Delphi Reports Fourth Quarter And Full Year 2011 Financial Results

Delphi Automotive (NYSE: DLPH), a leading global vehicle components manufacturer providing electrical and electronic, powertrain, safety and thermal technology solutions to the global automotive and commercial vehicle markets, today reported fourth quarter 2011 revenues of $3.9 billion, an increase of 6.8% over the prior year period, and fourth quarter net income of $290 million, an increase of $215 million over the prior year period.

“Our ability to generate strong financial performance in the fourth quarter and for the full year is a result of our focus on flawless execution and providing market-relevant technologies to the world’s leading automakers,” said Rodney O’Neal, president and chief executive officer. “Our robust business model, operational excellence and industry-leading cost structure position us to provide continued superior returns to our stakeholders.”

Fourth Quarter 2011 Results

The Company reported fourth quarter 2011 revenue of $3.9 billion, an increase of 6.8% over the fourth quarter of 2010. The increase in revenue primarily reflects strong growth in Europe and Asia driven by customer and product mix, as well as the benefits of higher global vehicle production compared to the prior year period.

Fourth quarter net income totaled $290 million, or $0.88 per diluted share, compared to net income of $75 million, or $0.11 per diluted share, in the prior year period (refer to footnote 2 for determination of weighted average shares outstanding and earnings per share calculations).

Fourth quarter earnings before depreciation and amortization, interest expense, other income/expense, income tax expense, and equity income (“EBITDA”) was $530 million, compared to $223 million reported in the prior year period, an increase of $307 million. EBITDA margin was 13.6% in the fourth quarter of 2011, compared to 6.1% in the prior year period. The improvement in EBITDA reflects the contribution margin from increased revenue, operational improvements resulting from cost reduction initiatives, an $89 million reduction in restructuring charges, and the effect of a $75 million commercial settlement that was incurred in 2010.

Interest expense for the fourth quarter totaled $39 million, compared to $8 million in 2010, reflecting the debt financing incurred in 2011 to redeem the ownership interests previously held by General Motors Company and the Pension Benefit Guaranty Corporation.

Tax expense for the fourth quarter was $29 million, compared to $49 million in the prior year period. The 2011 period included discrete tax benefits of $53 million, primarily related to the release of deferred tax asset valuation allowances, as well as the impacts of the geographic mix of pretax earnings, resulting in an effective tax rate of 8%.

Full Year 2011 Results

The Company reported 2011 revenue of $16.0 billion, an increase of 16.1% over 2010. The increase includes solid revenue growth across all regions, driven by customer mix and strong demand for powertrain and electronic architecture products, increased global vehicle production, and favorable foreign currency exchange.

Full year 2011 net income totaled $1.1 billion, or $2.72 per diluted share, compared to net income of $631 million, or $0.92 per diluted share in 2010 (refer to footnote 2 for determination of weighted average shares outstanding and earnings per share calculations).

Full year 2011 EBITDA was $2.1 billion, an increase of $758 million over $1.4 billion reported in 2010. EBITDA margin for the full year 2011 was 13.2%, compared to 9.9% in 2010. The increase resulted from contribution margin from increased revenue, operational improvements resulting from cost reduction initiatives, and a $193 million reduction in restructuring charges.

Interest expense for 2011 totaled $123 million, compared to $30 million in 2010, reflecting the debt financing incurred in 2011 to redeem ownership interests.

Tax expense for 2011 was $305 million, compared to $258 million in 2010. The 2011 period includes the impacts of higher pretax earnings, offset by the geographic mix of pretax earnings and the release of deferred tax asset valuation allowances, resulting in an effective tax rate of 20%.

In 2011, the Company generated net cash flow from operating activities of $1.4 billion, as compared to $1.1 billion in 2010. Capital expenditures in 2011 were $630 million compared to $500 million last year. The Company generated $859 million in cash flow before financing, compared to $781 million in 2010.

As of December 31, 2011, the Company had cash and cash equivalents of $1.4 billion and access to $1.3 billion in undrawn committed bank facilities, providing the Company with $2.7 billion of total liquidity. Total debt outstanding as of December 31, 2011 was $2.1 billion.

Share Repurchase Program

Delphi’s Board of Directors has authorized the repurchase of up to $300 million of ordinary shares. The program will terminate on the earlier to occur of December 31, 2012 or when the Company attains $300 million in ordinary share repurchases.

2012 Outlook

The Company’s first quarter and full year 2012 guidance is as follows:
        Q1 2012           Full Year 2012
Revenue (millions)

$4,000-$4,100
$16,200-$16,500
Earnings Per Share $0.83-$0.96 $3.44-$3.69
EBITDA (millions) $525-$575 $2,150-$2,250
EBITDA Margin 13.1% - 14.0% 13.3% - 13.6%

Full year cash flow before financing is expected to be approximately $1.0 billion, which includes $750 million of estimated capital expenditures. The Company estimates a full year tax rate of approximately 19%. Quarterly tax rates can be affected by the geographic mix of pretax earnings as well as the timing of discrete tax items.

Conference Call and Webcast

The Company will host a conference call to discuss these results at 5:00 p.m. (ET) today, which is accessible by dialing 888.486.0553 (US domestic) or 706.634.4982 (international) or through a webcast at http://delphi.com/investors. The conference ID number is 45458948. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Company's website. A replay will be available two hours following the conference call.

Use of Non-GAAP Financial Information

This press release contains information about Delphi’s financial results which are not presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures at the end of this press release. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures of other companies.

About Delphi

Delphi is a leading global supplier of electronics and technologies for automotive, commercial vehicle and other market segments. Operating major technical centers, manufacturing sites and customer support facilities in 30 countries, Delphi delivers real-world innovations that make products smarter and safer as well as more powerful and efficient. Connect to innovation at www.delphi.com .

FORWARD-LOOKING STATEMENTS

This press release, as well as other statements made by Delphi Automotive PLC (“Delphi” or the “Company”), contain forward-looking statements that reflect, when made, the Company’s current views with respect to current events 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, express or implied, by such forward-looking statements. All statements that address future operating, financial or business performance or the Company’s strategies or expectations are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: global economic conditions, including conditions affecting the credit market, the cyclical nature of automotive sales and production; the potential disruptions in the supply of and changes in the competitive environment for raw material integral to our products; the Company’s ability to maintain contracts that are critical to its operations; the ability of the Company to attract, motivate and/or retain key executives; the ability of the Company to avoid or continue to operate during a strike, or partial work stoppage or slow down by any of its unionized employees or those of its principal customers, and the ability of the Company to attract and retain customers. Additional factors 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. Delphi 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.
DELPHI AUTOMOTIVE PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts; unaudited)
     
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
 
Net sales $ 3,900 $ 3,652 $ 16,041 $ 13,817
 
Operating expenses:
Cost of sales 3,221 3,210 13,386 11,768
Selling, general and administrative 234 211 901 815
Amortization 23 18 79 70
Restructuring   11     100     31     224  
Total operating expenses   3,489     3,539     14,397     12,877  
Operating income 411 113 1,644 940
Interest expense (39 ) (8 ) (123 ) (30 )
Other (expense) income, net   (28 )   27     (15 )   34  
Income before income taxes and equity (loss) income 344 132 1,506 944
Income tax expense   (29 )   (49 )   (305 )   (258 )
Income before equity (loss) income 315 83 1,201 686
Equity (loss) income, net of tax   (3 )   8     22     17  
Net income 312 91 1,223 703
Net income attributable to noncontrolling interest   22     16     78     72  
Net income attributable to Delphi $ 290   $ 75   $ 1,145   $ 631  
 
 
Basic and diluted earnings per share:
Basic and diluted earnings per share $ 0.88   $ 0.11   $ 2.72   $ 0.92  
Weighted average shares outstanding   328     687     421     686  
 

DELPHI AUTOMOTIVE PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions; unaudited)
       

December 31,

2011

2010
ASSETS
Current assets:
Cash and cash equivalents $ 1,363 $ 3,219
Restricted cash 9 47
Time deposits - 550
Accounts receivable, net 2,459 2,307
Inventories, net 1,054 988
Other current assets   616   555
Total current assets 5,501 7,666
Long-term assets:
Property, net 2,315 2,067
Investments in affiliates 257 281
Intangible assets, net 596 665
Other long-term assets   459   403
Total long-term assets   3,627   3,416
Total assets $ 9,128 $ 11,082
 
LIABILITIES AND SHAREHOLDERS' AND OWNERS' EQUITY
Current liabilities:
Short-term debt $ 107 $ 218
Accounts payable 2,397 2,236
Accrued liabilities   1,208   1,265
Total current liabilities 3,712 3,719
Long-term liabilities:
Long-term debt 1,996 71
Pension and other postretirement benefit obligations 674 677
Other long-term liabilities   575   516
Total long-term liabilities   3,245   1,264
Total liabilities 6,957 4,983
Shareholders' and owners' equity 1,688 5,641
Noncontrolling interest   483   458
Total liabilities and shareholders' and owners' equity $ 9,128 $ 11,082
 

DELPHI AUTOMOTIVE PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
             
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
Cash flows from operating activities:
Net income $ 312 $ 91 $ 1,223 $ 703

Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation and amortization 119 110 475 421
Deferred income taxes (53 ) (1 ) (36 ) (14 )
Equity loss (income), net of dividends received 2 - (13 ) (7 )
Other, net 11 34 8 (20 )
Changes in operating assets and liabilities:
Accounts receivable, net 185 8 (149 ) (184 )
Inventories, net 92 13 (64 ) (130 )
Accounts payable (87 ) 109 98 354
Other, net (5 ) (8 ) (6 ) 136
Pension contributions and other postretirement benefit payments   (108 )   (69 )   (159 )   (117 )
Net cash provided by operating activities   468     287     1,377     1,142  
 
Cash flows from investing activities:
Capital expenditures (176 ) (219 ) (630 ) (500 )
(Purchase) maturity of time deposits - (550 ) 550 (550 )
Proceeds (loss) from divestitures, net 8 (6 ) 72 93
Cost of acquisitions, net of cash required - - (17 ) -
Other, net   (17 )   12     15     46  
Net cash used in investing activities   (185 )   (763 )   (10 )   (911 )
 
Cash flows from financing activities
(Decrease) increase in short and long-term debt, net (70 ) (7 ) 1,689 (99 )
Dividend payments to noncontrolling interests (14 ) (2 ) (43 ) (27 )
Distributions to Delphi equity holders (93 ) - (93 ) -
Redemption of membership interests   (109 )   -     (4,747 )   -  
Net cash used in financing activities   (286 )   (9 )   (3,194 )   (126 )
 
Effect of exchange rate fluctuations on cash and cash equivalents (20 ) (1 ) (29 ) 7
 
(Decrease) increase in cash and cash equivalents (23 ) (486 ) (1,856 ) 112
Cash and cash equivalents at beginning of period   1,386     3,705     3,219     3,107  
Cash and cash equivalents at end of period $ 1,363   $ 3,219   $ 1,363   $ 3,219  
 

DELPHI AUTOMOTIVE PLC
FOOTNOTES
(unaudited)
           
1. Segment Summary
Three Months Ended Twelve Months Ended
December 31, December 31,
(in millions) 2011 2010 % 2011 2010 %
 

Net sales
Electronics and Safety $ 686 $ 681 1 % $ 2,931 $ 2,721 8 %
Powertrain Systems 1,241 1,122 11 % 4,970 4,086 22 %
Electrical/Electronic Architecture 1,630 1,482 10 % 6,642 5,620 18 %
Thermal Systems 402 420 (4

%)
1,755 1,603 9 %
Eliminations and Other (a)   (59 )   (53 )   (257 )   (213 )
Net sales $ 3,900   $ 3,652   $ 16,041   $ 13,817  
 

EBITDA
Electronics and Safety $ 90 $ 57 58 % $ 369 $ 247 49 %
Powertrain Systems 223 46 385 % 710 361 97 %
Electrical/Electronic Architecture 178 148 20 % 868 650 34 %
Thermal Systems 39 (22 ) n/a 172 109 58 %
Eliminations and Other (a)   -     (6 )   -     (6 )
EBITDA $ 530   $ 223   $ 2,119   $ 1,361  
 
(a) Eliminations and Other includes the elimination of inter-segment transactions.
 
2. Basic and Diluted Weighted Average Shares
 

The Company has calculated weighted average shares outstanding giving retrospective effect to our corporate conversion (exchange of membership interest for ordinary shares and consummation of the initial public offering). The impact of these transactions on weighted average shares outstanding follows:

 
Three Months Ended Twelve Months Ended
December 31, December 31,
(in millions, except per share amounts) 2011 2010 2011 2010
 
Weighted average ordinary shares outstanding as a result of the IPO offering 328 328 328 328
Redemption of the Class A & C membership interests - 349 86 349
Repurchase of Class B membership interests - 10 7 10
Issuance of Class E-1 membership interests   -     -     -     (1 )
Weighted average ordinary shares outstanding for the period   328     687     421     686  
 
 
Net income attributable to Delphi $ 290   $ 75   $ 1,145   $ 631  
Diluted earnings per share $ 0.88   $ 0.11   $ 2.72   $ 0.92  
 

DELPHI AUTOMOTIVE PLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)
     
In this press release the Company has provided information regarding certain non-GAAP financial measures including "EBITDA" and "cash flow before financing". Such non-GAAP financial measures are reconciled to their closest GAAP financial measure in the schedules below.
 

EBITDA: EBITDA is presented as a supplemental measure of the Company's performance which is consistent with the basis and manner in which management presents financial information for the purpose of making internal operating decisions. EBITDA is defined as net income (loss) before depreciation and amortization (including long-lived asset and goodwill impairment), interest expense, other income (expense), net, income tax expense and equity income (loss), net of tax. Not all companies use identical calculations of EBITDA therefore this presentation may not be comparable to other similarly titled measures of other companies. The Company's 2012 guidance was determined using a consistent manner and methodology.
 

Consolidated EBITDA
Three Months Ended Twelve Months Ended
December 31, December 31,
(in millions) 2011 2010 2011 2010
 
Net income attributable to Delphi $ 290 $ 75 $ 1,145 $ 631
Income tax expense 29 49 305 258
Interest expense 39 8 123 30
Other expense (income), net 28 (27 ) 15 (34 )
Noncontrolling interest 22 16 78 72
Equity loss (income), net of tax   3   (8 )   (22 )   (17 )
Operating income 411 113 1,644 940
Depreciation and amortization   119   110     475     421  
EBITDA $ 530 $ 223   $ 2,119   $ 1,361  

Segment EBITDA
           
(in millions)
 
Three months ended December 31, 2011: Electronics and Safety Powertrain Systems

Electrical/ Electronic Architecture
Thermal Systems Eliminations and Other Total
 
Operating income $ 64 $ 172 $ 144 $ 31 $ - $ 411
Depreciation and amortization   26   51   34   8     -     119
EBITDA $ 90 $ 223 $ 178 $ 39   $ -   $ 530
 
Three months ended December 31, 2010: Electronics and Safety Powertrain Systems

Electrical/ Electronic Architecture
Thermal Systems Eliminations and Other Total
 
Operating income (loss) $ 33 $ 2 $ 117 $ (33 ) $ (6 ) $ 113
Depreciation and amortization   24   44   31   11     -     110
EBITDA $ 57 $ 46 $ 148 $ (22 ) $ (6 ) $ 223
 
Twelve months ended December 31, 2011: Electronics and Safety Powertrain Systems

Electrical/ Electronic Architecture
Thermal Systems Eliminations and Other Total
 
Operating income $ 264 $ 515 $ 737 $ 128 $ - $ 1,644
Depreciation and amortization   105   195   131   44     -     475
EBITDA $ 369 $ 710 $ 868 $ 172   $ -   $ 2,119
 
Twelve months ended December 31, 2010: Electronics and Safety Powertrain Systems

Electrical/ Electronic Architecture
Thermal Systems Eliminations and Other Total
 
Operating income $ 147 $ 191 $ 542 $ 67 $ (7 ) $ 940
Depreciation and amortization   100   170   108   42     1     421
EBITDA $ 247 $ 361 $ 650 $ 109   $ (6 ) $ 1,361
 

DELPHI AUTOMOTIVE PLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)
       

Cash flow before financing: Cash flow before financing is presented as a supplemental measure of the Company's liquidity which is consistent with the basis and manner in which management presents financial information for the purpose of making internal operating decisions. Cash flow before financing is defined as cash provided by (used in) operating activities plus cash used in investing activities, adjusted for purchases and maturities of time deposits and costs associated with the initial public offering (IPO). Not all companies use identical calculations of cash flow before financing therefore this presentation may not be comparable to other similarly titled measures of other companies. The Company's 2012 guidance was determined using a consistent manner and methodology.
 
Three Months Ended Twelve Months Ended
December 31, December 31,
(in millions) 2011 2010 2011 2010
 
Cash flows from operating activities:
Net income $ 312 $ 91 $ 1,223 $ 703
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 119 110 475 421
Working capital 190 130 (115 ) 40

Pension contributions and other postretirement benefit payments
(108 ) (69 ) (159 ) (117 )
Other, net   (45 )   25     (47 )   95  
Net cash provided by operating activities   468     287     1,377     1,142  
 
Cash flows from investing activities:
Capital expenditures (176 ) (219 ) (630 ) (500 )
(Purchase) maturity of time deposits - (550 ) 550 (550 )
Other, net   (9 )   6     70     139  

Net cash used in investing activities
  (185 )   (763 )   (10 )   (911 )
 
Adjustment for purchases and maturities of time deposits - 550 (550 ) 550
Adjustment for costs associated with initial public offering 42 - 42 -
       
Cash flow before financing $ 325   $ 74   $ 859   $ 781  
 

Copyright Business Wire 2010

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