Sensata Technologies (NYSE:ST) today announced financial results for its second quarter and six months ended June 30, 2016.
Revenue for the second quarter 2016 was $827.5 million, an increase of $57.1 million, or 7.4%, from $770.4 million for the second quarter of 2015. Excluding an 8.5 percent positive effect from acquisitions, net of exited businesses, and a 1.2 percent negative effect from changes in foreign exchange rates, Sensata reported flat organic revenue growth in the second quarter of 2016.
Net income for the second quarter 2016 was $65.5 million, which was 7.9% of revenue, or $0.38per diluted share. This compares to net income for the second quarter 2015 of $40.9 million, which was 5.3% of revenue or $0.24 per diluted share. Adjusted net income for the second quarter 2016 was $124.3 million which was 15.0% of revenue or $0.73 per diluted share. This compares to adjusted net income of $124.6 million which was 16.2% of revenue, or $0.73 per diluted share in the second quarter of 2015.
On a sequential basis, Sensata’s adjusted net income margin of 15.0% for the second quarter increased by 80 basis points compared to an adjusted net income margin of 14.2% in the first quarter of 2016. A definition of non-GAAP measures and a reconciliation of GAAP to non-GAAP financial measures is provided in the financial tables accompanying this press release.
Revenue for the six months ended June 30, 2016 was $1,624.1 million, an increase of $103.0 million, or 6.8% from $1,521.1 million for the six months ended June 30, 2015. Excluding an 8.7 percent positive effect from acquisitions, net of exited businesses, and a 1.6 percent negative effect from changes in foreign exchange rates, Sensata reported flat organic revenue growth in the first six months of 2016.
Net income for the six months ended June 30, 2016 was $126.1 million, which was 7.8% of revenue, or $0.74 per diluted share. This compares to net income for the six months ended June 30, 2015 of $76.3 million, which was 5.0% of revenue, or $0.44 per diluted share. Adjusted net income for the six months ended June 30, 2016 was $237.5 million which was 14.6% of revenue, or $1.39 per diluted share. This was an increase of 0.9% compared to adjusted net income for the six months ended June 30, 2015 of $235.4 million which was 15.5% of revenue, or$1.37 per diluted share.
“Sensata delivered steady sequential margin expansion and earnings growth in the face of currency headwinds and a challenging market,” said Martha Sullivan, President and Chief Executive Officer. “We also generated strong cash flow, which enabled us to further pay down our revolver debt and improve our leverage position. As we look ahead to the remainder of the year, we believe we can continue to improve our margins and further strengthen our balance sheet.”
Sensata’s ending cash balance at June 30, 2016 was $309.1 million. During the first six months of 2016, the Company generated operating cash flow of $246.6 million and free cash flow of $182.2 million. The Company’s total gross indebtedness at June 30, 2016 was $3.5 billion, a reduction of$168.1 million from December 31, 2015 as a result of debt repayment.
Performance Sensing’s profit from operations as a percentage of revenue totaled 24.8 percent in the second quarter of 2016. The impact of changes in foreign exchange rates and the CST acquisition lowered Performance Sensing’s profit from operations as a percentage of revenue by 120 basis points in the second quarter of 2016. Sensing Solution’s profit from operations as a percentage of revenue totaled 32.2 percent in the second quarter of 2016. The impact of changes in foreign exchange rates and the CST acquisition lowered Sensing Solution’s profit from operations as a percentage of revenue by 80 basis points in the second quarter of 2016.
Guidance
Sensata anticipates net revenue of $770 to $810 million for the third quarter 2016 as compared to third quarter 2015 net revenue of $727 million. In addition, the Company expects adjusted earnings per share for the third quarter 2016 to be between $0.70 and $0.76. This guidance assumes a diluted share count of 171.6 million for the third quarter 2016.
For the full year 2016, the Company anticipates net revenue of $3.17 to $3.25 billion which, at the midpoint, represents growth of 7.9% compared to the full year 2015 net revenue of $2.98 billion. In addition, the Company expects adjusted net income of $480 million to $505 million, or $2.80 to $2.94 per diluted share for the full year 2016. At the midpoint, this represents 4% growth compared to full year 2015 adjusted net income per diluted share of $2.75. This guidance assumes a diluted share count of 171.5 million for the full year 2016.
Conference Call & Webcast
The Company will conduct a conference call today at 8:00 AM eastern time to discuss the financial results and its outlook for the remainder of the year. The dial-in numbers for the call are 1-877-486-0682 (toll-free) or +1-706-634-5536 (international) and the Conference ID is 43137786. A live webcast and a replay of the conference call will also be available on the investor relations page of the Company’s website at http://investors.sensata.com.
