August 1, 2019 Second Quarter 2019 Resultss22.q4cdn.com/144082429/files/doc_financials/2019/Q2/Q2-2019-sli… · Strong relationships with LV & CV customers - potential to expand

August 1, 2019

Second Quarter

2019 Results

This presentation, as well as other statements made by Delphi Technologies PLC

(the “Company”), contains 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.

Forward-looking statements

1

2

Operational and commercial progress despite more challenging macro/industry dynamics

Q2 2019 highlights

Revenue

$1.1 b(-5.1% YoY1)

Adj. Operating income2

$81 m(7.2%2, down 550bps YoY)

Adjusted EPS2

$0.58

Operating cash flow

$70 mReturned $15 m

through share

repurchases

Updating full year outlook

reflecting lower global

production, FX and tariff

headwinds

On track with operational

and transitional initiatives

$3.8b of lifetime gross

bookings, including

largest ever win

1. At constant foreign exchange rates, calculated by translating current period net sales in local currency to the U.S. dollar amount by using the currency conversion rate for the prior comparative period

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

3

Global production now expected to decline by approximately 5% in 2019

Market dynamics

EuropeUncertain H2 outlook: softer GDP forecasts, weak economic data in Germany

Continued Brexit uncertainty

Lower FY 2019 outlook to -3% (versus prior -2% estimate)

EUR/USD exchange rate now assumed @ 1.12 versus previous 1.15

ChinaQ2 production declined by 19% YoY (vs our -8% estimate)

Impacts from CN6 timing, change in NEV credits, ongoing trade/tariff uncertainty

Lower FY production outlook (-12% vs -8% previously)

North America Lower FY outlook (-2% versus prior outlook of -1%)

Softer CV market – expect impact in H2 2019 and into 2020

Shorter-term headwinds increasing

More stringent government regulations

Shift continues from PC diesel to GDi

Accelerating OEM commitment to

electrified vehicles, market tipping point

expected in 2023-24.

Tremendous long-term CPV and growth

opportunity

Longer-term outlook is strong

Source: IHS and internal estimates

75-2-20

4

Delphi Technologies is GOOD … SIGNIFICANT WORK remains to become GREAT

CEO orientation complete

Fully on track to complete transitional

milestones (TSAs and CMSAs)

Met with key customers focused on

advanced propulsion technologies.

CEO/ELT-level reviews of operating sites,

major business programs and supply chain

Established new Vision and Mission

Visited 96% of all operating sites, in 14

countries

Deep analysis of legacy OH structure,

finalizing rationalization plans

Initiated LEAN systems journey targeting

costs and working capital efficiency

Realigned organizational structure & new

leadership talent to address key challenges

New vision and mission

5

Even greater focus on investments in key technologies to support long-term profitable growth

To be the

pioneers in propulsion

technologies, solutions &

services.

To make vehicles drive

cleaner, better and further

while being the

partner of choice

for all stakeholders.

VISION MISSION

Landmark Power Electronics win!

6

Pioneering propulsion technology leadership coupled with focused customer collaboration

$2.7bn

Industry leading 800v

silicon carbide inverter

Launch in 2022

Top cover

Control

Circuit board

Casting

Top cooling rail

Bottom cooling rail

Busbar assembly

Busbar assembly

Power circuit board

Gate drive

Circuit board

Casting

Capacitor

Example Delphi Technologies inverter

Pioneering GDi technology leadership

7

Multiple commercial wins on 350 bar technology; 500 bar validated & introduced in May 2019

200 bar fuel pressure produces

many large particulates

350 bar fuel pressure reduces

the exhaust PN by 70%

500 bar fuel pressure further reduces

PN by 50% versus 350 bar

No engine redesign required

CURRENTLEGACY FUTURE

New talent to address key challenges

8

Michael Dorah

SVP Manufacturing

& Quality Systems

Dean Harlow

SVP Engineering

Optimization

Todd Anderson

VP & Managing

Director, Diesel

Systems

Dave Culton

VP Program

Management &

Launch

Key new hires include:CEO scorecard

Focused on improving execution and driving operational efficiencies to support

long-term growth

PRODUCTS

PARTNERS

PEOPLE

PROFITS

PROCESSESNeed for common processes, systems and tools. Become truly

LEAN, improve program management & launch performance.

Talented, loyal and dedicated workforce with deep rooted

technical capabilities – great foundational strength

Significant opportunities exist to improve GDi business, reduce

SG&A and engineering footprint

Cutting-edge and industry leading technology portfolio, strong

brand, major transitions underway across auto propulsion systems

Strong relationships with LV & CV customers - potential to expand

geographical revenue mix. Several opportunities across supply base.

Opportunity to improve overhead costs

9

Targeting significant reductions in engineering and SG&A, expect to finalize plans in H2 2019

Delphi

Technologies

Powertrain

Peer Average

Tier 1

Peer Average

150-200bps

300-500bps

Source: Public company filings and internal estimates

Complete full transition to standalone company by Q1 2020

Improve GDi and CV profitability through improved operations & flawless launch execution

Balance pace of investments in Power Electronics to offset short-term industry headwinds

Leverage progress of Aftermarket team and position for accelerated global growth

Start transition to common processes & systems (LEAN, IT, HRM)

Key initiatives to accelerate profitable growth

Complete analysis & initiate cost reduction plans in H2 2019 to support long-term margin expansion

10

Q2 2019 vs Q2 2018

111. At constant foreign exchange rates


Q2 financial highlights$ millions

except per share amountsQ2 2019 Q2 2018

Revenue

Adjusted growth %1

$1,121

(5.1)%

$1,232

1.1%

Adjusted operating income2

Adjusted operating margin %2

$81

7.2%

$156

12.7%

Adjusted earnings per share2 $0.58 $1.29

Operating cash flow $70 $164

>2% year-on-year growth over market

Global vehicle production down >7%

Mid single-digit growth in Commercial Vehicle and GDi

Offset by lower PC diesel and China revenue

Power Electronics decline driven by transitional headwinds in China and overall market weakness

Year-on-year adj. operating margin decline

Unfavorable product mix

Lower global production

FX headwind

Higher engineering and D&A

Higher commodity and tariff-related costs

Partially offset by ongoing cost control initiatives

Q2 2019 revenue performance

12

Above market growth in all regions, with the exception of North America


2. GoM = growth over market

3. Percent of revenue as of FY 2018

Revenue$ millions

Regional growthAdjusted1 year-on-year growth

7% GoM2

(10)% Adj

(8)% GoM2

0% Adj

(14)% Adj

5% GoM2

3% Adj

4% GoM2

(5.1)%1

$1,232

$1,121$(61)

$(49)

$(1)

N. America(28% of revenue3)

S. America(3% of revenue3)

Europe(44% of revenue3)

China(18% of revenue3)

Q2 2019 adj. operating income performance

13

Year-on-year decline primarily due to unfavorable mix, lower volume and FX headwinds


Adjusted operating income1 Financial highlights

(550) bps1

12.7%

7.2%

$156

$(51)$(16) $(7)

$(1)

$81

Year-on-year decline driven by:

Unfavorable mix (primarily GDi versus PC diesel)

Lower global industry production, particularly in China

FX headwinds

Higher engineering spend to support future growth

Higher D&A


Partially offset by:

Operational performance

Ongoing cost control initiatives

$ millions

$134

$64

Q2 2018 Q2 2019

Powertrain Systems segment highlights

14

Revenue growth in CV and GDi, offset by lower China and passenger car diesel sales


2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation

Revenue Adjusted operating income2 Q2 financial highlights$ millions $ millions

Revenue

Commercial Vehicle growth of ~5%

GDi growth of ~5%

Passenger car diesel decline of ~25%

Power Electronics decline of ~20%

Adjusted operating margin

Year-on-year decline due to:

Unfavorable mix and lower volumes

FX headwinds

Higher engineering spend and D&A


Partially offset by operational performance and ongoing cost control initiatives

6.6%

12.3%

(6.6)%1 (570)bps2

$1,086

$971

Q2 2018 Q2 2019

$22

$17

Q2 2018 Q2 2019

Aftermarket segment highlights

15

Consistent focused strategy, continue to expect full year margin expansion


2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation

Revenue

3% year-on-year adjusted growth

Higher sales to independent aftermarket customers

Offset partially by lower OES sales, consistent with

focused strategy

Adjusted operating margin

230 bps year-on-year margin decline

Unfavorable product mix

Higher tariff-related costs

Partially offset by continued improvements in

operational performance

Continue to expect full year margin expansion

7.9%

10.2%

(230)bps22.7%1

Revenue$ millions

Adjusted operating income2

$ millions

Q2 financial highlights

$215 $214

Q2 2018 Q2 2019

Updated FY 2019 outlook

16

Revised outlook primarily due to lower production and incremental macro headwinds


2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP. FY2019 EPS outlook does not reflect any potential impact from share repurchases

We do not provide forward-looking operating income, net income per share or effective tax rate on a U.S. GAAP basis, or a quantitative reconciliation of these forward-looking non-GAAP financial measures to the most

directly comparable U.S. GAAP financial measures, due to the difficulty in predicting with a reasonable degree of certainty extraordinary expenses that we may incur, or extraordinary benefits that we may realize,

during the financial outlook period presented. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results during the financial outlook period presented.

$ millions FY 2019 outlook

except per share amounts Updated Prior

Revenue $4,425 - $4,475 $4,650 - $4,750

Adjusted growth1 (6)% – (5)% (3)% – (1)%

Adjusted operating income margin2 ~8% ~9%

Adjusted earnings per share2 $2.65 - $2.85 $3.00 - $3.20

Operating cash flow $280 - $310 $320 - $350

Restructuring charges $35-$45m (prior $25-$35m)

One-time separation costs $45-$50m (unchanged)

Capital expenditures $315-$325m (prior $310-$330m)

Adjusted tax rate ~18% (unchanged)

Global production down ~5% (prior down ~2%)

China down ~12% (prior down ~8%)

Europe down ~3% (prior down ~2%)

North America down ~2% (prior down ~1%)

EUR/USD $1.12 (prior $1.15)

USD/CNY $6.85 (prior $6.75)

GBP/USD $1.25 (prior $1.35)

Other outlook metrics

Select macro assumptions

Updated FY 2019 revenue outlook

17

Revised outlook driven primarily by lower production and FX headwinds

Revenue

$4,650 – $4,750

$4,425 – 4,475

~$(50)

$(200) – $(150)

(3)% – (1)%

adj. growth1

(6)% – (5)%

adj. growth1


(400) – (300) bps

Revenue performance drivers

Change to full year outlook versus prior

Global production down ~5% (prior down ~2%)

Slower ramp in new launches, particularly in PE

FX headwinds

Softer demand in NA and Europe in Aftermarket, partially offset by favorable pricing

Q3 revenue outlook

Adj. growth of mid-to-high single digit decline

Global production down ~1%, China down ~9%

China revenue down >20%, due to ongoing China 6 regulatory transition and related inventory alignment, partially offset by GDi growth

Power Electronics decline driven by transitional headwinds in China and overall market weakness

$ millions

~$(25)

~(50) bps

Updated H2 2019 vs H1 2019 adj. margin profile

18

Delphi Technologies specific initiatives on track with prior outlook

1. Adjusted for restructuring and other special items

Adjusted margin performance driversChange in H2 2019 adj. margin1 expansion outlook

~100 bps

50-100 bps

Market/macro

~10 bps

~(200) bps

Delphi Technologies initiatives

Expected dollar value consistent with prior outlook

~1/3 from H2 reduction in engineering spend

~1/3 from lower spin costs (e.g. duplicate costs) and other ongoing SG&A initiatives

~1/3 from material and manufacturing improvements, offset partially by higher D&A

~25% in Q3, ~75% in Q4

Market and macro drivers

Lower production, FX and tariffs more than offsets volume and operational improvements in GDi and PE

Aftermarket margin expansion driven by stronger sales, mix and pricing

Q3 margin outlook: mid-7% range

200 – 250 bps

DT initiatives

~300 bps

Updated FY 2019 cash outlook

19

Lower earnings and increase in restructuring, partially offset by working capital and cost initiatives

Change to full-year outlook versus prior

Lower earnings from lower production

Incremental $5-10m of restructuring cash costs

Partially offset by improved working capital performance and cost initiatives

Improved H2 operating cash performance versus H1

Higher earnings

Seasonality

Working capital improvement

Change in operating cash flow outlookOperating cash performance drivers

$ millions

$280 – $310

$320 – $350

$(70) – (65)$(10) – (5)

$30 – 40

1. Adjusted for restructuring and other special items

1

Q&A

Appendix

Non-GAAP reconciliation: Net income to Adj. op. income

22

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.

Adjusted Operating Income is presented as a supplemental measure of the Company's financial performance which management believes is useful to investors in assessing the Company’s ongoing financial performance that, when reconciled to the

corresponding U.S. GAAP measure, provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company’s core operating performance and which may obscure

underlying business results and trends. Our management utilizes Adjusted Operating Income in its financial decision making process to evaluate performance of the Company and for internal reporting, planning and forecasting purposes.

Management also utilizes Adjusted Operating Income as the key performance measure of segment income or loss and for planning and forecasting purposes to allocate resources to our segments, as management also believes this measure is most

reflective of the operational profitability or loss of our operating segments. Adjusted Operating Income is defined as net income before interest expense, other income (expense), net, income tax expense, equity (loss) income, net of tax, restructuring,

separation costs, asset impairments and pension charges. Not all companies use identical calculations of Adjusted Operating Income, therefore this presentation may not be comparable to other similarly titled measures of other companies. The

Company's 2019 outlook was determined using a consistent manner and methodology.

($ millions)

Delphi Technologies Q2 2019 Q2 2018

Net income attributable to Delphi Technologies $27 $86

Net income attributable to noncontrolling interest 4 4

Net income $31 $90

Equity loss (income), net of tax 1 (3)

Income tax expense 14 20

Other income, net (8) (4)

Interest expense 18 19

Operating income $56 $122

Restructuring 5 12

Separation costs1 13 21

Asset impairments 5 1

Pension charges2 2 -

Adjusted operating income $81 $156

Reconciliation: Segment adjusted operating income

23

($ millions)

Aftermarket Segment Q2 2019 Q2 2018


Restructuring 1 1


Asset impairments 1 -


Powertrain Segment Q2 2019 Q2 2018


Restructuring 4 11







Adjusted Operating Income is presented as a supplemental measure of the Company's financial performance which management believes is useful to investors in assessing the Company’s ongoing financial performance that provides improved

comparability between periods through the exclusion of certain items that management believes are not indicative of the Company’s core operating performance and which may obscure underlying business results and trends. Our management

utilizes Adjusted Operating Income in its financial decision making process to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Management also utilizes Adjusted Operating Income as the key

performance measure of segment income or loss and for planning and forecasting purposes to allocate resources to our segments, as management also believes this measure is most reflective of the operational profitability or loss of our operating

segments. Adjusted Operating Income is defined as net income before interest expense, other income (expense), net, income tax expense, equity (loss) income, net of tax, restructuring, separation costs, asset impairments and pension charges.

Not all companies use identical calculations of Adjusted Operating Income, therefore this presentation may not be comparable to other similarly titled measures of other companies. The Company's 2019 outlook was determined using a consistent

manner and methodology.

Non-GAAP reconciliation: Adjusted net income

24

($ millions, except per share amounts)

Delphi Technologies Q2 2019 Q2 2018

Net income attributable to Delphi Technologies $27 $86

Adjusting items:

Restructuring 5 12




Tax impact of adjusting items3 (1) (5)

Adjusted net income attributable to Delphi Technologies $51 $115

Weighted average number of diluted shares outstanding 88.11 89.05

Diluted net income per share attributable to Delphi Technologies $0.31 $0.97

Adjusted net income per share $0.58 $1.29



3 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 the charges were incurred.

Adjusted Net Income and Adjusted Net Income Per Share, which are non-GAAP measures, are presented as supplemental measures of the Company's financial performance which management believes are useful to investors in assessing the

Company’s ongoing financial performance that, when reconciled to the corresponding U.S. 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 which may obscure underlying business results and trends. Management utilizes Adjusted Net Income and Adjusted Net Income Per Share in its financial decision making process to evaluate

performance of the Company and for internal reporting, planning and forecasting purposes. Adjusted Net Income is defined as net income attributable to Delphi Technologies before restructuring and other special items, including the tax impact

thereon. Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the period. Not all companies use identical calculations of Adjusted Net Income and Adjusted Net

Income Per Share, therefore this presentation may not be comparable to other similarly titled measures of other companies. The Company's 2019 outlook was determined using a consistent manner and methodology.

Documents

August 1, 2019 Second Quarter 2019 Resultss22.q4cdn.com/144082429/files/doc_financials/2019/Q2/Q2-2019-sli… · Strong relationships with LV & CV customers - potential to expand