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Delphi Q4 2016 Earnings Overview

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0% found this document useful (0 votes)
54 views29 pages

Delphi Q4 2016 Earnings Overview

Uploaded by

rui zhu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

February 2, 2017

Fourth quarter 2016


earnings call
Forward-looking statements
This presentation, 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, certain investments and acquisitions 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.

2
Agenda

Operations overview
• Q4 2016 summary Kevin Clark
Chief Executive Officer
• Strategic update

Financial overview
• Q4 2016 results Joe Massaro
Chief Financial Officer
• 2017 guidance

Q&A Kevin Clark / Joe Massaro

3
Operations overview
Kevin Clark
President and Chief Executive Officer
Q4 and 2016 highlights
Revenue growth Operating income Earnings per share

$4.3B $16.7B $0.6B $2.2B $1.83 $6.28


Q4 Up 10% 2016 Up 8% Q4 Up 20% 2016 Up 13% Q4 Up 32% 2016 Up 20%

• Advanced technologies drive higher growth across the portfolio

• New business bookings of $26B for the year driven by large conquest wins

• Confident in 2017 outlook – strong growth in sales, earnings and cash flow

Well positioned for 2017


Note: Revenue growth excludes impact of FX, commodities, the E&S divestitures and HellermannTyton acquisition;
5 EPS and operating income adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP
CES highlights
3,000 total “The best
over 230 drives

visitors automated drive


including we’ve ever
8 experienced.”
– Automotive News
VIP events

Over 1,800 customers from over 60 companies


8 demo
“If CES gave an award
vehicles:
for the best in show,
4 Automated
Delphi would win it.”
2 V2X
– Major US OEM Customer
150 pavilion tours 2 48V

Showcased industry-leading innovation and expertise

6
Power of data analytics
Real world application

4x7 ~1,400 ~99%


4 vehicles over miles traveled in miles traveled in real time vehicle fuel economy
7 days at CES live Las Vegas Automated mode performance improvement
conditions tracking
Foundation

• Leverages real-time data and the cloud • Scalable vehicle software enhances • Provider of telematics, analytics and
to identify and solve issues Services business revenues via OTA update technologies
expanding usage with global OEMs
• Continued organic and inorganic
• Broadens our “Big Data” capabilities investment in software and service • Opportunity to drive market adoption

Validating applications in the real world

7
Bookings growth
Continued bookings growth 2011 - 2016 cumulative bookings
($ billions)
Infotainment &
Active Safety User Experience
$26 $26
$25
$24 $24 $1.4B $2.9B
$22 2016 2016
$21 $21 bookings bookings
$20 $20
$17
~$5B ~$13B

Vehicle Electrification GDi & Valve Train

$2.1B $1.9B
2016 2016
bookings bookings

2011 2012 2013 2014 2015 2016


1
~$5B ~$7B
Reported bookings Adjusted bookings

New bookings accelerating in high-growth segments


1 Adjusted for divestitures, foreign exchange, and commodities
8 Note: Bookings represent lifetime gross program revenues awarded, based upon expected volumes and pricing
Select fourth quarter bookings
E/EA E&S Powertrain
DEEDS Infotainment GDi

North American
OEM

>$1B >$1B >$0.5B


lifetime lifetime lifetime
revenue revenue revenue

Strong wins in every business

9
Delivering technology innovation
Centralized computing Autonomous capabilities Intelligent electrification
Leader in centralized computing platforms Industry-leading autonomous capabilities Intelligent electrification 48V solutions
• Scalable domain integration • CSLP platform partnership with MBLY • Builds on HV E/EA competency
• More efficient architectures • Commercialization on track for 2019 • Integration with full Delphi product suite
• Automated driving and cockpit • Unprecedented interest following CES • Better functionality, performance, efficiency
• First to market • First to market • Uniquely positioned

Innovation creates value through best-in-class technologies


10
Better positioned for the long-term
Portfolio Advanced Strategic Software and
evolution engineering partnerships services

Investing for
Strategic acquisitions
growth and divestitures Increasing to ~20% of CSLP collaboration 25% increase in
align with industry total engineering with Mobileye and Intel software engineers
megatrends

Continuing Material Maintain flexible


Flawless execution
footprint rotation cost improvement workforce
Cost structure
optimization Rightsizing and
>100bps material cost Continued headcount
~95% flawless
transitioning Western execution on
improvement rationalization
European footprint record launches

Driving sustainable long-term revenue, earnings and cash flow growth

11
Financial overview
Joe Massaro
Chief Financial Officer and Senior Vice President
Q4 2016 vs. Q4 2015
($ millions, except per share amounts)

Q4 2016 Q4 2015 B/(W)

Reported revenue $434


$4,313 $3,879
Adjusted Growth %1 10%

EBITDA2 $777 $639 $138


EBITDA margin % 18.0% 16.5% 150 bps

Operating income2 $606 $503 $103


Operating margin % 14.1% 13.0% 110 bps

Earnings per share2 $0.44


$1.83 $1.39
Growth % 32%

Operating cash flow $683 $638 $45

Focused execution drives strong results


1 At constant foreign exchange and commodity rates; excludes impact of the E&S divestitures and HellermannTyton acquisition
13 2 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP
Revenue growth
Q4 2016 vs. Q4 2015 Year-over-year growth by region
($ millions)
Reported Adjusted1
$190 $4,313 Q4 2016 Q4 2016
$407
$3,879
Europe 8% 5%
($106) ($57)

N. America 10% 9%

Asia 16% 16%

S. America 34% 7%

Total 11% 10%


Q4 2015 FX/ Price Sales Acquisitions/ Q4 2016
commodities growth divestitures

Strong growth in every region

14 1 Growth rates at constant foreign exchange and commodity rates; excludes impact of the E&S divestitures and HellermannTyton acquisition
Operating income growth
Q4 2016 vs. Q4 2015 Highlights
($ millions)

$33 $6 $606 • Strong volume flow through


$136
14.1%
$503
13.0%
• 1.5% annual price downs
($57) ($15)

• Accretive M&A activity

• Improved performance

• Ongoing restructuring benefits


Q4 2015 Price Performance/ Sales Acq/div FX/ Q4 2016
D&A growth commodities

Organic growth drives 110bps margin expansion

15 Note: Operating income adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP
Earnings per share
Q4 2016 vs. Q4 2015

$0.06 $0.02 $0.01 $1.83


$0.35

$1.39

Q4 20151 Operating2 Share FX/ Taxes/ Q4 20161


income repurchases commodities other

Strong EPS growth driven primarily by operational performance


1 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP
16 2 Adjusted for restructuring and other special items and at constant foreign exchange and commodity rates; see Appendix for detail and reconciliation to US GAAP
Segment financials
E/EA Powertrain E&S
Revenue Mechatronics revenue
$2,400 $1,146 $806
$1,114
$2,117
$686
$743

$613
7% 6% 23%
Q4 2016 Q4 2016 Q4 2016
adjusted adjusted adjusted
growth1 growth1 growth1

Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016

($ millions) Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016


Operating income2 $276 $380 Operating income2 $147 $133 Operating income2 $80 $93
Operating margin 13.0% 15.8% Operating margin 13.2% 11.6% Operating margin 11.7% 11.5%

Robust revenue growth across all segments


1 At constant foreign exchange and commodity rates; excludes impact of the E&S divestitures and HellermannTyton acquisition
2 Adjusted for restructuring and other special items; margin calculations based on reported revenue. See Appendix for detail and reconciliation to US GAAP
17
Note: Financial details of the Mechatronics business and details of the reclassification of Power Electronics product line from E&S to Powertrain are provided in the appendix
Full year segment financials
E/EA Powertrain E&S
Revenue $9,316 Mechatronics revenue
$4,486 $3,014
$8,180 $4,407
$2,744
$2,729
$2,449
8% 5% 16%
CY 2016 CY 2016 CY 2016
adjusted adjusted adjusted
growth1 growth1 growth1

2015 2016 2015 2016 2015 2016

($ millions) 2015 2016 2015 2016 2015 2016


Operating income2 $1,095 $1,344 Operating income2 $524 $511 Operating income2 $352 $368
Operating margin 13.4% 14.4% Operating margin 11.9% 11.4% Operating margin 12.8% 12.2%

Funding investments for growth and productivity


1 At constant foreign exchange and commodity rates; excludes impact of the E&S divestitures and HellermannTyton acquisition
2 Adjusted for restructuring and other special items; margin calculations based on reported revenue. See Appendix for detail and reconciliation to US GAAP
18
Note: Financial details of the Mechatronics business and details of the reclassification of Power Electronics product line from E&S to Powertrain are provided in the appendix
2016 vs. 2015
($ millions, except per share amounts)

2016 2015 B/(W)

Reported revenue $1,496


$16,661 $15,165
Adjusted Growth %1 8%

EBITDA2 $2,897 $2,495 $402


EBITDA margin % 17.4% 16.5% 90 bps

Operating income2 $2,223 $1,971 $252


Operating margin % 13.3% 13.0% 30 bps

Earnings per share2 $1.06


$6.28 $5.22
Growth % 20%

Operating cash flow $1,941 $1,667 $274

Outstanding performance consistent with outlook


1 At constant foreign exchange and commodity rates; excludes impact of the E&S divestitures and HellermannTyton acquisition
19 2 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP
2017 guidance
($ millions, except per share amounts)

2016 pro forma1 2017 Q1 2017

Reported revenue $16,376 $16,500 - $16,900 $4,050 - $4,150


Adjusted growth2 4% - 6% 5% - 7%

Operating income3 $2,136 $2,185 - $2,285 $490 - $520


Operating margin 13.0% 13.3% - 13.5% ~12.3%

EPS3 $6.01 $6.40 - $6.70 $1.40 - $1.50


Growth 7% - 11% 9% - 16%

Tax rate3 ~16% ~16%

Operating cash flow $2,100


Capex $850

Compelling 2017 outlook


1 Pro forma data excludes the results of Mechatronics; See appendix for detail
2 Average actual 2016 exchange rates; revenue growth is adjusted for FX, commodities, the Mechatronics divestiture
20
3 Adjusted for restructuring and other special items
Wrap up
• Delivered continued outperformance in 2016
– Strong sales growth above market and 30 bps of margin expansion yielding 20% EPS growth
– Continued traction on portfolio rotation, strengthening position to leverage secular growth trends

• Confident in 2017 outlook


– Mid-single digit organic revenue growth driven by portfolio of advanced technologies
– Solid operating margin expansion while continuing investments for growth

• Strong, sustainable competitive advantages


– Industry-leading technology portfolio driving record new business wins
– Attractive cost structure and flexible business model
– Efficient capital structure drives more cash yielding industry-leading shareholder returns

Creating shareholder value remains highest priority

21
Making it possible.
Appendix
Non-US GAAP financial metrics
($ millions) Q4 2016 Q4 2015 2016 2015
Net income attributable to Delphi $281 $192 $1,257 $1,450
Interest expense $33 $35 $156 $127
Other expense, net $302 $21 $366 $88
Income tax expense $26 $61 $242 $263
Equity income, net of tax ($12) ($6) ($35) ($16)
Loss (income) from discontinued operations, net of tax - $3 ($108) ($274)
Net income attributable to noncontrolling interest $25 $29 $69 $85
Operating income $655 $335 $1,947 $1,723
Restructuring $76 $108 $328 $177
Other acquisition and portfolio project costs $9 $17 $59 $47
Asset impairments $7 $10 $30 $16
(Gain) loss on business divestitures, net ($141) $33 ($141) $8
Adjusted operating income $606 $503 $2,223 $1,971
The company’s guidance was determined using a consistent manner and methodology

24
Non-US GAAP financial metrics
($ millions) Q4 2016 Q4 2015 2016 2015
Net income attributable to Delphi $281 $192 $1,257 $1,450
Interest expense $33 $35 $156 $127
Other expense, net $302 $21 $366 $88
Income tax expense $26 $61 $242 $263
Equity income, net of tax ($12) ($6) ($35) ($16)
Loss (income) from discontinued operations, net of tax - $3 ($108) ($274)
Net income attributable to noncontrolling interest $25 $29 $69 $85
Operating income $655 $335 $1,947 $1,723
Depreciation and amortization $178 $146 $704 $540
EBITDA $833 $481 $2,651 $2,263
Restructuring $76 $108 $328 $177
Other acquisition and portfolio project costs $9 $17 $59 $47
(Gain) loss on business divestitures, net ($141) $33 ($141) $8
Adjusted EBITDA $777 $639 $2,897 $2,495

25
Non-US GAAP financial metrics
($ millions, except per share amounts) Q4 2016 Q4 2015 2016 2015
Net income attributable to Delphi $281 $192 $1,257 $1,450
Loss (income) from discontinued operations attributable to Delphi, net of tax - $7 ($105) ($262)
Income from continuing operations attributable to Delphi $281 $199 $1,152 $1,188
Adjusting items:
Restructuring $76 $108 $328 $177
Other acquisition and portfolio project costs $9 $17 $59 $47
Asset impairments $7 $10 $30 $16
(Gain) loss on business divestitures, net ($141) $33 ($141) $8
Debt extinguishment costs - $6 $73 $58
Reserve for unsecured creditors litigation $300 - $300 -
Transaction and related costs associated with acquisitions - $30 - $43
Contingent consideration liability fair value adjustments $3 ($7) $3 ($7)
Tax impact of adjusting items (a) ($37) ($5) ($85) ($35)
Adjusted net income attributable to Delphi $498 $391 $1,719 $1,495
Weighted average number of diluted shares outstanding 271.64 281.64 273.70 286.64
Diluted net income per share from continuing operations attributable to Delphi $1.03 $0.70 $4.21 $4.14
Adjusted net income per share $1.83 $1.39 $6.28 $5.22
(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 charges were incurred.
26 The company’s guidance was determined using a consistent manner and methodology
Shares outstanding
(millions) Q4 2016 Q4 2015 2016 2015
Weighted average ordinary shares outstanding, basic 270.38 279.29 273.02 285.20
Dilutive shares related to RSUs 1.26 2.35 0.68 1.44
Weighted average ordinary shares outstanding, including dilutive shares 271.64 281.64 273.70 286.64

27
Mechatronics financial detail
($ millions, except per share amounts)

Delphi – Reported Q1 2016 Q2 2016 Q3 2016 Q4 2016 2015 2016


Revenue $4,051 $4,206 $4,091 $4,313 $15,165 $16,661
Adjusted operating income1 $509 $577 $531 $606 $1,971 $2,223
Adjusted operating margin 12.6% 13.7% 13.0% 14.1% 13.0% 13.3%
Earnings per share1 $1.36 $1.59 $1.50 $1.83 $5.22 $6.28

Less Mechatronics divestiture Q1 2016 Q2 2016 Q3 2016 Q4 2016 2015 2016


Revenue $75 $78 $69 $63 $295 $285
Adjusted operating income1 $23 $25 $19 $20 $93 $87
Earnings per share1 $0.07 $0.07 $0.06 $0.07 $0.27 $0.27

Delphi – Pro forma Q1 2016 Q2 2016 Q3 2016 Q4 2016 2015 2016


Revenue $3,976 $4,128 $4,022 $4,250 $14,870 $16,376
Adjusted operating income1 $486 $552 $512 $586 $1,878 $2,136
Adjusted operating margin 12.2% 13.4% 12.7% 13.8% 12.6% 13.0%
Earnings per share1 $1.29 $1.52 $1.44 $1.76 $4.95 $6.01
1 Adjusted for restructuring and other special items

28
Power Electronics change in segment reporting
($ millions)

Power Electronics Q1 2016 Q2 2016 Q3 2016 Q4 2016 2015 2016


Revenue $23 $28 $33 $35 $30 $119
Adjusted operating (loss) income1 ($6) ($4) ($7) $4 ($29) ($13)
Note: Power Electronics reclassified for all prior periods from Electronics & Safety segment to Powertrain segment to align with updated management reporting
structure, no impact to consolidated financial statements or amounts

Electronics & Safety segment excluding Power Electronics Q1 2016 Q2 2016 Q3 2016 Q4 2016 2015 2016
Revenue $697 $748 $763 $806 $2,744 $3,014
Adjusted operating income1 $80 $100 $95 $93 $352 $368

Powertrain segment including Power Electronics Q1 2016 Q2 2016 Q3 2016 Q4 2016 2015 2016
Revenue $1,117 $1,146 $1,077 $1,146 $4,407 $4,486
Adjusted operating income1 $124 $134 $120 $133 $524 $511
1 Adjusted for restructuring and other special items

29

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