Sensata Technologies Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________________________

FORM 10-Q

_________________________________________________________________________________

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-34652

_________________________________________________________________________________

SENSATA TECHNOLOGIES HOLDING PLC

(Exact name of registrant as specified in its charter)

_________________________________________________________________________________



England and Wales				98-1386780
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

529 Pleasant Street

Attleboro, Massachusetts, 02703, United States

(Address of principal executive offices, including zip code))

+1 (508) 236 3800

(Registrant's telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

_____________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of exchange on which registered
Ordinary Shares - nominal value €0.01 per share	ST	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 15, 2020, 157,212,763 ordinary shares were outstanding.

Table of Contents

TABLE OF CONTENTS



PART I
	Item 1.	Financial Statements (unaudited):
		Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	3
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019	4
		Condensed Consolidated Statements of Comprehensive (Loss)/Income for the Three and Six Months Ended June 30, 2020 and 2019	5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	6
		Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months ended June 30, 2020 and 2019	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
	Item 4.	Controls and Procedures	31

PART II
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	32
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 3.	Defaults Upon Senior Securities	33
	Item 6.	Exhibits	33
		Signatures	34

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1.
Financial Statements.

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(unaudited)



	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	1,242,949		$	774,119
Accounts receivable, net of allowances of $17,655 and $15,129 as of June 30, 2020 and December 31, 2019, respectively	443,712			557,874
Inventories	488,807			506,678
Prepaid expenses and other current assets	103,696			126,981
Total current assets	2,279,164			1,965,652
Property, plant and equipment, net	815,872			830,998
Goodwill	3,093,598			3,093,598
Other intangible assets, net of accumulated amortization of $2,105,318 and $2,039,436 as of June 30, 2020 and December 31, 2019, respectively	706,102			770,904
Deferred income tax assets	29,011			21,150
Other assets	161,138			152,217
Total assets	$	7,084,885		$	6,834,519
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt, finance lease and other financing obligations	$	407,042		$	6,918
Accounts payable	250,219			376,968
Income taxes payable	866			35,234
Accrued expenses and other current liabilities	268,432			215,626
Total current liabilities	926,559			634,746
Deferred income tax liabilities	254,230			251,033
Pension and other post-retirement benefit obligations	31,900			36,100
Finance lease and other financing obligations, less current portion	28,243			28,810
Long-term debt, net	3,220,833			3,219,885
Other long-term liabilities	129,715			90,190
Total liabilities	4,591,480			4,260,764
Commitments and contingencies (Note 12)
Shareholders’ equity:
Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 172,844 and 172,561 shares issued, as of June 30, 2020 and December 31, 2019, respectively	2,215			2,212
Treasury shares, at cost, 15,631 and 14,733 shares as of June 30, 2020 and December 31, 2019, respectively	(784,596		)	(749,421		)
Additional paid-in capital	1,735,826			1,725,091
Retained earnings	1,579,931			1,616,357
Accumulated other comprehensive loss	(39,971		)	(20,484		)
Total shareholders’ equity	2,493,405			2,573,755
Total liabilities and shareholders’ equity	$	7,084,885		$	6,834,519

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)



	For the three months ended						For the six months ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net revenue	$	576,505		$	883,726		$	1,350,774		$	1,754,225
Operating costs and expenses:
Cost of revenue	412,443			575,235			978,849			1,156,041
Research and development	30,239			36,685			64,692			71,781
Selling, general and administrative	64,730			72,026			141,951			142,575
Amortization of intangible assets	32,743			36,031			65,835			72,174
Restructuring and other charges, net	38,218			16,310			42,716			21,619
Total operating costs and expenses	578,373			736,287			1,294,043			1,464,190
Operating (loss)/income	(1,868		)	147,439			56,731			290,035
Interest expense, net	(40,808		)	(39,608		)	(80,211		)	(78,861		)
Other, net	1,576			(3,554		)	(10,705		)	(365		)
(Loss)/income before taxes	(41,100		)	104,277			(34,185		)	210,809
Provision for/(benefit from) income taxes	1,441			30,841			(75		)	52,308
Net (loss)/income	$	(42,541	)	$	73,436		$	(34,110	)	$	158,501
Basic net (loss)/income per share:	$	(0.27	)	$	0.45		$	(0.22	)	$	0.98
Diluted net (loss)/income per share:	$	(0.27	)	$	0.45		$	(0.22	)	$	0.97

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Comprehensive (Loss)/Income

(In thousands)

(unaudited)



	For the three months ended						For the six months ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net (loss)/income	$	(42,541	)	$	73,436		$	(34,110	)	$	158,501
Other comprehensive (loss)/income, net of tax:
Cash flow hedges	(5,167		)	(4,646		)	(24,501		)	5,414
Defined benefit and retiree healthcare plans	1,672			83			5,014			166
Other comprehensive (loss)/income	(3,495		)	(4,563		)	(19,487		)	5,580
Comprehensive (loss)/income	$	(46,036	)	$	68,873		$	(53,597	)	$	164,081

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)



	For the six months ended
	June 30, 2020			June 30, 2019
Cash flows from operating activities:
Net (loss)/income	$	(34,110	)	$	158,501
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation	65,288			55,182
Amortization of debt issuance costs	3,263			3,718
Share-based compensation	9,590			12,425
Amortization of intangible assets	65,835			72,174
Deferred income taxes	1,500			13,213
Loss on litigation judgment	41,314			—
Unrealized loss on derivative instruments and other	8,035			16,717
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, net	114,162			(53,775		)
Inventories	17,871			2,196
Prepaid expenses and other current assets	14,790			(1,645		)
Accounts payable and accrued expenses	(99,467		)	(27,157		)
Income taxes payable	(34,368		)	(2,241		)
Other	(3,431		)	2,858
Net cash provided by operating activities	170,272			252,166
Cash flows from investing activities:
Acquisitions, net of cash received	—			(1,681		)
Additions to property, plant and equipment and capitalized software	(56,697		)	(81,549		)
Other	(3,798		)	305
Net cash used in investing activities	(60,495		)	(82,925		)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares	1,146			7,099
Payment of employee restricted stock tax withholdings	(2,314		)	(6,778		)
Proceeds from borrowings on Revolving Credit Facility	400,000			—
Payments on debt	(4,604		)	(8,248		)
Payments to repurchase ordinary shares	(35,175		)	(168,198		)
Payments of debt and equity issuance costs	—			(1,876		)
Net cash provided by/(used in) financing activities	359,053			(178,001		)
Net change in cash and cash equivalents	468,830			(8,760		)
Cash and cash equivalents, beginning of period	774,119			729,833
Cash and cash equivalents, end of period	$	1,242,949		$	721,073

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Changes in Shareholders' Equity

(In thousands)

(unaudited)



	Ordinary Shares					Treasury Shares					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Number		Amount			Number		Amount			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance as of March 31, 2020	172,596		$	2,212		(15,631	)	$	(784,596	)	$	1,731,884	$	1,624,773		$	(36,476	)	$	2,537,797
Surrender of shares for tax withholding	—		—			(83	)	(2,299		)	—		—			—			(2,299		)
Stock options exercised	21		1			—		—			436		—			—			437
Vesting of restricted securities	310		3			—		—			—		(3		)	—			—
Retirement of ordinary shares	(83	)	(1		)	83		2,299			—		(2,298		)	—			—
Share-based compensation	—		—			—		—			3,506		—			—			3,506
Net loss	—		—			—		—			—		(42,541		)	—			(42,541		)
Other comprehensive loss	—		—			—		—			—		—			(3,495		)	(3,495		)
Balance as of June 30, 2020	172,844		$	2,215		(15,631	)	$	(784,596	)	$	1,735,826	$	1,579,931		$	(39,971	)	$	2,493,405



	Ordinary Shares					Treasury Shares					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Number		Amount			Number		Amount			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance as of December 31, 2019	172,561		$	2,212		(14,733	)	$	(749,421	)	$	1,725,091	$	1,616,357		$	(20,484	)	$	2,573,755
Surrender of shares for tax withholding	—		—			(83	)	(2,314		)	—		—			—			(2,314		)
Stock options exercised	55		1			—		—			1,145		—			—			1,146
Vesting of restricted securities	311		3			—		—			—		(3		)	—			—
Repurchase of ordinary shares	—		—			(898	)	(35,175		)	—		—			—			(35,175		)
Retirement of ordinary shares	(83	)	(1		)	83		2,314			—		(2,313		)	—			—
Share-based compensation	—		—			—		—			9,590		—			—			9,590
Net loss	—		—			—		—			—		(34,110		)	—			(34,110		)
Other comprehensive loss	—		—			—		—			—		—			(19,487		)	(19,487		)
Balance as of June 30, 2020	172,844		$	2,215		(15,631	)	$	(784,596	)	$	1,735,826	$	1,579,931		$	(39,971	)	$	2,493,405



	Ordinary Shares					Treasury Shares					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Number		Amount			Number		Amount			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance as of March 31, 2019	171,987		$	2,206		(10,607	)	$	(550,166	)	$	1,702,940	$	1,425,426		$	(16,035	)	$	2,564,371
Surrender of shares for tax withholding	—		—			(138	)	(6,503		)	—		—			—			(6,503		)
Stock options exercised	64		—			—		—			1,286		—			—			1,286
Vesting of restricted securities	412		5			—		—			—		(5		)	—			—
Repurchase of ordinary shares	—		—			(379	)	(17,449		)	—		—			—			(17,449		)
Retirement of ordinary shares	(138	)	(2		)	138		6,503			—		(6,501		)	—			—
Share-based compensation	—		—			—		—			6,485		—			—			6,485
Net income	—		—			—		—			—		73,436			—			73,436
Other comprehensive loss	—		—			—		—			—		—			(4,563		)	(4,563		)
Balance as of June 30, 2019	172,325		$	2,209		(10,986	)	$	(567,615	)	$	1,710,711	$	1,492,356		$	(20,598	)	$	2,617,063



	Ordinary Shares					Treasury Shares					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Number		Amount			Number		Amount			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance as of December 31, 2018	171,719		$	2,203		(7,571	)	$	(399,417	)	$	1,691,190	$	1,340,636		$	(26,178	)	$	2,608,434
Surrender of shares for tax withholding	—		—			(144	)	(6,778		)	—		—			—			(6,778		)
Stock options exercised	312		3			—		—			7,096		—			—			7,099
Vesting of restricted securities	438		5			—		—			—		(5		)	—			—
Repurchase of ordinary shares	—		—			(3,415	)	(168,198		)	—		—			—			(168,198		)
Retirement of ordinary shares	(144	)	(2		)	144		6,778			—		(6,776		)	—			—
Share-based compensation	—		—			—		—			12,425		—			—			12,425
Net income	—		—			—		—			—		158,501			—			158,501
Other comprehensive income	—		—			—		—			—		—			5,580			5,580
Balance as of June 30, 2019	172,325		$	2,209		(10,986	)	$	(567,615	)	$	1,710,711	$	1,492,356		$	(20,598	)	$	2,617,063

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

SENSATA TECHNOLOGIES HOLDING PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations, comprehensive (loss)/income, cash flows, and changes in shareholders' equity of Sensata Technologies Holding plc, a public limited company incorporated under the laws of England and Wales, and its wholly-owned subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," or "us."

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q. Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The accompanying financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

All U.S. dollar ("USD") and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated.

Certain reclassifications have been made to prior periods to conform to current period presentation.

2. New Accounting Standards

There are no recently issued accounting standards that have been adopted in the current period or will be adopted in future periods that have had or are expected to have a material impact on our consolidated financial position or results of operations.

3. Revenue Recognition

The following tables present net revenue disaggregated by segment and end market for the three and six months ended June 30, 2020 and 2019:



	For the three months ended June 30, 2020						For the three months ended June 30, 2019
	Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total
Automotive	$	286,499	$	7,279	$	293,778	$	498,296	$	10,672	$	508,968
HVOR ⁽¹⁾	98,708		—		98,708		146,220		—		146,220
Industrial	—		79,264		79,264		—		95,818		95,818
Appliance and HVAC ⁽²⁾	—		43,689		43,689		—		55,832		55,832
Aerospace	—		27,193		27,193		—		44,902		44,902
Other	—		33,873		33,873		—		31,986		31,986
Total	$	385,207	$	191,298

Price	49.40	EPS	3
Shares	163	P/E	17
MCap	8,041	P/FCF	19
Net Debt	2,503	EBIT	564
TEV	10,543	TEV/EBIT	19
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-28
10-Q	2020-03-31	Filed 2020-04-29
10-K	2019-12-31	Filed 2020-02-11
10-Q	2019-09-30	Filed 2019-10-30
10-Q	2019-06-30	Filed 2019-07-30
10-Q	2019-03-31	Filed 2019-05-01
10-K	2018-12-31	Filed 2019-02-06
10-Q	2018-09-30	Filed 2018-10-30
10-Q	2018-06-30	Filed 2018-07-24
10-Q	2018-03-31	Filed 2018-04-24
10-K	2017-12-31	Filed 2018-02-01
10-Q	2017-09-30	Filed 2017-10-24
10-Q	2017-06-30	Filed 2017-07-25
10-Q	2017-03-31	Filed 2017-04-25
10-K	2016-12-31	Filed 2017-02-02
10-Q	2016-09-30	Filed 2016-10-25
10-Q	2016-06-30	Filed 2016-07-26
10-Q	2016-03-31	Filed 2016-04-26
10-K	2015-12-31	Filed 2016-02-02
10-Q	2015-09-30	Filed 2015-10-27
10-Q	2015-06-30	Filed 2015-07-28
10-Q	2015-03-31	Filed 2015-04-28
10-K	2014-12-31	Filed 2015-02-03
10-Q	2014-09-30	Filed 2014-10-28
10-Q	2014-06-30	Filed 2014-07-29
10-Q	2014-03-31	Filed 2014-04-29
10-K	2013-12-31	Filed 2014-02-06
10-Q	2013-09-30	Filed 2013-10-29
10-Q	2013-06-30	Filed 2013-07-29
10-Q	2013-03-31	Filed 2013-04-29
10-K	2012-12-31	Filed 2013-02-08
10-Q	2012-09-30	Filed 2012-10-26
10-Q	2012-06-30	Filed 2012-07-27
10-Q	2012-03-31	Filed 2012-05-01
10-K	2011-12-31	Filed 2012-02-10
10-Q	2011-09-30	Filed 2011-10-24
10-Q	2011-06-30	Filed 2011-07-22
10-Q	2011-03-31	Filed 2011-04-22
10-K	2010-12-31	Filed 2011-01-31
10-Q	2010-09-30	Filed 2010-10-22
10-Q	2010-06-30	Filed 2010-07-26
10-Q	2010-03-31	Filed 2010-04-26

8-K	2020-09-08	Regulation FD, Exhibits
8-K	2020-09-04	Officers
8-K	2020-08-17	Enter Agreement, Off-BS Arrangement, Shareholder Rights, Exhibits
8-K	2020-08-03	Other Events, Exhibits
8-K	2020-07-31	Officers, Exhibits
8-K	2020-07-28	Earnings, Exhibits
8-K	2020-05-28
8-K	2020-04-29
8-K	2020-04-01
8-K	2020-03-16
8-K	2020-02-14
8-K	2020-02-11
8-K	2020-01-17
8-K	2019-10-30
8-K	2019-09-20
8-K	2019-09-10
8-K	2019-08-01
8-K	2019-07-30
8-K	2019-05-28
8-K	2019-05-01
8-K	2019-03-27
8-K	2019-02-06
8-K	2019-01-21
8-K	2018-10-30
8-K	2018-08-28
8-K	2018-07-24
8-K	2018-05-31
8-K	2018-04-24
8-K	2018-02-21
8-K	2018-02-16
8-K	2018-02-06
8-K	2018-02-01
8-K	2018-01-01

EX-10.1	ex101votavaemployment.htm
EX-10.2	ex102caljouwemployment.htm
EX-10.3	ex103elliottamendedemp.htm
EX-31.1	exhibit311063020.htm
EX-31.2	exhibit312063020.htm
EX-32.1	exhibit321063020.htm

ST 10Q Quarterly Report

Sensata Technologies Earnings 2020-06-30