Delphi Reports Second Quarter 2016 Financial Results

GILLINGHAM, England, Aug. 3, 2016 /PRNewswire/ -- Delphi Automotive PLC DLPH, a leading global technology company serving the automotive sector, today reported second quarter 2016 U.S. GAAP earnings from continuing operations of $0.94 per diluted share. Excluding special items, second quarter earnings from continuing operations totaled $1.59 per diluted share.

Second Quarter Highlights Include:

• Revenue of $4,206 million, up 7% adjusted for currency exchange, commodity movements, acquisitions and divestitures
• U.S. GAAP net income from continuing operations of $258 million, diluted earnings per share from continuing operations of $0.94
  • Excluding special items, earnings from continuing operations of $1.59 per diluted share, up 19%
• Adjusted Operating Income of $577 million, up 10%
  • U.S. GAAP Operating Income margin of 9.3%. Adjusted Operating Income margin of 13.7%, up 10 basis points
• Generated $575 million of cash from continuing operations
• Share repurchases and dividends of $144 million

Year-to-Date Highlights Include:

• Revenue of $8,257 million, up 7% adjusted for currency exchange, commodity movements, acquisitions and divestitures
• U.S. GAAP net income from continuing operations of $578 million, diluted earnings per share from continuing operations of $2.10
  • Excluding special items, earnings from continuing operations of $2.95 per diluted share, up 16%
• Adjusted Operating Income of $1,086 million, up 9%
  • U.S. GAAP Operating Income margin of 10.1%. Adjusted Operating Income margin of 13.2%, up 20 basis points
• Generated $843 million of cash from continuing operations
• Share repurchases and dividends of $594 million

"Delphi delivered solid second quarter financial results, with accelerated revenue and earnings growth," said Kevin Clark, president and chief executive officer. "We continue to leverage our business model and remain disciplined in our allocation of capital, investing in both organic and inorganic growth."

Second Quarter 2016 Results

The Company reported second quarter 2016 revenue of $4.2 billion, an increase of 9% from the prior year period, reflecting the acquisition of HellermannTyton Group PLC ("HellermannTyton") and continued volume growth in North America, Europe and Asia Pacific. Adjusted for currency exchange, commodity movements, the acquisition of HellermannTyton and the divestiture of the Company's Reception Systems business, revenue increased by 7% in the second quarter. This reflects growth of 7% in North America, 10% in Europe and 5% in Asia, partially offset by a decline of 19% in South America.

The Company reported second quarter 2016 U.S. GAAP net income from continuing operations of $258 million and earnings from continuing operations of $0.94 per diluted share, compared to $350 million and $1.21 per diluted share in the prior year period. The second quarter 2016 results include pre-tax restructuring charges of $154 million and related asset impairments of $22 million, principally related to programs focused on the continued rotation of our manufacturing footprint to low cost locations in Europe. Second quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $435 million, or $1.59 per diluted share, which includes the favorable impact of a reduced share count, offset by a higher tax rate compared to the prior year period. Adjusted Net Income in the prior year period was $386 million, or $1.34 per diluted share.

Second quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $577 million, compared to $526 million in the prior year period. Adjusted Operating Income margin increased 10 basis points in the second quarter of 2016 to 13.7%, compared with 13.6% in the prior year period, resulting from the continued above-market growth of our businesses in Europe, North America and Asia Pacific, increased earnings from the acquisition of HellermannTyton in December of 2015 and the impact of successful cost reduction initiatives, including our continuing rotation to low cost manufacturing locations in Europe. Depreciation and amortization expense (including asset impairment charges) totaled $190 million in the second quarter, an increase from $135 million in the prior year period, primarily attributable to the acquisition of HellermannTyton in December of 2015.

Interest expense for the second quarter totaled $41 million, an increase from $30 million in the prior year period, which reflects the issuance of $1.3 billion in senior unsecured notes in the fourth quarter of 2015 to finance the acquisition of HellermannTyton.

Tax expense in the second quarter of 2016 was $84 million, resulting in an effective tax rate of approximately 24%, compared to $80 million, or an effective rate of 18%, in the prior year period. The increase is primarily attributable to the geographic mix of pretax earnings, and includes the impacts related to certain of the restructuring charges described above for which no tax benefit was recognized.

The Company generated net cash flow from continuing operating activities of $575 million in the three months ended June 30, 2016, compared to $514 million in the prior year period.

Year-to-Date 2016 Results

For the six months ended June 30, 2016, the Company reported revenue of $8.3 billion, an increase of 8% from the prior year period, reflecting the acquisition of HellermannTyton and continued volume growth in North America, Europe and Asia Pacific. Adjusted for currency exchange, commodity movements, the acquisition of HellermannTyton and the divestiture of the Company's Reception Systems business, revenue increased by 7% during the period. This reflects growth of 6% in North America, 10% in Europe and 7% in Asia, partially offset by a decline of 21% in South America.

For the 2016 year-to-date period the Company reported U.S. GAAP net income from continuing operations of $578 million and earnings from continuing operations of $2.10 per diluted share, compared to $638 million and $2.20 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $812 million, or $2.95 per diluted share, which includes the favorable impact of a reduced share count, offset by a higher tax rate compared to the prior year period. Adjusted Net Income in the prior year period was $739 million, or $2.55 per diluted share.

The Company reported Adjusted Operating Income of $1,086 million for the six months ended June 30, 2016, compared to $998 million in the prior year period. Adjusted Operating Income margin was 13.2% for the six months ended June 30, 2016, an improvement of 20 basis points, compared with 13.0% in the prior year period, resulting from the continued above-market growth of our businesses in Europe, Asia Pacific and North America, increased earnings from the acquisition of HellermannTyton and the impact of successful cost reduction initiatives, including our continuing rotation to low cost manufacturing locations in Europe. Depreciation and amortization expense totaled $352 million, an increase from $263 million in the prior year period, primarily attributable to the acquisition of HellermannTyton.

Interest expense for the six months ended June 30, 2016 totaled $82 million, an increase from $62 million in the prior year period, which reflects the issuance of $1.3 billion in senior unsecured notes in the fourth quarter of 2015 to finance the acquisition of HellermannTyton.

Tax expense for the six months ended June 30, 2016 was $159 million, resulting in an effective tax rate of approximately 21%, compared to $141 million, or an effective rate of 17%, in the prior year period. The increase is primarily attributable to the geographic mix of pretax earnings, and includes the impacts related to certain of the restructuring charges described above for which no tax benefit was recognized.

The Company generated net cash flow from continuing operating activities of $843 million in the six months ended June 30, 2016, compared to $635 million in the prior year period. As of June 30, 2016, the Company had cash and cash equivalents of $0.4 billion and total debt of $4.1 billion.

Reconciliations of Adjusted Net Income, Adjusted Net Income per Share, Adjusted Operating Income and Cash Flow Before Financing, which are non-GAAP measures, to the most directly comparable financial measures, respectively, calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP") are provided in the attached supplemental schedules.

Share Repurchase Program

During the second quarter of 2016, Delphi repurchased 0.89 million shares for approximately $65 million under its existing authorized share repurchase programs, leaving approximately $1.57 billion available for future share repurchases. Year-to-date, the Company has repurchased 6.49 million shares for approximately $435 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.

Q3 and Full Year 2016 Outlook

The Company's third quarter and full year 2016 financial guidance is as follows:

Conference Call and Webcast

The Company will host a conference call to discuss these results at 9:00 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 42279016. 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 GAAP. Specifically, Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income per Share and Cash Flow Before Financing are non-GAAP financial measures. Adjusted Operating Income represents net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, income (loss) from discontinued operations, net of tax, restructuring, other acquisition and portfolio project costs, asset impairments and gains (losses) on business divestitures. Other acquisition and portfolio project costs includes costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures. Adjusted Operating Income margin is defined as Adjusted Operating Income as a percentage of Net sales.

Adjusted Net Income represents net income attributable to Delphi before discontinued operations, restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share represents Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the period. Cash Flow Before Financing represents cash provided by (used in) operating activities from continuing operations plus cash provided by (used in) investing activities from continuing operations, adjusted for the purchase price of business acquisitions (including the settlement of foreign currency derivatives related to the 2015 acquisition of HellermannTyton) and net proceeds from the divestiture of discontinued operations.

Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company's financial position and results of operations. In particular, management believes Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are useful measures in assessing the Company's ongoing financial performance that, when reconciled to the corresponding GAAP measure, provide improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance and that may obscure underlying business results and trends. Management also uses these non-GAAP financial measures for internal planning and forecasting purposes.

Such non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the attached supplemental schedules 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 DLPH is a high-technology company that integrates safer, greener and more connected solutions for the automotive sector. Headquartered in Gillingham, U.K., Delphi operates technical centers, manufacturing sites and customer support services in 44 countries. Visit delphi.com.

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE Delphi Automotive PLC