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Aptiv Reports First Quarter 2019 Financial Results Ahead of Expectations; Strong Outgrowth Continues Despite Weakening Macro Environment

DUBLIN, May 2, 2019 /PRNewswire/ -- Aptiv PLC (APTV), a global technology company enabling the future of mobility, today reported first quarter 2019 U.S. GAAP earnings of $0.92 per diluted share. Excluding special items, first quarter earnings totaled $1.05 per diluted share.

First Quarter Highlights Include:

  • Revenue of $3.6 billion, up 4% adjusted for currency exchange, commodity movements and divestitures
  • U.S. GAAP net income of $240 million, diluted earnings per share of $0.92
  • U.S. GAAP operating income margin of 8.3%
  • Generated $84 million of cash from operations
  • Returned $283 million to shareholders through share repurchases and dividends

"Our stronger than expected first quarter performance reflects our portfolio of leading technologies aligned to the safe, green and connected mega trends, driving sustained above-market growth," said Kevin Clark, president and chief executive officer. "While our revised outlook for the year reflects softer global vehicle production and further headwinds from foreign exchange and commodities compared to our prior guidance, we continue to see the benefits of our flexible operating model and technology portfolio position us well for outperformance as these headwinds mitigate in the back half of the year and into 2020. Our mission to be our customers' partner of choice, uniquely providing the brain and nervous system of the vehicle, has created a sustainable business advantage for Aptiv, which in turn allows us to deliver long-term value to our shareholders through innovation, effective execution, profitable growth, strong cash flow generation and disciplined capital deployment."

First Quarter 2019 Results

The Company reported first quarter 2019 revenue of $3.6 billion, a decrease of 2% from the prior year period. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 4% in the first quarter. This reflects growth of 7% in North America and 6% in Europe, partially offset by a decline of 12% in South America and 1% in Asia, which includes a decline of 12% in China.

The Company reported first quarter 2019 U.S. GAAP net income of $240 million and earnings of $0.92 per diluted share, compared to $307 million and $1.15 per diluted share in the prior year period. First quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $273 million, or $1.05 per diluted share, compared to $343 million, or $1.29 per diluted share, in the prior year period.

First quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $345 million, compared to $427 million in the prior year period. Adjusted Operating Income margin was 9.7%, compared to 11.8% in the prior year period, reflecting the unfavorable impacts of foreign currency exchange, vehicle production declines in China and continued incremental investments for growth, partially offset by above-market sales growth. Depreciation and amortization expense totaled $173 million, an increase from $155 million in the prior year period, reflecting increases related to our acquisitions and capital investments.

Interest expense for the first quarter totaled $38 million, as compared to $34 million in the prior year period, which reflects the impacts of our debt refinancing transactions in the first quarter of 2019.

Tax expense in the first quarter of 2019 was $33 million, resulting in an effective tax rate of approximately 12%, compared to $59 million, or an effective rate of approximately 16%, in the prior year period. The decrease in the effective tax rate reflects the geographic mix of pretax earnings and the impact of favorable discrete items.

The Company generated net cash flow from operating activities of $84 million in the first quarter. As of March 31, 2019, the Company had cash and cash equivalents of $321 million and total available liquidity of $2.1 billion.

Reconciliations of Adjusted Net Income, Adjusted Net Income Per Share, Adjusted Operating Income and Cash Flow Before Financing, which are non-GAAP measures, to the most directly comparable financial measures, respectively, calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP") are provided in the attached supplemental schedules.

Share Repurchase Programs

During the first quarter of 2019, the Company repurchased 2.84 million shares for approximately $226 million, leaving approximately $2.26 billion available for future share repurchases. All repurchased shares were retired, and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in-capital and retained earnings.

Q2 and Full Year 2019 Outlook

The Company's second quarter and full year 2019 financial guidance is as follows:

(in millions, except per share amounts)

Q2 2019 (1)

Full Year 2019 (1)

Net sales

$3,600 - $3,700

$14,425 - $14,825

Adjusted operating income

$375 - $395

$1,630 - $1,710

Adjusted operating income margin

10.4% - 10.7%

11.3% - 11.5%

Adjusted net income per share

$1.11 - $1.17

$4.90 - $5.10

Cash flow from operations


$1,650

Capital expenditures


$800

Adjusted effective tax rate

15% - 16%

14% - 15%



(1)

The Company's second quarter and full year 2019 financial guidance includes $12 million and $50 million, respectively, for the anticipated impacts of tariffs.

 

Conference Call and Webcast

The Company will host a conference call to discuss these results at 8:00 a.m. (ET) today, which is accessible by dialing 877.790.5109 (US domestic) or 647.689.5633 (international) or through a webcast at ir.aptiv.com. The conference ID number is 5593386. 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 Aptiv's financial results which are not presented in accordance with GAAP. Specifically, Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are non-GAAP financial measures. Adjusted Operating Income represents net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, restructuring, other acquisition and portfolio project costs, asset impairments, gains (losses) on business divestitures and deferred compensation related to acquisitions. Other acquisition and portfolio project costs include costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures. Adjusted Operating Income margin is defined as Adjusted Operating Income as a percentage of net sales.

Adjusted Net Income represents net income attributable to Aptiv before restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share represents Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the period. Cash Flow Before Financing represents cash provided by operating activities from continuing operations plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and net proceeds from the divestiture of discontinued operations and other significant businesses.

Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company's financial position, results of operations and liquidity. In particular, management believes Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are useful measures in assessing the Company's ongoing financial performance that, when reconciled to the corresponding 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 that may obscure underlying business results and trends. Management also uses these non-GAAP financial measures for internal planning and forecasting purposes.

Such non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the attached supplemental schedules 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 Aptiv

Aptiv is a global technology company that develops safer, greener and more connected solutions enabling the future of mobility. Visit aptiv.com.

Forward-Looking Statements

This press release, as well as other statements made by Aptiv PLC (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. 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.

 

 

APTIV PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended March 31,


2019


2018


(in millions, except per share amounts)

Net sales

$

3,575



$

3,630


Operating expenses:




Cost of sales

2,962



2,947


Selling, general and administrative

256



259


Amortization

34



30


Restructuring

26



20


Total operating expenses

3,278



3,256


Operating income

297



374


Interest expense

(38)



(34)


Other income, net

16



30


Income before income taxes and equity income

275



370


Income tax expense

(33)



(59)


Income before equity income

242



311


Equity income, net of tax

3



5


Net income

245



316


Net income attributable to noncontrolling interest

5



9


Net income attributable to Aptiv

$

240



$

307






Diluted net income per share:




Diluted net income per share attributable to Aptiv

$

0.92



$

1.15


Weighted average number of diluted shares outstanding

259.55



266.44


 

 

APTIV PLC

CONDENSED CONSOLIDATED BALANCE SHEETS



March 31,
 2019


December 31,
2018


(Unaudited)



(in millions)

ASSETS




Current assets:




Cash and cash equivalents

$

321



$

567


Restricted cash

1



1


Accounts receivable, net

2,736



2,487


Inventories

1,326



1,277


Other current assets

435



445


Total current assets

4,819



4,777


Long-term assets:




Property, net

3,218



3,179


Operating lease right-of-use assets

434




Investments in affiliates

102



99


Intangible assets, net

1,334



1,380


Goodwill

2,503



2,524


Other long-term assets

609



521


Total long-term assets

8,200



7,703


Total assets

$

13,019



$

12,480


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Short-term debt

$

542



$

306


Accounts payable

2,340



2,334


Accrued liabilities

1,132



1,054


Total current liabilities

4,014



3,694


Long-term liabilities:




Long-term debt

3,995



4,038


Pension benefit obligations

440



445


Long-term operating lease liabilities

350




Other long-term liabilities

585



633


Total long-term liabilities

5,370



5,116


Total liabilities

9,384



8,810


Commitments and contingencies




Total Aptiv shareholders' equity

3,418



3,459


Noncontrolling interest

217



211


Total shareholders' equity

3,635



3,670


Total liabilities and shareholders' equity

$

13,019



$

12,480


 

 

APTIV PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended March 31,


2019


2018


(in millions)

Cash flows from operating activities:




Net income

$

245



$

316


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

173



155


Restructuring expense, net of cash paid

(5)



(16)


Deferred income taxes

4



(7)


Income from equity method investments, net of dividends received

(3)



(5)


Loss on extinguishment of debt

6




Other, net

27



26


Changes in operating assets and liabilities:




Accounts receivable, net

(249)



(206)


Inventories

(49)



(119)


Accounts payable

53



140


Other, net

(110)



(87)


Pension contributions

(8)



(11)


Net cash provided by operating activities from continuing operations

84



186


Net cash used in operating activities from discontinued operations



(31)


Net cash provided by operating activities

84



155


Cash flows from investing activities:




Capital expenditures

(235)



(243)


Proceeds from sale of property / investments

3



3


Cost of business acquisitions, net of cash acquired

2




Deposit for acquisition of KUM



(5)


Cost of technology investments

(3)




Settlement of derivatives

(2)




Net cash used in investing activities

(235)



(245)


Cash flows from financing activities:




Increase in other short and long-term debt, net

229



35


Repayment of senior notes

(654)




Proceeds from issuance of senior notes, net of issuance costs

643




Repurchase of ordinary shares

(226)



(149)


Distribution of cash dividends

(57)



(59)


Taxes withheld and paid on employees' restricted share awards

(34)



(32)


Net cash used in financing activities

(99)



(205)


Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

4



44


Decrease in cash, cash equivalents and restricted cash

(246)



(251)


Cash, cash equivalents and restricted cash at beginning of period

568



1,597


Cash, cash equivalents and restricted cash at end of period

$

322



$

1,346


 

 

APTIV PLC

FOOTNOTES

(Unaudited)


1. Segment Summary



Three Months Ended March 31,


2019


2018


%


(in millions)



Net Sales






Signal and Power Solutions

$

2,562



$

2,617



(2)%

Advanced Safety and User Experience

1,023



1,032



(1)%

Eliminations and Other (a)

(10)



(19)




Net Sales

$

3,575



$

3,630










Adjusted Operating Income






Signal and Power Solutions

$

283



$

351



(19)%

Advanced Safety and User Experience

62



76



(18)%

Eliminations and Other (a)






Adjusted Operating Income

$

345



$

427










(a) Eliminations and Other includes the elimination of inter-segment transactions.

 

 

2. Weighted Average Number of Diluted Shares Outstanding


The following table illustrates the weighted average shares outstanding used in calculating basic and diluted net income
per share attributable to Aptiv for the three months ended March 31, 2019 and 2018:



Three Months Ended March 31,


2019


2018


(in millions, except per share amounts)

Weighted average ordinary shares outstanding, basic

259.08



265.69


Dilutive shares related to RSUs

0.47



0.75


Weighted average ordinary shares outstanding, including dilutive shares

259.55



266.44


Net income per share attributable to Aptiv




Basic

$

0.93



$

1.16


Diluted

$

0.92



$

1.15


 

 

APTIV PLC

RECONCILIATION OF NON-GAAP MEASURES

(Unaudited)


In this press release the Company has provided information regarding certain non-GAAP financial measures, including "Adjusted Operating Income," "Adjusted Net Income," "Adjusted Net Income Per Share" and "Cash Flow Before Financing." Such non-GAAP financial measures are reconciled to their closest GAAP financial measure in the following schedules.


Adjusted Operating Income: 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 and other special items. 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. Operating income margin represents Operating income as a percentage of net sales, and Adjusted Operating Income margin represents Adjusted Operating Income as a percentage of net sales.

 


Consolidated Adjusted Operating Income


Three Months Ended March 31,


2019


2018


($ in millions)


$


Margin


$


Margin

Net income attributable to Aptiv

$

240





$

307




Interest expense

38





34




Other income, net

(16)





(30)




Income tax expense

33





59




Equity income, net of tax

(3)





(5)




Net income attributable to noncontrolling interest

5





9




Operating income

$

297



8.3

%


$

374



10.3

%

Restructuring

26





20




Other acquisition and portfolio project costs

11





19




Deferred compensation related to nuTonomy acquisition

11





14




Adjusted operating income

$

345



9.7

%


$

427



11.8

%

 

 

Segment Adjusted Operating Income

(in millions)








Three Months Ended March 31, 2019

Signal and
Power Solutions


Advanced
Safety and User
Experience


Eliminations
and Other


Total

Operating income

$

257



$

40



$



$

297


Restructuring

19



7





26


Other acquisition and portfolio project costs

7



4





11


Deferred compensation related to nuTonomy acquisition



11





11


Adjusted operating income

$

283



$

62



$



$

345










Depreciation and amortization (a)

$

131



$

42



$



$

173










Three Months Ended March 31, 2018

Signal and
Power Solutions


Advanced
Safety and User
Experience


Eliminations
and Other


Total

Operating income

$

322



$

52



$



$

374


Restructuring

18



2





20


Other acquisition and portfolio project costs

11



8





19


Deferred compensation related to nuTonomy acquisition



14





14


Adjusted operating income

$

351



$

76



$



$

427










Depreciation and amortization (a)

$

119



$

36



$



$

155










(a) Includes asset impairments.

 

Adjusted Net Income and Adjusted Net Income Per Share: 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 Aptiv 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.

 


Three Months Ended March 31,


2019


2018


(in millions, except per share amounts)

Net income attributable to Aptiv

$

240



$

307


Adjusting items:




Restructuring

26



20


Other acquisition and portfolio project costs

11



19


Deferred compensation related to nuTonomy acquisition

11



14


Debt extinguishment costs

6




Transaction and related (benefits) costs associated with acquisitions



(11)


Gain on changes in fair value of equity investments

(19)




Tax impact of adjusting items (a)

(2)



(6)


Adjusted net income attributable to Aptiv

$

273



$

343






Weighted average number of diluted shares outstanding

259.55



266.44


Diluted net income per share attributable to Aptiv

$

0.92



$

1.15


Adjusted net income per share

$

1.05



$

1.29




(a)

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.

 

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, evaluating its liquidity and determining appropriate capital allocation strategies. Management believes this measure is useful to investors to understand how the Company's core operating activities generate and use cash. Cash Flow Before Financing is defined as cash provided by operating activities from continuing operations plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and net proceeds from the divestiture of discontinued operations and other significant businesses. 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 calculation of Cash Flow Before Financing does not reflect cash used to service debt, pay dividends or repurchase shares and, therefore, does not necessarily reflect funds available for investment or other discretionary uses.

 


Three Months Ended March 31,


2019


2018


(in millions)

Cash flows from operating activities:




Net income

$

245



$

316


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

173



155


Restructuring expense, net of cash paid

(5)



(16)


Working capital

(245)



(185)


Pension contributions

(8)



(11)


Other, net

(76)



(73)


Net cash provided by operating activities from continuing operations

84



186






Cash flows from investing activities:




Capital expenditures

(235)



(243)


Cost of business acquisitions, net of cash acquired

2




Deposit for acquisition of KUM



(5)


Cost of technology investments

(3)




Settlement of derivatives

(2)




Other, net

3



3


Net cash used in investing activities

(235)



(245)






Adjusting items:




Adjustment for amount deposited for acquisition of KUM



5


Adjustment for the cost of business acquisitions, net of cash acquired

(2)




Cash flow before financing

$

(153)



$

(54)


 

 

Financial Guidance: The reconciliation of the forward-looking non-GAAP financial measures provided in the Company's financial guidance to the most comparable forward-looking GAAP measure is as follows:

 


Estimated Q2


Estimated Full Year


2019 (1)


2019 (1)


($ and shares in millions, except per share amounts)

Adjusted Operating Income

$


Margin (2)


$


Margin (2)

Net income attributable to Aptiv

$

237





$

1,128




Interest expense

39





156




Other income, net

(8)





(32)




Income tax expense

50





195




Equity income, net of tax

(4)





(21)




Net income attributable to noncontrolling interest

9





40




Operating income

323



8.8

%


1,466



10.0

%

Restructuring

40





126




Other acquisition and portfolio project costs

10





35




Deferred compensation related to nuTonomy acquisition

12





43




Adjusted operating income

$

385



10.5

%


$

1,670



11.4

%









Adjusted Net Income Per Share








Net income attributable to Aptiv

$

237





$

1,128




Restructuring

40





126




Other acquisition and portfolio project costs

10





35




Deferred compensation related to nuTonomy acquisition

12





43




Debt extinguishment costs





6




Gain on changes in fair value of equity investments





(19)




Tax impact of adjusting items

(5)





(29)




Adjusted net income attributable to Aptiv

$

294





$

1,290












Weighted average number of diluted shares outstanding

258.59





258.06




Diluted net income per share attributable to Aptiv

$

0.92





$

4.37




Adjusted net income per share

$

1.14





$

5.00






(1)

Prepared at the estimated mid-point of the Company's financial guidance range.



(2)

Represents operating income and Adjusted Operating Income, respectively, as a percentage of estimated net sales.

 

Cision

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