Delphi Reports Second Quarter 2017 Financial Results; Raises Full Year Outlook

GILLINGHAM, England, Aug. 2, 2017 /PRNewswire/ -- Delphi Automotive PLC (NYSE: DLPH), a leading global technology company serving the automotive sector, today reported second quarter 2017 U.S. GAAP earnings from continuing operations of $1.38 per diluted share. Excluding special items, second quarter earnings from continuing operations totaled $1.71 per diluted share.

Second Quarter Highlights Include:

    --  Revenue of $4.3 billion, up 5% adjusted for currency exchange, commodity
        movements, acquisitions and divestitures
    --  U.S. GAAP net income from continuing operations of $369 million, diluted
        earnings per share from continuing operations of $1.38
        --  Excluding special items, earnings from continuing operations of
            $1.71 per diluted share, up 8%
    --  Adjusted Operating Income of $587 million, up 1%
        --  U.S. GAAP Operating Income margin of 10.8%. Adjusted Operating
            Income margin of 13.6%
    --  Generated $599 million of cash from continuing operations
    --  Share repurchases and dividends of $173 million

Year-to-Date Highlights Include:

    --  Revenue of $8.6 billion, up 7% adjusted for currency exchange, commodity
        movements, acquisitions and divestitures
    --  U.S. GAAP net income from continuing operations of $704 million, diluted
        earnings per share from continuing operations of $2.62
        --  Excluding special items, earnings from continuing operations of
            $3.29 per diluted share, up 12%
    --  Adjusted Operating Income of $1,124 million, up 3%
        --  U.S. GAAP Operating Income margin of 10.8%. Adjusted Operating
            Income margin of 13.1%
    --  Generated $889 million of cash from continuing operations
    --  Share repurchases and dividends of $444 million
    --  Spin-off of Powertrain Systems segment remains on track for completion
        by March 2018
    --  Raising full year outlook for sales and earnings

"Delphi delivered another strong quarter driven by our portfolio of relevant technologies," said Kevin Clark, president and chief executive officer. "Based on our strong first half performance, we are raising our sales and earnings outlook for the year. We continue to execute as planned on the announced spin-off of our Powertrain segment and remain committed to providing value to our customers and creating value for our shareholders."

Second Quarter 2017 Results

The Company reported second quarter 2017 revenue of $4.3 billion, an increase of 3% from the prior year period. Adjusted for currency exchange, commodity movements and the divestiture of the Company's Mechatronics businesses, revenue increased by 5% in the second quarter. This reflects growth of 3% in Europe, 16% in Asia, 15% in South America and consistent performance in North America.

The Company reported second quarter 2017 U.S. GAAP net income from continuing operations of $369 million and earnings from continuing operations of $1.38 per diluted share, compared to $258 million and $0.94 per diluted share in the prior year period. Second quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $457 million, or $1.71 per diluted share, which includes the favorable impacts of a reduced share count and a lower tax rate compared to the prior period. Adjusted Net Income in the prior year period was $435 million, or $1.59 per diluted share.

Second quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $587 million, compared to $580 million in the prior year period, resulting from the continued above-market growth of our businesses in all regions. Second quarter Adjusted Operating margin was 13.6%, compared to 13.8% in the prior year period, reflecting the 40 basis point impact of the Mechatronics divestiture as well as continued investments for growth, offset by sales growth and the beneficial impacts of cost reduction initiatives, including our continuing rotation to best cost manufacturing locations in Europe. Depreciation and amortization expense (including asset impairment charges) totaled $181 million, a decrease from $190 million in the prior year period.

Interest expense for the second quarter totaled $35 million, as compared to $41 million in the prior year period, which reflects the benefits of our debt refinancing transactions in the third quarter of 2016.

Tax expense in the second quarter of 2017 was $62 million, resulting in an effective tax rate of approximately 14%, compared to $84 million, or an effective rate of 24%, in the prior year period. The decrease in the effective tax rate reflects the geographic mix of pretax earnings and the absence of certain restructuring charges recorded in the prior period for which no tax benefit was recognized.

The Company generated net cash flow from operating activities of $599 million in the second quarter, compared to $575 million in the prior year period.

Year-to-Date 2017 Results

For the six months ended June 30, 2017, the Company reported revenue of $8.6 billion, an increase of 4% from the prior year period, reflecting volume growth in all regions. Adjusted for currency exchange, commodity movements and the divestiture of the Company's Mechatronics businesses, revenue increased by 7% during the period. This reflects growth of 3% in North America, 6% in Europe, 13% in Asia and 15% in South America.

For the 2017 year-to-date period, the Company reported U.S. GAAP net income from continuing operations of $704 million and earnings from continuing operations of $2.62 per diluted share, compared to $578 million and $2.10 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $885 million, or $3.29 per diluted share, which includes the favorable impacts of a reduced share count and a lower tax rate compared to the prior period. Adjusted Net Income in the prior year period was $812 million, or $2.95 per diluted share.

The Company reported Adjusted Operating Income of $1,124 million for the six months ended June 30, 2017, compared to $1,092 million in the prior year period, resulting from the continued above-market growth of our businesses in all regions. Adjusted Operating margin was 13.1% for the six months ended June 30, 2017, compared to 13.2% in the prior year period, reflecting the 30 basis point impact of the Mechatronics divestiture, continued investments for growth and warranty charges, offset by sales growth and the beneficial impacts of cost reduction initiatives, including our continuing rotation to best cost manufacturing locations in Europe. Depreciation and amortization expense totaled $356 million, an increase from $352 million in the prior year period.

Interest expense for the six months ended June 30, 2017 totaled $69 million, as compared to $82 million in the prior year period, which reflects the benefits of our debt refinancing transactions in the third quarter of 2016.

Tax expense for the six months ended June 30, 2017 was $123 million, resulting in an effective tax rate of approximately 15%, compared to $159 million, or an effective rate of 21%, in the prior year period. The decrease in the effective tax rate reflects the geographic mix of pretax earnings, the absence of certain restructuring charges recorded in the prior period for which no tax benefit was recognized and the impacts of discrete items.

The Company generated net cash flow from operating activities of $889 million in the six months ended June 30, 2017, compared to $843 million in the prior year period. As of June 30, 2017, the Company had cash and cash equivalents of $0.8 billion and total debt of $4.1 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 Program

During the second quarter of 2017, the Company repurchased 1.09 million shares for approximately $95 million under its existing authorized share repurchase program, leaving approximately $1,084 million available for future share repurchases. Year-to-date, the Company repurchased 3.65 million shares for approximately $288 million. 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.

Q3 and Full Year 2017 Outlook

The Company's third quarter and full year 2017 financial guidance is as follows:


    (in millions, except per share
     amounts)                         Q3 2017        Full Year 2017
    ------------------------------    -------        --------------

    Net sales                        $4,000 - $4,100  $16,850 - $17,050

    Adjusted operating income            $520 - $540    $2,240 - $2,300

    Adjusted operating income margin          ~13.1%    ~13.4% - 13.5%

    Adjusted net income per share      $1.52 - $1.58      $6.55 - $6.75

    Cash flow from operations                                    $1,850

    Capital expenditures                                           $850

    Adjusted effective tax rate                 ~15%              ~15%

Spin-off of Powertrain Systems Segment

The Company continued its progress toward the planned tax-free spin-off of its Powertrain Systems segment into a new, independent publicly traded company, and remains on track to complete the transaction by March 2018. Certain details of the separation were included in the initial Form 10 registration statement that was filed with the Securities and Exchange Commission in June 2017, and further information will be included in future amendments to the Form 10 registration statement. Powertrain intends to have its ordinary shares listed on the New York Stock Exchange. There can be no assurance regarding the timing of the spin-off or its completion, and the transaction is subject to customary market, regulatory and other conditions.

Conference Call and Webcast

The Company will host a conference call to discuss the planned transaction and these results at 9:00 a.m. (ET) today, which is accessible by dialing 888.486.0553 (US domestic) or 706.634.4982 (international) or through a webcast at http://investor.delphi.com/. The conference ID number is 54160666. 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 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, income (loss) from discontinued operations, net of tax, restructuring, separation costs related to the planned spin-off of the Powertrain Systems segment, other acquisition and portfolio project costs, asset impairments and gains (losses) on business divestitures. 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 Delphi before discontinued operations, 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 from continuing operations, 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 Delphi

Delphi Automotive PLC (NYSE: DLPH) is a high-technology company that integrates safer, greener and more connected solutions for the automotive and transportation sectors. Headquartered in Gillingham, U.K., Delphi operates technical centers, manufacturing sites and customer support services in 46 countries. Visit delphi.com.

Forward-Looking Statements

This press release, as well as other statements made by Delphi Automotive 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.


                                                                                    DELPHI AUTOMOTIVE PLC

                                                                            CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                         (Unaudited)


                                                                                                       Three Months Ended June 30,                     Six Months Ended June 30,

                                                                                                          2017                   2016                      2017                   2016
                                                                                                          ----                   ----                      ----                   ----

                                                                                                                        (in millions, except per share amounts)

    Net sales                                                                                                     $4,318                                          $4,206                $8,610  $8,257

    Operating expenses:

    Cost of sales                                                                                        3,419                              3,346                               6,864     6,608

    Selling, general and administrative                                                                    301                                278                                 589       555

    Amortization                                                                                            33                                 34                                  66        67

    Restructuring                                                                                           97                                154                                 159       189
                                                                                                           ---                                ---                                 ---       ---

    Total operating expenses                                                                             3,850                              3,812                               7,678     7,419
                                                                                                         -----                              -----                               -----     -----

    Operating income                                                                                       468                                394                                 932       838

    Interest expense                                                                                      (35)                              (41)                               (69)     (82)

    Other income (expense), net                                                                              8                                (5)                               (20)      (4)
                                                                                                           ---                                ---                                 ---       ---

    Income from continuing operations before income taxes and equity income                                441                                348                                 843       752

    Income tax expense                                                                                    (62)                              (84)                              (123)    (159)
                                                                                                           ---                                ---                                ----      ----

    Income from continuing operations before equity income                                                 379                                264                                 720       593

    Equity income, net of tax                                                                                7                                  7                                  18        13
                                                                                                           ---                                ---                                 ---       ---

    Income from continuing operations                                                                      386                                271                                 738       606

    Income from discontinued operations, net of tax                                                          -                                 -                                  -      108
                                                                                                           ---                               ---                                ---      ---

    Net income                                                                                             386                                271                                 738       714

    Net income attributable to noncontrolling interest                                                      17                                 13                                  34        31

    Net income attributable to Delphi                                                                               $369                                            $258                  $704    $683
                                                                                                                    ====                                            ====                  ====    ====


    Amounts attributable to Delphi:

    Income from continuing operations                                                                               $369                                            $258                  $704    $578

    Income from discontinued operations                                                                      -                                 -                                  -      105
                                                                                                           ---                               ---                                ---      ---

    Net income                                                                                                      $369                                            $258                  $704    $683
                                                                                                                    ====                                            ====                  ====    ====


    Diluted net income per share:

    Continuing operations                                                                                          $1.38                                           $0.94                 $2.62   $2.10

    Discontinued operations                                                                                  -                                 -                                  -     0.38
                                                                                                           ---                               ---                                ---     ----

    Diluted net income per share attributable to Delphi                                                            $1.38                                           $0.94                 $2.62   $2.48
                                                                                                                   =====                                           =====                 =====   =====

    Weighted average number of diluted shares outstanding                                               268.03                             273.37                              268.78    275.20
                                                                                                        ======                             ======                              ======    ======


    Cash dividends declared per share                                                                              $0.29                                           $0.29                 $0.58   $0.58


                                                  DELPHI AUTOMOTIVE PLC

                                               CONSOLIDATED BALANCE SHEETS


                                                                            June 30,              December 31,
                                                                                  2017                     2016


                                                                           (Unaudited)
                                                                           ----------

                                                                                       (in millions)

    ASSETS

    Current assets:

    Cash and cash equivalents                                                              $792                          $838

    Restricted cash                                                                  1                              1

    Accounts receivable, net                                                     3,127                          2,938

    Inventories                                                                  1,485                          1,232

    Other current assets                                                           444                            410
                                                                                   ---                            ---

    Total current assets                                                         5,849                          5,419

    Long-term assets:

    Property, net                                                                3,671                          3,515

    Investments in affiliates                                                      127                            101

    Intangible assets, net                                                       1,232                          1,240

    Goodwill                                                                     1,628                          1,508

    Other long-term assets                                                         549                            509
                                                                                   ---                            ---

    Total long-term assets                                                       7,207                          6,873
                                                                                 -----                          -----

    Total assets                                                                        $13,056                       $12,292
                                                                                        =======                       =======

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

    Short-term debt                                                                         $13                           $12

    Accounts payable                                                             2,603                          2,563

    Accrued liabilities                                                          1,554                          1,573
                                                                                 -----                          -----

    Total current liabilities                                                    4,170                          4,148

    Long-term liabilities:

    Long-term debt                                                               4,059                          3,959

    Pension benefit obligations                                                    986                            955

    Other long-term liabilities                                                    556                            467
                                                                                   ---                            ---

    Total long-term liabilities                                                  5,601                          5,381
                                                                                 -----                          -----

    Total liabilities                                                            9,771                          9,529
                                                                                 -----                          -----

    Commitments and contingencies

    Total Delphi shareholders' equity                                            2,895                          2,401

    Noncontrolling interest                                                        390                            362
                                                                                   ---                            ---

    Total shareholders' equity                                                   3,285                          2,763
                                                                                 -----                          -----

    Total liabilities and shareholders' equity                                          $13,056                       $12,292
                                                                                        =======                       =======


                                                                                                         DELPHI AUTOMOTIVE PLC

                                                                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


                                                                                                                                                  Six Months Ended June 30,

                                                                                                                                                     2017                  2016
                                                                                                                                                     ----                  ----

                                                                                                                                                      (in millions)

    Cash flows from operating activities:

    Net income                                                                                                                                                $738                     $714

    Income from discontinued operations, net of tax                                                                                                     -                         108
                                                                                                                                                      ---                         ---

    Income from continuing operations                                                                                                                 738                          606

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

    Depreciation and amortization                                                                                                                     356                          352

    Restructuring expense, net of cash paid                                                                                                            53                           93

    Deferred income taxes                                                                                                                               3                            9

    Income from equity method investments, net of dividends received                                                                                 (18)                         (9)

    Other, net                                                                                                                                         80                           63

    Changes in operating assets and liabilities:

    Accounts receivable, net                                                                                                                        (184)                       (141)

    Inventories                                                                                                                                     (253)                       (136)

    Accounts payable                                                                                                                                  121                           75

    Other, net                                                                                                                                         30                         (30)

    Pension contributions                                                                                                                            (37)                        (39)
                                                                                                                                                      ---                          ---

    Net cash provided by operating activities                                                                                                         889                          843
                                                                                                                                                      ---                          ---

    Cash flows from investing activities:

    Capital expenditures                                                                                                                            (393)                       (412)

    Proceeds from sale of property / investments                                                                                                        7                            8

    Net proceeds from divestiture of discontinued operations                                                                                            -                          52

    Cost of business acquisitions, net of cash acquired                                                                                              (40)                        (15)

    Cost of technology investments                                                                                                                   (25)                         (3)

    Settlement of derivatives                                                                                                                        (12)                        (16)

    Net cash used in investing activities from continuing operations                                                                                (463)                       (386)

    Net cash used in investing activities from discontinued operations                                                                                  -                         (4)
                                                                                                                                                      ---                         ---

    Net cash used in investing activities                                                                                                           (463)                       (390)
                                                                                                                                                     ----                         ----

    Cash flows from financing activities:

    Net (repayments) proceeds under other short-term debt agreements                                                                                  (5)                          51

    Contingent consideration and deferred acquisition purchase price payments                                                                        (20)                           -

    Dividend payments of consolidated affiliates to minority shareholders                                                                            (10)                        (12)

    Repurchase of ordinary shares                                                                                                                   (289)                       (435)

    Distribution of cash dividends                                                                                                                  (156)                       (159)

    Taxes withheld and paid on employees' restricted share awards                                                                                    (33)                        (40)
                                                                                                                                                      ---                          ---

    Net cash used in financing activities                                                                                                           (513)                       (595)
                                                                                                                                                     ----                         ----

    Effect of exchange rate fluctuations on cash and cash equivalents                                                                                  41                            -
                                                                                                                                                      ---                          ---

    Decrease in cash and cash equivalents                                                                                                            (46)                       (142)

    Cash and cash equivalents at beginning of period                                                                                                  838                          579

    Cash and cash equivalents at end of period                                                                                                                $792                     $437
                                                                                                                                                              ====                     ====


                                                                                                                                DELPHI AUTOMOTIVE PLC

                                                                                                                                      FOOTNOTES

                                                                                                                                     (Unaudited)


    1. Segment Summary


                                                                                          Three Months Ended June 30,                      Six Months Ended June 30,

                                                                                        2017                      2016        %                          2017             2016  %
                                                                                        ----                      ----       ---                         ----             ---- ---

                                                                                          (in millions)                                                  (in millions)

    Net Sales
    ---------

    Electrical/Electronic Architecture                                                           $2,345                                 $2,352                             -%      $4,687         $4,629  1%

    Powertrain Systems                                                                 1,187                           1,146                               4%           2,355         2,263    4%

    Electronics and Safety                                                               821                             748                              10%           1,639         1,445   13%

    Eliminations and Other (a)                                                          (35)                           (40)                                            (71)         (80)
                                                                                         ---                             ---                                              ---           ---

    Net Sales                                                                                    $4,318                                 $4,206                                      $8,610         $8,257
                                                                                                 ======                                 ======                                      ======         ======


    Adjusted Operating Income
    -------------------------

    Electrical/Electronic Architecture                                                             $333                                   $345                           (3)%         $662           $652  2%

    Powertrain Systems                                                                   162                             134                              21%             322           259   24%

    Electronics and Safety                                                                92                             101                             (9)%             140           181 (23)%

    Eliminations and Other (a)                                                             -                              -                                               -            -
                                                                                         ---                            ---                                             ---          ---

    Adjusted Operating Income                                                                      $587                                   $580                                      $1,124         $1,092
                                                                                                   ====                                   ====                                      ======         ======


    (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 Delphi for the three and six months ended June 30, 2017 and 2016:


                                                                                                                             Three Months Ended June 30,                Six Months Ended June 30,

                                                                                                                                  2017                2016                   2017                2016
                                                                                                                                  ----                ----                   ----                ----

                                                                                                                                        (in millions, except per share data)

    Weighted average ordinary shares outstanding, basic                                                                         267.41                        272.92                          268.30   274.77

    Dilutive shares related to RSUs                                                                                               0.62                          0.45                            0.48     0.43
                                                                                                                                  ----                          ----                            ----     ----

    Weighted average ordinary shares outstanding, including dilutive shares                                                     268.03                        273.37                          268.78   275.20

    Basic net income per share:

    Continuing operations                                                                                                                 $1.38                                     $0.95              $2.62  $2.10

    Discontinued operations                                                                                                          -                            -                              -    0.38

    Basic net income per share attributable to Delphi                                                                                     $1.38                                     $0.95              $2.62  $2.48
                                                                                                                                          =====                                     =====              =====  =====

    Diluted net income per share:

    Continuing operations                                                                                                                 $1.38                                     $0.94              $2.62  $2.10

    Discontinued operations                                                                                                          -                            -                              -    0.38

    Diluted net income per share attributable to Delphi                                                                                   $1.38                                     $0.94              $2.62  $2.48
                                                                                                                                          =====                                     =====              =====  =====

DELPHI AUTOMOTIVE 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, income (loss) from discontinued operations, 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 June 30,                                     Six Months Ended June 30,

                                                                    2017                              2016                               2017                    2016
                                                                    ----                              ----                               ----                    ----

                                                                                                    ($ in millions)

                                                         $          Margin                   $          Margin                          $               Margin             $     Margin
                                                       ---          ------                 ---          ------                     ---               ------           ---     ------

    Net income attributable to Delphi                      $369                                                     $258                                                 $704                       $683

    Interest expense                                    35                                        41                                                69                                  82

    Other (income) expense, net                        (8)                                        5                                                20                                   4

    Income tax expense                                  62                                        84                                               123                                 159

    Equity income, net of tax                          (7)                                      (7)                                             (18)                               (13)

    Income from discontinued operations, net of tax      -                                        -                                                -                              (108)

    Net income attributable to noncontrolling interest  17                                        13                                                34                                  31
                                                                                                                                                 ---                                 ---

    Operating income                                       $468                           10.8%                          $394                              9.4%                      $932   10.8%          $838    10.1%
                                                           ----                            ----                           ----                               ---                       ----    ----           ----     ----

    Restructuring                                       97                                       154                                               159                                 189

    Separation costs                                    15                                         -                                               15                                   -

    Other acquisition and portfolio project costs        3                                        10                                                 9                                  43

    Asset impairments                                    4                                        22                                                 9                                  22

    Adjusted operating income                              $587                           13.6%                          $580                             13.8%                    $1,124   13.1%        $1,092    13.2%
                                                           ====                            ====                           ====                              ====                     ======    ====         ======     ====


    Segment Adjusted Operating Income

    (in millions)

    Three Months Ended June 30, 2017              Electrical/        Powertrain      Electronics       Eliminations   Total
                                                                     Systems        and Safety          and Other
                                                   Electronic
                                                  Architecture
                                                  ------------

    Operating income                                           $318                                $76                       $74     $   -   $468

    Restructuring                                           13                   67                                17           -   97

    Separation costs                                         -                  15                                 -          -   15

    Other acquisition and portfolio project costs            2                    -                                1           -    3

    Asset impairments                                        -                   4                                 -          -    4

    Adjusted operating income                                  $333                               $162                       $92     $   -   $587
                                                               ====                               ====                       ===   === ===   ====


    Depreciation and amortization (a)                          $104                                $52                       $25     $   -   $181


    Three Months Ended June 30, 2016              Electrical/        Powertrain      Electronics       Eliminations   Total
                                                                    Systems        and Safety          and Other
                                                   Electronic
                                                  Architecture
                                                  ------------

    Operating income (loss)                                    $323                              $(16)                      $87     $   -   $394

    Restructuring                                           17                  126                                11           -  154

    Other acquisition and portfolio project costs            5                    2                                 3           -   10

    Asset impairments                                        -                  22                                 -          -   22
                                                           ---

    Adjusted operating income                                  $345                               $134                      $101     $   -   $580
                                                               ====                               ====                      ====   === ===   ====


    Depreciation and amortization (a)                          $100                                $70                       $20     $   -   $190


    Six Months Ended June 30, 2017                Electrical/        Powertrain      Electronics       Eliminations   Total
                                                                    Systems        and Safety          and Other
                                                   Electronic
                                                  Architecture
                                                  ------------

    Operating income                                           $631                               $220                       $81     $   -   $932

    Restructuring                                           26                   77                                56           -  159

    Separation costs                                         -                  15                                 -          -   15

    Other acquisition and portfolio project costs            5                    2                                 2           -    9

    Asset impairments                                        -                   8                                 1           -    9

    Adjusted operating income                                  $662                               $322                      $140     $   - $1,124
                                                               ====                               ====                      ====   === === ======


    Depreciation and amortization (a)                          $205                               $102                       $49     $   -   $356


    Six Months Ended June 30, 2016                Electrical/        Powertrain      Electronics       Eliminations   Total
                                                                    Systems        and Safety          and Other
                                                   Electronic
                                                  Architecture
                                                  ------------

    Operating income                                           $585                                $96                      $157     $   -   $838

    Restructuring                                           35                  135                                19           -  189

    Other acquisition and portfolio project costs           32                    6                                 5           -   43

    Asset impairments                                        -                  22                                 -          -   22

    Adjusted operating income                                  $652                               $259                      $181     $   - $1,092
                                                               ====                               ====                      ====   === === ======


    Depreciation and amortization (a)                          $195                               $116                       $41     $   -   $352


    (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 Delphi before discontinued operations, 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 June 30,                   Six Months Ended June 30,

                                                                                 2017                  2016                      2017                 2016
                                                                                 ----                  ----                      ----                 ----

                                                                                            (in millions, except per share amounts)

    Net income attributable to Delphi                                                     $369                                           $258                 $704   $683

    Income from discontinued operations attributable to Delphi, net of tax          -                                -                                -    (105)
                                                                                  ---                              ---                              ---     ----

    Income from continuing operations attributable to Delphi                      369                               258                               704       578
                                                                                  ---                               ---                               ---       ---

    Adjusting items:

    Restructuring                                                                  97                               154                               159       189

    Separation costs                                                               15                                 -                               15         -

    Other acquisition and portfolio project costs                                   3                                10                                 9        43

    Asset impairments                                                               4                                22                                 9        22

    Reserve for Unsecured Creditors litigation                                   (17)                                -                               10         -

    Tax impact of adjusting items (a)                                            (14)                              (9)                             (21)     (20)

    Adjusted net income attributable to Delphi                                            $457                                           $435                 $885   $812
                                                                                          ====                                           ====                 ====   ====


    Weighted average number of diluted shares outstanding                      268.03                            273.37                            268.78    275.20
                                                                               ======                            ======                            ======    ======

    Diluted net income per share from continuing operations attributable                 $1.38                                          $0.94                $2.62  $2.10
      to Delphi


    Adjusted net income per share                                                        $1.71                                          $1.59                $3.29  $2.95
                                                                                         =====                                          =====                =====  =====


    (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 from continuing operations, adjusted for the purchase price of business acquisitions (including the settlement of foreign currency derivatives in 2016 related to the 2015 acquisition of HellermannTyton) 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 June 30,                Six Months Ended June 30,

                                                                             2017                  2016                  2017                  2016
                                                                             ----                  ----                  ----                  ----

                                                                                                     (in millions)

    Cash flows from operating activities:

    Income from continuing operations                                                 $386                                       $271                  $738  $606

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

    Depreciation and amortization                                             181                               190                            356       352

    Restructuring expense, net of cash paid                                    49                                88                             53        93

    Working capital                                                          (43)                                1                          (316)    (202)

    Pension contributions                                                    (18)                             (20)                          (37)     (39)

    Other, net                                                                 44                                45                             95        33

    Net cash provided by operating activities from continuing operations      599                               575                            889       843
                                                                              ---                               ---                            ---       ---


    Cash flows from investing activities:

    Capital expenditures                                                    (178)                            (172)                         (393)    (412)

    Net proceeds from divestiture of discontinued operations                    -                                -                             -       52

    Cost of business acquisitions, net of cash acquired                         -                                -                          (40)     (15)

    Cost of technology investments                                           (10)                                -                          (25)      (3)

    Settlement of derivatives                                                (12)                              (1)                          (12)     (16)

    Other, net                                                                  7                                 7                              7         8

    Net cash used in investing activities from continuing operations        (193)                            (166)                         (463)    (386)
                                                                             ----                              ----                           ----      ----


    Adjusting items:

    Adjustment for net proceeds from divestiture of discontinued                -                                -                             -     (52)
      operations

    Adjustment for the cost of business acquisitions, net of cash               -                                -                            40        15
      acquired

    Adjustment for settlement of derivatives related to business                -                                -                             -       15
      acquisition


    Cash flow before financing                                                        $406                                       $409                  $466  $435
                                                                                      ====                                       ====                  ====  ====

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 Q3                                Estimated Full Year

                                                                          2017 (1)                                      2017 (1)


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

    Adjusted Operating Income                                  $            Margin (2)                     $                  Margin (2)
    -------------------------                                ---            ---------                    ---                  ---------

    Net income attributable to Delphi                                $351                                                                  $1,480

    Interest expense                                          34                                                         138

    Other (income) expense, net                                -                                                         17

    Income tax expense                                        62                                                         267

    Equity income, net of tax                                (6)                                                       (30)

    Net income attributable to noncontrolling interest        15                                                          69
                                                             ---                                                         ---

    Operating income                                         456                              11.3%                                 1,941                 11.5%
                                                             ---                               ----                                  -----                  ----

    Restructuring                                             47                                                         242

    Separation costs                                          22                                                          61

    Other acquisition and portfolio project costs              5                                                          17

    Asset impairments                                          -                                                          9

    Adjusted operating income                                        $530                               13.1%                                     $2,270         13.4%
                                                                     ====                                ====                                      ======          ====


    Adjusted Net Income per share
    -----------------------------

    Net income attributable to Delphi                                $351                                                                  $1,480

    Restructuring                                             47                                                         242

    Separation costs                                          22                                                          61

    Other acquisition and portfolio project costs              5                                                          17

    Asset impairments                                          -                                                          9

    Reserve for Unsecured Creditors litigation                 -                                                         10

    Tax impact of adjusting items                           (10)                                                       (41)

    Adjusted net income attributable to Delphi                       $415                                                                  $1,778
                                                                     ====                                                                  ======


    Weighted average number of diluted shares outstanding 266.97                                                      267.52
                                                          ======                                                      ======

    Diluted net income per share attributable to Delphi             $1.31                                                                   $5.53
                                                                    =====                                                                   =====

    Adjusted net income per share                                   $1.55                                                                   $6.65
                                                                    =====                                                                   =====


             (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.

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SOURCE Delphi Automotive PLC