Delphi Asia & North America Sales Drive Q3 Earnings Beat
Delphi Automotive PLC (DLPH) saw a 19.6% rise in adjusted earnings to $1.16 per share in the third quarter of 2014 from 97 cents per share in the prior-year quarter. Earnings also beat the Zacks Consensus Estimate of $1.13 a share. Adjusted net income increased 14.9% to $347 million from $302 million a year ago.
Including special items consisting of restructuring charges, acquisition-related integration costs, asset impairments and losses on extinguishment of debt, Delphi Automotive reported a profit of $305 million or $1.02 per share in the third quarter of 2014 compared with $271 million or 87 cents per share a year ago.
Revenues rose 3.2% to $4.1 billion but missed the Zacks Consensus Estimate of $4.3 billion. The revenues benefited from better performance in Asia and North America. Excluding the impact of currency exchange, commodity movements, acquisitions and divestitures, revenues increased 3% year over year. The upside was led by a performance improvement of 9% in Asia, 6% in North America and 1% in Europe, partially offset by a 20% decline in South America.
Adjusted operating income increased 9.3% to $468 million from $428 million in the third quarter of fiscal 2013. Operating margin came in at 11.3% versus 10.7% a year ago. The rise in adjusted operating income can be attributed to strong performance and improvement of businesses in Asia and North America, together with benefits from on-going restructuring programs in Europe and South America.
Segment Details
In the Electrical/Electronic Architecture segment, revenues rose 2% to $2 billion. In the Powertrain Systems segment, revenues improved 8% to $1.1 billion. The Electronics and Safety segment’s revenues declined 1% to $697 million from $705 million a year ago. Revenues at the Thermal Systems segment increased 7% to $390 million from $364 million in the prior-year quarter.
Share Repurchase Update
In the third quarter of 2014, Delphi Automotive repurchased about 4.36 million shares for $297 million under the existing share repurchase program. The company had $516 million available under its share repurchase program. Year-to-date, the company has repurchased 10.0 million shares for $674 million.
Financial Position
Delphi Automotive had cash and cash equivalents of $1.03 billion as of Sep 30, 2014, compared with $1.4 million as of Dec 31, 2013. Total debt amounted to $2.45 billion as of Sep 30, 2014, as against $2.41 billion as of Dec 31, 2013.
In the first nine months of 2014, operating cash flow increased to $1.3 billion from $1.1 million in the year-ago period. Capital expenditure was $666 million compared with $512 million in the same period a year ago.
Outlook
For 2014, Delphi Automotive raised the adjusted earnings expectation to the range of $5.00 to $5.10 from the previous estimate of $4.95 to $5.10 per share. Revenues are expected in the band of $17.0–$17.3 billion, down from the previous estimate of $17.2–$17.6 billion. Adjusted operating income will range from $2 billion to $2.05 billion (11.8% of sales) in 2014. The company estimates capital expenditure at around $800 million.
Delphi Automotive carries a Zacks Rank #4 (Sell). Some better-ranked stocks that are worth considering in the auto sector include Gentherm Incorporated (THRM), STRATTEC Security Corporation (STRT) and Commercial Vehicle Group Inc. (CVGI). Gentherm Incorporated and STRATTEC Security sport a Zacks Rank #1 (Strong Buy) while Commercial Vehicle carries a Zacks Rank #2 (Buy).
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