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

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Delphi Technologies PLC (DLPH - Free Report) reported disappointing second-quarter 2019 results wherein both earnings and revenues lagged the Zacks Consensus Estimate.

Adjusted earnings per share of 58 cents lagged the consensus mark by 4 cents and declined 55.1% on a year-over-year basis on unfavorable product mix, lower volume and unfavorable currency exchange movements, which were partially offset by improvements in operational performance.

Revenues of $1.12 billion missed the consensus estimate by $11 million and decreased 9% year over year on a reported basis and 5% on an adjusted basis (adjustments were made for currency exchange). The top line was hurt by lower sales in China and lower passenger car diesel revenues in Europe, which were, however, partially offset by mid-single digit growth in Commercial Vehicle and GDI along with improvement in aftermarket business.

Region-wise, revenue growth was 3% in South America. Europe revenues were flat year over year. Revenues from Asia Pacific and North America declined 10% each. 

So far this year, shares of Delphi Technologies have gained 5.8% compared with 15.6% rise of the industry it belongs to.


Revenues in Detail

Segment-wise, Powertrain Systems revenues of $971 million decreased 10.5% year over year on a reported basis and 7% on an adjusted basis. In the reported quarter, lower revenues from the roll-offs in passenger car diesel in Europe, OEM customer decision to exit certain programs in North America and lower Power Electronics revenues partially offset growth in commercial vehicle and GDI.

Delphi Technologies Aftermarket revenues of $214 million declined marginally year over year on a reported basis but improved 3% on an adjusted basis as record sales to independent aftermarket customers more than offset lower OES revenues.

Operating Results

Adjusted operating income of $81 million decreased 48.1% from the prior-year quarter. Adjusted operating income margin decreased 550 basis points from the prior-year quarter to 7.2%.

Segment-wise, adjusted operating income of Powertrain Systems and Delphi Technologies Aftermarket came in at $64 million (down 52.2% y/y) and $17 million (down 22.7% y/y), respectively.

Delphi Technologies PLC Price, Consensus and EPS Surprise


Delphi Technologies PLC Price, Consensus and EPS Surprise

Delphi Technologies PLC price-consensus-eps-surprise-chart | Delphi Technologies PLC Quote

Balance Sheet and Cash Flow

Delphi Technologies exited second-quarter 2019 with cash and cash equivalents of $162 million compared with $217 million at the end of the prior quarter. Long-term debt of $1.48 billion was flat sequentially.

The company generated $70 million of cash from operating activities in the quarter. Capital expenditures totaled $103 million.

The company repurchased shares worth $15 million in the reported quarter.

2019 Guidance

Delphi Technologies updated its full-year 2019 guidance. The company now expects revenues in the range of $4.43-$4.48 billion compared with the previously guided range of $4.65-$4.75 billion. The current Zacks Consensus Estimate of $4.54 billion is higher than the guided range.

Adjusted earnings are now expected in the range of $2.65-$2.85 per share compared with the previously guided range of $3.00-$3.20. The current Zacks Consensus Estimate of $2.89 lies above the guided range.

Adjusted operating income margin is expected to be around 8% compared with the prior guidance of 9%. Cash flow from operations is anticipated in the range of $280-$310 million compared with the prior guidance of $320-$350 million. Capital expenditure is projected to be in the range of $315-$325 million compared with the prior guidance of $310-$330 million. Adjusted effective tax rate is expected to be around 18%.

Zacks Rank & Upcoming Releases

Delphi Technologies currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting second-quarter 2019 results of key players like MAXIMUS (MMS - Free Report) , Navigant Consulting and Parsons (PSN - Free Report) . While MAXIMUS and Navigant Consulting are scheduled to release results on Aug 8, Parsons is slated to report on Aug 13.

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