May 9, First Quarter 2018 Results

Transcription

1 May 9, 2018 First Quarter 2018 Results

2 Forward-looking statements This presentation, as well as other statements made by Delphi Technologies PLC (the Company ), contain forward-looking statements that reflect, when made, the Company s current views with respect to current events, certain investments and acquisitions and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to the Company s operations and business environment, which may cause the actual results of the Company to be materially different from any future results. All statements that address future operating, financial or business performance or the Company s strategies or expectations are forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements are discussed under the captions Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in the Company s filings with the Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. It should be remembered that the price of the ordinary shares and any income from them can go down as well as up. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law. 2

3 Q highlights Underlying performance on track, raising full year outlook Revenue $1.3 b (+4.6% YoY) Operating income 1 $159 m (12.3% up 80 bps) 2 $3 b of bookings across ICE and Electronics Robust growth in key areas of the portfolio Post-spin operational progress on track Increased outlook driven by FX tailwinds Earnings per share 1 $1.30 Strong start to the year with raised EPS outlook for Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 2. Excluding $17 million commercial settlement which benefited Q adjusted operating income 3

4 Market update Regulatory driven demand for advanced propulsion solutions GDi continues to displace diesel and PFi for passenger car Accelerated demand for electrification Higher pressure systems for commercial vehicles Recent industry topics Balanced business, fully focused on delivering on our commitments Diesel headlines in Europe Potential changes in trade/tariff framework Higher commodity prices Relaxation of regulatory framework in the U.S. 4

5 Bookings update Disciplined commercial strategy driving long-term value Booked program lifetime value Adjusted bookings 1 ($ billions) Key technologies 15% CAGR Power Electronics Gasoline Direct Injection $4.7 $6.1 $6.7 $7.1 2 Electronics & Software Commercial Vehicle Diesel $ Q1 YTD Remain on track for another year of record bookings in Bookings represent lifetime gross program revenues awarded, based upon expected volumes and pricing adjusted for FX 2. Bookings for Powertrain Segment (OEM) only 5

6 Spin update Progress made in Q1 All transition service agreements fully operational Significant progress made on standalone functions Lean corporate HQ fully staffed and operational in London On track with plan to eliminate spin-related inefficiencies Spin-related costs and capex expected to ramp during 2018 Clearer line of sight to exit TSAs and CMSAs Focused on lean and efficient standalone operations 6 Post-spin progress on track, creating optimal structure to support future growth

7 Summary Great start to the year Solid financial performance and excellent bookings momentum in Q1 Post-spin operational progress on track Increased outlook for FY

8 Financial Review

9 Q vs Q $ millions Q Q (pro forma 4 ) Q (reported) Financial highlights 6% year-on-year growth over market Revenue Adjusted growth % 1 $1, % $1,148 - $1,168 - Global vehicle production down ~1% Strong growth in key technologies Operating income 2 Operating margin % 2 Margin ex commercial settlement 3 $ % $ % 11.5% $ % 80 basis points of underlying operating margin expansion Driven by FX tailwinds and continued operational performance Partially offset by mix and higher advanced engineering expense Earnings per share 2 $ Operating cash flow $ EPS ahead of expectations ~ $0.05 impact from phasing of spin-related costs Operating cash flow on track with full year outlook 1. At constant foreign exchange rates, and excludes impact of certain aftermarket revenue retained by former parent 2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 3. Excludes $17m commercial settlement that benefited Q results 4. See appendix for reconciliation 9

10 Q revenue growth Growth across key areas of the portfolio, with strong performance in China Revenue $ millions Regional growth Adjusted 1 year-on-year growth 4.6% 1 $71 $93 $1,296 N. America 6% Adj 8% GoM Europe 0% Adj 0% GoM China 15% Adj 18% GoM $1,148 $(16) S. America 6% Adj (6)% GoM 1. At constant foreign exchange rates, and excludes impact of certain aftermarket revenue retained by former parent 10

11 Q operating income growth Strong year-on-year growth driven by FX and continued improvements in operating performance Operating income 1 $ millions +80 bps 2 $30 $1 12.3% 11.5% 2 $149 $12 $(17) $(16) $159 Financial highlights Performance/growth driven by: Continued operating performance Negative mix from strong GDi and Power Electronics growth and LDD declines Higher engineering spend (~40 bps impact) FX tailwinds primarily due to: $/EUR rate of 1.23 vs 1.07 in Q Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 2. Excludes $17m commercial settlement that benefited Q results 11

12 Powertrain segment highlights Strong revenue growth in key areas of the portfolio with record Q1 bookings Revenue Operating income 2 Financial highlights $ millions $ millions $1, % bps 3 Revenue: $1, % 3 $141 $ % $142 Strong year-on-year revenue growth ~25% growth for Commercial Vehicle ~20% growth for GDi ~65% growth for Power Electronics Pass. Car diesel revenue decline of ~20% EU revenue decline of ~25% ROW revenue growth Q (pro forma) Q Q (pro forma) Q Operating income: Margin expansion driven by: FX tailwinds and operational performance Offset by mix and higher engineering spend 1. At constant foreign exchange rates 2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 3. Excludes $17m commercial settlement that benefited Q results 12

13 Aftermarket segment results Improved margin performance, consistent with focused strategy Revenue Operating income 2 Financial highlights $ millions $ millions $ % bps Revenue: $ % $8 7.9% $17 1% year-on-year growth Growth in OES channel Operating income: Margin expansion driven by improved operating performance On track to deliver full year margin expansion Q (pro forma) Q Q (pro forma) Q At constant foreign exchange rates, and excludes impact of certain aftermarket revenue retained by former parent 2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 13

14 Increased 2018 outlook Raised outlook for the year, primarily driven by FX tailwinds 2018 outlook $ millions, except per share amounts 2017 Pro-forma 4 Updated Previous Revenue $4,773 $5,000 - $5,200 $4,900 - $5,100 Adjusted growth 1 8.5% 2% - 6% 2% - 6% Operating income 2 $569 Operating income margin 11.9% 12.3% % 12.2% % Earnings per share 3 $ $4.95 $ $4.80 $/EUR exchange rate $1.20 $ At constant foreign exchange rates, and excludes impact of certain aftermarket revenue retained by former parent 2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 3. Adjusted for restructuring and other special items 4. See appendix for reconciliation 14

15 Capital allocation Position for sustainable long-term growth Focus on operational execution and spin-related activities in 2018 Capex and R&D investments to support organic growth Cash flow profile to further strengthen balance sheet Targeting through the cycle leverage of ~1.5x, comfortable up to ~2.0x Flexibility to go higher for right investment opportunities Bolt-on acquisitions to supplement our portfolio Strengthen existing portfolio of advanced technologies Selective and disciplined approach, focused on long-term value creation Return capital to shareholders Maintain and grow recently instituted dividend policy Future share repurchases to stay within targeted leverage range 15

16 Q&A

17 Appendix

18 Non-GAAP reconciliation: Net income to Adj. op. income ($ millions) Delphi Technologies Q Q Net income attributable to Delphi Technologies $98 $103 Net income attributable to noncontrolling interest 7 8 Net income $105 $111 Equity (income), net of tax (3) (1) Income tax expense Other (income) expense, net (6) 6 Interest expense 20 1 Operating income $138 $148 Restructuring Separation costs Asset impairments - 4 Adjusted operating income $159 $ Separation costs include one-time incremental expenses associated with becoming a stand-alone publicly-traded company. Adjusted Operating Income is presented as a supplemental measure of the Company's financial performance which management believes is useful to investors in assessing the Company s ongoing financial performance that, when reconciled to the corresponding U.S. GAAP measure, provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company s core operating performance and which may obscure underlying business results and trends. Our management utilizes Adjusted Operating Income in its financial decision making process, to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Management also utilizes Adjusted Operating Income as the key performance measure of segment income or loss and for planning and forecasting purposes to allocate resources to our segments, as management also believes this measure is most reflective of the operational profitability or loss of our operating segments. Adjusted Operating Income is defined as net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, restructuring, separation costs and asset impairments. Not all companies use identical calculations of Adjusted Operating Income, therefore this presentation may not be comparable to other similarly titled measures of other companies. The Company's 2018 guidance was determined using a consistent manner and methodology. 18

19 Non-GAAP reconciliation: Segment Adj. operating income ($ millions) Powertrain Segment Q Q Operating income $123 $142 Restructuring 11 4 Separation costs Asset impairments - 4 Adjusted operating income $142 $150 Aftermarket Segment Q Q Operating income $15 $6 Restructuring - 6 Separation costs Adjusted operating income $17 $12 1. Separation costs include one-time incremental expenses associated with becoming a stand-alone publicly-traded company. Adjusted Operating Income is presented as a supplemental measure of the Company's financial performance which management believes is useful to investors in assessing the Company s ongoing financial performance that, when reconciled to the corresponding U.S. GAAP measure, provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company s core operating performance and which may obscure underlying business results and trends. Our management utilizes Adjusted Operating Income in its financial decision making process, to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Management also utilizes Adjusted Operating Income as the key performance measure of segment income or loss and for planning and forecasting purposes to allocate resources to our segments, as management also believes this measure is most reflective of the operational profitability or loss of our operating segments. Adjusted Operating Income is defined as net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, restructuring, separation costs and asset impairments. Not all companies use identical calculations of Adjusted Operating Income, therefore this presentation may not be comparable to other similarly titled measures of other companies. The Company's 2018 guidance was determined using a consistent manner and methodology. 19

20 Non-GAAP reconciliation: Adjusted net income ($ millions, except per share amounts) Delphi Technologies Q Q Net income attributable to Delphi Technologies $98 $103 Adjusting items: Restructuring Separation costs Asset impairments - 4 Tax impact of adjusting items 2 (3) (1) Adjusted net income attributable to Delphi Technologies $116 $116 Weighted average number of diluted shares outstanding Diluted net income per share attributable to Delphi Technologies $1.10 $1.16 Adjusted net income per share $1.30 $ Separation costs include one-time incremental expenses associated with becoming a stand-alone publicly-traded company. 2. Represents the income tax impacts of the adjustments made for restructuring and other special items by calculating the income tax impact of these items using the appropriate tax rate for the jurisdiction where the charges were incurred. Adjusted Net Income and Adjusted Net Income Per Share, which are non-gaap measures, are presented as supplemental measures of the Company's financial performance which management believes are useful to investors in assessing the Company s ongoing financial performance that, when reconciled to the corresponding U.S. GAAP measure, provide improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company s core operating performance and which may obscure underlying business results and trends. Management utilizes Adjusted Net Income and Adjusted Net Income Per Share in its financial decision making process, to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Adjusted Net Income is defined as net income attributable to Delphi Technologies, restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the period. Not all companies use identical calculations of Adjusted Net Income and Adjusted Net Income Per Share, therefore this presentation may not be comparable to other similarly titled measures of other companies. The Company's 2018 guidance was determined using a consistent manner and methodology. 20

21 Pro forma financial schedules ($ millions) Delphi Technologies - Revenue Q Q Q Q Revenue Reported 1 $1,168 $1,187 $1,205 $1,289 $4,849 Spin-Related Adjustments 2 N/A N/A N/A $5 $5 Historical Comparable 3 $1,168 $1,187 $1,205 $1,294 $4,854 Pro forma Adjustments 4 ($20) ($21) ($20) ($20) ($81) Revenue Pro forma $1,148 $1,166 $1,185 $1,274 $4,773 Delphi Technologies - Adjusted Operating Income Q Q Q Q Adjusted Operating Income 1 $162 $164 $147 $164 $637 % to sales 13.9% 13.8% 12.2% 12.7% 13.1% Spin-Related Adjustments 2 N/A N/A N/A $4 $4 Historical Comparable 3 $162 $164 $147 $168 $641 % to sales 13.9% 13.8% 12.2% 13.0% 13.2% Pro forma Adjustments 4 ($13) N/A N/A N/A ($72) Adjusted Operating Income Pro forma $149 N/A N/A N/A $569 % to sales 13.0% N/A N/A N/A 11.9% 1. Results for periods prior to December 4, 2017 prepared on a stand-alone combined basis derived from the former parent s accounting records and results for periods subsequent to December 4, 2017 are presented on a consolidated basis. 2. Adjustments to present results for the year ended December 31, 2017 on a comparable basis to historical periods, as though the separation did not occur during Adjustments include: (1) impact of the original equipment services business that remained with the former parent, (2) incremental costs and inefficiencies associated with being a stand-alone publicly-traded company for periods subsequent to December 4, 2017, and (3) costs associated with the Transition Services Agreement and Contract Manufacturing Services Agreement entered with our former parent in connection with the separation. 3. Represents results for the year ended December 31, 2017 on a comparable basis to historical periods, as though the separation did not occur during Adjustments to present results for the year ended December 31, 2017 on a comparable basis to expected future period results. Financial information for periods prior to December 4, 2017 was prepared on a stand-alone combined basis derived from the former parent s accounting records and is not necessarily indicative of results that will be achieved as a stand-alone publicly-traded company. Adjustments include: (1) impact of the original equipment services business that remained with the former parent, (2) incremental costs and inefficiencies associated with being a stand-alone publicly-traded company for periods subsequent to December 4, 2017, and (3) costs associated with the Transition Services Agreement and Contract Manufacturing Services Agreement entered with our former parent in connection with the separation. 21

22 Pro forma financial schedules ($ millions) Powertrain Segment - Revenue Q Q Q Q Revenue Reported 1 $1,023 $1,035 $1,049 $1,115 $4,222 Spin-Related Adjustments 2 N/A N/A N/A N/A N/A Historical Comparable 3 $1,023 $1,035 $1,049 $1,115 $4,222 Pro forma Adjustments 4 N/A N/A N/A N/A N/A Revenue Pro forma $1,023 $1,035 $1,049 $1,115 $4,222 Powertrain Segment - Adjusted Operating Income Q Q Q Q Adjusted Operating Income 1 $150 $141 $128 $143 $562 % to sales 14.7% 13.6% 12.2% 12.8% 13.3% Spin-Related Adjustments 2 N/A N/A N/A $3 $3 Historical Comparable 3 $150 $141 $128 $146 $565 % to sales 14.7% 13.6% 12.2% 13.1% 13.4% Pro forma Adjustments 4 ($9) N/A N/A N/A ($53) Adjusted Operating Income Pro forma $141 N/A N/A N/A $512 % to sales 13.8% N/A N/A N/A 12.1% 1. Results for periods prior to December 4, 2017 prepared on a stand-alone combined basis derived from the former parent s accounting records and results for periods subsequent to December 4, 2017 are presented on a consolidated basis. 2. Adjustments to present results for the year ended December 31, 2017 on a comparable basis to historical periods, as though the separation did not occur during Adjustments include: (1) impact of the original equipment services business that remained with the former parent, (2) incremental costs and inefficiencies associated with being a stand-alone publicly-traded company for periods subsequent to December 4, 2017, and (3) costs associated with the Transition Services Agreement and Contract Manufacturing Services Agreement entered with our former parent in connection with the separation. 3. Represents results for the year ended December 31, 2017 on a comparable basis to historical periods, as though the separation did not occur during Adjustments to present results for the year ended December 31, 2017 on a comparable basis to expected future period results. Financial information for periods prior to December 4, 2017 was prepared on a stand-alone combined basis derived from the former parent s accounting records and is not necessarily indicative of results that will be achieved as a stand-alone publicly-traded company. Adjustments include: (1) impact of the original equipment services business that remained with the former parent, (2) incremental costs and inefficiencies associated with being a stand-alone publicly-traded company for periods subsequent to December 4, 2017, and (3) costs associated with the Transition Services Agreement and Contract Manufacturing Services Agreement entered with our former parent in connection with the separation. 22

23 Pro forma financial schedules ($ millions) Aftermarket Segment - Revenue Q Q Q Q Revenue Reported 1 $222 $232 $243 $250 $947 Spin-Related Adjustments 2 N/A N/A N/A $5 $5 Historical Comparable 3 $222 $232 $243 $255 $952 Pro forma Adjustments 4 ($20) ($21) ($20) ($20) ($81) Revenue Pro forma $202 $212 $224 $235 $871 Aftermarket Segment - Adjusted Operating Income Q Q Q Q Adjusted Operating Income 1 $12 $23 $19 $21 $75 % to sales 5.4% 9.9% 7.8% 8.4% 7.9% Spin-Related Adjustments 2 N/A N/A N/A $1 $1 Historical Comparable 3 $12 $23 $19 $22 $76 % to sales 5.4% 9.9% 7.8% 8.6% 8.0% Pro forma Adjustments 4 ($4) N/A N/A N/A ($19) Adjusted Operating Income Pro forma $8 N/A N/A N/A $57 % to sales 4.0% N/A N/A N/A 6.5% 1. Results for periods prior to December 4, 2017 prepared on a stand-alone combined basis derived from the former parent s accounting records and results for periods subsequent to December 4, 2017 are presented on a consolidated basis. 2. Adjustments to present results for the year ended December 31, 2017 on a comparable basis to historical periods, as though the separation did not occur during Adjustments include: (1) impact of the original equipment services business that remained with the former parent, (2) incremental costs and inefficiencies associated with being a stand-alone publicly-traded company for periods subsequent to December 4, 2017, and (3) costs associated with the Transition Services Agreement and Contract Manufacturing Services Agreement entered with our former parent in connection with the separation. 3. Represents results for the year ended December 31, 2017 on a comparable basis to historical periods, as though the separation did not occur during Adjustments to present results for the year ended December 31, 2017 on a comparable basis to expected future period results. Financial information for periods prior to December 4, 2017 was prepared on a stand-alone combined basis derived from the former parent s accounting records and is not necessarily indicative of results that will be achieved as a stand-alone publicly-traded company. Adjustments include: (1) impact of the original equipment services business that remained with the former parent, (2) incremental costs and inefficiencies associated with being a stand-alone publicly-traded company for periods subsequent to December 4, 2017, and (3) costs associated with the Transition Services Agreement and Contract Manufacturing Services Agreement entered with our former parent in connection with the separation. 23

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