Delphi Automotive PLC (NYSE: DLPH), a leading global technology company serving the automotive sector, today reported second quarter 2017 U.S. GAAP earnings from continuing operations of $1.38 per diluted share. Excluding special items, second quarter earnings from continuing operations totaled $1.71 per diluted share.
Second Quarter Highlights Include:
Revenue of $4.3 billion, up 5% adjusted for currency exchange, commodity movements, acquisitions and divestitures
U.S. GAAP net income from continuing operations of $369 million, diluted earnings per share from continuing operations of $1.38
Excluding special items, earnings from continuing operations of $1.71 per diluted share, up 8%
Adjusted Operating Income of $587 million, up 1%
U.S. GAAP Operating Income margin of 10.8%. Adjusted Operating Income margin of 13.6%
Generated $599 million of cash from continuing operations
Share repurchases and dividends of $173 million
Year-to-Date Highlights Include:
Revenue of $8.6 billion, up 7% adjusted for currency exchange, commodity movements, acquisitions and divestitures
U.S. GAAP net income from continuing operations of $704 million, diluted earnings per share from continuing operations of $2.62
Excluding special items, earnings from continuing operations of $3.29 per diluted share, up 12%
Adjusted Operating Income of $1,124 million, up 3%
U.S. GAAP Operating Income margin of 10.8%. Adjusted Operating Income margin of 13.1%
Generated $889 million of cash from continuing operations
Share repurchases and dividends of $444 million
Spin-off of Powertrain Systems segment remains on track for completion by March 2018
Raising full year outlook for sales and earnings
“Delphi delivered another strong quarter driven by our portfolio of relevant technologies,” said Kevin Clark, president and chief executive officer. “Based on our strong first half performance, we are raising our sales and earnings outlook for the year. We continue to execute as planned on the announced spin-off of our Powertrain segment and remain committed to providing value to our customers and creating value for our shareholders.”
Second Quarter 2017 Results
The Company reported second quarter 2017 revenue of $4.3 billion, an increase of 3% from the prior year period. Adjusted for currency exchange, commodity movements and the divestiture of the Company’s Mechatronics businesses, revenue increased by 5% in the second quarter. This reflects growth of 3% in Europe, 16% in Asia, 15% in South America and consistent performance in North America.
The Company reported second quarter 2017 U.S. GAAP net income from continuing operations of $369 million and earnings from continuing operations of $1.38 per diluted share, compared to $258 million and $0.94 per diluted share in the prior year period. Second quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $457 million, or $1.71 per diluted share, which includes the favorable impacts of a reduced share count and a lower tax rate compared to the prior period. Adjusted Net Income in the prior year period was $435 million, or $1.59 per diluted share.
Second quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $587 million, compared to $580 million in the prior year period, resulting from the continued above-market growth of our businesses in all regions. Second quarter Adjusted Operating margin was 13.6%, compared to 13.8% in the prior year period, reflecting the 40 basis point impact of the Mechatronics divestiture as well as continued investments for growth, offset by sales growth and the beneficial impacts of cost reduction initiatives, including our continuing rotation to best cost manufacturing locations in Europe. Depreciation and amortization expense (including asset impairment charges) totaled $181 million, a decrease from $190 million in the prior year period.
Interest expense for the second quarter totaled $35 million, as compared to $41 million in the prior year period, which reflects the benefits of our debt refinancing transactions in the third quarter of 2016.
Tax expense in the second quarter of 2017 was $62 million, resulting in an effective tax rate of approximately 14%, compared to $84 million, or an effective rate of 24%, in the prior year period. The decrease in the effective tax rate reflects the geographic mix of pretax earnings and the absence of certain restructuring charges recorded in the prior period for which no tax benefit was recognized.
The Company generated net cash flow from operating activities of $599 million in the second quarter, compared to $575 million in the prior year period.
Year-to-Date 2017 Results
For the six months ended June 30, 2017, the Company reported revenue of $8.6 billion, an increase of 4% from the prior year period, reflecting volume growth in all regions. Adjusted for currency exchange, commodity movements and the divestiture of the Company’s Mechatronics businesses, revenue increased by 7% during the period. This reflects growth of 3% in North America, 6% in Europe, 13% in Asia and 15% in South America.
For the 2017 year-to-date period, the Company reported U.S. GAAP net income from continuing operations of $704 million and earnings from continuing operations of $2.62 per diluted share, compared to $578 million and $2.10 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $885 million, or $3.29 per diluted share, which includes the favorable impacts of a reduced share count and a lower tax rate compared to the prior period. Adjusted Net Income in the prior year period was $812 million, or $2.95 per diluted share.
The Company reported Adjusted Operating Income of $1,124 million for the six months ended June 30, 2017, compared to $1,092 million in the prior year period, resulting from the continued above-market growth of our businesses in all regions. Adjusted Operating margin was 13.1% for the six months ended June 30, 2017, compared to 13.2% in the prior year period, reflecting the 30 basis point impact of the Mechatronics divestiture, continued investments for growth and warranty charges, offset by sales growth and the beneficial impacts of cost reduction initiatives, including our continuing rotation to best cost manufacturing locations in Europe. Depreciation and amortization expense totaled $356 million, an increase from $352 million in the prior year period.
Interest expense for the six months ended June 30, 2017 totaled $69 million, as compared to $82 million in the prior year period, which reflects the benefits of our debt refinancing transactions in the third quarter of 2016.
Tax expense for the six months ended June 30, 2017 was $123 million, resulting in an effective tax rate of approximately 15%, compared to $159 million, or an effective rate of 21%, in the prior year period. The decrease in the effective tax rate reflects the geographic mix of pretax earnings, the absence of certain restructuring charges recorded in the prior period for which no tax benefit was recognized and the impacts of discrete items.
The Company generated net cash flow from operating activities of $889 million in the six months ended June 30, 2017, compared to $843 million in the prior year period. As of June 30, 2017, the Company had cash and cash equivalents of $0.8 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 2017, the Company repurchased 1.09 million shares for approximately $95 million under its existing authorized share repurchase program, leaving approximately $1,084 million available for future share repurchases. Year-to-date, the Company repurchased 3.65 million shares for approximately $288 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.
