Delphi Automotive 1Q Earnings Beat Ests, Up Y/Y - Analyst Blog

Delphi Automotive PLC DLPH saw a 12.1% rise in adjusted earnings to $1.20 per share in the first quarter of fiscal 2014 from $1.07 in the prior-year quarter.  Earnings also beat the Zacks Consensus Estimate by 12 cents a share. Adjusted net income increased 9.5% to $368 million from $336 million a year ago.

Including special items consisting of restructuring charges and costs associated with acquisition and integration and losses on extinguishment of debt, Delphi Automotive reported profit of $320 million or $1.04 per share in the first quarter of 2014 compared with $276 million or 88 cents per share a year ago.

Revenues rose 6.3% to $4.28 billion, marginally missing the Zacks Consensus Estimate of $4.29 billion. The improvement was driven by better performance in Asia and North America. After adjusting the currency exchange, commodity movements, acquisitions and divestitures, revenues increased 6% year over year. A 12% improvement in performance in Asia, 8% in North America and 2% in Europe contributed to the upside, but was partially offset by a 9% decline in South America.

Adjusted operating income increased 12% to $483 million from $431 million in the first quarter of fiscal 2013. Operating margin came in at 11.3% versus 10.7% a year ago. The hike in adjusted operating income can be attributable to the better performance in Asia and North America, together with benefits from on-going restructuring programs in Europe.

Segment Details

In the Electrical/Electronic Architecture segment, revenues rose 9.9% to $2.1 billion. In the Powertrain Systems segment, revenues remained in line at $1.1 billion. The Electronics and Safety segment's revenues improved 5% to $730 million from $693 million a year ago.  Revenues at the Thermal Systems segment increased 8% to $389 million from $360 million.

Share Repurchase & Dividend

Delphi Automotive repurchased about 2.38 million shares for $157 million in the first quarter of 2014 under the existing $750 million share repurchase program. As of Apr 24, 2013, the company had roughly $33 million available under its share repurchase program.

The company's board has authorized a new $1 billion share repurchase program. This repurchase will commence after the completion of the existing program.

On Jan 14, 2014, Delphi's board of directors approved an increase in the annual dividend to $1 from 68 cents per share. It also declared a quarterly cash dividend of 25 cents per share to the shareholders of record as of Feb 18, 2014. On Feb 27, 2014, the company paid $77 million to shareholders.

Financial Position

Delphi Automotive had cash and cash equivalents of $978 million as of Mar 31, 2014, compared with $1.4 million as of Dec 31, 2013. Total debt amounted to $2.44 billion as of Mar 31, 2014, as against $2.41 billion as of Dec 31, 2013. The long-term debt-to-capitalization ratio stood at 41.2% as of Mar 31, 2014, versus 41.3% as of Dec 31, 2013.

In the first three months of 2014, operating cash flow dipped to $136 million from $149 million in the year-ago period. Capital expenditure was $298 million compared with $213 million in the same period a year ago.

Outlook

For the second quarter of 2014, Delphi Automotive expects adjusted earnings in the range of $1.27 to $1.35. Revenues are expected in the band of $4,375 to $4,475. Adjusted operating income is likely to be in the range of $525 million (12% of sales) to $550 million (12.3% of sales).

For 2014, Delphi Automotive raised the adjusted earnings expectations to the range of $4.80 to $5.00 from the previous estimate of $4.70 to $4.95. Revenues are expected in the band of $17,200 to $17,600. Adjusted operating income will likely come in between $1.97 billion (11.5% of sales) and $2.05 billion (11.6% of sales). The company's capital expenditure guidance stands at $800 million.

Delphi Automotive, is one of the largest vehicle components manufacturer companies, and provides electrical and electronic services, powertrain systems, and safety and thermal technology solutions to the global automotive and commercial vehicle markets. Currently, it carries a Zacks Rank #3 (Hold).

Other stocks worth considering in the same industry are Commercial Vehicle Group Inc. CVGI, Superior Industries International, Inc. SUP and Gentherm Inc. THRM. All three sport a Zacks Rank #1 (Strong Buy).