Delphi 4Q16 Earnings Call Notes

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Kevin P. Clark

Autonomous driving capabilities continue to garner strong customer interest

“As I mentioned, our autonomous driving capabilities continue to garner strong customer interest. When you combine Mobileye’s Vision and Road Experience Management systems with Delphi’s best-in-class sensor suite, automated driving software from Ottomatika, and our multi-domain controller, no other entity comes close to matching the quality or the capability of our CSLP automated driving platform. We believe no other system will be faster to market. And as we’ve heard from our customers, no other company is in as strong a position as Delphi.”

Some of the more automated stuff in Mexico could potentially come back

“The whole discussion around border tax, it’s actually broader than Mexico at this point, right? When they talk about import value, they’re talking effectively globally. So it’s clearly Mexico is a big piece of it, but it is hard to speak to specifics. As it relates to businesses or types of operations down there, there are certainly more automated-type manufacturing processes down there, which you could conceivably see coming back to the – or coming to the U.S. Some of these were never in the U.S. We’ve grown them in Mexico or started them in Mexico. And we’ll look at that depending on where the rules go. But it would have to be much more of the – sort of the automated-type manufacturing operations, just given the difference – the labor differential there.”

Joseph Massaro

Guidance

“In total, 2017 revenue guidance is $16.5 billion to $16.9 billion, including approximately $400 million of net FX and commodity headwinds, including the euro at $1.05 versus an average of $1.11 in 2016. While operating income is expected to be between $2.2 billion and $2.3 billion with margins between 13.3% and 13.5%. Earnings are expected to be in the range of $6.40 to $6.70, up 7% to 11% over 2016, including the benefit from $600 million of share repurchases in 2017, which we are using for planning purposes. Our guidance assumes a 16% effective tax rate for the year. And we expect to generate over $2 billion of operating cash flow.”

Strength in China

“Yeah. About half the revenue upside – about half of it, Itay, came from China. Particularly late in the quarter we saw very strong demand in China. I think China totals up about 19% in the quarter. The rest was spread sort of evenly between Europe and North America. And again, we saw it flow strongly from an OI perspective, from a performance perspective. So it sort of mirrored that volume flow.”