Sensata Technologies Reports Fourth Quarter and Full Year 2023 Financial Results
- None.
- Decrease in revenue for the fourth quarter
- Non-cash goodwill impairment charge affecting operating income and adjusted earnings per share
Insights
The reported financial results of Sensata Technologies, featuring both a year-over-year increase in adjusted earnings per share (EPS) and a significant reduction in net leverage, indicate a strategic emphasis on financial health and shareholder return. The increase in adjusted EPS by 6.2% in 2023 and even more notably by 14.4% on a constant-currency basis, suggests that the company's core operations have improved in efficiency and profitability despite potential currency headwinds. Furthermore, the reduction in gross leverage from 4.7x to 3.8x demonstrates a robust approach to debt management, which is crucial for maintaining financial flexibility.
However, the reported operating loss in Q4 2023, including a substantial non-cash goodwill impairment charge, highlights the volatility within certain segments of the business. This impairment, often indicative of a decline in the expected future cash flows or profitability of the Insights reporting unit, could be a red flag for investors, signaling potential overvaluation of assets in past periods or a strategic shift that has yet to pay off.
Moreover, the flat to slight decrease in anticipated revenue for the first half of 2024, as per the guidance provided, may concern investors regarding near-term growth prospects. Yet, the expected sequential increase in adjusted operating margins suggests management's confidence in cost control and operational improvements. The focus on electrification, with a 50% growth in revenue to approximately $700 million, positions Sensata in a rapidly expanding market segment, which could be a significant growth driver in the long term.
Sensata's performance in the electrification sector, with revenue growth of nearly 50% to $700 million, indicates a strategic realignment towards high-growth areas. The $1.3 billion in won electrification opportunities over the last three years underscores the company's competitive positioning in a market that is benefiting from global trends towards sustainable energy and electric vehicles. This pivot towards electrification is not only timely but essential, as traditional automotive and industrial sectors face increasing regulatory pressures to reduce carbon emissions.
Despite a slight overall revenue increase for the year, the organic revenue growth of 1.5% suggests that Sensata is managing to grow its operations amidst challenging economic conditions. The reorganization of reportable segments, moving material handling products from Performance Sensing to Sensing Solutions, reflects an internal strategic shift to optimize the company's portfolio and could potentially lead to more focused investment and innovation in each segment.
The guidance for 2024, with expected flat to slightly down revenue in the first half of the year, could be attributed to broader market conditions, including the IHS automotive outlook and regional production weaknesses. However, the anticipated rebound in the second half of the year, driven by product launches, suggests that Sensata is banking on its innovation pipeline to drive future growth.
The impact of foreign currency exchange rates on Sensata's financial performance is noteworthy. The company's results, when adjusted for constant currency, show a stronger performance, highlighting the external economic factors at play. The expected negative impact of currency exchange rates in the first quarter of 2024 guidance further emphasizes the global economic challenges that multinational corporations like Sensata face, particularly in the context of currency volatility.
Additionally, the decision to reduce debt by $850 million and the actions to return cash to shareholders through share repurchases and dividends in 2023 reflect a proactive capital allocation strategy. This strategy not only strengthens the balance sheet but also signals to the market a commitment to enhancing shareholder value. Such financial maneuvers are particularly important in uncertain economic times as they can provide a buffer against potential downturns and instill confidence among investors.
The overall economic environment, with flat projections for end markets, indicates a cautious outlook for the industrial technology sector. Sensata's guidance aligns with broader economic indicators that suggest a period of stagnation or modest growth in the near term. Nonetheless, the company's strategic investments in electrification and new product launches could position it well for recovery and growth as market conditions improve.
"Our capital allocation strategy to reduce net leverage and return cash to shareholders is showing strong early returns as adjusted EPS of
Operating Results - Fourth Quarter
Operating results for the fourth quarter of 2023 compared to the fourth quarter of 2022 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
$992.5 million ( , or ($22.2) million 2.2% ), compared to$1,014.7 million
-
Revenue decreased (
1.3% ) on an organic basis, which excludes a decrease of (0.9% ) from foreign currency exchange rates versus the prior year period.
Operating (loss)/income:
-
Operating loss was
( , or ($201.4) million 20.3% ) of revenue, a decrease of( compared to operating income of$353.8) million $152.4 million 15.0% of revenue, in the fourth quarter of 2022.
-
Operating loss includes a
$321.7 million
-
Adjusted operating income was
$183.7 million 18.5% of revenue (19.1% on a constant currency basis), a decrease of( , or ($20.6) million 10.1% ), compared to adjusted operating income of$204.3 million 20.1% of revenue, in the fourth quarter of 2022.
(Loss)/earnings per share:
-
Loss per share was (
$1.34 $(2.08) $0.74
-
Adjusted earnings per share was
$0.81 $0.15 15.6% ) (decrease of (4.2% ) on a constant currency basis), compared to adjusted earnings per share of$0.96
Sensata generated
Operating Results - Full Year
Operating results for the year ended December 31, 2023 compared to the year ended December 31, 2022 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 a record
$4,054.1 million $24.8 million 0.6% , compared to$4,029.3 million
-
Revenue increased
1.5% on an organic basis, which excludes a decrease of (1.4% ) from foreign currency exchange rates and an increase of0.5% from acquisitions, net of divestitures, each versus the prior year.
Operating income:
-
Operating income was
$181.7 million 4.5% of revenue, a decrease of( , or ($488.5) million 72.9% ), compared to operating income of$670.1 million 16.6% of revenue, in the year ended December 31, 2022.
- Operating income includes a non-cash goodwill impairment charge related to our Insights reporting unit, charges related to the Q3 2023 Restructuring Plan, and charges related to the exit of the Spear Marine Business.
-
Adjusted operating income was
$774.0 million 19.1% of revenue (19.7% on a constant currency basis), a decrease of( , or ($3.9) million 0.5% ), compared to adjusted operating income of$777.9 million 19.3% of revenue, in the year ended December 31, 2022.
(Loss)/earnings per share:
-
Loss per share was (
$0.03 $2.02 101.5% ), compared to earnings per share of$1.99
-
Adjusted earnings per share was
$3.61 $0.21 6.2% (increase of14.4% on a constant currency basis), compared to adjusted earnings per share of$3.40
Sensata generated
Segment Performance
|
|
For the three months ended
|
|
For the full year ended
|
||||||||||||
$ in 000s |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Performance Sensing (1) |
|
|
|
|
|
|
|
|
||||||||
Revenue |
|
$ |
753,028 |
|
|
$ |
746,604 |
|
|
$ |
3,002,728 |
|
|
$ |
2,920,393 |
|
Operating income |
|
$ |
184,353 |
|
|
$ |
192,870 |
|
|
$ |
744,246 |
|
|
$ |
728,308 |
|
% of Performance Sensing revenue |
|
|
24.5 |
% |
|
|
25.8 |
% |
|
|
24.8 |
% |
|
|
24.9 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Sensing Solutions (1) |
|
|
|
|
|
|
|
|
||||||||
Revenue |
|
$ |
239,466 |
|
|
$ |
268,072 |
|
|
$ |
1,051,355 |
|
|
$ |
1,108,869 |
|
Operating income |
|
$ |
68,219 |
|
|
$ |
78,443 |
|
|
$ |
299,032 |
|
|
$ |
323,347 |
|
% of Sensing Solutions revenue |
|
|
28.5 |
% |
|
|
29.3 |
% |
|
|
28.4 |
% |
|
|
29.2 |
% |
(1) |
Effective April 1, 2023, we reorganized our reportable segments to move material handling products from Performance Sensing to Sensing Solutions to align with new management reporting. Prior year amounts have been reclassified. |
|
Guidance
"We anticipate our end markets to be relatively flat year over year given the current IHS automotive outlook, weakness in
Q1 2024 Guidance |
|
|
|
$ in millions, except EPS |
Q1-24 Guidance |
Q1-23 |
Y/Y Change |
Revenue |
|
|
( |
organic growth |
|
|
( |
Adjusted Operating Income |
|
|
( |
Adjusted Net Income |
|
|
( |
Adjusted EPS |
|
|
( |
Versus the prior year period, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately
Conference Call and Webcast
Sensata will conduct a conference call today at 8:00 a.m. Eastern Time to discuss its fourth quarter and full year 2023 financial results and its outlook for the first quarter of 2024. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Q4 2023 Financial Results Conference Call." A live webcast 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 13, 2024. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 5379784.
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 approximately 19,400 employees and operations in 16 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
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
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, market outgrowth, adjusted corporate and other expenses, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), net debt, and net leverage ratio. We also refer to changes in certain non-GAAP measures, usually reported either as a percentage or number of basis points, between two periods. Such changes are also considered non-GAAP measures.
Adjusted net income (or loss) is defined as net income (or loss), determined in accordance with
Adjusted operating income (or loss) is defined as operating income (or loss), determined in accordance with
Free cash flow is defined as net cash provided by/(used in) operating activities 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 (or decline) is defined as the reported percentage change in net revenue calculated in accordance with
Adjusted EBITDA is defined as net income (or loss), determined in accordance with
Adjusted corporate and other expenses is defined as corporate and other expenses calculated in accordance with
Gross leverage ratio is defined as gross debt divided by last twelve months (LTM) adjusted EBITDA. We believe that gross leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.
Net debt is defined as total debt, finance lease, and other financing obligations less cash and cash equivalents. We believe net debt is a useful measure to management and investors in understanding trends in our overall financial condition.
Net leverage ratio is defined as net debt divided by last twelve months (LTM) adjusted EBITDA. We believe the net leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.
In discussing trends in our performance, we may refer to certain non-GAAP financial measures or the percentage change of certain non-GAAP financial measures in one period versus another, calculated on a constant currency basis. Constant currency is determined by stating revenues and expenses at prior period foreign currency exchange rates and excludes the impact of foreign currency exchange rates on all hedges and, as applicable, net monetary assets. We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
Safe Harbor Statement
This earnings release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," "potential," "opportunity," "guidance," and similar terms or phrases. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives, business and market outlook, trends, priorities, growth, shareholder value, capital expenditures, cash flows, demand for products and services, share repurchases, and Sensata’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. These statements are subject to risks, uncertainties, and other important factors relating to our operations and business environment, and we can give no assurances that these forward-looking statements will prove to be correct.
A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements, including, but not limited to, risks related to public health crises, instability and changes in the global markets, supplier interruption or non-performance, the acquisition or disposition of businesses, adverse conditions or competition in the industries upon which we are dependent, intellectual property, product liability, warranty, and recall claims, market acceptance of new product introductions and product innovations, labor disruptions or increased labor costs, and changes in existing environmental or safety laws, regulations, and programs.
Investors and others should carefully consider the foregoing factors and other uncertainties, risks, and potential events including, but not limited to, those described in Item 1A: Risk Factors in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A: Risk Factors in our quarterly reports on Form 10-Q or other subsequent filings with the United States Securities and Exchange Commission. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.
SENSATA TECHNOLOGIES HOLDING PLC |
Condensed Consolidated Statements of Operations |
(In thousands, except per share amounts) |
(Unaudited) |
|
|
For the three months ended
|
|
For the full year ended
|
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net revenue |
|
$ |
992,494 |
|
|
$ |
1,014,676 |
|
|
$ |
4,054,083 |
|
|
$ |
4,029,262 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
||||||||
Cost of revenue |
|
|
702,287 |
|
|
|
673,830 |
|
|
|
2,792,825 |
|
|
|
2,712,048 |
|
Research and development |
|
|
42,623 |
|
|
|
47,446 |
|
|
|
178,867 |
|
|
|
189,344 |
|
Selling, general and administrative |
|
|
87,532 |
|
|
|
87,622 |
|
|
|
350,655 |
|
|
|
370,644 |
|
Amortization of intangible assets |
|
|
38,553 |
|
|
|
39,302 |
|
|
|
173,860 |
|
|
|
153,787 |
|
Goodwill impairment charge |
|
|
321,700 |
|
|
|
— |
|
|
|
321,700 |
|
|
|
— |
|
Restructuring and other charges, net |
|
|
1,238 |
|
|
|
14,111 |
|
|
|
54,500 |
|
|
|
(66,700 |
) |
Total operating costs and expenses |
|
|
1,193,933 |
|
|
|
862,311 |
|
|
|
3,872,407 |
|
|
|
3,359,123 |
|
Operating (loss)/income |
|
|
(201,439 |
) |
|
|
152,365 |
|
|
|
181,676 |
|
|
|
670,139 |
|
Interest expense, net |
|
|
(35,756 |
) |
|
|
(43,676 |
) |
|
|
(150,860 |
) |
|
|
(178,819 |
) |
Other, net |
|
|
(4,759 |
) |
|
|
16,449 |
|
|
|
(12,974 |
) |
|
|
(94,618 |
) |
(Loss)/income before taxes |
|
|
(241,954 |
) |
|
|
125,138 |
|
|
|
17,842 |
|
|
|
396,702 |
|
(Benefit from)/provision for income taxes |
|
|
(39,716 |
) |
|
|
11,988 |
|
|
|
21,751 |
|
|
|
86,017 |
|
Net (loss)/income |
|
|
(202,238 |
) |
|
|
113,150 |
|
|
|
(3,909 |
) |
|
|
310,685 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss)/income per share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
(1.34 |
) |
|
$ |
0.74 |
|
|
$ |
(0.03 |
) |
|
$ |
2.00 |
|
Diluted |
|
$ |
(1.34 |
) |
|
$ |
0.74 |
|
|
$ |
(0.03 |
) |
|
$ |
1.99 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average ordinary shares outstanding: |
|
|
|
|
|
|
||||||||||
Basic |
|
|
151,090 |
|
|
|
152,639 |
|
|
|
152,089 |
|
|
|
155,253 |
|
Diluted |
|
|
151,090 |
|
|
|
153,140 |
|
|
|
152,089 |
|
|
|
155,927 |
|
SENSATA TECHNOLOGIES HOLDING PLC |
Condensed Consolidated Balance Sheets |
(In thousands) |
(Unaudited) |
|
|
December 31,
|
|
December 31,
|
||
Assets |
|
|
|
|
||
Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
508,104 |
|
$ |
1,225,518 |
Accounts receivable, net of allowances |
|
|
744,129 |
|
|
742,382 |
Inventories |
|
|
713,485 |
|
|
644,875 |
Prepaid expenses and other current assets |
|
|
136,686 |
|
|
162,268 |
Total current assets |
|
|
2,102,404 |
|
|
2,775,043 |
Property, plant and equipment, net |
|
|
886,010 |
|
|
840,819 |
Goodwill |
|
|
3,542,770 |
|
|
3,911,224 |
Other intangible assets, net |
|
|
883,671 |
|
|
999,722 |
Deferred income tax assets |
|
|
131,527 |
|
|
100,539 |
Other assets |
|
|
134,605 |
|
|
128,873 |
Total assets |
|
$ |
7,680,987 |
|
$ |
8,756,220 |
|
|
|
|
|
||
Liabilities and shareholders' equity |
|
|
|
|
||
Current liabilities: |
|
|
|
|
||
Current portion of long-term debt and finance lease obligations |
|
$ |
2,276 |
|
$ |
256,471 |
Accounts payable |
|
|
482,301 |
|
|
531,572 |
Income taxes payable |
|
|
32,139 |
|
|
43,987 |
Accrued expenses and other current liabilities |
|
|
307,002 |
|
|
346,942 |
Total current liabilities |
|
|
823,718 |
|
|
1,178,972 |
Deferred income tax liabilities |
|
|
359,073 |
|
|
364,593 |
Pension and other post-retirement benefit obligations |
|
|
38,178 |
|
|
36,086 |
Finance lease obligations, less current portion |
|
|
22,949 |
|
|
24,742 |
Long-term debt, net |
|
|
3,373,988 |
|
|
3,958,928 |
Other long-term liabilities |
|
|
66,805 |
|
|
82,092 |
Total liabilities |
|
|
4,684,711 |
|
|
5,645,413 |
Total shareholders' equity |
|
|
2,996,276 |
|
|
3,110,807 |
Total liabilities and shareholders' equity |
|
$ |
7,680,987 |
|
$ |
8,756,220 |
SENSATA TECHNOLOGIES HOLDING PLC |
Condensed Consolidated Statements of Cash Flows |
(In thousands) |
(Unaudited) |
|
|
For the year ended
|
||||||
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
|
||||
Net (loss)/income |
|
$ |
(3,909 |
) |
|
$ |
310,685 |
|
Adjustments to reconcile net (loss)/income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation |
|
|
133,105 |
|
|
|
127,184 |
|
Amortization of debt issuance costs |
|
|
6,772 |
|
|
|
6,969 |
|
Goodwill impairment charge |
|
|
321,700 |
|
|
|
— |
|
Gain on sale of business |
|
|
(5,877 |
) |
|
|
(135,112 |
) |
Share-based compensation |
|
|
29,994 |
|
|
|
31,791 |
|
Loss on debt financing |
|
|
1,413 |
|
|
|
5,468 |
|
Amortization of intangible assets |
|
|
173,860 |
|
|
|
153,787 |
|
Deferred income taxes |
|
|
(54,159 |
) |
|
|
(781 |
) |
Loss on equity investments, net |
|
|
711 |
|
|
|
75,569 |
|
Unrealized loss on derivative instruments and other |
|
|
35,986 |
|
|
|
34,309 |
|
Changes in operating assets and liabilities, net of effects of acquisitions |
|
|
(160,301 |
) |
|
|
(125,776 |
) |
Acquisition-related compensation payments |
|
|
(22,620 |
) |
|
|
(23,500 |
) |
Net cash provided by operating activities |
|
|
456,675 |
|
|
|
460,593 |
|
Cash flows from investing activities: |
|
|
|
|
||||
Acquisitions, net of cash received |
|
|
— |
|
|
|
(631,516 |
) |
Additions to property, plant and equipment and capitalized software |
|
|
(184,609 |
) |
|
|
(150,064 |
) |
Investment in debt and equity securities |
|
|
(390 |
) |
|
|
(7,983 |
) |
Proceeds from the sale of business, net of cash sold |
|
|
19,000 |
|
|
|
198,841 |
|
Other |
|
|
994 |
|
|
|
152 |
|
Net cash used in investing activities |
|
|
(165,005 |
) |
|
|
(590,570 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Proceeds from exercise of stock options and issuance of ordinary shares |
|
|
5,346 |
|
|
|
22,803 |
|
Payment of employee restricted stock tax withholdings |
|
|
(12,280 |
) |
|
|
(8,525 |
) |
Proceeds from borrowings on debt |
|
|
— |
|
|
|
500,000 |
|
Payments on debt |
|
|
(848,897 |
) |
|
|
(510,701 |
) |
Dividends paid |
|
|
(71,543 |
) |
|
|
(51,072 |
) |
Payments to repurchase ordinary shares |
|
|
(88,398 |
) |
|
|
(292,274 |
) |
Payments of debt financing costs |
|
|
(787 |
) |
|
|
(13,691 |
) |
Net cash used in financing activities |
|
|
(1,016,559 |
) |
|
|
(353,460 |
) |
Effect of exchange rate changes on cash and equivalents |
|
|
7,475 |
|
|
|
— |
|
Net change in cash and cash equivalents |
|
|
(717,414 |
) |
|
|
(483,437 |
) |
Cash and cash equivalents, beginning of year |
|
|
1,225,518 |
|
|
|
1,708,955 |
|
Cash and cash equivalents, end of year |
|
$ |
508,104 |
|
|
$ |
1,225,518 |
|
Revenue by Business, Geography, and End Market (Unaudited)
(percent of total revenue) |
|
For the three months
|
|
For the full year
|
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Performance Sensing (1) |
|
75.9 |
% |
|
73.6 |
% |
|
74.1 |
% |
|
72.5 |
% |
Sensing Solutions (1) |
|
24.1 |
% |
|
26.4 |
% |
|
25.9 |
% |
|
27.5 |
% |
Total |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
(percent of total revenue) |
|
For the three months
|
|
For the full year
|
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
43.3 |
% |
|
43.5 |
% |
|
45.0 |
% |
|
42.3 |
% |
|
|
21.3 |
% |
|
25.6 |
% |
|
26.3 |
% |
|
25.9 |
% |
|
|
35.4 |
% |
|
30.9 |
% |
|
28.7 |
% |
|
31.8 |
% |
Total |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
(percent of total revenue) |
|
For the three months
|
|
For the full year
|
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Automotive (2) |
|
55.8 |
% |
|
53.8 |
% |
|
53.7 |
% |
|
52.3 |
% |
Heavy vehicle and off-road (1) |
|
21.1 |
% |
|
20.6 |
% |
|
21.3 |
% |
|
21.1 |
% |
Industrial (1) |
|
13.5 |
% |
|
14.8 |
% |
|
14.7 |
% |
|
14.4 |
% |
Appliance and HVAC |
|
4.0 |
% |
|
4.9 |
% |
|
4.6 |
% |
|
5.4 |
% |
Aerospace |
|
4.9 |
% |
|
4.3 |
% |
|
4.7 |
% |
|
3.8 |
% |
All other |
|
0.7 |
% |
|
1.6 |
% |
|
1.0 |
% |
|
3.0 |
% |
Total |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
(1) |
Effective April 1, 2023, we reorganized our structure to move material handling products from the Performance Sensing reportable segment to the Sensing Solutions reportable segment to align with new management reporting. Accordingly, material handling revenue, which has historically been presented in the HVOR end-market, is now presented in the Industrial end-market. Prior period amounts for revenue by business and end market have been reclassified above. |
|
(2) |
Includes amounts reflected in the Sensing Solutions segment as follows: |
|
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
Operating income and margin, income tax, net income, and earnings per share
($ in thousands, except per share amounts) |
For the three months ended December 31, 2023 |
|||||||||||||||||
|
Operating
|
|
Operating
|
|
Income
|
|
Net
|
|
Diluted
|
|||||||||
Reported (GAAP) |
$ |
(201,439 |
) |
|
(20.3 |
%) |
|
$ |
(39,716 |
) |
|
$ |
(202,238 |
) |
|
$ |
(1.34 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|||||||||
Restructuring related and other (1) |
|
345,926 |
|
|
34.9 |
% |
|
|
(992 |
) |
|
|
344,934 |
|
|
|
2.28 |
|
Financing and other transaction costs |
|
2,111 |
|
|
0.2 |
% |
|
|
(49 |
) |
|
|
6,651 |
|
|
|
0.04 |
|
Step-up depreciation and amortization |
|
37,301 |
|
|
3.8 |
% |
|
|
— |
|
|
|
37,301 |
|
|
|
0.25 |
|
Deferred gain on derivative instruments |
|
(218 |
) |
|
0.0 |
% |
|
|
471 |
|
|
|
(2,521 |
) |
|
|
(0.02 |
) |
Amortization of debt issuance costs |
|
— |
|
|
— |
% |
|
|
— |
|
|
|
1,664 |
|
|
|
0.01 |
|
Deferred taxes and other tax related |
|
— |
|
|
— |
% |
|
|
(62,493 |
) |
|
|
(62,493 |
) |
|
|
(0.41 |
) |
Total adjustments |
|
385,120 |
|
|
38.8 |
% |
|
|
(63,063 |
) |
|
|
325,536 |
|
|
|
2.15 |
|
Adjusted (non-GAAP) |
$ |
183,681 |
|
|
18.5 |
% |
|
$ |
23,347 |
|
|
$ |
123,298 |
|
|
$ |
0.81 |
|
(1) |
Includes |
|
($ in thousands, except per share amounts) |
For the three months ended December 31, 2022 |
|||||||||||||||||
|
Operating
|
|
Operating
|
|
Income
|
|
Net
|
|
Diluted
|
|||||||||
Reported (GAAP) |
$ |
152,365 |
|
|
15.0 |
% |
|
$ |
11,988 |
|
|
$ |
113,150 |
|
|
$ |
0.74 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|||||||||
Restructuring related and other |
|
12,041 |
|
|
1.2 |
% |
|
|
(2,935 |
) |
|
|
10,205 |
|
|
|
0.07 |
|
Financing and other transaction costs |
|
5,074 |
|
|
0.5 |
% |
|
|
— |
|
|
|
5,508 |
|
|
|
0.04 |
|
Step-up depreciation and amortization |
|
38,027 |
|
|
3.7 |
% |
|
|
— |
|
|
|
38,027 |
|
|
|
0.25 |
|
Deferred gain on derivative instruments |
|
(3,213 |
) |
|
(0.3 |
%) |
|
|
2,985 |
|
|
|
(11,481 |
) |
|
|
(0.07 |
) |
Amortization of debt issuance costs |
|
— |
|
|
— |
% |
|
|
— |
|
|
|
1,713 |
|
|
|
0.01 |
|
Deferred taxes and other tax related |
|
— |
|
|
— |
% |
|
|
(10,627 |
) |
|
|
(10,627 |
) |
|
|
(0.07 |
) |
Total adjustments |
|
51,929 |
|
|
5.1 |
% |
|
|
(10,577 |
) |
|
|
33,345 |
|
|
|
0.22 |
|
Adjusted (non-GAAP) |
$ |
204,294 |
|
|
20.1 |
% |
|
$ |
22,565 |
|
|
$ |
146,495 |
|
|
$ |
0.96 |
|
($ in thousands, except per share amounts) |
For the full year ended December 31, 2023 |
|||||||||||||||||
|
Operating
|
|
Operating
|
|
Income
|
|
Net
|
|
Diluted
|
|||||||||
Reported (GAAP) |
$ |
181,676 |
|
|
4.5 |
% |
|
$ |
21,751 |
|
|
$ |
(3,909 |
) |
|
$ |
(0.03 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|||||||||
Restructuring related and other (1) |
|
411,494 |
|
|
10.2 |
% |
|
|
(3,659 |
) |
|
|
407,835 |
|
|
|
2.67 |
|
Financing and other transaction costs (2) |
|
16,286 |
|
|
0.4 |
% |
|
|
2,727 |
|
|
|
24,219 |
|
|
|
0.16 |
|
Step-up depreciation and amortization (3) |
|
168,582 |
|
|
4.2 |
% |
|
|
— |
|
|
|
168,582 |
|
|
|
1.11 |
|
Deferred gain on derivative instruments |
|
(4,078 |
) |
|
(0.1 |
%) |
|
|
273 |
|
|
|
(1,733 |
) |
|
|
(0.01 |
) |
Amortization of debt issuance costs |
|
— |
|
|
— |
% |
|
|
— |
|
|
|
6,771 |
|
|
|
0.04 |
|
Deferred taxes and other tax related |
|
— |
|
|
— |
% |
|
|
(50,391 |
) |
|
|
(50,391 |
) |
|
|
(0.33 |
) |
Total adjustments |
|
592,284 |
|
|
14.6 |
% |
|
|
(51,050 |
) |
|
|
555,283 |
|
|
|
3.64 |
|
Adjusted (non-GAAP) |
$ |
773,960 |
|
|
19.1 |
% |
|
$ |
72,801 |
|
|
$ |
551,374 |
|
|
$ |
3.61 |
|
(1) |
Primarily includes (1) |
|
(2) |
Primarily includes |
|
(3) |
Includes |
|
($ in thousands, except per share amounts) |
For the full year ended December 31, 2022 |
|||||||||||||||
|
Operating
|
|
Operating
|
|
Income
|
|
Net
|
|
Diluted
|
|||||||
Reported (GAAP) |
$ |
670,139 |
|
|
16.6 |
% |
|
$ |
86,017 |
|
|
$ |
310,685 |
|
$ |
1.99 |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|||||||
Restructuring related and other |
|
36,472 |
|
|
0.9 |
% |
|
|
(3,498 |
) |
|
|
34,515 |
|
|
0.22 |
Financing and other transaction costs (1) |
|
(75,550 |
) |
|
(1.9 |
%) |
|
|
2,767 |
|
|
|
10,726 |
|
|
0.07 |
Step-up depreciation and amortization |
|
148,291 |
|
|
3.7 |
% |
|
|
— |
|
|
|
148,291 |
|
|
0.95 |
Deferred (gain)/loss on derivative instruments |
|
(1,473 |
) |
|
0.0 |
% |
|
|
(387 |
) |
|
|
1,490 |
|
|
0.01 |
Amortization of debt issuance costs |
|
— |
|
|
— |
% |
|
|
— |
|
|
|
6,969 |
|
|
0.04 |
Deferred taxes and other tax related (2) |
|
— |
|
|
— |
% |
|
|
17,828 |
|
|
|
17,828 |
|
|
0.11 |
Total adjustments |
|
107,740 |
|
|
2.7 |
% |
|
|
16,710 |
|
|
|
219,819 |
|
|
1.41 |
Adjusted (non-GAAP) |
$ |
777,879 |
|
|
19.3 |
% |
|
$ |
69,307 |
|
|
$ |
530,504 |
|
$ |
3.40 |
(1) |
Includes gain on the sale of the Qinex Business in the third quarter of 2022 and changes in the fair value of acquisition-related contingent consideration amounts of |
|
(2) |
Includes |
|
Non-GAAP adjustments by location in statements of operations
(in thousands) |
For the three months
|
|
For the full year
|
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenue (1) |
$ |
22,194 |
|
|
$ |
(1,189 |
) |
|
$ |
37,766 |
|
|
$ |
10,873 |
|
Selling, general and administrative |
|
2,890 |
|
|
|
1,266 |
|
|
|
10,639 |
|
|
|
16,457 |
|
Amortization of intangible assets (2) |
|
37,098 |
|
|
|
37,741 |
|
|
|
167,679 |
|
|
|
147,110 |
|
Goodwill impairment charge (3) |
|
321,700 |
|
|
|
— |
|
|
|
321,700 |
|
|
|
— |
|
Restructuring and other charges, net (4) |
|
1,238 |
|
|
|
14,111 |
|
|
|
54,500 |
|
|
|
(66,700 |
) |
Operating income adjustments |
|
385,120 |
|
|
|
51,929 |
|
|
|
592,284 |
|
|
|
107,740 |
|
Interest expense, net |
|
1,664 |
|
|
|
1,713 |
|
|
|
6,771 |
|
|
|
6,969 |
|
Other, net (5) |
|
1,815 |
|
|
|
(9,720 |
) |
|
|
7,278 |
|
|
|
88,400 |
|
(Benefit from)/provision for income taxes (6) |
|
(63,063 |
) |
|
|
(10,577 |
) |
|
|
(51,050 |
) |
|
|
16,710 |
|
Net income adjustments |
$ |
325,536 |
|
|
$ |
33,345 |
|
|
$ |
555,283 |
|
|
$ |
219,819 |
|
(1) |
The three and twelve months ended December 31, 2023 includes |
|
(2) |
The twelve months ended December 31, 2023 includes |
|
(3) |
In the fourth quarter of 2023, we impaired goodwill in our Insights reporting unit. Refer to our Annual Report on Form 10-K for additional information. |
|
(4) |
The twelve months ended December 31, 2023 includes (1) |
|
(5) |
The year ended December 31, 2022 includes mark-to-market losses on our equity investments, primarily in Quanergy Systems, Inc, of |
|
(6) |
The year ended December 31, 2022 includes current tax expense of |
|
Free cash flow
($ in thousands) |
|
Three months ended
|
|
Full year ended
|
||||||||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
||
Net cash provided by operating activities |
|
$ |
105,098 |
|
|
$ |
224,860 |
|
|
(53.3 |
%) |
|
$ |
456,675 |
|
|
$ |
460,593 |
|
|
(0.9 |
%) |
Additions to property, plant and equipment and capitalized software |
|
|
(48,385 |
) |
|
|
(39,640 |
) |
|
(22.1 |
%) |
|
|
(184,609 |
) |
|
|
(150,064 |
) |
|
(23.0 |
%) |
Free cash flow |
|
$ |
56,713 |
|
|
$ |
185,220 |
|
|
(69.4 |
%) |
|
$ |
272,066 |
|
|
$ |
310,529 |
|
|
(12.4 |
%) |
Adjusted corporate and other expenses
|
|
Three months ended
|
|
Full year ended
|
||||||||||||
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Corporate and other expenses (GAAP) |
|
$ |
(414,220 |
) |
|
$ |
(65,535 |
) |
|
$ |
(633,242 |
) |
|
$ |
(294,429 |
) |
Restructuring related and other (1) |
|
|
345,594 |
|
|
|
(1,229 |
) |
|
|
366,509 |
|
|
|
11,896 |
|
Financing and other transaction costs |
|
|
1,205 |
|
|
|
4,233 |
|
|
|
6,771 |
|
|
|
15,726 |
|
Step-up depreciation and amortization |
|
|
203 |
|
|
|
286 |
|
|
|
903 |
|
|
|
1,181 |
|
Deferred gain on derivative instruments |
|
|
(218 |
) |
|
|
(3,213 |
) |
|
|
(4,078 |
) |
|
|
(1,473 |
) |
Total Adjustments |
|
|
346,784 |
|
|
|
77 |
|
|
|
370,105 |
|
|
|
27,330 |
|
Adjusted corporate and other expenses |
|
$ |
(67,436 |
) |
|
$ |
(65,458 |
) |
|
$ |
(263,137 |
) |
|
$ |
(267,099 |
) |
(1) |
Includes |
|
Adjusted EBITDA
|
|
Three months ended
|
|
Full year ended
|
|||||||||||
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
Net (loss)/income |
|
$ |
(202,238 |
) |
|
$ |
113,150 |
|
|
$ |
(3,909 |
) |
|
$ |
310,685 |
Interest expense, net |
|
|
35,756 |
|
|
|
43,676 |
|
|
|
150,860 |
|
|
|
178,819 |
(Benefit from)/provision for income taxes |
|
|
(39,716 |
) |
|
|
11,988 |
|
|
|
21,751 |
|
|
|
86,017 |
Depreciation expense |
|
|
36,228 |
|
|
|
32,622 |
|
|
|
133,105 |
|
|
|
127,184 |
Amortization of intangible assets |
|
|
38,553 |
|
|
|
39,302 |
|
|
|
173,860 |
|
|
|
153,787 |
EBITDA |
|
|
(131,417 |
) |
|
|
240,738 |
|
|
|
475,667 |
|
|
|
856,492 |
Non-GAAP Adjustments |
|
|
|
|
|
|
|
|
|||||||
Restructuring related and other |
|
|
345,926 |
|
|
|
13,140 |
|
|
|
411,494 |
|
|
|
38,013 |
Financing and other transaction costs |
|
|
6,700 |
|
|
|
5,053 |
|
|
|
21,492 |
|
|
|
7,504 |
Deferred (gain)/loss on derivative instruments |
|
|
(2,992 |
) |
|
|
(14,466 |
) |
|
|
(2,006 |
) |
|
|
1,877 |
Adjusted EBITDA |
|
$ |
218,217 |
|
|
$ |
244,465 |
|
|
$ |
906,647 |
|
|
$ |
903,886 |
Debt and leverage (gross and net)
|
|
As of |
||||||
($ in thousands) |
|
December 31,
|
|
December 31,
|
||||
Current portion of long-term debt and finance lease obligations |
|
$ |
2,276 |
|
|
$ |
256,471 |
|
Finance lease obligations, less current portion |
|
|
22,949 |
|
|
|
24,742 |
|
Long-term debt, net |
|
|
3,373,988 |
|
|
|
3,958,928 |
|
Total debt and finance lease obligations |
|
|
3,399,213 |
|
|
|
4,240,141 |
|
Less: Discount, net of premium |
|
|
(1,568 |
) |
|
|
(3,360 |
) |
Less: Deferred financing costs |
|
|
(24,444 |
) |
|
|
(29,916 |
) |
Total gross indebtedness |
|
$ |
3,425,225 |
|
|
$ |
4,273,417 |
|
Adjusted EBITDA (LTM) |
|
$ |
906,647 |
|
|
$ |
903,886 |
|
Gross leverage ratio |
|
|
3.8 |
|
|
|
4.7 |
|
|
|
|
|
|
||||
|
|
As of |
||||||
($ in thousands) |
|
December 31,
|
|
December 31,
|
||||
Total gross indebtedness |
|
$ |
3,425,225 |
|
|
$ |
4,273,417 |
|
Less: Cash and cash equivalents |
|
|
508,104 |
|
|
|
1,225,518 |
|
Net Debt |
|
$ |
2,917,121 |
|
|
$ |
3,047,899 |
|
Adjusted EBITDA (LTM) |
|
$ |
906,647 |
|
|
$ |
903,886 |
|
Net leverage ratio |
|
|
3.2 |
|
|
|
3.4 |
|
Guidance
|
For the three months ending March 31, 2024 |
||||||||||||||||
($ in millions, except per share amounts) |
Operating Income |
|
Net Income |
|
EPS |
||||||||||||
|
Low |
|
High |
|
Low |
|
High |
|
Low |
|
High |
||||||
GAAP |
$ |
132.9 |
|
$ |
140.9 |
|
$ |
73.4 |
|
$ |
78.2 |
|
$ |
0.48 |
|
$ |
0.52 |
Restructuring related and other |
|
1.6 |
|
|
3.1 |
|
|
1.6 |
|
|
3.1 |
|
|
0.01 |
|
|
0.02 |
Financing and other transaction costs |
|
1.0 |
|
|
3.0 |
|
|
1.0 |
|
|
3.0 |
|
|
0.01 |
|
|
0.02 |
Step-up depreciation and amortization |
|
42.5 |
|
|
43.0 |
|
|
42.5 |
|
|
43.0 |
|
|
0.28 |
|
|
0.28 |
Deferred (gain)/loss on derivative instruments(1) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Amortization of debt issuance costs |
|
— |
|
|
— |
|
|
1.5 |
|
|
1.7 |
|
|
0.01 |
|
|
0.01 |
Deferred taxes and other tax related |
|
— |
|
|
— |
|
|
4.0 |
|
|
5.0 |
|
|
0.03 |
|
|
0.03 |
Non-GAAP |
$ |
178.0 |
|
$ |
190.0 |
|
$ |
124.0 |
|
$ |
134.0 |
|
$ |
0.82 |
|
$ |
0.88 |
Weighted-average diluted shares outstanding (in millions) |
|
|
|
|
|
|
151.7 |
|
|
151.7 |
|||||||
(1) |
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 projected operating results. In prior periods such adjustments have been significant to our reported GAAP earnings. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240206221749/en/
Investors:
Jacob Sayer
(508) 236-1666
jsayer@sensata.com
Media:
Alexia Taxiarchos
(508) 236-1761
ataxiarchos@sensata.com
Source: Sensata Technologies
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