Sensata Technologies Reports Second Quarter 2022 Financial Results

Rhea-AI Summary

Sensata Technologies (NYSE: ST) reported record revenue of $1,020.5 million for Q2 2022, a 2.8% increase from Q2 2021. Despite market challenges, organic revenue growth outpaced market trends by 650 basis points. Operating income fell by 15.7% to $138.9 million, while earnings per share dropped 69% to $0.22. Adjusted EPS was $0.83, down 12.6%. The company issued guidance for Q3 2022 revenue between $980 to $1,020 million and adjusted EPS of $0.81 to $0.89. Sensata also repurchased shares and announced a quarterly dividend of $0.11 per share.

Positive

• Record Q2 2022 revenue of $1,020.5 million, up 2.8% year-over-year.
• Organic revenue growth exceeded market trends by 650 basis points.
• Awarded largest design win for an electric vehicle battery disconnect system.

Negative

• Operating income decreased by 15.7% to $138.9 million.
• Earnings per share declined by 69% to $0.22.
• Operating cash flow dropped to $94.5 million from $163.4 million year-over-year.

Achieves Record Quarterly Revenue

Awarded Largest Single Design Win in Company's History

SWINDON, England--(BUSINESS WIRE)-- 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 second quarter ended June 30, 2022.

"Sensata delivered record revenue in the second quarter, with results in line with guidance despite significant market, supply chain, and foreign currency headwinds. Sensata’s organic revenue growth outpaced underlying markets by 650 basis points and we delivered growth from acquisitions of 280 basis points, offsetting end market declines compared to the prior-year quarter,” said Jeff Cote, CEO and President of Sensata. “In addition, during the quarter the Company was awarded its largest ever design win for a new electric vehicle battery disconnect system for a major North American OEM, further demonstrating Sensata’s ability to capitalize on our electrification strategy to grow through new product design and new market opportunities.”

Operating results for the second quarter of 2022 compared to the second quarter of 2021 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 $1,020.5 million, an increase of $27.9 million, or 2.8%, compared to $992.7 million in the second quarter of 2021.

• Revenue increased 2.2% on an organic basis, which excludes a decrease of (2.2%) from foreign currency exchange rates and an increase of 2.8% from acquisitions, each versus the prior-year period.

Operating income:

• Operating income was $138.9 million, or 13.6% of revenue, a decrease of $(25.8) million, or (15.7%), compared to operating income of $164.8 million, or 16.6% of revenue, in the second quarter of 2021.

• Adjusted operating income was $193.8 million, or 19.0% of revenue, a decrease of $(15.5) million, or (7.4%), compared to adjusted operating income of $209.3 million, or 21.1% of revenue, in the second quarter of 2021.

Earnings per share:

• Earnings per share was $0.22, a decrease of $(0.49), or (69.0%), compared to earnings per share of $0.71 in the second quarter of 2021.

• Adjusted earnings per share was $0.83, a decrease of $(0.12), or (12.6%), compared to adjusted earnings per share of $0.95 in the second quarter of 2021.

• Changes in foreign currency exchange rates decreased Sensata's adjusted earnings per share by $(0.05) in the second quarter of 2022 compared to the prior-year period.

Sensata generated $94.5 million of operating cash flow in the second quarter of 2022 compared to $163.4 million in the prior-year period. The Company's free cash flow totaled $56.2 million in the second quarter of 2022 compared to $127.0 million in the prior-year period.

During the second quarter of 2022, Sensata repurchased nearly 1.7 million ordinary shares for total consideration of $77.0 million as part of its existing share repurchase program. The Company also returned approximately $17.2 million to shareholders through its first quarterly dividend paid on May 25, 2022.

Operating results for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 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 $1,996.3 million, an increase of $61.1 million, or 3.2%, compared to $1,935.2 million in the six months ended June 30, 2021.

• Revenue increased 1.1% on an organic basis, which excludes a decrease of (1.3%) from foreign currency exchange rates and an increase of 3.4% from acquisitions, each versus the prior-year period.

Operating income:

• Operating income was $264.9 million, or 13.3% of revenue, a decrease of $(57.3) million, or (17.8%), compared to operating income of $322.2 million, or 16.7% of revenue, in the six months ended June 30, 2021.

• Adjusted operating income was $376.3 million, or 18.8% of revenue, a decrease of $(31.1) million, or (7.6%), compared to adjusted operating income of $407.4 million, or 21.1% of revenue, in the six months ended June 30, 2021.

Earnings per share:

• Earnings per share was $0.36, a decrease of $(0.69), or (65.7%), compared to earnings per share of $1.05 in the six months ended June 30, 2021.

• Adjusted earnings per share was $1.60, a decrease of $(0.21), or (11.6%), compared to adjusted earnings per share of $1.81 in the six months ended June 30, 2021.

• Changes in foreign currency exchange rates decreased Sensata's adjusted earnings per share by $(0.02) in the six months ended June 30, 2022 compared to the prior-year period.

Sensata generated $141.9 million of operating cash flow in the six months ended June 30, 2022, compared to $267.9 million in the prior-year period. The Company's free cash flow totaled $67.8 million in the six months ended June 30, 2022 compared to $204.4 million in the prior-year period.

During the six months ended June 30, 2022, Sensata repurchased approximately 2.8 million ordinary shares for total consideration of $144.3 million as part of its existing share repurchase program.

“We are continuing to monitor supply chain challenges and the macroeconomic backdrop. Sensata is working closely with our customers to understand their current needs and we are leveraging the deep experience of our management team to respond accordingly in these uncertain times. As a result of the investments we are making, we are continuing to post record levels of new business wins and we are confident that we are well positioned for the future," Cote added.

Segment Performance
		For the three months ended June 30,								For the six months ended June 30,
$ in 000s			2022				2021				2022				2021
Performance Sensing
Revenue		$	746,882			$	741,852			$	1,464,579			$	1,456,364
Operating income		$	185,519			$	202,064			$	366,157			$	397,908
% of Performance Sensing revenue			24.8	%			27.2	%			25.0	%			27.3	%
Sensing Solutions
Revenue		$	273,666			$	250,808			$	531,739			$	478,824
Operating income		$	79,488			$	76,549			$	152,003			$	143,443
% of Sensing Solutions revenue			29.0	%			30.5	%			28.6	%			30.0	%

Quarterly Dividend

Sensata recently announced a quarterly dividend of $0.11 per share, payable on August 24, 2022 to shareholders of record as of August 10, 2022.

Guidance

"Sensata delivered solid financial performance in a challenging second quarter, posting 2.8% revenue growth and 19.0% adjusted operating income margin," said Paul Vasington, EVP and CFO of Sensata. “For the third quarter of 2022, we expect revenue of $980 to $1,020 million and adjusted EPS of $0.81 to $0.89. For fiscal year 2022, we are adjusting our annual financial guidance calling for revenue of $3,970 to $4,050 million and adjusted EPS of $3.30 to $3.42. This updated guidance includes the previously announced acquisition of Dynapower and divestiture of Qinex."

Fiscal Year 2022 Guidance
$ in millions, except EPS	FY-22 Guidance	FY-21	Y/Y Change
Revenue	$3,970- $4,050	$3,820.8	4% - 6%
organic growth			3% - 5%
Adjusted Operating Income	$758 - $782	$806.0	(6%) - (3%)
Adjusted Net Income	$514 - $534	$566.8	(9%) - (6%)
Adjusted EPS	$3.30 - $3.42	$3.56	(7%) - (4%)

Versus the prior year, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $(76) million at the midpoint and decrease adjusted EPS by approximately $(0.11) at the midpoint for fiscal year 2022.

Q3 2022 Guidance
$ in millions, except EPS	Q3-22 Guidance	Q3-21	Y/Y Change
Revenue	$980 - $1,020	$951.0	3% - 7%
organic growth			2% - 6%
Adjusted Operating Income	$187 - $199	$201.0	(7%) - (1%)
Adjusted Net Income	$126 - $138	$138.6	(9%) - 0%
Adjusted EPS	$0.81 - $0.89	$0.87	(7%) - 2%

Versus the prior-year period, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $(23) million at the midpoint and decrease adjusted EPS by approximately $(0.02) at the midpoint in the third quarter of 2022.

Conference Call and Webcast

Sensata will conduct a conference call today at 8:00 a.m. Eastern Time to discuss its second quarter of 2022 financial results and its outlook for the third quarter and full year 2022. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Q2 2022 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 August 2, 2022. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 4911125.

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 21,000 employees and operations in 13 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, market outgrowth, 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 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 (or loss) is defined as net income (or loss), 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 (or loss) 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 (or loss) is defined as operating income (or loss), 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 (or loss) 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/(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 U.S. GAAP, excluding the period-over-period impact of foreign exchange rate differences as well as the net impact of material 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.

Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, net, provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable: (1) restructuring related and other, (2) financing and other transaction costs, (3) deferred gain or loss on derivative instruments, and (4) step-up inventory amortization.

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.

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, megatrends, 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 June 30,								For the six months ended June 30,
			2022				2021				2022				2021
Net revenue		$	1,020,548			$	992,660			$	1,996,318			$	1,935,188
Operating costs and expenses:
Cost of revenue			686,603				658,285				1,343,683				1,293,634
Research and development			47,971				42,913				93,951				78,869
Selling, general and administrative			97,329				86,821				193,009				163,944
Amortization of intangible assets			36,805				34,857				74,172				66,921
Restructuring and other charges, net			12,897				5,029				26,630				9,611
Total operating costs and expenses			881,605				827,905				1,731,445				1,612,979
Operating income			138,943				164,755				264,873				322,209
Interest expense, net			(44,842	)			(45,213	)			(90,287	)			(89,256	)
Other, net			(39,240	)			1,012				(89,696	)			(38,385	)
Income before taxes			54,861				120,554				84,890				194,568
Provision for income taxes			20,020				7,638				27,608				27,919
Net Income			34,841				112,916				57,282				166,649
Net income per share:
Basic		$	0.22			$	0.71			$	0.36			$	1.05
Diluted		$	0.22			$	0.71			$	0.36			$	1.05
Weighted-average ordinary shares outstanding:
Basic			156,477				158,208				156,950				157,986
Diluted			156,994				159,344				157,812				159,287

SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
		June 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents		$	1,558,578		$	1,708,955
Accounts receivable, net of allowances			743,048			653,438
Inventories			656,736			588,231
Prepaid expenses and other current assets			161,367			126,370
Total current assets			3,119,729			3,076,994
Property, plant and equipment, net			825,862			820,933
Goodwill			3,534,438			3,502,063
Other intangible assets, net			904,929			946,731
Deferred income tax assets			101,899			105,028
Other assets			119,820			162,017
Total assets		$	8,606,677		$	8,613,766
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt, finance lease and other financing obligations		$	6,566		$	6,833
Accounts payable			537,261			459,093
Income taxes payable			15,309			26,517
Accrued expenses and other current liabilities			327,993			343,816
Total current liabilities			887,129			836,259
Deferred income tax liabilities			341,383			339,273
Pension and other post-retirement benefit obligations			37,863			38,758
Finance lease and other financing obligations, less current portion			25,623			26,564
Long-term debt, net			4,213,512			4,214,946
Other long-term liabilities			77,583			63,232
Total liabilities			5,583,093			5,519,032
Total shareholders' equity			3,023,584			3,094,734
Total liabilities and shareholders' equity		$	8,606,677		$	8,613,766

SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
		For the six months ended June 30,
			2022				2021
Cash flows from operating activities:
Net income		$	57,282			$	166,649
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			62,882				62,833
Amortization of debt issuance costs			3,433				3,426
Share-based compensation			15,739				11,475
Loss on debt financing			—				30,066
Amortization of intangible assets			74,172				66,921
Deferred income taxes			(5,211	)			(7,070	)
Acquisition-related compensation payments			(15,000	)			—
Mark-to-market loss on equity investments, net			71,100				—
Unrealized loss on derivative instruments and other			20,669				12,700
Changes in operating assets and liabilities, net of effects of acquisitions			(143,178	)			(79,069	)
Net cash provided by operating activities			141,888				267,931
Cash flows from investing activities:
Acquisitions, net of cash received			(48,989	)			(421,951	)
Additions to property, plant and equipment and capitalized software			(74,069	)			(63,572	)
Investment in debt and equity securities			(6,878	)			(6,444	)
Other			152				2,862
Net cash used in investing activities			(129,784	)			(489,105	)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares			14,577				17,957
Payment of employee restricted stock tax withholdings			(7,577	)			(7,948	)
Proceeds from borrowings on debt			—				1,001,875
Payments on debt			(5,664	)			(757,889	)
Dividends paid			(17,225	)			—
Payments to repurchase ordinary shares			(144,279	)			—
Payments of debt financing costs			(2,313	)			(33,032	)
Net cash (used in)/provided by financing activities			(162,481	)			220,963
Net change in cash and cash equivalents			(150,377	)			(211	)
Cash and cash equivalents, beginning of year			1,708,955				1,861,980
Cash and cash equivalents, end of period		$	1,558,578			$	1,861,769

Revenue by Business, Geography, and End Market (Unaudited)
(percent of total revenue)		For the three months ended June 30,						For the six months ended June 30,
		2022			2021			2022			2021
Performance Sensing		73.2	%		74.7	%		73.4	%		75.3	%
Sensing Solutions		26.8	%		25.3	%		26.6	%		24.7	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

(percent of total revenue)		For the three months ended June 30,						For the six months ended June 30,
		2022			2021			2022			2021
Americas		42.1	%		38.0	%		41.0	%		37.2	%
Europe		26.0	%		27.2	%		26.1	%		27.8	%
Asia/Rest of World		31.9	%		34.8	%		32.9	%		35.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

(percent of total revenue)		For the three months ended June 30,						For the six months ended June 30,
		2022			2021			2022			2021
Automotive (1)		50.6	%		53.4	%		51.5	%		55.7	%
Heavy vehicle and off-road		23.6	%		22.5	%		22.8	%		20.7	%
Industrial		12.0	%		10.6	%		11.9	%		10.1	%
Appliance and HVAC		5.7	%		6.4	%		5.8	%		6.4	%
Aerospace		3.8	%		3.3	%		3.6	%		3.4	%
All other		4.3	%		3.8	%		4.4	%		3.7	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

⁽¹⁾ Includes amounts reflected in the Sensing Solutions segment as follows: $9.9 million and $12.1 million of revenue in the three months ended June 30, 2022 and 2021, respectively, and $19.2 million and $23.6 million of revenue in the six months ended June 30, 2022 and 2021, respectively.

Market Outgrowth (Unaudited)

		For the three months ended June 30, 2022									For the six months ended June 30, 2022
		Reported Growth			Organic Growth			End Market Decline(1)			Reported Growth			Organic Growth			End Market Decline(1)
Sensata		2.8	%		2.2	%		(0.9	%)		3.2	%		1.1	%		(3.3	%)

⁽¹⁾ End Market excludes (3.4%) and (2.8%) inventory build in the three months and six months ended June 30, 2021, 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 earnings per share

($ in thousands, except per share amounts)	For the three months ended June 30, 2022
	Operating Income			Operating Margin			Income Taxes				Net Income			Diluted EPS
Reported (GAAP)	$	138,943		13.6	%		$	20,020			$	34,841		$	0.22
Non-GAAP adjustments:
Restructuring related and other		3,888		0.4	%			(36	)			4,294			0.03
Financing and other transaction costs (1)		14,434		1.4	%			(450	)			28,277			0.18
Step-up depreciation and amortization		35,318		3.5	%			—				35,318			0.22
Deferred loss on derivative instruments		1,190		0.1	%			(4,013	)			15,431			0.10
Amortization of debt issuance costs		—		—	%			—				1,717			0.01
Deferred taxes and other tax related (2)		—		—	%			9,669				9,669			0.06
Total adjustments		54,830		5.4	%			5,170				94,706			0.60
Adjusted (non-GAAP)	$	193,773		19.0	%		$	14,850			$	129,547		$	0.83

⁽¹⁾ Includes a mark-to-market loss on our investment in Quanergy Systems, Inc of $11.8 million, recorded in other, net. Also includes $12.8 million of expense related to compensation arrangements entered into concurrent with the closing of an acquisition, partially offset by $3.3 million of gains, which relate to changes in the fair value of acquisition-related contingent consideration amounts, each recorded in restructuring and other charges, net. Refer to our Quarterly Report on Form 10-Q for additional information.
⁽²⁾ Includes $11.4 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

($ in thousands, except per share amounts)	For the three months ended June 30, 2021
	Operating Income			Operating Margin			Income Tax				Net Income				Diluted EPS
Reported (GAAP)	$	164,755		16.6	%		$	7,638			$	112,916			$	0.71
Non-GAAP adjustments:
Restructuring related and other		5,738		0.6	%			(85	)			6,926				0.04
Financing and other transaction costs		2,544		0.3	%			(443	)			1,267				0.01
Step-up depreciation and amortization		33,684		3.4	%			—				33,684				0.21
Deferred loss on derivative instruments		2,595		0.3	%			(352	)			1,057				0.01
Amortization of debt issuance costs		—		—	%			—				1,715				0.01
Deferred taxes and other tax related		—		—	%			(6,200	)			(6,200	)			(0.04	)
Total adjustments		44,561		4.5	%			(7,080	)			38,449				0.24
Adjusted (non-GAAP)	$	209,316		21.1	%		$	14,718			$	151,365			$	0.95

($ in thousands, except per share amounts)	For the six months ended June 30, 2022
	Operating Income			Operating Margin			Income Tax				Net Income			Diluted EPS
Reported (GAAP)	$	264,873		13.3	%		$	27,608			$	57,282		$	0.36
Non-GAAP adjustments:
Restructuring related and other		8,037		0.4	%			(136	)			8,343			0.05
Financing and other transaction costs (1)		30,259		1.5	%			(994	)			102,837			0.65
Step-up depreciation and amortization		71,263		3.6	%			—				71,263			0.45
Deferred loss on derivative instruments		1,842		0.1	%			(2,202	)			8,470			0.05
Amortization of debt issuance costs		—		—	%			—				3,433			0.02
Deferred taxes and other tax related (2)		—		—	%			1,334				1,334			0.01
Total adjustments		111,401		5.6	%			(1,998	)			195,680			1.24
Adjusted (non-GAAP)	$	376,274		18.8	%		$	29,606			$	252,962		$	1.60

⁽¹⁾ Includes a mark-to-market loss on our investment in Quanergy Systems, Inc of $71.7 million, recorded in other, net. Also includes $31.1 million of expense related to compensation arrangements entered into concurrent with the closing of an acquisition, partially offset by $9.4 million of gains, which relate to changes in the fair value of acquisition-related contingent consideration amounts, each recorded in restructuring and other charges, net. Refer to our Quarterly Report on Form 10-Q for additional information.
⁽²⁾ Includes $11.4 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent companies in the Netherlands and the United States. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

($ in thousands, except per share amounts)	For the six months ended June 30, 2021
	Operating Income		Operating Margin			Income Tax			Net Income		Diluted EPS
Reported (GAAP)	$ 322,209		16.7	%		$ 27,919			$ 166,649		$ 1.05
Non-GAAP adjustments:
Restructuring related and other	10,263		0.5	%		(286	)		14,217		0.09
Financing and other transaction costs (1)	7,115		0.4	%		(3,546	)		34,072		0.21
Step-up depreciation and amortization	63,380		3.3	%		—			63,380		0.40
Deferred loss on derivative instruments	4,435		0.2	%		(1,100	)		3,302		0.02
Amortization of debt issuance costs	—		—	%		—			3,426		0.02
Deferred taxes and other tax related (2)	—		—	%		3,922			3,922		0.02
Total adjustments	85,193		4.4	%		(1,010	)		122,319		0.77
Adjusted (non-GAAP)	$ 407,402		21.1	%		$ 28,929			$ 288,968		$ 1.81

⁽¹⁾ Includes a $30.1 million loss recognized in the first quarter of 2021 related to the early redemption of our 6.25% Senior Notes due 2026 at 103.125%. The loss primarily includes the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs. The loss is presented in other, net in our condensed consolidated statement of operations. Refer to our Quarterly Report on Form 10-Q for additional information.
⁽²⁾ Includes $10.9 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

Non-GAAP adjustments by location in statements of operations

(in thousands)	For the three months ended June 30,							For the six months ended June 30,
		2022			2021				2022				2021
Cost of revenue	$	1,215		$	3,038			$	3,375			$	5,453
Selling, general and administrative		5,699			3,253				10,730				7,641
Amortization of intangible assets		35,019			33,241				70,666				62,488
Restructuring and other charges, net (1)		12,897			5,029				26,630				9,611
Operating income adjustments		54,830			44,561				111,401				85,193
Interest expense, net		1,717			1,715				3,433				3,426
Other, net (2)		32,989			(747	)			82,844				34,710
Provision for income taxes (3)		5,170			(7,080	)			(1,998	)			(1,010	)
Net income adjustments	$	94,706		$	38,449			$	195,680			$	122,319

⁽¹⁾ The three and six months ended June 30, 2022 include $12.8M and $31.1M, respectively, of expense related to compensation arrangements entered into concurrent with the closing of an acquisition. The six months ended June 30, 2022 also includes $9.4M of gains, which relate to changes in the fair value of acquisition-related contingent consideration amounts.
⁽²⁾ The three and six months ended June 30, 2022 include a mark-to-market loss on our investment in Quanergy Systems, Inc of $11.8 million and $71.7 million, respectively. Refer to our Quarterly Report on Form 10-Q for additional information. The six months ended June 30, 2021 includes a $30.1 million loss recognized in the first quarter of 2021 related to the early redemption of our 6.25% Senior Notes due 2026 at 103.125%. The loss primarily reflects the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs.
⁽³⁾ Each period presented includes current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital. This includes $11.4 million in each of the three and six months ended June 30, 2022, and $10.1 million and $10.9 million, in the three and six months ended June 30, 2021, respectively.

Free cash flow

($ in thousands)	Three months ended June 30,											Six months ended June 30,
		2022				2021			% △				2022				2021			% △
Net cash provided by operating activities	$	94,533			$	163,420			(42.2	%)		$	141,888			$	267,931			(47.0	%)
Additions to property, plant and equipment and capitalized software		(38,358	)			(36,400	)		(5.4	%)			(74,069	)			(63,572	)		(16.5	%)
Free cash flow	$	56,175			$	127,020			(55.8	%)		$	67,819			$	204,359			(66.8	%)

Adjusted EBITDA

					For the three months ended June 30,						For the six months ended June 30,
(in thousands)		LTM				2022			2021			2022			2021
Net income		$	254,213		$	34,841		$	112,916		$	57,282		$	166,649
Interest expense, net			180,322			44,842			45,213			90,287			89,256
Provision for income taxes			50,026			20,020			7,638			27,608			27,919
Depreciation expense			125,008			31,351			31,636			62,882			62,833
Amortization of intangible assets			141,380			36,805			34,857			74,172			66,921
EBITDA			750,949			167,859			232,260			312,231			413,578
Non-GAAP Adjustments
Restructuring related and other			17,746			4,330			7,011			8,479			14,377
Financing and other transaction costs			107,255			28,727			1,710			103,831			37,618
Deferred loss on derivative instruments			17,564			19,444			1,409			10,672			4,402
Adjusted EBITDA		$	893,514		$	220,360		$	242,390		$	435,213		$	469,975

Net debt and leverage

		As of
($ in thousands)		June 30, 2022				December 31, 2021
Current portion of long-term debt, finance lease and other financing obligations		$	6,566			$	6,833
Finance lease and other financing obligations, less current portion			25,623				26,564
Long-term debt, net			4,213,512				4,214,946
Total debt, finance lease, and other financing obligations			4,245,701				4,248,343
Less: discount, net of premium			(4,317	)			(5,207	)
Less: deferred financing costs			(26,691	)			(26,682	)
Total gross indebtedness			4,276,709				4,280,232
Less: Cash and cash equivalents			1,558,578				1,708,955
Net debt		$	2,718,131			$	2,571,277
Adjusted EBITDA (LTM)		$	893,514			$	928,276
Net leverage ratio			3.0				2.8

Guidance

	Three months ending September 30, 2022
($ in millions, except per share amounts)	Operating Income						Net Income						EPS
	Low			High			Low			High			Low			High
GAAP	$	141.5		$	151.0		$	63.8		$	72.3		$	0.41		$	0.46
Restructuring related and other		4.0			4.5			3.5			4.0			0.02			0.03
Financing and other transaction costs(1)		7.5			8.5			7.0			8.0			0.05			0.05
Step-up depreciation and amortization(1)		34.0			35.0			34.0			35.0			0.22			0.23
Deferred (gain)/loss on derivative instruments(2)		—			—			—			—			—			—
Amortization of debt issuance costs		—			—			1.7			1.7			0.01			0.01
Deferred taxes and other tax related		—			—			16.0			17.0			0.10			0.11
Non-GAAP	$	187.0		$	199.0		$	126.0		$	138.0		$	0.81		$	0.89
Weighted-average diluted shares outstanding (in millions)														155.2			155.2

	Full year ending December 31, 2022
($ in millions, except per share amounts)	Operating Income						Net Income						EPS
	Low			High			Low			High			Low			High
GAAP	$	559.2		$	578.2		$	198.5		$	211.5		$	1.29		$	1.37
Restructuring related and other		13.0			14.0			12.0			13.0			0.08			0.08
Financing and other transaction costs(1)		46.0			48.0			117.0			119.0			0.75			0.76
Step-up depreciation and amortization(1)		138.0			140.0			138.0			140.0			0.88			0.90
Deferred (gain)/loss on derivative instruments(2)		1.8			1.8			8.5			8.5			0.05			0.05
Amortization of debt issuance costs		—			—			7.0			7.0			0.04			0.04
Deferred taxes and other tax related		—			—			33.0			35.0			0.21			0.22
Non-GAAP	$	758.0		$	782.0		$	514.0		$	534.0		$	3.30		$	3.42
Weighted-average diluted shares outstanding (in millions)														156.0			156.0

⁽¹⁾ Amounts do not contemplate the effects of future acquisitions, divestitures, or financing transactions that occur beyond our most recent fiscal period end, including the acquisition of Dynapower and the sale of Qinex each of which occurred subsequent to June 30, 2022.
⁽²⁾ 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/20220726005383/en/

Investors:

Jacob Sayer

(508) 236-1666

jsayer@sensata.com

Media:

Alexia Taxiarchos

(508) 236-1761

ataxiarchos@sensata.com

Source: Sensata Technologies

FAQ

What were Sensata's revenue and earnings for Q2 2022 (ST)?

Sensata reported Q2 2022 revenue of $1,020.5 million and earnings per share of $0.22.

How does Sensata's Q2 2022 performance compare to Q2 2021 (ST)?

Q2 2022 revenue increased by 2.8%, but operating income fell by 15.7% and earnings per share dropped by 69%.

What guidance did Sensata provide for Q3 and FY 2022 (ST)?

For Q3 2022, Sensata expects revenue of $980 to $1,020 million and adjusted EPS of $0.81 to $0.89.