Delphi Automotive PLC (DLPH) saw a 14.5% rise in adjusted earnings to $1.42 per share in the second quarter of 2014 from $1.24 per share in the prior-year quarter. Earnings also beat the Zacks Consensus Estimate of $1.32 a share. Adjusted net income increased 11.3% to $432 million from $388 million a year ago.

Including special items consisting of restructuring charges, acquisition-related integration costs, asset impairments and losses on extinguishment of debt, Delphi Automotive reported a profit of $382 million or $1.26 per share in the second quarter of 2014 compared with $367 million or $1.17 per share a year ago.

Revenues rose 5% to $4.45 billion but missed the Zacks Consensus Estimate of $4.46 billion. After excluding the impact of currency exchange, commodity movements, acquisitions and divestitures, revenues increased 3% year over year. The upside was led by a performance improvement of 13% in Asia and 7% in North America, partially offset by a 24% decline in South America. Results from Europe remained flat year over year.

Adjusted operating income increased 7% to $547 million from $513 million in the second quarter of fiscal 2013. Operating margin came in at 12.3% versus 12.1% a year ago. The rise in adjusted operating income can be attributed to better performance in Asia and North America, together with benefits from ongoing restructuring programs in Europe.

Segment Details

In the Electrical/Electronic Architecture segment, revenues rose 6% to $2.2 billion. In the Powertrain Systems segment, revenues improved 3% to $1.2 billion. The Electronics and Safety segment’s revenues improved 4% to $753 million from $725 million a year ago. Revenues at the Thermal Systems segment increased 6% to $397 million from $373 million.

Share Repurchase Update

In the second quarter of 2014, Delphi Automotive repurchased about 3.27 million shares for $220 million under the existing share repurchase program. As of Jun 30, 2014, the company had roughly $813 million available under its share repurchase program.

Dividend Update

On Jul 14, 2014, Delphi Automotive declared a quarterly cash dividend of 25 cents per share, payable on Aug 27, 2014 to shareholders of record as of Aug 13, 2014.

Financial Position

Delphi Automotive had cash and cash equivalents of $1.2 billion as of Jun 30, 2014, compared with $1.4 million as of Dec 31, 2013. Total debt amounted to $2.45 billion as of Jun 30, 2014, as against $2.41 billion as of Dec 31, 2013.

In the first half of 2014, operating cash flow increased to $763 million from $672 million in the year-ago period. Capital expenditure was $470 million compared with $336 million in the same period a year ago.

Outlook

For the third quarter of 2014, Delphi Automotive expects adjusted earnings in the range of $1.10 to $1.18 per share. Revenues are anticipated in the band of $4.2–$4.3 billion. Adjusted operating income is likely to be in the range of $450–$480 million (10.7–11.2% of sales).

For 2014, Delphi Automotive raised the adjusted earnings expectation to the range of $4.95 to $5.10 from the previous estimate of $4.80 to $5.00 per share. Revenues are expected in the band of $17.2–$17.6 billion. Adjusted operating income will likely range from $2 billion to $2.05 billion (11.6% of sales) in 2014. The company’s capital expenditure guidance stands at $800 million.

Delphi Automotive carries a Zacks Rank #2 (Buy). Some better-ranked stocks that are worth considering in the auto sector include Visteon Corporation (VC), Accuride Corp. (ACW) and Cooper Tire & Rubber Co. (CTB). All these stocks sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on CTB
Read the Full Research Report on VC
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Read the Full Research Report on ACW


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