SENSATA TECHNOLOGIES REPORTS FOURTH QUARTER
AND FULL YEAR 2016 FINANCIAL RESULTS
Hengelo, the Netherlands – February 02, 2017 - Sensata Technologies (NYSE: ST) today announced financial results for its fourth quarter and full year ended December 31, 2016.
Revenue was $788.4 million in the fourth quarter of 2016, an increase of $61.9 million, or 8.5%, from revenue of $726.5 million in the fourth quarter of 2015. Excluding a 5.6% positive effect from acquisitions, net of exited businesses, and a 2.9% negative effect from changes in foreign currency exchange rates, Sensata reported organic revenue growth of 5.8% in the fourth quarter of 2016.
Net income was $66.5 million in the fourth quarter of 2016, which was 8.4% of revenue, or $0.39 per diluted share. This compares to net income of $218.3 million in the fourth quarter of 2015, which was 30.0% of revenue, or $1.27 per diluted share. Adjusted net income was $131.0 million in the fourth quarter of 2016, which was 16.6% of revenue, or $0.76 per diluted share. This was an increase of 15.6% compared to adjusted net income of $113.3 million in the fourth quarter of 2015, which was 15.6% of revenue, or $0.66 per diluted share. Changes in foreign currency exchange rates reduced Sensata's earnings per share by ($0.08) in the fourth quarter of 2016 compared to the prior year period.
On a sequential basis, Sensata's adjusted net income margin of 16.6% for the fourth quarter increased by 60 basis points compared to an adjusted net income margin of 16.0% in the third quarter of 2016.
Revenue for the full year ended December 31, 2016 was $3.202 billion, an increase of $227.3 million, or 7.6%, from $2.975 billion for the full year ended December 31, 2015. Excluding a 7.9% positive effect from acquisitions, net of exited businesses, and a 1.9% negative effect from changes in foreign currency exchange rates, Sensata reported organic revenue growth of 1.6% in the full year ended December 31, 2016.
Net income for the full year ended December 31, 2016 was $262.4 million, which was 8.2% of revenue, or $1.53 per diluted share. This compares to net income for the full year ended December 31, 2015 of $347.7 million, which was 11.7% of revenue, or $2.03 per diluted share. Adjusted net income for the full year ended December 31, 2016 was $494.8 million, which was 15.5% of revenue, or $2.89 per diluted share. This was an increase of 4.8% compared to adjusted net income for the full year ended December 31, 2015 of $472.0 million, which was 15.9% of revenue, or $2.75 per diluted share. Changes in foreign currency exchange rates reduced Sensata's earnings per share by ($0.22) for the full year 2016 compared to the prior year period.
During the full year ended December 31, 2016, Sensata's operating cash flow totaled $521.5 million. The Company's free cash flow grew 9.9% year over year, totaling $391.3 million. Sensata’s total gross indebtedness at December 31, 2016 was $3.3 billion, a reduction of $335 million from December 31, 2015.
"For the full year 2016, Sensata grew its adjusted earnings per share by fourteen percent organically despite facing soft demand in many of our key markets," said Martha Sullivan, President and Chief Executive Officer. "We also delivered on our promise to strengthen our balance sheet, while continuing to invest for the future and expand into new markets. We expect that we will sustain double-digit organic growth for adjusted earnings per share in 2017 as we capture M&A synergies and drive further operational efficiencies in our organization."
Segment Performance
|
| | | | | | | | | | | | |
| | For the three months ended December 31, | For the full year ended December 31, |
| $ in 000s | 2016 | 2015 | 2016 | 2015 |
| Performance Sensing revenue | $ | 587,985 |
| $ | 572,145 |
| $ | 2,385,380 |
| $ | 2,346,226 |
|
| Performance Sensing profit from operations | $ | 161,986 |
| $ | 150,862 |
| $ | 615,526 |
| $ | 598,524 |
|
| % of Performance Sensing revenue | 27.5 | % | 26.4 | % | 25.8 | % | 25.5 | % |
| | | | | |
| Sensing Solutions revenue | $ | 200,411 |
| $ | 154,326 |
| $ | 816,908 |
| $ | 628,735 |
|
| Sensing Solutions profit from operations | $ | 63,177 |
| $ | 48,675 |
| $ | 261,914 |
| $ | 199,744 |
|
| % of Sensing Solutions revenue | 31.5 | % | 31.5 | % | 32.1 | % | 31.8 | % |
Performance Sensing’s profit from operations as a percentage of revenue totaled 27.5% in the fourth quarter of 2016. Excluding the impact of changes in foreign exchange rates and the CST acquisition in both periods, Performance Sensing’s profit from operations as a percentage of revenue was 28.4% in the fourth quarter of 2016, representing an increase of 190 basis points from the fourth quarter of 2015. Sensing Solutions' profit from operations as a percentage of revenue totaled 31.5% in the fourth quarter of 2016. Excluding the impact of changes in foreign exchange rates and the CST acquisition in both periods, Sensing Solutions' profit from operations as a percentage of revenue was 33.0% in the fourth quarter of 2016, representing an increase of 60 basis points compared to the fourth quarter of 2015.
FY 2017 Guidance
Sensata anticipates revenue to be between $3.150 billion and $3.250 billion for full year 2017, which would represent organic revenue growth of between 1 and 3 percent. Sensata is introducing new guidance for adjusted EBIT in 2017 as the Company believes it is an important indicator of its operational performance. For full year 2017, Sensata expects adjusted EBIT to be between $734 and $756 million. Additionally, the Company expects adjusted net income to be between $528 million and $550 million and adjusted earnings per share to be between $3.08 and $3.20 for full year 2017, which would represent organic growth of 8 to 12 percent. Sensata expects that changes in foreign currency exchange rates will lower revenues by approximately 2 percent and will lower adjusted earnings per share by ($0.02) to ($0.03) for full year 2017.
Q1 2017 Guidance
Sensata anticipates revenue to be between $781 million and $805 million for the first quarter of 2017, which would represent organic revenue growth of between 1 and 3 percent. Additionally, Sensata expects adjusted EBIT to be between $164 and $170 million and for adjusted net income to be between $114 million and $120 million, which would represent organic growth of 6 to 11 percent. The Company expects adjusted earnings per share to be between $0.66 and $0.70 for the first quarter of 2017.
Sensata expects that changes in foreign currency exchange rates will lower revenues by approximately 3 percent and will lower adjusted net income by approximately $6 million, or ($0.04) in the first quarter of 2017. The Company also anticipates integration expenses of $10 million in the first quarter of 2017. Both foreign currency exchange rates and integration expenses will have a disproportionate effect on adjusted net income in the first quarter of 2017. For the remaining three quarters of 2017, Sensata anticipates that foreign currency exchange rates will increase adjusted net income by approximately $1 to $2 million. Additionally, the company expects to spend approximately $7 million on integration expenses for the remaining three quarters of 2017.
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 2016 financial results and its outlook for the first quarter and full year 2017. The dial-in numbers for the call are 1-877-317-6789 or +1-412-317-6789 and callers can reference the Sensata Q4 and Full Year 2016 Earnings 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.
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, ventilation, and air conditioning, 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.
Organic earnings growth is defined 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.
Free cash flow is defined as net cash provided by operating activities less additions to property, plant, and equipment and capitalized software.
We believe organic revenue growth and organic earnings growth provide investors with helpful information with respect to our operating performance, and we use these measures to evaluate our
ongoing operations and for internal planning and forecasting purposes. We believe organic revenue growth and organic earnings growth provide useful information in evaluating the results of our business because they exclude items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior year.
Management uses adjusted net income as a measure of operating performance, for planning purposes (including the preparation of our annual operating budget), to allocate resources to enhance the financial performance of our business, to evaluate the effectiveness of our business strategies, and in communications with our Board of Directors and investors concerning our financial performance. We believe that investors and securities analysts also use adjusted net income in their evaluation of our performance and the performance of other similar companies.
We also measure our employees and compensate them, in part, based on certain non-GAAP measures. We believe that the non-GAAP financial measures provide useful and supplementary information to investors regarding our quarterly and annual performance.
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 U.S. GAAP.
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 first quarter and full year 2017. 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 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 full year ended |
| | December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 |
| Net revenue | $ | 788,396 |
| $ | 726,471 |
| $ | 3,202,288 |
| $ | 2,974,961 |
|
| Operating costs and expenses: | | | | |
| Cost of revenue | 509,498 |
| 476,657 |
| 2,084,261 |
| 1,977,799 |
|
| Research and development | 31,425 |
| 30,872 |
| 126,665 |
| 123,666 |
|
| Selling, general and administrative | 68,950 |
| 67,724 |
| 293,587 |
| 271,361 |
|
| Amortization of intangible assets | 49,926 |
| 50,564 |
| 201,498 |
| 186,632 |
|
| Restructuring and special charges | 946 |
| 9,495 |
| 4,113 |
| 21,919 |
|
| Total operating costs and expenses | 660,745 |
| 635,312 |
| 2,710,124 |
| 2,581,377 |
|
| Profit from operations | 127,651 |
| 91,159 |
| 492,164 |
| 393,584 |
|
| Interest expense, net | (40,617 | ) | (41,597 | ) | (165,818 | ) | (137,626 | ) |
| Other, net | (9,793 | ) | (5,682 | ) | (4,901 | ) | (50,329 | ) |
| Income before taxes | 77,241 |
| 43,880 |
| 321,445 |
| 205,629 |
|
| Provision for/(benefit from) income taxes | 10,714 |
| (174,409 | ) | 59,011 |
| (142,067 | ) |
| Net income | $ | 66,527 |
| $ | 218,289 |
| $ | 262,434 |
| $ | 347,696 |
|
| | | | | |
| Net income per share: | | | | |
| Basic | $ | 0.39 |
| $ | 1.28 |
| $ | 1.54 |
| $ | 2.05 |
|
| Diluted | $ | 0.39 |
| $ | 1.27 |
| $ | 1.53 |
| $ | 2.03 |
|
| | | | | |
| Weighted-average ordinary shares outstanding: | | | | |
| Basic | 170,870 |
| 170,265 |
| 170,709 |
| 169,977 |
|
| Diluted | 171,765 |
| 171,513 |
| 171,460 |
| 171,513 |
|
| | | | | |
|
|
| SENSATA TECHNOLOGIES HOLDING N.V. |
| Condensed Consolidated Statements of Comprehensive Income |
| (Unaudited) |
|
| | | | | | | | | | | | |
| ($ in 000s) | | | | |
| | For the three months ended | For the full year ended |
| | December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 |
| Net income | $ | 66,527 |
| $ | 218,289 |
| $ | 262,434 |
| $ | 347,696 |
|
| Other comprehensive income/(loss), net of tax: | | | | |
| Deferred gain/(loss) on derivative instruments, net of reclassifications | 21,181 |
| (668 | ) | (3,829 | ) | (13,726 | ) |
| Defined benefit and retiree healthcare plans | (4,539 | ) | (1,276 | ) | (4,248 | ) | (516 | ) |
| Other comprehensive income/(loss) | 16,642 |
| (1,944 | ) | (8,077 | ) | (14,242 | ) |
| Comprehensive income | $ | 83,169 |
| $ | 216,345 |
| $ | 254,357 |
| $ | 333,454 |
|
|
|
| SENSATA TECHNOLOGIES HOLDING N.V. |
| Condensed Consolidated Balance Sheets |
| (Unaudited) |
|
| | | | | | |
| ($ in 000s) | December 31, 2016 | December 31, 2015 |
| Assets | | |
| Current assets: | | |
| Cash and cash equivalents | $ | 351,428 |
| $ | 342,263 |
|
| Accounts receivable, net of allowances | 500,211 |
| 467,567 |
|
| Inventories | 389,844 |
| 358,701 |
|
| Prepaid expenses and other current assets | 100,002 |
| 109,392 |
|
| Total current assets | 1,341,485 |
| 1,277,923 |
|
| Property, plant and equipment, net | 725,754 |
| 694,155 |
|
| Goodwill | 3,005,464 |
| 3,019,743 |
|
| Other intangible assets, net | 1,075,431 |
| 1,262,572 |
|
| Deferred income tax assets | 20,695 |
| 26,417 |
|
| Other assets | 72,147 |
| 18,100 |
|
| Total assets | $ | 6,240,976 |
| $ | 6,298,910 |
|
| | | |
| Liabilities and shareholders’ equity | | |
| Current liabilities: | | |
| Current portion of long-term debt, capital lease and other financing obligations | $ | 14,643 |
| $ | 300,439 |
|
| Accounts payable | 299,198 |
| 290,779 |
|
| Income taxes payable | 23,889 |
| 21,968 |
|
| Accrued expenses and other current liabilities | 245,566 |
| 251,989 |
|
| Total current liabilities | 583,296 |
| 865,175 |
|
| Deferred income tax liabilities | 392,628 |
| 390,490 |
|
| Pension and other post-retirement benefit obligations | 34,878 |
| 34,314 |
|
| Capital lease and other financing obligations, less current portion | 32,369 |
| 36,219 |
|
| Long-term debt, net of discount and deferred financing costs, less current portion | 3,226,582 |
| 3,264,333 |
|
| Other long-term liabilities | 29,216 |
| 39,803 |
|
| Total liabilities | 4,298,969 |
| 4,630,334 |
|
| Total shareholders’ equity | 1,942,007 |
| 1,668,576 |
|
| Total liabilities and shareholders’ equity | $ | 6,240,976 |
| $ | 6,298,910 |
|
|
|
| SENSATA TECHNOLOGIES HOLDING N.V. |
| Condensed Consolidated Statements of Cash Flows |
| (Unaudited) |
|
| | | | | | |
| ($ in 000s) | | |
| | For the full year ended |
| | December 31, 2016 | December 31, 2015 |
| Cash flows from operating activities: | | |
| Net income | $ | 262,434 |
| $ | 347,696 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | |
| Depreciation | 106,903 |
| 96,051 |
|
| Amortization of deferred financing costs and original issue discounts | 7,334 |
| 6,456 |
|
| Currency remeasurement gain on debt | (324 | ) | (1,924 | ) |
| Share-based compensation | 17,425 |
| 15,326 |
|
| Loss on debt financing | — |
| 34,335 |
|
| Amortization of inventory step-up to fair value | 2,319 |
| 1,820 |
|
| Amortization of intangible assets | 201,498 |
| 186,632 |
|
| Deferred income taxes | 8,344 |
| (179,009 | ) |
| Unrealized loss on hedges and other non-cash items | 9,522 |
| 1,334 |
|
| Changes in operating assets and liabilities, net of effects of acquisitions | (93,930 | ) | 24,414 |
|
| Net cash provided by operating activities | 521,525 |
| 533,131 |
|
| | | |
| Cash flows from investing activities: | | |
| Acquisition of CST, net of cash received | 4,688 |
| (996,871 | ) |
| 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 | (130,217 | ) | (177,196 | ) |
| Investment in equity securities | (50,000 | ) | — |
|
| Proceeds from the sale of assets | 751 |
| 4,775 |
|
| Net cash used in investing activities | (174,778 | ) | (1,166,369 | ) |
| | | |
| Cash flows from financing activities: | | |
| Proceeds from exercise of stock options and issuance of ordinary shares | 3,944 |
| 19,411 |
|
| Proceeds from issuance of debt | — |
| 2,795,120 |
|
| Payments on debt | (336,256 | ) | (2,000,257 | ) |
| Payments to repurchase ordinary shares | (4,752 | ) | (50 | ) |
| Payments of debt issuance costs | (518 | ) | (50,052 | ) |
| Net cash (used in)/provided by financing activities | (337,582 | ) | 764,172 |
|
| Net change in cash and cash equivalents | 9,165 |
| 130,934 |
|
| Cash and cash equivalents, beginning of period | 342,263 |
| 211,329 |
|
| Cash and cash equivalents, end of period | $ | 351,428 |
| $ | 342,263 |
|
Revenue by Business, Geography and End Market (unaudited)
|
| | | | | | | | |
| (% of total net revenue) | Three months ended
December 31, | Full year ended
December 31, |
| | 2016 | 2015 | 2016 | 2015 |
| Performance Sensing | 74.6 | % | 78.8 | % | 74.5 | % | 78.9 | % |
| Sensing Solutions | 25.4 | % | 21.2 | % | 25.5 | % | 21.1 | % |
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
|
| | | | | | | | |
| (% of total net revenue) | Three months ended
December 31, | Full year ended
December 31, |
| | 2016 | 2015 | 2016 | 2015 |
| Americas | 40.8 | % | 40.5 | % | 42.7 | % | 40.9 | % |
| Europe | 30.4 | % | 32.6 | % | 32.0 | % | 33.4 | % |
| Asia/Rest of World | 28.8 | % | 26.9 | % | 25.3 | % | 25.7 | % |
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
|
| | | | | | | | |
(% of total net revenue)1 | Three months ended
December 31, | Full year ended
December 31, |
| | 2016 | 2015 | 2016 | 2015 |
| European automotive | 23.8 | % | 27.4 | % | 25.2 | % | 28.3 | % |
| North American automotive | 19.8 | % | 20.8 | % | 20.1 | % | 21.5 | % |
| Asian automotive | 20.2 | % | 19.6 | % | 17.6 | % | 17.6 | % |
| Rest of world automotive | 0.3 | % | 0.7 | % | 0.2 | % | 0.9 | % |
| Heavy vehicle off-road | 11.9 | % | 12.0 | % | 12.8 | % | 12.3 | % |
| Appliance and heating, ventilation and air-conditioning | 6.0 | % | 5.2 | % | 5.9 | % | 5.8 | % |
| Industrial | 8.9 | % | 5.8 | % | 9.0 | % | 5.7 | % |
| Aerospace | 5.1 | % | 3.1 | % | 4.7 | % | 2.8 | % |
| All other | 4.0 | % | 5.4 | % | 4.5 | % | 5.1 | % |
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
1Reclassification of certain acquired product lines has led to retrospective adjustments of certain end-market percentages. Revenues have shifted from Industrial into European automotive for the three months and full year ended December 31, 2015.
The following unaudited table reconciles Sensata’s net income to adjusted net income for the three months and full year ended December 31, 2016 and 2015.
|
| | | | | | | | | | | | |
| (In 000s, except per share amounts) | Three months ended December 31, | Full year ended December 31, |
| | 2016 | 2015 | 2016 | 2015 |
| | | | | |
| Net income | $ | 66,527 |
| $ | 218,289 |
| $ | 262,434 |
| $ | 347,696 |
|
| Restructuring and special charges | 3,985 |
| 10,651 |
| 14,982 |
| 42,332 |
|
| Financing and other transaction costs | — |
| 14,395 |
| 1,508 |
| 43,850 |
|
| Deferred loss/(gain) on other hedges | 5,150 |
| (174 | ) | (19,347 | ) | 11,864 |
|
| Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory | 52,559 |
| 53,313 |
| 210,847 |
| 193,370 |
|
| Deferred income tax and other tax expense/(benefit) | 936 |
| (184,889 | ) | 17,086 |
| (173,550 | ) |
| Amortization of deferred financing costs | 1,833 |
| 1,701 |
| 7,334 |
| 6,456 |
|
| Total adjustments | $ | 64,463 |
| $ | (105,003 | ) | $ | 232,410 |
| $ | 124,322 |
|
| Adjusted net income | $ | 130,990 |
| $ | 113,286 |
| $ | 494,844 |
| $ | 472,018 |
|
| Weighted average diluted shares outstanding | 171,765 |
| 171,513 |
| 171,460 |
| 171,513 |
|
| Adjusted net income per diluted share | $ | 0.76 |
| $ | 0.66 |
| $ | 2.89 |
| $ | 2.75 |
|
Sensata’s definition of adjusted net income excludes the deferred provision for/(benefit from) income taxes and other tax expense/(benefit). Sensata’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 Sensata 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 $(0.2) million for the three months ended December 31, 2016 and 2015, respectively and $(0.1) million and $(0.6) million for the full year ended December 31, 2016 and 2015, respectively; and Restructuring and special charges of $(0.5) million and $(0.1) million for the three months ended December 31, 2016 and 2015, respectively, and $(1.0) million and $(2.1) million for the full year ended December 31, 2016 and 2015, respectively.
The following unaudited table identifies where in the Condensed Consolidated Statements of Operations the adjustments to reconcile net income to adjusted net income were recorded for the three months and full years ended December 31, 2016 and 2015.
|
| | | | | | | | | | | | |
| ($ in 000s) | Three months ended December 31, | Full year ended December 31, |
| | 2016 | 2015 | 2016 | 2015 |
| | | | | |
| Cost of revenue | $ | 6,791 |
| $ | 9,379 |
| $ | 19,653 |
| $ | 41,359 |
|
| Selling, general and administrative | 262 |
| 7,301 |
| 4,140 |
| 18,623 |
|
| Amortization of intangible assets | 48,634 |
| 48,958 |
| 195,848 |
| 181,132 |
|
| Restructuring and special charges | 857 |
| 3,924 |
| 2,829 |
| 14,520 |
|
| Interest expense, net | 1,833 |
| 10,498 |
| 7,334 |
| 15,253 |
|
| Other, net | 5,150 |
| (174 | ) | (14,480 | ) | 31,985 |
|
| Provision for/(benefit from) income taxes | 936 |
| (184,889 | ) | 17,086 |
| (178,550 | ) |
| Total adjustments | $ | 64,463 |
| $ | (105,003 | ) | $ | 232,410 |
| $ | 124,322 |
|
The following unaudited table reconciles Sensata’s net cash provided by operating activities to free cash flow.
|
| | | | | | | | | | | | | | | |
| ($ in 000s) | | Three months ended December 31, | Full Year ended December 31, |
| | | 2016 | | 2015 | 2016 | | 2015 |
| Net cash provided by operating activities | | $ | 125,174 |
| | $ | 169,418 |
| $ | 521,525 |
| | $ | 533,131 |
|
| Additions to property, plant and equipment and capitalized software | | (35,633 | ) | | (46,953 | ) | (130,217 | ) | | (177,196 | ) |
| Free cash flow | | $ | 89,541 |
| | $ | 122,465 |
| $ | 391,308 |
| | $ | 355,935 |
|
The following unaudited table reconciles Sensata’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.
|
| | | | | | |
| | Twelve months ended December 31, |
| | 2016 | 2015 |
| | | |
| Diluted net income per share | $ | 1.53 |
| $ | 2.03 |
|
| Non-GAAP adjustments: | | |
| Restructuring and special charges | 0.09 |
| 0.25 |
|
| Financing and other transaction costs | 0.01 |
| 0.26 |
|
| Deferred (gain)/loss on other hedges | (0.11 | ) | 0.07 |
|
| Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory | 1.23 |
| 1.13 |
|
| Deferred income tax expense and other tax expense/(benefit) | 0.10 |
| (1.01 | ) |
| Amortization of deferred financing costs | 0.04 |
| 0.04 |
|
| Adjusted net income per share | $ | 2.89 |
| $ | 2.75 |
|
| | | |
| Percentage change in adjusted earnings per share | 5.1 | % | |
| Non-GAAP adjustments: | | |
| Effects of foreign currency exchange movements | (8.0 | )% | |
Acquisitions, net of exited businesses that occurred within the previous 12 months1 | (1.1 | )% | |
| Organic earnings growth | 14.2 | % |
|
|
1 On December 1, 2015, we completed the acquisition of all of the outstanding shares of certain subsidiaries of Customer Sensors & Technologies Ltd. as well as certain additional assets (collectively “CST”). Portions of CST are being integrated into our Performing Sensing and Sensing Solutions segments. In the reconciliations above, the term “acquisitions” refers to CST and the term “exited businesses” represents the impact of the termination of unprofitable business activities in late 2015, primarily at our Schrader Brazil facility.
The following unaudited table reconciles Sensata’s projected GAAP earnings per diluted share to projected adjusted net income per diluted share for the first quarter ended March 31, 2017 and full year ended December 31, 2017. 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 March 31, 2017 | Full year ended December 31, 2017 |
| | Low End | High End | Low End | High End |
| | | | | |
| Projected GAAP earnings per diluted share | $ | 0.33 |
| $ | 0.36 |
| $ | 1.83 |
| $ | 1.93 |
|
| Restructuring and special charges | 0.03 |
| 0.04 |
| 0.06 |
| 0.08 |
|
| Deferred (gain)/loss on other hedges* | — |
| — |
| — |
| — |
|
| Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory | 0.25 |
| 0.25 |
| 0.97 |
| 0.97 |
|
| Deferred income tax and other tax expense/(benefit) | 0.04 |
| 0.04 |
| 0.18 |
| 0.18 |
|
| Amortization of deferred financing costs | 0.01 |
| 0.01 |
| 0.04 |
| 0.04 |
|
| Projected adjusted net income per diluted share | $ | 0.66 |
| $ | 0.70 |
| $ | 3.08 |
| $ | 3.20 |
|
| Weighted average diluted shares outstanding (in 000s) | 171,700 |
| 171,700 |
| 171,600 |
| 171,600 |
|
| | | | | |
* We are unable to predict movements in commodity prices and, therefore, the impact of mark-to-market adjustments on our commodity forward contracts to our 2017 GAAP earnings per diluted share. In prior years such adjustments have been significant to our reported GAAP earnings.
# # #
|
| | |
| Contact: | | |
| | | |
| Investors: | | Media: |
| Joshua Young | | Alexia Taxiarchos |
| (508) 236-2196 | | (508) 236-1761 |
| joshua.young@sensata.com | | ataxiarchos@sensata.com |
