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May 4, 2016 First quarter 2016 earnings call

First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

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Page 1: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

May 4, 2016

First quarter 2016earnings call

Page 2: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

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: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Agenda

3

Operations overview

• Q1 2016 in review

• Summary

Financial overview

• Q1 2016 results

• 2016 guidance

Q&A

Kevin Clark Chief Executive Officer

Joe MassaroChief Financial Officer

Kevin Clark/

Joe Massaro

Page 4: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Operations overview

Kevin ClarkPresident and Chief Executive Officer

Page 5: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Summary

5

• Another quarter of strong performance– Solid revenue performance driving 6% adjusted growth

– Operating income growth, continued margin expansion

– EPS up 12%; high-end of guidance

– Returned $450 million of cash to shareholders through share repurchases and dividends

• Confident in 2016– Balanced macro environment; accelerating growth across portfolio

– Disciplined cost focus driving operating income and cash generation for future growth investments

• Investor Update Meeting Outperformance continues– Strong bookings and multi-year tailwinds driving increased content and margin expansion

– Convergence of safe, green and connected technologies yielding exciting new Delphi solutions

– Increased cash generation upside from effective deployment

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

EPS growth and operating margins are adjusted for restructuring and other special items; see Appendix for detail and reconcil iation to US GAAP

Delivering on our commitments

Page 6: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Pricing

Current macro outlook

6

Positive trends Neutral Challenges

High-growth verticals: ADAS, GDi, vehicle connectivity

and electrical architecture

China

production

Consumer &

regulatory demands

North American

production

CommoditiesSouth American

production

Eastern European

production

European

production

Balanced view of 2016 versus guidance

Commercial

vehicle marketExchange rates (Euro, GBP, BRL and CNY)

Pricing

Japan earthquake

impact

Page 7: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Beijing Auto Show 2016

7

Fostering customer relationships in fastest growing region

Ford

Jaguar Land Rover

PSA

Great Wall Motor

Innovation, Collaboration, Excellence

Page 8: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Bookings growth

1 At constant foreign exchange rates

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

($ billions)

$18

$20

$22

$24 $24

$26

$7

2010 2011 2012 2013 2014 2015 Q1 2016

Europe22%

Asia36%

Americas42%

Strong first quarter bookings growth

Q1 2016 bookings by region

8

Continued bookings growth

Page 9: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Q1 2016 major launches

9

Strong launch activity

2016 BMW Active Tourer Powertrain components

2016 BMW X5Onboard charger for plug-in HEV

2016 Buick ExcelleIntegrated infotainment center panel

2016 Kia CadenzaShort range radar

2016 Dodge RAM TruckInfotainment head unit

2016 Lincoln MKXMedia control module

Page 10: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Creating intelligent electrification with 48V solution

Improved functionality, better performance, greater efficiencyOptimized electrical architecture is the foundation

DC/DC converter

Connected InfotainmentEngine control

Active Safety

Builds on electrical solution competency

• Includes electrical architecture, power

electronics and management

Fuel injection systems

Optimized electrification architecture

Valve Train & engine sensors

Software, software, software…

Designs a custom vehicle architecture

• Maximizes the use of power, moving high load

components to 48V & incorporating all desired

comfort, convenience & functional features

Incorporates Delphi’s suite of products

Th

e D

elp

hi so

luti

on

48V electrification Enabling intelligent electrification

10

Customized vehicle architectures for all applications

Page 11: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Winning with Innovation

11

Dual Role

HubInverter Power Device for

Electrified Vehicles

High Voltage

Splice Connection

GM Supplier

of the Year

2016 PACE Award Winner #18 2016 PACE Finalist 2016 PACE Finalist 2015 Innovation Award

Dual Role Chip Technology:

Enabling Apple CarPlay

functionality at lowest cost

• Only single chip hub solution

currently in the market

• Latest technology with industry

leading packaging and low cost

Game changing technology

• Mass and volume reduction;

increased power density

• Enables Delphi to capture increased

share of the market

Proprietary technology that

allows two electrical loads

to share one fuse

• Reduces cost and complexity

• Eliminates 20 feet of wire and

numerous connectors and headers

Honored for the V2X

Module introduced on 2017

Cadillac CT6

• One of five suppliers, among

thousands globally recognized for

inaugural Innovation Award

• First to market with this technology

Recognition from the industry and our customers

Page 12: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Delphi investment thesis

12

Organic growth

acceleration

• Growing faster than

served markets

• Targeted market

penetration

• Well-positioned for key

customers in region

• Optimized cost structure

• Enterprise operating

system advancements

• Flexible global footprint

adaptation

• Balanced, predictable

cash deployment

• Laser-focused on

shareholder return

• Essential, accretive

portfolio enhancements

Margin

expansion

Capital

allocation

• Portfolio aligned to mega-

trends

• Increasing exposure to

key technologies

• Global scale and reach

for key markets

Portfolio

management

Delivering value is at the core of what we do

Page 13: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Financial overview

Joe MassaroChief Financial Officer and Senior Vice President

Page 14: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Q1 2016 vs. Q1 2015($ millions, except per share amounts)

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; includes D&A of $162M and $128M for Q1 2016 and Q1 2015, respectively. See Appendix for detail and reconciliation to US GAAP

3 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP14

Record performance in the quarter

Reported revenueGrowth %

Operating income2

Operating margin %

Net income3

Earnings per share3

Growth %

Q1 2016 Q1 2015 B/(W)

$4,051 $3,797$254

7%/6%1

$50912.6%

$47212.4%

$3720 bps

$377 $353 $24

$1.36 $1.21$0.1512%

Page 15: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Year-over-year growth by region Q1 2016 vs. Q1 2015

1 Growth rates at constant foreign exchange and commodity rates; excludes impact of the E&S divestiture and HellermannTyton acquisition15

Revenue growth

Strong revenue growth

$3,797

$314 $162

($81) ($141)

$4,051

Q1 2015 Sales

growth

Price FX/

commodities

Q1 2016

Reported

Q1 2016

Adjusted1

Q1 2016

Europe 11% 9%

N. America 7% 5%

Asia 6% 8%

S. America (37%) (24%)

Total 7% 6%

($ millions)

Acquisitions/

divestitures

Page 16: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

$472

$90 $20 $6 $2

($81)

$509

Q1 2015 Sales Acquisitions/ FX/ Net Price Q1 2016

growth divestitures commodities performance

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

12.4%12.6%

Operating income growthQ1 2016 vs. Q1 2015($ millions)

16

Solid flow through funding growth

Page 17: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Operating income2Revenue1

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; margin calculations based on reported revenue. See Appendix for detail and reconciliation to US GAAP17

Segment financials

Solid segment performance

($ millions) ($ millions)

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

$2,078 $2,277 $1,081 $1,094 $682 $720Reported

Revenue

$264

$129

$79

$305

$130

$74

E/EA Powertrain E&S

12.7% 13.4% 11.9% 11.9% 11.6% 10.3%Operating income

margin2

10% 1% 6%Reported

Q1 2015

5% 13%Adjusted1

Q1 2016 growth

5%

Q1 2016

Q1 2015

Q1 2016

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

Q1 2015

Q1 2016

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

Q1 2015

Q1 2016

Page 18: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

$1.21

$0.11$0.07 $0.01

($0.04)

$1.36

Q1 20151 Operating2 Share FX/ Taxes/ Q1 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 GAAP18

Q1 2016 vs. Q1 2015

Continued solid earnings growth

Page 19: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

2016 guidance

19

(millions, except per share amounts)

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

3 Includes estimated mid-point revenue and adjusted operating income impacts of $75M and $20M, respectively, from Japan earthquake in Q2 2016; recovery expected in second half of 2016

Reaffirming full year guidance

Commentary2016 outlook

Reported sales

Adjusted growth1

$16,600 - $17,000

8% - 10%

$4,125 - $4,225

6% - 9%

Operating income2

Operating margin

$2,200 - $2,300

13.3% - 13.6%

$555 - $585

13.5% - 13.8%

EPS2

Tax rate

$5.80 - $6.10

17%

$1.50 - $1.60

17%

Cash flow from

operations

Capex

$2,000

$800

Growth outpacing underlying market in every region

Accelerated growth from new launches throughout the year

Monitoring global vehicle production, FX, CV and Japan impact

Material and manufacturing performance upside

Launch volume continues to impact engineering performance

Double-digit earnings growth

Increased share repurchase authorization

Increased cash flow generation

Disciplined investment in the business through capex & M&A

Returning excess cash to shareholders

CY 2016 Q2 20163

Page 20: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Cash generation and deployment

20

Dividends

10-15%

• Increased dividend payout to 15% of operating cash flow

• Increased annual dividend from $1.00 to $1.16

Capital

Expenditures

35-40%

• Supporting customer launches

• Technology tools for increasing business efficiency

• Further optimizing global footprint

M&A and

share

repurchases

45-55%

• Portfolio modifications strengthen competitive position

• Pursue strategic transactions that enhance value

• New $1.5B share repurchase authorization

Capital allocation strategy remains the same

Operating cash flow growth Capital deployment

$1.7

2015 2016E

($ billions)

$2.0

Page 21: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

2015

Refocused core portfolio

2015

Software for automated driving

Value enhancing portfolio modifications

2012

(MVL)

Strengthened leading position in connectors

2015 Thermal divestituresWholly owned and

Korean JV

Refocused E&S portfolio

2015

Solid state LiDAR startup

2015

Software-as-a-service for data management

2014

Expanded connectivity products portfolio

2014

Reception Systems divestiture

Expanded connectivity products portfolio

2015

Software for dynamic cylinder deactivation

2015

Enhanced position in electrical architecture

Investment DivestitureAcquisition

21

2016

Thermal divestitureChina JV

Refocusedcore portfolio

2016

Multi-layer 3D display technology

Unwired

Transactions that increase shareholder value

Page 22: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Summary

22

• Delivered continued outperformance in Q1 2016– Strong growth and margin expansion yielding double-digit EPS growth

– Relentless focus on structural cost initiatives, funding incremental growth investments

• Balanced view of 2016– High single-digit organic revenue growth

– ~50 bps operating margin expansion; continued benefits from footprint rotation and rationalizations

– Staying flexible with clear path to mid-teens EPS growth

• Continue disciplined capital allocation plan– Maintain investment grade credit ratings

– Pursue high return organic and inorganic growth opportunities

– Return excess cash flow to shareholders

Foundation in place for continued outperformance

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

EPS growth and operating margins are adjusted for restructuring and other special items; see Appendix for detail and reconcil iation to US GAAP

Page 23: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Making it possible.

Page 24: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Appendix

Page 25: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

($ millions) Q1 2016 Q1 2015

Net income attributable to Delphi $425 $209

Interest expense $41 $32

Other (income) expense, net ($4) $54

Income tax expense $75 $61

Equity income, net of tax ($6) ($5)

(Income) loss from discontinued operations, net of tax ($108) $75

Net Income attributable to noncontrolling interest $18 $20

Operating income $441 $446

Restructuring $35 $16

Other acquisition and portfolio project costs $33 $8

Asset impairments - $2

Adjusted operating income $509 $472

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

Non-US GAAP financial metrics

25

Page 26: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

($ millions) Q1 2016 Q1 2015

Net income attributable to Delphi $425 $209

(Income) loss from discontinued operations attributable to Delphi, net of tax ($105) $79

Income from continuing operations attributable to Delphi $320 $288

Adjusting items:

Restructuring $35 $16

Other acquisition and portfolio project costs $33 $8

Asset impairments - $2

Debt extinguishment costs - $52

Tax impact of adjusting items (a) ($11) ($13)

Adjusted net income attributable to Delphi $377 $353

Weighted average number of diluted shares outstanding 277.04 291.81

Diluted net income per share from continuing operations attributable to Delphi $1.15 $0.99

Adjusted net income per share $1.36 $1.21

(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: First quarter 2016 earnings call€¦ · Material and manufacturing performance upside Launch volume continues to impact engineering performance Double-digit earnings growth Increased

Shares outstanding

27

(millions) Q1 2016 Q1 2015

Weighted average ordinary shares outstanding, basic 276.62 290.90

Dilutive shares related to RSUs 0.42 0.91

Weighted average ordinary shares outstanding, including dilutive shares 277.04 291.81