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Delphi Automotive (DLPH) Q2 Earnings Beat, View Revised

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Delphi Automotive PLC posted a 19% increase in adjusted earnings to $1.59 per share in the second quarter of 2016 from $1.34 earned in the prior-year quarter. Moreover, earnings per share surpassed the Zacks Consensus Estimate of $1.55.

Adjusted net income increased to $435 million from $386 million a year ago. Including special items, Delphi Automotive reported net income of $258 million or 94 cents per share in second-quarter 2016, down from $350 million or $1.21 per share a year ago.

Revenues rose 9% year over year to $4.21 billion, but surpassed the Zacks Consensus Estimate of $4.20 billion. The year-over-year increase was supported by the acquisition of HellermannTyton Group PLC and volume growth in North America, Europe and Asia Pacific.

Excluding the impact of currency exchange, commodity movements, the acquisition of HellermannTyton and the divestiture of the company's Reception Systems business, revenues increased 7% year over year. The upside was led by performance improvement of 5% in Asia, 7% in North America and 10% in Europe, partially countered by a 19% decline in South America.

Adjusted operating income rose to $577 million from $526 million in the second quarter of 2015. Adjusted operating margin increased to 13.7% from 13.6% in the year-ago quarter. The rise in margins can be attributed to strong performance in the Asia Pacific, Europe and North America, an increase in earnings from the acquisition of HellermannTyton and successful cost-reduction initiatives.

Segment Details

In the Electrical/Electronic Architecture segment, revenues improved 15% to $2.35 billion in the reported quarter. Adjusted operating income surged 17% to $343 million.

In the Powertrain Systems segment, revenues dropped 2% to $1.12 billion. Adjusted operating income fell 5% to $138 million.

The Electronics and Safety segment’s revenues rose 9% to $777 million. Adjusted operating income improved 9% to $96 million.

Share Repurchases

In first half of 2016, Delphi Automotive repurchased 6.49 million shares for approximately $435 million. Following this, the company had $1.57 billion available for repurchases under its current share buyback program.

Financial Position

Delphi Automotive had cash and cash equivalents of $437 million as of Jun 30, 2016, compared with $535 million as of Dec 31, 2015. Total debt amounted to $4.07 billion as of Jun 30, 2016, against $4.01 billion as of Dec 31, 2015.

In first-half 2016, operating cash flow increased to $843 million from $635 million in the first half of 2015. Capital expenditure totaled $412 million compared with $360 million a year ago.

Outlook

For 2016, Delphi Automotive reduced its revenue guidance to $16.25–$16.45 billion from the prior range of $16.6–$17 billion. Adjusted earnings per share are expected in the range of $5.95–$6.05, compared to the prior range of $5.80–$6.10.

Adjusted operating income is anticipated in the range of $2.15–$2.2 billion (13.2%–13.4% of sales) in 2016, down from the prior guidance of $2.2–$2.3 billion (13.3%–13.6% of sales). Meanwhile, capital expenditure is projected to be around $750–$800 million and operating cash flow is expected to be about $1.9 billion.

DELPHI AUTO PLC Price, Consensus and EPS Surprise

DELPHI AUTO PLC Price, Consensus and EPS Surprise | DELPHI AUTO PLC Quote

Zacks Rank

Delphi Automotive currently carries a Zacks Rank #4 (Sell). Some better-ranked automobile stocks include Visteon Corporation (VC - Free Report) , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).

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