It has been about a month since the last earnings report for Delphi Technologies . Shares have lost about 13.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Delphi Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Delphi Technologies Beats Q4 Earnings Estimates, Revenues Lag
Delphi Technologies reported mixed fourth-quarter 2018 results wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings per share of $1.06 beat the consensus mark by 18 cents and declined on a year-over-year basis on unfavorable product mix and spin-related costs associated with becoming a stand-alone public company, which were, partially offset by reduced incentive compensation accruals.
Revenues in Detail
Revenues of $1.17 billion missed the consensus estimate by $3.7 million and decreased 9.2% year over year on a reported basis and 5% on an adjusted basis (adjustments were made for currency exchange and certain aftermarket original equipment service revenue retained by the former parent).
The top line was hurt by lower GDi sales in China and impacts related to passenger car diesel and WLTP in Europe. This was, however, partially offset by strong growth in Power Electronics and Commercial Vehicle Systems, which grew approximately 30% and 25%, respectively, in the reported quarter.
Segment-wise, Powertrain Systems revenues of $1.02 billion decreased 8.7% year over year on a reported basis and 6% on an adjusted basis. In the reported quarter, lower revenues in passenger car diesel, softness in GDi China and the impact of WLTP partially offset strong growth in Power Electronics and Commercial Vehicle.
Revenues for Delphi Technologies Aftermarket of $225 million declined 10% year over year on a reported basis but improved 3% on an adjusted basis as higher sales to independent aftermarket customers than offset lower sales through the OES channel.
Region-wise, revenue growth was 16% in South America, 6% in North America and 3% in Europe. Revenues from Asia declined 26%.
Operating Results
Adjusted operating income of $125 million decreased 23.8% from the prior-year quarter. Adjusted operating income margin decreased 200 basis points from the prior-year quarter to 10.7%.
Segment-wise, adjusted operating income of Powertrain Systems and Delphi Technologies Aftermarket came in at $99 million (down 30.8% y/y) and $26 million (up 23.8% y/y), respectively.
Balance Sheet and Cash Flow
Delphi Technologies exited fourth-quarter 2018 with cash and cash equivalents of $359 million compared with $340 million at the end of the prior quarter. Long-term debt was $1.49 billion compared with $1.50 billion at the end of the prior quarter.
The company generated $126 million of cash from operating activities in the quarter. Capital expenditures totaled $80 million.
The company repurchased shares worth $10 million and paid $60 million in dividends in 2018.
2019 Guidance
For 2019, Delphi Technologies unveiled its guidance for revenues, adjusted earnings, adjusted operating income margin and cash flow from operations. The company expects revenues in the range of $4.65-$4.75 billion. Adjusted earnings are expected in the range of $3.00-$3.20 per share. Adjusted operating income margin is expected to be around 9%. Cash flow from operations is expected in the range of $320-$350 million. Capital expenditures are projected to be in the range of $310-$330 million. Adjusted effective tax rate is expected to be around 18%.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -23.32% due to these changes.
VGM Scores
At this time, Delphi Technologies has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Delphi Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Delphi Technologies (DLPH) Down 13.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Delphi Technologies . Shares have lost about 13.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Delphi Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Delphi Technologies Beats Q4 Earnings Estimates, Revenues Lag
Delphi Technologies reported mixed fourth-quarter 2018 results wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings per share of $1.06 beat the consensus mark by 18 cents and declined on a year-over-year basis on unfavorable product mix and spin-related costs associated with becoming a stand-alone public company, which were, partially offset by reduced incentive compensation accruals.
Revenues in Detail
Revenues of $1.17 billion missed the consensus estimate by $3.7 million and decreased 9.2% year over year on a reported basis and 5% on an adjusted basis (adjustments were made for currency exchange and certain aftermarket original equipment service revenue retained by the former parent).
The top line was hurt by lower GDi sales in China and impacts related to passenger car diesel and WLTP in Europe. This was, however, partially offset by strong growth in Power Electronics and Commercial Vehicle Systems, which grew approximately 30% and 25%, respectively, in the reported quarter.
Segment-wise, Powertrain Systems revenues of $1.02 billion decreased 8.7% year over year on a reported basis and 6% on an adjusted basis. In the reported quarter, lower revenues in passenger car diesel, softness in GDi China and the impact of WLTP partially offset strong growth in Power Electronics and Commercial Vehicle.
Revenues for Delphi Technologies Aftermarket of $225 million declined 10% year over year on a reported basis but improved 3% on an adjusted basis as higher sales to independent aftermarket customers than offset lower sales through the OES channel.
Region-wise, revenue growth was 16% in South America, 6% in North America and 3% in Europe. Revenues from Asia declined 26%.
Operating Results
Adjusted operating income of $125 million decreased 23.8% from the prior-year quarter. Adjusted operating income margin decreased 200 basis points from the prior-year quarter to 10.7%.
Segment-wise, adjusted operating income of Powertrain Systems and Delphi Technologies Aftermarket came in at $99 million (down 30.8% y/y) and $26 million (up 23.8% y/y), respectively.
Balance Sheet and Cash Flow
Delphi Technologies exited fourth-quarter 2018 with cash and cash equivalents of $359 million compared with $340 million at the end of the prior quarter. Long-term debt was $1.49 billion compared with $1.50 billion at the end of the prior quarter.
The company generated $126 million of cash from operating activities in the quarter. Capital expenditures totaled $80 million.
The company repurchased shares worth $10 million and paid $60 million in dividends in 2018.
2019 Guidance
For 2019, Delphi Technologies unveiled its guidance for revenues, adjusted earnings, adjusted operating income margin and cash flow from operations. The company expects revenues in the range of $4.65-$4.75 billion. Adjusted earnings are expected in the range of $3.00-$3.20 per share. Adjusted operating income margin is expected to be around 9%. Cash flow from operations is expected in the range of $320-$350 million. Capital expenditures are projected to be in the range of $310-$330 million. Adjusted effective tax rate is expected to be around 18%.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -23.32% due to these changes.
VGM Scores
At this time, Delphi Technologies has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Delphi Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.