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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Delphi Technologies PLC | NYSE:DLPH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 17.02 | 0 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Jersey
|
|
98-1367514
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
Large accelerated filer
|
|
x
.
|
|
|
|
Accelerated filer
|
¨
.
|
Non-accelerated filer
|
|
¨
.
|
|
|
|
Smaller reporting company
|
¨
.
|
|
|
|
|
|
|
Emerging growth company
|
¨
.
|
|
||
|
|
Page
|
Part I - Financial Information
|
||
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
Part II - Other Information
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 6.
|
||
|
|
|
|
||
Exhibits
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions, except per share amounts)
|
||||||
Net sales
|
$
|
1,151
|
|
|
$
|
1,296
|
|
Operating expenses:
|
|
|
|
||||
Cost of sales
|
983
|
|
|
1,046
|
|
||
Selling, general and administrative
|
104
|
|
|
97
|
|
||
Amortization
|
6
|
|
|
4
|
|
||
Restructuring (Note 8)
|
3
|
|
|
11
|
|
||
Total operating expenses
|
1,096
|
|
|
1,158
|
|
||
Operating income
|
55
|
|
|
138
|
|
||
Interest expense
|
(18
|
)
|
|
(20
|
)
|
||
Other (expense) income, net (Note 18)
|
(12
|
)
|
|
6
|
|
||
Income before income taxes and equity income
|
25
|
|
|
124
|
|
||
Income tax expense
|
(8
|
)
|
|
(22
|
)
|
||
Income before equity income
|
17
|
|
|
102
|
|
||
Equity income, net of tax
|
2
|
|
|
3
|
|
||
Net income
|
19
|
|
|
105
|
|
||
Net income attributable to noncontrolling interest
|
3
|
|
|
7
|
|
||
Net income attributable to Delphi Technologies
|
$
|
16
|
|
|
$
|
98
|
|
|
|
|
|
||||
Net income per share attributable to Delphi Technologies:
|
|
|
|
||||
Basic
|
$
|
0.18
|
|
|
$
|
1.10
|
|
Diluted
|
$
|
0.18
|
|
|
$
|
1.10
|
|
|
|
|
|
||||
Weighted average ordinary shares outstanding:
|
|
|
|
||||
Basic
|
88.45
|
|
|
88.71
|
|
||
Diluted
|
88.55
|
|
|
88.92
|
|
||
|
|
|
|
||||
Cash dividends declared per share
|
$
|
—
|
|
|
$
|
0.17
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Net income
|
$
|
19
|
|
|
$
|
105
|
|
Other comprehensive income:
|
|
|
|
||||
Currency translation adjustments
|
9
|
|
|
31
|
|
||
Net change in unrecognized gain on derivative instruments, net of tax (Note 16)
|
16
|
|
|
(1
|
)
|
||
Employee benefit plans adjustment, net of tax
|
34
|
|
|
(8
|
)
|
||
Other comprehensive income
|
59
|
|
|
22
|
|
||
Comprehensive income
|
78
|
|
|
127
|
|
||
Comprehensive income attributable to noncontrolling interests
|
4
|
|
|
9
|
|
||
Comprehensive income attributable to Delphi Technologies
|
$
|
74
|
|
|
$
|
118
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
|
|||||
|
|
|
|
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
217
|
|
|
$
|
359
|
|
Restricted cash
|
1
|
|
|
1
|
|
||
Accounts receivable, net
|
914
|
|
|
878
|
|
||
Inventories, net (Note 3)
|
549
|
|
|
521
|
|
||
Other current assets (Note 4)
|
182
|
|
|
172
|
|
||
Total current assets
|
1,863
|
|
|
1,931
|
|
||
Long-term assets:
|
|
|
|
||||
Property, net
|
1,469
|
|
|
1,445
|
|
||
Investments in affiliates
|
45
|
|
|
44
|
|
||
Intangible assets and goodwill, net (Note 2)
|
71
|
|
|
76
|
|
||
Other long-term assets (Note 4)
|
509
|
|
|
397
|
|
||
Total long-term assets
|
2,094
|
|
|
1,962
|
|
||
Total assets
|
$
|
3,957
|
|
|
$
|
3,893
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt (Note 9)
|
$
|
44
|
|
|
$
|
43
|
|
Accounts payable
|
840
|
|
|
906
|
|
||
Accrued liabilities (Note 5)
|
442
|
|
|
428
|
|
||
Total current liabilities
|
1,326
|
|
|
1,377
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt (Note 9)
|
1,479
|
|
|
1,488
|
|
||
Pension and other postretirement benefit obligations (Note 10)
|
437
|
|
|
467
|
|
||
Other long-term liabilities (Note 5)
|
219
|
|
|
123
|
|
||
Total long-term liabilities
|
2,135
|
|
|
2,078
|
|
||
Total liabilities
|
3,461
|
|
|
3,455
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, none issued and outstanding
|
—
|
|
|
—
|
|
||
Ordinary shares, $0.01 par value per share, 1,200,000,000 shares authorized, 87,985,653 and 88,491,963 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively
|
1
|
|
|
1
|
|
||
Additional paid-in-capital
|
406
|
|
|
407
|
|
||
Retained earnings
|
301
|
|
|
296
|
|
||
Accumulated other comprehensive loss (Note 15)
|
(354
|
)
|
|
(412
|
)
|
||
Total Delphi Technologies shareholders’ equity
|
354
|
|
|
292
|
|
||
Noncontrolling interest
|
142
|
|
|
146
|
|
||
Total shareholders’ equity
|
496
|
|
|
438
|
|
||
Total liabilities and shareholders’ equity
|
$
|
3,957
|
|
|
$
|
3,893
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
19
|
|
|
$
|
105
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
47
|
|
|
46
|
|
||
Amortization
|
6
|
|
|
4
|
|
||
Amortization of deferred debt issuance costs
|
1
|
|
|
1
|
|
||
Restructuring expense, net of cash paid
|
(6
|
)
|
|
(7
|
)
|
||
Deferred income taxes
|
(3
|
)
|
|
2
|
|
||
Pension and other postretirement benefit expenses
|
21
|
|
|
11
|
|
||
Income from equity method investments, net of dividends received
|
(2
|
)
|
|
(3
|
)
|
||
Share-based compensation
|
4
|
|
|
5
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(36
|
)
|
|
(23
|
)
|
||
Inventories
|
(28
|
)
|
|
(1
|
)
|
||
Other assets
|
6
|
|
|
(9
|
)
|
||
Accounts payable
|
(6
|
)
|
|
(74
|
)
|
||
Accrued and other long-term liabilities
|
1
|
|
|
24
|
|
||
Other, net
|
11
|
|
|
5
|
|
||
Pension contributions
|
(14
|
)
|
|
(11
|
)
|
||
Net cash provided by operating activities
|
21
|
|
|
75
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(131
|
)
|
|
(66
|
)
|
||
Proceeds from sale of property
|
2
|
|
|
1
|
|
||
Cost of technology investments
|
—
|
|
|
(7
|
)
|
||
Settlement of undesignated derivatives
|
(2
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(131
|
)
|
|
(72
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net repayments under short-term debt agreements
|
—
|
|
|
(1
|
)
|
||
Repayments under long-term debt agreements
|
(9
|
)
|
|
(5
|
)
|
||
Dividend payments of consolidated affiliates to minority shareholders
|
(8
|
)
|
|
(10
|
)
|
||
Distribution of cash dividends
|
—
|
|
|
(15
|
)
|
||
Taxes withheld and paid on employees’ restricted share awards
|
(1
|
)
|
|
(2
|
)
|
||
Repurchase of ordinary shares
|
(14
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(32
|
)
|
|
(33
|
)
|
||
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
|
—
|
|
|
8
|
|
||
Decrease in cash, cash equivalents and restricted cash
|
(142
|
)
|
|
(22
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of the period
|
360
|
|
|
339
|
|
||
Cash, cash equivalents and restricted cash at end of the period
|
$
|
218
|
|
|
$
|
317
|
|
|
Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Number of Shares
|
|
Amount
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Delphi Technologies Shareholders’ Equity
|
|
Noncontrolling Interest
|
|
Total Shareholders’ Equity
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
|||||||||||||||||||||||||||||
Balance at December 31, 2018
|
89
|
|
|
$
|
1
|
|
|
$
|
407
|
|
|
$
|
296
|
|
|
$
|
(412
|
)
|
|
$
|
292
|
|
|
$
|
146
|
|
|
$
|
438
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|
3
|
|
|
19
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
58
|
|
|
1
|
|
|
59
|
|
|||||||
Dividend payments of consolidated affiliates to minority shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|||||||
Repurchase of ordinary shares
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|
(11
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||||
Taxes withheld on employees’ restricted share award vestings
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
Balance at March 31, 2019
|
88
|
|
|
$
|
1
|
|
|
$
|
406
|
|
|
$
|
301
|
|
|
$
|
(354
|
)
|
|
$
|
354
|
|
|
$
|
142
|
|
|
$
|
496
|
|
|
Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Number of Shares
|
|
Amount
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Delphi Technologies Shareholders’ Equity
|
|
Noncontrolling Interest
|
|
Total Shareholders’ Equity
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
|||||||||||||||||||||||||||||
Balance at December 31, 2017
|
89
|
|
|
$
|
1
|
|
|
$
|
431
|
|
|
$
|
7
|
|
|
$
|
(371
|
)
|
|
$
|
68
|
|
|
$
|
164
|
|
|
$
|
232
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
|
7
|
|
|
105
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|
2
|
|
|
22
|
|
|||||||
Dividends on ordinary shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||||
Dividend payments of consolidated affiliates to minority shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|||||||
Separation related adjustments
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
(32
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||||
Taxes withheld on employees’ restricted share award vestings
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||
Balance as of March 31, 2018
|
89
|
|
|
$
|
1
|
|
|
$
|
399
|
|
|
$
|
90
|
|
|
$
|
(351
|
)
|
|
$
|
139
|
|
|
$
|
163
|
|
|
$
|
302
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Productive material
|
$
|
246
|
|
|
$
|
250
|
|
Work-in-process
|
46
|
|
|
36
|
|
||
Finished goods
|
257
|
|
|
235
|
|
||
Total
|
$
|
549
|
|
|
$
|
521
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Value added tax receivable
|
$
|
101
|
|
|
$
|
98
|
|
Reimbursable engineering costs
|
26
|
|
|
17
|
|
||
Income and other taxes receivable
|
16
|
|
|
16
|
|
||
Prepaid insurance and other expenses
|
14
|
|
|
14
|
|
||
Notes receivable
|
13
|
|
|
15
|
|
||
Return assets (Note 2)
|
6
|
|
|
7
|
|
||
Derivative financial instruments (Note 16)
|
4
|
|
|
4
|
|
||
Other
|
2
|
|
|
1
|
|
||
Total
|
$
|
182
|
|
|
$
|
172
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Deferred income taxes, net
|
$
|
275
|
|
|
$
|
280
|
|
Operating lease assets (Note 6)
|
118
|
|
|
—
|
|
||
Income and other taxes receivable
|
36
|
|
|
53
|
|
||
Investment in Tula (Note 2)
|
21
|
|
|
21
|
|
||
Derivative financial instruments (Note 16)
|
10
|
|
|
—
|
|
||
Investment in PolyCharge (Note 2)
|
7
|
|
|
7
|
|
||
Debt issuance costs
|
3
|
|
|
3
|
|
||
Reimbursable engineering costs
|
2
|
|
|
—
|
|
||
Other
|
37
|
|
|
33
|
|
||
Total
|
$
|
509
|
|
|
$
|
397
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Income and other taxes payable
|
$
|
61
|
|
|
$
|
63
|
|
Warranty obligations (Note 7)
|
59
|
|
|
68
|
|
||
Payroll-related obligations
|
51
|
|
|
45
|
|
||
Restructuring (Note 8)
|
40
|
|
|
46
|
|
||
Deferred reimbursable engineering
|
32
|
|
|
31
|
|
||
Accrued rebates
|
30
|
|
|
29
|
|
||
Freight
|
22
|
|
|
20
|
|
||
Accrued interest
|
21
|
|
|
12
|
|
||
Operating lease liabilities (Note 6)
|
19
|
|
|
—
|
|
||
Outside services
|
14
|
|
|
13
|
|
||
Employee benefits
|
12
|
|
|
16
|
|
||
Deferred cost reimbursement
|
7
|
|
|
5
|
|
||
Customer deposits
|
5
|
|
|
5
|
|
||
Other
|
69
|
|
|
75
|
|
||
Total
|
$
|
442
|
|
|
$
|
428
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Operating lease liabilities (Note 6)
|
$
|
101
|
|
|
$
|
—
|
|
Accrued income taxes
|
46
|
|
|
46
|
|
||
Warranty obligations (Note 7)
|
32
|
|
|
28
|
|
||
Restructuring (Note 8)
|
20
|
|
|
19
|
|
||
Deferred income taxes, net
|
13
|
|
|
14
|
|
||
Derivative financial instruments (Note 16)
|
—
|
|
|
6
|
|
||
Environmental (Note 11)
|
2
|
|
|
2
|
|
||
Other
|
5
|
|
|
8
|
|
||
Total
|
$
|
219
|
|
|
$
|
123
|
|
|
|
March 31, 2019
|
||
|
|
|
||
|
|
(in millions)
|
||
Assets
|
Balance Sheet Location
|
|
||
Operating lease assets
|
Other long-term assets (Note 4)
|
$
|
118
|
|
Finance lease assets
|
Property, net
|
14
|
|
|
|
Total lease assets
|
$
|
132
|
|
|
|
|
||
Liabilities
|
|
|
||
Current
|
|
|
||
Operating leases
|
Accrued liabilities (Note 5)
|
$
|
19
|
|
Finance leases
|
Short-term debt (Note 9)
|
2
|
|
|
Long-term
|
|
|
||
Operating leases
|
Other long-term liabilities (Note 5)
|
101
|
|
|
Finance leases
|
Long-term debt (Note 9)
|
12
|
|
|
|
Total lease liabilities
|
$
|
134
|
|
|
Three Months Ended March 31, 2019
|
||
|
|
||
|
(in millions)
|
||
Finance lease cost - amortization of lease assets (1)
|
$
|
1
|
|
Operating lease cost (2)
|
8
|
|
|
Total lease cost
|
$
|
9
|
|
(1)
|
Includes interest on finance lease liabilities, which was not material.
|
(2)
|
Includes short-term leases and variable lease costs, which were not material.
|
|
March 31, 2019
|
|
Weighted-average remaining lease term:
|
|
|
Operating leases
|
6.95
|
|
Finance leases
|
8.97
|
|
Weighted-average discount rate:
|
|
|
Operating leases
|
6.58
|
%
|
Finance leases
|
4.12
|
%
|
|
Three Months Ended March 31, 2019
|
||
|
|
||
|
(in millions)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows for operating leases (1)
|
$
|
7
|
|
(1)
|
Operating and financing cash flows for finance leases were not material for the three months ended March 31, 2019.
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Remainder of 2019
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
21
|
|
2020
|
25
|
|
|
2
|
|
|
27
|
|
|||
2021
|
23
|
|
|
2
|
|
|
25
|
|
|||
2022
|
19
|
|
|
2
|
|
|
21
|
|
|||
2023
|
14
|
|
|
1
|
|
|
15
|
|
|||
Thereafter
|
51
|
|
|
9
|
|
|
60
|
|
|||
Total future minimum lease payments
|
151
|
|
|
18
|
|
|
169
|
|
|||
Less: amount of lease payments representing interest
|
(31
|
)
|
|
(4
|
)
|
|
(35
|
)
|
|||
Total lease liabilities
|
$
|
120
|
|
|
$
|
14
|
|
|
$
|
134
|
|
|
Warranty Obligations
|
||
|
|
||
|
(in millions)
|
||
Accrual balance at beginning of period
|
$
|
96
|
|
Provision for estimated warranties incurred during the period
|
9
|
|
|
Changes in estimate for pre-existing warranties
|
1
|
|
|
Settlements made during the period (in cash or in kind)
|
(15
|
)
|
|
Foreign currency translation and other
|
—
|
|
|
Accrual balance at end of period
|
$
|
91
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Powertrain Systems
|
$
|
3
|
|
|
$
|
11
|
|
Aftermarket
|
—
|
|
|
—
|
|
||
Total
|
$
|
3
|
|
|
$
|
11
|
|
|
Employee Termination Benefits Liability
|
|
Other Exit Costs Liability
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Accrual balance at December 31, 2018
|
$
|
64
|
|
|
$
|
1
|
|
|
$
|
65
|
|
Provision for estimated expenses incurred during the period
|
3
|
|
|
—
|
|
|
3
|
|
|||
Payments made during the period
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||
Foreign currency and other
|
1
|
|
|
—
|
|
|
1
|
|
|||
Accrual balance at March 31, 2019
|
$
|
59
|
|
|
$
|
1
|
|
|
$
|
60
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
$750 million Term Loan A Facility, due 2022 (net of $4 and $4 unamortized issuance costs)
|
$
|
718
|
|
|
$
|
727
|
|
$800 million Senior Notes at 5.00%, due 2025 (net of $11 and $12 unamortized issuance costs and $3 and $3 discount, respectively)
|
786
|
|
|
785
|
|
||
Finance lease liabilities and other
|
19
|
|
|
19
|
|
||
Total debt
|
1,523
|
|
|
1,531
|
|
||
Less: current portion
|
(44
|
)
|
|
(43
|
)
|
||
Long-term debt
|
$
|
1,479
|
|
|
$
|
1,488
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||
|
LIBOR plus
|
|
ABR plus
|
|
LIBOR plus
|
|
ABR plus
|
||||
Revolving Credit Facility
|
1.45
|
%
|
|
0.45
|
%
|
|
1.45
|
%
|
|
0.45
|
%
|
Term Loan A Facility
|
1.75
|
%
|
|
0.75
|
%
|
|
1.75
|
%
|
|
0.75
|
%
|
|
|
|
Borrowings as of
|
|
|
|||
|
|
|
March 31, 2019
|
|
Rate effective as of
|
|||
|
Applicable Rate
|
|
(in millions)
|
|
March 31, 2019
|
|||
Term Loan A Facility
|
LIBOR plus 1.75%
|
|
$
|
722
|
|
|
4.25
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Service cost
|
$
|
7
|
|
|
$
|
10
|
|
Interest cost
|
9
|
|
|
9
|
|
||
Expected return on plan assets
|
(14
|
)
|
|
(14
|
)
|
||
Curtailment loss
|
15
|
|
|
—
|
|
||
Amortization of actuarial losses
|
4
|
|
|
6
|
|
||
Net periodic benefit cost
|
$
|
21
|
|
|
$
|
11
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
North America
|
$
|
338
|
|
|
$
|
356
|
|
Europe
|
542
|
|
|
566
|
|
||
Asia Pacific
|
236
|
|
|
339
|
|
||
South America
|
35
|
|
|
35
|
|
||
Total
|
$
|
1,151
|
|
|
$
|
1,296
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Internal Combustion Engine Products
|
$
|
721
|
|
|
$
|
795
|
|
Electronics & Electrification
|
237
|
|
|
284
|
|
||
Independent Aftermarket
|
141
|
|
|
155
|
|
||
Original Equipment Service
|
52
|
|
|
62
|
|
||
Total
|
$
|
1,151
|
|
|
$
|
1,296
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(dollars in millions)
|
||||||
Income tax expense
|
$
|
8
|
|
|
$
|
22
|
|
Effective tax rate
|
32
|
%
|
|
18
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions, except per share data)
|
||||||
Numerator:
|
|
|
|
||||
Net income attributable to Delphi Technologies
|
$
|
16
|
|
|
$
|
98
|
|
Denominator:
|
|
|
|
||||
Weighted average ordinary shares outstanding, basic
|
88.45
|
|
|
88.71
|
|
||
Dilutive shares related to restricted stock units (“RSUs”)
|
0.10
|
|
|
0.21
|
|
||
Weighted average ordinary shares outstanding, including dilutive shares
|
88.55
|
|
|
88.92
|
|
||
|
|
|
|
||||
Net income per share attributable to Delphi Technologies:
|
|
|
|
||||
Basic
|
$
|
0.18
|
|
|
$
|
1.10
|
|
Diluted
|
$
|
0.18
|
|
|
$
|
1.10
|
|
Anti-dilutive securities share impact
|
—
|
|
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Total number of shares repurchased
|
737,917
|
|
|
—
|
|
||
Average price paid per share
|
$
|
20.33
|
|
|
$
|
—
|
|
Total (in millions)
|
$
|
15
|
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Foreign currency translation adjustments:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(165
|
)
|
|
$
|
(85
|
)
|
Aggregate adjustment for the period (1)
|
8
|
|
|
29
|
|
||
Balance at end of period
|
(157
|
)
|
|
(56
|
)
|
||
|
|
|
|
||||
Gains (losses) on derivatives:
|
|
|
|
||||
Balance at beginning of period
|
(2
|
)
|
|
—
|
|
||
Other comprehensive income before reclassifications (net tax effect of $0 and $0)
|
18
|
|
|
(1
|
)
|
||
Reclassification to income (net tax effect of $0 and $0)
|
(2
|
)
|
|
—
|
|
||
Balance at end of period
|
14
|
|
|
(1
|
)
|
||
|
|
|
|
||||
Pension and postretirement plans:
|
|
|
|
||||
Balance at beginning of period
|
(245
|
)
|
|
(286
|
)
|
||
Other comprehensive income before reclassifications (net tax effect of $2 and $2)
|
19
|
|
|
(13
|
)
|
||
Reclassification to income (net tax effect of $4 and $1)
|
15
|
|
|
5
|
|
||
Balance at end of period
|
(211
|
)
|
|
(294
|
)
|
||
|
|
|
|
||||
Accumulated other comprehensive loss, end of period
|
$
|
(354
|
)
|
|
$
|
(351
|
)
|
(1)
|
Includes a loss of
$3 million
and a gain of
$7 million
, for the
three months ended
March 31, 2019
, and 2018, respectively, related to the foreign currency impact of intra-entity loans that are of a long-term investment nature. Also included are gains of
$4 million
and losses of less than
$1 million
for the
three months ended
March 31, 2019
, and 2018, respectively, related to non-derivative net investment hedges. Refer to Note 16. Derivatives and Hedging Activities for further description of these hedges.
|
(1)
|
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 10. Pension Benefits for additional details).
|
Foreign Currency
|
|
Quantity
Hedged |
|
Unit of
Measure |
|
Notional Amount
(USD Equivalent) |
|||
|
|
(in millions)
|
|||||||
Euro
|
|
140
|
|
|
EUR
|
|
$
|
160
|
|
Chinese Yuan Renminbi
|
|
839
|
|
|
RMB
|
|
120
|
|
|
Mexican Peso
|
|
860
|
|
|
MXN
|
|
40
|
|
|
Singapore Dollar
|
|
45
|
|
|
SGD
|
|
30
|
|
|
Turkish Lira
|
|
118
|
|
|
TRY
|
|
20
|
|
|
Polish Zloty
|
|
57
|
|
|
PLN
|
|
10
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet
|
||||||||||
|
Balance Sheet Location*
|
|
March 31,
2019 |
|
Balance Sheet Location*
|
|
March 31,
2019 |
|
March 31,
2019 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||||||
Designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency derivatives
|
Other current assets
|
|
$
|
5
|
|
|
Other current assets
|
|
$
|
1
|
|
|
$
|
4
|
|
Foreign currency derivatives
|
Other long-term assets
|
|
1
|
|
|
Other long-term assets
|
|
1
|
|
|
—
|
|
|||
Interest rate swaps
|
Other long-term assets
|
|
—
|
|
|
Other long-term assets
|
|
3
|
|
|
(3
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Designated as net investment hedges:
|
|
|
|
|
|
|
|
|
|||||||
Cross-currency swaps
|
Other long-term assets
|
|
13
|
|
|
Other long-term assets
|
|
—
|
|
|
13
|
|
|||
Total designated as hedges
|
|
$
|
19
|
|
|
|
|
$
|
5
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency derivatives
|
Other current assets
|
|
$
|
—
|
|
|
Other current assets
|
|
$
|
—
|
|
|
—
|
|
|
Total not designated as hedges
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet
|
||||||||||
|
Balance Sheet Location*
|
|
December 31, 2018
|
|
Balance Sheet Location*
|
|
December 31, 2018
|
|
December 31, 2018
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||||||
Designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency derivatives
|
Other current assets
|
|
$
|
5
|
|
|
Other current assets
|
|
$
|
1
|
|
|
$
|
4
|
|
Interest rate swaps
|
Other long-term liabilities
|
|
—
|
|
|
Other long-term liabilities
|
|
3
|
|
|
(3
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Designated as net investment hedges:
|
|
|
|
|
|
|
|
|
|||||||
Cross-currency swaps
|
Other long-term liabilities
|
|
—
|
|
|
Other long-term liabilities
|
|
3
|
|
|
(3
|
)
|
|||
Total designated as hedges
|
|
$
|
5
|
|
|
|
|
$
|
7
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency derivatives
|
Other current assets
|
|
$
|
—
|
|
|
Other current assets
|
|
$
|
—
|
|
|
—
|
|
|
Total not designated as hedges
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Three Months Ended March 31, 2019
|
Gain Recognized in OCI
|
|
Gain Reclassified from OCI into Income
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Derivatives designated as cash flow hedges:
|
|
|
|
||||
Foreign currency derivatives
|
$
|
2
|
|
|
$
|
2
|
|
Derivatives designated as net investment hedges:
|
|
|
|
||||
Cross-currency swaps
|
16
|
|
|
—
|
|
||
Total
|
$
|
18
|
|
|
$
|
2
|
|
|
|
|
|
||||
|
|
|
Loss Recognized in Income
|
||||
|
|
|
|
||||
|
|
|
(in millions)
|
||||
Derivatives not designated
|
|
$
|
(2
|
)
|
|||
Total
|
|
$
|
(2
|
)
|
|||
|
|
|
|
||||
Three Months Ended March 31, 2018
|
Loss Recognized in OCI
|
|
Gain (Loss) Reclassified from OCI into Income
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Derivatives designated as cash flow hedges:
|
|
|
|
||||
Foreign currency derivatives
|
$
|
(1
|
)
|
|
$
|
—
|
|
Total
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
|
|
|
||||
|
|
|
Loss Recognized in Income
|
||||
|
|
|
|
||||
|
|
|
(in millions)
|
||||
Derivatives not designated
|
|
$
|
(4
|
)
|
|||
Total
|
|
$
|
(4
|
)
|
|
Total
|
|
Quoted Prices in Active Markets
Level 1 |
|
Significant Other Observable Inputs
Level 2 |
|
Significant Unobservable Inputs
Level 3 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
As of March 31, 2019:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Interest rate swaps*
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||
Cross-currency swaps*
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Total
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
As of December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Total
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
Total
|
|
Quoted Prices in Active Markets
Level 1 |
|
Significant Other Observable Inputs
Level 2 |
|
Significant Unobservable Inputs
Level 3 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
As of December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps*
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Cross-currency swaps*
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Total
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Interest income
|
$
|
2
|
|
|
$
|
1
|
|
Components of net periodic benefit cost other than service cost (Note 10)
|
(14
|
)
|
|
(1
|
)
|
||
Other, net
|
—
|
|
|
6
|
|
||
Other (expense) income, net
|
$
|
(12
|
)
|
|
$
|
6
|
|
Metric
|
2019 Grant
|
|
|
2018 Grant
|
|
|
2016 - 2017 Former Parent Grants
|
Average return on invested capital (1)
|
50%
|
|
|
N/A
|
|
|
N/A
|
Average return on net assets (2)
|
N/A
|
|
|
50%
|
|
|
50%
|
Cumulative net income
|
N/A
|
|
|
25%
|
|
|
25%
|
Relative total shareholder return (3)
|
50%
|
|
|
25%
|
|
|
25%
|
(1)
|
Average return on invested capital is measured by the Company’s tax-affected operating income divided by average net pension liabilities plus average debt plus average total equity (excluding noncontrolling interest) minus average cash and cash equivalents for each calendar year during the respective performance period.
|
(2)
|
Average return on net assets is measured by the Company’s tax-affected operating income divided by average net working capital plus average net property, plant and equipment for each calendar year during the respective performance period.
|
(3)
|
Relative total shareholder return is measured by comparing the average closing price per share of the Company’s ordinary shares for the defined period at the end of the performance period to the average closing price per share of the Company’s ordinary shares for the defined period at the beginning of the performance period, including dividends, and assessed against a comparable measure of competitor and peer group companies.
|
Grant Date
|
|
RSUs Granted
|
|
Grant Date Fair Value
|
|
Time-Based Award Vesting Dates
|
|
Performance-Based Award Vesting Date
|
|
|
(in millions)
|
|
|
|
|
||
February 2019
|
|
1.0
|
|
$27
|
|
Annually on the anniversary grant date, 2020-2022
|
|
December 31, 2021
|
February 2018
|
|
0.3
|
|
$16
|
|
Annually on the anniversary grant date, 2019-2021
|
|
December 31, 2020
|
|
RSUs
|
|
Weighted Average Grant Date Fair Value
|
|||
|
(in thousands)
|
|
|
|||
Nonvested, January 1, 2019
|
679
|
|
|
$
|
42.70
|
|
Granted
|
1,063
|
|
|
25.15
|
|
|
Vested
|
(137
|
)
|
|
41.96
|
|
|
Forfeited
|
(4
|
)
|
|
44.09
|
|
|
Nonvested, March 31, 2019
|
1,601
|
|
|
36.90
|
|
•
|
Powertrain Systems, which manufactures fuel injection systems as well as various other powertrain products including valvetrain, fuel delivery modules, ignition coils, canisters, sensors, valves and actuators. This segment also offers electronic control modules and corresponding software, algorithms and calibration that provide centralized and reliable management of various powertrain components. Additionally, we provide power electronics solutions that include supervisory controllers and software, along with DC/DC converters and inverters.
|
•
|
Aftermarket, which sells aftermarket products to independent aftermarket and original equipment service customers. This segment also supplies a wide range of aftermarket products and services covering the fuel injection, electronics and engine management, maintenance, and test equipment and vehicle diagnostics categories.
|
•
|
Eliminations and Other, which includes the elimination of inter-segment transactions.
|
|
Powertrain Systems
|
|
Aftermarket
|
|
Eliminations
and Other (1) |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2019:
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,020
|
|
|
$
|
193
|
|
|
$
|
(62
|
)
|
|
$
|
1,151
|
|
Depreciation & amortization
|
$
|
52
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
53
|
|
Adjusted operating income
|
$
|
76
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
87
|
|
Operating income
|
$
|
47
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
55
|
|
Equity income, net of tax
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Net income attributable to noncontrolling interest
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
Powertrain Systems
|
|
Aftermarket
|
|
Eliminations
and Other (1) |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,153
|
|
|
$
|
217
|
|
|
$
|
(74
|
)
|
|
$
|
1,296
|
|
Depreciation & amortization
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
50
|
|
Adjusted operating income
|
$
|
142
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
159
|
|
Operating income
|
$
|
123
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
138
|
|
Equity income, net of tax
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Net income attributable to noncontrolling interest
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
(1)
|
Eliminations and Other includes the elimination of inter-segment transactions.
|
|
Powertrain Systems
|
|
Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2019:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
76
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
87
|
|
Restructuring
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Separation costs (1)
|
(16
|
)
|
|
(2
|
)
|
|
—
|
|
|
(18
|
)
|
||||
Asset impairments
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Pension charges (2)
|
(7
|
)
|
|
(1
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Operating income
|
$
|
47
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
55
|
|
|
Interest expense
|
|
|
|
|
|
|
(18
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(12
|
)
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
25
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(8
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
2
|
|
|||||||
Net income
|
|
|
|
|
|
|
19
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
3
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
16
|
|
|
Powertrain Systems
|
|
Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
142
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
159
|
|
Restructuring
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||
Separation costs (1)
|
(8
|
)
|
|
(2
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Operating income
|
$
|
123
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
138
|
|
|
Interest expense
|
|
|
|
|
|
|
(20
|
)
|
|||||||
Other income, net
|
|
|
|
|
|
|
6
|
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
124
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(22
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
3
|
|
|||||||
Net income
|
|
|
|
|
|
|
105
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
7
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
98
|
|
(1)
|
Separation costs include one-time incremental expenses associated with becoming a stand-alone publicly-traded company.
|
(2)
|
Pension charges include additional contributions to defined contribution plans, other payments to impacted employees and other related expenses resulting from the freeze of future accruals for nearly all U.K. defined benefit pension plans.
|
•
|
global and regional economic conditions, including conditions affecting the credit market and those resulting from the United Kingdom referendum held on June 23, 2016 in which voters approved an exit from the European Union, commonly referred to as “Brexit”;
|
•
|
risks inherent in operating as a global company, such as, fluctuations in interest rates and foreign currency exchange rates and economic, political and trade conditions around the world;
|
•
|
the cyclical nature of automotive sales and production;
|
•
|
the potential disruptions in the supply of and changes in the competitive environment for raw material integral to the Company’s products;
|
•
|
the Company’s ability to maintain contracts that are critical to its operations;
|
•
|
potential changes to beneficial free trade laws and regulations such as the North American Free Trade Agreement;
|
•
|
the ability of the Company to achieve the intended benefits from its separation from its former parent or from acquisitions the Company may make;
|
•
|
the ability of the Company to attract, motivate and/or retain key executives;
|
•
|
the ability of the Company to avoid or continue to operate during a strike, or partial work stoppage or slow down by any of its unionized employees or those of its principal customers or suppliers;
|
•
|
the ability of the Company to attract and retain customers;
|
•
|
new technologies that displace demand for our products and our ability to develop and commercialize new products to meet our customers’ needs;
|
•
|
changes in customer preferences and requirements, including any resultant inability to realize the sales represented by our bookings;
|
•
|
changes in the costs of raw materials;
|
•
|
the Company’s indebtedness, including the amount thereof and capital availability and cost;
|
•
|
the cost and outcome of any claims, legal proceedings or investigations;
|
•
|
the failure or breach of information technology systems;
|
•
|
severe weather conditions and natural disasters and any resultant disruptions on the supply or production of goods or services or customer demands;
|
•
|
acts of war and/or terrorism, as well as the impact of actions taken by governments as a result of further acts or threats of terrorism; and
|
•
|
the timing and occurrence (or non-occurrence) of other events or circumstances that may be beyond our control.
|
•
|
Expand Leadership in Technologies that Solve Our Customers’ Most Complex Propulsion Challenges.
We are focused on providing technologies and solutions that solve some of our customers’ biggest propulsion-related challenges, including helping our customers meet increasingly stringent global regulatory requirements while also enhancing vehicle performance. We believe we have strong positions in fuel injectors, fuel pumps, and complete fuel-injection systems, including software and controls. Additionally, we provide leading technology solutions in the areas of electronics and electrification, including engine control modules and power electronics, where we see growth over the long-term driven by increasing levels of electrification. Our power electronics technologies include products such as high-voltage inverters, DC/DC converters and on-board chargers that convert electricity to enable
|
•
|
Focused Regional Strategies To Best Serve Our Customers’ Needs.
The combination of our global operating capabilities and our portfolio of advanced technologies help us serve our global customers’ local needs. We have a presence in all major global regions and have positioned ourselves as a leading supplier of advanced vehicle propulsion technologies, including electrification, that are tailored to satisfy our customers’ needs in each region. We believe our focus on providing customer solutions to meet increasingly stringent emissions and fuel efficiency regulations will collectively drive greater demand for our products and enable us to experience growth over the long-term.
|
•
|
Continue to Enhance Aftermarket Position.
Globally we plan to expand margins over the long-term by focusing on higher value product lines such as electronics and services, which include diagnostics and remanufacturing. We expect that demand for these product lines will grow faster than the overall aftermarket industry as the electronics content of new vehicles continues to increase, providing a strong foundation to gain scale profitability in the future. In addition, we expect to benefit from Aftermarket growth in key regions around the world, especially China, as the average age of vehicles increases and expands the need for replacement products.
|
•
|
Leverage Our Lean and Flexible Cost Structure to Deliver Strong Earnings and Cash Flow Growth
. We recognize the importance of maintaining a lean and flexible business model in order to deliver earnings and cash flow growth. We intend to improve our cost competitiveness by leveraging our enterprise operating system, continuously increasing operational efficiency, maximizing manufacturing output and manufacturing product lines in best-cost countries. We have ongoing processes and resources dedicated to further improvement of our operations, and we expect to use our cash flow to reinvest in our business to drive growth.
|
•
|
Volume—changes in volume and changes in mix;
|
•
|
Contractual price changes—adjustments in price (which are typically reductions ranging from 1% to 3% of net sales);
|
•
|
Operational performance—changes to costs for materials and commodities or manufacturing variances; and
|
•
|
Other—including restructuring costs and any remaining variances not included in Volume, net of contractual price changes or Operational performance.
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Favorable/(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(dollars in millions)
|
||||||||||
Net sales
|
$
|
1,151
|
|
|
$
|
1,296
|
|
|
$
|
(145
|
)
|
Cost of sales
|
983
|
|
|
1,046
|
|
|
63
|
|
|||
Gross margin
|
168
|
|
14.6%
|
250
|
|
19.3%
|
(82
|
)
|
|||
Selling, general and administrative
|
104
|
|
|
97
|
|
|
(7
|
)
|
|||
Amortization
|
6
|
|
|
4
|
|
|
(2
|
)
|
|||
Restructuring
|
3
|
|
|
11
|
|
|
8
|
|
|||
Operating income
|
55
|
|
|
138
|
|
|
(83
|
)
|
|||
Interest expense
|
(18
|
)
|
|
(20
|
)
|
|
2
|
|
|||
Other (expense) income, net
|
(12
|
)
|
|
6
|
|
|
(18
|
)
|
|||
Income before income taxes and equity income
|
25
|
|
|
124
|
|
|
(99
|
)
|
|||
Income tax expense
|
(8
|
)
|
|
(22
|
)
|
|
14
|
|
|||
Income before equity income
|
17
|
|
|
102
|
|
|
(85
|
)
|
|||
Equity income, net of tax
|
2
|
|
|
3
|
|
|
(1
|
)
|
|||
Net income
|
19
|
|
|
105
|
|
|
(86
|
)
|
|||
Net income attributable to noncontrolling interest
|
3
|
|
|
7
|
|
|
(4
|
)
|
|||
Net income attributable to Delphi Technologies
|
$
|
16
|
|
|
$
|
98
|
|
|
$
|
(82
|
)
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
Favorable/(unfavorable)
|
|
|
Volume
|
|
Contractual price changes
|
|
FX
|
|
Other
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(in millions)
|
|
|
(in millions)
|
||||||||||||||||||||||||||||
Total net sales
|
$
|
1,151
|
|
|
$
|
1,296
|
|
|
$
|
(145
|
)
|
|
|
$
|
(75
|
)
|
|
$
|
(9
|
)
|
|
$
|
(61
|
)
|
|
$
|
—
|
|
|
$
|
(145
|
)
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
Favorable/(unfavorable)
|
|
|
Volume
|
|
Contractual price changes
|
|
FX
|
|
Operational performance
|
|
Other
|
|
Total
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
(dollars in millions)
|
|
|
(in millions)
|
||||||||||||||||||||||||||||||||
Cost of sales
|
$
|
983
|
|
|
$
|
1,046
|
|
|
$
|
63
|
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
18
|
|
|
$
|
1
|
|
|
$
|
63
|
|
Gross margin ($)
|
$
|
168
|
|
|
$
|
250
|
|
|
$
|
(82
|
)
|
|
|
$
|
(77
|
)
|
|
$
|
(9
|
)
|
|
$
|
(15
|
)
|
|
$
|
18
|
|
|
$
|
1
|
|
|
$
|
(82
|
)
|
Gross margin (%)
|
14.6
|
%
|
|
19.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
||||||
|
|
|
|
|
|
||||||
|
(dollars in millions)
|
||||||||||
Selling, general and administrative expense
|
$
|
104
|
|
|
$
|
97
|
|
|
$
|
(7
|
)
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Amortization
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
||||||
|
|
|
|
|
|
||||||
|
(dollars in millions)
|
||||||||||
Restructuring
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
8
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Interest expense
|
$
|
18
|
|
|
$
|
20
|
|
|
$
|
2
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Other (expense) income, net
|
$
|
(12
|
)
|
|
$
|
6
|
|
|
$
|
(18
|
)
|
•
|
An increase of $13 million in the components of net periodic benefit cost other than service costs related to the Company’s defined benefit pension plans (primarily due to the $15 million curtailment loss associated with the closure of the defined benefit plans in the U.K. to future accruals); and
|
•
|
A decrease to income of $5 million related to remeasurement of cross currency intercompany loans.
|
|
Three Months Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Income tax expense
|
$
|
8
|
|
|
$
|
22
|
|
|
$
|
14
|
|
•
|
Powertrain Systems, which manufactures fuel injection systems as well as various other powertrain products including valvetrain, fuel delivery modules, ignition coils, canisters, sensors, valves and actuators. This segment also offers electronic control modules and corresponding software, algorithms and calibration that provide centralized and reliable management of various powertrain components. Additionally, we provide power electronics solutions that include supervisory controllers and software, along with the DC/DC converters and inverters and on-board chargers that convert electricity to enable hybrid and electric vehicle propulsion systems.
|
•
|
Aftermarket, which sells aftermarket products to independent aftermarket and original equipment service customers. This segment also supplies a wide range of aftermarket products and services covering the fuel injection, electronics and engine management, maintenance, and test equipment and vehicle diagnostics categories.
|
•
|
Eliminations and Other, which includes the elimination of inter-segment transactions.
|
|
Powertrain Systems
|
|
Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2019:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
76
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
87
|
|
Restructuring
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Separation costs (1)
|
(16
|
)
|
|
(2
|
)
|
|
—
|
|
|
(18
|
)
|
||||
Asset impairments
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Pension charges (2)
|
(7
|
)
|
|
(1
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Operating income
|
$
|
47
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
55
|
|
|
Interest expense
|
|
|
|
|
|
|
(18
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(12
|
)
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
25
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(8
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
2
|
|
|||||||
Net income
|
|
|
|
|
|
|
19
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
3
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
16
|
|
|
Powertrain Systems
|
|
Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
142
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
159
|
|
Restructuring
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||
Separation costs (1)
|
(8
|
)
|
|
(2
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Operating income
|
$
|
123
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
138
|
|
|
Interest expense
|
|
|
|
|
|
|
(20
|
)
|
|||||||
Other income, net
|
|
|
|
|
|
|
6
|
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
124
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(22
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
3
|
|
|||||||
Net income
|
|
|
|
|
|
|
105
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
7
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
98
|
|
(1)
|
Separation costs include one-time incremental expenses associated with becoming a stand-alone publicly-traded company.
|
(2)
|
Pension charges include additional contributions to defined contribution plans, other payments to impacted employees and other related expenses resulting from the freeze of future accruals for nearly all U.K. defined benefit pension plans.
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
|
|
Volume, net of contractual price changes
|
|
FX
|
|
Other
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(in millions)
|
|
|
(in millions)
|
||||||||||||||||||||||||
Powertrain Systems
|
$
|
1,020
|
|
|
$
|
1,153
|
|
|
$
|
(133
|
)
|
|
|
$
|
(78
|
)
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
|
$
|
(133
|
)
|
Aftermarket
|
193
|
|
|
217
|
|
|
(24
|
)
|
|
|
(14
|
)
|
|
(10
|
)
|
|
—
|
|
|
(24
|
)
|
|||||||
Eliminations and Other
|
(62
|
)
|
|
(74
|
)
|
|
12
|
|
|
|
8
|
|
|
4
|
|
|
—
|
|
|
12
|
|
|||||||
Total
|
$
|
1,151
|
|
|
$
|
1,296
|
|
|
$
|
(145
|
)
|
|
|
$
|
(84
|
)
|
|
$
|
(61
|
)
|
|
$
|
—
|
|
|
$
|
(145
|
)
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2018
|
||
Powertrain Systems
|
12.6
|
%
|
|
17.5
|
%
|
Aftermarket
|
20.2
|
%
|
|
22.1
|
%
|
Total
|
14.6
|
%
|
|
19.3
|
%
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
Favorable/
(unfavorable) |
|
|
Volume, net of contractual price changes
|
|
FX
|
|
Operational performance
|
|
Other
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(in millions)
|
|
|
(in millions)
|
||||||||||||||||||||||||||||
Powertrain Systems
|
$
|
76
|
|
|
$
|
142
|
|
|
$
|
(66
|
)
|
|
|
$
|
(80
|
)
|
|
$
|
(8
|
)
|
|
$
|
18
|
|
|
$
|
4
|
|
|
$
|
(66
|
)
|
Aftermarket
|
11
|
|
|
17
|
|
|
(6
|
)
|
|
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|
2
|
|
|
(6
|
)
|
||||||||
Total
|
$
|
87
|
|
|
$
|
159
|
|
|
$
|
(72
|
)
|
|
|
$
|
(84
|
)
|
|
$
|
(12
|
)
|
|
$
|
18
|
|
|
$
|
6
|
|
|
$
|
(72
|
)
|
•
|
$3 million of decreased warranty costs during the three months ended March 31, 2019; and
|
•
|
The absence of $3 million of costs incurred during the three months ended March 31, 2018 related to commercial settlements.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Total number of shares repurchased
|
737,917
|
|
|
—
|
|
||
Average price paid per share
|
$
|
20.33
|
|
|
$
|
—
|
|
Total (in millions)
|
$
|
15
|
|
|
$
|
—
|
|
Period
|
|
Total Number of Shares Purchased (1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Program (in millions) (2)
|
||||||
January 1, 2019 to January 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
200
|
|
February 1, 2019 to February 28, 2019
|
|
107,900
|
|
|
$
|
22.21
|
|
|
107,900
|
|
|
$
|
198
|
|
March 1, 2019 to March 31, 2019
|
|
630,017
|
|
|
$
|
20.08
|
|
|
630,017
|
|
|
$
|
185
|
|
Total
|
|
737,917
|
|
|
$
|
20.33
|
|
|
737,917
|
|
|
|
(1)
|
The total number of shares purchased under the plan approved by the Board of Directors are described below.
|
(2)
|
In January 2019, the Board of Directors approved a $200 million share repurchase program, which commenced in February 2019. Repurchases will be made at management’s discretion from time to time on the open market or through privately negotiated transactions. The program is expected to be completed by December 31, 2021.
|
Exhibit
Number
|
|
Description
|
*10.1
|
|
|
*10.2
|
|
|
*10.3
|
|
|
*31.1
|
|
|
*31.2
|
|
|
*32.1
|
|
|
*32.2
|
|
|
*101.INS
|
|
XBRL Instance Document -
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
DELPHI TECHNOLOGIES PLC
|
|
|
|
|
|
/s/ Vivid Sehgal
|
|
|
By: Vivid Sehgal
|
|
|
Chief Financial Officer
|
|
|
|
1 Year Delphi Technologies Chart |
1 Month Delphi Technologies Chart |
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