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Delphi Technologies (DLPH) Beats on Q2 Earnings, Tweaks View

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Delphi Technologies PLC (DLPH - Free Report) reported mixed second-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings of $1.29 per share beat the consensus mark by 4 cents but fell short of the year-ago figure by 6 cents due to interest expense related to the issuance of debt in 2017 and spin-related costs associated with becoming a standalone public company.

So far this year, shares of Delphi Technologies have declined 20.5% against the 14.3% rise of the industry it belongs to.


Revenues in Detail

Revenues of $1.23 billion missed the consensus mark by $62 million. However, the top line was up 4% year over year on a reported basis and 1% on an adjusted basis (adjustments were made for currency exchange and certain aftermarket original equipment service revenue retained by the former parent).

Segment-wise, Powertrain Systems revenues of $1.09 billion increased 4.9% year over year on a reported basis and was consistent on an adjusted basis. In the quarter, strong growth in commercial vehicle and power electronics was offset by weakness in light-duty diesel and decline in GDi.

Revenues for Delphi Technologies Aftermarket declined 7.3% year over yearon a reported basis and 1% on an adjusted basis to $215 million. Lower sales through the OES channel more than offset higher sales to independent Aftermarket customers.

Region-wise, revenue growth was 6% in South America, 4% in North America and 2% in Europe. However, revenues from Asia declined 4%.

Operating Results

Adjusted operating income of $156 million decreased 4.9% from the prior-year quarter due to spin-related and public company costs. Adjusted operating income margin declined 110 basis points (bps) year over year to 12.7%.

Delphi Technologies PLC Price, Consensus and EPS Surprise


Delphi Technologies PLC Price, Consensus and EPS Surprise | Delphi Technologies PLC Quote

Balance Sheet and Cash Flow

Delphi Technologies exited the second quarter with cash and cash equivalents of $370 million compared with $316 million at the end of the prior quarter. Long-term debt was $1.49 billion compared with $1.51 billion at the end of the prior quarter.

The company generated $164 million of net cash from operating activities in the quarter. Capital expenditures totaled $57 million.

Apart from a quarterly dividend payment of $15 million, the company’s board of directors also approved a $100 million repurchase authorization concurrent with the earnings release on Aug 8. Notably, this is the first share repurchase program approved by Delphi Technologies.

2018 Guidance

For 2018, Delphi Technologies tightened its revenue and earnings guidance. The company now expects revenues in the range of $5.00-$5.10 billion compared with the previously guided range of $5.00-$5.20 billion.

Adjusted earnings are expected in the range of $4.65-$4.85 per share compared with the previously guided range of $4.65-$4.95. The Zacks Consensus Estimate is pegged higher at $4.89.

Adjusted operating income margin is expected in the range of 12.1%-12.3%, down 20 bps from the previously guided range of 12.3% - 12.5%. Capital expenditure is projected to be in the range of $290-$310 million compared with the previously guided range of $280-$300 million.

Operating cash flow expectations remain unchanged in the range of $440-480 million. Adjusted effective tax rate is expected between 16-17%, as expected earlier.

Zacks Rank & Upcoming Releases

Delphi Technologies currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Business Services sector are keenly awaiting second-quarter earnings reports from key players like Cardlytics (CDLX - Free Report) , CDTi Advanced Materials and Switch (SWCH - Free Report) . While Cardlytics and CDTi Advanced Materials will report their quarterly numbers on Aug 14, Switch will release results on Aug 13.

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