August 8, Second Quarter 2018 Results

Transcription

1 August 8, 2018 Second Quarter 2018 Results

2 Forward-looking statements This presentation, as well as other statements made by Delphi Technologies PLC (the Company ), contains 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 Solid execution, with strong bookings performance Revenue $1.2 b (+1.1% YoY 1 ) Operating income 2 $156 m (12.7%, up 10bps YoY 3 ) $2.3 b of lifetime bookings across ICE and Electronics Robust growth in Power Electronics and Commercial Vehicle Earnings per share 2 Operating cash flow Full year 2018 outlook narrowed $1.29 $164 m $100m share repurchase authorization 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. Versus prior year pro-forma results; see appendix for detail and reconciliation to US GAAP 3

4 Market update Continued regulatory driven demand for advanced propulsion solutions Balanced portfolio for all propulsion systems Accelerated demand for electrification GDi continues to displace diesel and PFi for passenger car Internal combustion Software and controls Electrification Higher pressure systems for commercial vehicles Recent industry topics Uncertainty in global trade, tariffs and Brexit WLTP in Europe Passenger car diesel mix in Europe Higher commodity prices 4

5 Bookings update Balancing strong demand with disciplined commercial strategy to drive long-term value Booked program lifetime value Adjusted bookings 1 ($ billions) Key technologies 15% CAGR Power Electronics Gasoline Direct Injection 2 $5.3 $6.1 $4.7 $6.7 $ H1 2 Q2 $2.3 Q1 $ Electronics & Software Commercial Vehicle Diesel 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 Accelerating momentum in key technologies >$5 b $4.5b 1 lifetime bookings H1 through 2018 lifetime H bookings ~$1 b 1 lifetime bookings through 2014 >$9 b 6b 1,2 lifetime bookings H1 through 2018 H1 lifetime 2018 bookings ~$3 b 1,2 lifetime bookings through 2014 >$5 b 1 lifetime bookings through H ~$1.5 b 1 lifetime bookings through 2014 Power Electronics Gasoline fuel systems Commercial vehicle diesel systems Investments aligned with long-term growth opportunities 1. Bookings represent lifetime gross program revenues awarded since 2011, based upon expected volumes and pricing adjusted for FX 2. Bookings for GDi only 6

7 Financial Review

8 Q vs Q $ millions Q Q (pro forma 3 ) Q (reported) Financial highlights 1.1% year-on-year adjusted revenue growth Revenue $1,232 Adjusted growth % 1 1.1% $1,166 - $1,187 - Double-digit growth in key technologies including Power Electronics and commercial vehicle Primarily offset by softer China sales and lower Aftermarket revenues consistent with commercial strategy Operating income 2 $156 Operating margin % % $ % $ % Earnings per share 2 $ bps year-on-year adjusted operating margin expansion Stringent cost control and benefits from prior restructuring FX tailwinds Partially offset by unfavorable product mix Operating cash flow $ 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. See appendix for reconciliation 8

9 Q revenue growth Growth in key areas of the portfolio offset by lower revenues in China Revenue $ millions Regional growth Adjusted 1 year-on-year growth 1.1% 1 $1,166 $(17) $31 $52 $1,232 N. America 4% Adj 5% GoM 2 Europe 2% Adj (3)% GoM 2 China (4)% Adj (12)% GoM 2 S. America 6% Adj (2)% GoM At constant foreign exchange rates, and excludes impact of certain aftermarket revenue retained by former parent 2. GoM = growth over market 3. See appendix for reconciliation 9

10 Q operating income growth Year-on-year growth driven by continued improvements in operating performance and FX Operating income 1 $ millions +10 bps Financial highlights Performance driven by: 12.6% $147 $(17) $14 $9 $3 12.7% $156 Healthy incremental margin performance driven by disciplined cost control Partially offset by price downs (1.4%), unfavorable mix and higher commodity prices FX tailwinds primarily due to: Q EUR/USD rate of 1.19 vs 1.10 in Q Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 2. See appendix for reconciliation 10

11 Powertrain segment highlights Strong revenue growth in key areas offset by lower light duty diesel and China sales Revenue Operating income 2 Financial highlights $ millions $ millions $1,035 0% 1 (20) bps $1, % $ % $134 Revenue: Strong year-on-year revenue growth in >45% growth for Power Electronics >20% growth for Commercial Vehicle Passenger car diesel decline of ~15% GDi decline of ~10% due to lower sales in China Operating margin: 20 bps year-on-year decline driven by: Unfavorable mix Partially offset by operational performance and FX tailwinds Q (pro forma 3) Q Q (pro forma 3) Q At constant foreign exchange rates 2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP 3. See appendix for reconciliation 11

12 Aftermarket segment results Continued margin expansion, consistent with focused strategy Revenue Operating income 2 Financial highlights $ millions $ millions $212 (1.0)% bps $ % $ % $22 Revenue: 1% year-on-year adjusted decline Consistent with strategy to focus on higher margin products and channels Lower OES channel offset growth in IAM channel Operating margin: 170 bps year-on-year margin expansion driven by commercial strategy and operating performance Remain 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 3. See appendix for reconciliation 12

13 Updated 2018 outlook Narrowed revenue and EPS ranges, operating cash flow unchanged $ millions 2018 outlook except per share amounts 2017 Pro forma 4 Updated Prior outlook Revenue $4,773 $5,000 - $5,100 $5,000 - $5,200 Adjusted growth 1 8.5% 2% - 4% 2% - 6% Operating income 2 $569 Operating income margin 11.9% 12.1% % 12.3% % Earnings per share 3 $ $4.85 $ $4.95 Operating cash flow $440 - $480 $440 - $480 Other outlook metrics Restructuring charges $80-$85m (prior $95-$100m) One-time separation costs $90-$95m (prior $75-$80m) Capital expenditures $290-$310m (prior $280-$300m) EUR/USD $1.18 (prior $1.20) Adjusted tax rate 16-17% unchanged 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. Adjusted for restructuring and other special items 4. See appendix for reconciliation 13

14 Q&A

15 Appendix

16 Non-GAAP reconciliation: Net income to Adj. op. income ($ millions) Delphi Technologies Q Q Net income attributable to Delphi Technologies $86 $48 Net income attributable to noncontrolling interest 4 8 Net income $90 $56 Equity (income) loss, net of tax (3) 1 Income tax expense Other (income) expense, net (4) - Interest expense 19 - Operating income $122 $79 Restructuring Separation costs Asset impairments 1 4 Adjusted operating income $156 $ Prior to December 4, 2017 separation costs include one-time expenses related to the separation from the Company s former parent. For periods subsequent to December 4, 2017, these costs include one-time incremental expenses associated with becoming a stand-alone publiclytraded 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. 16

17 Non-GAAP reconciliation: Segment Adj. operating income ($ millions) Powertrain Segment Q Q Operating income $105 $61 Restructuring Separation costs Asset impairments 1 4 Adjusted operating income $134 $141 Aftermarket Segment Q Q Operating income $17 $18 Restructuring 1 2 Separation costs Adjusted operating income $22 $23 1. Prior to December 4, 2017 separation costs include one-time expenses related to the separation from the Company s former parent. For periods subsequent to December 4, 2017, these costs include one-time incremental expenses associated with becoming a stand-alone publiclytraded 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. 17

18 Non-GAAP reconciliation: Adjusted net income ($ millions, except per share amounts) Delphi Technologies Q Q Net income attributable to Delphi Technologies $86 $48 Adjusting items: Restructuring Separation costs Asset impairments 1 4 Tax impact of adjusting items 2 (5) (13) Adjusted net income attributable to Delphi Technologies $115 $120 Weighted average number of diluted shares outstanding Diluted net income per share attributable to Delphi Technologies $0.97 $0.54 Adjusted net income per share $1.29 $ Prior to December 4, 2017 separation costs include one-time expenses related to the separation from the Company s former parent. For periods subsequent to December 4, 2017, these costs include one-time incremental expenses associated with becoming a stand-alone publiclytraded 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 before 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. 18

19 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) ($17) N/A N/A ($72) Adjusted Operating Income Pro forma $149 $147 N/A N/A $569 % to sales 13.0% 12.6% 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. 19

20 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) ($12) N/A N/A ($53) Adjusted Operating Income Pro forma $141 $129 N/A N/A $512 % to sales 13.8% 12.5% 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. 20

21 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) ($5) N/A N/A ($19) Adjusted Operating Income Pro forma $8 $18 N/A N/A $57 % to sales 4.0% 8.5% 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. 21

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