Sensata Technologies B.V. Announces Second Quarter 2007 Results
-- Second quarter net revenue grew by 15.9 percent to $345.6 million
from $298.1 million for the same period in 2006.
-- Second quarter Adjusted EBITDA(1) grew by 10.3 percent to $89.2
million from $80.9 million for the same period in 2006.
ALMELO, The Netherlands, Aug. 8 /PRNewswire-FirstCall/ -- Sensata
Technologies B.V. announces the results of its operations for the second quarter
and six months ended June 30, 2007.
Highlights of the Second Quarter and Six Months Ended June 30, 2007
Second quarter 2007 net revenue was $345.6 million, which represents an
increase of $47.4 million or 15.9 percent over the second quarter of 2006.
Adjusted EBITDA(1) was $89.2 million, an increase of $8.3 million or 10.3
percent over the second quarter of 2006 adjusted EBITDA(1).
For the six months ended June 30, 2007, net revenue was $673.6 million, an
increase of 13.7 percent from $592.3 million for the same period in 2006.
Adjusted EBITDA(1) increased to $174.0 million or 9.2 percent from $159.3
million in the same period 2006.
Quarter ending cash balances grew to $105.9 million up 18 percent from
$89.8 million at March 31, 2007. Tom Wroe, Chairman and Chief Executive Officer
said, "We continue to meet or exceed the financial goals that we have set for
the company. Our long term goal is to grow earnings at a rate that is the same
or faster than net revenue. We continue to make progress toward this goal."
Recent Developments
On June 8, 2007, we entered into a definitive Agreement with Airpax
Holdings, Inc., a manufacturer of components and systems for power protection,
sensing and control applications.
The $276 million purchase, plus fees and expenses, was completed on July
27, 2007 and affirms Sensata's position as a leading global supplier of sensors
and controls across a broad array of markets and applications. Sensata closed
the acquisition with a combination of cash and new borrowings. A new senior
subordinated term loan was issued for approximately $195 million and the balance
was funded with cash from operations.
Airpax, headquartered in Cambridge, Maryland, employs approximately 2,300
people and has facilities in Mexico, Japan, China and the United States. Airpax
is the leading global manufacturer of customized hydraulic magnetic circuit
breakers and certain thermostats and temperature sensors, and is a leading
manufacturers of DC to AC inverters, electronic monitoring and control systems,
and other sensors.
Mr. Wroe added, "This transaction gives us leading customer positions in
electrical protection for high-growth network and telecom power and
high-reliability mobile power applications. The transaction further secures
Sensata's position as a leading designer and manufacturer of sensing and
electrical protection solutions for the residential, industrial, heating,
ventilation, air-conditioning, military and mobile markets. The purchase also
offers opportunities for operational synergies across both organizations."
Company Earnings Conference Call
The Company will conduct a conference call on August 8, 2007 at 10:00am
(EDT) to discuss the financial results for its second quarter 2007. The U.S.
dial-in number is 1-800-665-0430 and the non-U.S. dial-in number is
1-913-312-1300. The conference code number is 2411025. For those unable to
participate in the conference call, a replay will be available August 8, 2007 at
1:00pm (EDT) thru August 22, 2007 at 11:59pm. To access the replay, the U.S.
dial-in number is 1-888-203-1112 and the non-U.S. dial-in number is
1-719-457-0820. The replay passcode is 2411025. The replay will also be
available for two weeks on our website at http://www.sensata.com.
About Sensata Technologies B.V.
On April 27, 2006, Sensata Technologies B.V.("Sensata" or the
"Successor"), a company owned by an affiliate of Bain Capital Partners, LLC, a
leading global private investment firm, completed the acquisition of the Sensors
& Controls business of Texas Instruments Incorporated ("S&C" or the
"Predecessor").
Sensata is a leading designer and manufacturer of sensors and controls in
each of the key applications in which it competes. Sensata has business and
technology development centers in Attleboro, Massachusetts; The Netherlands and
Japan and manufacturing operations in Brazil, China, Korea, Malaysia, Mexico,
and The Dominican Republic, as well as sales offices around the world. Sensata
currently employs approximately 9,500 people worldwide, including the Airpax
transaction.
The Company manufactures over 20,000 different products that are highly
engineered and application specific and ships over one billion units each year.
Safe Harbor Statement
This earnings release and our statements on our earnings calls contain
forward-looking statements, which may involve risks or uncertainties that could
cause actual results to differ materially from those expressed in the
forward-looking statements. Factors that might cause these differences include,
but are not limited to: our ability to operate as a stand-alone company,
including our ability to raise additional funds when needed; risks associated
with establishing and maintaining internal control over financial reporting in
compliance with Section 404 of the Sarbanes-Oxley Act of 2002; competition in
our markets; fundamental changes in the industries in which we operate,
including economic declines that impact the sales of any of the products
manufactured by our customers that use our sensors or controls; continued
pricing and other pressures from our customers; general economic, political,
business and market risks associated with our non-U.S. operations; fluctuations
in foreign currency exchange and interest rates; our ability to realize revenue
or achieve anticipated gross operating margins from products subject to existing
purchase orders; fluctuations in the cost and/or availability of manufactured
components and raw materials; labor costs and disputes; our dependence on third
parties for certain transportation, warehousing and logistics services; material
disruptions at any of our manufacturing facilities; our ability to develop and
implement technology in our product lines; litigation and disputes involving us,
including the extent of product liability and warranty claims asserted against
us; our ability to protect our intellectual property and know-how; our exposure
to claims that our products or processes infringe on the intellectual property
rights of others; the costs of compliance with environmental, health and safety
laws and responding to potential liabilities under these laws; non-performance
by our suppliers; our ability to attract and retain key personnel; our ability
to integrate acquired businesses, including Airpax Holdings, Inc., and our
ability to realize synergies related to our integration of acquisitions, joint
ventures or asset dispositions; the possibility that our controlling
shareholder's interests will conflict with ours or yours; and risks associated
with our substantial indebtedness, leverage and debt service obligations. 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, http://www.sec.gov.
Non-GAAP Measures
EBITDA and Adjusted EBITDA are non-GAAP measures of profitability. EBITDA
and Adjusted EBITDA are supplemental measures of our performance that are not
required by, or presented in accordance with, GAAP. They are not measurements of
our financial performance under GAAP and should not be considered as
alternatives to net income or any other performance measures derived in
accordance with GAAP or as alternatives to cash flow from operating activities
as measures of our liquidity. Adjusted EBITDA is a required measure in our bank
reporting. We define EBITDA as earnings before interest, taxes, depreciation and
amortization. We calculate Adjusted EBITDA by adjusting EBITDA to exclude
non-cash expenses, one-time charges associated with becoming a stand-alone
company and charges associated with becoming a public company ("transition
expenses"), and significant nonrecurring items. We believe Adjusted EBITDA
provides investors with helpful information with respect to our operations and
cash flows. We include it to provide additional information with respect to our
ability to meet our future debt service, capital expenditures and working
capital requirements. Our EBITDA and Adjusted EBITDA measures have limitations
as analytical tools, and you should not consider them in isolation, or as a
substitute for analysis of our results as reported under GAAP. Because of these
limitations, our EBITDA and Adjusted EBITDA measures should not be considered as
measures of discretionary cash available to us to invest in the growth of our
business or as measures of cash that will be available to us to meet our
obligations. You should compensate for these limitations by relying primarily on
our GAAP results and using these measures supplementally. See the tables below
which reconcile net (loss)/income to EBITDA and Adjusted EBITDA.
((1)) See Non-GAAP Measures for discussion of EBITDA and Adjusted EBITDA,
including a reconciliation of these measures to GAAP Net (Loss) / Income
The following table reconciles Net (Loss)/Income to EBITDA and Adjusted
EBITDA for the second quarter 2007 and 2006.
($ in 000s)
Successor Predecessor
Pro-forma
&
Combined Combined
Three Three Three
Months Months Months Period Period
Ended Ended Ended April 27- April 1-
June 30, June 30, June 30, June 30, April 26,
2007 2006 2006 2006 2006
Net (Loss)/Income $(44,889) $(41,575) $(65,788) $(71,555) $5,767
Provision for
income taxes 16,581 14,835 14,835 10,458 4,377
Interest expense,
net 44,263 33,955 53,498 53,593 (95)
Depreciation &
amortization 45,854 27,155 27,155 24,673 2,482
EBITDA 61,809 34,370 29,700 17,169 12,531
Acquisition and
transition
expenses 13,395 8,176 8,176 3,526 4,650
Write-off of
Inventory
step-up - 24,571 24,571 24,571 -
Currency translation
losses on debt 11,857 12,745 17,415 17,415 -
Stock compensation,
management fees
and other 2,176 1,072 1,072 917 155
ADJUSTED EBITDA $89,237 $80,934 $80,934 $63,598 $17,336
-- The accompanying financial information for the three months ended June
30, 2007 has been prepared on a combined basis as further described in
the accompanying Basis of Presentation. Although this presentation does
not comply with accounting principles generally accepted in the U.S.
(U.S. GAAP), we believe that it provides a meaningful method of
comparison to prior periods.
-- The Pro-forma column eliminates the interest expense and the loss on
currency translation related to the Deferred Payment Certificates (DPCs)
as if they had never been issued. Please see Basis of Presentation for
additional information on the DPCs.
-- Adjusted EBITDA excludes transition expenses, and significant non-
recurring items as well as non-cash expenses from EBITDA.
The following table reconciles Net (Loss)/Income to EBITDA and Adjusted
EBITDA for the six months ended June 30, 2007.
($ in 000s)
Successor Predecessor
Pro-forma
&
Combined Combined
Six Six Six
Months Months Months Period Period
Ended Ended Ended April 27- January 1-
June 30, June 30, June 30, June 30, April 26,
2007 2006 2006 2006 2006
Net (Loss)/Income $(85,544) $(1,972) $(26,185) $(71,555) $45,370
Provision for
income taxes 30,134 36,254 36,254 10,458 25,796
Interest expense,
net 87,698 34,561 54,104 53,593 511
Depreciation &
amortization 90,794 34,282 34,282 24,673 9,609
EBITDA 123,082 103,125 98,455 17,169 81,286
Acquisition and
transition
expenses 19,629 16,909 16,909 3,526 13,383
Acquired
in-process
research and
development 5,700 - - - -
Write-off of
inventory
step-up 2,158 24,571 24,571 24,571 -
Currency
translation
losses on debt 19,822 12,745 17,415 17,415 -
Stock compensation,
management fees
and other 3,666 1,987 1,987 917 1,070
ADJUSTED EBITDA $174,057 $159,337 $159,337 $63,598 $95,739
-- The accompanying financial information for the three months ended June
30, 2007 has been prepared on a combined basis as further described in
the accompanying Basis of Presentation. Although this presentation does
not comply with accounting principles generally accepted in the U.S.
(U.S. GAAP), we believe that it provides a meaningful method of
comparison to prior periods.
-- The Pro-forma column eliminates the interest expense and the loss on
currency translation related to the Deferred Payment Certificates (DPCs)
as if they had never been issued. Please see Basis of Presentation for
additional information on the DPCs.
-- Adjusted EBITDA excludes transition expenses, and significant non-
recurring items as well as non-cash expenses from EBITDA.
SENSATA TECHNOLOGIES B.V. AND PREDECESSOR
Statement of Operations
(In thousands of U.S. Dollars)
(Unaudited)
Successor Predecessor
Pro-forma
&
Combined Combined
Three Three Three
Months Months Months Period Period
Ended Ended Ended April 27- April 1-
June 30, June 30, June 30, June 30, April 26,
2007 2006 2006 2006 2006
Net revenue $345,564 $298,130 $298,130 $216,691 $81,439
Operating costs and
expenses:
Cost of revenue 234,052 215,929 215,929 157,303 58,626
Research and
Development 10,259 8,403 8,403 5,923 2,480
Acquired
in-process
research and
development - - - - -
Selling, general and
administrative 73,776 54,465 54,465 44,110 10,355
Total operating costs
and expenses 318,087 278,797 278,797 207,336 71,461
Profit from
operations 27,477 19,333 19,333 9,355 9,978
Interest (expense)/
income, net (44,263) (33,955) (53,498) (53,593) 95
Currency translation
(loss)/ gain and
other (11,522) (12,118) (16,788) (16,859) 71
(Loss)/income before
taxes (28,308) (26,740) (50,953) (61,097) 10,144
Provision for income
taxes 16,581 14,835 14,835 10,458 4,377
Net (Loss)/income $(44,889) $(41,575) $(65,788) $(71,555) $5,767
Adjusted EBITDA* $89,237 $80,934 $80,934 $63,598 $17,336
* See accompanying basis of presentation and discussion of Non-GAAP
Measures
SENSATA TECHNOLOGIES B.V. AND PREDECESSOR
Statement of Operations
(In thousands of U.S. Dollars)
(Unaudited)
Successor Predecessor
Pro-forma
&
Combined Combined
Six Six Year-to-
Months Months Date Period Period
Ended Ended Ended April 27- January 1-
June 30, June 30, June 30, June 30, April 26,
2007 2006 2006 2006 2006
Net revenue $673,568 $592,291 $592,291 $216,691 $375,600
Operating costs and
expenses:
Cost of revenue 455,332 412,759 412,759 157,303 255,456
Research and
Development 20,057 14,725 14,725 5,923 8,802
Acquired
in-process
research and
development 5,700 - - - -
Selling, general and
administrative 141,665 83,890 83,890 44,110 39,780
Total operating costs
and expenses 622,754 511,374 511,374 207,336 304,038
Profit from
operations 50,814 80,917 80,917 9,355 71,562
Interest (expense)/
income, net (87,698) (34,561) (54,104) (53,593) (511)
Currency translation
(loss)/gain and
other (18,526) (12,074) (16,744) (16,859) 115
(Loss)/income before
taxes (55,410) 34,282 10,069 (61,097) 71,166
Provision for income
taxes 30,134 36,254 36,254 10,458 25,796
Net (Loss)/income $(85,544) $(1,972) $(26,185) $(71,555) $45,370
Adjusted EBITDA* $174,057 $159,337 $159,337 $63,598 $95,739
* See accompanying basis of presentation and discussion of Non-GAAP
Measures
SENSATA TECHNOLOGIES B.V. AND PREDECESSOR
NOTES TO UNAUDITED STATEMENT OF OPERATIONS
Basis of Presentation
On April 27, 2006, Sensata Technologies B.V., a company owned by an
affiliate of Bain Capital Partners, LLC, a leading global private investment
firm, completed the acquisition of the Sensors & Controls business of Texas
Instruments Incorporated (the Sensata Acquisition). In connection with the
acquisition, a new accounting basis was established for the Company as of the
acquisition date. Financial information for the Predecessor and Successor
periods have been separated by a line on the face of the statement of operations
to highlight that the financial information for such periods have been prepared
under two different historical cost bases of accounting.
Deferred Payment Certificates (DPCs) issued in connection with the Sensata
acquisition were originally classified as debt on the Company's Balance Sheet.
On September 21, 2006, the DPCs were restructured to their original intended
classification as equity with an effective date of April 27, 2006. However, for
accounting purposes, the DPCs are classified as debt until the September 21 date
of the restructuring of the instrument. Effective September 21, 2006, the
principal amount of the DPCs ($768.3 million), related interest ($44.6 million),
and foreign exchange losses ($13.4 million) were capitalized into equity as
additional paid-in capital.
The pro forma and combined column on the Statement of Operations
eliminates the amounts through June 30, 2006 to reflect the results of
operations as if the DPCs were never issued.
The results for the three and combined six months ended June 30, 2007, are
not necessarily indicative of a full year's results. US GAAP requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements. In addition, the combined financial information combines
periods with different bases of accounting and as such do not include the impact
of the purchase accounting for the full period. Actual results may vary
materially from these estimates and assumptions.