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Delphi Automotive Beats Q4 Earnings & Revenue Estimates

Delphi Automotive PLCDLPH posted a 7% increase in adjusted earnings to $1.39 per share in the fourth quarter of 2015 from $1.30 earned in the prior-year quarter. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.37.

Adjusted net income increased to $391 million from $386 million a year ago. Including special items, Delphi Automotive reported net income of $199 million or 70 cents per share in fourth-quarter 2015, down significantly from $340 million or $1.15 per share a year ago.

Revenues increased 3% year over year to $3.9 billion and surpassed the Zacks Consensus Estimate of $3.79 billion. The year-over-year improvement was driven by volume growth, partially offset by unfavorable currency impact.

Excluding the impact of currency exchange, commodity movements, acquisitions and divestitures, revenues increased 11% year over year. The upside was led by performance improvement of 18% in Asia, 7% in North America and 13% in Europe, partially countered by a 26% decline in South America.

Adjusted operating income rose to $503 million from $497 million in the fourth quarter of 2014. The rise can be attributed to strong performance in the Asia Pacific, Europe and North America. Adjusted operating margin declined to 13% from 13.2% in the year-ago quarter.

2015 Results

Delphi Automotive reported adjusted earnings of $5.22 per share in 2015, up 6% from $4.94 per share in 2014. Earnings per share for 2015 also exceeded the Zacks Consensus Estimate of $5.20.

Adjusted net income increased to $1.50 billion from $1.49 billion a year ago. Including special items, Delphi Automotive reported profits of $1.19 billion or $4.14 per share in 2015, down from $1.31 billion or $4.34 per share in 2014.

Revenues decreased 2% to $15.2 billion from $15.5 billion in 2014. However, the figure beat the Zacks Consensus Estimate of $15.07 billion. The decline was due to unfavorable currency impact, which offset continued volume growth.

Segment Details

In the Electrical/Electronic Architecture segment, revenues improved 6% to $2.12 billion in the reported quarter. In the Powertrain Systems segment, revenues fell 3% to $1.10 billion. Also, the Electronics and Safety segment's revenues increased 3% to $704 million.

Divestiture and Acquisition

In the fourth quarter of 2015, Delphi Automotive completed the acquisition of HellermannTyton Group for approximately £1.07 billion ($1.85 billion). HellermannTyton Group PLC is now part of Delphi Automotive's Electrical/Electronic Architecture segment.

The transaction is expected to boost Delphi Automotive's earnings by 15 cents per share, excluding one-time integration expenses this year onward. It is also anticipated to provide synergies of around $50 million annually by the end of 2018 through sourcing savings, supply chain savings and leveraging the combined product portfolio.

Share Repurchases

In 2015, Delphi Automotive repurchased 14.58 million shares for approximately $1.2 billion. Following this, the company had $507 million available for repurchases under its current share buyback program.

Dividend Update

On Jan 12, 2016, Delphi Automotive hiked its annual dividend by 16% to $1.16 per share from the prior payout of $1.00. Consequently, the company will pay an increased quarterly dividend of 29 cents per share on Feb 29, to shareholders on record as of Feb 17, 2016.

Financial Position

Delphi Automotive had cash and cash equivalents of $535 million as of Dec 31, 2015, compared with $859 million as of Dec 31, 2014. Total debt amounted to $4.01 billion as of Dec 31, 2015, against $2.43 billion as of Dec 31, 2014.

In 2015, operating cash flow decreased to $1.67 billion from $2.05 billion in 2014. Capital expenditure totaled $704 million compared with $779 million a year ago.

Outlook

For 2016, Delphi Automotive expects revenues to be in the range of $16.6-$17 billion. Adjusted earnings per share are expected in the band of $5.80-$6.10.

Adjusted operating income is anticipated in the range of $2.2-$2.3 billion (13.3%-13.6% of sales) in 2016. Meanwhile, capital expenditure is projected to be around $800 million and operating cash flow is expected to be about $2 billion.

Zacks Rank

Delphi Automotive carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include General Motors Company GM , Ferrari N.V. RACE and Lear Corp. LEA . All these stocks carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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