Aptiv Reports First Quarter 2019 Financial Results Ahead of Expectations; Strong Outgrowth Continues Despite Weakening Macro Environment
DUBLIN, May 2, 2019 /PRNewswire/ -- Aptiv PLC (NYSE: APTV), a global technology company enabling the future of mobility, today reported first quarter 2019 U.S. GAAP earnings of $0.92 per diluted share. Excluding special items, first quarter earnings totaled $1.05 per diluted share.
First Quarter Highlights Include:
-- Revenue of $3.6 billion, up 4% adjusted for currency exchange, commodity
movements and divestitures
-- U.S. GAAP net income of $240 million, diluted earnings per share of
$0.92
-- Excluding special items, earnings of $1.05 per diluted share
-- U.S. GAAP operating income margin of 8.3%
-- Adjusted Operating Income margin of 9.7%; Adjusted Operating Income
of $345 million
-- Generated $84 million of cash from operations
-- Returned $283 million to shareholders through share repurchases and
dividends
"Our stronger than expected first quarter performance reflects our portfolio of leading technologies aligned to the safe, green and connected mega trends, driving sustained above-market growth," said Kevin Clark, president and chief executive officer. "While our revised outlook for the year reflects softer global vehicle production and further headwinds from foreign exchange and commodities compared to our prior guidance, we continue to see the benefits of our flexible operating model and technology portfolio position us well for outperformance as these headwinds mitigate in the back half of the year and into 2020. Our mission to be our customers' partner of choice, uniquely providing the brain and nervous system of the vehicle, has created a sustainable business advantage for Aptiv, which in turn allows us to deliver long-term value to our shareholders through innovation, effective execution, profitable growth, strong cash flow generation and disciplined capital deployment."
First Quarter 2019 Results
The Company reported first quarter 2019 revenue of $3.6 billion, a decrease of 2% from the prior year period. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 4% in the first quarter. This reflects growth of 7% in North America and 6% in Europe, partially offset by a decline of 12% in South America and 1% in Asia, which includes a decline of 12% in China.
The Company reported first quarter 2019 U.S. GAAP net income of $240 million and earnings of $0.92 per diluted share, compared to $307 million and $1.15 per diluted share in the prior year period. First quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $273 million, or $1.05 per diluted share, compared to $343 million, or $1.29 per diluted share, in the prior year period.
First quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $345 million, compared to $427 million in the prior year period. Adjusted Operating Income margin was 9.7%, compared to 11.8% in the prior year period, reflecting the unfavorable impacts of foreign currency exchange, vehicle production declines in China and continued incremental investments for growth, partially offset by above-market sales growth. Depreciation and amortization expense totaled $173 million, an increase from $155 million in the prior year period, reflecting increases related to our acquisitions and capital investments.
Interest expense for the first quarter totaled $38 million, as compared to $34 million in the prior year period, which reflects the impacts of our debt refinancing transactions in the first quarter of 2019.
Tax expense in the first quarter of 2019 was $33 million, resulting in an effective tax rate of approximately 12%, compared to $59 million, or an effective rate of approximately 16%, in the prior year period. The decrease in the effective tax rate reflects the geographic mix of pretax earnings and the impact of favorable discrete items.
The Company generated net cash flow from operating activities of $84 million in the first quarter. As of March 31, 2019, the Company had cash and cash equivalents of $321 million and total available liquidity of $2.1 billion.
Reconciliations of Adjusted Net Income, Adjusted Net Income Per Share, Adjusted Operating Income and Cash Flow Before Financing, which are non-GAAP measures, to the most directly comparable financial measures, respectively, calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP") are provided in the attached supplemental schedules.
Share Repurchase Programs
During the first quarter of 2019, the Company repurchased 2.84 million shares for approximately $226 million, leaving approximately $2.26 billion available for future share repurchases. All repurchased shares were retired, and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in-capital and retained earnings.
Q2 and Full Year 2019 Outlook
The Company's second quarter and full year 2019 financial guidance is as follows:
(in millions, except per share amounts)
Q2 2019 (1)
Full Year 2019 (1)
---
Net sales
$3,600 - $3,700
$14,425 - $14,825
Adjusted operating income
$375 - $395
$1,630 - $1,710
Adjusted operating income margin 10.4% - 10.7% 11.3% - 11.5%
Adjusted net income per share
$1.11 - $1.17
$4.90 - $5.10
Cash flow from operations $1,650
Capital expenditures $800
Adjusted effective tax rate 15% - 16% 14% - 15%
(1) The Company's second quarter and
full year 2019 financial
guidance includes $12 million
and $50 million, respectively,
for the anticipated impacts of
tariffs.
Conference Call and Webcast
The Company will host a conference call to discuss these results at 8:00 a.m. (ET) today, which is accessible by dialing 877.790.5109 (US domestic) or 647.689.5633 (international) or through a webcast at ir.aptiv.com. The conference ID number is 5593386. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Company's website. A replay will be available two hours following the conference call.
Use of Non-GAAP Financial Information
This press release contains information about Aptiv's financial results which are not presented in accordance with GAAP. Specifically, Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are non-GAAP financial measures. Adjusted Operating Income represents net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, restructuring, other acquisition and portfolio project costs, asset impairments, gains (losses) on business divestitures and deferred compensation related to acquisitions. Other acquisition and portfolio project costs include costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures. Adjusted Operating Income margin is defined as Adjusted Operating Income as a percentage of net sales.
Adjusted Net Income represents net income attributable to Aptiv before restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share represents Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the period. Cash Flow Before Financing represents cash provided by operating activities from continuing operations plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and net proceeds from the divestiture of discontinued operations and other significant businesses.
Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company's financial position, results of operations and liquidity. In particular, management believes Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are useful measures in assessing the Company's ongoing financial performance that, when reconciled to the corresponding GAAP measure, provide improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance and that may obscure underlying business results and trends. Management also uses these non-GAAP financial measures for internal planning and forecasting purposes.
Such non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the attached supplemental schedules at the end of this press release. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures of other companies.
About Aptiv
Aptiv is a global technology company that develops safer, greener and more connected solutions enabling the future of mobility. Visit aptiv.com.
Forward-Looking Statements
This press release, as well as other statements made by Aptiv PLC (the "Company"), contain forward-looking statements that reflect, when made, the Company's current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to the Company's operations and business environment, which may cause the actual results of the Company to be materially different from any future results. All statements that address future operating, financial or business performance or the Company's strategies or expectations are forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements are discussed under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's filings with the Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. It should be remembered that the price of the ordinary shares and any income from them can go down as well as up. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law.
APTIV PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
2019 2018
---
(in millions, except per share
amounts)
Net sales $
3,575 $
3,630
Operating expenses:
Cost of sales 2,962 2,947
Selling, general and administrative 256 259
Amortization 34 30
Restructuring 26 20
Total operating expenses 3,278 3,256
Operating income 297 374
Interest expense (38) (34)
Other income, net 16 30
Income before income taxes and equity income 275 370
Income tax expense (33) (59)
Income before equity income 242 311
Equity income, net of tax 3 5
Net income 245 316
Net income attributable to noncontrolling interest 5 9
Net income attributable to Aptiv $
240 $
307
Diluted net income per share:
Diluted net income per share attributable to Aptiv $
0.92 $
1.15
Weighted average number of diluted shares outstanding 259.55 266.44
APTIV PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2019 2018
(Unaudited)
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $
321 $
567
Restricted cash 1 1
Accounts receivable, net 2,736 2,487
Inventories 1,326 1,277
Other current assets 435 445
Total current assets 4,819 4,777
Long-term assets:
Property, net 3,218 3,179
Operating lease right-of-use assets 434
Investments in affiliates 102 99
Intangible assets, net 1,334 1,380
Goodwill 2,503 2,524
Other long-term assets 609 521
Total long-term assets 8,200 7,703
Total assets $
13,019 $
12,480
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $
542 $
306
Accounts payable 2,340 2,334
Accrued liabilities 1,132 1,054
Total current liabilities 4,014 3,694
Long-term liabilities:
Long-term debt 3,995 4,038
Pension benefit obligations 440 445
Long-term operating lease liabilities 350
Other long-term liabilities 585 633
Total long-term liabilities 5,370 5,116
Total liabilities 9,384 8,810
Commitments and contingencies
Total Aptiv shareholders' equity 3,418 3,459
Noncontrolling interest 217 211
Total shareholders' equity 3,635 3,670
Total liabilities and shareholders' equity $
13,019 $
12,480
APTIV PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
2019 2018
---
(in millions)
Cash flows from operating activities:
Net income $
245 $
316
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 173 155
Restructuring expense, net of cash paid (5) (16)
Deferred income taxes 4 (7)
Income from equity method investments, net of dividends received (3) (5)
Loss on extinguishment of debt 6
Other, net 27 26
Changes in operating assets and liabilities:
Accounts receivable, net (249) (206)
Inventories (49) (119)
Accounts payable 53 140
Other, net (110) (87)
Pension contributions (8) (11)
Net cash provided by operating activities from continuing operations 84 186
Net cash used in operating activities from discontinued operations (31)
Net cash provided by operating activities 84 155
Cash flows from investing activities:
Capital expenditures (235) (243)
Proceeds from sale of property / investments 3 3
Cost of business acquisitions, net of cash acquired 2
Deposit for acquisition of KUM (5)
Cost of technology investments (3)
Settlement of derivatives (2)
Net cash used in investing activities (235) (245)
Cash flows from financing activities:
Increase in other short and long-term debt, net 229 35
Repayment of senior notes (654)
Proceeds from issuance of senior notes, net of issuance costs 643
Repurchase of ordinary shares (226) (149)
Distribution of cash dividends (57) (59)
Taxes withheld and paid on employees' restricted share awards (34) (32)
Net cash used in financing activities (99) (205)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash 4 44
Decrease in cash, cash equivalents and restricted cash (246) (251)
Cash, cash equivalents and restricted cash at beginning of period 568 1,597
Cash, cash equivalents and restricted cash at end of period $
322 $
1,346
APTIV PLC
FOOTNOTES
(Unaudited)
1. Segment Summary
Three Months Ended March 31,
2019 2018 %
---
(in millions)
Net Sales
---
Signal and Power Solutions $
2,562 $
2,617 (2)%
Advanced Safety and User Experience 1,023 1,032 (1)%
Eliminations and Other (a) (10) (19)
Net Sales $
3,575 $
3,630
Adjusted Operating Income
---
Signal and Power Solutions $
283 $
351 (19)%
Advanced Safety and User Experience 62 76 (18)%
Eliminations and Other (a) -
Adjusted Operating Income $
345 $
427
(a) Eliminations and Other includes the elimination of inter-segment transactions.
2. Weighted Average Number of Diluted Shares Outstanding
The following table illustrates the weighted average shares outstanding used in calculating basic and diluted net income
per share attributable to Aptiv for the three months ended March 31, 2019 and 2018:
Three Months Ended March 31,
2019 2018
---
(in millions, except per share
amounts)
Weighted average ordinary shares outstanding, basic 259.08 265.69
Dilutive shares related to RSUs 0.47 0.75
Weighted average ordinary shares outstanding, including dilutive shares 259.55 266.44
Net income per share attributable to Aptiv
Basic $
0.93 $
1.16
Diluted $
0.92 $
1.15
APTIV PLC
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
In this press release the Company has
provided information regarding
certain non-GAAP financial
measures, including "Adjusted
Operating Income," "Adjusted Net
Income," "Adjusted Net Income Per
Share" and "Cash Flow Before
Financing." Such non-GAAP financial
measures are reconciled to their
closest GAAP financial measure in
the following schedules.
Adjusted Operating Income
: Adjusted Operating Income is
presented as a supplemental measure
of the Company's financial
performance which management
believes is useful to investors in
assessing the Company's ongoing
financial performance that, when
reconciled to the corresponding U.S.
GAAP measure, provides improved
comparability between periods
through the exclusion of certain
items that management believes are
not indicative of the Company's core
operating performance and which may
obscure underlying business results
and trends. Our management utilizes
Adjusted Operating Income in its
financial decision making process,
to evaluate performance of the
Company and for internal reporting,
planning and forecasting purposes.
Management also utilizes Adjusted
Operating Income as the key
performance measure of segment
income or loss and for planning and
forecasting purposes to allocate
resources to our segments, as
management also believes this
measure is most reflective of the
operational profitability or loss of
our operating segments. Adjusted
Operating Income is defined as net
income before interest expense,
other income (expense), net, income
tax expense, equity income (loss),
net of tax, restructuring and other
special items. Not all companies use
identical calculations of Adjusted
Operating Income, therefore this
presentation may not be comparable
to other similarly titled measures
of other companies. Operating income
margin represents Operating income
as a percentage of net sales, and
Adjusted Operating Income margin
represents Adjusted Operating Income
as a percentage of net sales.
---
Consolidated Adjusted Operating Income
Three Months Ended March 31,
2019 2018
---
($ in millions)
$ Margin
$ Margin
---
Net income attributable to Aptiv $
240 $
307
Interest expense 38 34
Other income, net (16) (30)
Income tax expense 33 59
Equity income, net of tax (3) (5)
Net income attributable to noncontrolling interest 5 9
Operating income $
297 8.3 $
374 10.3
% %
---
Restructuring 26 20
Other acquisition and portfolio project costs 11 19
Deferred compensation related to nuTonomy acquisition 11 14
Adjusted operating income $
345 9.7 $
427 11.8
% %
===
Segment Adjusted Operating Income
(in millions)
Three Months Ended March 31, 2019 Signal and Advanced Eliminations Total
Power Solutions Safety and User and Other
Experience
---
Operating income $
257 $
40
$ $
297
Restructuring 19 7 26
Other acquisition and portfolio project costs 7 4 11
Deferred compensation related to nuTonomy acquisition 11 11
Adjusted operating income $
283 $
62
$ $
345
Depreciation and amortization (a) $
131 $
42
$ $
173
Three Months Ended March 31, 2018 Signal and Advanced Eliminations Total
Power Solutions Safety and User and Other
Experience
---
Operating income $
322 $
52
$ $
374
Restructuring 18 2 20
Other acquisition and portfolio project costs 11 8 19
Deferred compensation related to nuTonomy acquisition 14 14
Adjusted operating income $
351 $
76
$ $
427
Depreciation and amortization (a) $
119 $
36
$ $
155
(a) Includes asset impairments.
Adjusted Net Income and Adjusted
Net Income Per Share
:
Adjusted Net Income and Adjusted
Net Income Per Share, which are
non-GAAP measures, are presented
as supplemental measures of the
Company's financial performance
which management believes are
useful to investors in assessing
the Company's ongoing financial
performance that, when reconciled
to the corresponding U.S. GAAP
measure, provide improved
comparability between periods
through the exclusion of certain
items that management believes are
not indicative of the Company's
core operating performance and
which may obscure underlying
business results and trends.
Management utilizes Adjusted Net
Income and Adjusted Net Income Per
Share in its financial decision
making process, to evaluate
performance of the Company and for
internal reporting, planning and
forecasting purposes. Adjusted Net
Income is defined as net income
attributable to Aptiv before
restructuring and other special
items, including the tax impact
thereon. Adjusted Net Income Per
Share is defined as Adjusted Net
Income divided by the weighted
average number of diluted shares
outstanding for the period. Not
all companies use identical
calculations of Adjusted Net
Income and Adjusted Net Income Per
Share, therefore this presentation
may not be comparable to other
similarly titled measures of other
companies.
---
Three Months Ended March 31,
2019 2018
(in millions, except per share
amounts)
Net income attributable to Aptiv $
240 $
307
Adjusting items:
Restructuring 26 20
Other acquisition and portfolio project costs 11 19
Deferred compensation related to nuTonomy acquisition 11 14
Debt extinguishment costs 6
Transaction and related (benefits) costs associated with acquisitions (11)
Gain on changes in fair value of equity investments (19)
Tax impact of adjusting items (a) (2) (6)
Adjusted net income attributable to Aptiv $
273 $
343
Weighted average number of diluted shares outstanding 259.55 266.44
Diluted net income per share attributable to Aptiv $
0.92 $
1.15
Adjusted net income per share $
1.05 $
1.29
(a) Represents the income tax
impacts of the adjustments made
for restructuring and other
special items by calculating
the income tax impact of these
items using the appropriate tax
rate for the jurisdiction where
the charges were incurred.
Cash Flow Before Financing
: Cash Flow Before
Financing is presented as a
supplemental measure of the
Company's liquidity which is
consistent with the basis and
manner in which management
presents financial information
for the purpose of making
internal operating decisions,
evaluating its liquidity and
determining appropriate capital
allocation strategies.
Management believes this measure
is useful to investors to
understand how the Company's
core operating activities
generate and use cash. Cash Flow
Before Financing is defined as
cash provided by operating
activities from continuing
operations plus cash provided by
(used in) investing activities,
adjusted for the purchase price
of business acquisitions and net
proceeds from the divestiture of
discontinued operations and
other significant businesses.
Not all companies use identical
calculations of Cash Flow Before
Financing, therefore this
presentation may not be
comparable to other similarly
titled measures of other
companies. The calculation of
Cash Flow Before Financing does
not reflect cash used to service
debt, pay dividends or
repurchase shares and,
therefore, does not necessarily
reflect funds available for
investment or other
discretionary uses.
---
Three Months Ended March 31,
2019 2018
(in millions)
Cash flows from operating activities:
Net income $
245 $
316
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 173 155
Restructuring expense, net of cash paid (5) (16)
Working capital (245) (185)
Pension contributions (8) (11)
Other, net (76) (73)
Net cash provided by operating activities from continuing operations 84 186
Cash flows from investing activities:
Capital expenditures (235) (243)
Cost of business acquisitions, net of cash acquired 2
Deposit for acquisition of KUM (5)
Cost of technology investments (3)
Settlement of derivatives (2)
Other, net 3 3
Net cash used in investing activities (235) (245)
Adjusting items:
Adjustment for amount deposited for acquisition of KUM 5
Adjustment for the cost of business acquisitions, net of cash acquired (2)
Cash flow before financing $
(153) $
(54)
Financial Guidance
:
The reconciliation of the
forward-looking non-GAAP
financial measures provided in
the Company's financial guidance
to the most comparable forward-
looking GAAP measure is as
follows:
---
Estimated Q2 Estimated Full Year
2019 (1) 2019 (1)
($ and shares in millions, except per share amounts)
Adjusted Operating Income
$ Margin (2)
$ Margin (2)
---
Net income attributable to Aptiv $
237 $
1,128
Interest expense 39 156
Other income, net (8) (32)
Income tax expense 50 195
Equity income, net of tax (4) (21)
Net income attributable to noncontrolling interest 9 40
Operating income 323 8.8 1,466 10.0
% %
Restructuring 40 126
Other acquisition and portfolio project costs 10 35
Deferred compensation related to nuTonomy acquisition 12 43
Adjusted operating income $
385 10.5 $
1,670 11.4
% %
Adjusted Net Income Per Share
---
Net income attributable to Aptiv $
237 $
1,128
Restructuring 40 126
Other acquisition and portfolio project costs 10 35
Deferred compensation related to nuTonomy acquisition 12 43
Debt extinguishment costs 6
Gain on changes in fair value of equity investments (19)
Tax impact of adjusting items (5) (29)
Adjusted net income attributable to Aptiv $
294 $
1,290
Weighted average number of diluted shares outstanding 258.59 258.06
Diluted net income per share attributable to Aptiv $
0.92 $
4.37
Adjusted net income per share $
1.14 $
5.00
(1) Prepared at the estimated mid-
point of the Company's
financial guidance range.
(2) Represents operating income and
Adjusted Operating Income,
respectively, as a percentage
of estimated net sales.
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SOURCE Aptiv PLC
