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November 2, 2016 Third quarter 2016 earnings call

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Page 1: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

November 2, 2016

Third quarter 2016 earnings call

Page 2: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Forward-looking statements

This presentation, as well as other statements made by Delphi Automotive PLC (the “Company”), contain

forward-looking statements that reflect, when made, the Company’s current views with respect to current

events, certain investments and acquisitions 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.

2

Page 3: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Agenda

3

Operations overview

• Q3 2016 summary

• Technology update

Financial overview

• Q3 2016 results

• 2016 guidance

Q&A

Kevin Clark Chief Executive Officer

Joe Massaro Chief Financial Officer

Kevin Clark / Joe Massaro

Page 4: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Operations overview

Kevin Clark President and Chief Executive Officer

Page 5: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Highlights

5

• Revenue increased 10% to $4.1B

• Operating income expanded to $531M

• EPS increased 17% to $1.50

• Portfolio modification and efficient capital deployment continues

• New business bookings of ~$18B YTD

• Further strengthened our competitive position

Note: Revenue growth excludes impact of FX, commodities, the E&S divestiture and HellermannTyton acquisition;

EPS and operating income adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP

Focused on execution

5

Page 6: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

IAA CV Hanover 2016: “Driven by ideas”

6

Delphi showcases next-generation commercial vehicle technologies

6

To be updated

Page 7: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Paris Auto Show focus on electrification

7

Delphi’s electrification portfolio provides innovative customer solutions

“Electric cars are very important for the future – if

you’d like to offer sustainable mobility solutions then

you need electrified products.” – Automotive News

“We’re now flipping the switch, we’re

ready for the launch of an electric product

offensive that will cover all vehicle

segments.” – Bloomberg

Photos of the Paris Auto Show credited to Bitton and Paris Digest

“Plans to launch more than 30 electric

vehicles over the next decade, forecasting

they will account for about a quarter of

group deliveries by 2025.”

– Fortune

“Our vision of the electric market is that it is

not a niche market.” – Bloomberg

Page 8: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Comprehensive portfolio enables vehicle electrification

Electrification increases Delphi content per vehicle Powertrain Management Battery Management Electrical System

• Charging inlets and cables

• Internal battery connections

• 12V battery monitor

• Battery pack controller

• On-board charger

• Supervisory controller

• Supervisory software

• Inverter

• Combined inverter/converter

• 48V Driver module

• 48V fusing & distribution

• High power & voltage connectors

• High voltage shielded cable

• DC/DC converter

Full Hybrid (HEV)

5x CPV$

Plug-in Hybrid (PHEV)

7-8x CPV$

Electric Vehicle (EV)

7-8x CPV$

48V Mild Hybrid (Components and

Full System)

2-4x CPV$

Gasoline ICE

1x CPV$

8

Page 9: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Bookings growth

1 At constant foreign exchange rates

Note: Bookings represent lifetime gross program revenues awarded, based upon expected volumes and pricing

Significant portion of bookings in high growth products

9

GDi & Valve Train

Cumulative bookings (2013 – 2016 YTD) Continued bookings growth

($ billions)

Infotainment & User

Experience

48V / EV / HEV

~$4B ~$8B

~$3B ~$5B

Active Safety

$18

$20

$22

$24 $24

$26

$18

2010 2011 2012 2013 2014 2015 2016YTD

Page 10: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Scalable software platform

Reduced architecture complexity

Faster communication/interconnection

Multi-processor configurations

Delphi enables industry technology trends

Future system software optimization and upgradeability

Advanced computing platforms Active Safety & Infotainment functionality

10

Production launch in 2017 & 2018

Multi-Domain Controller (MDC) Integrated Cockpit Controller (ICC) Centralized sensor fusion and user experience control

Multi-Domain Controller

Integrated Cockpit

Controller

Radar Controller

Airbag Controller

Camera Controller

Crash Sensor

Controller

Detection System

Controller

Gesture Controller

Cluster Controller Head Unit

Controller

Radio Controller

V2X Connectivity Controller

Page 11: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

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Delphi and Mobileye CSLP level 4/5 platform

Offering a fully autonomous solution to OEMs by 2019

Mobileye’s best-in-class vision

(camera) systems and real-time

mapping and vehicle location

Mobileye Vision System

Cameras take a 360-degree

image around the car and

send it to the Multi-Domain

Controller. The images are

processed and objects are

identified.

Mobileye’s Policy and

Reinforcement Learning Systems

Helps negotiate with other human

drivers and pedestrians in complex

urban scenes.

Mobileye’s real-time

mapping and vehicle

location (REMTM)

Performs detailed

interpretations of camera

images to map the area

around the vehicle and

plots a drivable path.

Delphi’s Ottomatika Automated Driving software, sensor suite, and computing platform

• Radars: Radio waves sent

out and bounce off objects,

like this pedestrian. The

speed and distance of these

objects is calculated in any

weather, day or night.

• LiDAR: Light pulses sent

out and reflect off objects

like this pedestrian. LiDAR

identifies the object as a

person and her distance

from the car, day or night.

• RACam: Combines a mid-

range radar and a forward-

facing camera that can see

and identify the pedestrian,

plus sense objects further

down the road.

Delphi’s Multi-Domain Controller

Information from the sensing systems as well as mapping and navigation

data is fused to make driving decisions such as when to stop or go.

Delphi’s Sensor Suite

Page 12: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

76GHz Short Range Radar for 360° Sensing 3D Gesture Recognition System

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PACE award finalists

Engineering excellence yields innovative product portfolio

12

4 SSR Radars in 360 deg Configuration

60 50 40 30 20 10 0 10 20 30 40 50 60 90

80

70

60

50

40

30

20

10

0

10

20

30

40

50

60

70

80

90

Cross Range - X (m)

Dow

n R

ange -

Y (

m)

80 m

+/- 75 deg,

250 MHz BW

50 msec

40 m

+/- 75 deg,

500 MHz BW

50 msec

Superior radar performance

enables more sophisticated

features, including:

1) Frontal cross-traffic alert

2) Lateral collision avoidance

3) Evasive steering maneuvers

4) Automatic lane changes

5) Parking space detection

Page 13: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Financial overview

Joe Massaro Chief Financial Officer and Senior Vice President

Page 14: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Q3 2016 vs. Q3 2015 ($ millions, except per share amounts)

14

Delivered double digit organic revenue and earnings growth

Reported revenue Growth %

Earnings per share2

Growth %

Operating cash flow

Q3 2016 Q3 2015 B/(W)

$4,091 $3,631 $460

13%/10%1

$704 17.2%

$601 16.6%

$103 60 bps

$1.50 $1.28 $0.22 17%

$415 $394 $21

EBITDA2

EBITDA margin %

$531 13.0%

$470 12.9%

$61 10 bps

Operating income2

Operating margin %

1 At constant foreign exchange and commodity rates; excludes impact of the E&S divestiture and HellermannTyton acquisition

2 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP

Page 15: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Year-over-year growth by region Q3 2016 vs. Q3 2015

15

Revenue growth

Strong outperformance globally

$3,631

$436 $185

($71) ($90)

$4,091

Q3 2015 Sales

growth

Price FX/

commodities

Q3 2016

Reported

Q3 2016

Adjusted1

Q3 2016

Europe 11% 7%

N. America 10% 9%

Asia 20% 19%

S. America 5% (13%)

Total 13% 10%

($ millions)

Acquisitions/

divestitures

1 Growth rates at constant foreign exchange and commodity rates; excludes impact of the E&S divestiture and HellermannTyton acquisition

Page 16: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

$470

$117 $22 $8

($15)

($71)

$531

Q3 2015 Sales Acquisitions/ Net FX/ Price Q3 2016

growth divestitures performance commodities

Note: Operating income adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP

12.9%

13.0%

Operating income growth Q3 2016 vs. Q3 2015

($ millions)

16

Margin expansion while investing for growth

16

Page 17: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Operating income1,3 Revenue1,2

1 Reflects reclassification of Power Electronics product line from E&S to Powertrain for all periods to align with updated management reporting structure

2 At constant foreign exchange and commodity rates; excludes impact of the E&S divestiture and HellermannTyton acquisition

3 Adjusted for restructuring and other special items; margin calculations based on reported revenue. See Appendix for detail and reconciliation to US GAAP 17

Segment financials

Solid growth in all segments

($ millions) ($ millions)

$1,941

$1,064

$653

$2,147

$1,108

$763

E/EA Powertrain E&S

$1,941 $2,287 $1,064 $1,077 $668 $763

$263

$115 $92

$316

$120

$95

E/EA Powertrain E&S

13.5% 13.8% 10.8% 11.1% 13.8% 12.5% Operating

margin3

18% 1% 14% Reported

4% 17% Adjusted2

Q3 2016 growth

11%

Q3 2015

Q3 2016

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

Q1 2015

Q1 2016

Note: Power

Electronics

realignment Note: Power

Electronics

realignment

Q3 2015

Q3 2016

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

Q1 2015

Q1 2016

Reported

revenue

Page 18: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

$1.28

$0.27 $0.06

($0.05) ($0.06)

$1.50

Q3 20151 Operating2 Share FX/ Taxes/ Q3 20161

income repurchases commodities other

Earnings per share

1 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP

2 Adjusted for restructuring and other special items and at constant foreign exchange and commodity rates; see Appendix for detail and reconciliation to US GAAP 18

Q3 2016 vs. Q3 2015

Another quarter of double digit EPS growth

Page 19: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

6.6

9.4

Before refinancing After refinancing

Refinancing enables flexibility

Capital allocation strategy remains unchanged

Weighted average maturity Capital deployment

~$40

~$20

Interest on prior notes Interest on new issuance

19

Interest expense

(years)

($ millions)

($ billions)

~$8 ~$4

2014 - 2016 YTD LTM

Capex Dividends Share repurchases M&A

~3 year

increase

~$20M

annual

savings

Free cash flow1

$490

$644

2015 YTD 2016 YTD

($ millions)

100% 100%

1 See Appendix for detail and reconciliation to US GAAP

Page 20: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

2016 guidance

20

($ millions, except per share amounts)

Reported sales

Adjusted growth1

$4,050 - $4,150

~4%

$16,400 - $16,500

6% - 7%

Operating income2

Operating margin

$545 - $575

~13.7%

$2,160 - $2,190

13.2% - 13.3%

EPS2

Growth

$1.55 - $1.65

~15%

$6.00 - $6.10

~16%

Tax rate2

15% - 16%

17%

Operating cash flow

Capex

~$600

~$150

$1,900

$800

Improved outlook underscores strong finish to 2016

Q4 2016 CY 2016

1 Average actual 2015 exchange rates; revenue growth is adjusted for FX, commodities, the E&S divestiture and the HellermannTyton acquisition

2 Adjusted for restructuring and other special items

Page 21: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Wrap up

21

• Delivered strong Q3 performance – Double-digit sales growth driven by new launches and higher content

– Lean cost structure enables growth investment

• Confident in 2016 outlook – Technology and innovation yield accelerated sales growth

– Delivering incremental value through accretive capital deployment

• Well positioned for continued growth and operating performance – Most relevant portfolio in the industry

– More attractive cost structure yielding more income and cash

– Flexible business model, efficient capital structure, more profitable growth

Focused on execution

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Page 22: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Making it possible.

Page 23: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Appendix

Page 24: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

($ millions) Q3 2016 Q3 2015

Net income attributable to Delphi $293 $404

Interest expense $41 $30

Other expense (income), net $66 $11

Income tax expense $57 $61

Equity income, net of tax ($10) ($5)

Income from discontinued operations, net of tax - ($54)

Net income attributable to noncontrolling interest $13 $14

Operating income $460 $461

Restructuring $63 $36

Other acquisition and portfolio project costs $7 $12

Asset impairments $1 -

(Gain) loss on business divestitures, net - ($39)

Adjusted operating income $531 $470

The company’s guidance was determined using a consistent manner and methodology

Non-US GAAP financial metrics

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Page 25: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Non-US GAAP financial metrics ($ millions) Q3 2016 Q3 2015

Net income attributable to Delphi $293 $404

Interest expense $41 $30

Other (income) expense, net $66 $11

Income tax expense $57 $61

Equity income, net of tax ($10) ($5)

(Income) loss from discontinued operations, net of tax - ($54)

Net income attributable to noncontrolling interest $13 $14

Operating income $460 $461

Depreciation and amortization $174 $131

EBITDA $634 $592

Restructuring $63 $36

Other acquisition and portfolio project costs $7 $12

(Gain) loss on business divestitures, net - ($39)

Adjusted EBITDA $704 $601

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Page 26: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

($ millions) Q3 2016 Q3 2015

Net income attributable to Delphi $293 $404

Income from discontinued operations attributable to Delphi, net of tax - ($53)

Income from continuing operations attributable to Delphi $293 $351

Adjusting items:

Restructuring $63 $36

Other acquisition and portfolio project costs $7 $12

Asset impairments $1 -

(Gain) loss on business divestitures, net - ($39)

Debt extinguishment costs $73 -

Transaction and related costs associated with acquisitions - $12

Tax impact of adjusting items (a) ($28) ($7)

Adjusted net income attributable to Delphi $409 $365

Weighted average number of diluted shares outstanding 272.77 284.40

Diluted net income per share from continuing operations attributable to Delphi $1.07 $1.23

Adjusted net income per share $1.50 $1.28

(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 charges were incurred.

The company’s guidance was determined using a consistent manner and methodology

Non-US GAAP financial metrics

26

Page 27: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Non-US GAAP financial metrics

27

(millions) Q3 2016 Q3 2015

Net cash provided by operating activities from continuing operations $1,258 $1,029

Capital expenditures ($614) ($539)

Free cash flow $644 $490

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Page 28: Third quarter 2016 earnings call · 2018-08-08 · Q3 2016 vs. Q3 2015 Year-over-year growth by region 15 Revenue growth Strong outperformance globally $3,631 $436 $185 Q3 ($71) ($90)

Shares outstanding

28

(millions) Q3 2016 Q3 2015

Weighted average ordinary shares outstanding, basic 272.19 282.97

Dilutive shares related to RSUs 0.58 1.43

Weighted average ordinary shares outstanding, including dilutive shares 272.77 284.40

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