Delphi Automotive plc (DLPH)

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Delphi Automotive PLC (DLPH)

Q4 2012 Earnings Conference Call

February 5, 2013 10:00 am ET


Jack Monti – Director-Investor Relations

Rodney O’Neal – President and Chief Executive Officer

Kevin P. Clark – Senior Vice President and Chief Financial Officer


Brian A. Johnson – Barclays Capital

Rod Lache – Deutsche Bank

John Murphy – Bank of America Merrill Lynch

Christopher J. Ceraso – Crédit Suisse AG

Itay Michaeli – Citigroup Inc.

Aditya Oberoi – Goldman Sachs & Co.

Matt T. Stover – Guggenheim Securities LLC



Good morning, my name is Brandy and I will be your conference facilitator. At this time, I would like to welcome everyone to Delphi’s Fourth Quarter 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Jack Monti, Delphi’s Director of Investor Relations. Sir, you may now begin your conference.

Jack Monti

Thank you, Brandy, and thanks so much everyone for joining Delphi’s fourth quarter earnings call. Please see slide two for disclosure on forward-looking statements, which we will be making on today’s call, and only reflect Delphi’s current view of future financial performance, which may be materially different from our actual performance.

Joining today’s call will be Rodney O’Neal, Delphi’s CEO and President and Kevin Clark, our CFO.

And see on slide three, Rod O’Neal begin the call with an overview 2012 and our 2013 priorities, followed by Kevin Clark who will review our financial performance in greater detail, and provide 2013 in first quarter guidance. After Rod’s closing remarks, we’ll open the line for Q&A.

With that, I’ll now turn it over to Rod.

Rodney O'Neal

Thanks, Jack and good morning everyone and I appreciate you joining us as we close out our 2012 year and talk about our priorities for this year. Even with the challenging environment in Europe, we had a very solid quarter in Q4, that was consistent with our previous guidance reflects the cost structure and we implemented several restructuring initiatives primarily in Europe, and we continued to rotate our footprint to lower cost countries.

Our performance is a testament to our management team that is laser focused for operational execution and increasing shareholder value. Delphi has a lot to be excited about we are going to continue to stay focused on providing solutions for our customers’ challenges.

So let’s move into the presentation, and go to slide 5. overall 2012 was a great year for Delphi, while our revenue was relatively flat as a result of a soft market in Europe in the effect of foreign exchange.

EBITDA margins increased to 13.8% in earnings per share grew a robust 38%. Our credit ratings were increased to just under investment grade. We were added to the S&P 500 which is a real knock to the confidence we generated in the marketplace, and throughout 2012 we continue to reduce our industry leading cost structure, which positions us well to meet the challenges in 2013.

And as I’ve already mentioned we implemented several restructuring initiatives as we continue to rotate our footprint, optimize our cost structure, proactively address the soft market. Now at the same time, we’re continuing to invest these strategic growth initiatives. As an example, we completed acquisition of MVL last quarter, it significantly enhances our position in automotive connectors market, we expand about the progress we’ve made in integrating this company into Delphi.

We also expanded our footprint into China, I’ll discuss that in the minute. We also continue to invest in our Safe, Green and Connected product portfolio. That all of these things have us well positioned for top and bottom line expansion 2013 have begun.

Let’s go slide six, in April I’m going to be in China at the Shanghai Show to meet our customers, our partners, and my management team. And I could tell you that we are more excited endeavor up opportunities in the world’s largest automotive market. In 2012, we opened three new plants in China, in order to keep up with increase demand.

We have additional expansion plan for 2013 including opening up a diesel fuel injection plant in Yantai in the fourth quarter to serve the commercial vehicle market. In this past quarter, we completed the expansion of our Beijing operations to handle increase demand, gas fuel injection systems, then we will continue to significantly out growth the underlying market in this high growth region. We are on track to double the size of our China business over the next four to five years.

So let’s move into the technology, let’s go to slide seven, I said before about what our mission is, and we’re focused on solving our customers’ problems, that’s our value problem. And we invest $1.5 billion in gross engineering last year to focus on the mega trends of Safe, Green and Connected, that’s really starting to pay off.

Our gasoline direct injection technology has really taken a hold in the marketplace with the solution for better fuel economy. Our diesel products are getting a great reception as the customer to begin the oil business that helps them supply with the more stricter Euro 7 standards. We’re investing in China because we know that region will soon be the largest medium in heavy duty diesel market in the world.

In the area back to safety, in our MyFi products; we book $1.5 billion in new business last year in this arena, and with the acquisition of MVL we now have all the connectors to optimize an entire architecture.

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