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Sensata (ST) Surpasses Q1 Earnings and Revenue Estimates

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Sensata Technologies Holding plc (ST - Free Report) delivered healthy first-quarter 2022 results, with the bottom and top lines surpassing the Zacks Consensus Estimate.

On an adjusted basis, the company reported earnings of 78 cents per share compared with 86 cents reported in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 2.6%.

Quarterly revenues aggregated $975.8 million, up 3.5% year over year. The top line beat the consensus estimate by 1.9%. Acquisitions acted as tailwinds, but unfavorable currency changes reduced revenues by 0.6%.

In the reported quarter, Sensata inked an agreement with Pfingsten Partners to buy Dynapower Company, LLC for $580 million in an all-cash deal. Dynapower is a leading developer of high-voltage power conversion solutions for clean energy businesses. The transaction is subject to regulatory approval and is expected to be completed by the third quarter of 2022.

Sensata Technologies Holding N.V. Price, Consensus and EPS Surprise

 

Sensata Technologies Holding N.V. Price, Consensus and EPS Surprise

Sensata Technologies Holding N.V. price-consensus-eps-surprise-chart | Sensata Technologies Holding N.V. Quote

Sensata and Dynapower are well-poised to aid clean energy transition for clients and partners. This is due to the success with global blue-chip customers in commercial and industrial power conversion solutions, green hydrogen rectifiers, and front-of-meter power conversion and energy storage, stated Sensata.

Sensata's Clean Energy Solutions strategy has been strengthened by the Dynapower acquisition, which follows the acquisitions of Lithium Balance, Gigavac and Spear Power Systems.

Following the quarterly announcement, Sensata’s shares have lost 6.65% and closed at $45.49 on Apr 26. In the past year, ST has lost 23.2% compared with the industry’s decline of 8.8%%.

Segmental Results

Performance Sensing revenues (73.6% of the total revenues) increased 0.5% year over year to $717.7. Strong outgrowth and acquisitions offset losses in OEM production due to supply-chain restrictions, resulting in almost flat revenues. Segment operating income was $180.6 million compared with $195.8 million reported in the prior-year quarter. Lower organic volumes and increased supply-chain costs offset the benefits achieved from higher pricing, acquisitions and positive foreign exchange fluctuations.

Sensing Solutions revenues (26.4% of total revenues) increased to $258 million, up 13.2% from the year-ago quarter. The year-over-year improvement was led by the latest electrification launches and revenues from acquisitions. The segment’s operating income increased to $72.5 million from $66.9 million mainly due to higher volumes, partly offset by supply-chain costs.

Other details

Overall organic revenues were flat year over year. The heavy vehicle off-road business reported organic revenue growth of 2.5%. The automotive business witnessed a 5.8% decline in organic revenue growth. The industrial business rose 13.3% organically as global industrial end markets continued to recover. The aerospace business witnessed a 1.8% increase in organic revenues.

Total operating expenses were $849.8 million compared with $785 million in the prior-year quarter primarily due to the higher cost of revenues, and selling, general and administrative expenses. Adjusted operating income was $182.5 million, down from $198.1 million in the year-ago quarter.
The downtick was mainly caused by reduced organic volumes and higher investments.

Adjusted EBITDA totaled $214.8 million in the quarter, down from $227.6 million in the previous quarter.

Cash Flow & Liquidity

In the quarter under review, Sensata generated $47.3 million of net cash from operating activities compared with $104.5 million in the prior year. Free cash flow was $11.6 million compared with $77.3 million a year ago.
As of Mar 31, 2022, the company had $1,608 million in cash and cash equivalents, with $4,215 million of net long-term debt.

In the quarter under review, Sensata repurchased 1.1 million shares worth $67.3 million.

Guidance

Sensata provided guidance for the second quarter of 2022. For the quarter, the company expects revenues of $990-$1,030 million, suggesting flat to a 4% rise year over year.

Adjusted earnings per share are estimated to be 79-87 cents, implying a year-over-year decline of 8-17%. Adjusted net income is expected to be $125-137 million, indicating a year-over-year decline of 10-17%.

For 2022, the company expects revenues of $4.125-$4.275 billion, suggesting year-over-year growth of 8-12%. Adjusted earnings per share are estimated to be $3.80-$4.06, implying year-over-year growth of 7-14%.

Adjusted net income is expected to be $600-$640 million, indicating year-over-year growth of 6-13%.

Zacks Rank & Stocks to Consider

Sensata currently has a Zacks Rank #4 (Sell)

Some better-ranked stocks from the broader technology sector are Flex (FLEX - Free Report) , Jabil (JBL - Free Report) and Broadcom (AVGO - Free Report) . Flex and Jabil sport a Zacks Rank #1 (Strong Buy), while Broadcom carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Flex’s fiscal 2022 earnings is pegged at $1.88 per share, unchanged in the past 60 days. The long-term earnings growth rate is pegged at 14.9%.

Flex earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 25.6%. Shares of FLEX have declined 11.2% in the past year.

The Zacks Consensus Estimate for Jabil fiscal 2022 earnings is pegged at $7.25 per share, up 10.2% in the past 60 days. The long-term earnings growth rate is 12%.

Jabil earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 13.5%. Shares of JBL have gained 4.3% in the past year.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $35.67 per share, up 7.6% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 1.9%. Shares of AVGO have increased 22% in the past year.


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