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): February 2, 2021
__________________________________________
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>of incorporation) | (Commission<br>File Number) | (IRS Employer<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 2.02 | Results of Operations and Financial Condition. |
|---|
On February 2, 2021, Sensata Technologies Holding plc (the "Company") issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2020. The press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The Company will conduct a conference call on February 2, 2021 at 8:00 AM eastern time to discuss its fourth quarter and full year financial results and its outlook for the first quarter and full year 2021. The dial in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Q4 2020 Financial Results Conference Call." 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. Additional information relating to the Company's financial results will be contained in a presentation that will be referenced during the webcast, and that is being made available on the investor relations page of the Company’s website. Additionally, a replay of the call will be available until February 9, 2021. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 10151035
The information contained in, or incorporated into, this Current Report on Form 8-K is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in any such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | February 2, 2021 press release entitled "Sensata Technologies Reports Fourth Quarter and Full Year 2020 Financial Results" (furnished pursuant to Item 2.02) |
| 104 | Cover Page Interactive Data File (embedded within inline XBRL document) |
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: | February 2, 2021 | Name: Maria Freve |
| Title: Vice President and Chief Accounting Officer |
3
Document
SENSATA TECHNOLOGIES REPORTS FOURTH QUARTER
AND FULL YEAR 2020 FINANCIAL RESULTS
Company provides First Quarter and Full Year 2021 Financial Guidance
Swindon, United Kingdom – February 2, 2021 - Sensata Technologies (NYSE: ST), a global industrial technology company and leading provider of sensor-rich solutions that create insights for customers, today announced financial results for its fourth quarter and full year ended December 31, 2020.
Operating results for the fourth quarter of 2020 compared to the fourth quarter of 2019 and the third quarter of 2020 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 $906.5 million, an increase of $59.8 million, or 7.1%, compared to $846.7 million in the fourth quarter of 2019.
•Revenue increased 5.3% from the fourth quarter of 2019 on an organic basis, which excludes a 1.8% increase from foreign currency exchange rates versus the prior year period.
•Revenue increased 15.0% from the third quarter of 2020 on a reported basis.
Operating income:
•Operating income was $154.2 million (17.0% of revenue), an increase of $33.4 million, or 27.7%, compared to operating income of $120.7 million (14.3% of revenue) in the fourth quarter of 2019 and an increase of 21.5% compared to operating income of $126.8 million (16.1% of revenue) in the third quarter of 2020.
•Adjusted operating income was $195.6 million (21.6% of revenue), an increase of $3.1 million, or 1.6%, compared to adjusted operating income of $192.5 million (22.7% of revenue) in the fourth quarter of 2019. Adjusted operating income increased $40.8 million, or 26.4%, sequentially from $154.8 million (19.6% of revenue) in the third quarter of 2020.
Earnings per share:
•Earnings per share was $0.77, an increase of 126.5% compared to earnings per share of $0.34 in the fourth quarter of 2019 and an increase of $0.28, or 57.1%, compared to earnings per share of $0.49 in the third quarter of 2020.
•Adjusted earnings per share was $0.85, a decrease of (4.5%) compared to adjusted earnings per share of $0.89 in the fourth quarter of 2019 but an increase of 28.8% compared to adjusted earnings per share of $0.66 in the third quarter of 2020.
•Changes in foreign currency exchange rates increased Sensata's adjusted earnings per share by $0.05 in the fourth quarter of 2020 compared to the prior year period.
"The fourth quarter results reflect a meaningful return to growth across our automotive, heavy vehicle and industrial markets. Beyond improvements in end markets, Sensata's growth outpaced the automotive market by 970 basis points and the heavy vehicle market by 990 basis points during the quarter,” said Jeff Cote, CEO and President of Sensata. "While 2020 posed challenges across the world, we are pleased with how quickly and effectively we adapted to evolving conditions, clearly positioning Sensata to benefit from the recovery. We are continuing to execute on our long-term growth strategy as evidenced by the recent acquisition of Lithium Balance in Electrification, adding a key core competence in Battery Management Systems to Sensata's extensive capabilities."
Full Year Ended December 31, 2020
Operating results for the full year ended December 31, 2020 compared to the full year ended December 31, 2019 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 $3,045.6 million, a decrease of ($405.1) million, or (11.7%), compared to $3,450.6 million in 2019.
•Revenue declined (11.9%) from 2019 on an organic basis, which excludes a 0.2% increase from foreign currency exchange rates versus the prior year.
Operating income:
•Operating income was $337.7 million (11.1% of revenue), a decrease of ($219.1) million, or (39.4%), compared to operating income of $556.9 million (16.1% of revenue) in 2019.
•Adjusted operating income was $562.1 million (18.5% of revenue), a decrease of ($223.6) million, or (28.5%), compared to adjusted operating income of $785.7 million (22.8% of revenue) in 2019.
Earnings per share:
•Earnings per share was $1.04, a decrease of (40.6%) compared to earnings per share of $1.75 in 2019.
•Adjusted earnings per share was $2.21, a decrease of (37.9%) compared to adjusted earnings per share of $3.56 in 2019.
•Changes in foreign currency exchange rates increased Sensata's adjusted earnings per share by $0.14 in 2020 compared to the prior year.
Sensata generated $559.8 million of operating cash flow in 2020, compared to $619.6 million in the prior year. The Company's free cash flow totaled $453.1 million in 2020 compared to $458.3 million in the prior year.
Segment Performance
| For the three months ended December 31, | For the full year ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $ in 000s | 2020 | 2019 | 2020 | 2019 | ||||||||
| Performance Sensing | ||||||||||||
| Revenue | $ | 688,978 | $ | 632,879 | $ | 2,223,810 | $ | 2,546,016 | ||||
| Operating income* | $ | 185,101 | $ | 171,488 | $ | 532,529 | $ | 670,470 | ||||
| % of Performance Sensing revenue | 26.9 | % | 27.1 | % | 23.9 | % | 26.3 | % | ||||
| Sensing Solutions | ||||||||||||
| Revenue | $ | 217,513 | $ | 213,812 | $ | 821,768 | $ | 904,615 | ||||
| Operating income* | $ | 70,673 | $ | 69,141 | $ | 241,218 | $ | 293,967 | ||||
| % of Sensing Solutions revenue | 32.5 | % | 32.3 | % | 29.4 | % | 32.5 | % |
* Includes adjustments for reclassification of Megatrend growth spend to corporate and other.
Guidance
"Sensata delivered strong financial performance in the fourth quarter, posting 15.0% revenue growth and 26.4% adjusted operating income growth from the third quarter," said Paul Vasington, EVP and CFO of Sensata. "Sensata generated record free cash flow of $240 million in the fourth quarter, driven by strong earnings recovery, working capital management, and Capital Expenditure controls. For the first quarter of 2021, we expect revenue of $875 to $915 million and adjusted EPS of $0.67 to $0.77."
| Fiscal Year 2021 Guidance | |||
|---|---|---|---|
| $ in millions, except EPS | FY-21 Guidance | FY-20 | Y/Y Change |
| Revenue | $3,425 - $3,575 | $3,045.6 | 12% - 17% |
| organic growth | 10% - 15% | ||
| Adjusted Operating Income | $695 - $755 | $562.1 | 24% - 34% |
| Adjusted Net Income | $488 - $544 | $349.2 | 40% - 56% |
| Adjusted EPS | $3.06 - $3.42 | $2.21 | 38% - 55% |
Versus the prior year period, Sensata expects that changes in foreign currency exchange rates will increase revenues by approximately $64 million at the midpoint and will have minimal impact on adjusted earnings per share for the full year 2021.
| Q1 2021 Guidance | |||
|---|---|---|---|
| $ in millions, except EPS | Q1-21 Guidance | Q1-20 | Y/Y Change |
| Revenue | $875 - $915 | $774.3 | 13% - 18% |
| organic growth | 11% - 16% | ||
| Adjusted Operating Income | $166 - $182 | $136.7 | 21% - 33% |
| Adjusted Net Income | $106 - $122 | $83.2 | 27% - 47% |
| Adjusted EPS | $0.67 - $0.77 | $0.53 | 26% - 45% |
Versus the prior year period, Sensata expects that changes in foreign currency exchange rates will increase revenues by approximately $17 million at the midpoint and will decrease adjusted earnings per share by approximately ($0.01) in the first quarter of 2021.
Conference Call and Webcast
Sensata will conduct a conference call today at 8:00 AM eastern time to discuss its fourth quarter and full year 2020 financial results and its outlook for the first quarter and full year 2021. The dial-in numbers for the call are 1-844-784-1726 or +1-412-380-7411. Callers should reference the "Sensata Q4 2020 Financial Results Conference Call." A live webcast and a replay 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 February 9, 2021. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 10151035.
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 19,000 employees and operations in 12 countries, Sensata’s solutions help to make products safer, cleaner and more efficient, more electrified, and more connected. For more information, please visit Sensata’s website at www.sensata.com.
Non-GAAP Financial Measures
We supplement the reporting of our financial information determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures. We use these non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance, and as a factor in determining compensation for certain employees. We believe presenting non-GAAP financial measures is useful for period-over-period comparisons of underlying business trends and our ongoing business performance. We also believe presenting these non-GAAP measures provides additional transparency into how management evaluates the business.
Non-GAAP financial measures should be considered as supplemental in nature and are not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, our non-GAAP financial measures may not be the same as, or comparable to, similar non-GAAP measures presented by other companies.
The non-GAAP financial measures referenced by Sensata in this release include: adjusted net income, adjusted earnings per share (“EPS”), adjusted operating income, adjusted operating margin, free cash flow, organic revenue growth, and segment operating margin measured on a constant currency basis. We also refer to changes in certain non-GAAP measures, usually reported either as a percentage or number of basis points, between two periods and measured on either a reported, constant currency, or an organic basis, the latter of which excludes the net impact of acquisitions and divestitures for the 12-month period following the respective transaction date(s) and the effect of foreign currency exchange rate differences between the comparative periods. Such changes are also considered non-GAAP measures.
Adjusted net income is defined as net income, determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted EPS is calculated by dividing adjusted net income 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 is defined as operating income, determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted operating margin is calculated by dividing adjusted operating income 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 operating activities, determined in accordance with U.S. GAAP, 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 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 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.
Safe Harbor Statement
This earnings release contains "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995, which relate to future events and are subject to risks and uncertainties. The forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, may contain words or phrases such as: “believe,” “continue,” “expect,” “look ahead,” “predict,” or “will,” and other words and phrases of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about expected earnings, revenues, growth, liquidity or other financial matters, together with any statements related in any way to the COVID-19 pandemic including its impact on the Company. Although the Company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, no assurance can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this earnings release, including, without limitation, the following: future risks and existing uncertainties associated with the COVID-19 pandemic, which continues to have a significant adverse impact on our operations including, depending on the specific location, full or partial shutdowns of our facilities as mandated by government decree, government actions limiting our ability to adjust certain costs, significant travel restrictions, “work-from-home” orders, limited availability of our workforce, supplier constraints, supply chain interruptions, logistics challenges and limitations, and reduced demand from certain customers; uncertainties associated with a protracted economic slowdown that could negatively affect the financial condition of our customers and suppliers; uncertainties and volatility in the global capital markets; political, economic, military and other risks in countries outside of the United States; the impact of general economic conditions, geopolitical conditions and U.S. trade policies, legislation, trade disputes, treaties and tariffs, including those affecting China, on the Company’s business operations; risks associated with the improper conduct by any of our employees, customers, suppliers, distributors or any other business
A further description of these uncertainties and other risks can be found in the Company's 2019 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and the Company’s other reports filed with the SEC. Copies of our filings are available from our Investor Relations department or from the SEC website, www.sec.gov.
| SENSATA TECHNOLOGIES HOLDING PLC | ||||||||
|---|---|---|---|---|---|---|---|---|
| Condensed Consolidated Statements of Operations | ||||||||
| (In thousands, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| For the three months ended December 31, | For the full year ended December 31, | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | 2020 | 2019 | |||||
| Net revenue | $ | 906,491 | $ | 846,691 | $ | 3,045,578 | $ | 3,450,631 |
| Operating costs and expenses: | ||||||||
| Cost of revenue | 609,940 | 556,482 | 2,119,044 | 2,267,433 | ||||
| Research and development | 33,314 | 38,455 | 131,429 | 148,425 | ||||
| Selling, general and administrative | 77,027 | 70,709 | 294,725 | 281,442 | ||||
| Amortization of intangible assets | 31,152 | 34,807 | 129,549 | 142,886 | ||||
| Restructuring and other charges, net | 897 | 25,520 | 33,094 | 53,560 | ||||
| Total operating costs and expenses | 752,330 | 725,973 | 2,707,841 | 2,893,746 | ||||
| Operating income | 154,161 | 120,718 | 337,737 | 556,885 | ||||
| Interest expense, net | (47,417) | (40,137) | (171,757) | (158,554) | ||||
| Other, net | 1,172 | 17 | (339) | (7,908) | ||||
| Income before taxes | 107,916 | 80,598 | 165,641 | 390,423 | ||||
| (Benefit from)/provision for income taxes | (13,751) | 27,060 | 1,355 | 107,709 | ||||
| Net income | $ | 121,667 | $ | 53,538 | $ | 164,286 | $ | 282,714 |
| Net income per share: | ||||||||
| Basic | $ | 0.77 | $ | 0.34 | $ | 1.04 | $ | 1.76 |
| Diluted | $ | 0.77 | $ | 0.34 | $ | 1.04 | $ | 1.75 |
| Weighted-average ordinary shares outstanding: | ||||||||
| Basic | 157,488 | 158,462 | 157,373 | 160,946 | ||||
| Diluted | 158,567 | 159,564 | 158,134 | 161,968 | ||||
| SENSATA TECHNOLOGIES HOLDING PLC | ||||||||
| --- | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | December 31,<br>2020 | December 31, 2019 | ||||||
| --- | --- | --- | --- | --- | ||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,861,980 | $ | 774,119 | ||||
| Accounts receivable, net of allowances | 576,647 | 557,874 | ||||||
| Inventories | 451,005 | 506,678 | ||||||
| Prepaid expenses and other current assets | 90,340 | 126,981 | ||||||
| Total current assets | 2,979,972 | 1,965,652 | ||||||
| Property, plant and equipment, net | 803,825 | 830,998 | ||||||
| Goodwill | 3,111,349 | 3,093,598 | ||||||
| Other intangible assets, net | 691,549 | 770,904 | ||||||
| Deferred income tax assets | 84,785 | 21,150 | ||||||
| Other assets | 172,722 | 152,217 | ||||||
| Total assets | $ | 7,844,202 | $ | 6,834,519 | ||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt, finance lease and other financing obligations | $ | 7,205 | $ | 6,918 | ||||
| Accounts payable | 393,907 | 376,968 | ||||||
| Income taxes payable | 19,215 | 35,234 | ||||||
| Accrued expenses and other current liabilities | 324,830 | 215,626 | ||||||
| Total current liabilities | 745,157 | 634,746 | ||||||
| Deferred income tax liabilities | 259,857 | 251,033 | ||||||
| Pension and other post-retirement benefit obligations | 48,002 | 36,100 | ||||||
| Finance lease and other financing obligations, less current portion | 27,931 | 28,810 | ||||||
| Long-term debt, net | 3,963,747 | 3,219,885 | ||||||
| Other long-term liabilities | 94,022 | 90,190 | ||||||
| Total liabilities | 5,138,716 | 4,260,764 | ||||||
| Total shareholders’ equity | 2,705,486 | 2,573,755 | ||||||
| Total liabilities and shareholders’ equity | $ | 7,844,202 | $ | 6,834,519 | ||||
| SENSATA TECHNOLOGIES HOLDING PLC | ||||||||
| --- | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | For the full year ended December 31, | |||||||
| --- | --- | --- | --- | --- | ||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Income | $ | 164,286 | $ | 282,714 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 125,680 | 115,862 | ||||||
| Amortization of debt issuance costs | 6,854 | 7,804 | ||||||
| Share-based compensation | 19,125 | 18,757 | ||||||
| Loss on debt financing | — | 4,364 | ||||||
| Amortization of intangible assets | 129,549 | 142,886 | ||||||
| Deferred income taxes | (44,900) | 27,623 | ||||||
| Unrealized loss on derivative instruments and other | 4,709 | 30,292 | ||||||
| Changes in operating assets and liabilities | 154,472 | (10,740) | ||||||
| Net cash provided by operating activities | 559,775 | 619,562 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisitions, net of cash received | (64,432) | (32,465) | ||||||
| Additions to property, plant and equipment and capitalized software | (106,719) | (161,259) | ||||||
| Investments in debt and equity securities | (22,963) | (9,950) | ||||||
| Other | 12,022 | (5,103) | ||||||
| Net cash used in investing activities | (182,092) | (208,777) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options and issuance of ordinary shares | 15,456 | 15,150 | ||||||
| Payments of employee restricted stock tax withholdings | (2,911) | (6,990) | ||||||
| Proceeds from issuance of debt | 1,150,000 | 450,000 | ||||||
| Payments on debt | (408,913) | (464,605) | ||||||
| Payments to repurchase ordinary shares | (35,175) | (350,004) | ||||||
| Payments of debt and equity issuance costs | (8,279) | (10,050) | ||||||
| Net cash provided by/(used in) financing activities | 710,178 | (366,499) | ||||||
| Net change in cash and cash equivalents | 1,087,861 | 44,286 | ||||||
| Cash and cash equivalents, beginning of period | 774,119 | 729,833 | ||||||
| Cash and cash equivalents, end of period | $ | 1,861,980 | $ | 774,119 |
Revenue by Business, Geography, and End Market (Unaudited)
| (percent of total revenue) | Three months ended December 31, | Full year ended December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| Performance Sensing | 76.0 | % | 74.7 | % | 73.0 | % | 73.8 | % |
| Sensing Solutions | 24.0 | % | 25.3 | % | 27.0 | % | 26.2 | % |
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| (percent of total revenue) | Three months ended December 31, | Full year ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | 2020 | 2019 | |||||
| Americas | 37.6 | % | 38.9 | % | 39.3 | % | 42.3 | % |
| Europe | 27.2 | % | 27.0 | % | 26.8 | % | 28.1 | % |
| Asia/Rest of World | 35.2 | % | 34.1 | % | 33.9 | % | 29.6 | % |
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| (percent of total revenue) | Three months ended December 31, | Full year ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | 2020 | 2019 | |||||
| Automotive* | 60.4 | % | 60.5 | % | 57.5 | % | 58.8 | % |
| Heavy vehicle and off-road | 16.9 | % | 15.4 | % | 16.7 | % | 16.2 | % |
| Industrial | 9.9 | % | 9.4 | % | 11.0 | % | 10.2 | % |
| Appliance and heating, ventilation and air-conditioning | 5.9 | % | 5.3 | % | 6.2 | % | 5.8 | % |
| Aerospace | 3.9 | % | 5.5 | % | 4.5 | % | 5.1 | % |
| All other | 3.0 | % | 3.9 | % | 4.1 | % | 3.9 | % |
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
* Includes amounts reflected in the Sensing Solutions segment as follows: $12.3 million and $9.6 million of revenue in the three months ended December 31, 2020 and 2019, respectively, and $35.6 million and $42.4 million of revenue in the full year ended December 31, 2020 and 2019, respectively.
Market Outgrowth (Unaudited)
| For the three months ended<br>December 31, 2020 | For the full year ended <br>December 31, 2020 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reported Growth | Organic Growth | End Market Growth | Reported Growth | Organic Growth | End Market Growth | |||||||||
| Automotive | 6.5 | % | 4.4 | % | 0.1 | % | * | (13.6 | %) | (13.9 | %) | (18.5 | %) | * |
| Heavy vehicle and off-road | 17.9 | % | 16.2 | % | 6.3 | % | (9.2 | %) | (9.2 | %) | (18.0 | %) |
* Excludes Toyota, adjusted for Sensata's geographic mix. Adjustments for inventory in the supply chain, not included here, are (5.4%) and (2.3%) for the three months and full year ended December 31, 2020, respectively.
GAAP to Non-GAAP Reconciliations
The following unaudited tables provide a reconciliation of the difference between each of the non-GAAP financial measures referenced herein and the most directly comparable U.S. GAAP financial measure. Amounts presented in these tables may not appear to recalculate due to the effect of rounding.
Operating income and margin, income tax, net income, and EPS
| ($ in thousands, except per share amounts) | For the three months ended December 31, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income | Operating Margin | Income Tax | Net Income | Diluted EPS | ||||||
| Reported (GAAP) | $ | 154,161 | 17.0 | % | $ | (13,751) | $ | 121,667 | $ | 0.77 |
| Non-GAAP adjustments: | ||||||||||
| Restructuring related and other | 8,379 | 0.9 | % | 4,123 | 17,025 | 0.11 | ||||
| Financing and other transaction costs | 1,014 | 0.1 | % | — | (832) | (0.01) | ||||
| Step-up depreciation and amortization | 30,042 | 3.3 | % | — | 30,042 | 0.19 | ||||
| Deferred loss/(gain) on derivative instruments | 2,045 | 0.2 | % | — | (1,992) | (0.01) | ||||
| Amortization of debt issuance costs | — | — | % | — | 1,828 | 0.01 | ||||
| Deferred taxes and other tax related | — | — | % | (33,053) | (33,053) | (0.21) | ||||
| Total adjustments | 41,480 | 4.6 | % | (28,930) | 13,018 | 0.08 | ||||
| Adjusted (non-GAAP) | $ | 195,641 | 21.6 | % | $ | 15,179 | $ | 134,685 | $ | 0.85 |
| ($ in thousands, except per share amounts) | For the three months ended December 31, 2019 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Income | Operating Margin | Income Tax | Net Income | Diluted EPS | ||||||
| Reported (GAAP) | $ | 120,718 | 14.3 | % | $ | 27,060 | $ | 53,538 | $ | 0.34 |
| Non-GAAP adjustments: | ||||||||||
| Restructuring related and other | 17,000 | 2.0 | % | (343) | 18,794 | 0.12 | ||||
| Financing and other transaction costs* | 20,842 | 2.5 | % | — | 20,842 | 0.13 | ||||
| Step-up depreciation and amortization | 33,823 | 4.0 | % | — | 33,823 | 0.21 | ||||
| Deferred loss/(gain) on derivative instruments | 149 | 0.0 | % | — | (1,932) | (0.01) | ||||
| Amortization of debt issuance costs | — | — | % | — | 2,231 | 0.01 | ||||
| Deferred taxes and other tax related | — | — | % | 14,403 | 14,403 | 0.09 | ||||
| Total adjustments | 71,814 | 8.5 | % | 14,060 | 88,161 | 0.55 | ||||
| Adjusted (non-GAAP) | $ | 192,532 | 22.7 | % | $ | 13,000 | $ | 141,699 | $ | 0.89 |
* Includes $17.8 million of costs relating to the termination of an unfavorable long-term supplier agreement.
| ($ in thousands, except per share amounts) | For the full year ended December 31, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income | Operating Margin | Income Tax | Net Income | Diluted EPS | ||||||
| Reported (GAAP) | $ | 337,737 | 11.1 | % | $ | 1,355 | $ | 164,286 | $ | 1.04 |
| Non-GAAP adjustments: | ||||||||||
| Restructuring related and other* | 87,420 | 2.9 | % | (4,214) | 93,803 | 0.59 | ||||
| Financing and other transaction costs | 8,209 | 0.3 | % | — | 6,363 | 0.04 | ||||
| Step-up depreciation and amortization | 125,677 | 4.1 | % | — | 125,677 | 0.79 | ||||
| Deferred loss/(gain) on derivative instruments | 3,066 | 0.1 | % | — | (6,961) | (0.04) | ||||
| Amortization of debt issuance costs | — | — | % | — | 6,854 | 0.04 | ||||
| Deferred taxes and other tax related | — | — | % | (40,856) | (40,856) | (0.26) | ||||
| Total adjustments | 224,372 | 7.4 | % | (45,070) | 184,880 | 1.17 | ||||
| Adjusted (non-GAAP) | $ | 562,109 | 18.5 | % | $ | 46,425 | $ | 349,166 | $ | 2.21 |
* Includes a $29.6 million loss related to the September 2020 settlement of patent infringement litigation with Wasica and $30.2 million of charges related to the Q2 2020 Global Restructure Program. Refer to our third quarter 2020 Form 10-Q for additional information regarding the litigation and restructuring program.
| ($ in thousands, except per share amounts) | For the full year ended December 31, 2019 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income | Operating Margin | Income Tax | Net Income | Diluted EPS | ||||||
| Reported (GAAP) | $ | 556,885 | 16.1 | % | $ | 107,709 | $ | 282,714 | $ | 1.75 |
| Non-GAAP adjustments: | ||||||||||
| Restructuring related and other | 61,916 | 1.8 | % | (1,843) | 62,210 | 0.38 | ||||
| Financing and other transaction costs* | 28,911 | 0.8 | % | — | 34,851 | 0.22 | ||||
| Step-up depreciation and amortization | 139,587 | 4.0 | % | — | 139,587 | 0.86 | ||||
| Deferred gain on derivative instruments | (1,604) | (0.0 | %) | — | (6,492) | (0.04) | ||||
| Amortization of debt issuance costs | — | — | % | — | 7,804 | 0.05 | ||||
| Deferred taxes and other tax related | — | — | % | 55,242 | 55,242 | 0.34 | ||||
| Total adjustments | 228,810 | 6.6 | % | 53,399 | 293,202 | 1.81 | ||||
| Adjusted (non-GAAP) | $ | 785,695 | 22.8 | % | $ | 54,310 | $ | 575,916 | $ | 3.56 |
* Includes $17.8 million of costs relating to the termination of an unfavorable long-term supplier agreement.
Non-GAAP Adjustments by location in statements of operations
| ($ in thousands) | Three months ended December 31, | Full year ended December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| Cost of revenue (1) | $ | 4,802 | $ | 7,577 | $ | 42,873 | $ | 25,115 |
| Selling, general and administrative | 6,262 | 5,618 | 25,490 | 14,048 | ||||
| Amortization of intangible assets | 29,519 | 33,099 | 122,915 | 136,087 | ||||
| Restructuring and other charges, net (2) | 897 | 25,520 | 33,094 | 53,560 | ||||
| Operating income adjustments | 41,480 | 71,814 | 224,372 | 228,810 | ||||
| Interest expense, net | 1,828 | 2,231 | 6,854 | 7,804 | ||||
| Other, net | (1,360) | 56 | (1,276) | 3,189 | ||||
| (Benefit from)/provision for income taxes | (28,930) | 14,060 | (45,070) | 53,399 | ||||
| Net income adjustments | $ | 13,018 | $ | 88,161 | $ | 184,880 | $ | 293,202 |
(1) Includes a $29.2 million loss recorded in the full year ended December 31, 2020 related to the patent infringement case brought by Wasica. We settled this litigation in the third quarter 2020, refer to our third quarter 2020 Form 10-Q for additional information.
(2) The full year ended December 31, 2020 includes $24.5 million of charges recognized in 2020 related to the Q2 2020 Global Restructure Program. Refer to our third quarter 2020 Form 10-Q for additional information regarding this restructuring program.
Operating income and margin, income tax, net income, and EPS (for the three months ended September 30, 2020)
| ($ in thousands, except per share amounts) | For the three months ended September 30, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income | Operating Margin | Income Taxes | Net Income | Diluted EPS | ||||||
| Reported (GAAP) | $ | 126,845 | 16.1 | % | $ | 15,181 | $ | 76,729 | $ | 0.49 |
| Non-GAAP adjustments: | ||||||||||
| Restructuring related and other(1) | (5,555) | (0.7 | %) | 10,042 | 4,992 | 0.03 | ||||
| Financing and other transaction costs | 1,842 | 0.2 | % | — | 1,842 | 0.01 | ||||
| Step-up depreciation and amortization | 31,467 | 4.0 | % | — | 31,467 | 0.20 | ||||
| Deferred loss/(gain) on derivative instruments | 212 | 0.0 | % | — | (5,926) | (0.04) | ||||
| Amortization of debt issuance costs | — | — | % | — | 1,763 | 0.01 | ||||
| Deferred taxes and other tax related | — | — | % | (7,272) | (7,272) | (0.05) | ||||
| Total adjustments | 27,966 | 3.5 | % | 2,770 | 26,866 | 0.17 | ||||
| Adjusted (non-GAAP) | $ | 154,811 | 19.6 | % | $ | 12,411 | $ | 103,595 | $ | 0.66 |
(1) Includes an $11.7 million gain recognized upon release of excess accrual following the September 2020 settlement of patent infringement litigation with Wasica. Refer to our third quarter 2020 Form 10-Q for additional information regarding this litigation.
Free cash flow
| ($ in thousands) | Three months ended December 31, | % Change | Full year ended December 31, | % Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net cash provided by operating activities | $ | 266,437 | $ | 186,035 | 43.2 | % | $ | 559,775 | $ | 619,562 | (9.6 | %) |
| Additions to property, plant and equipment and capitalized software | (26,780) | (38,053) | 29.6 | % | (106,719) | (161,259) | 33.8 | % | ||||
| Free cash flow | $ | 239,657 | $ | 147,982 | 62.0 | % | $ | 453,056 | $ | 458,303 | (1.1 | %) |
Adjusted EBITDA
| ($ in thousands) | FY 20 (LTM) | Q4 20 | Q3 20 | Q2 20 | Q1 20 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Net income/(loss) | $ | 164,286 | $ | 121,667 | $ | 76,729 | $ | (42,541) | $ | 8,431 |
| Interest expense, net | 171,757 | 47,417 | 44,129 | 40,808 | 39,403 | |||||
| Provision for/(benefit from) income taxes | 1,355 | (13,751) | 15,181 | 1,441 | (1,516) | |||||
| Depreciation expense | 125,680 | 31,464 | 28,928 | 30,609 | 34,679 | |||||
| Amortization of intangible assets | 129,549 | 31,152 | 32,562 | 32,743 | 33,092 | |||||
| Earnings before interest, taxes, depreciation, and amortization (EBITDA) | 592,627 | 217,949 | 197,529 | 63,060 | 114,089 | |||||
| Non-GAAP Adjustments | ||||||||||
| Restructuring related and other | 93,117 | 12,902 | (5,050) | 42,708 | 42,557 | |||||
| Financing and other transaction costs | 6,363 | (832) | 1,842 | 3,619 | 1,734 | |||||
| Deferred (gain)/loss on derivative instruments | (6,961) | (1,992) | (5,926) | (4,927) | 5,884 | |||||
| Adjusted EBITDA | $ | 685,146 | $ | 228,027 | $ | 188,395 | $ | 104,460 | $ | 164,264 |
Net debt and leverage
| As of | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | |||||
| Current portion of long-term debt, finance lease and other financing obligations | $ | 7,205 | $ | 7,049 | $ | 407,042 | $ | 7,095 | $ | 6,918 |
| Finance lease and other financing obligations, less current portion | 27,931 | 28,360 | 28,243 | 28,280 | 28,810 | |||||
| Long-term debt, net | 3,963,747 | 3,963,076 | 3,220,833 | 3,220,359 | 3,219,885 | |||||
| Total debt, finance lease, and other financing obligations | 3,998,883 | 3,998,485 | 3,656,118 | 3,255,734 | 3,255,613 | |||||
| Less: Discount | (9,605) | (10,143) | (10,681) | (11,220) | (11,758) | |||||
| Less: Deferred financing costs | (28,114) | (29,404) | (22,266) | (23,359) | (24,452) | |||||
| Total Gross indebtedness | 4,036,602 | 4,038,032 | 3,689,065 | 3,290,313 | 3,291,823 | |||||
| Less: Cash and cash equivalents | 1,861,980 | 1,610,191 | 1,242,949 | 802,971 | 774,119 | |||||
| Net Debt | $ | 2,174,622 | $ | 2,427,841 | $ | 2,446,116 | $ | 2,487,342 | $ | 2,517,704 |
| Adjusted EBITDA (LTM) | 685,146 | 682,216 | 719,192 | 845,933 | 900,137 | |||||
| Net leverage ratio | 3.2 | 3.6 | 3.4 | 2.9 | 2.8 |
Guidance
| For the three months ending March 31, 2021 | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions, except per share amounts) | Operating Income | Net Income | EPS | |||||||||||||||||||||||
| Low | High | Low | High | Low | High | |||||||||||||||||||||
| GAAP | $ | 131.3 | $ | 145.8 | $ | 68.7 | $ | 82.2 | $ | 0.43 | $ | 0.52 | ||||||||||||||
| Restructuring related and other | 5.5 | 6.0 | 5.3 | 5.8 | 0.03 | 0.04 | ||||||||||||||||||||
| Financing and other transaction costs(a) | 0.2 | 0.2 | 0.2 | 0.2 | — | — | ||||||||||||||||||||
| Step-up depreciation and amortization(a) | 29.0 | 30.0 | 29.0 | 30.0 | 0.18 | 0.19 | ||||||||||||||||||||
| Deferred (gain)/loss on derivative instruments(b) | — | — | — | — | — | — | ||||||||||||||||||||
| Amortization of debt issuance costs | — | — | 1.8 | 1.8 | 0.01 | 0.01 | ||||||||||||||||||||
| Deferred taxes and other tax related | — | — | 1.0 | 2.0 | 0.01 | 0.01 | ||||||||||||||||||||
| Non-GAAP | $ | 166.0 | $ | 182.0 | $ | 106.0 | $ | 122.0 | $ | 0.67 | $ | 0.77 | ||||||||||||||
| Weighted-average diluted shares outstanding (in millions) | 158.9 | 158.9 | For the full year ending December 31, 2021 | |||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||
| ($ in millions, except per share amounts) | Operating Income | Net Income | EPS | |||||||||||||||||||||||
| Low | High | Low | High | Low | High | |||||||||||||||||||||
| GAAP | $ | 566.0 | $ | 620.0 | $ | 349.0 | $ | 395.0 | $ | 2.19 | $ | 2.48 | ||||||||||||||
| Restructuring related and other | 16.0 | 18.0 | 15.0 | 17.0 | 0.09 | 0.11 | ||||||||||||||||||||
| Financing and other transaction costs(a) | 1.0 | 1.0 | 1.0 | 1.0 | 0.01 | 0.01 | ||||||||||||||||||||
| Step-up depreciation and amortization(a) | 112.0 | 116.0 | 112.0 | 116.0 | 0.70 | 0.73 | ||||||||||||||||||||
| Deferred (gain)/loss on derivative instruments(b) | — | — | — | — | — | — | ||||||||||||||||||||
| Amortization of debt issuance costs | — | — | 7.0 | 7.0 | 0.04 | 0.04 | ||||||||||||||||||||
| Deferred taxes and other tax related | — | — | 4.0 | 8.0 | 0.03 | 0.05 | ||||||||||||||||||||
| Non-GAAP | $ | 695.0 | $ | 755.0 | $ | 488.0 | $ | 544.0 | $ | 3.06 | $ | 3.42 | ||||||||||||||
| Weighted-average diluted shares outstanding (in millions) | 159.2 | 159.2 |
(a) Amounts do not contemplate the effects of future acquisition or financing transactions that occur beyond our most recent fiscal year end.
(b) We are unable to predict movements in commodity prices and, therefore, the impact of market-to-market adjustments on our commodity forward contracts to our projected 2021 operating results. In prior periods such adjustments have been significant in relation to our reported GAAP results.
| # # # | ||
|---|---|---|
| Investors: | Media: | |
| Jacob Sayer | Alexia Taxiarchos | |
| (508) 236-1666 | (508) 236-1761 | |
| jsayer@sensata.com | ataxiarchos@sensata.com |
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