Industrial Electronics IPO: Sensata Technologies

| About: Sensata Technologies (ST)

Sensata Technologies (NYSE:ST), a manufacturer of industrial sensors and controls, is expected to price its IPO this week.

Business Overview (from prospectus)

Sensata, a global industrial technology company, is a leader in the development, manufacture and sale of sensors and controls. We produce a wide range of customized, innovative sensors and controls for mission-critical applications such as thermal circuit breakers in aircraft, pressure sensors in automotive systems, and bimetal current and temperature control devices in electric motors. We believe that we are one of the largest suppliers of sensors and controls in the majority of the key applications in which we compete and that we have developed our strong market position due to our long-standing customer relationships, technical expertise, product performance and quality and competitive cost structure. We compete in growing global market segments driven by demand for products that are safe, energy-efficient and environmentally friendly. In addition, our long-standing position in emerging markets, including our 14-year presence in China, further enhances our growth prospects. We deliver a strong value proposition to our customers by leveraging an innovative portfolio of core technologies and manufacturing at high volumes in low-cost locations such as China, Mexico, Malaysia and the Dominican Republic. Our primary products include pressure sensors, force sensors, position sensors, motor protectors, and thermal and magnetic-hydraulic circuit breakers and switches. We develop customized and innovative solutions for specific customer requirements, or applications, across the appliance, automotive, heating, ventilation and air-conditioning, or “HVAC,” industrial, aerospace, defense, data / telecom, and other end-markets.

Offering: 31.6 million shares at $18 - $20 per share. Net proceeds of $350 million will be used for debt retirement, for professional and advisory fees and general corporate purposes.

Lead Underwriters: Morgan Stanley (NYSE:MS), Barclays Capital (NYSE:BCS), Goldman Sachs (NYSE:GS)

Financial Highlights:

Net revenue for fiscal year 2009 decreased $287.7 million, or 20.2%, to $1,134.9 million from $1,422.7 million for fiscal year 2008...Cost of revenue for fiscal years 2009 and 2008 was $742.1 million and $951.8 million respectively...Research and development expense for fiscal years 2009 was $16.8 million as compared to $38.3 million for 2008...SG&A expense for fiscal years 2009 and 2008 was $127.0 million and $166.6 million respectively...Loss from operations for fiscal years 2009 totaled $27 million as compared to $20.1 million for 2008


Within each of the principal product categories in our sensors business, we compete with a variety of independent suppliers and with the in-house operations of Tier 1 systems suppliers. We believe that the key competitive factors in this market are product quality and reliability, technical expertise and development capability, breadth of product offerings, product service and price. Our principal competitors in the market for automotive sensors are Robert Bosch GmbH and Denso Corporation which are in-house, or captive, providers, and Nagano Keiki Co., Ltd. and Schneider Electric (OTCPK:SBGSF), which are independent.

Our principal competitors in the market for commercial and industrial sensors include Saginomiya Seisakusho, Inc. and Schneider Electric. Our primary competitors in the basic alternating current motor protection market include Asian manufacturers Jiangsu Chengsheng Electric Appliance Company Ltd., ChwenDer Thermostat & Company Ltd., Wanbao Refrigeration Group Guangzhou Appliances Company Ltd., Hangzhou Star Shuaier Electric Appliance Co., Ltd., Ubukata Industries Co., Ltd. and Foshan TongBao Corporation Limited.

Our competitors in the thermal circuit breaker, thermostat and switches markets include: Cutler Hammer, a division of Eaton Corporation (NYSE:ETN), and Crouzet, a division of Schneider Electric, in aircraft circuit breakers; Honeywell International Inc. (NYSE:HON) in aircraft switches and thermostats; and Cooper Bussman, a division of Cooper Electric, in heavy and off-road thermal circuit breakers. Our competitors in magnetic-hydraulic circuit breaker markets include Carling Technologies, Circuit Breaker Industries, the Heinemann brand of Eaton Corporation and a growing number of smaller competitors primarily in Asia.

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