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Sensata Technologies Reports First Quarter 2022 Financial Results

First Quarter Results above Guidance

Sensata Technologies (NYSE: ST), a global industrial technology company and leading provider of sensor-rich solutions that create insights for customers, today announced financial results for its first quarter ended March 31, 2022.

Operating results for the first quarter of 2022 compared to the first quarter of 2021 are summarized below. These results include non-GAAP financial measures, each of which is defined and reconciled to the most directly comparable GAAP measure later in this press release.

Revenue:

  • Revenue was $975.8 million, an increase of $33.2 million, or 3.5%, compared to $942.5 million in the first quarter of 2021.
  • Revenue growth was flat on an organic basis, which excludes a decrease of (0.6)% from foreign currency exchange rates and an increase of 4.1% from acquisitions, each versus the prior-year period.
  • Sensata grew revenue above guidance provided in February 2022 due to effective execution of our plan: strong revenue outgrowth and growth from acquisitions.

Operating income:

  • Operating income was $125.9 million, or 12.9% of revenue, a decrease of $31.5 million, or 20.0%, compared to operating income of $157.5 million, or 16.7% of revenue, in the first quarter of 2021.
  • Adjusted operating income was $182.5 million, or 18.7% of revenue, a decrease of $15.6 million, or 7.9%, compared to adjusted operating income of $198.1 million, or 21.0% of revenue, in the first quarter of 2021.
  • Sensata delivered adjusted operating income at the top end of guidance. Pricing initiatives largely offset inflationary cost pressures and investments in long term growth vectors through R&D and acquisitions position Sensata well in high-growth segments.

Earnings per share:

  • Earnings per share was $0.14, a decrease of $0.20, or 58.8%, compared to earnings per share of $0.34 in the first quarter of 2021.
  • Adjusted earnings per share was $0.78, a decrease of $0.08, or 9.3%, compared to adjusted earnings per share of $0.86 in the first quarter of 2021.
  • Changes in foreign currency exchange rates increased Sensata's adjusted earnings per share by $0.05 in the first quarter of 2022 compared to the prior-year period.

Sensata generated $47.4 million of operating cash flow in the first quarter of 2022 compared to $104.5 million in the prior-year period. The Company's free cash flow totaled $11.6 million in the first quarter of 2022 compared to $77.3 million in the prior-year period.

During the first quarter of 2022, Sensata repurchased approximately 1.1 million ordinary shares for total consideration of $67.3 million as part of its existing share repurchase program.

“Sensata delivered higher than targeted revenue in the first quarter due to strong market outgrowth and acquired growth of 7.9% and 4.1% respectively, despite market headwinds of 5.8%. Lower volumes and increased investments in our Megatrend growth areas are weighing on margins, but these investments position Sensata for growth as evidenced by our demonstrated outgrowth and record new business wins.” said Jeff Cote, CEO and President of Sensata. “Additionally, we are excited to announce the initiation of a quarterly dividend and the acquisition of Dynapower."

Segment Performance

 

 

For the three months ended

March 31,

$ in 000s

 

 

2022

 

 

 

2021

 

Performance Sensing

 

 

 

 

Revenue

 

$

717,697

 

 

$

714,512

 

Operating income

 

$

180,638

 

 

$

195,844

 

% of Performance Sensing revenue

 

 

25.2

%

 

 

27.4

%

 

 

 

 

 

Sensing Solutions

 

 

 

 

Revenue

 

$

258,073

 

 

$

228,016

 

Operating income

 

$

72,515

 

 

$

66,894

 

% of Sensing Solutions revenue

 

 

28.1

%

 

 

29.3

%

 

New Quarterly Dividend

Sensata announced today that it intends to commence a quarterly dividend of $0.11 per share, with the first payment expected to be payable on May 25, 2022 for shareholders of record as of May 11, 2022.

Acquisition of Dynapower

Sensata also announced today that it had agreed to acquire Dynapower Company, LLC (“Dynapower”), a leading provider of high voltage power conversion solutions for clean energy market segments from Pfingsten Partners for $580 million in cash. A trusted leader with nearly 60 years of experience, Dynapower is a leader in power conversion systems including inverters, converters, and rectifiers for renewable energy generation, green hydrogen production, electric vehicle charging stations, and microgrid applications, as well as industrial and defense applications. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to be completed early in the third quarter of 2022.

Guidance

"Sensata delivered solid financial performance in a challenging first quarter, posting 3.5% revenue growth and 18.7% adjusted operating income margin," said Paul Vasington, EVP and CFO of Sensata. “For the second quarter of 2022, we expect revenue of $990 to $1,030 million and adjusted EPS of $0.79 to $0.87. For the fiscal year 2022, we are maintaining our annual financial guidance calling for revenue of $4,175 to $4,275 million and adjusted EPS of $3.80 to $4.06."

Fiscal Year 2022 Guidance

 

 

 

$ in millions, except EPS

FY-22 Guidance

FY-21

Y/Y Change

Revenue

$4,125- $4,275

$3,820.8

8% - 12%

organic growth

 

 

6% - 9%

Adjusted Operating Income

$848 - $892

$806.0

5% - 11%

Adjusted Net Income

$600 - $640

$566.8

6% - 13%

Adjusted EPS

$3.80 - $4.06

$3.56

7% - 14%

Versus the prior year, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $21 million at the midpoint and increase adjusted EPS by approximately $0.06 at the midpoint for fiscal year 2022.

Q2 2022 Guidance

 

 

 

$ in millions, except EPS

Q2-22 Guidance

Q2-21

Y/Y Change

Revenue

$990 - $1,030

$992.7

0% - 4%

organic growth

 

 

(2%) - 2%

Adjusted Operating Income

$186 - $198

$209.3

(11%) - (5%)

Adjusted Net Income

$125 - $137

$151.4

(17%) - (10%)

Adjusted EPS

$0.79 - $0.87

$0.95

(17%) - (8%)

Versus the prior-year period, Sensata expects that changes in foreign currency exchange rates will decrease revenue by approximately $8 million at the midpoint and increase adjusted EPS by approximately $0.01 at the midpoint in the second quarter of 2022.

Conference Call and Webcast

Sensata will conduct a conference call today at 8:00 a.m. Eastern Time to discuss its first quarter 2022 financial results and its outlook for the second quarter and full year 2022. The dial-in numbers for the call are 1-844-784-1726 or 1-412-380-7411. Callers should reference the "Sensata Q1 2022 Financial Results Conference Call." A live webcast of the conference call will also be available on the investor relations page of Sensata’s website at http://investors.sensata.com. Additionally, a replay of the call will be available until May 3, 2022. To access the replay, dial 1-877-344-7529 or 1-412-317-0088 and enter confirmation code: 8713067.

About Sensata Technologies

Sensata Technologies is a leading industrial technology company that develops sensors, sensor-based solutions, including controllers and software, and other mission-critical products to create valuable business insights for customers and end users. For more than 100 years, Sensata has provided a wide range of customized, sensor-rich solutions that address complex engineering requirements to help customers solve difficult challenges in the automotive, heavy vehicle & off-road, industrial, and aerospace industries. With more than 21,000 employees and operations in 13 countries, Sensata’s solutions help to make products safer, cleaner and more efficient, more electrified, and more connected. 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 the 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 earnings per share (“EPS”), adjusted operating income, adjusted operating margin, free cash flow, organic revenue growth, market outgrowth, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), net debt, and net leverage ratio. We also refer to changes in certain non-GAAP measures, usually reported either as a percentage or number of basis points, between two periods and measured on either a reported, constant currency, or an organic basis, the latter of which excludes the net impact of acquisitions and divestitures for the 12-month period following the respective transaction date(s) and the effect of foreign currency exchange rate differences between the comparative periods. Such changes are also considered non-GAAP measures.

Adjusted net income (or loss) is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted EPS is calculated by dividing adjusted net income (or loss) 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 operating income (or loss) is defined as operating income (or loss), determined in accordance with U.S. GAAP, excluding certain non-GAAP adjustments which are described in the accompanying reconciliation tables. Adjusted operating margin is calculated by dividing adjusted operating income (or loss) 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/(used in) operating activities 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 for the accelerated repayment of debt obligations.

Organic revenue growth (or decline) is defined as the reported percentage change in net revenue calculated in accordance with U.S. GAAP, excluding the period-over-period impact of foreign exchange rate differences as well as the net impact of material acquisitions and divestitures for the 12-month period following the respective transaction date(s). We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Adjusted EBITDA is defined as net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, net, provision for (or benefit from) income taxes, depreciation expense, amortization of intangible assets, and the following non-GAAP adjustments, if applicable: (1) restructuring related and other, (2) financing and other transaction costs, (3) deferred gain or loss on derivative instruments, and (4) step-up inventory amortization.

Net debt is defined as total debt, finance lease, and other financing obligations less cash and cash equivalents. We believe net debt is a useful measure to management and investors in understanding trends in our overall financial condition.

Net leverage ratio is defined as net debt divided by last twelve months (LTM) adjusted EBITDA. We believe the net leverage ratio is a useful measure to management and investors in understanding trends in our overall financial condition.

Safe Harbor Statement

This earnings release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," "potential," "opportunity," "guidance," and similar terms or phrases. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives, business and market outlook, megatrends, priorities, growth, shareholder value, capital expenditures, cash flows, demand for products and services, share repurchases, and Sensata’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. These statements are subject to risks, uncertainties, and other important factors relating to our operations and business environment, and we can give no assurances that these forward-looking statements will prove to be correct.

A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements, including, but not limited to, risks related to public health crises, instability and changes in the global markets, supplier interruption or non-performance, the acquisition of disposition of businesses, adverse conditions or competition in the industries upon which we are dependent, intellectual property, product liability, warranty, and recall claims, market acceptance of new product introductions and product innovations, labor disruptions or increased labor costs, and changes in existing environmental or safety laws, regulations, and programs.

Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in Item 1A: Risk Factors in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A: Risk Factors in our quarterly reports on Form 10-Q or other subsequent filings with the United States ("U.S.") Securities and Exchange Commission (the "SEC"). All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

 
 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

For the three months ended

March 31,

 

 

 

2022

 

 

 

2021

 

Net revenue

 

$

975,770

 

 

$

942,528

 

Operating costs and expenses:

 

 

 

 

Cost of revenue

 

 

657,080

 

 

 

635,349

 

Research and development

 

 

45,980

 

 

 

35,956

 

Selling, general and administrative

 

 

95,680

 

 

 

77,123

 

Amortization of intangible assets

 

 

37,367

 

 

 

32,064

 

Restructuring and other charges, net

 

 

13,733

 

 

 

4,582

 

Total operating costs and expenses

 

 

849,840

 

 

 

785,074

 

Operating income

 

 

125,930

 

 

 

157,454

 

Interest expense, net

 

 

(45,445

)

 

 

(44,043

)

Other, net

 

 

(50,456

)

 

 

(39,397

)

Income before taxes

 

 

30,029

 

 

 

74,014

 

Provision for income taxes

 

 

7,588

 

 

 

20,281

 

Net Income

 

 

22,441

 

 

 

53,733

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

 

$

0.14

 

 

$

0.34

 

Diluted

 

$

0.14

 

 

$

0.34

 

 

 

 

 

 

Weighted-average ordinary shares outstanding:

 

 

Basic

 

 

157,422

 

 

 

157,764

 

Diluted

 

 

158,630

 

 

 

159,230

 

 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

March 31,

2022

 

December 31,

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,608,481

 

$

1,708,955

Accounts receivable, net of allowances

 

 

693,568

 

 

653,438

Inventories

 

 

641,709

 

 

588,231

Prepaid expenses and other current assets

 

 

146,342

 

 

126,370

Total current assets

 

 

3,090,100

 

 

3,076,994

Property, plant and equipment, net

 

 

822,633

 

 

820,933

Goodwill

 

 

3,555,369

 

 

3,502,063

Other intangible assets, net

 

 

907,315

 

 

946,731

Deferred income tax assets

 

 

104,226

 

 

105,028

Other assets

 

 

131,745

 

 

162,017

Total assets

 

$

8,611,388

 

$

8,613,766

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt, finance lease and other financing obligations

 

$

6,694

 

$

6,833

Accounts payable

 

 

486,432

 

 

459,093

Income taxes payable

 

 

19,249

 

 

26,517

Accrued expenses and other current liabilities

 

 

327,670

 

 

343,816

Total current liabilities

 

 

840,045

 

 

836,259

Deferred income tax liabilities

 

 

339,332

 

 

339,273

Pension and other post-retirement benefit obligations

 

 

39,089

 

 

38,758

Finance lease and other financing obligations, less current portion

 

 

26,347

 

 

26,564

Long-term debt, net

 

 

4,215,505

 

 

4,214,946

Other long-term liabilities

 

 

78,753

 

 

63,232

Total liabilities

 

 

5,539,071

 

 

5,519,032

Total shareholders' equity

 

 

3,072,317

 

 

3,094,734

Total liabilities and shareholders' equity

 

$

8,611,388

 

$

8,613,766

 

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

For the three months

ended March 31,

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

22,441

 

 

$

53,733

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

 

31,531

 

 

 

31,197

 

Amortization of debt issuance costs

 

 

1,716

 

 

 

1,711

 

Share-based compensation

 

 

6,540

 

 

 

5,099

 

Loss on debt financing

 

 

 

 

 

30,066

 

Amortization of intangible assets

 

 

37,367

 

 

 

32,064

 

Deferred income taxes

 

 

(340

)

 

 

130

 

Acquisition-related deferred compensation payments

 

 

(7,500

)

 

 

 

Mark-to-market loss on equity investments

 

 

59,279

 

 

 

 

Unrealized loss on derivative instruments and other

 

 

(517

)

 

 

8,797

 

Changes in operating assets and liabilities, net of effects of acquisitions

 

 

(103,162

)

 

 

(58,286

)

Net cash provided by operating activities

 

 

47,355

 

 

 

104,511

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisitions, net of cash received

 

 

(48,441

)

 

 

(20,406

)

Additions to property, plant and equipment and capitalized software

 

 

(35,711

)

 

 

(27,172

)

Investment in debt and equity securities

 

 

(6,853

)

 

 

(1,799

)

Other

 

 

152

 

 

 

340

 

Net cash used in investing activities

 

 

(90,853

)

 

 

(49,037

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from exercise of stock options and issuance of ordinary shares

 

 

13,348

 

 

 

10,556

 

Payment of employee restricted stock tax withholdings

 

 

(135

)

 

 

(221

)

Proceeds from borrowings on debt

 

 

 

 

 

750,000

 

Payments on debt

 

 

(2,931

)

 

 

(752,753

)

Payments to repurchase ordinary shares

 

 

(67,258

)

 

 

 

Payments of debt financing costs

 

 

 

 

 

(31,110

)

Net cash used in financing activities

 

 

(56,976

)

 

 

(23,528

)

Net change in cash and cash equivalents

 

 

(100,474

)

 

 

31,946

 

Cash and cash equivalents, beginning of year

 

 

1,708,955

 

 

 

1,861,980

 

Cash and cash equivalents, end of period

 

$

1,608,481

 

 

$

1,893,926

 

 
 

Revenue by Business, Geography, and End Market (Unaudited)

(percent of total revenue)

 

Three months ended

March 31,

 

 

2022

 

2021

Performance Sensing

 

73.6 %

 

75.8 %

Sensing Solutions

 

26.4 %

 

24.2 %

Total

 

100.0 %

 

100.0 %

 
 

(percent of total revenue)

 

Three months ended

March 31,

 

 

2022

 

2021

Americas

 

39.8 %

 

36.5 %

Europe

 

26.2 %

 

28.3 %

Asia/Rest of World

 

34.0 %

 

35.2 %

Total

 

100.0 %

 

100.0 %

 
 

(percent of total revenue)

 

Three months ended

March 31,

 

 

2022

 

2021

Automotive (1)

 

52.4 %

 

58.2 %

Heavy vehicle and off-road

 

22.1 %

 

18.9 %

Industrial

 

11.7 %

 

9.6 %

Appliance and heating, ventilation and air-conditioning

 

6.0 %

 

6.4 %

Aerospace

 

3.4 %

 

3.5 %

All other

 

4.4 %

 

3.4 %

Total

 

100.0 %

 

100.0 %

(1) Includes amounts reflected in the Sensing Solutions segment as follows: $9.3 million and $11.5 million of revenue in the three months ended March 31, 2022 and 2021, respectively.

Market Outgrowth (Unaudited)

 

 

For the three months ended

March 31, 2022

 

 

 

Reported

Growth

 

Organic

Growth

 

End

Market

Growth

 

Automotive

 

(6.4%)

 

(5.8%)

 

(6.2%)

 

Heavy vehicle and off-road

 

21.1%

 

2.5%

 

(10.9%)

 

 

GAAP to Non-GAAP Reconciliations

The following unaudited tables provide a reconciliation of the difference between each of the non-GAAP financial measures referenced herein and the most directly comparable U.S. GAAP financial measure. Amounts presented in these tables may not appear to recalculate due to the effect of rounding.

Operating income and margin, income tax, net income, and earnings per share

($ in thousands, except per share amounts)

For the three months ended March 31, 2022

 

Operating

Income

 

Operating

Margin

 

Income

Taxes

 

Net

Income

 

Diluted

EPS

Reported (GAAP)

$

125,930

 

12.9

%

 

$

7,588

 

 

$

22,441

 

 

$

0.14

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

4,149

 

0.4

%

 

 

(100

)

 

 

4,049

 

 

 

0.03

 

Financing and other transaction costs

 

15,825

 

1.6

%

 

 

(544

)

 

 

74,560

 

 

 

0.47

 

Step-up depreciation and amortization

 

35,945

 

3.7

%

 

 

 

 

 

35,945

 

 

 

0.23

 

Deferred loss/(gain) on derivative instruments

 

652

 

0.1

%

 

 

1,811

 

 

 

(6,961

)

 

 

(0.04

)

Amortization of debt issuance costs

 

 

%

 

 

 

 

 

1,716

 

 

 

0.01

 

Deferred taxes and other tax related

 

 

%

 

 

(8,335

)

 

 

(8,335

)

 

 

(0.05

)

Total adjustments

 

56,571

 

5.8

%

 

 

(7,168

)

 

 

100,974

 

 

 

0.64

 

Adjusted (non-GAAP)

$

182,501

 

18.7

%

 

$

14,756

 

 

$

123,415

 

 

$

0.78

 

 
 

($ in thousands, except per share amounts)

For the three months ended March 31, 2021

 

Operating

Income

 

Operating

Margin

 

Income

Tax

 

Net

Income

 

Diluted

EPS

Reported (GAAP)

$

157,454

 

16.7

%

 

$

20,281

 

 

$

53,733

 

$

0.34

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

Restructuring related and other

 

4,525

 

0.5

%

 

 

(201

)

 

 

7,291

 

 

0.05

Financing and other transaction costs

 

4,571

 

0.5

%

 

 

(3,103

)

 

 

32,805

 

 

0.21

Step-up depreciation and amortization

 

29,696

 

3.2

%

 

 

 

 

 

29,696

 

 

0.19

Deferred loss on derivative instruments

 

1,840

 

0.2

%

 

 

(748

)

 

 

2,245

 

 

0.01

Amortization of debt issuance costs

 

 

%

 

 

 

 

 

1,711

 

 

0.01

Deferred taxes and other tax related

 

 

%

 

 

10,122

 

 

 

10,122

 

 

0.06

Total adjustments

 

40,632

 

4.3

%

 

 

6,070

 

 

 

83,870

 

 

0.53

Adjusted (non-GAAP)

$

198,086

 

21.0

%

 

$

14,211

 

 

$

137,603

 

$

0.86

 
 

Non-GAAP adjustments by location in statements of operations

(in thousands)

For the three months

ended March 31,

 

 

2022

 

 

 

 

2021

 

 

 

 

 

Cost of revenue

$

2,160

 

 

 

$

2,415

Selling, general and administrative

 

5,031

 

 

 

 

4,388

Amortization of intangible assets

 

35,647

 

 

 

 

29,247

Restructuring and other charges, net (1)

 

13,733

 

 

 

 

4,582

Operating income adjustments

 

56,571

 

 

 

 

40,632

Interest expense, net

 

1,716

 

 

 

 

1,711

Other, net (2)

 

49,855

 

 

 

 

35,457

Provision for income taxes (3)

 

(7,168

)

 

 

 

6,070

Net income adjustments

$

100,974

 

 

 

$

83,870

(1)

The first quarter of 2022 includes a charge of $15.0 million related to acquisition-related incentive compensation earned by Elastic M2M in the first quarter, partially offset by a gain of $6.2 million related to a reduced expectation of contingent consideration to be paid as a result of the acquisition of Spear.

 
(2)

The first quarter of 2022 includes a $59.9 million mark-to-market loss on our investment in Quanergy Systems, Inc. Refer to our first quarter Quarterly Report on Form 10-Q for additional information. The first quarter of 2021 includes a $30.1 million loss recognized in the first quarter of 2021 related to the early redemption of our 6.25% Senior Notes due 2026 at 103.125%. The loss primarily includes the payment of $23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs.

 
(3)

The first quarter of 2021 includes $10.1 million of current tax expense related to the repatriation of profit from certain Asian subsidiaries to their parent company in the Netherlands. The decision to repatriate these profits was the result of our goal to reduce our balance sheet exposure and corresponding earnings volatility related to changes in foreign currency exchange rates as well as to fund our deployment of capital.

 

Free cash flow

($ in thousands)

Three months ended March 31,

 

 

2022

 

 

2021

 

% Change

Net cash provided by operating activities

$

47,355

 

$

104,511

 

(54.7%)

Additions to property, plant and equipment and capitalized software

 

(35,711)

 

 

(27,172)

 

(31.4%)

Free cash flow

$

11,644

 

$

77,339

 

(84.9%)

 
 

Adjusted EBITDA

 

 

 

 

Three months ended

March 31,

(in thousands)

 

LTM

 

 

2022

 

 

 

2021

Net income

 

$

332,288

 

 

$

22,441

 

 

$

53,733

Interest expense, net

 

 

180,693

 

 

 

45,445

 

 

 

44,043

Provision for income taxes

 

 

37,644

 

 

 

7,588

 

 

 

20,281

Depreciation expense

 

 

125,293

 

 

 

31,531

 

 

 

31,197

Amortization of intangible assets

 

 

139,432

 

 

 

37,367

 

 

 

32,064

EBITDA

 

 

815,350

 

 

 

144,372

 

 

 

181,318

Non-GAAP Adjustments

 

 

 

 

 

 

Restructuring related and other

 

 

20,427

 

 

 

4,149

 

 

 

7,366

Financing and other transaction costs

 

 

80,238

 

 

 

75,104

 

 

 

35,908

Deferred (gain)/loss on derivative instruments

 

 

(471

)

 

 

(8,772

)

 

 

2,993

Adjusted EBITDA

 

$

915,544

 

 

$

214,853

 

 

$

227,585

 
 

Net debt and leverage

 

 

As of

($ in thousands)

 

March 31,

2022

 

December 31,

2021

Current portion of long-term debt, finance lease and other financing obligations

 

$

6,694

 

 

$

6,833

 

Finance lease and other financing obligations, less current portion

 

 

26,347

 

 

 

26,564

 

Long-term debt, net

 

 

4,215,505

 

 

 

4,214,946

 

Total debt, finance lease, and other financing obligations

 

 

4,248,546

 

 

 

4,248,343

 

Less: Discount, net of premium

 

 

(4,763

)

 

 

(5,207

)

Less: Deferred financing costs

 

 

(25,410

)

 

 

(26,682

)

Total Gross indebtedness

 

 

4,278,719

 

 

 

4,280,232

 

Less: Cash and cash equivalents

 

 

1,608,481

 

 

 

1,708,955

 

Net Debt

 

$

2,670,238

 

 

$

2,571,277

 

 

 

 

 

 

Adjusted EBITDA (LTM)

 

$

915,544

 

 

$

928,276

 

Net leverage ratio

 

 

2.9

 

 

 

2.8

 

 
 

Guidance

 

For the three months ending June 30, 2022

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$

142.0

 

$

151.5

 

$

57.8

 

$

66.3

 

$

0.37

 

$

0.41

Restructuring related and other

 

3.0

 

 

4.0

 

 

3.0

 

 

4.0

 

 

0.02

 

 

0.03

Financing and other transaction costs

 

6.0

 

 

6.5

 

 

5.5

 

 

6.0

 

 

0.03

 

 

0.04

Step-up depreciation and amortization

 

35.0

 

 

36.0

 

 

35.0

 

 

36.0

 

 

0.22

 

 

0.23

Deferred (gain)/loss on derivative instruments(1)

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

 

 

 

1.7

 

 

1.7

 

 

0.01

 

 

0.01

Deferred taxes and other tax related

 

 

 

 

 

22.0

 

 

23.0

 

 

0.14

 

 

0.15

Non-GAAP

$

186.0

 

$

198.0

 

$

125.0

 

$

137.0

 

$

0.79

 

$

0.87

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

 

158.6

 

 

158.6

 
 

 

For the full year ending December 31, 2022

($ in millions, except per share amounts)

Operating Income

 

Net Income

 

EPS

 

Low

 

High

 

Low

 

High

 

Low

 

High

GAAP

$ 676.3

 

$ 708.3

 

$ 314.5

 

$ 339.5

 

$ 1.99

 

$ 2.15

Restructuring related and other

10.0

 

13.0

 

9.5

 

12.5

 

0.06

 

0.08

Financing and other transaction costs

25.0

 

30.0

 

85.0

 

90.0

 

0.54

 

0.57

Step-up depreciation and amortization

136.0

 

140.0

 

136.0

 

140.0

 

0.86

 

0.89

Deferred (gain)/loss on derivative instruments(1)

0.7

 

0.7

 

(7.0)

 

(7.0)

 

(0.04)

 

(0.04)

Amortization of debt issuance costs

 

 

7.0

 

7.0

 

0.04

 

0.04

Deferred taxes and other tax related

 

 

55.0

 

58.0

 

0.35

 

0.37

Non-GAAP

$ 848.0

 

$ 892.0

 

$ 600.0

 

$ 640.0

 

$ 3.80

 

$ 4.06

Weighted-average diluted shares outstanding (in millions)

 

 

 

 

 

157.8

 

157.8

(1)

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 operating results. In prior periods such adjustments have been significant to our reported GAAP earnings.

 

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