EX-99.1 2 q2-22pressrelease.htm EX-99.1 Document

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SENSATA TECHNOLOGIES REPORTS SECOND QUARTER 2022 FINANCIAL RESULTS

Achieves Record Quarterly Revenue
Awarded Largest Single Design Win in Company's History

Swindon, United Kingdom – July 26, 2022 - Sensata Technologies (NYSE: ST), a global industrial technology company and leading provider of sensor-rich solutions that create insights for customers, today announced financial results for its second quarter ended June 30, 2022.
"Sensata delivered record revenue in the second quarter, with results in line with guidance despite significant market, supply chain, and foreign currency headwinds. Sensata’s organic revenue growth outpaced underlying markets by 650 basis points and we delivered growth from acquisitions of 280 basis points, offsetting end market declines compared to the prior-year quarter,” said Jeff Cote, CEO and President of Sensata. “In addition, during the quarter the Company was awarded its largest ever design win for a new electric vehicle battery disconnect system for a major North American OEM, further demonstrating Sensata’s ability to capitalize on our electrification strategy to grow through new product design and new market opportunities.”
Operating results for the second quarter of 2022 compared to the second quarter of 2021 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.
Revenue:
•Revenue was a record $1,020.5 million, an increase of $27.9 million, or 2.8%, compared to $992.7 million in the second quarter of 2021.
•Revenue increased 2.2% on an organic basis, which excludes a decrease of (2.2%) from foreign currency exchange rates and an increase of 2.8% from acquisitions, each versus the prior-year period.
Operating income:
•Operating income was $138.9 million, or 13.6% of revenue, a decrease of $(25.8) million, or (15.7%), compared to operating income of $164.8 million, or 16.6% of revenue, in the second quarter of 2021.
•Adjusted operating income was $193.8 million, or 19.0% of revenue, a decrease of $(15.5) million, or (7.4%), compared to adjusted operating income of $209.3 million, or 21.1% of revenue, in the second quarter of 2021.
Earnings per share:
•Earnings per share was $0.22, a decrease of $(0.49), or (69.0%), compared to earnings per share of $0.71 in the second quarter of 2021.
•Adjusted earnings per share was $0.83, a decrease of $(0.12), or (12.6%), compared to adjusted earnings per share of $0.95 in the second quarter of 2021.
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•Changes in foreign currency exchange rates decreased Sensata's adjusted earnings per share by $(0.05) in the second quarter of 2022 compared to the prior-year period.
Sensata generated $94.5 million of operating cash flow in the second quarter of 2022 compared to $163.4 million in the prior-year period. The Company's free cash flow totaled $56.2 million in the second quarter of 2022 compared to $127.0 million in the prior-year period.
During the second quarter of 2022, Sensata repurchased nearly 1.7 million ordinary shares for total consideration of $77.0 million as part of its existing share repurchase program. The Company also returned approximately $17.2 million to shareholders through its first quarterly dividend paid on May 25, 2022.
Operating results for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.
Revenue:
•Revenue was $1,996.3 million, an increase of $61.1 million, or 3.2%, compared to $1,935.2 million in the six months ended June 30, 2021.
•Revenue increased 1.1% on an organic basis, which excludes a decrease of (1.3%) from foreign currency exchange rates and an increase of 3.4% from acquisitions, each versus the prior-year period.
Operating income:
•Operating income was $264.9 million, or 13.3% of revenue, a decrease of $(57.3) million, or (17.8%), compared to operating income of $322.2 million, or 16.7% of revenue, in the six months ended June 30, 2021.
•Adjusted operating income was $376.3 million, or 18.8% of revenue, a decrease of $(31.1) million, or (7.6%), compared to adjusted operating income of $407.4 million, or 21.1% of revenue, in the six months ended June 30, 2021.
Earnings per share:
•Earnings per share was $0.36, a decrease of $(0.69), or (65.7%), compared to earnings per share of $1.05 in the six months ended June 30, 2021.
•Adjusted earnings per share was $1.60, a decrease of $(0.21), or (11.6%), compared to adjusted earnings per share of $1.81 in the six months ended June 30, 2021.
•Changes in foreign currency exchange rates decreased Sensata's adjusted earnings per share by $(0.02) in the six months ended June 30, 2022 compared to the prior-year period.
Sensata generated $141.9 million of operating cash flow in the six months ended June 30, 2022, compared to $267.9 million in the prior-year period. The Company's free cash flow totaled $67.8 million in the six months ended June 30, 2022 compared to $204.4 million in the prior-year period.
During the six months ended June 30, 2022, Sensata repurchased approximately 2.8 million ordinary shares for total consideration of $144.3 million as part of its existing share repurchase program.

“We are continuing to monitor supply chain challenges and the macroeconomic backdrop. Sensata is working closely with our customers to understand their current needs and we are leveraging the deep experience of our management team to respond accordingly in these uncertain times. As a
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result of the investments we are making, we are continuing to post record levels of new business wins and we are confident that we are well positioned for the future," Cote added.
Segment Performance
For the three months ended June 30, For the six months ended June 30,
$ in 000s2022202120222021
Performance Sensing
Revenue$746,882 $741,852 $1,464,579 $1,456,364 
Operating income$185,519 $202,064 $366,157 $397,908 
% of Performance Sensing revenue24.8 %27.2 %25.0 %27.3 %
Sensing Solutions
Revenue$273,666 $250,808 $531,739 $478,824 
Operating income$79,488 $76,549 $152,003 $143,443 
% of Sensing Solutions revenue29.0 %30.5 %28.6 %30.0 %
Quarterly Dividend
Sensata recently announced a quarterly dividend of $0.11 per share, payable on August 24, 2022 to shareholders of record as of August 10, 2022.
Guidance
"Sensata delivered solid financial performance in a challenging second quarter, posting 2.8% revenue growth and 19.0% adjusted operating income margin," said Paul Vasington, EVP and CFO of Sensata. “For the third quarter of 2022, we expect revenue of $980 to $1,020 million and adjusted EPS of $0.81 to $0.89. For fiscal year 2022, we are adjusting our annual financial guidance calling for revenue of $3,970 to $4,050 million and adjusted EPS of $3.30 to $3.42. This updated guidance includes the previously announced acquisition of Dynapower and divestiture of Qinex."
Fiscal Year 2022 Guidance
$ in millions, except EPSFY-22 GuidanceFY-21Y/Y Change
Revenue
$3,970- $4,050
$3,820.8
4% - 6%
organic growth
3% - 5%
Adjusted Operating Income
$758 - $782
$806.0
(6%) - (3%)
Adjusted Net Income
$514 - $534
$566.8
(9%) - (6%)
Adjusted EPS
$3.30 - $3.42
$3.56
(7%) - (4%)
Versus the prior year, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $(76) million at the midpoint and decrease adjusted EPS by approximately $(0.11) at the midpoint for fiscal year 2022.
Q3 2022 Guidance
$ in millions, except EPSQ3-22 GuidanceQ3-21Y/Y Change
Revenue
$980 - $1,020
$951.0
3% - 7%
organic growth
2% - 6%
Adjusted Operating Income
$187 - $199
$201.0
(7%) - (1%)
Adjusted Net Income
$126 - $138
$138.6
(9%) - 0%
Adjusted EPS
$0.81 - $0.89
$0.87
(7%) - 2%
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Versus the prior-year period, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $(23) million at the midpoint and decrease adjusted EPS by approximately $(0.02) at the midpoint in the third quarter of 2022.
Conference Call and Webcast
Sensata will conduct a conference call today at 8:00 a.m. Eastern Time to discuss its second quarter of 2022 financial results and its outlook for the third quarter and full year 2022. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Q2 2022 Financial Results Conference Call." A live webcast of the conference call will also be available on the investor relations page of Sensata’s website at http://investors.sensata.com. Additionally, a replay of the call will be available until August 2, 2022. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 4911125.
About Sensata Technologies
Sensata Technologies is a leading industrial technology company that develops sensors, sensor-based solutions, including controllers and software, and other mission-critical products to create valuable business insights for customers and end users. For more than 100 years, Sensata has provided a wide range of customized, sensor-rich solutions that address complex engineering requirements to help customers solve difficult challenges in the automotive, heavy vehicle & off-road, industrial, and aerospace industries. With more than 21,000 employees and operations in 13 countries, Sensata’s solutions help to make products safer, cleaner and more efficient, more electrified, and more connected. For more information, please visit Sensata’s website at www.sensata.com.
Non-GAAP Financial Measures
We supplement the reporting of our financial information determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures. We use these non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance, and as a factor in determining compensation for certain employees. We believe presenting non-GAAP financial measures is useful for period-over-period comparisons of underlying business trends and our ongoing business performance. We also believe presenting these non-GAAP measures provides additional transparency into how management evaluates the business.
Non-GAAP financial measures should be considered as supplemental in nature and are not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, our non-GAAP financial measures may not be the same as, or comparable to, similar non-GAAP measures presented by other companies.
The non-GAAP financial measures referenced by Sensata in this release include: adjusted net income, adjusted earnings per share (“EPS”), adjusted operating income, adjusted operating margin, free cash flow, organic revenue growth, market outgrowth, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), net debt, and net leverage ratio. We also refer to changes in certain non-GAAP measures, usually reported either as a percentage or number of basis points, between two periods and measured on either a reported, constant currency, or an organic basis, the latter of which excludes the net impact of acquisitions and divestitures for the 12-month period following the respective transaction date(s) and the effect of foreign currency exchange rate differences between the comparative periods. Such changes are also considered non-GAAP measures.
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Adjusted net income (or loss) is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted EPS is calculated by dividing adjusted net income (or loss) by the number of diluted weighted-average ordinary shares outstanding in the period. We believe that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
Adjusted operating income (or loss) is defined as operating income (or loss), determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted operating margin is calculated by dividing adjusted operating income (or loss) by net revenue. We believe that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
Free cash flow is defined as net cash provided by/(used in) operating activities less additions to property, plant and equipment and capitalized software. We believe that this measure is useful to investors and management as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to fund acquisitions, repurchase ordinary shares, or for the accelerated repayment of debt obligations.
Organic revenue growth (or decline) is defined as the reported percentage change in net revenue calculated in accordance with U.S. GAAP, excluding the period-over-period impact of foreign exchange rate differences as well as the net impact of material acquisitions and divestitures for the 12-month period following the respective transaction date(s). We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, net, provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable: (1) restructuring related and other, (2) financing and other transaction costs, (3) deferred gain or loss on derivative instruments, and (4) step-up inventory amortization.
Net debt is defined as total debt, finance lease, and other financing obligations less cash and cash equivalents. We believe net debt is a useful measure to management and investors in understanding trends in our overall financial condition.

Net leverage ratio is defined as net debt divided by last twelve months (LTM) adjusted EBITDA. We believe the net leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.
Safe Harbor Statement
This earnings release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," "potential," "opportunity," "guidance," and similar terms or phrases. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives, business and market outlook, megatrends, priorities, growth, shareholder value, capital expenditures, cash flows, demand for products and services, share repurchases, and Sensata’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic
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and operational plans and financial results. These statements are subject to risks, uncertainties, and other important factors relating to our operations and business environment, and we can give no assurances that these forward-looking statements will prove to be correct.
A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements, including, but not limited to, risks related to public health crises, instability and changes in the global markets, supplier interruption or non-performance, the acquisition or disposition of businesses, adverse conditions or competition in the industries upon which we are dependent, intellectual property, product liability, warranty and recall claims, market acceptance of new product introductions and product innovations, labor disruptions or increased labor costs, and changes in existing environmental or safety laws, regulations, and programs.
Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in Item 1A: Risk Factors in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A: Risk Factors in our quarterly reports on Form 10-Q or other subsequent filings with the United States Securities and Exchange Commission. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

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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 June 30, For the six months ended June 30,
2022202120222021
Net revenue$1,020,548 $992,660 $1,996,318 $1,935,188 
Operating costs and expenses:
Cost of revenue686,603 658,285 1,343,683 1,293,634 
Research and development47,971 42,913 93,951 78,869 
Selling, general and administrative97,329 86,821 193,009 163,944 
Amortization of intangible assets 36,805 34,857 74,172 66,921 
Restructuring and other charges, net12,897 5,029 26,630 9,611 
Total operating costs and expenses881,605 827,905 1,731,445 1,612,979 
Operating income138,943 164,755 264,873 322,209 
Interest expense, net(44,842)(45,213)(90,287)(89,256)
Other, net(39,240)1,012 (89,696)(38,385)
Income before taxes54,861 120,554 84,890 194,568 
Provision for income taxes20,020 7,638 27,608 27,919 
Net Income34,841 112,916 57,282 166,649 
Net income per share:
Basic$0.22 $0.71 $0.36 $1.05 
Diluted$0.22 $0.71 $0.36 $1.05 
Weighted-average ordinary shares outstanding:
Basic156,477 158,208 156,950 157,986 
Diluted156,994 159,344 157,812 159,287 





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SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30,
2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents$1,558,578 $1,708,955 
Accounts receivable, net of allowances743,048 653,438 
Inventories656,736 588,231 
Prepaid expenses and other current assets161,367 126,370 
Total current assets3,119,729 3,076,994 
Property, plant and equipment, net825,862 820,933 
Goodwill3,534,438 3,502,063 
Other intangible assets, net904,929 946,731 
Deferred income tax assets101,899 105,028 
Other assets119,820 162,017 
Total assets$8,606,677 $8,613,766 
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt, finance lease and other financing obligations$6,566 $6,833 
Accounts payable537,261 459,093 
Income taxes payable15,309 26,517 
Accrued expenses and other current liabilities327,993 343,816 
Total current liabilities887,129 836,259 
Deferred income tax liabilities341,383 339,273 
Pension and other post-retirement benefit obligations37,863 38,758 
Finance lease and other financing obligations, less current portion25,623 26,564 
Long-term debt, net
4,213,512 4,214,946 
Other long-term liabilities77,583 63,232 
Total liabilities5,583,093 5,519,032 
Total shareholders' equity3,023,584 3,094,734 
Total liabilities and shareholders' equity$8,606,677 $8,613,766 




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SENSATA TECHNOLOGIES HOLDING PLC
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
For the six months ended June 30,
20222021
Cash flows from operating activities:
Net income$57,282 $166,649 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation62,882 62,833 
Amortization of debt issuance costs3,433 3,426 
Share-based compensation15,739 11,475 
Loss on debt financing— 30,066 
Amortization of intangible assets74,172 66,921 
Deferred income taxes(5,211)(7,070)
Acquisition-related compensation payments(15,000)— 
Mark-to-market loss on equity investments, net71,100 — 
Unrealized loss on derivative instruments and other20,669 12,700 
Changes in operating assets and liabilities, net of effects of acquisitions(143,178)(79,069)
Net cash provided by operating activities141,888 267,931 
Cash flows from investing activities:
Acquisitions, net of cash received(48,989)(421,951)
Additions to property, plant and equipment and capitalized software(74,069)(63,572)
Investment in debt and equity securities(6,878)(6,444)
Other152 2,862 
Net cash used in investing activities(129,784)(489,105)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares14,577 17,957 
Payment of employee restricted stock tax withholdings(7,577)(7,948)
Proceeds from borrowings on debt— 1,001,875 
Payments on debt(5,664)(757,889)
Dividends paid(17,225)— 
Payments to repurchase ordinary shares(144,279)— 
Payments of debt financing costs(2,313)(33,032)
Net cash (used in)/provided by financing activities(162,481)220,963 
Net change in cash and cash equivalents(150,377)(211)
Cash and cash equivalents, beginning of year1,708,955 1,861,980 
Cash and cash equivalents, end of period$1,558,578 $1,861,769 


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Revenue by Business, Geography, and End Market (Unaudited)
(percent of total revenue)For the three months ended June 30, For the six months ended June 30,
2022202120222021
Performance Sensing73.2 %74.7 %73.4 %75.3 %
Sensing Solutions26.8 %25.3 %26.6 %24.7 %
Total100.0 %100.0 %100.0 %100.0 %
(percent of total revenue)For the three months ended June 30, For the six months ended June 30,
2022202120222021
Americas42.1 %38.0 %41.0 %37.2 %
Europe26.0 %27.2 %26.1 %27.8 %
Asia/Rest of World31.9 %34.8 %32.9 %35.0 %
Total100.0 %100.0 %100.0 %100.0 %
(percent of total revenue)For the three months ended June 30, For the six months ended June 30,
2022202120222021
Automotive (1)
50.6 %53.4 %51.5 %55.7 %
Heavy vehicle and off-road23.6 %22.5 %22.8 %20.7 %
Industrial12.0 %10.6 %11.9 %10.1 %
Appliance and HVAC5.7 %6.4 %5.8 %6.4 %
Aerospace3.8 %3.3 %3.6 %3.4 %
All other4.3 %3.8 %4.4 %3.7 %
Total100.0 %100.0 %100.0 %100.0 %
(1)    Includes amounts reflected in the Sensing Solutions segment as follows: $9.9 million and $12.1 million of revenue in the three months ended June 30, 2022 and 2021, respectively, and $19.2 million and $23.6 million of revenue in the six months ended June 30, 2022 and 2021, respectively.
Market Outgrowth (Unaudited)
For the three months ended June 30, 2022For the six months ended June 30, 2022
Reported GrowthOrganic Growth
End Market Decline(1)
Reported GrowthOrganic Growth
End Market Decline(1)
Sensata2.8 %2.2 %(0.9 %)3.2 %1.1 %(3.3 %)
(1) End Market excludes (3.4%) and (2.8%) inventory build in the three months and six months ended June 30, 2021, respectively.
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GAAP to Non-GAAP Reconciliations
The following unaudited tables provide a reconciliation of the difference between each of the non-GAAP financial measures referenced herein and the most directly comparable U.S. GAAP financial measure. Amounts presented in these tables may not appear to recalculate due to the effect of rounding.
Operating income and margin, income tax, net income, and earnings per share
($ in thousands, except per share amounts)For the three months ended June 30, 2022
Operating IncomeOperating MarginIncome TaxesNet IncomeDiluted EPS
Reported (GAAP)$138,943 13.6 %$20,020 $34,841 $0.22 
Non-GAAP adjustments:
Restructuring related and other3,888 0.4 %(36)4,294 0.03 
Financing and other transaction costs (1)
14,434 1.4 %(450)28,277 0.18 
Step-up depreciation and amortization35,318 3.5 %— 35,318 0.22 
Deferred loss on derivative instruments1,190 0.1 %(4,013)15,431 0.10 
Amortization of debt issuance costs— — %— 1,717 0.01 
Deferred taxes and other tax related (2)
— — %9,669 9,669 0.06 
Total adjustments54,830 5.4 %5,170 94,706 0.60 
Adjusted (non-GAAP)$193,773 19.0 %$14,850 $129,547 $0.83 
(1)    Includes a mark-to-market loss on our investment in Quanergy Systems, Inc of $11.8 million, recorded in other, net. Also includes $12.8 million of expense related to compensation arrangements entered into concurrent with the closing of an acquisition, partially offset by $3.3 million of gains, which relate to changes in the fair value of acquisition-related contingent consideration amounts, each recorded in restructuring and other charges, net. Refer to our Quarterly Report on Form 10-Q for additional information.
(2)    Includes $11.4 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.
($ in thousands, except per share amounts)For the three months ended June 30, 2021
Operating IncomeOperating MarginIncome TaxNet IncomeDiluted EPS
Reported (GAAP)$164,755 16.6 %$7,638 $112,916 $0.71 
Non-GAAP adjustments:
Restructuring related and other5,738 0.6 %(85)6,926 0.04 
Financing and other transaction costs2,544 0.3 %(443)1,267 0.01 
Step-up depreciation and amortization33,684 3.4 %— 33,684 0.21 
Deferred loss on derivative instruments2,595 0.3 %(352)1,057 0.01 
Amortization of debt issuance costs— — %— 1,715 0.01 
Deferred taxes and other tax related— — %(6,200)(6,200)(0.04)
Total adjustments44,561 4.5 %(7,080)38,449 0.24 
Adjusted (non-GAAP)$209,316 21.1 %$14,718 $151,365 $0.95 
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($ in thousands, except per share amounts)For the six months ended June 30, 2022
Operating IncomeOperating MarginIncome TaxNet IncomeDiluted EPS
Reported (GAAP)$264,873 13.3 %$27,608 $57,282 $0.36 
Non-GAAP adjustments:
Restructuring related and other8,037 0.4 %(136)8,343 0.05 
Financing and other transaction costs (1)
30,259 1.5 %(994)102,837 0.65 
Step-up depreciation and amortization71,263 3.6 %— 71,263 0.45 
Deferred loss on derivative instruments1,842 0.1 %(2,202)8,470 0.05 
Amortization of debt issuance costs— — %— 3,433 0.02 
Deferred taxes and other tax related (2)
— — %1,334 1,334 0.01 
Total adjustments111,401 5.6 %(1,998)195,680 1.24 
Adjusted (non-GAAP)$376,274 18.8 %$29,606 $252,962 $1.60 
(1)    Includes a mark-to-market loss on our investment in Quanergy Systems, Inc of $71.7 million, recorded in other, net. Also includes $31.1 million of expense related to compensation arrangements entered into concurrent with the closing of an acquisition, partially offset by $9.4 million of gains, which relate to changes in the fair value of acquisition-related contingent consideration amounts, each recorded in restructuring and other charges, net. Refer to our Quarterly Report on Form 10-Q for additional information.
(2)    Includes $11.4 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent companies in the Netherlands and the United States. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.
($ in thousands, except per share amounts)For the six months ended June 30, 2021
Operating IncomeOperating MarginIncome TaxNet IncomeDiluted EPS
Reported (GAAP)$322,209 16.7 %$27,919 $166,649 $1.05 
Non-GAAP adjustments:
Restructuring related and other10,263 0.5 %(286)14,217 0.09 
Financing and other transaction costs (1)
7,115 0.4 %(3,546)34,072 0.21 
Step-up depreciation and amortization63,380 3.3 %— 63,380 0.40 
Deferred loss on derivative instruments4,435 0.2 %(1,100)3,302 0.02 
Amortization of debt issuance costs— — %— 3,426 0.02 
Deferred taxes and other tax related (2)
— — %3,922 3,922 0.02 
Total adjustments85,193 4.4 %(1,010)122,319 0.77 
Adjusted (non-GAAP)$407,402 21.1 %$28,929 $288,968 $1.81 
(1)    Includes a $30.1 million loss recognized in the first quarter of 2021 related to the early redemption of our 6.25% Senior Notes due 2026 at 103.125%. The loss primarily includes the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs. The loss is presented in other, net in our condensed consolidated statement of operations. Refer to our Quarterly Report on Form 10-Q for additional information.
(2)    Includes $10.9 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.
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Non-GAAP adjustments by location in statements of operations
(in thousands)For the three months ended June 30, For the six months ended June 30,
2022202120222021
Cost of revenue$1,215 $3,038 $3,375 $5,453 
Selling, general and administrative5,699 3,253 10,730 7,641 
Amortization of intangible assets35,019 33,241 70,666 62,488 
Restructuring and other charges, net (1)
12,897 5,029 26,630 9,611 
Operating income adjustments54,830 44,561 111,401 85,193 
Interest expense, net1,717 1,715 3,433 3,426 
Other, net (2)
32,989 (747)82,844 34,710 
Provision for income taxes (3)
5,170 (7,080)(1,998)(1,010)
Net income adjustments$94,706 $38,449 $195,680 $122,319 
(1)    The three and six months ended June 30, 2022 include $12.8M and $31.1M, respectively, of expense related to compensation arrangements entered into concurrent with the closing of an acquisition. The six months ended June 30, 2022 also includes $9.4M of gains, which relate to changes in the fair value of acquisition-related contingent consideration amounts.
(2)    The three and six months ended June 30, 2022 include a mark-to-market loss on our investment in Quanergy Systems, Inc of $11.8 million and $71.7 million, respectively. Refer to our Quarterly Report on Form 10-Q for additional information. The six months ended June 30, 2021 includes a $30.1 million loss recognized in the first quarter of 2021 related to the early redemption of our 6.25% Senior Notes due 2026 at 103.125%. The loss primarily reflects the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs.
(3)    Each period presented includes current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital. This includes $11.4 million in each of the three and six months ended June 30, 2022, and $10.1 million and $10.9 million, in the three and six months ended June 30, 2021, respectively.
Free cash flow
($ in thousands)Three months ended June 30, Six months ended June 30,
20222021% △20222021% △
Net cash provided by operating activities$94,533 $163,420 (42.2 %)$141,888 $267,931 (47.0 %)
Additions to property, plant and equipment and capitalized software
(38,358)(36,400)(5.4 %)(74,069)(63,572)(16.5 %)
Free cash flow$56,175 $127,020 (55.8 %)$67,819 $204,359 (66.8 %)
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Adjusted EBITDA
For the three months ended June 30, For the six months ended June 30,
(in thousands)LTM2022202120222021
Net income$254,213 $34,841 $112,916 $57,282 $166,649 
Interest expense, net180,322 44,842 45,213 90,287 89,256 
Provision for income taxes50,026 20,020 7,638 27,608 27,919 
Depreciation expense125,008 31,351 31,636 62,882 62,833 
Amortization of intangible assets141,380 36,805 34,857 74,172 66,921 
EBITDA750,949 167,859 232,260 312,231 413,578 
Non-GAAP Adjustments
Restructuring related and other17,746 4,330 7,011 8,479 14,377 
Financing and other transaction costs107,255 28,727 1,710 103,831 37,618 
Deferred loss on derivative instruments17,564 19,444 1,409 10,672 4,402 
Adjusted EBITDA$893,514 $220,360 $242,390 $435,213 $469,975 

Net debt and leverage
As of
($ in thousands)June 30,
2022		December 31, 2021
Current portion of long-term debt, finance lease and other financing obligations$6,566 $6,833 
Finance lease and other financing obligations, less current portion25,623 26,564 
Long-term debt, net4,213,512 4,214,946 
Total debt, finance lease, and other financing obligations4,245,701 4,248,343 
Less: discount, net of premium(4,317)(5,207)
Less: deferred financing costs(26,691)(26,682)
Total gross indebtedness4,276,709 4,280,232 
Less: Cash and cash equivalents1,558,578 1,708,955 
Net debt$2,718,131 $2,571,277 
Adjusted EBITDA (LTM)$893,514 $928,276 
Net leverage ratio3.02.8

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Guidance
Three months ending September 30, 2022
($ in millions, except per share amounts)Operating IncomeNet IncomeEPS
LowHighLowHighLowHigh
GAAP$141.5 $151.0 $63.8 $72.3 $0.41 $0.46 
Restructuring related and other4.0 4.5 3.5 4.0 0.02 0.03 
Financing and other transaction costs(1)
7.5 8.5 7.0 8.0 0.05 0.05 
Step-up depreciation and amortization(1)
34.0 35.0 34.0 35.0 0.22 0.23 
Deferred (gain)/loss on derivative instruments(2)
— — — — — — 
Amortization of debt issuance costs— — 1.7 1.7 0.01 0.01 
Deferred taxes and other tax related— — 16.0 17.0 0.10 0.11 
Non-GAAP$187.0 $199.0 $126.0 $138.0 $0.81 $0.89 
Weighted-average diluted shares outstanding (in millions)155.2155.2
Full year ending December 31, 2022
($ in millions, except per share amounts)Operating IncomeNet IncomeEPS
LowHighLowHighLowHigh
GAAP$559.2 $578.2 $198.5 $211.5 $1.29 $1.37 
Restructuring related and other13.0 14.0 12.0 13.0 0.08 0.08 
Financing and other transaction costs(1)
46.0 48.0 117.0 119.0 0.75 0.76 
Step-up depreciation and amortization(1)
138.0 140.0 138.0 140.0 0.88 0.90 
Deferred (gain)/loss on derivative instruments(2)
1.8 1.8 8.5 8.5 0.05 0.05 
Amortization of debt issuance costs— — 7.0 7.0 0.04 0.04 
Deferred taxes and other tax related— — 33.0 35.0 0.21 0.22 
Non-GAAP$758.0 $782.0 $514.0 $534.0 $3.30 $3.42 
Weighted-average diluted shares outstanding (in millions)156.0156.0
(1)    Amounts do not contemplate the effects of future acquisitions, divestitures, or financing transactions that occur beyond our most recent fiscal period end, including the acquisition of Dynapower and the sale of Qinex each of which occurred subsequent to June 30, 2022.
(2) We are unable to predict movements in commodity prices and, therefore, the impact of mark-to-market adjustments on our commodity forward contracts to our projected operating results. In prior periods such adjustments have been significant to our reported GAAP earnings.

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