copy of the Credit Agreement is listed as an exhibit to the Form 10-K.
Suspension of Share Repurchase Program
The Company announced the suspension of its share repurchase program. As the uncertainty resulting from the COVID-19 pandemic is resolved, the Board of Directors will re-evaluate such suspension.
Removal of Guidance
Due to unprecedented global economic conditions and uncertainty resulting from the COVID-19 pandemic, the Company is removing its financial guidance that it previously provided for 2020. The Company expects to provide a business update on its first quarter earnings call.
Reduction of Director Cash Retainer
The Company’s Board of Directors has reduced all cash retainer amounts owed to the non-management directors by 50% for the period beginning April 1, 2020 through June 30, 2020.
Updated Risk Factor
The Company is updating the risk factors previously described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
We are subject to various risks related to public health crises, including the global coronavirus (COVID-19) pandemic.
We are impacted by public health crises such as the global COVID-19 pandemic. The COVID-19 outbreak has triggered significant economic and demand uncertainty. In addition, global government directives and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, closing of borders, stay at home directives and closing of entire plants, cities and countries, have materially impacted our operations. In these challenging and dynamic circumstances, we are working to protect our employees and the public, maintain business continuity and sustain our operations, including
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ensuring the safety and protection of about our people who work in our plants and distribution centers across the world, many of whom support the manufacturing and delivery of products deemed part of the critical infrastructure or essential businesses by the applicable local or country governments. The impact of the COVID-19 pandemic has negatively impacted our supply chain and in some cases, reduced the demand for our products or created significant difficulties in delivering our products to our customers. Furthermore, COVID-19 has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates. For example, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital. Due to the speed with which the situation is developing and the uncertainty of its duration and the timing of recovery, we are not able at this time to predict the extent to which the COVID-19 pandemic may have a material effect on our financial or operational results.
A copy of the press release is attached as Exhibit 99.1.
Forward-Looking Statements
This report, as well as other statements made by the Company, contain forward-looking statements that reflect, when made, the Company’s current views with respect to current events and financial performance, including the impact of the current COVID-19 pandemic on the Company’s future operations and balance sheet. Such forward-looking statements are subject to many risks, uncertainties and factors relating to the Company’s operations and business environment, which may cause the actual results of the Company to be materially different from the expectations set forth in this report, in particular due to the uncertainties posed by the pandemic and the difficulty in predicting its future course and its impact on the global economy. All statements that address future operating, financial or business performance or the Company’s strategies or expectations are forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements are discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s filings with the Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law.
| Item 9.01 | Financial Statements and Exhibits. |
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(d) Exhibits
| 99.1 | Press release issued by Sensata Technologies Holding plc, dated April 2, 2020, announcing 2020 business update due to the COVID-19 pandemic |
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| 104 | Cover Page Interactive Data File (embedded within Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SENSATA TECHNOLOGIES HOLDING PLC | |
|---|---|
| /s/ Maria Freve | |
| Date: April 3, 2020 | Name: Maria Freve |
| Title: Vice President and Chief Accounting Officer |
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Exhibit
Sensata Technologies Provides Business Update Regarding COVID-19
and Withdraws Guidance
SWINDON, United Kingdom - April 2, 2020 - Sensata Technologies (NYSE:ST), a global industrial technology company and a leading provider of sensor-rich solutions that create insights for customers, today announced a series of actions the Company has taken in response to the coronavirus (COVID-19) pandemic to ensure the health and safety of our employees, continue to serve our critical customer needs and further enhance our financial flexibility during a time of economic uncertainty and market disruption.
As the COVID-19 pandemic has spread rapidly around the globe, it has become increasingly difficult to quantify the impact on our business as well as to provide a reliable forecast of our future financial performance. Therefore, Sensata is withdrawing its first quarter and full year 2020 guidance given on February 11. Sensata currently expects revenue for the first quarter of fiscal 2020 to be in the range of $760 - $770 million. We will provide more information on our first quarter 2020 earnings call.
“The COVID-19 health and economic crisis is an unprecedented situation that warrants business and government response. During this time, our top priority remains the health and safety of our employees, customers and communities,” said Jeff Cote, President and Chief Executive Officer of Sensata. “OEM orders and global economic conditions have deteriorated over the last few weeks, and in response we are taking necessary measures to ensure that we have the financial strength to weather this period of uncertainty. During this period we are prioritizing essential production for our critical customer needs who in many cases are performing work essential in this environment. We have managed through tough times in the past; we are confident and focused on coming out of this stronger.”
To protect the safety, health and well-being of our employees, customers, suppliers, and communities Sensata continues to implement preventative measures including increased frequency of cleaning and disinfecting of facilities, social distancing, remote working when possible, travel restrictions and limitations on visitor access to our facilities.
Although we believe our financial position is strong, given the increasing level of economic uncertainty, the Company has further enhanced its financial flexibility by drawing down most of its $420 million revolving credit facility. With these additional funds, Sensata’s cash on hand as of April 1, 2020 is approximately $1.2 billion. In addition, the Company is suspending temporarily its share repurchase program.
Sensata is taking additional actions to manage and reduce operating costs and further enhance its financial flexibility, including the following:
| • | Cash retainers paid to non-employee directors will be cut by 50% during the 2^nd^ quarter; |
|---|---|
| • | Jeff Cote, CEO & President, will temporarily reduce his salary to $1.00 during the 2^nd^ quarter; |
| --- | --- |
| • | Senior Leaders will temporarily reduce their salaries by 25% during the 2^nd^ quarter; |
| --- | --- |
| • | Reduction in salaries and temporary furloughs for employees during the 2^nd^ quarter; |
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| • | Reduction in discretionary spend and capital expenditures and managing working capital; and |
| --- | --- |
| • | Ramping down of certain production facilities in line with end-market demand. |
| --- | --- |
We believe these measures, among other cost reductions being considered at our locations around the world, will improve the Company’s financial flexibility in light of the substantial impact COVID-19 is having on the Company and the global economy.
The Company is continuing to closely monitor and adhere to the safety guidelines provided by the World Health Organization and Centers for Disease Control and Prevention, as well as all state, national and country directives. Additionally, the Board of Directors formed a Health & Economic Response Committee that is overseeing the Company’s health and safety matters, and business impact caused by the COVID-19 global crisis.
About Sensata Technologies
Sensata Technologies is a leading industrial technology company that develops sensors, sensor-based solutions, including controllers and software, and other mission-critical products to create valuable business insights for customers and end users. For more than 100 years, Sensata has provided a wide range of customized, sensor-rich solutions that address complex engineering requirements to help customers solve difficult challenges in the automotive, heavy vehicle & off-road, industrial and aerospace industries. With more than 22,000 employees and operations in 11 countries, Sensata’s solutions help to make products safer, cleaner and more efficient, electrified, and connected. For more information, please visit Sensata’s website at www.sensata.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated financial results and liquidity. The words "will," "may," "designed to," "outlook," "believes," "should," "anticipates," "plans," "expects," "intends," "estimates," "forecasts" and similar expressions identify certain of these forward-looking statements. The Company also may provide forward-looking statements in oral statements or other written materials released to the public. All statements contained or incorporated in this press release or in any other public statements that address operating performance, events or developments that the Company expects or anticipates may occur in the future are forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements are discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, and its other Securities and Exchange Commission filings. Future operating results will be based on various factors, including actual industry production volumes, the impact of COVID-19 on the Company’s business and the global economy, commodity prices, the impact of restructuring actions and the Company's success in implementing its operating strategy. The forward-looking statements in this press release are made as of the date hereof, and the Company does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof.
Media Contact: Investor Contact:
Alexia Taxiarchos Jacob Sayer
Senior Director, Global Communications Vice President, Investor Relations
+1 (508) 236-1761 +1 (508) 236-1666
ataxiarchos@sensata.com jsayer@sensata.com