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Delphi Automotive PLC (NYSE: DLPH), a leading global vehicle components manufacturer, today reported first quarter 2014 U.S. GAAP earnings of $1.04 per diluted share. Excluding special items, earnings increased 12% to $1.20 per diluted share.
Highlights include:
- Revenue of $4.3 billion, up 6%
- U.S. GAAP diluted earnings per share of $1.04, up 18%
- Excluding special items, earnings of $1.20 per diluted share, up 12%
- Adjusted Operating Income of $483 million, up 12%
- Adjusted Operating Income margin of 11.3%, up 60 basis points
- Generated $136 million of cash from operations
- Share repurchases and dividends of $234 million
“Overall, Delphi had an outstanding first quarter of 2014, with strong earnings on revenue growth that was in-line with our expectations,” said Rodney O’Neal, chief executive officer and president. “We believe we are well-positioned for the remainder of 2014.”
First Quarter 2014 Results
The Company reported first quarter 2014 revenues of $4.3 billion, an increase of 6% from the prior year period, reflecting continued strong growth in Asia and North America. Adjusted for the impacts of currency exchange, commodity movements, acquisitions and divestitures, revenue also increased by 6% in the first quarter. This reflects growth of 12% in Asia, 8% in North America and 2% in Europe, partially offset by declines of 9% in South America.
The Company reported first quarter U.S. GAAP net income of $320 million and earnings of $1.04 per diluted share, compared to $276 million and $0.88 per diluted share in the prior year period. First quarter net income excluding special items consisting of restructuring-related charges, acquisition-related integration costs and losses on extinguishment of debt (“Adjusted Net Income”), totaled $368 million, or $1.20 per diluted share, which includes the unfavorable impact of an increased effective tax rate as well as the favorable impact of a reduced share count. Adjusted Net Income in the prior year period was $336 million, or $1.07 per diluted share.
First quarter earnings before interest expense, other income (expense), income tax expense, restructuring, acquisition-related integration costs and equity income (loss) (“Adjusted Operating Income”) was $483 million, compared to $431 million in the prior year period. Adjusted Operating Income margin increased 60 basis points in the first quarter of 2014 to 11.3%, compared with 10.7% in the prior year period. The increase in Adjusted Operating Income reflects the continued strong performance and growth of our businesses in Asia and North America, as well as the benefits of our on-going European restructuring programs initiated over the past 15 months. Depreciation and amortization expense totaled $145 million in the first quarter, compared to $131 million in the prior year period.
Interest expense for the first quarter totaled $35 million, comparable to $36 million in the prior year period. Additionally, both the first quarter of 2014 and 2013 included net losses on the extinguishment of debt totaling $34 million and $39 million, respectively.
Tax expense in the first quarter of 2014 was $75 million, resulting in an effective tax rate of approximately 18%, compared to $37 million, or an effective rate of 11%, in the prior year period. The increase reflects higher pretax earnings, as well as the geographic mix of pretax earnings, and the favorable impact of discrete items recorded in the prior year period.
The Company generated net cash flow from operating activities of $136 million in the first quarter of 2014, compared to $149 million in the prior year period. As of March 31, 2014, the Company had cash and cash equivalents of $1 billion and access to $1.5 billion in undrawn committed revolving bank facilities, and total debt of $2.4 billion.
Increase of Quarterly Cash Dividend
On January 14, 2014, Delphi’s Board of Directors approved an increase in the annual dividend rate paid on its ordinary shares from $0.68 to $1 per ordinary share, and declared a quarterly cash dividend of $0.25 per ordinary share to shareholders of record at the close of business on February 18, 2014. On February 27, 2014, $77 million was paid to shareholders of record as of February 18, 2014.
Share Repurchase Program
During the first quarter of 2014, Delphi repurchased 2.38 million shares for approximately $157 million under its existing $750 million share repurchase program, leaving approximately $33 million available for future share repurchases under this program. As previously disclosed, the Company’s Board of Directors also authorized a new $1 billion share repurchase program, which will commence following the completion of the existing program. 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.
Q2 2014 and Full Year 2014 Outlook
The Company’s second quarter and full year 2014 financial guidance is as follows:
| (in millions, except per share amounts) | Q2 2014 |
Previous Full Year 2014 |
Current Full Year 2014 |
| Revenue | $4,375 – $4,475 | $17,200 – $17,600 | $17,200 – $17,600 |
| Adjusted Operating Income | $525 – $550 | $1,950 – $2,050 | $1,975 – $2,050 |
| Adjusted Operating Income Margin | 12.0% – 12.3% | 11.3% – 11.6% | 11.5% – 11.6% |
| Adjusted Earnings Per Share | $1.27 – $1.35 | $4.70 – $4.95 | $4.80 – $5.00 |
| Cash Flow Before Financing | $1,100 | $1,100 | |
| Capital Expenditures | $800 | $800 | |
| Depreciation and Amortization | $600 | $600 | |
| Adjusted Effective Tax Rate | 18% | 18% | |
| Share Count – Diluted | 309 | 306 |
Full year 2014 mid-point earnings per share guidance represents 11% growth year-over-year, and assumes global vehicle production increases of 2%.
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 24590424. 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 accounting principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures 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 leading global supplier of technologies for the automotive and commercial vehicle markets. Headquartered in Gillingham, England, Delphi operates major technical centers, manufacturing sites and customer support services in 32 countries, with regional headquarters in Bascharage, Luxembourg; Sao Paulo, Brazil; Shanghai, China and Troy, Michigan, U.S. Delphi delivers innovation for the real world with technologies that make cars and trucks safer as well as more powerful, efficient and connected
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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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