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Sensata (ST) Q2 Earnings In Line With Estimates, Revenues Beat

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Sensata Technologies Holding plc (ST - Free Report) reported tepid second-quarter 2022 results, with only the top line surpassing the Zacks Consensus Estimate.

On an adjusted basis, the company reported earnings of 83 cents per share compared with 95 cents reported in the year-ago quarter. The bottom line matched the Zacks Consensus Estimate.

Quarterly revenues aggregated $1.02 billion, up 2.8% year over year. The top line beat the consensus estimate by 1.33%. Acquisitions acted as tailwinds, but unfavorable currency changes reduced revenues by 2.2%.

Following the quarterly announcement, Sensata’s shares lost 5.57% and closed at $41.51 on Jul 26. In the pre-market trading on Jul 27, shares are down 1.08%. In the past year, ST has lost 26.3% compared with the industry’s decline of 18.8%.

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Segmental Results

Performance Sensing revenues (73.2% of the total revenues) increased 0.7% year over year to $746.9 million. Strong market growth, acquisitions and higher pricing offset the loss in the automotive sector due to unfavorable inventory build-up and foreign-currency movement, resulting in almost flat revenues. Segment operating income was $185.5 million compared with $202.1 million reported in the prior-year quarter. Increased supply-chain constraints, inflation-induced higher logistics and material costs offset the benefits of higher pricing and acquisitions.

Sensing Solutions revenues (26.8% of total revenues) were $273.7 million, up 9.1% 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 $79.5 million from $76.5 million, mainly due to higher volumes, partly offset by higher inflationary costs.

Other details

In the quarter under review, overall organic revenues were up 2.2%. The heavy vehicle off-road business witnessed a 0.6% decline in organic revenue growth. The automotive business reported organic revenue growth of 0.1%. The industrial business rose 7.7% organically as global industrial end markets continued to recover. The aerospace business witnessed a 17.7% increase in organic revenues.

Total operating expenses were $881.6 million compared with $827.9 million in the prior-year quarter, primarily due to higher cost of revenues, selling and general and administrative expenses. Adjusted operating income was $193.8 million, down from $209.3 million in the year-ago quarter. The downtick was mainly caused by reduced volume and productivity and higher investments.

Adjusted EBITDA totaled $220.4 million in the quarter, down from $242.4 million in the previous year quarter.

Cash Flow & Liquidity

In the quarter under review, Sensata generated $94.5 million of net cash from operating activities compared with $163.4 million in the prior year. Free cash flow was $56.2 million compared with $127 million a year ago.

As of Jun 30, 2022, the company had $1,558.6 million in cash and cash equivalents, with $4,213.5 million of net long-term debt compared with $1608 million and $4216 million, respectively, as of Mar 31, 2022.

In the quarter under review, Sensata shares were worth $77 million.

Guidance

Sensata provided guidance for the third quarter of 2022. For the quarter, the company expects revenues of $980-$1,020 million, suggesting a rise of 3-7% year over year. Adjusted operating income is expected to be $187-199 million, indicating a year-over-year decline of 7-1%

Adjusted earnings per share are estimated to be 81-89 cents, suggesting a decline of 7% to a rise of 2%. Adjusted net income is expected to be $126-138 million, suggesting a 9% decline to no change on a year-over-year basis.

For 2022, the company expects revenues of $3.970-$4.050 billion, suggesting year-over-year growth of 4-6%. Adjusted earnings per share are estimated to be $3.30-$3.42, implying a year-over-year decline of 7-4%. Adjusted operating income is expected to be $758-782 million, indicating a year-over-year decline of 6-3%

Adjusted net income is expected to be $514-$534 million, indicating a year-over-year decline of 9-6%.

Zacks Rank & Stocks to Consider

Sensata currently has a Zacks Rank #3 (Hold)

Some better-ranked stocks from the broader technology space are Aspen Technology (AZPN - Free Report) , Synopsys (SNPS - Free Report) and InterDigital Inc. (IDCC - Free Report) . Aspen Technology, Synopsys and InterDigital each carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Aspen Technology’s 2022 earnings is pegged at $5.49 per share, increasing 0.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.3%.

Aspen Technology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.1%. Shares of AZPN have soared 25% in the past year.

The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.67 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.6%.

Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 2.7%. Shares of SNPS have jumped 20.7% in the past year.

The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.90 per share, declining 11.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 15%.

InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 141.1%. Shares of IDCC have declined 9.8% in the past year.