Delphi Automotive PLC DLPH recorded a 4% rise in adjusted earnings to $1.21 per share in the first quarter of 2015 from $1.16 in the prior-year quarter. Earnings also beat the Zacks Consensus Estimate of $1.19 per share.
Including special items consisting of restructuring charges, Delphi Automotive reported net income of $288 million or 99 cents per share in first-quarter 2015, down from $310 million or $1.01 per share a year ago.
Revenues declined 3% to $3.8 billion and missed the Zacks Consensus Estimate of $3.86 billion. The year-over-year decline was due to the unfavorable impact of currency fluctuations, partially offset by an increase in volume in Asia and North America.
Excluding the impact of currency exchange and commodity movements, revenues increased 6% year over year. The upside was led by a performance improvement of 15% in Asia, 7% in North America and 2% in Europe, partially offset by a 16% decline in South America.
Adjusted operating income increased 1.9% to $472 million from $463 million in the first quarter of 2014. The rise can be attributed to better performance in Asia and North America, together with benefits from ongoing cost-reduction initiatives. Operating margin came in at 12.4% versus 11.9% a year ago.
Segment Details
In the Electrical/Electronic Architecture segment, revenues fell 2% to $2.1 billion in the reported quarter. In the Powertrain Systems segment, revenues dropped 1% to $1.1 billion. The Electronics and Safety segment’s revenues declined 7% to $682 million.
Divestiture
During the first quarter of 2015, Delphi Automotive signed an agreement to sell its Thermal Systems business to MAHLE GmbH for $727 million. The transaction is expected to close by the third quarter of 2015. Delphi Automotive will receive proceeds of $670 million and record a profit of $300 million for the divestiture. The proceeds will be used for funding future growth initiatives, like acquisitions and share repurchases.
In addition, Delphi Automotive plans to sell its interest in Shanghai Delphi Automotive Air-Conditioning System Co., Ltd. (“SDAAC”) to MAHLE GmbH. Proceeds from this transaction will be in addition to the proceeds from the sale of its Thermal Systems business. Delphi Automotive also intends to sell its interest in the Korea Delphi Automotive Systems Corporation (“KDAC”) joint venture.
Share Repurchases
In the first quarter of 2015, Delphi Automotive repurchased about 3.23 million shares for $240 million under its old share repurchase program. As of Mar 31, 2015, the company had roughly $1.4 billion available under the share repurchase program.
Dividend Update
On Apr 23, 2015, Delphi Automotive declared a quarterly cash dividend of 25 cents per share, payable on May 27 to shareholders on record as of May 13, 2015.
Financial Position
Delphi Automotive had cash and cash equivalents of $558 million as of Mar 31, 2015, compared with $859 million as of Dec 31, 2014. Total debt amounted to $2.71 billion as of Mar 31, 2015, as against $2.45 billion as of Dec 31, 2014.
In the first quarter of 2015, operating cash flow decreased to $135 million from $136 million in the year-ago period. Capital expenditure was $213 million compared with $272 million in the same period a year ago.
Outlook
For the second quarter of 2015, Delphi Automotive expects adjusted earnings in the range of $1.27–$1.37 per share. Revenues are anticipated in the band of $3.8–$3.9 billion. Adjusted operating income is likely to be in the range of $500–$520 million (13.1%–13.2% of sales).
For 2015, Delphi Automotive expects adjusted earnings in the range of $5.35–$5.50 per share, as against the previous projection of $5.35–$5.65. Revenues are expected in the band of $15.3–$15.7 billion, down from $17.1–$17.5 billion predicted earlier.
Adjusted operating income will likely be in the range of $1.98–$2.08 billion (12.9%–13.2% of sales) compared with the previous estimate of $2.1–$2.2 billion (12.3%–12.6% of sales) in 2015. The company’s capital expenditure is projected to be $800 million.
Zacks Rank
Delphi Automotive carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include Daimler AG DDAIF, PACCAR Inc. PCAR and General Motors Co. GM. All these stocks carry a Zacks Rank #2 (Buy).
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