Aptiv Plc · NYSE:APTV
Aptiv — Delphi Automotive — Investor Day (April 2016)
43 slides from Aptiv's investor day presentation, Apr 13, 2016
Slide 1: Strategic overview
Strategic overview Kevin Clark President and Chief Executive Officer Exhibit 99.1
Slide 2: Evolution of Delphi
Evolution of Delphi DLPH evolution 2011 - Initial public offering; value creation opportunity for shareholders 2012 - MVL acquisition; strengthening core connector offering 2013 - Streamlining operational efficiencies; continued margin expansion 2014 - Antaya/Unwired acquisitions; enhancing connecti
Slide 3: Business model that delivers value
Aligned to safe, green and connected megatrends Accelerating the introduction of advanced technologies Global scale with regional capabilities Increasing profitable growth with strategic acquisitions Processes Delphi business model Foundation Innovation • 19,000 scientists and engineers • 14 major t
Slide 4: Delphi Enterprise Operating System
Delphi Enterprise Operating System 1. Adjusted for FX, commodities, the E&S divestiture and HellermannTyton in 2016 2. Adjusted for restructuring and other special items; see appendix to Financial overview for detail; growth off 2015 base year Setting robust goals: • Operating targets • Financial ta
Slide 5: Transactions that increase shareholder value
Value enhancing portfolio modifications 2012 MVL Strengthened leading position in connectors 2015 Thermal divestiture Refocused core portfolio 2015 Solid state LiDAR startup 2015 Software for automated driving 2015 Thermal joint venture divestitures Refocused core portfolio 2015 Software-as-a-servic
Slide 6: Optimizing cost structure while investing for growth
Optimizing cost structure while investing for growth Continuing footprint rotation Reduced high cost country footprint from 40% to 25% since 2010 Cost structure improvement Investing for growth Over $350 million in average annual savings Reduced manufacturing run rate by 190bps Increased revenue per
Slide 7: Today's Delphi
Today’s Delphi More technology More diverse More balanced More efficient More profitable More cash generative More predictable Well positioned to drive value
Slide 8: Delphi investment thesis
Delphi investment thesis 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 c
Slide 9: Convergence: The catalyst for intelligent driving
Convergence: The catalyst for intelligent driving 2010 2020 2025 2015 Semi automated Assisted automation ADAS expansion Fully automated Full cloud connectivity Brought-in connectivity Smartphone integration Vehicle as a device Increasing levels of electrification Electrical architecture is an enable
Slide 10: Further diversifying customer revenue mix
GM 12% VW 10% FCA 9% Ford 7% SGM 5% PSA 5% Geely 4% Daimler 3% Hyundai 3% Chang’an 2% Volvo Truck 2% Great Wall 2% Other 36% GM 14% VW 8% Ford 6% FCA 5% Daimler 5% PSA 5% SGM 5% Hyundai 4% Geely 3% Chang’an 2% Volvo Truck 2% GM 21% Ford 9% VW 8% Daimler 6% PSA 5% SGM 4% FCA 4% Hyundai 3% Volvo Truck
Slide 11: Further diversifying regional revenue mix
Europe 33% Asia 31% Americas 36% Further diversifying regional revenue mix Regional revenue mix 2020E 2010 Europe 35% Asia 25% Americas 40% Europe 43% Asia 16% Americas 41% 2015 Continue rotation to high growth markets
Slide 12: Track record of outperformance continues
Track record of outperformance continues Note: Revenue adjusted for foreign exchange and M&A; Margins are adjusted for restructuring and other special items and represents the peer median Auto peers: Aisin Seiki , Autoliv, BorgWarner, Continental AG, Denso, Federal-Mogul, Harman, Johnson Controls, L
Slide 13: Strategic imperatives towards 2020
Strategic imperatives towards 2020 • Enhance portfolio of market relevant products • Balanced regional growth • Further diversify customer base and platform mix • Maintain investment grade ratings • Continue investment in organic and acquisition growth • Return cash to shareholders Disciplined reven
Slide 14: Delphi growth drivers: next years
Delphi growth drivers: next 5 years ~$3B ~$2B ~$2B • Optimized vehicle architectures enabling high-speed connectivity • Faster digital data demands advanced cabling solutions • Accelerating demand for electrification and diagnostics • Emissions regulations demand advanced products • US fuel economy
Slide 15: Influence of Silicon Valley
Influence of Silicon Valley Moving at the speed of software 2010 2015 2020 Lines of code shipped daily 200M 20B 200B Software revenue <$50M $500M $1.5B Software engineers 2,000 5,000 8,000 Key partnerships 15+ 30+ 60+ Software launches 150+ 300+ 400+ Delphi’s technology acceleration Creating tomorro
Slide 16: Cost structure optimization
Cost structure optimization Price-to-Price 50% Design Innovation 30% Utilization 10% Localization 5% Logistic 5% 2010 – 2015 (6 years) average annual savings $350M 2016 – 2020 (5 years) average annual savings $400M 2010 – 2015 (6 years) average annual savings $165M 2016 – 2020 (5 years) average annu
Slide 17: Capital deployment
Capital deployment Operating cash flow growth Cash priorities Cash flow deployment 17 $1.7 ~$2.6 ~$3.2 2015 2018E 2020E • Maintain investment grade ratings • Disciplined re-investment in business to drive growth and increase returns • Pay a competitive dividend • Strategic acquisitions that are accr
Slide 18: Strengthening technology portfolio
Strengthening technology portfolio Areas of focus Operating • Solid operating systems • Strong management team and cultural fit •High confidence integration plan Strategic • Enhance competitive position • Strengthen product portfolio •Diversify customer and regional mix Financial • Enhance growth an
Slide 19: Returning value to shareholders
TSR since IPO Returning value to shareholders Auto peers DLPH 320% 160% $0.4 $0.5 $1.0 $1.2 2012 2013 2014 2015 (Total shareholder return) Share repurchase history ($ billions) Note: Total shareholder return (TSR) is from 11/17/11 to 12/31/15 Auto peers: Aisin Seiki, Autoliv, BorgWarner, Continental
Slide 20: Long-term outlook
Long-term outlook 1. Adjusted for FX, commodities, the E&S divestiture and HellermannTyton in 2016 2. Adjusted for restructuring and other special items; see appendix to Financial overview for detail; growth off 2015 base year ~8-10% organic growth Sales growth1 Operating margin expansion2 Earnings
Slide 21: Why Delphi will outperform
Why Delphi will outperform Track record of delivering on commitments Macro trends are a catalyst for growth Disciplined cost focus translates into more margin expansion Effective and accretive cash deployment Well positioned in a transformed and growing industry Consistent strategy; delivering outpe
Slide 22: Financial overview
Financial overview Joe Massaro Chief Financial Officer and Senior Vice President
Slide 23: Performance highlights 2010-2015
Performance highlights 2010-2015 1. Adjusted for FX, commodities, the E&S divestiture and significant historical acquisitions 2. Adjusted for restructuring and other special items; see appendix for detail 3. Represents cash flow from continuing operating activities of $1.7B in 2015 and $1.0B in 2010
Slide 24: Financial strategy remains unchanged
Financial strategy remains unchanged Disciplined revenue growth Cost structure optimization Increase cash flow • Enhance portfolio of market relevant products • Continue rotation to high growth regions • Further diversify customer base and platform mix • Continue footprint rotation to best cost coun
Slide 25: 2010-2015 bookings by region
2010-2015 bookings by region Bookings growth 1. At constant foreign exchange rates Note: Bookings represent lifetime gross program revenues awarded, based upon expected volumes and pricing ($ billions) $26 $20 $22 $24 $24 $18 2010 2011 2012 2013 2014 2015 Europe 35% Asia 28% Americas 37% Booked over
Slide 26: Macro update
Europe China South America Source: March 2016 IHS Automotive and Delphi internal estimates Note: Includes medium/heavy duty trucks Macro update North America Global Markets 93.6 mil units Prior ’14-’17 Current ‘15-’18 2% 2% Prior ’14-’17 Current ‘15-’18 4% 7% Prior ’14-’17 Current ‘15-’18 3% 2% Prio
Slide 27: 2016-2018 net new business by region and segment
2016-2018 net new business by region 2016-2018 net new business by segment Net new business ($ billions) Electronics & Safety 38% Electrical Architecture 37% Powertrain 25% Asia 48% Americas 30% Europe 22% $1.4 $1.4 $1.5 2016 2017 2018 ~$4.3 billion of cumulative net new business
Slide 28: Further improving cost structure
$0.9 $1.2 $1.5 2010 2015 2018 Net engineering spend1 Further improving cost structure ($ billions) 1. Represents gross engineering expenditures less rebills to customers and government agencies; 2015 gross engineering was $1.5B Material cost % of revenue Manufacturing expense % of revenue 19.5% 17.6
Slide 29: 2016 outlook
2016 outlook Key outlook assumptions 1. Adjusted for FX, commodities, the E&S divestiture and HellermannTyton in 2016 2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation to US GAAP Production source: March 2016 IHS Automotive forecast and management esti
Slide 30: Revenue and margin outlook
Operating margin2 Revenue Revenue and margin outlook 1. Adjusted for FX, commodities, the E&S divestiture and HellermannTyton in 2016; growth off 2015 base year; revenue rounded to nearest half billion 2. Adjusted for restructuring and other special items; see appendix for detail and reconciliation
Slide 31: Outlook by segment
Revenue 2015-2018 CAGR1 Operating income2 ($ billions) 2016 2018 2016 2018 Electrical Architecture $9.5 ~$10.5 7% 14.0% ~14.5% Powertrain $4.5 ~$5.5 7% 12.8% ~14.0% Electronics & Safety $3.0 ~$4.0 14% 12.0% ~13.5% Outlook by segment 1. Adjusted for FX, commodities, the E&S divestiture and Hellermann
Slide 32: Robust business model
Risks Opportunities Robust business model 1. Adjusted for restructuring and other special items; see appendix for detail $16.8 ~$20 $18 $22 2016 2018 2018 EBITDA1 % 17.5% >18% Upside ~19% Downside ~17% +/-10% + Additional volume + Operating leverage + Acquisitions - Lower industry volume - Foreign e
Slide 33: Significant financial flexibility
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Maturity schedule ($ millions) Dec 31, 2014 Dec 31, 2015 Cash1 $860 $536 Debt $2,426 $4,008 Net debt $1,566 $3,472 Debt-to-EBITDA2 1.6x 2.1x Net debt-to-EBITDA3 1.3x 1.9x S&P Moody’s Fitch BBB Baa3 BBB- (pos) BBB Baa3 (pos) BBB Capital structure
Slide 34: Capital deployment drives shareholder returns
2016-2018 capital deployment 2016-2018 operating cash flow Capital allocation ~$750 ~$2,000 ~$2,500 ~$1,300 2011 2012 2013 2014 2015 Capex Dividends Share repurchases M&A ~45-55% M&A and share repurchases ~35-40% Capital expenditures ~10-15% Dividends ~$4.0B cash returned to shareholders since 2011
Slide 35: Continuation of capital deployment strategy
Continuation of capital deployment strategy • New share repurchase program – $1.5B opportunistic program – Reflects continued confidence in our business – Commitment to create and enhance value for our shareholders • Previously announced increase to annual dividend payout to $1.16 per share – Repres
Slide 36: 2016 spending profile
2016 spending profile 2016 major programs Capital spend Capital spending 2014 2015 2016 • Gas Direct injection programs • Euro 6 diesel programs • Restructuring and integration capital • IT investments and facility expansions Growth 50% 5.0% 4.6% 4.8% % of Revenue Efficiencies 10% Footprint/ restruc
Slide 37: Portfolio realignment track record
Acquisition/ divestiture date 2015-2018 revenue CAGR 2015-2018 EBITDA Margins Synergy achievement Explanation Q4 2012 ~5% ~30% 1.5x EBITDA margins over plan Synergies in excess of plan Q4 2014 ~30% ~20% 1.5x Bookings ahead of plan Revenue growth well over plan Synergies in excess of plan Q4 2014 ~20
Slide 38: Valuation metrics
0.0% 0.8% 10.8% 13.9% 2.9% Auto peers (range) Other groups (median) Delphi (guidance) Valuation metrics Auto peers: Aisin Seiki , Autoliv, BorgWarner, Continental AG, Denso, Federal-Mogul, Harman, Johnson Controls, Lear, Magna, Sumitomo, Tenneco, Valeo, Visteon (Excludes outliers) Other Comp Group m
Slide 39: Why Delphi will outperform
Why Delphi will outperform Track record of strong financial performance Accelerating revenue with new business wins Continuing to optimize cost structure while investing for growth Significant operational and financial flexibility Strong cash generation and accretive deployment plan Consistently del
Slide 40: Appendix
Appendix
Slide 41: Non-US GAAP financial metrics
($ millions) 2015 2010 Net income attributable to Delphi $1,450 $631 Income tax expense $263 $226 Interest expense $127 $30 Other (income) expense, net $88 ($35) Noncontrolling interest $85 $72 Equity income, net of tax ($16) ($6) Income from discontinued operations, net of tax ($274) ($64) Operatin
Slide 42: Non-US GAAP financial metrics
($ millions) 2015 2014 Net income attributable to Delphi $1,450 $1,351 Income tax expense $263 $255 Interest expense $127 $135 Other expense (income), net $88 $8 Noncontrolling interest $85 $89 Equity income, net of tax ($16) ($20) Income from discontinued operations, net of tax ($274) ($60) Operati
Slide 43: Adjusted net income reconciliation
($ millions) 2015 2014 Net income attributable to Delphi $1,450 $1,351 Income from discontinued operations attributable to Delphi, net of tax ($262) ($42) Income from continuing operations attributable to Delphi $1,188 $1,309 Adjusting items: Restructuring $177 $140 Other acquisition and portfolio p