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Aptiv reports second quarter 2019 financial results ahead of expectations; strong outgrowth and operating performance despite weak macros

Aptiv PLC (NYSE: APTV), a global technology company enabling the future of mobility, today reported second quarter 2019 U.S. GAAP earnings of $1.07 per diluted share

Aptiv PLC (NYSE: APTV), a global technology company enabling the future of mobility, today reported second quarter 2019 U.S. GAAP earnings of $1.07 per diluted share. Excluding special items, second quarter earnings totaled $1.33 per diluted share.

Second Quarter Highlights Include:

  • U.S. GAAP revenue of $3.6 billion, a decrease of 2%
    • Revenue increased 4% adjusted for currency exchange, commodity movements and divestitures
  • U.S. GAAP net income of $274 million, diluted earnings per share of $1.07
    • Excluding special items, earnings of $1.33 per diluted share
  • U.S. GAAP operating income margin of 9.2%
    • Adjusted Operating Income margin of 11.2%; Adjusted Operating Income of $405 million
  • Generated $512 million of cash from operations
  • Returned $177 million to shareholders through share repurchases and dividends

Year-to-Date Highlights Include:

  • U.S. GAAP revenue of $7.2 billion, a decrease of 2%
    • Revenue increased 4% adjusted for currency exchange, commodity movements and divestitures
  • U.S. GAAP net income of $514 million, diluted earnings per share of $1.99
    • Excluding special items, earnings of $2.38 per diluted share
  • U.S. GAAP operating income margin of 8.8%
    • Adjusted Operating Income margin of 10.4%; Adjusted Operating Income of $750 million
  • Generated $596 million of cash from operations
  • Returned $460 million to shareholders through share repurchases and dividends

“Aptiv’s second quarter performance, including sustained strong above-market growth despite weak global vehicle production, reflects the efforts we have taken to build a more sustainable business, perfectly positioned to efficiently solve our customer’s toughest challenges,” said Kevin Clark, president and chief executive officer. “As evidenced by our performance in the first half of this year, we are well-positioned to outperform in any environment, giving us confidence in our ability to deliver on our commitments for the remainder of the year despite our expectation of continued market headwinds. Further, our effective execution, investments for growth and disciplined capital deployment priorities have further strengthened our technology position and robust business model, allowing us to deliver long-term sustainable value to our shareholders.”

Second Quarter 2019 Results
The Company reported second quarter 2019 U.S. GAAP revenue of $3.6 billion, a decrease of 2% from the prior year period. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 4% in the second quarter. This reflects growth of 7% in Europe, 2% in Asia, which includes a decline of 6% in China, 1% in North America and 14% in South America.

The Company reported second quarter 2019 U.S. GAAP net income of $274 million and earnings of $1.07 per diluted share, compared to $291 million and $1.10 per diluted share in the prior year period. Second quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $342 million, or $1.33 per diluted share, compared to $372 million, or $1.40 per diluted share, in the prior year period.

Second quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $405 million, compared to $474 million in the prior year period. Adjusted Operating Income margin was 11.2%, compared to 12.9% in the prior year period, reflecting the unfavorable impacts of foreign currency exchange, vehicle production declines in China and continued incremental investments for growth, partially offset by above-market sales growth. Depreciation and amortization expense totaled $188 million, an increase from $156 million in the prior year period, resulting from non-cash impairment charges and increases related to our acquisitions and capital investments.

Interest expense for the second quarter totaled $43 million, as compared to $36 million in the prior year period, which reflects the impacts of our debt refinancing transactions in the first quarter of 2019.

Tax expense in the second quarter of 2019 was $31 million, resulting in an effective tax rate of approximately 10%, which includes approximately 5 points for the impact of favorable discrete items recorded during the period. Tax expense in the second quarter of 2018 was $83 million, resulting in an effective tax rate of approximately 22%, which includes $24 million, or approximately 6 points, due to the adjustment to the provisional amounts recorded for the one-time impacts of the U.S. tax reform enactment.

The Company generated net cash flow from operating activities of $512 million in the second quarter.

Year-to-Date 2019 Results
For the six months ended June 30, 2019, the Company reported U.S. GAAP revenue of $7.2 billion, a decrease of 2% from the prior year period. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 4% during the period. This reflects growth of 6% in Europe, 4% in North America and flat performance in South America and Asia, which includes a decline of 9% in China.

For the 2019 year-to-date period, the Company reported U.S. GAAP net income of $514 million and earnings of $1.99 per diluted share, compared to $598 million and $2.25 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $615 million, or $2.38 per diluted share, compared to $715 million, or $2.69 per diluted share, in the prior year period.

The Company reported Adjusted Operating Income of $750 million for the six months ended June 30, 2019, compared to $901 million in the prior year period. Adjusted Operating Income margin was 10.4% for the six months ended June 30, 2019, compared to 12.3% in the prior year period, reflecting the unfavorable impacts of foreign currency exchange, vehicle production declines in China and continued incremental investments for growth, partially offset by above-market sales growth. Depreciation and amortization expense totaled $361 million, an increase from $311 million in the prior year period, resulting from non-cash impairment charges and increases related to our acquisitions and capital investments.

Interest expense for the six months ended June 30, 2019 totaled $81 million, as compared to $70 million in the prior year period, which reflects the impacts of our debt refinancing transactions in the first quarter of 2019.

Tax expense for the six months ended June 30, 2019 was $64 million, resulting in an effective tax rate of approximately 11%, which includes approximately 4 points for the impact of favorable discrete items recorded during the period. Tax expense in the prior year period was $142 million, resulting in an effective tax rate of approximately 19%, which includes $24 million, or approximately 3 points, due to the adjustment to the provisional amounts recorded for the one-time impacts of the U.S. tax reform enactment.

The Company generated net cash flow from operating activities of $596 million in the six months ended June 30, 2019. As of June 30, 2019, the Company had cash and cash equivalents of $365 million and total available liquidity of $2.2 billion.

Reconciliations of Adjusted Revenue Growth, 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 Programs
During the second quarter of 2019, the Company repurchased 1.6 million shares for approximately $120 million, leaving approximately $2.1 billion available for future share repurchases. Year-to-date, the Company repurchased 4.5 million shares for approximately $346 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 2019 Outlook
The Company’s third quarter and full year 2019 financial guidance is as follows:

(in millions, except per share amounts) Q3 2019 (1) Full Year 2019 (1)
Net sales $3,600 – $3,700 $14,525 – $14,725
Adjusted operating income $415 – $435 $1,650 – $1,690
Adjusted operating income margin 11.5% – 11.8% 11.4% – 11.5%
Adjusted net income per share $1.27 – $1.33 $5.05 – $5.15
Cash flow from operations $1,650
Capital expenditures $800
Adjusted effective tax rate ~15% 12% – 13%


(1)  The Company’s third quarter and full year 2019 financial guidance includes $16 million and $44 million, respectively, for the anticipated impacts of tariffs. 

Conference Call and Webcast
The Company will host a conference call to discuss these results at 8:00 a.m. (ET) today, which is accessible by dialing 877.790.5109 (US domestic) or 647.689.5633 (international) or through a webcast at ir.aptiv.com. The conference ID number is 1475459. 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.

SOURCE: Aptiv

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