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Delphi Automotive (DLPH) Q1 Earnings Beat, Improve Y/Y

Delphi Automotive PLC DLPH posted a 12.4% increase in adjusted earnings to $1.36 per share in the first quarter of 2016 from $1.21 earned in the prior-year quarter. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.34.
 

 

 

Adjusted net income increased to $377 million from $353 million a year ago. Including special items, Delphi Automotive reported net income of $320 million or $1.15 per share in first-quarter 2016, up from $288 million or 99 cents per share a year ago.

Revenues increased 7% year over year to $4.05 billion, but missed the Zacks Consensus Estimate of $4.08 billion. The year-over-year improvement in the top line was driven by volume growth in North America, Europe and the Asia Pacific.

Excluding the impact of currency exchange, commodity movements, the acquisition of HellermannTyton Group PLC and the divestiture of the Company's Reception Systems business, revenues increased 6% year over year. The upside was led by performance improvement of 8% in Asia, 5% in North America and 9% in Europe, partially countered by a 24% decline in South America.

Adjusted operating income rose to $509 million from $472 million in the first quarter of 2015. The rise can be attributed to strong performance in the Asia Pacific, Europe and North America, and successful cost reduction initiatives. Adjusted operating margin increased to 12.6% from 12.4% in the year-ago quarter.

Segment Details

In the Electrical/Electronic Architecture segment, revenues improved 10% to $2.27 billion in the reported quarter. In the Powertrain Systems segment, revenues inched up 1% to $1.09 billion. Also, the Electronics and Safety segment’s revenues rose 6% to $720 million.

Divestiture and Acquisition

In the first quarter of 2016, Delphi Automotive acquired PureDepth, Inc. and thus expanded its portfolio of technology solutions. PureDepth is a leading provider of multi-layer display technology which enables glasses-less 3D for cluster and other applications. This acquisition will complement and enhance Delphi's fully-reconfigurable digital display product offerings.

In the quarter, the company also completed the divestiture of its former Thermal Systems business by closing the sale of its interest in the Shanghai Delphi Automotive Air Conditioning joint venture for $99 million. Additionally, the company recognized an after-tax gain on the divestiture of $104 million.

Share Repurchases

In first quarter of 2016, Delphi Automotive repurchased 5.60 million shares for approximately $370 million. Following this, the company had $137 million available for repurchases under its current share buyback program. In Apr 2016, the board of directors of the company authorized a new share repurchase program of up to $1.5 billion.

Financial Position

Delphi Automotive had cash and cash equivalents of $463 million as of Mar 31, 2016, compared with $535 million as of Dec 31, 2015. Total debt amounted to $4.35 billion as of Mar 31, 2016, against $4.01 billion as of Dec 31, 2015.

In first-quarter 2016, operating cash flow increased to $268 million from $121 million in the first quarter of 2015. Capital expenditure totaled $240 million compared with $213 million a year ago.

Outlook

For 2016, Delphi Automotive expects revenues to be in the range of $16.6–$17 billion. Adjusted earnings per share are expected in the band of $5.80–$6.10.

Adjusted operating income is anticipated in the range of $2.2–$2.3 billion (13.3%–13.6% of sales) in 2016. Meanwhile, capital expenditure is projected to be around $800 million and operating cash flow is expected to be about $2 billion.

Zacks Rank

Delphi Automotive carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include Lear Corp. LEA, Wabash National Corp. WNC and Oshkosh Corporation OSK. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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LEAR CORPORATN (LEA): Free Stock Analysis Report
 
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