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DUBLIN - Aptiv PLC (NYSE: APTV), a global technology company enabling the future of mobility, today reported third quarter 2019 U.S. GAAP earnings of $0.96 per diluted share. Excluding special items, third quarter earnings totaled $1.27 per diluted share. These results include the adverse impacts in the third quarter of approximately $0.10 per diluted share resulting from the General Motors (“GM”) labor strike.
Third Quarter Highlights Include:
- U.S. GAAP revenue of $3.6 billion, an increase of 2%
- Revenue increased 6% adjusted for currency exchange, commodity movements and divestitures; adversely impacted by approximately $70 million resulting from the GM labor strike
- U.S. GAAP net income of $246 million, diluted earnings per share of $0.96
- Excluding special items, earnings of $1.27 per diluted share
- U.S. GAAP operating income margin of 9.0%
- Adjusted Operating Income margin of 11.5%; Adjusted Operating Income of $410 million, which includes adverse impacts of approximately $30 million resulting from the GM labor strike
- Generated $325 million of cash from operations
- Returned $100 million to shareholders through share repurchases and dividends
Year-to-Date Highlights Include:
- U.S. GAAP revenue of $10.8 billion, consistent with the prior year period
- Revenue increased 4% adjusted for currency exchange, commodity movements and divestitures; adversely impacted by approximately $70 million resulting from the GM labor strike
- U.S. GAAP net income of $760 million, diluted earnings per share of $2.95
- Excluding special items, earnings of $3.65 per diluted share, which includes adverse impacts of approximately $0.10 per diluted share resulting from the GM labor strike
- U.S. GAAP operating income margin of 8.8%
- Adjusted Operating Income margin of 10.8%; Adjusted Operating Income of $1,160 million, which includes adverse impacts of approximately $30 million resulting from the GM labor strike
- Generated $921 million of cash from operations
- Returned $560 million to shareholders through share repurchases and dividends
“During the third quarter, Aptiv sustained strong above-market growth and operating performance, reflecting the efforts we have taken to build a more sustainable business,” said Kevin Clark, president and chief executive officer. “While our revised outlook for the year reflects the adverse impacts of the GM labor strike, we remain confident in our ability to deliver on our commitments and outperform in the more challenging macro environment. As evidenced by our strong year-to-date performance, the benefits of our robust business model and lean cost structure enable us to continue to invest in growth and effectively deploy capital. This balanced approach differentiates Aptiv as a company capable of capitalizing on key megatrends, while further strengthening our technology position and allowing us to deliver long-term value to our shareholders.
For the three months ended September 30, 2019, the Company reported U.S. GAAP revenue of $3.6 billion, an increase of 2% from the prior year period, despite the absence of approximately $70 million in revenue, primarily in North America, resulting from the GM labor strike. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 6% in the third quarter. This reflects growth of 14% in Europe, 5% in Asia, 2% in South America and flat performance in North America.
The Company reported third quarter 2019 U.S. GAAP net income of $246 million and earnings of $0.96 per diluted share, compared to $222 million and $0.84 per diluted share in the prior year period. Third quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $325 million, or $1.27 per diluted share, including adverse impacts of approximately $0.10 per diluted share resulting from the GM labor strike, compared to $329 million, or $1.24 per diluted share, in the prior year period.
Third quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $410 million, compared to $420 million in the prior year period. Adjusted Operating Income margin was 11.5%, compared to 12.1% in the prior year period, reflecting an approximately 60 basis point impact resulting from the GM labor strike, partially offset by above-market sales growth. Depreciation and amortization expense totaled $178 million, an increase from $163 million in the prior year period, resulting from increases related to our acquisitions and capital investments.
Interest expense for the third quarter totaled $42 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 third quarter of 2019 was $38 million, resulting in an effective tax rate of approximately 13%. Tax expense in the third quarter of 2018 was $66 million, resulting in an effective tax rate of approximately 23%, which includes $24 million, or approximately 8 points, due to the one-time impacts of the Company’s organizational entity restructuring in the quarter resulting from the spin-off transaction.
The Company generated net cash flow from operating activities of $325 million in the third quarter, compared to $138 million in the prior year period.
For the nine months ended September 30, 2019, the Company reported U.S. GAAP revenue of $10.8 billion, consistent with the prior year period. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 4% during the period. This reflects growth of 9% in Europe, 3% in North America, 2% in Asia and 1% in South America.
For the 2019 year-to-date period, the Company reported U.S. GAAP net income of $760 million and earnings of $2.95 per diluted share, compared to $820 million and $3.09 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $940 million, or $3.65 per diluted share, including adverse impacts of approximately $0.10 per diluted share resulting from the GM labor strike, compared to $1,044 million, or $3.93 per diluted share, in the prior year period.
The Company reported Adjusted Operating Income of $1,160 million for the nine months ended September 30, 2019, compared to $1,321 million in the prior year period. Adjusted Operating Income margin was 10.8% for the nine months ended September 30, 2019, compared to 12.2% in the prior year period, reflecting the unfavorable impacts of foreign currency exchange, an approximately 20 basis point impact resulting from the GM labor strike and incremental investments in advanced technologies and engineering, partially offset by above-market sales growth. Depreciation and amortization expense totaled $539 million, an increase from $474 million in the prior year period, resulting from non-cash impairment charges and increases related to our acquisitions and capital investments.
Interest expense for the nine months ended September 30, 2019 totaled $123 million, as compared to $104 million in the prior year period, which reflects the impacts of our debt refinancing transactions in the first quarter of 2019.
Tax expense for the nine months ended September 30, 2019 was $102 million, resulting in an effective tax rate of approximately 12%. Tax expense in the prior year period was $208 million, resulting in an effective tax rate of approximately 20%, which includes $24 million, or approximately 2 points, due to the adjustment to the provisional amounts recorded for the one-time impacts of the U.S. tax reform enactment and $24 million, or approximately 2 points, due to the one-time impacts of the Company's organizational entity restructuring in the third quarter resulting from the spin-off transaction.
The Company generated net cash flow from operating activities of $921 million in the nine months ended September 30, 2019, compared to $890 million in the prior year period. As of September 30, 2019, the Company had cash and cash equivalents of $341 million and total available liquidity of $2.3 billion.
Reconciliations of Adjusted Revenue Growth, 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 third quarter of 2019, the Company repurchased 0.5 million shares for approximately $44 million, leaving approximately $2.1 billion available for future share repurchases. Year-to-date,
the Company repurchased 5.0 million shares for approximately $390 million. All repurchased shares were retired.
Full Year 2019 Outlook
The Company’s full year 2019 financial guidance is as follows:
| (in millions, except per share amounts) | Full Year 2019 |
| Net sales (1) | $14,255 - $14,355 |
| Adjusted operating income (2) | $1,525 - $1,545 |
| Adjusted operating income margin | 10.7% - 10.8% |
| Adjusted net income per share (2) | $4.62 - $4.68 |
| Cash flow from operations | $1,540 |
| Capital expenditures | $800 |
| Adjusted effective tax rate | 12% - 13% |
(1) The Company’s full year 2019 financial guidance includes approximately $250 million for the anticipated impacts of the GM labor strike.
(2) The Company’s full year 2019 financial guidance includes Adjusted Operating Income of approximately $135 million, or $0.45 per diluted share, for the anticipated impacts of the GM labor strike and Adjusted Operating Income of approximately $38 million, or $0.13 per diluted share, for the anticipated impacts of tariffs.
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 6885726. 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.
This press release contains information about Aptiv’s financial results which are not presented in accordance with GAAP. Specifically, Adjusted Revenue Growth, Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are non-GAAP financial measures. Adjusted Revenue Growth represents the year-over-year change in reported net sales relative to the comparable period, excluding the impact on net sales from currency exchange, commodity movements and divestitures. 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.
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 Revenue Growth, 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.