Delphi Reports Fourth Quarter and Full Year 2012 Financial Results

Delphi Reports Fourth Quarter and Full Year 2012 Financial Results

Highlights include:

  • Fourth quarter U.S. GAAP diluted earnings per share of $0.43; full year U.S. GAAP diluted earnings per share of $3.33 compared to $2.72 in the prior year
  • Excluding restructuring and acquisition related costs, fourth quarter earnings of $0.90 per diluted share; full year earnings increased to $3.84 per diluted share, from $2.78 per diluted share in the prior year
  • Fourth quarter Adjusted EBITDA and Adjusted EBITDA margin of $486 million and 12.9%; full year 2012 Adjusted EBITDA and Adjusted EBITDA margin of $2,142 million and 13.8%, compared with $2,150 million and 13.4% for the full year of 2011
  • Full year cash flow from operations of $1.5 billion, an increase of $101 million from the prior year
  • Completed $403 million of share repurchases in 2012

GILLINGHAM, England & TROY, Mich.--(BUSINESS WIRE)-- Delphi Automotive (NYS: DLPH) , a leading global vehicle components manufacturer, today reported fourth quarter 2012 revenues of $3.8 billion, a decrease of 3.4% from the prior year period, the result of further reductions in European production and continued weakness of the Euro and Brazilian Real, partially offset by increases as a result of acquisitions. Adjusted for the impacts of currency exchange, commodity movements, acquisitions and divestitures, revenue decreased by 4% inthe fourth quarter.


The Company reported fourth quarter U.S. GAAP net income of $136 million and earnings of $0.43 per diluted share, compared to $290 million and $0.88 per diluted share in the prior year period. The current year quarterly U.S. GAAP results include special items consisting of restructuring-related charges and acquisition-related costs. Excluding these special items, the Company reported adjusted fourth quarter earnings of $287 million, or $0.90 per diluted share, compared to adjusted earnings of $299 million, or $0.91 per diluted share in the prior year period.

"Delphi's fourth quarter financial results reflect the continued high level of execution, particularly in the face of a challenging environment in Europe," said Rodney O'Neal, chief executive officer and president. "As expected, European vehicle production levels continued to be weak, and as previously announced, we initiated significant restructuring actions, primarily in Europe, that we believe will provide future benefits. Maintaining and improving our lean operating structure is of paramount importance to us, and we believe better positions Delphi to provide strong results for our shareholders."

Fourth Quarter 2012 Results

The Company reported fourth quarter 2012 revenue of $3.8 billion, a decrease of 4% over the fourth quarter of 2011, adjusting for currency exchange, commodity movements, acquisitions and divestitures. This reflects solid growth of 11% in Asia, 6% growth in North America and 4% growth in South America, offset by a 18% decline in Europe.

Fourth quarter net income excluding restructuring, asset impairments and acquisition related integration costs ("Adjusted Net Income"), totaled $287 million, or $0.90 per diluted share, which includes the favorable impacts of a lower effective tax rate and share repurchases, partially offset by increased expense resulting from the variable accounting related to the Company's 2010 Long-Term Incentive Plan. Adjusted Net Income in the prior year period was $299 million, or $0.91 per diluted share.

Fourth quarter earnings before depreciation and amortization, interest expense, other income (expense), income tax expense, equity income, restructuring and acquisition integration costs ("Adjusted EBITDA") was $486 million, compared to $541 million in the prior year period. Adjusted EBITDA margin was 12.9% in the fourth quarter of 2012, compared with 13.9% in the prior year period. The reduction in Adjusted EBITDA reflects continuing volume reductions in Europe, unfavorable impacts of currency exchange, and $11 million of increased expense resulting from the variable accounting impacts related to the Company's 2010 Long-Term Incentive Plan. Excluding the variable impacts of the 2010 Long-Term Incentive Plan, Adjusted EBITDA margin for the fourth quarter of 2012 was 13.2%.

Interest expense for the fourth quarter totaled $36 million, comparable to $39 million in the prior year period.

A tax benefit of $15 million was recognized in the fourth quarter of 2012, compared to a tax expense of $29 million in the prior year period. The 2012 period reflects lower pretax earnings, the geographic mix of pretax earnings, and the recognition of tax planning initiatives and discrete tax items.

Full Year 2012 Results

The Company reported 2012 revenue of $15.5 billion, essentially flat compared to 2011, adjusting for currency exchange, commodity movements, acquisitions and divestitures, and reflects growth of 11% in Asia and 6% in North America, partially offset by a 6% decline in Europe and South America, respectively.

The Company reported full year 2012 U.S. GAAP net income of $1.1 billion and earnings of $3.33 per diluted share, compared to $1.1 billion or $2.72 per diluted share in the prior year. Full year 2012 Adjusted Net Income totaled $1,240 million, or $3.84 per diluted share, which includes the favorable impact of share repurchases in 2012 and the unfavorable impact from the variable 2010 Long-Term Incentive Plan, compared to Adjusted Net Income of $1,169 million, or $2.78 per diluted share, in the prior year period.

Full year 2012 Adjusted EBITDA totaled $2,142 million, compared to $2,150 million in the prior year period. Adjusted EBITDA margin for the full year 2012 improved 40 basis points to 13.8%, from 13.4% in the prior year period. Adjusted EBITDA in 2012 reflects strong performance in the Electrical/Electronic Architecture, Powertrain and Electronics and Safety segments, partially offset by lower earnings in our Thermal business segment, the unfavorable impacts of currency exchange, and $64 million of increased expense resulting from the variable accounting impacts related to the Company's 2010 Long-Term Incentive Plan. Excluding the variable impacts of the 2010 Long-Term Incentive Plan, Adjusted EBITDA margin for the full year 2012 was 14.2%.

Interest expense for 2012 totaled $136 million, compared to $123 million in the prior year period, primarily reflecting the debt financing incurred at the end of the first quarter of 2011 to redeem the ownership interests previously held by General Motors Company and the Pension Benefit Guaranty Corporation.

Tax expense for 2012 was $212 million, resulting in an effective tax rate of approximately 16%, compared to $305 million, or an effective rate of 20%, in the prior year period. The improvement in 2012 primarily reflects the impacts of the geographic mix of pretax earnings, tax planning initiatives, and the recognition of discrete tax items.

The Company generated net cash flow from operating activities of $1.5 billion in 2012 including approximately $200 million related to the payments of awards under the Company's 2010 Long-Term Incentive Plan, compared to $1.4 billion in the prior year period. Cash flow before financing totaled $827 million compared to $859 million in the prior year period.

As of December 31, 2012, the Company had cash and cash equivalents of $1.1 billion and access to $1.3 billion in undrawn committed revolving bank facilities, providing the Company with $2.4 billion of total liquidity. Total debt outstanding as of December 31, 2012 was $2.5 billion.

Share Repurchase Program

In 2012, Delphi's Board of Directors authorized two share repurchase programs in the aggregate amount of $1.05 billion. During the fourth quarter of 2012 Delphi repurchased 2.68 million shares at an average price of $33.81 per share, which totaled approximately $91 million. During the full year 2012 Delphi repurchased 13.42 million shares at an average price of $30.02 per share, which totaled approximately $403 million, leaving approximately $647 million available for future share repurchases. These share repurchases are in addition to approximately $180 million of ownership interest repurchases in the third quarter of 2011. 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.

Restructuring and Integration

In light of continued economic uncertainties, particularly in Europe, we expanded our previously announced restructuring activities from $250 million to approximately $300 million, beginning in the fourth quarter of 2012, that are intended to improve Delphi's industry leading cost structure. We recorded restructuring charges of approximately $170 million in the fourth quarter of 2012, including $15 million of related asset impairments, with the balance expected to be recognized throughout 2013. Approximately 75% of the restructuring costs are in Europe, and include workforce reductions as well as plant closures. These actions are expected to be substantially completed by the end of 2013. Additionally, in the fourth quarter, we recognized $22 million of acquisition advisory and integration costs related to the acquisition of the Motorized Vehicles Division ("MVL") from FCI Group in October 2012.

Q1 2013 and Full Year 2013 Outlook

The Company's first quarter and full year 2013 financial guidance is as follows:

         
 

Q1

 

Full Year

(in millions, except per share amounts)

 

2013

 

2013

Adjusted Earnings Per Share $0.93 - $1.00 $4.12 - $4.38
Adjusted EBITDA $515 - $540 $2,325 - $2,425
Adjusted EBITDA Margin 13.2% - 13.5% 14.4% - 14.6%
Revenue $3,900 - $4,000 $16,200 - $16,600
Depreciation and Amortization $600
Cash Flow Before Financing $1,000
Capital Expenditures $750
Effective Tax Rate 16%
Share Count - Diluted 317

Full year 2013 mid-point earnings per share guidance represents 11% growth year-over-year and assumes global vehicle production increases of 1% and European declines of 4% in 2013.

Conference Call and Webcast

The Company will host a conference call to discuss these results at 10:00 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://delphi.com/investors. The conference ID number is 88676975. 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 is a leading global supplier of electronics and technologies for automotive, commercial vehicle and other market segments. Operating major technical centers, manufacturing sites and customer support facilities in 32 countries, Delphi delivers real-world innovations that make products smarter and safer as well as more powerful and efficient. Connect to innovation at www.delphi.com.

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.

 

DELPHI AUTOMOTIVE PLC

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

   
Three Months Ended Year Ended
December 31, December 31,
2012   2011 2012   2011
(in millions, except (in millions, except
per share amounts) per share amounts)
Net sales $ 3,767 $ 3,900 $ 15,519 $ 16,041
Operating expenses:
Cost of sales 3,158 3,221 12,861 13,386
Selling, general and administrative 254 234 927 901
Amortization 24 23 84 79
Restructuring 154   11   171   31  
Total operating expenses 3,590   3,489   14,043   14,397  
Operating income 177 411 1,476 1,644
Interest expense (36 ) (39 ) (136 ) (123 )
Other income (expense), net (10 ) (28 ) 5   (15 )
Income before income taxes and equity income 131 344 1,345 1,506
Income tax benefit (expense) 15   (29 ) (212 ) (305 )
Income before equity income 146 315 1,133 1,201
Equity income (loss), net of tax 9   (3 ) 27   22  
Net income 155 312 1,160 1,223
Net income attributable to noncontrolling interest 19   22   83   78  
Net income attributable to Delphi $ 136   $ 290   $ 1,077   $ 1,145  
Diluted net income per share:
Diluted net income per share attributable to Delphi $ 0.43   $ 0.88   $ 3.33   $ 2.72  
Weighted average number of diluted shares outstanding 317.38   328.34   323.29   421.26  
 

DELPHI AUTOMOTIVE PLC

CONSOLIDATED BALANCE SHEETS

   
December 31,
2012
December 31,
2011
(unaudited)
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 1,105 $ 1,363
Restricted cash 8 9
Accounts receivable, net 2,425 2,459
Inventories 1,066 1,054
Other current assets

623

  616
Total current assets

5,227

5,501
Long-term assets:
Property, net 2,860 2,315
Investments in affiliates 231 257
Intangible assets, net 803 588
Goodwill 473 8
Other long-term assets

582

  459
Total long-term assets

4,949

  3,627
Total assets $ 10,176   $ 9,128
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 140 $ 107
Accounts payable 2,278 2,397
Accrued liabilities 1,241   1,208
Total current liabilities 3,659 3,712
Long-term liabilities:
Long-term debt 2,324 1,996
Pension benefit obligations 929 674
Other long-term liabilities 434   575
Total long-term liabilities 3,687   3,245
Total liabilities 7,346   6,957
Commitments and contingencies
Total Delphi shareholder's equity 2,345 1,688
Noncontrolling interest 485   483
Total shareholders' equity 2,830   2,171
Total liabilities and shareholders' equity $ 10,176   $ 9,128
 

DELPHI AUTOMOTIVE PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
Year Ended
December 31,
2012   2011
(in millions)
Cash flows from operating activities:
Net income $ 1,160 $ 1,223
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 486 475
Deferred income taxes (63 ) (36 )
Income from equity method investments, net of dividends received (1 ) (13 )
Other, net 165 24
Changes in operating assets and liabilities:
Accounts receivable, net 198 (149 )
Inventories 49 (64 )
Accounts payable (153 ) 98
Other, net (294 ) (22 )
Pension contributions (69 ) (159 )
Net cash provided by operating activities 1,478   1,377  
Cash flows from investing activities:
Capital expenditures (705 ) (630 )
Maturity of time deposits 550
Proceeds from sale of property / investments 20 72
Cost of acquisitions, net of cash acquired (980 ) (17 )
(Increase) decrease in restricted cash 1 38
Loans to related parties 14 (14 )
Acquisition of minority held shares (16 )
Dividends from equity method investments in excess of earnings 37
Other, net (2 ) (9 )
Net cash used in investing activities (1,631 ) (10 )
Cash flows from financing activities:
(Decrease) increase in short and long-term debt, net 345 1,689
Dividend payments of consolidated affiliates to minority shareholders (47 ) (43

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