Auto-industry supplier Delphi Automotive PLC (DLPH) reported its fourth-quarter and full-year 2016 earnings on February 2. Here's what investors need to know.
The sensors on Delphi's latest self-driving test vehicles are closely integrated into the vehicle's body. Image source: Delphi Automotive PLC.
Delphi earnings: The raw numbers
| Metric | Q4 16 | Change vs. Q4 2015 | Full-year 2016 | Change vs. 2015 |
| Revenue | $4.3B | 11% | $16.7B | 10% |
| Adjusted operating income | $606M | 20.5% | $2.223B | 12.8% |
| Net income (GAAP) | $281M | 41% | $1.152B | (3.1)% |
| Earnings per share | $1.03 | 47% | $4.21 | 1.6% |
| Cash from operations | $683M | 7.1% | $1.941B | 16.4% |
Data source: Delphi Automotive PLC.
What happened at Delphi in the fourth quarter of 2016
Delphi's 47% year-over-year gain in net income in the fourth quarter was driven largely by growth in sales of the advanced technologies that are supporting the industry's (and Delphi's) evolution toward fully self-driving vehicles.
The company booked $9 billion in new business in the fourth quarter, a substantial percentage of it in high-tech areas: active safety, infotainment, and vehicle electrification. Delphi is emerging as a leader in active-safety systems, having partnered with machine-vision expert Mobileye with the intent to bring a "Level 4" self-driving system to market by the end of 2019. The partners may be first to market.
Delphi's adjusted operating margin for the quarter was 14.1%, up from 13% a year ago. That was a result of increased earnings from the acquisition of HellermannTyton in late 2015, the impact of cost-cutting efforts, including movement to lower-cost manufacturing locations in Europe, and above-market sales growth in all regions, the company said in a statement.
Delphi's new business bookings totaled $26 billion for the full year.
What Delphi's CEO said about the quarter
CEO Kevin Clark hailed what he called a record quarter during the company's earnings conference call.
We had a record quarter, delivering revenue and earnings growth above the top end of our guidance range. Revenue increased 10% in the quarter and 8% for the full year. Operating income increased 20% in the quarter and 13% for the full year with margin expansion and double-digit earnings growth in every quarter. And we continue to convert more income to cash, allowing us to reinvest in our business and return cash to shareholders, which totaled almost $1 billion in 2016 between dividends and share repurchases.
We expect more of the same in 2017 with strong growth in sales, earnings and cash flow, reinforcing the fact that our business model is working. Our portfolio of market-relevant technologies is driving revenue growth in every business and we continue to optimize our cost structure. And as a result, we believe we're well positioned for the long term.
Looking ahead: Delphi's guidance for 2017
Here are the company's expectations for key metrics in 2017.
- Revenue between $16.5 billion and $16.9 billion.
- Operating income between $2.185 billion and $2.285 billion.
- Earrings per share between $6.40 and $6.70.
For the first quarter of 2017, Delphi expects:
- Revenue between $4.05 billion and $4.15 billion.
- Operating income between $490 million and $520 million.
- Earnings per share between $1.40 and $1.50.
