Sensata Technologies Reports Fourth Quarter and Full Year 2021 Financial Results

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, 2021.

Operating results for the fourth quarter of 2021 compared to the fourth 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 $934.6 million, an increase of $28.1 million, or 3.1%, compared to $906.5 million in the fourth quarter of 2020.
  • Revenue decreased 0.9% on an organic basis, which excludes a 0.3% increase from foreign currency exchange rates and a 3.7% increase from acquisitions versus the prior-year period.

Operating income:

  • Operating income was $149.7 million, or 16.0% of revenue, a decrease of $4.5 million, or 2.9%, compared to operating income of $154.2 million, or 17.0% of revenue, in the fourth quarter of 2020.
  • Adjusted operating income was $197.6 million, or 21.1% of revenue, an increase of $2.0 million, or 1.0%, compared to adjusted operating income of $195.6 million, or 21.6% of revenue, in the fourth quarter of 2020.

Earnings per share:

  • Earnings per share was $0.70, a decrease of $0.07, or 9.1%, compared to earnings per share of $0.77 in the fourth quarter of 2020.
  • Adjusted earnings per share was $0.87, an increase of $0.02, or 2.4%, compared to adjusted earnings per share of $0.85 in the fourth quarter of 2020.
  • Changes in foreign currency exchange rates increased Sensata's adjusted earnings per share by $0.03 in the fourth quarter of 2021 compared to the prior-year period.

Sensata generated $160.9 million of operating cash flow in the fourth quarter of 2021 compared to $266.4 million in the prior-year period. The Company's free cash flow totaled $116.9 million in the fourth quarter of 2021 compared to $239.7 million in the prior-year period.

During the fourth quarter of 2021, Sensata repurchased approximately 0.8 million ordinary shares for total consideration of $47.8 million as part of its existing share repurchase program. On January 20, 2022, the Board approved a new share repurchase authorization in the amount of $500 million, replacing the prior authorization.

"Fourth quarter results were stronger than expected. Sensata's revenue growth outpaced markets by 800 basis points offsetting meaningful declines in automotive production versus the prior-year quarter,” said Jeff Cote, CEO and President of Sensata. "While 2021 posed supply chain challenges around the world, we are pleased with how quickly and effectively we adapted to rapidly changing conditions, delivering record annual revenue for Sensata. We are continuing to execute on our long-term growth strategy as evidenced by the recent acquisition of Sendyne, adding key current sensing and isolation monitoring to Sensata's extensive Electrification capabilities."

Operating results for the year ended December 31, 2021 compared to the year ended December 31, 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 a record $3,820.8 million, an increase of $775.2 million, or 25.5%, compared to $3,045.6 million in the prior year.
  • Revenue increased 20.7% on an organic basis, which excludes a 2.3% increase from foreign currency exchange rates and a 2.5% increase from acquisitions versus the prior year.

Operating income:

  • Operating income was $633.2 million, or 16.6% of revenue, an increase of $295.5 million, or 87.5%, compared to operating income of $337.7 million, or 11.1% of revenue, in the prior year.
  • Adjusted operating income was $806.0 million, or 21.1% of revenue, an increase of $243.9 million, or 43.4%, compared to adjusted operating income of $562.1 million, or 18.5% of revenue, in the prior year.

Earnings per share:

  • Earnings per share was $2.28, an increase of $1.24, compared to earnings per share of $1.04 in the prior year.
  • Adjusted earnings per share was $3.56, an increase of $1.35, or 61.1%, compared to adjusted earnings per share of $2.21 in the prior year.
  • Changes in foreign currency exchange rates increased Sensata's adjusted earnings per share by $0.04 in the year ended December 31, 2021 compared to the prior year.

Sensata generated $554.2 million of operating cash flow in the year ended December 31, 2021 compared to $559.8 million in the prior year. The Company's free cash flow totaled $409.7 million in the year ended December 31, 2021 compared to $453.1 million in the prior year.

Segment Performance

 

 

For the three months ended

December 31,

 

For the full year ended

December 31,

$ in 000s

 

2021

 

2020

 

2021

 

2020

Performance Sensing

 

 

 

 

 

 

 

 

Revenue

 

$

685,078

 

 

$

688,978

 

 

$

2,847,908

 

 

$

2,223,810

 

Operating income

 

$

185,587

 

 

$

185,101

 

 

$

777,237

 

 

$

532,529

 

% of Performance Sensing revenue

 

 

27.1

%

 

 

26.9

%

 

 

27.3

%

 

 

23.9

%

 

 

 

 

 

 

 

 

 

Sensing Solutions

 

 

 

 

 

 

 

 

Revenue

 

$

249,519

 

 

$

217,513

 

 

$

972,898

 

 

$

821,768

 

Operating income

 

$

74,480

 

 

$

70,673

 

 

$

293,185

 

 

$

241,218

 

% of Sensing Solutions revenue

 

 

29.8

%

 

 

32.5

%

 

 

30.1

%

 

 

29.4

%

 

Guidance

"Sensata delivered solid financial performance in a challenging fourth quarter, posting 3.1% revenue growth and 1.0% adjusted operating income growth from the prior-year quarter," said Paul Vasington, EVP and CFO of Sensata. For the full year 2022, we expect revenue of $4,125 to $4,275 million and adjusted EPS of $3.80 to $4.06. For the first quarter of 2022, we expect revenue of $935 to $975 million and adjusted EPS of $0.70 to $0.78."

Fiscal Year 2022 Guidance

 

 

 

$ in millions, except EPS

FY-22 Guidance

FY-21

Y/Y Change

Revenue

$4,125- $4,275

$3,820.8

8% - 12%

organic growth

 

 

6% - 10%

Adjusted Operating Income

$848 - $892

$806.0

5% - 11%

Adjusted Net Income

$600 - $640

$566.8

6% - 13%

Adjusted EPS

$3.80 - $4.06

$3.56

7% - 14%

Versus the prior year, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $12 million at the midpoint and increase adjusted EPS by approximately $0.08 at the midpoint for fiscal year 2022.

Q1 2022 Guidance

 

 

 

$ in millions, except EPS

Q1-22 Guidance

Q1-21

Y/Y Change

Revenue

$935 - $975

$942.5

(1%) - 3%

organic growth

 

 

(4%) - 1%

Adjusted Operating Income

$171 - $183

$198.1

(14%) - (8%)

Adjusted Net Income

$112 - $124

$137.6

(19%) - (10%)

Adjusted EPS

$0.70 - $0.78

$0.86

(19%) - (9%)

Versus the prior-year period, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $7 million at the midpoint and increase adjusted EPS by approximately $0.03 at the midpoint in the first quarter of 2022.

Conference Call and Webcast

Sensata will conduct a conference call today at 8:00 a.m. Eastern Time to discuss its fourth quarter and full year 2021 financial results and its outlook for the first 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 Q4 2021 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 February 8, 2022. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 5284574.

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.

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 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 of 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 ("U.S.") Securities and Exchange Commission (the "SEC"). 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.

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,

 

 

2021

 

2020

 

2021

 

2020

Net revenue

 

$

934,597

 

 

$

906,491

 

 

$

3,820,806

 

 

$

3,045,578

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of revenue

 

 

619,878

 

 

 

609,940

 

 

 

2,542,434

 

 

 

2,119,044

 

Research and development

 

 

40,143

 

 

 

33,314

 

 

 

159,072

 

 

 

131,429

 

Selling, general and administrative

 

 

87,261

 

 

 

77,027

 

 

 

336,989

 

 

 

294,725

 

Amortization of intangible assets

 

 

32,637

 

 

 

31,152

 

 

 

134,129

 

 

 

129,549

 

Restructuring and other charges, net

 

 

4,986

 

 

 

897

 

 

 

14,942

 

 

 

33,094

 

Total operating costs and expenses

 

 

784,905

 

 

 

752,330

 

 

 

3,187,566

 

 

 

2,707,841

 

Operating income

 

 

149,692

 

 

 

154,161

 

 

 

633,240

 

 

 

337,737

 

Interest expense, net

 

 

(44,898

)

 

 

(47,417

)

 

 

(179,291

)

 

 

(171,757

)

Other, net

 

 

7,756

 

 

 

1,172

 

 

 

(40,032

)

 

 

(339

)

Income before taxes

 

 

112,550

 

 

 

107,916

 

 

 

413,917

 

 

 

165,641

 

Provision for/(benefit from) income taxes

 

 

578

 

 

 

(13,751

)

 

 

50,337

 

 

 

1,355

 

Net Income

 

 

111,972

 

 

 

121,667

 

 

 

363,580

 

 

 

164,286

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.71

 

 

$

0.77

 

 

$

2.30

 

 

$

1.04

 

Diluted

 

$

0.70

 

 

$

0.77

 

 

$

2.28

 

 

$

1.04

 

 

 

 

 

 

 

 

 

 

Weighted-average ordinary shares outstanding:

 

 

 

 

 

 

Basic

 

 

158,299

 

 

 

157,488

 

 

 

158,166

 

 

 

157,373

 

Diluted

 

 

159,428

 

 

 

158,567

 

 

 

159,370

 

 

 

158,134

 

 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

December 31,

2021

 

December 31,

2020

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,708,955

 

$

1,861,980

Accounts receivable, net of allowances

 

 

653,438

 

 

576,647

Inventories

 

 

588,231

 

 

451,005

Prepaid expenses and other current assets

 

 

126,370

 

 

90,340

Total current assets

 

 

3,076,994

 

 

2,979,972

Property, plant and equipment, net

 

 

820,933

 

 

803,825

Goodwill

 

 

3,502,063

 

 

3,111,349

Other intangible assets, net

 

 

946,731

 

 

691,549

Deferred income tax assets

 

 

105,028

 

 

84,785

Other assets

 

 

162,017

 

 

172,722

Total assets

 

$

8,613,766

 

$

7,844,202

 

 

 

 

 

Liabilities and equity

 

 

 

 

Current liabilities:

 

 

 

 

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

 

$

6,833

 

$

757,205

Accounts payable

 

 

459,093

 

 

393,907

Income taxes payable

 

 

26,517

 

 

19,215

Accrued expenses and other current liabilities

 

 

343,816

 

 

324,830

Total current liabilities

 

 

836,259

 

 

1,495,157

Deferred income tax liabilities

 

 

339,273

 

 

259,857

Pension and other post-retirement benefit obligations

 

 

38,758

 

 

48,002

Finance lease and other financing obligations, less current portion

 

 

26,564

 

 

27,931

Long-term debt, net

 

 

4,214,946

 

 

3,213,747

Other long-term liabilities

 

 

63,232

 

 

94,022

Total liabilities

 

 

5,519,032

 

 

5,138,716

Total equity

 

 

3,094,734

 

 

2,705,486

Total liabilities and equity

 

$

8,613,766

 

$

7,844,202

 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

For the year ended

December 31,

 

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

Net income

 

$

363,580

 

 

$

164,286

 

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

 

 

 

 

Depreciation

 

 

124,959

 

 

 

125,680

 

Amortization of debt issuance costs

 

 

6,858

 

 

 

6,854

 

Share-based compensation

 

 

25,663

 

 

 

19,125

 

Loss on debt financing

 

 

30,066

 

 

 

 

Amortization of intangible assets

 

 

134,129

 

 

 

129,549

 

Deferred income taxes

 

 

(5,270

)

 

 

(44,900

)

Acquisition-related deferred compensation payments

 

 

(15,630

)

 

 

 

Unrealized loss on derivative instruments and other

 

 

13,837

 

 

 

4,709

 

Changes in operating assets and liabilities, net of effects of acquisitions

 

 

(124,041

)

 

 

154,472

 

Net cash provided by operating activities

 

 

554,151

 

 

 

559,775

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisitions, net of cash received

 

 

(736,077

)

 

 

(64,432

)

Additions to property, plant and equipment and capitalized software

 

 

(144,403

)

 

 

(106,719

)

Investment in debt and equity securities

 

 

(5,533

)

 

 

(22,963

)

Other

 

 

3,919

 

 

 

12,022

 

Net cash used in investing activities

 

 

(882,094

)

 

 

(182,092

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from exercise of stock options and issuance of ordinary shares

 

 

26,290

 

 

 

15,457

 

Payment of employee restricted stock tax withholdings

 

 

(9,048

)

 

 

(2,911

)

Proceeds from borrowings on debt

 

 

1,001,875

 

 

 

1,150,000

 

Payments on debt

 

 

(763,263

)

 

 

(408,914

)

Payments to repurchase ordinary shares

 

 

(47,843

)

 

 

(35,175

)

Payments of debt financing costs

 

 

(33,093

)

 

 

(8,279

)

Net cash provided by financing activities

 

 

174,918

 

 

 

710,178

 

Net change in cash and cash equivalents

 

 

(153,025

)

 

 

1,087,861

 

Cash and cash equivalents, beginning of year

 

 

1,861,980

 

 

 

774,119

 

Cash and cash equivalents, end of year

 

$

1,708,955

 

 

$

1,861,980

 

 

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

 

(percent of total revenue)

 

Three months ended

December 31,

 

Full year ended

December 31,

 

 

2021

2020

 

2021

2020

Performance Sensing

 

73.3

%

76.0

%

 

74.5

%

73.0

%

Sensing Solutions

 

26.7

%

24.0

%

 

25.5

%

27.0

%

Total

 

100.0

%

100.0

%

 

100.0

%

100.0

%

 

(percent of total revenue)

 

Three months ended

December 31,

 

Full year ended

December 31,

 

 

2021

2020

 

2021

2020

Americas

 

38.4

%

37.6

%

 

38.0

%

39.3

%

Europe

 

24.7

%

27.2

%

 

26.2

%

26.8

%

Asia/Rest of World

 

36.9

%

35.2

%

 

35.8

%

33.9

%

Total

 

100.0

%

100.0

%

 

100.0

%

100.0

%

 

(percent of total revenue)

 

Three months ended

December 31,

 

Full year ended

December 31,

 

 

2021

2020

 

2021

2020

Automotive (1)

 

52.0

%

60.4

%

 

54.0

%

57.5

%

Heavy vehicle and off-road

 

22.5

%

16.9

%

 

21.7

%

16.7

%

Industrial

 

11.9

%

9.9

%

 

10.8

%

11.0

%

Appliance and heating, ventilation and air-conditioning

 

6.2

%

5.9

%

 

6.4

%

6.2

%

Aerospace

 

3.7

%

3.9

%

 

3.5

%

4.5

%

All other

 

3.7

%

3.0

%

 

3.6

%

4.1

%

Total

 

100.0

%

100.0

%

 

100.0

%

100.0

%

(1)

Includes amounts reflected in the Sensing Solutions segment as follows: $11.3 million and $12.3 million of revenue in the three months ended December 31, 2021 and 2020, respectively, and $44.4 million and $35.6 million of revenue in the full year ended December 31, 2021 and 2020, respectively.

 

Market Outgrowth (Unaudited)

 

 

 

For the three months ended

December 31, 2021

 

For the full year ended

December 31, 2021

 

 

 

Reported

Growth

 

Organic

Growth

 

End

Market

Growth

 

Reported

Growth

 

Organic

Growth

 

End

Market

Growth

 

Automotive

 

(11.3

%)

 

(11.7

%)

 

(16.2

%)

*

17.6

%

 

15.1

%

 

1.2

%

*

Heavy vehicle and off-road

 

36.8

%

 

16.4

%

 

(0.6

%)

 

63.3

%

 

46.4

%

 

24.4

%

 

* Excludes Toyota, adjusted for Sensata's geographic mix.

 

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 December 31, 2021

 

Operating

Income

 

Operating

Margin

 

Income

Taxes

 

Net

Income

 

Diluted

EPS

Reported (GAAP)

$

149,692

 

16.0

%

 

$

578

 

 

$

111,972

 

 

$

0.70

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

7,876

 

0.8

%

 

 

(3,167

)

 

 

1,760

 

 

 

0.01

 

Financing and other transaction costs

 

7,093

 

0.8

%

 

 

(65

)

 

 

5,182

 

 

 

0.03

 

Step-up depreciation and amortization

 

31,606

 

3.4

%

 

 

 

 

 

31,606

 

 

 

0.20

 

Deferred loss/(gain) on derivative instruments

 

1,325

 

0.1

%

 

 

 

 

 

(2,170

)

 

 

(0.01

)

Amortization of debt issuance costs

 

 

%

 

 

 

 

 

1,716

 

 

 

0.01

 

Deferred taxes and other tax related

 

 

%

 

 

(10,758

)

 

 

(10,758

)

 

 

(0.07

)

Total adjustments

 

47,900

 

5.1

%

 

 

(13,990

)

 

 

27,336

 

 

 

0.17

 

Adjusted (non-GAAP)

$

197,592

 

21.1

%

 

$

14,568

 

 

$

139,308

 

 

$

0.87

 

 

($ 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 full year ended December 31, 2021

 

Operating

Income

 

Operating

Margin

 

Income

Tax

 

Net

Income

 

Diluted

EPS

Reported (GAAP)

$

633,240

 

16.6

%

 

$

50,337

 

 

$

363,580

 

 

$

2.28

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

23,565

 

0.6

%

 

 

(3,500

)

 

 

21,356

 

 

 

0.13

 

Financing and other transaction costs (1)

 

13,236

 

0.3

%

 

 

(65

)

 

 

40,977

 

 

 

0.26

 

Step-up depreciation and amortization

 

127,642

 

3.3

%

 

 

 

 

 

127,642

 

 

 

0.80

 

Deferred loss on derivative instruments

 

8,327

 

0.2

%

 

 

 

 

 

11,294

 

 

 

0.07

 

Amortization of debt issuance costs

 

 

%

 

 

 

 

 

6,858

 

 

 

0.04

 

Deferred taxes and other tax related (2)

 

 

%

 

 

(4,865

)

 

 

(4,865

)

 

 

(0.03

)

Total adjustments

 

172,770

 

4.5

%

 

 

(8,430

)

 

 

203,262

 

 

 

1.28

 

Adjusted (non-GAAP)

$

806,010

 

21.1

%

 

$

58,767

 

 

$

566,842

 

 

$

3.56

 

(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.

(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.

 

($ 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 (1)

 

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

 

(1)

Includes a $29.6 million loss recorded through cost of revenue related to the patent infringement case brought by Wasica, which we settled in the third quarter 2020, and $30.2 million of charges recognized related to the Q2 2020 Global Restructure Program. Refer to our 2020 Annual Report on Form 10-K for additional information.

 

Non-GAAP adjustments by location in statements of operations

 

(in thousands)

For the three months

ended December 31,

 

 

For the full year ended

December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)

$

7,060

 

 

 

$

4,802

 

 

 

$

16,525

 

 

 

$

42,873

 

Selling, general and administrative

 

4,657

 

 

 

 

6,262

 

 

 

 

15,321

 

 

 

 

25,490

 

Amortization of intangible assets

 

31,197

 

 

 

 

29,519

 

 

 

 

125,982

 

 

 

 

122,915

 

Restructuring and other charges, net (2)

 

4,986

 

 

 

 

897

 

 

 

 

14,942

 

 

 

 

33,094

 

Operating income adjustments

 

47,900

 

 

 

 

41,480

 

 

 

 

172,770

 

 

 

 

224,372

 

Interest expense, net

 

1,716

 

 

 

 

1,828

 

 

 

 

6,858

 

 

 

 

6,854

 

Other, net (3)

 

(8,290

)

 

 

 

(1,360

)

 

 

 

32,064

 

 

 

 

(1,276

)

Provision for/(benefit from) income taxes (4)

 

(13,990

)

 

 

 

(28,930

)

 

 

 

(8,430

)

 

 

 

(45,070

)

Net income adjustments

$

27,336

 

 

 

$

13,018

 

 

 

$

203,262

 

 

 

$

184,880

 

(1)

The full year ended December 31, 2020 includes a $29.2 million loss related to a judgment against us in a patent infringement case with Wasica Finance GmbH. We settled this litigation in the third quarter 2020. Refer to our 2020 Annual Report on Form 10-K for additional information.

(2)

The full year ended December 31, 2020 includes $24.5 million of charges related to the Q2 2020 Global Restructure Program. Refer to our 2020 Annual Report on Form 10-K for additional information regarding this restructuring program.

(3)

The full year ended December 31, 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 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.

(4)

The full year ended December 31, 2021 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.

 

Free cash flow

 

($ in thousands)

Three months ended December 31,

 

Full year ended December 31,

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Net cash provided by operating activities

$

160,925

 

 

$

266,437

 

 

(39.6

%)

 

$

554,151

 

 

$

559,775

 

 

(1.0

%)

Additions to property, plant and equipment and capitalized software

 

(43,993

)

 

 

(26,780

)

 

(64.3

%)

 

 

(144,403

)

 

 

(106,719

)

 

(35.3

%)

Free cash flow

$

116,932

 

 

$

239,657

 

 

(51.2

%)

 

$

409,748

 

 

$

453,056

 

 

(9.6

%)

 

Adjusted EBITDA

 

 

 

Three months ended

December 31,

 

Full year ended

December 31,

(in thousands)

 

2021

 

2020

 

2021

 

2020

Net income

 

$

111,972

 

 

$

121,667

 

 

$

363,580

 

$

164,286

 

Interest expense, net

 

 

44,898

 

 

 

47,417

 

 

 

179,291

 

 

171,757

 

Provision for/(benefit from) income taxes

 

 

578

 

 

 

(13,751

)

 

 

50,337

 

 

1,355

 

Depreciation expense

 

 

30,598

 

 

 

31,464

 

 

 

124,959

 

 

125,680

 

Amortization of intangible assets

 

 

32,637

 

 

 

31,152

 

 

 

134,129

 

 

129,549

 

EBITDA

 

 

220,683

 

 

 

217,949

 

 

 

852,296

 

 

592,627

 

Non-GAAP Adjustments

 

 

 

 

 

 

 

 

Restructuring related and other

 

 

4,927

 

 

 

12,902

 

 

 

23,644

 

 

93,117

 

Financing and other transaction costs

 

 

5,247

 

 

 

(832

)

 

 

41,042

 

 

6,363

 

Deferred (gain)/loss on derivative instruments

 

 

(2,170

)

 

 

(1,992

)

 

 

11,294

 

 

(6,961

)

Adjusted EBITDA

 

$

228,687

 

 

$

228,027

 

 

$

928,276

 

$

685,146

 

 

Net debt and leverage

 

 

 

As of

($ in thousands)

 

December 31,

2021

 

December 31,

2020

Current portion of long-term debt, finance lease and other financing obligations (1)

 

$

6,833

 

 

$

757,205

 

Finance lease and other financing obligations, less current portion

 

 

26,564

 

 

 

27,931

 

Long-term debt, net

 

 

4,214,946

 

 

 

3,213,747

 

Total debt, finance lease, and other financing obligations

 

 

4,248,343

 

 

 

3,998,883

 

Less: Discount, net of premium

 

 

(5,207

)

 

 

(9,605

)

Less: Deferred financing costs

 

 

(26,682

)

 

 

(28,114

)

Total Gross indebtedness

 

 

4,280,232

 

 

 

4,036,602

 

Less: Cash and cash equivalents

 

 

1,708,955

 

 

 

1,861,980

 

Net Debt

 

$

2,571,277

 

 

$

2,174,622

 

 

 

 

 

 

Adjusted EBITDA (LTM)

 

$

928,276

 

 

$

685,146

 

Net leverage ratio

 

 

2.8

 

 

 

3.2

 

(1)

On February 3, 2021, we announced that we intended to redeem in full the $750.0 million aggregate principal amount outstanding on our 6.25% Senior Notes due 2026. Because we had not issued our 2020 Annual Report on Form 10-K, we determined that these notes should be classified as current on our consolidated balance sheet as of December 31, 2020.

 

Guidance

 

 

For the three months ending March 31, 2022

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$

131.5

 

$

141.5

 

$

70.3

 

$

79.3

 

$

0.43

 

$

0.50

Restructuring related and other

 

1.5

 

 

2.0

 

 

1.0

 

 

1.5

 

 

0.01

 

 

0.01

Financing and other transaction costs

 

4.0

 

 

4.5

 

 

4.0

 

 

4.5

 

 

0.03

 

 

0.03

Step-up depreciation and amortization

 

34.0

 

 

35.0

 

 

34.0

 

 

35.0

 

 

0.21

 

 

0.22

Deferred (gain)/loss on derivative instruments(1)

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

 

 

 

1.7

 

 

1.7

 

 

0.01

 

 

0.01

Deferred taxes and other tax related

 

 

 

 

 

1.0

 

 

2.0

 

 

0.01

 

 

0.01

Non-GAAP

$

171.0

 

$

183.0

 

$

112.0

 

$

124.0

 

$

0.70

 

$

0.78

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

 

158.6

 

 

158.6

 

 

For the full year ending December 31, 2022

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$

695.0

 

$

731.0

 

$

437.5

 

$

466.0

 

$

2.77

 

$

2.96

Restructuring related and other

 

6.0

 

 

8.0

 

 

4.5

 

 

6.0

 

 

0.03

 

 

0.04

Financing and other transaction costs

 

11.0

 

 

13.0

 

 

11.0

 

 

13.0

 

 

0.07

 

 

0.08

Step-up depreciation and amortization

 

136.0

 

 

140.0

 

 

136.0

 

 

140.0

 

 

0.86

 

 

0.89

Deferred (gain)/loss on derivative instruments(1)

 

 

 

 

 

 

 

 

 

 

 

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

$

848.0

 

$

892.0

 

$

600.0

 

$

640.0

 

$

3.80

 

$

4.06

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

 

157.8

 

 

157.8

(1)

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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