Sensata reports revenue increase, profit drop in 2Q

SENSATA TECHNOLOGIES reported first-quarter net income of $71.7 million, or 42 cents per diluted share, compared with $60.6 million, or 35 cents per diluted share, a year ago. / COURTESY SENSATA TECHNOLOGIES
SENSATA TECHNOLOGIES reported first-quarter net income of $71.7 million, or 42 cents per diluted share, compared with $60.6 million, or 35 cents per diluted share, a year ago. / COURTESY SENSATA TECHNOLOGIES

ATTLEBORO – Sensata Technologies Inc. reported a 33.8 percent increase in revenue, but a 36 percent drop in net income in the quarter that ended June 30.
The company, which manufactures sensing, electrical protection, and control and power management solutions, released earnings Tuesday, reporting revenue of $770.4 million compared with $575.9 million during the year-ago period.
Net income was $40.9 million, or 24 cents per diluted share, compared with $63.9 million, or 37 cents per diluted share.
Martha Sullivan, president and CEO, said the company remains on track for 2015 “to be a year of strong double-digit growth.”
“We are undertaking certain cost-containment activities to ensure profitability remains high for the balance of the year,” she said in a statement.
Revenue of $2.99 billion to $3.07 billion is expected for the year, which is expected to exceed 2014 revenue of $2.41 billion.
When looking at adjusted net income – a non-GAAP measure Sensata uses internally that adjusts net income and removes the effects of financing, investments, inventory re-valuing, depreciation, amortization and other adjustments – Sensata had a 16.6 percent increase over the year, to $124.6 million, or 73 cents per diluted share, compared with $106.8 million, or 62 cents per diluted share, during the year-ago period.
“Despite increased headwinds in certain of our end-markets, we delivered adjusted net income for the second quarter in line with our expectations,” Sullivan said.
Sensata spent $56.1 million or 7.3 percent of net income on research, development and engineering-related costs in the second quarter to fund growth initiatives.

The company nearly doubled the amount of charges and other costs over a year earlier, adjusting down its profit by $83.7 million in the period, compared with $42.4 million in the 2014 second quarter. Adjustments included: restructuring and special charges; financing and other transaction costs; deferred gains or losses on other hedges; depreciation or amortization expense related to the step-up in fair value of fixed and intangible assets and inventory; deferred income tax and other tax expense; and amortization of deferred financing costs.

Among its business segments, the performance sensing business had $606.4 million in revenue, a 51.3 percent increase, while sensing solutions had $164.1 million in revenue, a 6.2 percent decrease. The majority of revenue is from performance sensing, at nearly 79 percent; sensing solutions accounts for 21.3 percent of revenue.
The Americas is the largest revenue market for the company at 41.2 percent, while Europe held 33.1 percent and Asia, 25.7 percent.
European automotive had the largest percentage of revenue at 27.4 percent, followed by North American automotive at 21.3 percent; Asian automotive at 17.3 percent; heavy vehicle off-road at 12.5 percent; industrial at 6.5 percent; appliance and heating, ventilation and air-conditioning at 6.2 percent; and “rest of world automotive” at 0.9 percent. “All other” made up 7.9 percent of revenue.

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