Sensata(US:ST)2023-08-01 13:13Revenue Performance - Net revenue for Q2 2023 was $1,062.1 million, a 4.1% increase from $1,020.5 million in Q2 2022, with organic growth of 3.4%[82] - For the first half of 2023, net revenue reached $2,060.3 million, up 3.2% from $1,996.3 million in the same period of 2022, with organic growth of 4.0%[83] - Performance Sensing net revenue for Q2 2023 increased by 3.5%, with organic growth of 5.2% after adjusting for foreign currency effects[93] - Automotive net revenue for Q2 2023 grew by 4.7%, with organic growth of 6.7% after adjusting for foreign currency effects[94] - Sensing Solutions net revenue for Q2 2023 increased by 5.5%, but declined 1.2% on an organic basis due to weakness in appliance and HVAC markets[97] Operating Income and Expenses - Operating income for Q2 2023 decreased by $20.9 million, or 15.1%, to $118.0 million, representing 11.1% of net revenue, primarily due to the exit from the Marine Business[84] - Operating income for the first half of 2023 increased by $2.0 million, or 0.7%, to $266.9 million, which is 13.0% of net revenue[85] - Total operating costs and expenses for Q2 2023 were $944.1 million, representing 88.9% of net revenue, compared to 86.4% in Q2 2022[100] - For the three months ended June 30, 2023, operating income decreased primarily due to $38.3 million of charges from the exit of the Marine Business and unfavorable foreign currency exchange rates[110] - For the six months ended June 30, 2023, operating income increased due to pricing recoveries, cost savings from repositioning actions, and a gain on the sale of a business, despite $38.3 million of charges from the Marine Business exit[111] Cash Flow and Capital Management - The company generated $212.6 million in operating cash flows in the first half of 2023, ending the quarter with $857.3 million in cash and cash equivalents[87] - Free cash flow for the six months ended June 30, 2023 was $128.2 million, compared to $67.8 million in the same period of 2022[138] - Net cash provided by operating activities for the six months ended June 30, 2023 was $212.6 million[138] - Cash dividends paid increased to $35.1 million in the first half of 2023, up from $17.2 million in the same period of 2022[158] - The company repurchased 0.6 million ordinary shares in the first half of 2023, down from 2.8 million shares in the same period of 2022[157] Debt and Leverage - Gross indebtedness as of June 30, 2023, was $3.8 billion, with a net leverage ratio of 3.2x, down from $4.3 billion and a net leverage ratio of 3.4x as of December 31, 2022[87] - Net debt decreased to $2.968 billion from $3.048 billion year-over-year[150] - Net leverage ratio improved to 3.2 from 3.4 year-over-year[150] - Availability under the Revolving Credit Facility was $746.1 million as of June 30, 2023[152] Adjusted Financial Metrics - Adjusted EBITDA is defined as net income excluding interest expense, provision for income taxes, depreciation, and amortization, which helps in understanding ongoing operations[128] - Adjusted EBITDA for the three months ended June 30, 2023 was $234.7 million, reflecting significant non-GAAP adjustments[141] - Adjusted EBITDA for the last twelve months (LTM) increased to $928.8 million, compared to $903.9 million in the previous year[150] - Total adjustments for the three months ended June 30, 2023 amounted to $87.7 million, primarily due to restructuring and step-up depreciation[135] Income Tax and Other Expenses - For the six months ended June 30, 2023, the provision for income taxes increased by $16.0 million due to an increase in profit before tax[118] - For the three months ended June 30, 2023, interest expense, net decreased by $6.7 million primarily due to increased interest income from rising interest rates[112] - For the six months ended June 30, 2023, other, net represented a net loss of $9.5 million, a favorable impact of $80.2 million compared to a net loss of $89.7 million in the prior period[116] Research and Development - For the three months ended June 30, 2023, research and development (R&D) expense decreased due to lower costs from repositioning actions taken in fiscal year 2022, partially offset by higher spending to support increased revenue[103] - For the six months ended June 30, 2023, selling, general and administrative (SG&A) expense decreased primarily due to cost savings from repositioning actions and lower transaction costs from reduced mergers and acquisitions activity[106] Depreciation and Restructuring Costs - The company incurred $34.0 million in restructuring-related costs for the six months ended June 30, 2023[137] - Step-up depreciation and amortization for the six months ended June 30, 2023 was $92.5 million[137]