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Sensata Technologies Reports Third Quarter 2017 Financial Results

HENGELO, the Netherlands, Oct. 24, 2017 (GLOBE NEWSWIRE) -- Sensata Technologies (NYSE:ST) today announced financial results for its third quarter and nine months ended September 30, 2017.

Revenue in the third quarter of 2017 was $819.1 million, an increase of $29.3 million, or 3.7%, from revenue of $789.8 million in the third quarter of 2016. Excluding a 0.1% positive effect from changes in foreign exchange rates, Sensata reported organic revenue growth of 3.6% in the third quarter of 2017.

Net income in the third quarter of 2017 grew 26.2%, totaling $88.0 million, which was 10.7% of revenue or $0.51 per diluted share, compared to net income of $69.8 million in the third quarter of 2016, which was 8.8% of revenue or $0.41 per diluted share. Adjusted net income in the third quarter of 2017 grew 9.9%, totaling $138.8 million, which was 16.9% of revenue, or $0.81 per diluted share, compared to adjusted net income of $126.3 million in the third quarter of 2016, which was 16.0% of revenue, or $0.74 per diluted share. Changes in foreign exchange rates increased Sensata's adjusted earnings per share by $0.01 in the third quarter of 2017 compared to the prior year period.

“We delivered a strong combination of organic revenue growth and adjusted EBIT margin expansion in the third quarter of 2017,” said Martha Sullivan, President and Chief Executive Officer. “Our heavy vehicle & off road business generated organic revenue growth of approximately 20% and we continued to see strong demand from our industrial customers. M&A cost synergies helped to drive our margin expansion, which reflects the value we are creating from previous acquisitions. During the quarter, we also announced our intention to re-domicile from the Netherlands to the U.K. As we continue to strengthen our balance sheet, our move to the U.K. will provide more flexibility to effectively deploy capital that creates shareholder value.”

Revenue in the nine months ended September 30, 2017 was $2,466.2 million, an increase of $52.3 million, or 2.2%, from revenue of $2,413.9 million in the nine months ended September 30, 2016. Excluding a 1.4% negative effect from changes in foreign exchange rates, Sensata reported organic revenue growth of 3.6% in the nine months ended September 30, 2017.

Net income in the nine months ended September 30, 2017 grew 22.1% totaling $239.2 million, which was 9.7% of revenue or $1.39 per diluted share, compared to net income of $195.9 million in the nine months ended September 30, 2016, which was 8.1% of revenue, or $1.14 per diluted share. Adjusted net income in the nine months ended September 30, 2017 grew 9.7% totaling $399.3 million, which was 16.2% of revenue or $2.32 per diluted share compared to adjusted net income of $363.9 million in the nine months ended September 30, 2016, which was 15.1% of revenue or $2.12 per diluted share. Changes in foreign exchange rates reduced Sensata's adjusted earnings per share by ($0.04) in the nine months ended September 30, 2017 compared to the prior year period.

Sensata’s ending cash balance at September 30, 2017 was $613.0 million, an improvement from $351.4 million as of December 31, 2016, demonstrating Sensata’s cash generation capabilities. During the nine months ended September 30, 2017, the Company generated operating cash flow of $372.3 million and free cash flow of $268.7 million. The Company’s net debt at September 30, 2017 was $2.701 billion, a reduction of $272.8 million from December 31, 2016.

Segment Performance

Three months ended Nine months ended
$ in 000s September 30,
2017
September 30,
2016
September 30,
2017
September 30,
2016
Performance Sensing revenue $603,932 $584,650 $1,825,904 $1,797,395
Performance Sensing profit 162,655 155,228 483,491 453,540
% of Performance Sensing revenue 26.9% 26.6% 26.5% 25.2%
Sensing Solutions revenue $215,122 $205,148 $640,295 $616,497
Sensing Solutions profit 72,372 67,314 209,911 198,737
% of Sensing Solutions revenue 33.6% 32.8% 32.8% 32.2%

Performance Sensing’s profit as a percentage of revenue totaled 26.9% in the third quarter of 2017. Excluding the impact of changes in foreign exchange rates, Performance Sensing’s profit as a percentage of revenue was 27.1% in the third quarter of 2017, representing an increase of 50 basis points from the third quarter of 2016. Sensing Solutions’ profit as a percentage of revenue totaled 33.6% in the third quarter of 2017. Excluding the impact of changes in foreign exchange rates, Sensing Solutions’ profit as a percentage of revenue was 33.9% in the third quarter of 2017, an increase of 110 basis points compared to the third quarter of 2016.

Guidance

For the fourth quarter ending December 31, 2017, Sensata anticipates revenue to total between $808 million and $832 million, compared to $788.4 million in the fourth quarter of 2016, representing organic revenue growth of 2 to 3 percent. Additionally, the Company expects adjusted net income to be between $142 and $149 million and adjusted earnings per share to be between $0.82 and $0.86 in the fourth quarter of 2017, representing organic growth of 7 to 12 percent.

For the full year 2017, Sensata is raising guidance for organic revenue growth and narrowing the range of its guidance for adjusted EBIT, adjusted net income and adjusted EPS. The Company expects revenues of $3.274 to $3.298 billion, which assumes organic revenue growth of approximately 3 to 4 percent, up from its previous guidance of 2 to 3 percent. For the full year 2017, Sensata expects adjusted EBIT to be between $744 and $751 million. Additionally, the Company expects adjusted net income to be between $541 million and $548 million and adjusted earnings per share to be between $3.14 and $3.18 for full year 2017, which assumes organic earnings growth of 10 to 11 percent.

Conference Call & Webcast

Sensata will conduct a conference call today at 8:00 AM eastern time to discuss its third quarter 2017 financial results and its outlook for the remainder of the year. The dial-in numbers for the call are 1-877-317-6789 or +1-412-317-6789 and callers can reference the Sensata Q3 2017 Earnings Call. A live webcast and a replay of the conference call will also be available on the investor relations page of the Company’s website at http://investors.sensata.com. Additionally, a replay of the call will be available until November 1st, 2017. To access the replay dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 10108464.

About Sensata Technologies

Sensata Technologies is one of the world's leading suppliers of sensing, electrical protection, control and power management solutions with operations and business centers in twelve countries. Sensata's products improve safety, efficiency, and comfort for millions of people every day in automotive, appliance, aircraft, industrial, military, heavy vehicle, heating, ventilation and air conditioning, data, telecommunications, recreational vehicle, and marine applications. 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 our 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 net income margin, adjusted earnings per share (“EPS”), adjusted earnings before interest and taxes (“EBIT”), adjusted EBIT margin, free cash flow, net debt, organic revenue growth, and segment profit margin measured on a constant currency basis. We also refer to the change of certain non-GAAP measures, usually reported either as a percentage or number of basis points, between two periods and measured on either a reported or an organic basis, the latter of which excludes the impact of acquisitions, net of exited businesses that occurred within the previous 12 months and the effect of foreign currency exchange rate differences between the comparative periods. Such reported changes are also considered non-GAAP measures.

Adjusted net income is defined as net income, determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted net income margin is calculated by dividing adjusted net income by net revenue. Adjusted EPS is calculated by dividing adjusted net income 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 EBIT is defined as net income, determined in accordance with U.S. GAAP, excluding interest expense, net, provision for/(benefit from) income taxes, and certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted EBIT margin is calculated by dividing adjusted EBIT 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 operating activities, determined in accordance with U.S. GAAP, 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 accelerate the repayment of debt obligations.

Net debt is defined as total debt, capital lease and other financing obligations, determined in accordance with U.S. GAAP, less cash and cash equivalents. We believe that this measure is useful to investors and management as an indicator of trends in our overall financial condition.

Organic revenue growth is defined as the reported percentage change in net revenue, determined in accordance with U.S. GAAP, excluding the impact of acquisitions, net of exited businesses that occurred within the previous 12 months and the effect of foreign currency exchange rate differences between the comparative periods. We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Segment profit margin measured on a constant currency basis is defined as segment profit, excluding the favorable or unfavorable impact of foreign currency exchange rate differences with the comparative (prior) period, divided by segment revenue, also adjusted to exclude the favorable or unfavorable impact of foreign currency exchange rate differences with the comparative (prior) period. We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Safe Harbor Statement

This earnings release contains "forward-looking statements" within the meaning of the federal securities laws. These forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements also relate to our future prospects, developments, and business strategies and include, among other things, our anticipated results for the fourth quarter and full year 2017. Forward-looking statements contained herein, or in other statements made by us, are made based on management’s expectations and beliefs concerning future events impacting us, and are subject to uncertainties and other important factors relating to our operations and business environment, all of which are difficult to predict, and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by forward-looking statements. Factors that might cause these differences include, but are not limited to, risks associated with: adverse conditions in the automotive industry; competitive pressures that could require us to lower prices or could result in reduced demand for our products; integration of acquired companies, including CST and Schrader; the assumption of known and unknown liabilities in the acquisition of CST and Schrader; risks associated with our non-U.S. operations and international business; litigation and disputes involving us, including the extent of intellectual property, product liability, warranty, and recall claims asserted against us; risks associated with our historical and future tax positions; risks associated with labor disruptions or increased labor costs; risks associated with our indebtedness; and risks associated with breaches and other disruptions to our information technology infrastructure. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date the statements were made; and we undertake no obligation to publicly update or revise any forward-looking statements, whether to reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in our SEC filings. Copies of our filings are available from our Investor Relations department or from the SEC website, www.sec.gov.


SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Operations
(Unaudited)
($ in 000s, except per share amounts)
For the three months ended For the nine months ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Net revenue $819,054 $789,798 $2,466,199 $2,413,892
Operating costs and expenses:
Cost of revenue 527,432 508,944 1,601,190 1,574,763
Research and development 34,002 31,601 97,032 95,240
Selling, general and administrative 75,972 75,046 227,256 224,637
Amortization of intangible assets 40,317 50,562 121,578 151,572
Restructuring and special charges 1,329 837 18,768 3,167
Total operating costs and expenses 679,052 666,990 2,065,824 2,049,379
Profit from operations 140,002 122,808 400,375 364,513
Interest expense, net (40,263) (41,176) (120,578) (125,201)
Other, net 3,112 (726) 7,190 4,892
Income before taxes 102,851 80,906 286,987 244,204
Provision for income taxes 14,816 11,121 47,759 48,297
Net income $88,035 $69,785 $239,228 $195,907
Net income per share:
Basic $0.51 $0.41 $1.40 $1.15
Diluted $0.51 $0.41 $1.39 $1.14
Weighted-average ordinary shares outstanding:
Basic 171,269 170,840 171,116 170,656
Diluted 172,245 171,478 172,023 171,359


SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
($ in 000s)
For the three months ended For the nine months ended
September 30,
2017
September 30,
2016
September 30,
2017
September 30,
2016
Net income $88,035 $69,785 $239,228 $195,907
Other comprehensive loss, net of tax:
Deferred loss on derivative instruments, net of reclassifications (6,784) (8,485) (17,820) (25,010)
Defined benefit and retiree healthcare plans 274 24 1,489 291
Other comprehensive loss (6,510) (8,461) (16,331) (24,719)
Comprehensive income $81,525 $61,324 $222,897 $171,188


SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Balance Sheets
(Unaudited)
($ in 000s)
September 30, 2017 December 31, 2016
Assets
Current assets:
Cash and cash equivalents $612,972 $351,428
Accounts receivable, net of allowances 569,881 500,211
Inventories 447,486 389,844
Prepaid expenses and other current assets 100,935 100,002
Total current assets 1,731,274 1,341,485
Property, plant and equipment, net 735,924 724,046
Goodwill 3,005,464 3,005,464
Other intangible assets, net 958,972 1,075,431
Deferred income tax assets 26,678 20,695
Other assets 79,625 73,855
Total assets $6,537,937 $6,240,976
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt, capital lease and other financing obligations $13,176 $14,643
Accounts payable 324,119 299,198
Income taxes payable 27,031 23,889
Accrued expenses and other current liabilities 263,611 245,566
Total current liabilities 627,937 583,296
Deferred income tax liabilities 404,575 392,628
Pension and other post-retirement benefit obligations 36,192 34,878
Capital lease and other financing obligations, less current portion 29,990 32,369
Long-term debt, net 3,224,684 3,226,582
Other long-term liabilities 32,034 29,216
Total liabilities 4,355,412 4,298,969
Total shareholders’ equity 2,182,525 1,942,007
Total liabilities and shareholders’ equity $6,537,937 $6,240,976


SENSATA TECHNOLOGIES HOLDING N.V.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in 000s) For the nine months ended
September 30, 2017 September 30, 2016
Cash flows from operating activities:
Net income $239,228 $195,907
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 82,014 77,649
Amortization of deferred financing costs and original issue discounts 5,528 5,501
Gain on sale of assets (1,180)
Share-based compensation 15,106 13,279
Amortization of inventory step-up to fair value 2,319
Amortization of intangible assets 121,578 151,572
Deferred income taxes 11,836 15,706
Unrealized loss on hedges and other non-cash items 5,844 660
Changes in operating assets and liabilities, net of effects of acquisitions (107,675) (66,242)
Net cash provided by operating activities 372,279 396,351
Cash flows from investing activities:
Acquisition of CST, net of cash received 4,688
Additions to property, plant and equipment and capitalized software (103,536) (94,584)
Investment in equity securities (50,000)
Proceeds from the sale of assets 8,862 751
Other (3,000)
Net cash used in investing activities (97,674) (139,145)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares 5,332 3,306
Payments on debt (14,459) (297,698)
Payments to repurchase ordinary shares (2,817) (4,672)
Payments of debt issuance costs (137) (518)
Other (980)
Net cash used in financing activities (13,061) (299,582)
Net change in cash and cash equivalents 261,544 (42,376)
Cash and cash equivalents, beginning of period 351,428 342,263
Cash and cash equivalents, end of period $612,972 $299,887


Revenue by Business, Geography, and End Market (Unaudited)
(% of total revenue) Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Performance Sensing 73.7% 74.0% 74.0% 74.5%
Sensing Solutions 26.3% 26.0% 26.0% 25.5%
Total 100.0% 100.0% 100.0% 100.0%


(% of total revenue) Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Americas 41.8% 43.7% 41.9% 43.2%
Europe 31.5% 31.1% 31.7% 32.6%
Asia/Rest of World 26.7% 25.2% 26.4% 24.2%
Total 100.0% 100.0% 100.0% 100.0%


(% of total revenue)1 Three months ended
September 30,
Nine months ended
September 30,
2017 2016 2017 2016
Europe automotive 24.2% 24.4% 24.2% 25.3%
North America automotive 18.0% 20.6% 18.9% 20.3%
Asia automotive 18.2% 17.5% 17.8% 16.8%
Rest of world automotive 0.3% 0.3% 0.3% 0.3%
Heavy vehicle and off-road 14.5% 12.8% 14.4% 13.3%
Appliance and heating, ventilation and air-conditioning 6.3% 6.1% 6.5% 5.8%
Industrial 9.6% 9.1% 9.6% 9.1%
Aerospace 4.7% 4.6% 4.6% 4.6%
All other 4.2% 4.6% 3.7% 4.5%
Total 100.0% 100.0% 100.0% 100.0%

1 Reclassification of certain acquired product lines has led to retrospective adjustments of certain prior period end-market percentages.

The following unaudited table reconciles Sensata’s net income to adjusted net income for the three and nine months ended September 30, 2017 and 2016.

(In 000s, except per share amounts) Three months ended
September 30,
Nine months ended
September 30,
2017 2016 2017 2016
Net income $88,035 $69,785 $239,228 $195,907
Restructuring and special charges 3,107 4,197 18,299 10,997
Financing and other transaction costs 4,538 452 4,538 1,508
Deferred gain on other hedges (2,503) (2,930) (5,241) (24,497)
Depreciation and amortization expense related to the step-up in fair value of fixed and
intangible assets and inventory
41,380 52,531 124,746 158,288
Deferred income tax and other tax expense/(benefit) 2,374 451 12,187 16,150
Amortization of deferred financing costs 1,835 1,823 5,528 5,501
Total adjustments $50,731 $56,524 $160,057 $167,947
Adjusted net income $138,766 $126,309 $399,285 $363,854
Weighted average diluted shares outstanding 172,245 171,478 172,023 171,359
Adjusted EPS $0.81 $0.74 $2.32 $2.12

Sensata's definition of adjusted net income excludes the deferred provision for/(benefit from) income taxes and other tax expense/(benefit). Sensata's deferred provision for/(benefit from) income taxes includes: adjustments for book-to-tax basis differences, due primarily to the step-up in fair value of fixed and intangible assets and goodwill, the utilization of net operating losses, and adjustments to our U.S. valuation allowance in connection with certain acquisitions. Other tax expense/(benefit) includes certain adjustments to unrecognized tax positions.

As Sensata treats deferred income taxes as an adjustment to compute adjusted net income, the deferred income tax effect associated with the reconciling items, above, would not change adjusted net income for any period presented.

The current income tax (benefit)/expense associated with the reconciling items above, which is included in adjusted net income, would be as follows: Depreciation and amortization expense related to the step-up in fair value of fixed and intangible assets and inventory: $(0.0) million and $(0.0) million for the three months ended September 30, 2017 and 2016, respectively, and $(0.0) million and $(0.1) million for the nine months ended September 30, 2017 and 2016, respectively; and Restructuring and special charges: $(0.1) million and $(0.1) million for the three months ended September 30, 2017 and 2016, respectively, and $(0.3) million and $(0.4) million for the nine months ended September 30, 2017 and 2016, respectively.

The following unaudited table identifies where in the Condensed Consolidated Statements of Operations the adjustments to reconcile net income to adjusted net income were recorded for the three and nine months ended September 30, 2017 and 2016.

($ in 000s) Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Cost of revenue $5,127 $5,938 $15,764 $12,862
Selling, general and administrative 4,269 1,158 7,367 3,878
Amortization of intangible assets 38,896 49,016 117,409 147,214
Restructuring and special charges 733 268 7,043 1,972
Interest expense, net 1,835 1,823 5,528 5,501
Other, net (2,503) (2,130) (5,241) (19,630)
Provision for income taxes 2,374 451 12,187 16,150
Total adjustments $50,731 $56,524 $160,057 $167,947

The following unaudited tables reconcile the Company’s net cash provided by operating activities to free cash flow.

($ in 000s) Three months ended
September 30,
% Change Nine months
ended September 30,
% Change
2017 2016 2017 2016
Net cash provided by operating activities $138,430 $149,720 (7.5)% $372,279 $396,351 (6.1)%
Additions to property, plant and equipment and capitalized software (36,344) (30,118) (20.7)%(103,536) (94,584) (9.5)%
Free cash flow $102,086 $119,602 (14.6)% $268,743 $301,767 (10.9)%

The following unaudited table reconciles Sensata’s diluted net income per share to organic adjusted EPS growth for the three and nine months ended September 30, 2017 and 2016. The amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding.

Three months ended
September 30,
Nine months ended
September 30,
2017 2016 2017 2016
Diluted net income per share $0.51 $0.41 $1.39 $1.14
Non-GAAP adjustments:
Restructuring and special charges 0.02 0.02 0.11 0.06
Financing and other transaction costs 0.03 0.00 0.03 0.01
Deferred gain on other hedges (0.01) (0.02) (0.03) (0.14)
Depreciation and amortization expense related to the step-up in fair value of fixed and
intangible assets and inventory
0.24 0.31 0.73 0.92
Deferred income tax expense and other tax expense/(benefit) 0.01 0.00 0.07 0.09
Amortization of deferred financing costs 0.01 0.01 0.03 0.03
Adjusted EPS $0.81 $0.74 $2.32 $2.12
Percentage change in adjusted EPS 9.5% 9.4%
Less: year-over-year impact due to:
Foreign exchange rate differences 1.4% (1.9)%
Organic adjusted EPS growth 8.1% 11.3%

The following unaudited table reconciles Sensata’s total debt, capital lease and other financing obligations to net debt.

Balance as of
($ in 000s) September 30, 2017 December 31, 2016 Change ($)
Current portion of long-term debt, capital lease and other financing obligations $13,176 $14,643 $(1,467)
Capital lease and other financing obligations, less current portion 29,990 32,369 (2,379)
Long-term debt, net 3,224,684 3,226,582 (1,898)
Total debt, capital lease and other financing obligations 3,267,850 3,273,594 (5,744)
Less: Discounts (15,812) (17,655) 1,843
Less: Deferred financing costs (29,971) (33,656) 3,685
Gross indebtedness 3,313,633 3,324,905 (11,272)
Less: Cash and cash equivalents 612,972 351,428 261,544
Net debt $2,700,661 $2,973,477 $(272,816)

The following unaudited tables reconcile Sensata’s net income to adjusted EBIT for the three and nine months ended September 30, 2017 and 2016. Percentage amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding.

$ in thousands% of net revenue
Three months ended
September 30,
Three months ended
September 30,
2017 20162017 2016
Net income$88,035 $69,785 10.7% 8.8%
Interest expense, net40,263 41,176 4.9% 5.2%
Provision for income taxes14,816 11,121 1.8% 1.4%
Earnings before interest and taxes (“EBIT”)143,114 122,082 17.5% 15.5%
Non-GAAP adjustments:
Restructuring and special charges3,107 4,197 0.4% 0.5%
Financing and other transaction costs4,538 452 0.6% 0.1%
Deferred gain on other hedges(2,503) (2,930) (0.3)% (0.4)%
Depreciation and amortization expense related to the step-up in fair value of fixed and
intangible assets and inventory
41,380 52,531 5.1% 6.7%
Adjusted EBIT$189,636 $176,332 23.2% 22.3%
Year-over-year change7.5% 90 bps
Less: year-over-year impact due to:
Foreign exchange rate differences0.4% 10 bps
Organic adjusted EBIT growth7.1% 80 bps


$ in thousands% of net revenue
Nine months ended
September 30,
Nine months ended
September 30,
2017201620172016
Net income $239,228 $195,907 9.7%8.1%
Interest expense, net 120,578 125,201 4.9%5.2%
Provision for income taxes 47,759 48,297 1.9%2.0%
EBIT 407,565 369,405 16.5%15.3%
Non-GAAP adjustments:
Restructuring and special charges 18,299 10,997 0.7%0.5%
Financing and other transaction costs 4,538 1,508 0.2%0.1%
Deferred gain on other hedges (5,241)(24,497)(0.2)%(1.0)%
Depreciation and amortization expense related to the step-up in fair value of fixed and
intangible assets and inventory
124,746 158,288 5.1%6.6%
Adjusted EBIT $549,907 $515,701 22.3%21.4%
Year-over-year change 6.6% 90 bps
Less: year-over-year impact due to:
Foreign exchange rate differences (1.3)% 0 bps
Organic adjusted EBIT growth 7.9% 90 bps

The following unaudited table reconciles Sensata’s projected (GAAP) diluted net income per share to its projected adjusted EPS for the three months and full year ended December 31, 2017. The amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding.

Three months ended
December 31, 2017
Full year ended
December 31, 2017
Low End High End Low End High End
Projected diluted net income per share $0.51 $0.53 $1.90 $1.92
Restructuring and special charges 0.01 0.11 0.12
Financing and other transaction costs 0.01 0.01 0.04 0.04
Deferred (gain)/loss on other hedges * (0.03) (0.03)
Depreciation and amortization expense related to the step-up in fair value of fixed
and intangible assets and inventory
0.24 0.24 0.96 0.96
Deferred income tax and other tax expense/(benefit) 0.05 0.06 0.12 0.13
Amortization of deferred financing costs 0.01 0.01 0.04 0.04
Projected adjusted EPS $0.82 $0.86 $3.14 $3.18
Weighted average diluted shares outstanding (in 000s) 172,600 172,600 172,200 172,200

* 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 2017 diluted net income per share. In prior periods, such adjustments have been significant to our reported GAAP earnings.

Contacts:
Investors: Media:
Joshua Young Alexia Taxiarchos
(508) 236-2196 (508) 236-1761
Joshua.young@sensata.com ataxiarchos@sensata.com


Source: Sensata Technologies Holding B.V