Delphi Reports Second Quarter 2016 Financial Results
GILLINGHAM, England - Delphi Automotive PLC (NYSE: 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:
|
| | |
| (in millions, except per share amounts) | Q3 2016 | Full Year 2016 |
| Revenue | $3,925 - $4,000 | $16,250 - $16,450 |
| Adjusted operating income | $505 - $525 | $2,150 - $2,200 |
| Adjusted operating income margin | 12.9% - 13.1% | 13.2% - 13.4% |
| Adjusted earnings per share | $1.38 - $1.44 | $5.95 - $6.05 |
| Cash flow from operations | | $1,900 |
| Capital expenditures | | $750 - $800 |
| Adjusted effective tax rate | 17% | 17% |
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 (NYSE: 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.
# # #
DELPHI AUTOMOTIVE PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| | (in millions, except per share amounts) |
| Net sales | $ | 4,206 |
| | $ | 3,858 |
| | $ | 8,257 |
| | $ | 7,655 |
|
| Operating expenses: | | |
| | | | |
| Cost of sales | 3,348 |
| | 3,076 |
| | 6,613 |
| | 6,132 |
|
| Selling, general and administrative | 279 |
| | 261 |
| | 556 |
| | 516 |
|
| Amortization | 34 |
| | 23 |
| | 67 |
| | 47 |
|
| Restructuring | 154 |
| | 17 |
| | 189 |
| | 33 |
|
| Total operating expenses | 3,815 |
| | 3,377 |
| | 7,425 |
| | 6,728 |
|
| Operating income | 391 |
| | 481 |
| | 832 |
| | 927 |
|
| Interest expense | (41 | ) | | (30 | ) | | (82 | ) | | (62 | ) |
| Other (expense) income, net | (2 | ) | | (2 | ) | | 2 |
| | (56 | ) |
| Income from continuing operations before income taxes and equity income | 348 |
| | 449 |
| | 752 |
| | 809 |
|
| Income tax expense | (84 | ) | | (80 | ) | | (159 | ) | | (141 | ) |
| Income from continuing operations before equity income | 264 |
| | 369 |
| | 593 |
| | 668 |
|
| Equity income, net of tax | 7 |
| | — |
| | 13 |
| | 5 |
|
| Income from continuing operations | 271 |
| | 369 |
| | 606 |
| | 673 |
|
| Income from discontinued operations, net of tax | — |
| | 298 |
| | 108 |
| | 223 |
|
| Net income | 271 |
| | 667 |
| | 714 |
| | 896 |
|
| Net income attributable to noncontrolling interest | 13 |
| | 22 |
| | 31 |
| | 42 |
|
| Net income attributable to Delphi | $ | 258 |
| | $ | 645 |
| | $ | 683 |
| | $ | 854 |
|
| | | | | | | | |
| Amounts attributable to Delphi: | | | | | | | |
| Income from continuing operations | $ | 258 |
| | $ | 350 |
| | $ | 578 |
| | $ | 638 |
|
| Income from discontinued operations | — |
| | 295 |
| | 105 |
| | 216 |
|
| Net income | $ | 258 |
| | $ | 645 |
| | $ | 683 |
| | $ | 854 |
|
| | | | | | | | |
| Diluted net income per share: | | | | | | | |
| Continuing operations | $ | 0.94 |
| | $ | 1.21 |
| | $ | 2.10 |
| | $ | 2.20 |
|
| Discontinued operations | — |
| | 1.02 |
| | 0.38 |
| | 0.74 |
|
| Diluted net income per share attributable to Delphi | $ | 0.94 |
| | $ | 2.23 |
| | $ | 2.48 |
| | $ | 2.94 |
|
| Weighted average number of diluted shares outstanding | 273.37 |
| | 288.85 |
| | 275.20 |
| | 290.32 |
|
| | | | | | | | |
| Cash dividends declared per share | $ | 0.29 |
| | $ | 0.25 |
| | $ | 0.58 |
| | $ | 0.50 |
|
DELPHI AUTOMOTIVE PLC
CONSOLIDATED BALANCE SHEETS
|
| | | | | | | |
| | June 30,
2016 | | December 31,
2015 |
| | (Unaudited) | |
| | (in millions) |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 437 |
| | $ | 535 |
|
| Restricted cash | 1 |
| | 1 |
|
| Accounts receivable, net | 2,900 |
| | 2,750 |
|
| Inventories | 1,318 |
| | 1,181 |
|
| Other current assets | 395 |
| | 431 |
|
| Current assets held for sale | — |
| | 223 |
|
| Total current assets | 5,051 |
| | 5,121 |
|
| Long-term assets: | | | |
| Property, net | 3,430 |
| | 3,377 |
|
| Investments in affiliates | 96 |
| | 94 |
|
| Intangible assets, net | 1,345 |
| | 1,383 |
|
| Goodwill | 1,571 |
| | 1,539 |
|
| Other long-term assets | 464 |
| | 459 |
|
| Total long-term assets | 6,906 |
| | 6,852 |
|
| Total assets | $ | 11,957 |
| | $ | 11,973 |
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Short-term debt | $ | 97 |
| | $ | 52 |
|
| Accounts payable | 2,527 |
| | 2,541 |
|
| Accrued liabilities | 1,275 |
| | 1,204 |
|
| Current liabilities held for sale | — |
| | 130 |
|
| Total current liabilities | 3,899 |
| | 3,927 |
|
| Long-term liabilities: | | | |
| Long-term debt | 3,969 |
| | 3,956 |
|
| Pension benefit obligations | 807 |
| | 854 |
|
| Other long-term liabilities | 512 |
| | 503 |
|
| Total long-term liabilities | 5,288 |
| | 5,313 |
|
| Total liabilities | 9,187 |
| | 9,240 |
|
| Commitments and contingencies | | | |
| Total Delphi shareholders' equity | 2,381 |
| | 2,250 |
|
| Noncontrolling interest | 389 |
| | 483 |
|
| Total shareholders’ equity | 2,770 |
| | 2,733 |
|
| Total liabilities and shareholders’ equity | $ | 11,957 |
| | $ | 11,973 |
|
DELPHI AUTOMOTIVE PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
| | | | | | | |
| | Six Months Ended June 30, |
| | 2016 | | 2015 |
| | (in millions) |
| Cash flows from operating activities: | | | |
| Net income | $ | 714 |
| | $ | 896 |
|
| Income from discontinued operations, net of tax | 108 |
| | 223 |
|
| Income from continuing operations | 606 |
| | 673 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 352 |
| | 263 |
|
| Restructuring expense, net of cash paid | 93 |
| | (32 | ) |
| Deferred income taxes | 9 |
| | — |
|
| Income from equity method investments, net of dividends received | (9 | ) | | 2 |
|
| Loss on extinguishment of debt | — |
| | 52 |
|
| Other, net | 63 |
| | 99 |
|
| Changes in operating assets and liabilities: | | | |
| Accounts receivable, net | (141 | ) | | (303 | ) |
| Inventories | (136 | ) | | (141 | ) |
| Accounts payable | 75 |
| | 182 |
|
| Other, net | (30 | ) | | (123 | ) |
| Pension contributions | (39 | ) | | (37 | ) |
| Net cash provided by operating activities from continuing operations | 843 |
| | 635 |
|
| Net cash provided by operating activities from discontinued operations | — |
| | 34 |
|
| Net cash provided by operating activities | 843 |
| | 669 |
|
| Cash flows from investing activities: | | | |
| Capital expenditures | (412 | ) | | (360 | ) |
| Proceeds from sale of property / investments | 8 |
| | 3 |
|
| Net proceeds from divestiture of discontinued operations | 52 |
| | 660 |
|
| Payments associated with business disposals | — |
| | (7 | ) |
| Cost of business acquisitions, net of cash acquired | (15 | ) | | — |
|
| Cost of technology investments | (3 | ) | | (23 | ) |
| Settlement of derivatives | (16 | ) | | — |
|
| Net cash (used in) provided by investing activities from continuing operations | (386 | ) | | 273 |
|
| Net cash used in investing activities from discontinued operations | (4 | ) | | (65 | ) |
| Net cash (used in) provided by investing activities | (390 | ) | | 208 |
|
| Cash flows from financing activities: | | | |
| Increase in short and long-term debt, net | 51 |
| | 214 |
|
| Dividend payments of consolidated affiliates to minority shareholders | (12 | ) | | (13 | ) |
| Repurchase of ordinary shares | (435 | ) | | (542 | ) |
| Distribution of cash dividends | (159 | ) | | (145 | ) |
| Taxes withheld and paid on employees' restricted share awards | (40 | ) | | (58 | ) |
| Net cash used in financing activities | (595 | ) | | (544 | ) |
| Effect of exchange rate fluctuations on cash and cash equivalents | — |
| | (2 | ) |
| (Decrease) increase in cash and cash equivalents | (142 | ) | | 331 |
|
| Cash and cash equivalents at beginning of period | 579 |
| | 904 |
|
| Cash and cash equivalents at end of period | $ | 437 |
| | $ | 1,235 |
|
| Cash and cash equivalents of discontinued operations | $ | — |
| | $ | 64 |
|
| Cash and cash equivalents of continuing operations | $ | 437 |
| | $ | 1,171 |
|
DELPHI AUTOMOTIVE PLC
FOOTNOTES
(Unaudited)
1. Segment Summary
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2016 | | 2015 | | % | | 2016 | | 2015 | | % |
| | (in millions) | | | | (in millions) | | |
| Net Sales | | | | | | | | | | | |
| Electrical/Electronic Architecture | $ | 2,352 |
| | $ | 2,044 |
| | 15% | | $ | 4,629 |
| | $ | 4,122 |
| | 12% |
| Powertrain Systems | 1,118 |
| | 1,143 |
| | (2)% | | 2,212 |
| | 2,224 |
| | (1)% |
| Electronics and Safety | 777 |
| | 713 |
| | 9% | | 1,497 |
| | 1,395 |
| | 7% |
| Eliminations and Other (a) | (41 | ) | | (42 | ) | | | | (81 | ) | | (86 | ) | | |
| Net Sales | $ | 4,206 |
| | $ | 3,858 |
| | | | $ | 8,257 |
| | $ | 7,655 |
| | |
| | | | | | | | | | | | |
| Adjusted Operating Income | | | | | | | | | | | |
| Electrical/Electronic Architecture | $ | 343 |
| | $ | 292 |
| | 17% | | $ | 648 |
| | $ | 556 |
| | 17% |
| Powertrain Systems | 138 |
| | 146 |
| | (5)% | | 268 |
| | 275 |
| | (3)% |
| Electronics and Safety | 96 |
| | 88 |
| | 9% | | 170 |
| | 167 |
| | 2% |
| Eliminations and Other (a) | — |
| | — |
| | | | — |
| | — |
| | |
| Adjusted Operating Income | $ | 577 |
| | $ | 526 |
| | | | $ | 1,086 |
| | $ | 998 |
| | |
| | | | | | | | | | | | |
| (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 six months ended June 30, 2016 and 2015:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| | (in millions, except per share data) |
| Weighted average ordinary shares outstanding, basic | 272.92 |
| | 287.77 |
| | 274.77 |
| | 289.33 |
|
| Dilutive shares related to RSUs | 0.45 |
| | 1.08 |
| | 0.43 |
| | 0.99 |
|
| Weighted average ordinary shares outstanding, including dilutive shares | 273.37 |
| | 288.85 |
| | 275.20 |
| | 290.32 |
|
| Basic net income per share: | | | | | | | |
| Continuing operations | $ | 0.95 |
| | $ | 1.22 |
| | $ | 2.10 |
| | $ | 2.21 |
|
| Discontinued operations | — |
| | 1.02 |
| | 0.38 |
| | 0.74 |
|
| Basic net income per share attributable to Delphi | $ | 0.95 |
| | $ | 2.24 |
| | $ | 2.48 |
| | $ | 2.95 |
|
| Diluted net income per share: | | | | | | | |
| Continuing operations | $ | 0.94 |
| | $ | 1.21 |
| | $ | 2.10 |
| | $ | 2.20 |
|
| Discontinued operations | — |
| | 1.02 |
| | 0.38 |
| | 0.74 |
|
| Diluted net income per share attributable to Delphi | $ | 0.94 |
| | $ | 2.23 |
| | $ | 2.48 |
| | $ | 2.94 |
|
DELPHI AUTOMOTIVE PLC
RECONCILIATION 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, income (loss) from discontinued operations, net of tax, restructuring and other special items. 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 2016 guidance was determined using a consistent manner and methodology.
|
| | | | | | | | | | | | | | | |
| Consolidated Adjusted Operating Income | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| | (in millions) |
| Net income attributable to Delphi | $ | 258 |
| | $ | 645 |
| | $ | 683 |
| | $ | 854 |
|
| Interest expense | 41 |
| | 30 |
| | 82 |
| | 62 |
|
| Other expense (income), net | 2 |
| | 2 |
| | (2 | ) | | 56 |
|
| Income tax expense | 84 |
| | 80 |
| | 159 |
| | 141 |
|
| Equity income, net of tax | (7 | ) | | — |
| | (13 | ) | | (5 | ) |
| Income from discontinued operations, net of tax | — |
| | (298 | ) | | (108 | ) | | (223 | ) |
| Net income attributable to noncontrolling interest | 13 |
| | 22 |
| | 31 |
| | 42 |
|
| Operating income | 391 |
| | 481 |
| | 832 |
| | 927 |
|
| Restructuring | 154 |
| | 17 |
| | 189 |
| | 33 |
|
| Other acquisition and portfolio project costs | 10 |
| | 10 |
| | 43 |
| | 18 |
|
| Asset impairments | 22 |
| | 4 |
| | 22 |
| | 6 |
|
| (Gain) loss on business divestitures, net | — |
| | 14 |
| | — |
| | 14 |
|
| Adjusted operating income | $ | 577 |
| | $ | 526 |
| | $ | 1,086 |
| | $ | 998 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Segment Adjusted Operating Income | | | | | | | | | |
| (in millions) | | | | | | | | | |
| Three Months Ended June 30, 2016 | Electrical/Electronic Architecture | | Powertrain Systems | | Electronics and Safety | | Eliminations and Other | | Total |
| Operating income (loss) | $ | 321 |
| | $ | (12 | ) | | $ | 82 |
| | $ | — |
| | $ | 391 |
|
| Restructuring | 17 |
| | 126 |
| | 11 |
| | — |
| | 154 |
|
| Other acquisition and portfolio project costs | 5 |
| | 2 |
| | 3 |
| | — |
| | 10 |
|
| Asset impairments | — |
| | 22 |
| | — |
| | — |
| | 22 |
|
| Adjusted operating income | $ | 343 |
| | $ | 138 |
| | $ | 96 |
| | $ | — |
| | $ | 577 |
|
| | | | | | | | | | |
| Depreciation and amortization (a) | $ | 100 |
| | $ | 67 |
| | $ | 23 |
| | $ | — |
| | $ | 190 |
|
| | | | | | | | | | |
| Three Months Ended June 30, 2015 | Electrical/Electronic Architecture | | Powertrain Systems | | Electronics and Safety | | Eliminations and Other | | Total |
| Operating income | $ | 267 |
| | $ | 135 |
| | $ | 79 |
| | $ | — |
| | $ | 481 |
|
| Restructuring | 5 |
| | 8 |
| | 4 |
| | — |
| | 17 |
|
| Other acquisition and portfolio project costs | 5 |
| | 3 |
| | 2 |
| | — |
| | 10 |
|
| Asset impairments | 1 |
| | — |
| | 3 |
| | — |
| | 4 |
|
| (Gain) loss on business divestitures, net | 14 |
| | — |
| | — |
| | — |
| | 14 |
|
| Adjusted operating income | $ | 292 |
| | $ | 146 |
| | $ | 88 |
| | $ | — |
| | $ | 526 |
|
| | | | | | | | | | |
| Depreciation and amortization (a) | $ | 69 |
| | $ | 45 |
| | $ | 21 |
| | $ | — |
| | $ | 135 |
|
| | | | | | | | | | |
| Six Months Ended June 30, 2016 | Electrical/Electronic Architecture | | Powertrain Systems | | Electronics and Safety | | Eliminations and Other | | Total |
| Operating income | $ | 581 |
| | $ | 105 |
| | $ | 146 |
| | $ | — |
| | $ | 832 |
|
| Restructuring | 35 |
| | 135 |
| | 19 |
| | — |
| | 189 |
|
| Other acquisition and portfolio project costs | 32 |
| | 6 |
| | 5 |
| | — |
| | 43 |
|
| Asset impairments | — |
| | 22 |
| | — |
| | — |
| | 22 |
|
| Adjusted operating income | $ | 648 |
| | $ | 268 |
| | $ | 170 |
| | $ | — |
| | $ | 1,086 |
|
| | | | | | | | | | |
| Depreciation and amortization (a) | $ | 195 |
| | $ | 111 |
| | $ | 46 |
| | $ | — |
| | $ | 352 |
|
| | | | | | | | | | |
| Six Months Ended June 30, 2015 | Electrical/Electronic Architecture | | Powertrain Systems | | Electronics and Safety | | Eliminations and Other | | Total |
| Operating income | $ | 520 |
| | $ | 256 |
| | $ | 151 |
| | $ | — |
| | $ | 927 |
|
| Restructuring | 9 |
| | 14 |
| | 10 |
| | — |
| | 33 |
|
| Other acquisition and portfolio project costs | 10 |
| | 5 |
| | 3 |
| | — |
| | 18 |
|
| Asset impairments | 3 |
| | — |
| | 3 |
| | — |
| | 6 |
|
| (Gain) loss on business divestitures, net | 14 |
| | — |
| | — |
| | — |
| | 14 |
|
| Adjusted operating income | $ | 556 |
| | $ | 275 |
| | $ | 167 |
| | $ | — |
| | $ | 998 |
|
| | | | | | | | | | |
| Depreciation and amortization (a) | $ | 135 |
| | $ | 89 |
| | $ | 39 |
| | $ | — |
| | $ | 263 |
|
| | | | | | | | | | |
| (a) Includes asset impairments. |
DELPHI AUTOMOTIVE PLC
RECONCILIATION 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 attributable to Delphi before discontinued operations, restructuring and other special items, including the tax impact thereon. 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 2016 guidance was determined using a consistent manner and methodology.
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| | (in millions, except per share amounts) |
| Net income attributable to Delphi | $ | 258 |
| | $ | 645 |
| | $ | 683 |
| | $ | 854 |
|
| Income from discontinued operations attributable to Delphi, net of tax | — |
| | (295 | ) | | (105 | ) | | (216 | ) |
| Income from continuing operations attributable to Delphi | 258 |
| | 350 |
| | 578 |
| | 638 |
|
| Adjusting items: | | | | | | | |
| Restructuring | 154 |
| | 17 |
| | 189 |
| | 33 |
|
| Other acquisition and portfolio project costs | 10 |
| | 10 |
| | 43 |
| | 18 |
|
| Asset impairments | 22 |
| | 4 |
| | 22 |
| | 6 |
|
| (Gain) loss on business divestitures, net | — |
| | 14 |
| | — |
| | 14 |
|
| Debt extinguishment costs | — |
| | — |
| | — |
| | 52 |
|
| Transaction and related costs associated with acquisitions | — |
| | 1 |
| | — |
| | 1 |
|
| Tax impact of adjusting items (a) | (9 | ) | | (10 | ) | | (20 | ) | | (23 | ) |
| Adjusted net income attributable to Delphi | $ | 435 |
| | $ | 386 |
| | $ | 812 |
| | $ | 739 |
|
| | | | | | | | |
| Weighted average number of diluted shares outstanding | 273.37 |
| | 288.85 |
| | 275.20 |
| | 290.32 |
|
| Diluted net income per share from continuing operations attributable to Delphi | $ | 0.94 |
| | $ | 1.21 |
| | $ | 2.10 |
| | $ | 2.20 |
|
| Adjusted net income per share | $ | 1.59 |
| | $ | 1.34 |
| | $ | 2.95 |
| | $ | 2.55 |
|
|
| |
| (a) | Represents the income tax impacts of the adjustments made for restructuring and other special items 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 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. 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 2016 guidance was determined using a consistent manner and methodology.
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| | (in millions) |
| Cash flows from operating activities: | | | | | | | |
| Income from continuing operations | $ | 271 |
| | $ | 369 |
| | $ | 606 |
| | $ | 673 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Depreciation and amortization | 190 |
| | 135 |
| | 352 |
| | 263 |
|
| Restructuring expense, net of cash paid | 88 |
| | (8 | ) | | 93 |
| | (32 | ) |
| Working capital | 1 |
| | (22 | ) | | (202 | ) | | (262 | ) |
| Pension contributions | (20 | ) | | (18 | ) | | (39 | ) | | (37 | ) |
| Other, net | 45 |
| | 58 |
| | 33 |
| | 30 |
|
| Net cash provided by operating activities from continuing operations | 575 |
| | 514 |
| | 843 |
| | 635 |
|
| | | | | | | | |
| Cash flows from investing activities: | | | | | | | |
| Capital expenditures | (172 | ) | | (147 | ) | | (412 | ) | | (360 | ) |
| Net proceeds from divestiture of discontinued operations | — |
| | 660 |
| | 52 |
| | 660 |
|
| Cost of business acquisitions, net of cash acquired | — |
| | — |
| | (15 | ) | | — |
|
| Cost of technology investments | — |
| | (23 | ) | | (3 | ) | | (23 | ) |
| Settlement of derivatives | (1 | ) | | — |
| | (16 | ) | | — |
|
| Other, net | 7 |
| | (4 | ) | | 8 |
| | (4 | ) |
| Net cash (used in) provided by investing activities from continuing operations | (166 | ) | | 486 |
| | (386 | ) | | 273 |
|
| | | | | | | | |
| Adjusting items: | | | | | | | |
| Adjustment for net proceeds from divestiture of discontinued operations | — |
| | (660 | ) | | (52 | ) | | (660 | ) |
| Adjustment for the cost of business acquisitions, net of cash acquired | — |
| | — |
| | 15 |
| | — |
|
| Adjustment for settlement of derivatives related to business acquisition | — |
| | | | 15 |
| | — |
|
| Cash flow before financing | $ | 409 |
| | $ | 340 |
| | $ | 435 |
| | $ | 248 |
|
Investor Contact:
Elena Rosman
248.813.5091
elena.rosman@delphi.com
Media Contact:
Kristen Kinley
248.535.3930
kristen.kinley@delphi.com
