Delphi Reports Fourth Quarter and Full Year 2012 Financial Results
Delphi Reports Fourth Quarter and Full Year 2012 Financial Results
- 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:
(in millions, except per share amounts)
|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|
|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.
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.
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,|
|(in millions, except||(in millions, except|
|per share amounts)||per share amounts)|
|Cost of sales||3,158||3,221||12,861||13,386|
|Selling, general and administrative||254||234||927||901|
|Total operating expenses||3,590||3,489||14,043||14,397|
|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 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||$||2.72|
|Weighted average number of diluted shares outstanding||317.38||328.34||323.29||421.26|
DELPHI AUTOMOTIVE PLC
CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||1,105||$||1,363|
|Accounts receivable, net||2,425||2,459|
|Other current assets|
|Total current assets|
|Investments in affiliates||231||257|
|Intangible assets, net||803||588|
|Other long-term assets|
|Total long-term assets|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Total current liabilities||3,659||3,712|
|Pension benefit obligations||929||674|
|Other long-term liabilities||434||575|
|Total long-term liabilities||3,687||3,245|
|Commitments and contingencies|
|Total Delphi shareholder's equity||2,345||1,688|
|Total shareholders' equity||2,830||2,171|
|Total liabilities and shareholders' equity||$||10,176||$||9,128|
DELPHI AUTOMOTIVE PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|Cash flows from operating activities:|
|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||)|
|Changes in operating assets and liabilities:|
|Accounts receivable, net||198||(149||)|
|Net cash provided by operating activities||1,478||1,377|
|Cash flows from investing activities:|
|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||—|
|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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