Aptiv Reports 2017 Financial Results, Exceeding Company's Previous Outlook
GILLINGHAM, England, Feb. 1, 2018 /PRNewswire/ -- Aptiv PLC (NYSE: APTV), a global technology company enabling the future of mobility, today reported full year 2017 U.S. GAAP earnings from continuing operations of $3.81 per diluted share. Excluding special items, 2017 earnings from continuing operations totaled $4.64 per diluted share.
Full Year 2017 Highlights Include:
-- Revenue of $12.9 billion, up 5% adjusted for currency exchange,
commodity movements, acquisitions and divestitures
-- U.S. GAAP net income from continuing operations of $1,021 million,
diluted earnings per share from continuing operations of $3.81
-- Excluding special items, earnings from continuing operations of
$4.64 per diluted share
-- U.S. GAAP Operating Income margin of 11.0%
-- Adjusted Operating Income margin of 12.4%; Adjusted Operating Income
of $1,594 million
-- Generated $1,106 million of cash from continuing operations
-- Returned $693 million to shareholders through share repurchases and
dividends
-- Completed the spin-off of Powertrain Systems segment
-- Powertrain Systems classified as discontinued operations for all
periods presented
-- Received dividend of $1,148 million in connection with the spin-off
Fourth Quarter Highlights Include:
-- Revenue of $3.4 billion, up 4% adjusted for currency exchange, commodity
movements, acquisitions and divestitures
-- U.S. GAAP net income from continuing operations of $207 million, diluted
earnings per share from continuing operations of $0.77
-- Excluding special items, earnings from continuing operations of
$1.28 per diluted share
-- U.S. GAAP Operating Income margin of 11.2%
-- Adjusted Operating Income margin of 13.1%; Adjusted Operating Income
of $450 million
"Our team's disciplined execution delivered strong financial performance in 2017 that exceeded our expectations, as we continue to invest and reposition the company for the future," said Kevin Clark, president and chief executive officer. "Aptiv remains highly focused on delivering value to shareholders through innovation, profitable growth, strong cash flow generation and disciplined capital deployment. Our 2018 outlook reflects that commitment, with double-digit growth in our fastest-growing product lines, including active safety, infotainment, vehicle electrification and connected services. This outlook underscores our unparalleled commitment to solving mobility's toughest challenges."
Full Year 2017 Results
The Company reported full year 2017 revenue of $12.9 billion, an increase of 5% from the prior year. Adjusted for currency exchange, commodity movements and the divestiture of the Company's Mechatronics business, revenue increased by 5% during the year. This reflects growth of 9% in Europe, 10% in Asia and 24% in South America, partially offset by a decline of 3% in North America.
For full year 2017, the Company reported U.S. GAAP net income from continuing operations of $1,021 million and earnings from continuing operations of $3.81 per diluted share, compared to $834 million and $3.05 per diluted share in the prior year. Full year 2017 Adjusted Net Income, a non-GAAP financial measure defined below, totaled $1,243 million, or $4.64 per diluted share. Adjusted Net Income in the prior year was $1,224 million, or $4.47 per diluted share.
The Company reported Adjusted Operating Income, a non-GAAP financial measure defined below, of $1,594 million for full year 2017, compared to $1,623 million in the prior year. Adjusted Operating Income margin was 12.4% for full year 2017, compared to 13.2% in the prior year, reflecting the 40 basis point impact of the Mechatronics divestiture and continued incremental investments for growth, partially offset by sales growth and the beneficial impacts of cost reduction initiatives. Depreciation and amortization expense totaled $546 million, an increase from $489 million in the prior year.
Interest expense for full year 2017 totaled $140 million, as compared to $155 million in the prior year, which reflects the benefits of our debt refinancing transactions in the third quarter of 2016. Additionally, the year ended December 31, 2016 included a loss on the extinguishment of debt totaling $73 million.
Tax expense for full year 2017 was $223 million, resulting in an effective tax rate of approximately 18%, which includes approximately $55 million, or 4 points, for the one-time impacts of the U.S. tax reform enactment. Tax expense for full year 2016 was $167 million, resulting in an effective tax rate of approximately 17%.
The Company generated net cash flow from continuing operating activities of $1,106 million in 2017, compared to $1,494 million in the prior year, primarily reflecting the $310 million payment made in 2017 to settle the Unsecured Creditors litigation. As of December 31, 2017, the Company had cash and cash equivalents of $1.6 billion and total debt of $4.1 billion.
Fourth Quarter 2017 Results
The Company reported fourth quarter 2017 revenue of $3.4 billion, an increase of 8% from the prior year period. Adjusted for currency exchange, commodity movements and the divestiture of the Company's Mechatronics business, revenue increased by 4% in the fourth quarter. This reflects growth of 11% in Europe, 8% in Asia and 26% in South America, partially offset by a decline of 6% in North America.
The Company reported fourth quarter 2017 U.S. GAAP net income from continuing operations of $207 million and earnings from continuing operations of $0.77 per diluted share, compared to $182 million and $0.67 per diluted share in the prior year period. Fourth quarter Adjusted Net Income totaled $343 million, or $1.28 per diluted share, which includes the unfavorable impacts of a higher tax rate compared to the prior period. Adjusted Net Income in the prior year period was $382 million, or $1.41 per diluted share.
Fourth quarter Adjusted Operating Income was $450 million, compared to $455 million in the prior year period. Fourth quarter Adjusted Operating Income margin was 13.1%, compared to 14.2% in the prior year period, reflecting continued incremental investments for growth and a 30 basis point reduction as a result of the Mechatronics divestiture, partially offset by above-market sales growth. Depreciation and amortization expense totaled $154 million in the fourth quarter, an increase from $126 million in the prior year period.
Interest expense for the fourth quarter totaled $37 million, as compared to $33 million in the prior year period.
Tax expense in the fourth quarter of 2017 was $135 million, resulting in an effective tax rate of approximately 39%, compared to a tax benefit of $4 million in the prior year period. The fourth quarter of 2017 includes $55 million, or 16 points, for the one-time impacts of the U.S. tax reform enactment, as well as tax impacts of approximately $27 million resulting from the timing of recognition of the spin-off and classification of Powertrain Systems as discontinued operations.
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 2017, the Company repurchased 4.67 million shares for approximately $383 million under its existing authorized share repurchase program, leaving approximately $989 million 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.
Q1 and Full Year 2018 Outlook
The Company's first quarter and full year 2018 financial
guidance is as follows:
(in millions,
except per share
amounts) Q1 2018 Full Year 2018
----------------- ------- --------------
Net sales $3,275 - $3,375 $13,400 - $13,800
Adjusted operating
income $390 - $410 $1,685 - $1,765
Adjusted operating
income margin 11.9% - 12.1% 12.6% - 12.8%
Adjusted net income
per share $1.17 - $1.22 $5.00 - $5.20
Cash flow from
operations $1,550
Capital
expenditures $750
Adjusted effective
tax rate 15% - 16% 15% - 16%
Discontinued Operations - Spin-off of Powertrain Systems Segment into Delphi Technologies
As previously disclosed, the spin-off of the Company's former Powertrain Systems segment into a new, independent publicly traded company, Delphi Technologies PLC, was completed on December 4, 2017. The results of the Powertrain Systems business through December 4, 2017 are presented as discontinued operations separate from the Company's continuing operations for all periods presented. In connection with the spin-off, Aptiv received a dividend of approximately $1,148 million from Delphi Technologies, which the Company intends to use to fund growth initiatives, including increased investment in advanced technologies and engineering, and for general corporate purposes.
Conference Call and Webcast
The Company will host a conference call to discuss these results at 8:30 a.m. (ET) today, which is accessible by dialing 888.486.0553 (US domestic) or 706.634.4982 (international) or through a webcast at ir.aptiv.com. The conference ID number is 1786308. 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, income (loss) from discontinued operations, 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 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 Aptiv
Aptiv PLC (NYSE: APTV) is a global technology company that develops safer, greener and more connected solutions, which enable the future of mobility. Headquartered in Gillingham, England, Aptiv has 147,000 employees and operates 14 technical centers, as well as manufacturing sites and customer support centers, in 45 countries. 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 Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except per share amounts)
Net sales $3,440 $3,193 $12,884 $12,274
Operating expenses:
Cost of sales 2,730 2,325 10,270 9,527
Selling, general and
administrative 266 252 952 924
Amortization 30 29 117 117
Restructuring 28 62 129 167
--- --- --- ---
Total operating expenses 3,054 2,668 11,468 10,735
----- ----- ------ ------
Operating income 386 525 1,416 1,539
Interest expense (37) (33) (140) (155)
Other income (expense),
net 1 (311) (21) (384)
--- ---- --- ----
Income from continuing
operations before
income taxes and equity
income 350 181 1,255 1,000
Income tax (expense)
benefit (135) 4 (223) (167)
---- --- ---- ----
Income from continuing
operations before
equity income 215 185 1,032 833
Equity income, net of
tax 7 12 31 35
--- --- --- ---
Income from continuing
operations 222 197 1,063 868
Income from discontinued
operations, net of tax 55 109 365 458
--- --- --- ---
Net income 277 306 1,428 1,326
Net income attributable
to noncontrolling
interest 21 25 73 69
Net income attributable
to Aptiv $256 $281 $1,355 $1,257
==== ==== ====== ======
Amounts attributable to Aptiv:
Income from continuing
operations $207 $182 $1,021 $834
Income from discontinued
operations 49 99 334 423
Net income $256 $281 $1,355 $1,257
==== ==== ====== ======
Diluted net income per share:
Continuing operations $0.77 $0.67 $3.81 $3.05
Discontinued operations 0.18 0.36 1.25 1.54
Diluted net income per
share attributable to
Aptiv $0.95 $1.03 $5.06 $4.59
===== ===== ===== =====
Weighted average number
of diluted shares
outstanding 267.44 271.64 268.03 273.70
====== ====== ====== ======
Cash dividends declared
per share $0.51 $0.29 $1.38 $1.16
APTIV PLC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, December 31,
2017 2016
---- ----
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $1,596 $737
Restricted cash 1 1
Accounts receivable, net 2,440 2,130
Inventories 1,083 859
Other current assets 521 302
Current assets of discontinued
operations - 1,390
--- -----
Total current assets 5,641 5,419
Long-term assets:
Property, net 2,804 2,325
Investments in affiliates 91 67
Intangible assets, net 1,219 1,148
Goodwill 1,944 1,502
Other long-term assets 470 280
Long-term assets of discontinued
operations - 1,551
--- -----
Total long-term assets 6,528 6,873
----- -----
Total assets $12,169 $12,292
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $17 $10
Accounts payable 2,227 1,820
Accrued liabilities 1,296 1,242
Current liabilities of
discontinued operations - 1,076
--- -----
Total current liabilities 3,540 4,148
Long-term liabilities:
Long-term debt 4,132 3,953
Pension benefit obligations 454 439
Other long-term liabilities 526 371
Long-term liabilities of
discontinued operations - 618
--- ---
Total long-term liabilities 5,112 5,381
----- -----
Total liabilities 8,652 9,529
----- -----
Commitments and contingencies
Total Aptiv shareholders' equity 3,299 2,401
Noncontrolling interest 218 362
--- ---
Total shareholders' equity 3,517 2,763
----- -----
Total liabilities and
shareholders' equity $12,169 $12,292
======= =======
APTIV PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended December 31,
2017 2016
---- ----
(in millions)
Cash flows from operating
activities:
Net income $1,428 $1,326
Income from
discontinued
operations, net
of tax 365 458
--- ---
Income from
continuing
operations 1,063 868
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization 546 489
Restructuring
expense, net of
cash paid 2 77
Deferred income
taxes (26) (121)
Income from
equity method
investments, net
of dividends
received (18) (18)
Loss on
extinguishment
of debt - 73
Other, net 117 (44)
Changes in operating assets and
liabilities:
Accounts
receivable, net (287) (207)
Inventories (224) (45)
Accounts payable 268 35
Other, net (295) 430
Pension
contributions (40) (43)
Net cash provided
by operating
activities from
continuing
operations 1,106 1,494
Net cash provided
by operating
activities from
discontinued
operations 362 447
--- ---
Net cash provided
by operating
activities 1,468 1,941
----- -----
Cash flows from investing
activities:
Capital
expenditures (698) (657)
Proceeds from
sale of property
/investments 7 19
Net proceeds from
divestiture of
discontinued
operations - 48
Proceeds from
business
divestitures - 197
Cost of business
acquisitions,
net of cash
acquired (324) (15)
Cost of
technology
investments (50) (3)
Settlement of
derivatives (28) (1)
Net cash used in
investing
activities from
continuing
operations (1,093) (412)
Net cash used in
investing
activities from
discontinued
operations (159) (166)
Net cash used in
investing
activities (1,252) (578)
------ ----
Cash flows from financing
activities:
Increase
(decrease) in
short and long-
term debt, net 779 (44)
Contingent
consideration
and deferred
acquisition
purchase price
payments (24) (4)
Dividend payments
of consolidated
affiliates to
minority
shareholders (38) (42)
Repurchase of
ordinary shares (383) (634)
Distribution of
cash dividends (310) (317)
Dividend received
from spin-off
of Delphi
Technologies 1,148 -
Cash transferred
to Delphi
Technologies
related to spin-
off (863) -
Cash transferred
from Delphi
Technologies
related to spin-
off 180 -
Taxes withheld
and paid on
employees'
restricted share
awards (33) (40)
--- ---
Net cash provided
by (used in)
financing
activities 456 (1,081)
--- ------
Effect of
exchange rate
fluctuations on
cash and cash
equivalents 86 (23)
--- ---
Increase
(decrease) in
cash and cash
equivalents 758 259
Cash and cash
equivalents at
beginning of
period 838 579
--- ---
Cash and cash
equivalents at
end of period $1,596 $838
====== ====
Cash and cash
equivalents of
discontinued
operations $ - $101
--- --- ----
Cash and cash
equivalents of
continuing
operations $1,596 $737
====== ====
APTIV PLC
FOOTNOTES
(Unaudited)
1. Segment Summary
Three Months Ended Year Ended
December 31, December 31,
2017 2016 % 2017 2016 %
---- ---- --- ---- ---- ---
(in millions) (in millions)
Net Sales
---------
Signal and Power
Solutions $2,501 $2,401 4% $9,507 $9,319 2%
Advanced Safety and
User Experience 956 809 18% 3,446 3,024 14%
Eliminations and
Other (a) (17) (17) (69) (69)
--- --- --- ---
Net Sales $3,440 $3,193 $12,884 $12,274
====== ====== ======= =======
Adjusted Operating Income
-------------------------
Signal and Power
Solutions $362 $365 (1)% $1,302 $1,272 2%
Advanced Safety and
User Experience 88 90 (2)% 292 351 (17)%
Eliminations and
Other (a) - - - -
--- --- --- ---
Adjusted Operating
Income $450 $455 $1,594 $1,623
==== ==== ====== ======
(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 and
years ended December 31, 2017 and 2016:
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except per share data)
Weighted average
ordinary shares
outstanding, basic 265.84 270.38 267.16 273.02
Dilutive shares
related to RSUs 1.60 1.26 0.87 0.68
---- ---- ----
Weighted average
ordinary shares
outstanding,
including dilutive
shares 267.44 271.64 268.03 273.70
Basic net income per
share:
Continuing operations $0.78 $0.67 $3.82 $3.05
Discontinued
operations 0.18 0.37 1.25 1.55
----
Basic net income per
share attributable to
Aptiv $0.96 $1.04 $5.07 $4.60
===== ===== ===== =====
Diluted net income per
share:
Continuing operations $0.77 $0.67 $3.81 $3.05
Discontinued
operations 0.18 0.36 1.25 1.54
----
Diluted net income per
share attributable to
Aptiv $0.95 $1.03 $5.06 $4.59
===== ===== ===== =====
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, 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 Year Ended
December 31, December 31,
------------
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
$ Margin $ Margin $ Margin $ Margin
--- ------ --- ------ --- ------ --- ------
Net income attributable to Aptiv $256 $281 $1,355 $1,257
Interest expense 37 33 140 155
Other (income) expense, net (1) 311 21 384
Income tax expense (benefit) 135 (4) 223 167
Equity income, net of tax (7) (12) (31) (35)
Income from discontinued operations, net of tax (55) (109) (365) (458)
Net income attributable to noncontrolling interest 21 25 73 69
Operating income 386 11.2% 525 16.4% 1,416 11.0% 1,539 12.5%
--- ---- --- ---- ----- ---- ----- ----
Restructuring 28 62 129 167
Other acquisition and portfolio project costs 17 9 28 57
Asset impairments 7 - 9 1
(Gain) loss on business divestitures, net - (141) - (141)
Deferred compensation related to nuTonomy acquisition 12 - 12 -
---
Adjusted operating income $450 13.1% $455 14.2% $1,594 12.4% $1,623 13.2%
==== ==== ==== ==== ====== ==== ====== ====
Segment Adjusted Operating Income
(in millions)
Three Months Ended Signal and Advanced Eliminations
December 31, 2017 Power Safety and and Other
Solutions User
Experience Total
----------- ----------- ------------- -----
Operating income $319 $67 $ - $386
Restructuring 23 5 - 28
Other acquisition and
portfolio project costs 13 4 - 17
Asset impairments 7 - - 7
Deferred compensation
related to nuTonomy
acquisition - 12 - 12
--- --- --- ---
Adjusted operating income $362 $88 $ - $450
==== === === === ====
Depreciation and
amortization (a) $122 $32 $ - $154
Three Months Ended Signal and Advanced Eliminations
December 31, 2016 Power Safety and and Other
Solutions User
Experience Total
----------- ----------- ------------- -----
Operating income $306 $219 $ - $525
Restructuring 52 10 - 62
Other acquisition and
portfolio project costs 7 2 - 9
(Gain) loss on business
divestitures, net - (141) - (141)
--- ---- ---
Adjusted operating income $365 $90 $ - $455
==== === === === ====
Depreciation and
amortization (a) $103 $23 $ - $126
Year Ended December 31, Signal and Advanced Eliminations
2017 Power Safety and and Other
Solutions User
Experience Total
----------- ----------- ------------- -----
Operating income $1,206 $210 $ - $1,416
Restructuring 67 62 - 129
Other acquisition and
portfolio project costs 21 7 - 28
Asset impairments 8 1 - 9
Deferred compensation
related to nuTonomy
acquisition - 12 - 12
--- --- --- ---
Adjusted operating income $1,302 $292 $ - $1,594
====== ==== === === ======
Depreciation and
amortization (a) $438 $108 $ - $546
Year Ended December 31, Signal and Advanced Eliminations
2016 Power Safety and and Other
Solutions User
Experience Total
----------- ----------- ------------- -----
Operating income $1,099 $440 $ - $1,539
Restructuring 125 42 - 167
Other acquisition and
portfolio project costs 48 9 - 57
Asset impairments - 1 - 1
(Gain) loss on business
divestitures, net - (141) - (141)
--- ---- --- ----
Adjusted operating income $1,272 $351 $ - $1,623
====== ==== === === ======
Depreciation and
amortization (a) $401 $88 $ - $489
(a) Includes asset impairments.
APTIV PLC
RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS
(Unaudited)
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 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 Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except per share amounts)
Net income attributable to
Aptiv $256 $281 $1,355 $1,257
Income from discontinued
operations attributable to
Aptiv, net of tax (49) (99) (334) (423)
---- ----
Income from continuing
operations attributable to
Aptiv 207 182 1,021 834
--- --- ----- ---
Adjusting items:
Restructuring 28 62 129 167
Other acquisition and
portfolio project costs 17 9 28 57
Asset impairments 7 - 9 1
(Gain) loss on business
divestitures, net - (141) - (141)
Deferred compensation
related to nuTonomy
acquisition 12 - 12 -
Debt extinguishment costs - - - 73
Reserve for Unsecured
Creditors litigation - 300 10 300
Transaction and related
costs associated with
acquisitions 8 - 8 -
Contingent consideration
liability fair value
adjustments (14) 3 (14) 3
Tax impact of U.S. tax
reform enactment 55 - 55 -
Tax impact of adjusting
items (a) 23 (33) (15) (70)
--- ---
Adjusted net income
attributable to Aptiv $343 $382 $1,243 $1,224
==== ==== ====== ======
Weighted average number of
diluted shares outstanding 267.44 271.64 268.03 273.70
====== ====== ====== ======
Diluted net income per
share from continuing
operations attributable to
Aptiv $0.77 $0.67 $3.81 $3.05
===== ===== ===== =====
Adjusted net income per
share $1.28 $1.41 $4.64 $4.47
===== ===== ===== =====
(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, the quarterly
intra-period tax allocation
impacts of approximately $27
million during the three months
ended December 31, 2017 resulting
from the effectiveness of the
spin-off, and the elimination of
the net impact of deferred tax
asset valuation allowance changes
in estimates of $15 million of
valuation allowances recorded
during the three months ended
December 31, 2016.
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 Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Cash flows from
operating activities:
Income from continuing
operations $222 $197 $1,063 $868
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 154 126 546 489
Restructuring expense,
net of cash paid (7) 35 2 77
Working capital 62 114 (243) (217)
Pension contributions (13) (35) (40) (43)
Other, net 3 167 (222) 320
--- --- ---- ---
Net cash provided by
operating activities
from continuing
operations 421 604 1,106 1,494
--- --- ----- -----
Cash flows from
investing activities:
Capital expenditures (218) (160) (698) (657)
Net proceeds from
divestiture of Thermal
discontinued
operations - (4) - 48
Net proceeds from
business divestitures - 197 - 197
Cost of business
acquisitions, net of
cash acquired (284) - (324) (15)
Cost of technology
investments - - (50) (3)
Settlement of
derivatives (16) 15 (28) (1)
Other, net 1 11 7 19
--- --- --- ---
Net cash (used in)
provided by investing
activities from
continuing operations (517) 59 (1,093) (412)
---- --- ------ ----
Adjusting items:
Adjustment for net
proceeds from
divestiture of Thermal
discontinued
operations - 4 - (48)
Adjustment for net
proceeds from
divestiture of
Mechatronics business - (197) - (197)
Adjustment for the cost
of business
acquisitions, net of
cash acquired 284 - 324 15
Adjustment for
settlement of
derivatives related to
business acquisition - - - 15
--- ---
Cash flow before
financing $188 $470 $337 $867
==== ==== ==== ====
Financial Guidance: The reconciliation of the forward-looking non-GAAP financial measures provided in the Company's financial guidance to the most comparable forward-looking
GAAP measure is as follows:
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Q1 Estimated Full Year
2018 (1) 2018 (1)
($ and shares in millions, except per share amounts)
Adjusted Operating Income $ Margin (2) $ Margin (2)
------------------------- --- ---------- --- ----------
Net income attributable
to Aptiv $166 $1,088
Interest expense 35 140
Other (income) expense,
net (10) (30)
Income tax expense 79 244
Equity income, net of tax (8) (30)
Net income attributable
to noncontrolling
interest 7 40
--- ---
Operating income 269 8.1% 1,452 10.7%
--- --- ----- ----
Restructuring 88 152
Other acquisition and
portfolio project costs 29 64
Deferred compensation
related to nuTonomy
acquisition 14 57
---
Adjusted operating income $400 12.0% $1,725 12.7%
==== ==== ====== ====
Adjusted Net Income per Share
-----------------------------
Net income attributable
to Aptiv $166 $1,088
Restructuring 88 152
Other acquisition and
portfolio project costs 29 64
Deferred compensation
related to nuTonomy
acquisition 14 57
Tax impact of adjusting
items and other 23 1
Adjusted net income
attributable to Aptiv $320 $1,362
==== ======
Weighted average number
of diluted shares
outstanding 266.95 267.26
====== ======
Diluted net income per
share attributable to
Aptiv $0.62 $4.07
===== =====
Adjusted net income per
share $1.20 $5.10
===== =====
(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 Aptiv PLC
