Sensata Technologies Reports Fourth Quarter and Full Year 2020 Financial Results

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 fourth quarter and full year ended December 31, 2020.

Operating results for the fourth quarter of 2020 compared to the fourth quarter of 2019 and the third quarter of 2020 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 $906.5 million, an increase of $59.8 million, or 7.1%, compared to $846.7 million in the fourth quarter of 2019.
  • Revenue increased 5.3% from the fourth quarter of 2019 on an organic basis, which excludes a 1.8% increase from foreign currency exchange rates versus the prior year period.
  • Revenue increased 15.0% from the third quarter of 2020 on a reported basis.

Operating income:

  • Operating income was $154.2 million (17.0% of revenue), an increase of $33.4 million, or 27.7%, compared to operating income of $120.7 million (14.3% of revenue) in the fourth quarter of 2019 and an increase of 21.5% compared to operating income of $126.8 million (16.1% of revenue) in the third quarter of 2020.
  • Adjusted operating income was $195.6 million (21.6% of revenue), an increase of $3.1 million, or 1.6%, compared to adjusted operating income of $192.5 million (22.7% of revenue) in the fourth quarter of 2019. Adjusted operating income increased $40.8 million, or 26.4%, sequentially from $154.8 million (19.6% of revenue) in the third quarter of 2020.

Earnings per share:

  • Earnings per share was $0.77, an increase of 126.5% compared to earnings per share of $0.34 in the fourth quarter of 2019 and an increase of $0.28, or 57.1%, compared to earnings per share of $0.49 in the third quarter of 2020.
  • Adjusted earnings per share was $0.85, a decrease of (4.5%) compared to adjusted earnings per share of $0.89 in the fourth quarter of 2019 but an increase of 28.8% compared to adjusted earnings per share of $0.66 in the third quarter of 2020.
  • Changes in foreign currency exchange rates increased Sensata’s adjusted earnings per share by $0.05 in the fourth quarter of 2020 compared to the prior year period.

“The fourth quarter results reflect a meaningful return to growth across our automotive, heavy vehicle and industrial markets. Beyond improvements in end markets, Sensata’s growth outpaced the automotive market by 970 basis points and the heavy vehicle market by 990 basis points during the quarter,” said Jeff Cote, CEO and President of Sensata. “While 2020 posed challenges across the world, we are pleased with how quickly and effectively we adapted to evolving conditions, clearly positioning Sensata to benefit from the recovery. We are continuing to execute on our long-term growth strategy as evidenced by the recent acquisition of Lithium Balance in Electrification, adding a key core competence in Battery Management Systems to Sensata’s extensive capabilities.”

Full Year Ended December 31, 2020

Operating results for the full year ended December 31, 2020 compared to the full year ended December 31, 2019 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 $3,045.6 million, a decrease of ($405.1) million, or (11.7%), compared to $3,450.6 million in 2019.
  • Revenue declined (11.9%) from 2019 on an organic basis, which excludes a 0.2% increase from foreign currency exchange rates versus the prior year.

Operating income:

  • Operating income was $337.7 million (11.1% of revenue), a decrease of ($219.1) million, or (39.4%), compared to operating income of $556.9 million (16.1% of revenue) in 2019.
  • Adjusted operating income was $562.1 million (18.5% of revenue), a decrease of ($223.6) million, or (28.5%), compared to adjusted operating income of $785.7 million (22.8% of revenue) in 2019.

Earnings per share:

  • Earnings per share was $1.04, a decrease of (40.6%) compared to earnings per share of $1.75 in 2019.
  • Adjusted earnings per share was $2.21, a decrease of (37.9%) compared to adjusted earnings per share of $3.56 in 2019.
  • Changes in foreign currency exchange rates increased Sensata’s adjusted earnings per share by $0.14 in 2020 compared to the prior year.

Sensata generated $559.8 million of operating cash flow in 2020, compared to $619.6 million in the prior year. The Company’s free cash flow totaled $453.1 million in 2020 compared to $458.3 million in the prior year.

Segment Performance

 

 

For the three months ended

December 31,

 

For the full year ended

December 31,

$ in 000s

 

2020

 

2019

 

2020

 

2019

Performance Sensing

 

 

 

 

 

 

 

 

Revenue

 

$

688,978

 

 

$

632,879

 

 

$

2,223,810

 

 

$

2,546,016

 

Operating income*

 

$

185,101

 

 

$

171,488

 

 

$

532,529

 

 

$

670,470

 

% of Performance Sensing revenue

 

26.9

%

 

27.1

%

 

23.9

%

 

26.3

%

 

 

 

 

 

 

 

 

 

Sensing Solutions

 

 

 

 

 

 

 

 

Revenue

 

$

217,513

 

 

$

213,812

 

 

$

821,768

 

 

$

904,615

 

Operating income*

 

$

70,673

 

 

$

69,141

 

 

$

241,218

 

 

$

293,967

 

% of Sensing Solutions revenue

 

32.5

%

 

32.3

%

 

29.4

%

 

32.5

%

*

Includes adjustments for reclassification of Megatrend growth spend to corporate and other.

Guidance

“Sensata delivered strong financial performance in the fourth quarter, posting 15.0% revenue growth and 26.4% adjusted operating income growth from the third quarter,” said Paul Vasington, EVP and CFO of Sensata. “Sensata generated record free cash flow of $240 million in the fourth quarter, driven by strong earnings recovery, working capital management, and Capital Expenditure controls. For the first quarter of 2021, we expect revenue of $875 to $915 million and adjusted EPS of $0.67 to $0.77.”

Fiscal Year 2021 Guidance

 

 

 

$ in millions, except EPS

FY-21 Guidance

FY-20

Y/Y Change

Revenue

$3,425 – $3,575

$3,045.6

12% – 17%

organic growth

 

 

10% – 15%

Adjusted Operating Income

$695 – $755

$562.1

24% – 34%

Adjusted Net Income

$488 – $544

$349.2

40% – 56%

Adjusted EPS

$3.06 – $3.42

$2.21

38% – 55%

Versus the prior year period, Sensata expects that changes in foreign currency exchange rates will increase revenues by approximately $64 million at the midpoint and will have minimal impact on adjusted earnings per share for the full year 2021.

Q1 2021 Guidance

 

 

 

$ in millions, except EPS

Q1-21 Guidance

Q1-20

Y/Y Change

Revenue

$875 – $915

$774.3

13% – 18%

organic growth

 

 

11% – 16%

Adjusted Operating Income

$166 – $182

$136.7

21% – 33%

Adjusted Net Income

$106 – $122

$83.2

27% – 47%

Adjusted EPS

$0.67 – $0.77

$0.53

26% – 45%

Versus the prior year period, Sensata expects that changes in foreign currency exchange rates will increase revenues by approximately $17 million at the midpoint and will decrease adjusted earnings per share by approximately ($0.01) in the first quarter of 2021.

Conference Call and Webcast

Sensata will conduct a conference call today at 8:00 AM eastern time to discuss its fourth quarter and full year 2020 financial results and its outlook for the first quarter and full year 2021. The dial-in numbers for the call are 1-844-784-1726 or +1-412-380-7411. Callers should reference the “Sensata Q4 2020 Financial Results Conference Call.” A live webcast and a replay 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 9, 2021. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 10151035.

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 19,000 employees and operations in 12 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, and segment operating margin measured on a constant currency basis. 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 is defined as net income, 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 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 is defined as operating income, 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 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 operating activities, determined in accordance with U.S. GAAP, 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 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 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.

Safe Harbor Statement

This earnings release contains “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995, which relate to future events and are subject to risks and uncertainties. The forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, may contain words or phrases such as: “believe,” “continue,” “expect,” “look ahead,” “predict,” or “will,” and other words and phrases of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about expected earnings, revenues, growth, liquidity or other financial matters, together with any statements related in any way to the COVID-19 pandemic including its impact on the Company. Although the Company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, no assurance can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this earnings release, including, without limitation, the following: future risks and existing uncertainties associated with the COVID-19 pandemic, which continues to have a significant adverse impact on our operations including, depending on the specific location, full or partial shutdowns of our facilities as mandated by government decree, government actions limiting our ability to adjust certain costs, significant travel restrictions, “work-from-home” orders, limited availability of our workforce, supplier constraints, supply chain interruptions, logistics challenges and limitations, and reduced demand from certain customers; uncertainties associated with a protracted economic slowdown that could negatively affect the financial condition of our customers and suppliers; uncertainties and volatility in the global capital markets; political, economic, military and other risks in countries outside of the United States; the impact of general economic conditions, geopolitical conditions and U.S. trade policies, legislation, trade disputes, treaties and tariffs, including those affecting China, on the Company’s business operations; risks associated with the improper conduct by any of our employees, customers, suppliers, distributors or any other business partners which could impair our business reputation and financial results and could result in our non-compliance with anti-corruption laws and regulations of the U.S. government and various foreign jurisdictions; changes in exchange rates of the various currencies in which the Company conducts business; the Company’s ability to obtain a consistent supply of materials, at stable pricing levels; changes in defense expenditures in the military market, including the impact of reductions or changes in the defense budgets of U.S. and foreign governments; the Company’s ability to compete successfully on the basis of technology innovation, product quality and performance, price, customer service and delivery time; the Company’s ability to continue to conceive, design, manufacture and market new products and upon continuing market acceptance of its existing and future product lines; difficulties and unanticipated expenses in connection with purchasing and integrating newly acquired businesses, including the potential for the impairment of goodwill and other intangible assets; events beyond the Company’s control that could lead to an inability to meet its financial covenants under its credit arrangements; the Company’s ability to access the capital markets on favorable terms, including as a result of significant deterioration of general economic or capital market conditions, or as a result of a downgrade in the Company’s credit rating; changes in interest rates; governmental export and import controls that certain of our products may be subject to, including export licensing, customs regulations, economic sanctions or other laws; cybersecurity threats or incidents that could arise on our information technology systems that could disrupt business operations and adversely impact our reputation and operating results and potentially lead to litigation and/or governmental investigations; changes in fiscal and tax policies, audits and examinations by taxing authorities, laws, regulations and guidance in the United States and foreign jurisdictions; any difficulties in protecting the Company’s intellectual property rights; and litigation, customer claims, product recalls, governmental investigations, criminal liability or environmental matters. In addition, the extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

A further description of these uncertainties and other risks can be found in the Company’s 2019 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and the Company’s other reports filed with the SEC. Copies of our filings are available from our Investor Relations department or from the SEC website, www.sec.gov.

 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

For the three months ended

December 31,

 

For the full year ended

December 31,

 

 

2020

 

2019

 

2020

 

2019

Net revenue

 

$

906,491

 

 

$

846,691

 

 

$

3,045,578

 

 

$

3,450,631

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of revenue

 

609,940

 

 

556,482

 

 

2,119,044

 

 

2,267,433

 

Research and development

 

33,314

 

 

38,455

 

 

131,429

 

 

148,425

 

Selling, general and administrative

 

77,027

 

 

70,709

 

 

294,725

 

 

281,442

 

Amortization of intangible assets

 

31,152

 

 

34,807

 

 

129,549

 

 

142,886

 

Restructuring and other charges, net

 

897

 

 

25,520

 

 

33,094

 

 

53,560

 

Total operating costs and expenses

 

752,330

 

 

725,973

 

 

2,707,841

 

 

2,893,746

 

Operating income

 

154,161

 

 

120,718

 

 

337,737

 

 

556,885

 

Interest expense, net

 

(47,417)

 

 

(40,137)

 

 

(171,757)

 

 

(158,554)

 

Other, net

 

1,172

 

 

17

 

 

(339)

 

 

(7,908)

 

Income before taxes

 

107,916

 

 

80,598

 

 

165,641

 

 

390,423

 

(Benefit from)/provision for income taxes

 

(13,751)

 

 

27,060

 

 

1,355

 

 

107,709

 

Net income

 

$

121,667

 

 

$

53,538

 

 

$

164,286

 

 

$

282,714

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.77

 

 

$

0.34

 

 

$

1.04

 

 

$

1.76

 

Diluted

 

$

0.77

 

 

$

0.34

 

 

$

1.04

 

 

$

1.75

 

 

 

 

 

 

 

 

 

 

Weighted-average ordinary shares outstanding:

 

 

 

 

 

 

Basic

 

157,488

 

 

158,462

 

 

157,373

 

 

160,946

 

Diluted

 

158,567

 

 

159,564

 

 

158,134

 

 

161,968

 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

December 31,

2020

 

December 31,

2019

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,861,980

 

 

$

774,119

 

Accounts receivable, net of allowances

 

576,647

 

 

557,874

 

Inventories

 

451,005

 

 

506,678

 

Prepaid expenses and other current assets

 

90,340

 

 

126,981

 

Total current assets

 

2,979,972

 

 

1,965,652

 

Property, plant and equipment, net

 

803,825

 

 

830,998

 

Goodwill

 

3,111,349

 

 

3,093,598

 

Other intangible assets, net

 

691,549

 

 

770,904

 

Deferred income tax assets

 

84,785

 

 

21,150

 

Other assets

 

172,722

 

 

152,217

 

Total assets

 

$

7,844,202

 

 

$

6,834,519

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt, finance lease and other financing obligations

 

$

7,205

 

 

$

6,918

 

Accounts payable

 

393,907

 

 

376,968

 

Income taxes payable

 

19,215

 

 

35,234

 

Accrued expenses and other current liabilities

 

324,830

 

 

215,626

 

Total current liabilities

 

745,157

 

 

634,746

 

Deferred income tax liabilities

 

259,857

 

 

251,033

 

Pension and other post-retirement benefit obligations

 

48,002

 

 

36,100

 

Finance lease and other financing obligations, less current portion

 

27,931

 

 

28,810

 

Long-term debt, net

 

3,963,747

 

 

3,219,885

 

Other long-term liabilities

 

94,022

 

 

90,190

 

Total liabilities

 

5,138,716

 

 

4,260,764

 

Total shareholders’ equity

 

2,705,486

 

 

2,573,755

 

Total liabilities and shareholders’ equity

 

$

7,844,202

 

 

$

6,834,519

 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

For the full year ended

December 31,

 

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

Net Income

 

$

164,286

 

 

$

282,714

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

125,680

 

 

115,862

 

Amortization of debt issuance costs

 

6,854

 

 

7,804

 

Share-based compensation

 

19,125

 

 

18,757

 

Loss on debt financing

 

 

 

4,364

 

Amortization of intangible assets

 

129,549

 

 

142,886

 

Deferred income taxes

 

(44,900)

 

 

27,623

 

Unrealized loss on derivative instruments and other

 

4,709

 

 

30,292

 

Changes in operating assets and liabilities

 

154,472

 

 

(10,740)

 

Net cash provided by operating activities

 

559,775

 

 

619,562

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisitions, net of cash received

 

(64,432)

 

 

(32,465)

 

Additions to property, plant and equipment and capitalized software

 

(106,719)

 

 

(161,259)

 

Investments in debt and equity securities

 

(22,963)

 

 

(9,950)

 

Other

 

12,022

 

 

(5,103)

 

Net cash used in investing activities

 

(182,092)

 

 

(208,777)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from exercise of stock options and issuance of ordinary shares

 

15,456

 

 

15,150

 

Payments of employee restricted stock tax withholdings

 

(2,911)

 

 

(6,990)

 

Proceeds from issuance of debt

 

1,150,000

 

 

450,000

 

Payments on debt

 

(408,913)

 

 

(464,605)

 

Payments to repurchase ordinary shares

 

(35,175)

 

 

(350,004)

 

Payments of debt and equity issuance costs

 

(8,279)

 

 

(10,050)

 

Net cash provided by/(used in) financing activities

 

710,178

 

 

(366,499)

 

Net change in cash and cash equivalents

 

1,087,861

 

 

44,286

 

Cash and cash equivalents, beginning of period

 

774,119

 

 

729,833

 

Cash and cash equivalents, end of period

 

$

1,861,980

 

 

$

774,119

 

 

Revenue by Business, Geography, and End Market (Unaudited)

(percent of total revenue)

 

Three months ended

December 31,

 

Full year ended

December 31,

 

 

2020

 

2019

 

2020

 

2019

Performance Sensing

 

76.0

%

 

74.7

%

 

73.0

%

 

73.8

%

Sensing Solutions

 

24.0

%

 

25.3

%

 

27.0

%

 

26.2

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

(percent of total revenue)

 

Three months ended

December 31,

 

Full year ended

December 31,

 

 

2020

 

2019

 

2020

 

2019

Americas

 

37.6

%

 

38.9

%

 

39.3

%

 

42.3

%

Europe

 

27.2

%

 

27.0

%

 

26.8

%

 

28.1

%

Asia/Rest of World

 

35.2

%

 

34.1

%

 

33.9

%

 

29.6

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

(percent of total revenue)

 

Three months ended

December 31,

 

Full year ended

December 31,

 

 

2020

 

2019

 

2020

 

2019

Automotive*

 

60.4

%

 

60.5

%

 

57.5

%

 

58.8

%

Heavy vehicle and off-road

 

16.9

%

 

15.4

%

 

16.7

%

 

16.2

%

Industrial

 

9.9

%

 

9.4

%

 

11.0

%

 

10.2

%

Appliance and heating, ventilation and air-conditioning

 

5.9

%

 

5.3

%

 

6.2

%

 

5.8

%

Aerospace

 

3.9

%

 

5.5

%

 

4.5

%

 

5.1

%

All other

 

3.0

%

 

3.9

%

 

4.1

%

 

3.9

%

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

*

Includes amounts reflected in the Sensing Solutions segment as follows: $12.3 million and $9.6 million of revenue in the three months ended December 31, 2020 and 2019, respectively, and $35.6 million and $42.4 million of revenue in the full year ended December 31, 2020 and 2019, respectively.

 

Market Outgrowth (Unaudited)

 

 

For the three months ended

December 31, 2020

 

For the full year ended

December 31, 2020

 

 

 

Reported

Growth

 

Organic

Growth

 

End

Market

Growth

 

Reported

Growth

 

Organic

Growth

 

End

Market

Growth

 

Automotive

 

6.5

%

 

4.4

%

 

0.1

%

*

(13.6

%)

 

(13.9

%)

 

(18.5

%)

*

Heavy vehicle and off-road

 

17.9

%

 

16.2

%

 

6.3

%

 

(9.2

%)

 

(9.2

%)

 

(18.0

%)

 

*

Excludes Toyota, adjusted for Sensata’s geographic mix. Adjustments for inventory in the supply chain, not included here, are (5.4%) and (2.3%) for the three months and full year ended December 31, 2020, 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 EPS

($ in thousands, except per share amounts)

For the three months ended December 31, 2020

 

Operating

Income

 

Operating

Margin

 

Income

Tax

 

Net

Income

 

Diluted

EPS

Reported (GAAP)

$

154,161

 

 

17.0

%

 

$

(13,751)

 

 

$

121,667

 

 

$

0.77

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

8,379

 

 

0.9

%

 

4,123

 

 

17,025

 

 

0.11

 

Financing and other transaction costs

1,014

 

 

0.1

%

 

 

 

(832)

 

 

(0.01)

 

Step-up depreciation and amortization

30,042

 

 

3.3

%

 

 

 

30,042

 

 

0.19

 

Deferred loss/(gain) on derivative instruments

2,045

 

 

0.2

%

 

 

 

(1,992)

 

 

(0.01)

 

Amortization of debt issuance costs

 

 

%

 

 

 

1,828

 

 

0.01

 

Deferred taxes and other tax related

 

 

%

 

(33,053)

 

 

(33,053)

 

 

(0.21)

 

Total adjustments

41,480

 

 

4.6

%

 

(28,930)

 

 

13,018

 

 

0.08

 

Adjusted (non-GAAP)

$

195,641

 

 

21.6

%

 

$

15,179

 

 

$

134,685

 

 

$

0.85

 

($ in thousands, except per share amounts)

For the three months ended December 31, 2019

 

Operating

Income

 

Operating

Margin

 

Income

Tax

 

Net

Income

 

Diluted

EPS

Reported (GAAP)

$

120,718

 

 

14.3

%

 

$

27,060

 

 

$

53,538

 

 

$

0.34

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

17,000

 

 

2.0

%

 

(343)

 

 

18,794

 

 

0.12

 

Financing and other transaction costs*

20,842

 

 

2.5

%

 

 

 

20,842

 

 

0.13

 

Step-up depreciation and amortization

33,823

 

 

4.0

%

 

 

 

33,823

 

 

0.21

 

Deferred loss/(gain) on derivative instruments

149

 

 

0.0

%

 

 

 

(1,932)

 

 

(0.01)

 

Amortization of debt issuance costs

 

 

%

 

 

 

2,231

 

 

0.01

 

Deferred taxes and other tax related

 

 

%

 

14,403

 

 

14,403

 

 

0.09

 

Total adjustments

71,814

 

 

8.5

%

 

14,060

 

 

88,161

 

 

0.55

 

Adjusted (non-GAAP)

$

192,532

 

 

22.7

%

 

$

13,000

 

 

$

141,699

 

 

$

0.89

 

*

Includes $17.8 million of costs relating to the termination of an unfavorable long-term supplier agreement.

 

($ in thousands, except per share amounts)

For the full year ended December 31, 2020

 

Operating

Income

Operating

Margin

Income

Tax

Net

Income

Diluted

EPS

Reported (GAAP)

$

337,737

 

11.1

%

$

1,355

 

$

164,286

 

$

1.04

 

Non-GAAP adjustments:

 

 

 

 

 

Restructuring related and other*

87,420

 

2.9

%

(4,214)

 

93,803

 

0.59

 

Financing and other transaction costs

8,209

 

0.3

%

 

6,363

 

0.04

 

Step-up depreciation and amortization

125,677

 

4.1

%

 

125,677

 

0.79

 

Deferred loss/(gain) on derivative instruments

3,066

 

0.1

%

 

(6,961)

 

(0.04)

 

Amortization of debt issuance costs

 

%

 

6,854

 

0.04

 

Deferred taxes and other tax related

 

%

(40,856)

 

(40,856)

 

(0.26)

 

Total adjustments

224,372

 

7.4

%

(45,070)

 

184,880

 

1.17

 

Adjusted (non-GAAP)

$

562,109

 

18.5

%

$

46,425

 

$

349,166

 

$

2.21

 

*

Includes a $29.6 million loss related to the September 2020 settlement of patent infringement litigation with Wasica and $30.2 million of charges related to the Q2 2020 Global Restructure Program. Refer to our third quarter 2020 Form 10-Q for additional information regarding the litigation and restructuring program.

 

($ in thousands, except per share amounts)

For the full year ended December 31, 2019

 

Operating

Income

Operating

Margin

Income

Tax

Net

Income

Diluted

EPS

Reported (GAAP)

$

556,885

 

16.1

%

$

107,709

 

$

282,714

 

$

1.75

 

Non-GAAP adjustments:

 

 

 

 

 

Restructuring related and other

61,916

 

1.8

%

(1,843)

 

62,210

 

0.38

 

Financing and other transaction costs*

28,911

 

0.8

%

 

34,851

 

0.22

 

Step-up depreciation and amortization

139,587

 

4.0

%

 

139,587

 

0.86

 

Deferred gain on derivative instruments

(1,604)

 

(0.0

%)

 

(6,492)

 

(0.04)

 

Amortization of debt issuance costs

 

%

 

7,804

 

0.05

 

Deferred taxes and other tax related

 

%

55,242

 

55,242

 

0.34

 

Total adjustments

228,810

 

6.6

%

53,399

 

293,202

 

1.81

 

Adjusted (non-GAAP)

$

785,695

 

22.8

%

$

54,310

 

$

575,916

 

$

3.56

 

*

Includes $17.8 million of costs relating to the termination of an unfavorable long-term supplier agreement.

 

Non-GAAP Adjustments by location in statements of operations

($ in thousands)

Three months ended

December 31,

 

 

Full year ended

December 31,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)

$

4,802

 

 

 

$

7,577

 

 

 

$

42,873

 

 

 

$

25,115

 

Selling, general and administrative

6,262

 

 

 

5,618

 

 

 

25,490

 

 

 

14,048

 

Amortization of intangible assets

29,519

 

 

 

33,099

 

 

 

122,915

 

 

 

136,087

 

Restructuring and other charges, net (2)

897

 

 

 

25,520

 

 

 

33,094

 

 

 

53,560

 

Operating income adjustments

41,480

 

 

 

71,814

 

 

 

224,372

 

 

 

228,810

 

Interest expense, net

1,828

 

 

 

2,231

 

 

 

6,854

 

 

 

7,804

 

Other, net

(1,360)

 

 

 

56

 

 

 

(1,276)

 

 

 

3,189

 

(Benefit from)/provision for income taxes

(28,930)

 

 

 

14,060

 

 

 

(45,070)

 

 

 

53,399

 

Net income adjustments

$

13,018

 

 

 

$

88,161

 

 

 

$

184,880

 

 

 

$

293,202

 

(1)

Includes a $29.2 million loss recorded in the full year ended December 31, 2020 related to the patent infringement case brought by Wasica. We settled this litigation in the third quarter 2020, refer to our third quarter 2020 Form 10-Q for additional information.

 

 

(2)

The full year ended December 31, 2020 includes $24.5 million of charges recognized in 2020 related to the Q2 2020 Global Restructure Program. Refer to our third quarter 2020 Form 10-Q for additional information regarding this restructuring program.

 

Operating income and margin, income tax, net income, and EPS (for the three months ended September 30, 2020)

($ in thousands, except per share amounts)

 

For the three months ended September 30, 2020

 

 

Operating

Income

 

Operating

Margin

 

Income

Taxes

 

Net

Income

 

Diluted

EPS

Reported (GAAP)

 

$

126,845

 

 

16.1

%

 

$

15,181

 

 

$

76,729

 

 

$

0.49

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

Restructuring related and other(1)

 

(5,555)

 

 

(0.7

%)

 

10,042

 

 

4,992

 

 

0.03

 

Financing and other transaction costs

 

1,842

 

 

0.2

%

 

 

 

1,842

 

 

0.01

 

Step-up depreciation and amortization

 

31,467

 

 

4.0

%

 

 

 

31,467

 

 

0.20

 

Deferred loss/(gain) on derivative instruments

 

212

 

 

0.0

%

 

 

 

(5,926)

 

 

(0.04)

 

Amortization of debt issuance costs

 

 

 

%

 

 

 

1,763

 

 

0.01

 

Deferred taxes and other tax related

 

 

 

%

 

(7,272)

 

 

(7,272)

 

 

(0.05)

 

Total adjustments

 

27,966

 

 

3.5

%

 

2,770

 

 

26,866

 

 

0.17

 

Adjusted (non-GAAP)

 

$

154,811

 

 

19.6

%

 

$

12,411

 

 

$

103,595

 

 

$

0.66

 

(1)

Includes an $11.7 million gain recognized upon release of excess accrual following the September 2020 settlement of patent infringement litigation with Wasica. Refer to our third quarter 2020 Form 10-Q for additional information regarding this litigation.

 

Free cash flow

($ in thousands)

Three months ended

December 31,

 

% Change

 

Full year ended

December 31,

 

% Change

 

2020

 

2019

 

 

 

2020

 

2019

 

 

Net cash provided by operating activities

$

266,437

 

 

$

186,035

 

 

43.2

%

 

$

559,775

 

 

$

619,562

 

 

(9.6

%)

Additions to property, plant and equipment and capitalized software

(26,780)

 

 

(38,053)

 

 

29.6

%

 

(106,719)

 

 

(161,259)

 

 

33.8

%

Free cash flow

$

239,657

 

 

$

147,982

 

 

62.0

%

 

$

453,056

 

 

$

458,303

 

 

(1.1

%)

Adjusted EBITDA

($ in thousands)

 

FY 20

(LTM)

 

Q4 20

 

Q3 20

 

Q2 20

 

Q1 20

Net income/(loss)

 

$

164,286

 

 

$

121,667

 

 

$

76,729

 

 

$

(42,541)

 

 

$

8,431

 

Interest expense, net

 

171,757

 

 

47,417

 

 

44,129

 

 

40,808

 

 

39,403

 

Provision for/(benefit from) income taxes

 

1,355

 

 

(13,751)

 

 

15,181

 

 

1,441

 

 

(1,516)

 

Depreciation expense

 

125,680

 

 

31,464

 

 

28,928

 

 

30,609

 

 

34,679

 

Amortization of intangible assets

 

129,549

 

 

31,152

 

 

32,562

 

 

32,743

 

 

33,092

 

Earnings before interest, taxes, depreciation, and amortization (EBITDA)

 

592,627

 

 

217,949

 

 

197,529

 

 

63,060

 

 

114,089

 

Non-GAAP Adjustments

 

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

93,117

 

 

12,902

 

 

(5,050)

 

 

42,708

 

 

42,557

 

Financing and other transaction costs

 

6,363

 

 

(832)

 

 

1,842

 

 

3,619

 

 

1,734

 

Deferred (gain)/loss on derivative instruments

 

(6,961)

 

 

(1,992)

 

 

(5,926)

 

 

(4,927)

 

 

5,884

 

Adjusted EBITDA

 

$

685,146

 

 

$

228,027

 

 

$

188,395

 

 

$

104,460

 

 

$

164,264

 

Net debt and leverage

 

 

As of

($ in thousands)

 

12/31/20

 

9/30/20

 

6/30/20

 

3/31/20

 

12/31/19

Current portion of long-term debt, finance lease and other financing obligations

 

$

7,205

 

 

$

7,049

 

 

$

407,042

 

 

$

7,095

 

 

$

6,918

 

Finance lease and other financing obligations, less current portion

 

27,931

 

 

28,360

 

 

28,243

 

 

28,280

 

 

28,810

 

Long-term debt, net

 

3,963,747

 

 

3,963,076

 

 

3,220,833

 

 

3,220,359

 

 

3,219,885

 

Total debt, finance lease, and other financing obligations

 

3,998,883

 

 

3,998,485

 

 

3,656,118

 

 

3,255,734

 

 

3,255,613

 

Less: Discount

 

(9,605)

 

 

(10,143)

 

 

(10,681)

 

 

(11,220)

 

 

(11,758)

 

Less: Deferred financing costs

 

(28,114)

 

 

(29,404)

 

 

(22,266)

 

 

(23,359)

 

 

(24,452)

 

Total Gross indebtedness

 

4,036,602

 

 

4,038,032

 

 

3,689,065

 

 

3,290,313

 

 

3,291,823

 

Less: Cash and cash equivalents

 

1,861,980

 

 

1,610,191

 

 

1,242,949

 

 

802,971

 

 

774,119

 

Net Debt

 

$

2,174,622

 

 

$

2,427,841

 

 

$

2,446,116

 

 

$

2,487,342

 

 

$

2,517,704

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (LTM)

 

685,146

 

 

682,216

 

 

719,192

 

 

845,933

 

 

900,137

 

Net leverage ratio

 

3.2

 

3.6

 

3.4

 

2.9

 

2.8

Guidance

 

For the three months ending March 31, 2021

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$

131.3

 

 

$

145.8

 

 

$

68.7

 

 

$

82.2

 

 

$

0.43

 

 

$

0.52

 

Restructuring related and other

5.5

 

 

6.0

 

 

5.3

 

 

5.8

 

 

0.03

 

 

0.04

 

Financing and other transaction costs(a)

0.2

 

 

0.2

 

 

0.2

 

 

0.2

 

 

 

 

 

Step-up depreciation and amortization(a)

29.0

 

 

30.0

 

 

29.0

 

 

30.0

 

 

0.18

 

 

0.19

 

Deferred (gain)/loss on derivative instruments(b)

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

 

 

1.8

 

 

1.8

 

 

0.01

 

 

0.01

 

Deferred taxes and other tax related

 

 

 

 

1.0

 

 

2.0

 

 

0.01

 

 

0.01

 

Non-GAAP

$

166.0

 

 

$

182.0

 

 

$

106.0

 

 

$

122.0

 

 

$

0.67

 

 

$

0.77

 

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

158.9

 

158.9

 

For the full year ending December 31, 2021

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$

566.0

 

 

$

620.0

 

 

$

349.0

 

 

$

395.0

 

 

$

2.19

 

 

$

2.48

 

Restructuring related and other

16.0

 

 

18.0

 

 

15.0

 

 

17.0

 

 

0.09

 

 

0.11

 

Financing and other transaction costs(a)

1.0

 

 

1.0

 

 

1.0

 

 

1.0

 

 

0.01

 

 

0.01

 

Step-up depreciation and amortization(a)

112.0

 

 

116.0

 

 

112.0

 

 

116.0

 

 

0.70

 

 

0.73

 

Deferred (gain)/loss on derivative instruments(b)

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

 

 

7.0

 

 

7.0

 

 

0.04

 

 

0.04

 

Deferred taxes and other tax related

 

 

 

 

4.0

 

 

8.0

 

 

0.03

 

 

0.05

 

Non-GAAP

$

695.0

 

 

$

755.0

 

 

$

488.0

 

 

$

544.0

 

 

$

3.06

 

 

$

3.42

 

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

159.2

 

159.2

(a)

Amounts do not contemplate the effects of future acquisition or financing transactions that occur beyond our most recent fiscal year end.

(b)

We are unable to predict movements in commodity prices and, therefore, the impact of market-to-market adjustments on our commodity forward contracts to our projected 2021 operating results. In prior periods such adjustments have been significant in relation to our reported GAAP results.

 

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