Aptiv Reports First Quarter 2019 Financial Results Ahead of Expectations; Strong Outgrowth Continues Despite Weakening Macro Environment

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DUBLIN - 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 margin10.4% - 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 rate15% - 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.

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