Delphi Automotive PLC, a leading global vehicle components manufacturer, today reported record third quarter 2014 U.S. GAAP earnings of $1.02 per diluted share. Excluding special items, third quarter earnings increased 20% to $1.16 per diluted share.
Third Quarter Highlights Include:
• Revenue of $4.1 billion, up 3%
• U.S. GAAP diluted earnings per share of $1.02, up 17%
◦ Excluding special items, earnings of $1.16 per diluted share, up 20%
• Adjusted Operating Income of $468 million, up 9%
◦ Adjusted Operating Income margin of 11.3%, up 60 basis points
• Generated $499 million of cash from operations, up 25%
• Share repurchases and dividends of $372 million
• Announced the acquisitions of Antaya Technologies Corporation and Unwired Technology LLC, further expanding connector portfolio
Year-to-Date Highlights Include:
• Revenue of $12.9 billion, up 5%
• U.S. GAAP diluted earnings per share of $3.32, up 14%
◦ Excluding special items, earnings of $3.78 per diluted share, up 15%
• Adjusted Operating Income of $1,498 million, up 9%
◦ Adjusted Operating Income margin of 11.6%, up 40 basis points
• Generated $1,262 million of cash from operations, up 18%
• Share repurchases and dividends of $902 million
“Our record third quarter financial results demonstrate continued outstanding operating performance and the leverage of our operating model,” said Rodney O’Neal, chief executive officer and president. “The entire Delphi team remains committed to building shareholder value and achieving our key objectives for the year.”
Third Quarter 2014 Results
The Company reported third quarter 2014 revenue of $4.1 billion, an increase of 3% from the prior year period, reflecting continued growth in Asia and North America. Adjusted for the impacts of currency exchange, commodity movements and acquisitions and divestitures, revenue increased by 3% in the third quarter. This reflects growth of 9% in Asia, 6% in North America and 1% in Europe, partially offset by a decline of 20% in South America.
The Company reported third quarter U.S. GAAP net income of $305 million and earnings of $1.02 per diluted share, compared to $271 million and $0.87 per diluted share in the prior year period. Third quarter net income excluding special items consisting of restructuring-related charges, acquisition-related integration costs, asset impairments and losses on extinguishment of debt (“Adjusted Net Income”), totaled $347 million, or $1.16 per diluted share, which includes the favorable impacts of a decreased effective tax rate and a reduced share count. Adjusted Net Income in the prior year period was $302 million, or $0.97 per diluted share.
Third quarter earnings before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, restructuring, other acquisition-related costs and asset impairments (“Adjusted Operating Income”) was $468 million, compared to $428 million in the prior year period. Adjusted Operating Income margin increased 60 basis points in the third 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 restructuring programs focused on aligning our manufacturing capacity with the current automotive production levels in Europe and South America. Depreciation and amortization expense totaled $150 million in the third quarter, compared to $138 million in the prior year period.
Interest expense for the third quarter totaled $33 million, a decrease from $34 million in the prior year period, which reflects the benefits of our debt refinancing transactions in the first quarter of 2014.
Tax expense in the third quarter of 2014 was $63 million, resulting in an effective tax rate of approximately 16%, compared to $72 million, or an effective rate of 20%, in the prior year period. The decrease reflects the geographic mix of pretax earnings, partially offset by higher pretax earnings, and the unfavorable impacts of discrete items recorded in the prior period.
The Company generated net cash flow from operating activities of $499 million in the three months ended September 30, 2014, compared to $398 million in the prior year period.
Year-to-Date 2014 Results
For the nine months ended September 30, 2014, the Company reported revenue of $12.9 billion, an increase of 5% from the prior year period, reflecting continued growth in Asia and North America. Adjusted for the impacts of currency exchange, commodity movements and acquisitions and divestitures, revenue increased by 4% during the period. This reflects growth of 11% in Asia, 7% in North America and 1% in Europe, partially offset by a decline of 17% in South America.
For the 2014 year-to-date period, the Company reported U.S. GAAP net income of $1,007 million and earnings of $3.32 per diluted share, compared to $914 million and $2.92 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $1,146 million, or $3.78 per diluted share, which includes the favorable impact of a reduced share count, compared to Adjusted Net Income of $1,026 million, or $3.28 per diluted share, in the prior year period.
The Company reported Adjusted Operating Income of $1,498 million for the nine months ended September 30, 2014, compared to $1,372 million in the prior year period. Adjusted Operating Income margin was 11.6% for the nine months ended September 30, 2014, an improvement of 40 basis points, compared with 11.2% 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 restructuring programs focused on aligning our manufacturing capacity with the current automotive production levels in Europe and South America. Depreciation and amortization expense totaled $441 million, compared to $401 million in the prior year period.
Interest expense for the nine months ended September 30, 2014 totaled $101 million, a decrease from $106 million in the prior year period, reflecting the benefits of our debt refinancing transactions in the first quarter of 2014. Additionally, the nine months ended September 30, 2014 and September 30, 2013 included losses on the extinguishment of debt totaling $34 million and $39 million, respectively.
Tax expense for the 2014 year-to-date period was $200 million, resulting in an effective tax rate of approximately 16%, compared to $182 million, or an effective rate of 16%, in the prior year period, which includes the impact of higher pretax earnings in the current period and the geographic mix of these pretax earnings.
The Company generated net cash flow from operating activities of $1,262 million in the nine months ended September 30, 2014, compared to $1,070 million in the prior year period. As of September 30, 2014, the Company had cash and cash equivalents of $1.0 billion and total debt of $2.5 billion.
Share Repurchase Program
During the third quarter of 2014, Delphi repurchased 4.36 million shares for approximately $297 million under its existing authorized share repurchase program, leaving approximately $516 million available for future share repurchases. Year-to-date, the Company has repurchased 10.0 million shares for approximately $674 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.
Full Year 2014 Outlook
| The Company’s full year 2014 financial guidance is as follows: (in millions, except per share amounts) | Full Year 2014 |
| Revenue | $17,000 -$17,300 |
| Adjusted Operating Income | $2,000 -$2,050 |
| Adjusted Operating Income Margin | 11.8% |
| Adjusted Earnings Per Share | $5.00 -$5.10 |
| Cash Flow Before Financing | $1,100 |
| Capital Expenditures | $800 |
| Depreciation and Amortization | $600 |
| Adjusted Effective Tax Rate | 17% |
| Share Count -Diluted |
