EX-99.1 2 q420pressrelease.htm EX-99.1 Document

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SENSATA TECHNOLOGIES REPORTS FOURTH QUARTER
AND FULL YEAR 2020 FINANCIAL RESULTS

Company provides First Quarter and Full Year 2021 Financial Guidance
Swindon, United Kingdom – February 2, 2021 - 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.
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"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.
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Segment Performance
For the three months ended December 31,For the full year ended December 31,
$ in 000s2020201920202019
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 revenue26.9 %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 revenue32.5 %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 EPSFY-21 GuidanceFY-20Y/Y Change
Revenue$3,425 - $3,575$3,045.612% - 17%
organic growth10% - 15%
Adjusted Operating Income$695 - $755$562.124% - 34%
Adjusted Net Income$488 - $544$349.240% - 56%
Adjusted EPS$3.06 - $3.42$2.2138% - 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 EPSQ1-21 GuidanceQ1-20Y/Y Change
Revenue$875 - $915$774.313% - 18%
organic growth11% - 16%
Adjusted Operating Income$166 - $182$136.721% - 33%
Adjusted Net Income$106 - $122$83.227% - 47%
Adjusted EPS$0.67 - $0.77$0.5326% - 45%
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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.
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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
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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.
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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,
2020201920202019
Net revenue$906,491 $846,691 $3,045,578 $3,450,631 
Operating costs and expenses:
Cost of revenue609,940 556,482 2,119,044 2,267,433 
Research and development33,314 38,455 131,429 148,425 
Selling, general and administrative77,027 70,709 294,725 281,442 
Amortization of intangible assets 31,152 34,807 129,549 142,886 
Restructuring and other charges, net897 25,520 33,094 53,560 
Total operating costs and expenses752,330 725,973 2,707,841 2,893,746 
Operating income154,161 120,718 337,737 556,885 
Interest expense, net(47,417)(40,137)(171,757)(158,554)
Other, net1,172 17 (339)(7,908)
Income before taxes107,916 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:
Basic157,488 158,462 157,373 160,946 
Diluted158,567 159,564 158,134 161,968 





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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 assets2,979,972 1,965,652 
Property, plant and equipment, net803,825 830,998 
Goodwill3,111,349 3,093,598 
Other intangible assets, net691,549 770,904 
Deferred income tax assets84,785 21,150 
Other assets172,722 152,217 
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 liabilities745,157 634,746 
Deferred income tax liabilities259,857 251,033 
Pension and other post-retirement benefit obligations48,002 36,100 
Finance lease and other financing obligations, less current portion27,931 28,810 
Long-term debt, net
3,963,747 3,219,885 
Other long-term liabilities94,022 90,190 
Total liabilities5,138,716 4,260,764 
Total shareholders’ equity2,705,486 2,573,755 
Total liabilities and shareholders’ equity$7,844,202 $6,834,519 




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SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
For the full year ended December 31,
20202019
Cash flows from operating activities:
Net Income$164,286 $282,714 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation125,680 115,862 
Amortization of debt issuance costs6,854 7,804 
Share-based compensation19,125 18,757 
Loss on debt financing— 4,364 
Amortization of intangible assets129,549 142,886 
Deferred income taxes(44,900)27,623 
Unrealized loss on derivative instruments and other4,709 30,292 
Changes in operating assets and liabilities154,472 (10,740)
Net cash provided by operating activities559,775 619,562 
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)
Other12,022 (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 shares15,456 15,150 
Payments of employee restricted stock tax withholdings(2,911)(6,990)
Proceeds from issuance of debt1,150,000 450,000 
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 activities710,178 (366,499)
Net change in cash and cash equivalents1,087,861 44,286 
Cash and cash equivalents, beginning of period774,119 729,833 
Cash and cash equivalents, end of period$1,861,980 $774,119 


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Revenue by Business, Geography, and End Market (Unaudited)
(percent of total revenue)Three months ended December 31,Full year ended December 31,
2020201920202019
Performance Sensing76.0 %74.7 %73.0 %73.8 %
Sensing Solutions24.0 %25.3 %27.0 %26.2 %
Total100.0 %100.0 %100.0 %100.0 %
(percent of total revenue)Three months ended December 31,Full year ended December 31,
2020201920202019
Americas37.6 %38.9 %39.3 %42.3 %
Europe27.2 %27.0 %26.8 %28.1 %
Asia/Rest of World35.2 %34.1 %33.9 %29.6 %
Total100.0 %100.0 %100.0 %100.0 %
(percent of total revenue)Three months ended December 31,Full year ended December 31,
2020201920202019
Automotive*60.4 %60.5 %57.5 %58.8 %
Heavy vehicle and off-road16.9 %15.4 %16.7 %16.2 %
Industrial9.9 %9.4 %11.0 %10.2 %
Appliance and heating, ventilation and air-conditioning
5.9 %5.3 %6.2 %5.8 %
Aerospace3.9 %5.5 %4.5 %5.1 %
All other3.0 %3.9 %4.1 %3.9 %
Total100.0 %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 $42.4 million of revenue in the full year ended December 31, 2020 and 2019, respectively.
Market Outgrowth (Unaudited)
For the three months ended
December 31, 2020		For the full year ended
December 31, 2020
Reported GrowthOrganic GrowthEnd Market GrowthReported GrowthOrganic GrowthEnd Market Growth
Automotive6.5 %4.4 %0.1 %*(13.6 %)(13.9 %)(18.5 %)*
Heavy vehicle and off-road17.9 %16.2 %6.3 %(9.2 %)(9.2 %)(18.0 %)
*    Excludes Toyota, adjusted for Sensata's geographic mix. Adjustments for inventory in the supply chain, not included here, are (5.4%) and (2.3%) for the three months and full year ended December 31, 2020, respectively.
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GAAP to Non-GAAP Reconciliations
The following unaudited tables provide a reconciliation of the difference between each of the non-GAAP financial measures referenced herein and the most directly comparable U.S. GAAP financial measure. Amounts presented in these tables may not appear to recalculate due to the effect of rounding.
Operating income and margin, income tax, net income, and EPS
($ in thousands, except per share amounts)For the three months ended December 31, 2020
Operating IncomeOperating MarginIncome TaxNet IncomeDiluted EPS
Reported (GAAP)$154,161 17.0 %$(13,751)$121,667 $0.77 
Non-GAAP adjustments:
Restructuring related and other8,379 0.9 %4,123 17,025 0.11 
Financing and other transaction costs1,014 0.1 %— (832)(0.01)
Step-up depreciation and amortization30,042 3.3 %— 30,042 0.19 
Deferred loss/(gain) on derivative instruments2,045 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 adjustments41,480 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 IncomeOperating MarginIncome TaxNet IncomeDiluted EPS
Reported (GAAP)$120,718 14.3 %$27,060 $53,538 $0.34 
Non-GAAP adjustments:
Restructuring related and other17,000 2.0 %(343)18,794 0.12 
Financing and other transaction costs*20,842 2.5 %— 20,842 0.13 
Step-up depreciation and amortization33,823 4.0 %— 33,823 0.21 
Deferred loss/(gain) on derivative instruments149 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 adjustments71,814 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.

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($ in thousands, except per share amounts)For the full year ended December 31, 2020
Operating IncomeOperating MarginIncome TaxNet IncomeDiluted 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 costs8,209 0.3 %— 6,363 0.04 
Step-up depreciation and amortization125,677 4.1 %— 125,677 0.79 
Deferred loss/(gain) on derivative instruments3,066 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 adjustments224,372 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 IncomeOperating MarginIncome TaxNet IncomeDiluted EPS
Reported (GAAP)$556,885 16.1 %$107,709 $282,714 $1.75 
Non-GAAP adjustments:
Restructuring related and other61,916 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 amortization139,587 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 adjustments228,810 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.

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Non-GAAP Adjustments by location in statements of operations
($ in thousands)Three months ended December 31,Full year ended December 31,
2020201920202019
Cost of revenue (1)
$4,802 $7,577 $42,873 $25,115 
Selling, general and administrative6,262 5,618 25,490 14,048 
Amortization of intangible assets29,519 33,099 122,915 136,087 
Restructuring and other charges, net (2)
897 25,520 33,094 53,560 
Operating income adjustments41,480 71,814 224,372 228,810 
Interest expense, net1,828 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 IncomeOperating MarginIncome TaxesNet IncomeDiluted 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 costs1,842 0.2 %— 1,842 0.01 
Step-up depreciation and amortization31,467 4.0 %— 31,467 0.20 
Deferred loss/(gain) on derivative instruments212 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 adjustments27,966 3.5 %2,770 26,866 0.17 
Adjusted (non-GAAP)$154,811 19.6 %$12,411 $103,595 $0.66 
(1)    Includes an $11.7 million gain recognized upon release of excess accrual following the September 2020 settlement of patent infringement litigation with Wasica. Refer to our third quarter 2020 Form 10-Q for additional information regarding this litigation.
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Free cash flow
($ in thousands)Three months ended December 31,% ChangeFull year ended December 31,% Change
2020201920202019
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 20Q3 20Q2 20Q1 20
Net income/(loss)$164,286 $121,667 $76,729 $(42,541)$8,431 
Interest expense, net171,757 47,417 44,129 40,808 39,403 
Provision for/(benefit from) income taxes1,355 (13,751)15,181 1,441 (1,516)
Depreciation expense125,680 31,464 28,928 30,609 34,679 
Amortization of intangible assets129,549 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 other93,117 12,902 (5,050)42,708 42,557 
Financing and other transaction costs6,363 (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)12/31/209/30/206/30/203/31/2012/31/19
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 portion27,931 28,360 28,243 28,280 28,810 
Long-term debt, net3,963,747 3,963,076 3,220,833 3,220,359 3,219,885 
Total debt, finance lease, and other financing obligations3,998,883 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 indebtedness4,036,602 4,038,032 3,689,065 3,290,313 3,291,823 
Less: Cash and cash equivalents1,861,980 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 ratio3.23.63.42.92.8

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Guidance
For the three months ending March 31, 2021
($ in millions, except per share amounts)Operating IncomeNet IncomeEPS
LowHighLowHighLowHigh
GAAP$131.3 $145.8 $68.7 $82.2 $0.43 $0.52 
Restructuring related and other5.5 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 $0.77 
Weighted-average diluted shares outstanding (in millions)158.9158.9
For the full year ending December 31, 2021
($ in millions, except per share amounts)Operating IncomeNet IncomeEPS
LowHighLowHighLowHigh
GAAP$566.0 $620.0 $349.0 $395.0 $2.19 $2.48 
Restructuring related and other16.0 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)159.2159.2
(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.


# # #
Investors:Media:
Jacob SayerAlexia Taxiarchos
(508) 236-1666(508) 236-1761
jsayer@sensata.comataxiarchos@sensata.com
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