Sensata(US:ST)2024-11-04 22:19Financial Performance - Net revenue for Q3 2024 was $982.8 million, a decrease of 1.8% from $1,001.3 million in Q3 2023[109] - Operating loss for Q3 2024 was $199.2 million, representing 20.3% of net revenue, compared to an operating income of $116.3 million (11.6% of net revenue) in Q3 2023[110] - Total operating costs and expenses for Q3 2024 were $1,182.1 million, representing 120.3% of net revenue, compared to $885.0 million (88.4% of net revenue) in Q3 2023[125] - The reported net loss for the same period was $219.6 million, with a diluted EPS of $(0.17)[172] - For the three months ended September 30, 2024, the company reported a net loss of $79.5 million compared to a net loss of $25.0 million for the same period in 2023[183] Revenue and Cost Analysis - Performance Sensing net revenue for Q3 2024 decreased 5.3% compared to the prior period, primarily due to market decline across vehicle end markets[120] - Sensing Solutions net revenue for Q3 2024 decreased 0.3%, attributed to inventory destocking in aerospace and industrial markets[122] - Cost of revenue for Q3 2024 was $701.5 million, accounting for 71.4% of net revenue, influenced by contract termination costs and inventory charges[126] - For the nine months ended September 30, 2024, cost of revenue as a percentage of net revenue increased due to $40.5 million in contract termination costs and inventory charges related to product line lifecycle management[128] Impairment and Losses - A non-cash impairment charge of $150.1 million was recorded for the Dynapower reporting unit in Q3 2024[112] - In the third quarter of 2024, a goodwill impairment charge of $150.1 million was recorded for the Dynapower reporting unit within the Sensing Solutions segment[133] - The company incurred a loss of $110.1 million on the sale of the Insights business during the three months ended September 30, 2024[178] Cash Flow and Liquidity - Operating cash flows generated in the nine months ended September 30, 2024, were $380.8 million, with cash and cash equivalents totaling $506.2 million at the end of the quarter[111] - Free cash flow for the nine months ended September 30, 2024 was $254.1 million, an increase from $215.4 million for the same period in 2023[180] - Net cash provided by operating activities for the nine months ended September 30, 2024 was $380.8 million, up from $351.6 million in the prior year, primarily due to favorable changes in working capital[191] - The company generated $15.2 million from investing activities in the nine months ended September 30, 2024, compared to a cash outflow of $117.6 million in the same period of 2023, largely due to proceeds from the sale of its Insights business amounting to $138.3 million[192] - Net cash used in financing activities decreased to $400.3 million for the nine months ended September 30, 2024, down from $569.8 million in the prior year, primarily due to $500.0 million received from the issuance of Senior Notes[193] Debt and Financing - The company issued 6.625% Senior Notes in June 2024 and redeemed 5.0% Senior Notes to improve liquidity, with a net leverage ratio of 3.0x as of September 30, 2024[115] - Total debt and finance lease obligations as of September 30, 2024 were $3,198.1 million, down from $3,399.2 million as of December 31, 2023[185] - The gross leverage ratio improved to 3.6 as of September 30, 2024, down from 3.8 as of December 31, 2023[185] - The company had $745.8 million available under its Revolving Credit Facility as of September 30, 2024, net of obligations related to outstanding letters of credit[197] Expenses and Adjustments - SG&A expense for the three months ended September 30, 2024, increased primarily due to $5.8 million of accelerated vesting of restricted securities related to the sale of the Insights Business[129] - Amortization of intangible assets for the three months ended September 30, 2024, increased by $9.6 million due to accelerated amortization related to exiting the Spear aerospace and defense business[131] - Restructuring and other charges, net increased for the nine months ended September 30, 2024, primarily due to the loss on the sale of the Insights Business and charges related to exiting the Spear aerospace and defense business[134] - Total adjustments for non-GAAP measures amounted to $387.6 million, which included $210.2 million related to restructuring and $131.9 million for financing and other transaction costs[172] Tax and Other Financial Metrics - The (benefit from)/provision for income taxes included a deferred tax benefit of approximately $257.7 million due to a tax strategy for certain intellectual property[147] - Deferred taxes and other tax-related adjustments for the nine months ended September 30, 2024, amounted to $(233.8) million, significantly affecting the net income[173] - The company reported a total of $498.1 million in adjustments for the nine months ended September 30, 2024, leading to an adjusted net income of $404.6 million[173] - Adjusted EBITDA for the three months ended September 30, 2024, was $188.4 million, representing an adjusted operating margin of 19.2%[172] - Adjusted EBITDA for the nine months ended September 30, 2024 was $673.3 million, compared to $688.4 million for the same period in 2023[183] Shareholder Returns - The company paid cash dividends totaling $54.3 million in the nine months ended September 30, 2024, compared to $53.4 million in the same period of 2023[204] - The company repurchased 1.3 million ordinary shares under its September 2023 Program during the nine months ended September 30, 2024[203] Future Outlook - The company anticipates capital expenditures of approximately $165.0 million for fiscal year 2024, which it expects to fund with cash on hand[192] - As of October 18, 2024, the company's corporate credit ratings were Ba2 with a positive outlook from Moody's and BB+ with a stable outlook from Standard & Poor's[199]