Delphi Automotive PLC (NYSE: DLPH), a leading global vehicle
components manufacturer, today reported record third quarter 2014
U.S. GAAP earnings of $1.02 per diluted share. Excluding special
items, third quarter earnings increased 20% to $1.16 per diluted
share.
Third Quarter Highlights
Include:
- Revenue of $4.1 billion, up
3%
- U.S. GAAP diluted earnings per share
of $1.02, up 17%
- Excluding special items, earnings of
$1.16 per diluted share, up 20%
- Adjusted Operating Income of $468
million, up 9%
- Adjusted Operating Income margin of
11.3%, up 60 basis points
- Generated $499 million of cash from
operations, up 25%
- Share repurchases and dividends of
$372 million
- Announced the acquisitions of Antaya
Technologies Corporation and Unwired Technology LLC, further
expanding connector portfolio
Year-to-Date Highlights
Include:
- Revenue of $12.9 billion, up
5%
- U.S. GAAP diluted earnings per share
of $3.32, up 14%
- Excluding special items, earnings of
$3.78 per diluted share, up 15%
- Adjusted Operating Income of $1,498
million, up 9%
- Adjusted Operating Income margin of
11.6%, up 40 basis points
- Generated $1,262 million of cash
from operations, up 18%
- Share repurchases and dividends of
$902 million
“Our record third quarter financial results demonstrate
continued outstanding operating performance and the leverage of our
operating model," said Rodney O'Neal, chief executive officer and
president. "The entire Delphi team remains committed to building
shareholder value and achieving our key objectives for the
year."
Third Quarter 2014 Results
The Company reported third quarter 2014 revenue of $4.1 billion,
an increase of 3% from the prior year period, reflecting continued
growth in Asia and North America. Adjusted for the impacts of
currency exchange, commodity movements and acquisitions and
divestitures, revenue increased by 3% in the third quarter. This
reflects growth of 9% in Asia, 6% in North America and 1% in
Europe, partially offset by a decline of 20% in South America.
The Company reported third quarter U.S. GAAP net income of $305
million and earnings of $1.02 per diluted share, compared to $271
million and $0.87 per diluted share in the prior year period. Third
quarter net income excluding special items consisting of
restructuring-related charges, acquisition-related integration
costs, asset impairments and losses on extinguishment of debt
("Adjusted Net Income"), totaled $347 million, or $1.16 per diluted
share, which includes the favorable impacts of a decreased
effective tax rate and a reduced share count. Adjusted Net Income
in the prior year period was $302 million, or $0.97 per diluted
share.
Third quarter earnings before interest expense, other income
(expense), net, income tax expense, equity income (loss), net of
tax, restructuring, other acquisition-related costs and asset
impairments ("Adjusted Operating Income") was $468 million,
compared to $428 million in the prior year period. Adjusted
Operating Income margin increased 60 basis points in the third
quarter of 2014 to 11.3%, compared with 10.7% in the prior year
period. The increase in Adjusted Operating Income reflects the
continued strong performance and growth of our businesses in Asia
and North America, as well as the benefits of our on-going
restructuring programs focused on aligning our manufacturing
capacity with the current automotive production levels in Europe
and South America. Depreciation and amortization expense totaled
$150 million in the third quarter, compared to $138 million in the
prior year period.
Interest expense for the third quarter totaled $33 million, a
decrease from $34 million in the prior year period, which reflects
the benefits of our debt refinancing transactions in the first
quarter of 2014.
Tax expense in the third quarter of 2014 was $63 million,
resulting in an effective tax rate of approximately 16%, compared
to $72 million, or an effective rate of 20%, in the prior year
period. The decrease reflects the geographic mix of pretax
earnings, partially offset by higher pretax earnings, and the
unfavorable impacts of discrete items recorded in the prior
period.
The Company generated net cash flow from operating activities of
$499 million in the three months ended September 30, 2014,
compared to $398 million in the prior year period.
Year-to-Date 2014 Results
For the nine months ended September 30, 2014, the Company
reported revenue of $12.9 billion, an increase of 5% from the prior
year period, reflecting continued growth in Asia and North America.
Adjusted for the impacts of currency exchange, commodity movements
and acquisitions and divestitures, revenue increased by 4% during
the period. This reflects growth of 11% in Asia, 7% in North
America and 1% in Europe, partially offset by a decline of 17% in
South America.
For the 2014 year-to-date period, the Company reported U.S. GAAP
net income of $1,007 million and earnings of $3.32 per diluted
share, compared to $914 million and $2.92 per diluted share in the
prior year period. Year-to-date Adjusted Net Income totaled $1,146
million, or $3.78 per diluted share, which includes the favorable
impact of a reduced share count, compared to Adjusted Net Income of
$1,026 million, or $3.28 per diluted share, in the prior year
period.
The Company reported Adjusted Operating Income of $1,498 million
for the nine months ended September 30, 2014, compared to
$1,372 million in the prior year period. Adjusted Operating Income
margin was 11.6% for the nine months ended September 30, 2014,
an improvement of 40 basis points, compared with 11.2% in the prior
year period. The increase in Adjusted Operating Income reflects the
continued strong performance and growth of our businesses in Asia
and North America, as well as the benefits of our on-going
restructuring programs focused on aligning our manufacturing
capacity with the current automotive production levels in Europe
and South America. Depreciation and amortization expense totaled
$441 million, compared to $401 million in the prior year
period.
Interest expense for the nine months ended September 30,
2014 totaled $101 million, a decrease from $106 million in the
prior year period, reflecting the benefits of our debt refinancing
transactions in the first quarter of 2014. Additionally, the nine
months ended September 30, 2014 and September 30, 2013
included losses on the extinguishment of debt totaling $34 million
and $39 million, respectively.
Tax expense for the 2014 year-to-date period was $200 million,
resulting in an effective tax rate of approximately 16%, compared
to $182 million, or an effective rate of 16%, in the prior year
period, which includes the impact of higher pretax earnings in the
current period and the geographic mix of these pretax earnings.
The Company generated net cash flow from operating activities of
$1,262 million in the nine months ended September 30, 2014,
compared to $1,070 million in the prior year period. As of
September 30, 2014, the Company had cash and cash equivalents
of $1.0 billion and total debt of $2.5 billion.
Share Repurchase Program
During the third quarter of 2014, Delphi repurchased 4.36
million shares for approximately $297 million under its existing
authorized share repurchase program, leaving approximately $516
million available for future share repurchases. Year-to-date, the
Company has repurchased 10.0 million shares for approximately $674
million. All repurchased shares were retired, and are reflected as
a reduction of ordinary share capital for the par value of the
shares, with the excess applied as reductions to additional
paid-in-capital and retained earnings.
Full Year 2014 Outlook
The Company's full year 2014 financial guidance is as
follows:
(in millions, except per share amounts) Full Year
2014 Revenue $17,000 - $17,300 Adjusted Operating
Income $2,000 - $2,050 Adjusted Operating Income Margin 11.8%
Adjusted Earnings Per Share $5.00 - $5.10 Cash Flow Before
Financing $1,100 Capital Expenditures $800 Depreciation and
Amortization $600 Adjusted Effective Tax Rate 17% Share Count -
Diluted 302
Conference Call and Webcast
The Company will host a conference call to discuss these results
at 10:00 a.m. (ET) today, which is accessible by dialing
888.486.0553 (US domestic) or 706.634.4982 (international) or
through a webcast at http://investor.delphi.com/. The conference ID
number is 15136190. A slide presentation will accompany the
prepared remarks and has been posted on the investor relations
section of the Company's website. A replay will be available two
hours following the conference call.
Use of Non-GAAP Financial Information
This press release contains information about Delphi's financial
results which are not presented in accordance with accounting
principles generally accepted in the United States (“GAAP”). Such
non-GAAP financial measures are reconciled to their closest GAAP
financial measures at the end of this press release. Non-GAAP
measures should not be considered in isolation or as a substitute
for our reported results prepared in accordance with GAAP and, as
calculated, may not be comparable to other similarly titled
measures of other companies.
About Delphi
Delphi Automotive PLC (NYSE: DLPH) is a leading global supplier
of technologies for the automotive and commercial vehicle markets.
Headquartered in Gillingham, England, Delphi operates major
technical centers, manufacturing sites and customer support
services in 32 countries, with regional headquarters in Bascharage,
Luxembourg; Sao Paulo, Brazil; Shanghai, China and Troy, Michigan,
U.S. Delphi delivers innovation for the real world with
technologies that make cars and trucks safer as well as more
powerful, efficient and connected.
Forward-Looking Statements
This press release, as well as other statements made by Delphi
Automotive PLC (the “Company”), contain forward-looking statements
that reflect, when made, the Company's current views with respect
to current events and financial performance. Such forward-looking
statements are subject to many risks, uncertainties and factors
relating to the Company's operations and business environment,
which may cause the actual results of the Company to be materially
different from any future results. All statements that address
future operating, financial or business performance or the
Company's strategies or expectations are forward-looking
statements. Factors that could cause actual results to differ
materially from these forward-looking statements are discussed
under the captions “Risk Factors” and “Management's Discussion and
Analysis of Financial Condition and Results of Operations” in the
Company's filings with the Securities and Exchange Commission. New
risks and uncertainties arise from time to time, and it is
impossible for us to predict these events or how they may affect
the Company. It should be remembered that the price of the
ordinary shares and any income from them can go down as well as up.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events and/or otherwise, except as may be
required by law.
DELPHI AUTOMOTIVE PLC
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended Nine Months
Ended September 30, September 30, 2014
2013 2014 2013 (in millions,
except per share amounts) Net sales $ 4,144 $ 4,017 $ 12,871 $
12,281 Operating expenses: Cost of sales 3,388 3,338 10,507 10,141
Selling, general and administrative 270 228 803 699 Amortization 25
27 76 79 Restructuring 47 37 124 95
Total operating expenses 3,730 3,630 11,510
11,014 Operating income 414 387 1,361 1,267 Interest expense
(33 ) (34 ) (101 ) (106 ) Other income (expense), net 5 4
(8 ) (25 ) Income before income taxes and equity income 386
357 1,252 1,136 Income tax expense (63 ) (72 ) (200 ) (182 ) Income
before equity income 323 285 1,052 954 Equity income, net of tax 2
8 20 26 Net income 325 293 1,072 980
Net income attributable to noncontrolling interest 20 22
65 66 Net income attributable to Delphi $ 305
$ 271 $ 1,007 $ 914 Diluted net income
per share: Diluted net income per share attributable to Delphi $
1.02 $ 0.87 $ 3.32 $ 2.92 Weighted
average number of diluted shares outstanding 300.14 310.62
303.56 312.87 Cash dividends declared
per share $ 0.25 $ 0.17 $ 0.75 $ 0.51
DELPHI AUTOMOTIVE PLC
CONSOLIDATED BALANCE SHEETS
September 30, 2014 December
31, 2013 (unaudited) (in millions)
ASSETS Current assets: Cash and cash equivalents $ 1,026 $
1,389 Restricted cash 2 4 Accounts receivable, net 2,839 2,662
Inventories 1,227 1,093 Other current assets 588 604 Total
current assets 5,682 5,752 Long-term assets: Property, net 3,273
3,216 Investments in affiliates 243 234 Intangible assets, net 627
723 Goodwill 456 496 Other long-term assets 642 626 Total
long-term assets 5,241 5,295 Total assets $ 10,923 $
11,047
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Short-term debt $ 37 $ 61 Accounts payable 2,521 2,595
Accrued liabilities 1,286 1,238 Total current liabilities
3,844 3,894 Long-term liabilities: Long-term debt 2,417 2,351
Pension benefit obligations 911 959 Other long-term liabilities 372
409 Total long-term liabilities 3,700 3,719 Total
liabilities 7,544 7,613 Commitments and contingencies Total
Delphi shareholder's equity 2,894 2,911 Noncontrolling interest 485
523 Total shareholders’ equity 3,379 3,434 Total
liabilities and shareholders’ equity $ 10,923 $ 11,047
DELPHI AUTOMOTIVE PLC
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
2014 2013 (in millions) Cash flows from
operating activities: Net income $ 1,072 $ 980 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 441 401 Deferred income taxes (4 ) 23
Income from equity method investments, net of dividends received
(10 ) 4 Loss on extinguishment of debt 34 39 Other, net 142 84
Changes in operating assets and liabilities: Accounts receivable,
net (177 ) (431 ) Inventories (134 ) (167 ) Accounts payable 38 306
Other, net (74 ) (104 ) Pension contributions (66 ) (65 ) Net cash
provided by operating activities 1,262 1,070 Cash
flows from investing activities: Capital expenditures (666 ) (512 )
Proceeds from sale of property / investments 7 24 Cost of business
and technology acquisitions, net of cash acquired — (10 ) Decrease
in restricted cash 2 3 Net cash used in investing
activities (657 ) (495 ) Cash flows from financing activities:
Increase (decrease) in short and long-term debt, net 10 (80 )
Dividend payments of consolidated affiliates to minority
shareholders (61 ) (26 ) Repurchase of ordinary shares (662 ) (353
) Distribution of cash dividends (228 ) (159 ) Taxes withheld and
paid on employees' restricted share awards (8 ) (14 ) Net cash used
in financing activities (949 ) (632 ) Effect of exchange rate
fluctuations on cash and cash equivalents (19 ) 5 Decrease
in cash and cash equivalents (363 ) (52 ) Cash and cash equivalents
at beginning of period 1,389 1,105 Cash and cash
equivalents at end of period $ 1,026 $ 1,053
DELPHI AUTOMOTIVE PLC
FOOTNOTES
(Unaudited)
1. Segment Summary
Three Months Ended Nine Months
Ended September 30, September 30, 2014
2013 % 2014 2013
% (in millions) (in millions) Net
Sales Electrical/Electronic Architecture $ 1,993 $ 1,956 2%
$ 6,269 $ 5,921 6% Powertrain Systems 1,131 1,048 8% 3,433 3,316 4%
Electronics and Safety 697 705 (1)% 2,180 2,123 3% Thermal Systems
390 364 7% 1,176 1,097 7% Eliminations and Other (a) (67 ) (56 )
(187 ) (176 ) Net sales $ 4,144 $ 4,017 $ 12,871
$ 12,281
Adjusted Operating
Income Electrical/Electronic Architecture $ 254 $ 248 2% $
825 $ 745 11% Powertrain Systems 118 94 26% 375 354 6% Electronics
and Safety 84 81 4% 256 242 6% Thermal Systems 12 5 140% 42 31 35%
Eliminations and Other (a) — — — —
Adjusted Operating Income $ 468 $ 428 $ 1,498
$ 1,372 (a) Eliminations and Other includes the
elimination of inter-segment transactions.
2. Weighted Average Number of Diluted Shares
Outstanding
The following table illustrates the weighted average shares
outstanding used in calculating basic and diluted net income per
share attributable to Delphi for the three and nine months ended
September 30, 2014 and 2013:
Three Months Ended September 30, Nine
Months Ended September 30, 2014 2013
2014 2013 (in millions, except per share
data) Weighted average ordinary shares outstanding, basic
298.59 309.68 302.35 312.08 Dilutive shares related to RSUs 1.55
0.94 1.21 0.79 Weighted average ordinary
shares outstanding, including dilutive shares 300.14 310.62 303.56
312.87 Net income per share attributable to Delphi: Basic $ 1.02 $
0.88 $ 3.33 $ 2.93 Diluted $ 1.02 $ 0.87 $ 3.32 $ 2.92
DELPHI AUTOMOTIVE PLCRECONCILIATION
OF NON-GAAP MEASURES(Unaudited)
In this press release the Company has provided information
regarding certain non-GAAP financial measures, including "Adjusted
Operating Income," "Adjusted Net Income," "Adjusted Net Income per
Share" and "Cash Flow Before Financing." Such non-GAAP financial
measures are reconciled to their closest GAAP financial measure in
the following schedules.
Adjusted Operating Income:
Adjusted Operating Income is presented as a supplemental measure of
the Company's performance which is consistent with the basis and
manner in which management presents financial information for the
purpose of making internal operating decisions. Adjusted Operating
Income is defined as net income before interest expense, other
income (expense), net, income tax expense, equity income (loss),
net of tax, restructuring, other acquisition-related costs and
asset impairments. Not all companies use identical calculations of
Adjusted Operating Income therefore this presentation may not be
comparable to other similarly titled measures of other companies.
The Company's 2014 guidance was determined using a consistent
manner and methodology.
Consolidated Adjusted Operating Income
Three Months Ended Nine Months Ended
September 30, September 30, 2014 2013
2014 2013 (in millions) Net income
attributable to Delphi $ 305 $ 271 $ 1,007 $ 914 Income tax expense
63 72 200 182 Interest expense 33 34 101 106 Other (income)
expense, net (5 ) (4 ) 8 25 Noncontrolling interest 20 22 65 66
Equity income, net of tax (2 ) (8 ) (20 ) (26 ) Operating income
414 387 1,361 1,267 Restructuring 47 37
124 95 Other acquisition-related costs 3 4 6 10 Asset impairments 4
— 7 — Adjusted operating income $ 468
$ 428 $ 1,498 $ 1,372
Segment
Adjusted Operating Income
(in millions) Three Months Ended September 30,
2014
Electrical/Electronic
Architecture
Powertrain Systems
Electronics and Safety
ThermalSystems
Eliminations and Other
Total Operating income $ 226 $ 108 $ 69 $ 11 $ — $ 414
Restructuring 24 9 13 1 — 47 Other acquisition-related costs 3 — —
— — 3 Asset impairments 1 1 2 — —
4 Adjusted operating income $ 254 $ 118 $ 84
$ 12 $ — $ 468 Depreciation and
amortization (a) $ 67 $ 50 $ 20 $ 13 $ — $ 150
Three
Months Ended September 30, 2013
Electrical/Electronic
Architecture
Powertrain Systems
Electronics and Safety
ThermalSystems
Eliminations and Other
Total Operating income $ 237 $ 86 $ 62 $ 2 $ — $ 387
Restructuring 7 8 19 3 — 37 Other acquisition-related costs 4
— — — — 4 Adjusted operating
income $ 248 $ 94 $ 81 $ 5 $ — $
428 Depreciation and amortization (a) $ 61 $ 48 $ 19 $ 10 $
— $ 138
Nine Months Ended September 30, 2014
Electrical/Electronic
Architecture
Powertrain Systems
Electronics and Safety
ThermalSystems
Eliminations and Other
Total Operating income $ 767 $ 326 $ 230 $ 38 $ — $ 1,361
Restructuring 50 48 22 4 — 124 Other acquisition-related costs 6 —
— — — 6 Asset impairments 2 1 4 — —
7 Adjusted operating income $ 825 $ 375 $ 256
$ 42 $ — $ 1,498 Depreciation and
amortization (a) $ 196 $ 149 $ 60 $ 36 $ — $ 441
Nine
Months Ended September 30, 2013
Electrical/Electronic
Architecture
Powertrain Systems
Electronics and Safety
ThermalSystems
Eliminations and Other
Total Operating income $ 709 $ 334 $ 198 $ 26 $ — $ 1,267
Restructuring 26 20 44 5 — 95 Other acquisition-related costs 10
— — — — 10 Adjusted operating
income $ 745 $ 354 $ 242 $ 31 $ —
$ 1,372 Depreciation and amortization (a) $ 174 $ 140
$ 55 $ 32 $ — $ 401 (a) Includes asset impairments.
DELPHI AUTOMOTIVE PLCRECONCILIATION
OF NET EARNINGS TO ADJUSTED EARNINGS(Unaudited)
Adjusted Net Income and Adjusted Net
Income Per Share: Management believes adjusted
net income and adjusted net income per share, which are non-GAAP
measures, are useful in evaluating the ongoing operating
performance of the Company. Adjusted Net Income is defined as net
income (loss) before restructuring, acquisition-related integration
costs, asset impairments and debt extinguishment costs. Adjusted
Net Income Per Share is defined as Adjusted Net Income divided by
the weighted average number of diluted shares outstanding for the
period. Not all companies use identical calculations of Adjusted
Net Income and Adjusted Net Income Per Share, therefore this
presentation may not be comparable to other similarly titled
measures of other companies. The Company's 2014 guidance was
determined using a consistent manner and methodology.
Three Months Ended Nine Months Ended
September 30, September 30, 2014
2013 2014 2013 (in millions, except
per share amounts) Net income attributable to Delphi $ 305 $
271 $ 1,007 $ 914 Adjusting items: Restructuring charges 47 37 124
95 Acquisition-related integration costs 3 4 6 10 Asset impairments
4 — 7 — Debt extinguishment costs — — 34 39 Tax impact of adjusting
items (a) (12 ) (10 ) (32 ) (32 ) Adjusted net income attributable
to Delphi $ 347 $ 302 $ 1,146 $ 1,026
Weighted average number of diluted shares outstanding 300.14
310.62 303.56 312.87 Diluted net income
per share attributable to Delphi $ 1.02 $ 0.87 $ 3.32
$ 2.92 Adjusted net income per share $ 1.16 $
0.97 $ 3.78 $ 3.28 (a) Represents the
income tax impacts of the adjustments made for restructuring
charges, acquisition-related integration costs, asset impairments
and debt extinguishment costs, by calculating the income tax impact
of these items using the appropriate tax rate for the jurisdiction
where the charges were incurred.
Cash Flow Before
Financing: Cash flow before financing is
presented as a supplemental measure of the Company's liquidity
which is consistent with the basis and manner in which management
presents financial information for the purpose of making internal
operating decisions. Cash flow before financing is defined as cash
provided by (used in) operating activities plus cash provided by
(used in) investing activities. Not all companies use identical
calculations of cash flow before financing therefore this
presentation may not be comparable to other similarly titled
measures of other companies. The Company's 2014 guidance was
determined using a consistent manner and methodology.
Three Months Ended Nine Months Ended
September 30, September 30, 2014
2013 2014 2013 (in millions)
Cash flows from operating activities: Net income $ 325 $ 293 $
1,072 $ 980 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization 150
138 441 401 Working capital 58 (49 ) (273 ) (292 ) Pension
contributions (23 ) (24 ) (66 ) (65 ) Other, net (11 ) 40 88
46 Net cash provided by operating activities 499
398 1,262 1,070 Cash flows from
investing activities: Capital expenditures (196 ) (176 ) (666 )
(512 ) Other, net 5 8 9 17 Net cash
used in investing activities (191 ) (168 ) (657 ) (495 )
Cash flow before
financing $ 308 $ 230 $ 605 $ 575
Delphi Automotive PLCInvestor Contact:Jessica
Holscott248.813.2312Jessica.Holscott@delphi.comMedia
Contact:Claudia Tapia248.813.1507Claudia.Tapia@delphi.com
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