Aptiv Reports 2017 Financial Results, Exceeding Company's Previous Outlook

GILLINGHAM, England, Feb. 1, 2018 /PRNewswire/ -- Aptiv PLC (NYSE: APTV), a global technology company enabling the future of mobility, today reported full year 2017 U.S. GAAP earnings from continuing operations of $3.81 per diluted share. Excluding special items, 2017 earnings from continuing operations totaled $4.64 per diluted share.

Full Year 2017 Highlights Include:

• Revenue of $12.9 billion, up 5% adjusted for currency exchange, commodity movements, acquisitions and divestitures
• U.S. GAAP net income from continuing operations of $1,021 million, diluted earnings per share from continuing operations of $3.81
• Excluding special items, earnings from continuing operations of $4.64 per diluted share
• U.S. GAAP Operating Income margin of 11.0%
• Adjusted Operating Income margin of 12.4%; Adjusted Operating Income of $1,594 million
• Generated $1,106 million of cash from continuing operations
• Returned $693 million to shareholders through share repurchases and dividends
• Completed the spin-off of Powertrain Systems segment
• Powertrain Systems classified as discontinued operations for all periods presented
• Received dividend of $1,148 million in connection with the spin-off

Fourth Quarter Highlights Include:

• Revenue of $3.4 billion, up 4% adjusted for currency exchange, commodity movements, acquisitions and divestitures
• U.S. GAAP net income from continuing operations of $207 million, diluted earnings per share from continuing operations of $0.77
• Excluding special items, earnings from continuing operations of $1.28 per diluted share
• U.S. GAAP Operating Income margin of 11.2%
• Adjusted Operating Income margin of 13.1%; Adjusted Operating Income of $450 million

"Our team's disciplined execution delivered strong financial performance in 2017 that exceeded our expectations, as we continue to invest and reposition the company for the future," said Kevin Clark, president and chief executive officer. "Aptiv remains highly focused on delivering value to shareholders through innovation, profitable growth, strong cash flow generation and disciplined capital deployment. Our 2018 outlook reflects that commitment, with double-digit growth in our fastest-growing product lines, including active safety, infotainment, vehicle electrification and connected services. This outlook underscores our unparalleled commitment to solving mobility's toughest challenges."

Full Year 2017 Results

The Company reported full year 2017 revenue of $12.9 billion, an increase of 5% from the prior year. Adjusted for currency exchange, commodity movements and the divestiture of the Company's Mechatronics business, revenue increased by 5% during the year. This reflects growth of 9% in Europe, 10% in Asia and 24% in South America, partially offset by a decline of 3% in North America.

For full year 2017, the Company reported U.S. GAAP net income from continuing operations of $1,021 million and earnings from continuing operations of $3.81 per diluted share, compared to $834 million and $3.05 per diluted share in the prior year. Full year 2017 Adjusted Net Income, a non-GAAP financial measure defined below, totaled $1,243 million, or $4.64 per diluted share. Adjusted Net Income in the prior year was $1,224 million, or $4.47 per diluted share.

The Company reported Adjusted Operating Income, a non-GAAP financial measure defined below, of $1,594 million for full year 2017, compared to $1,623 million in the prior year. Adjusted Operating Income margin was 12.4% for full year 2017, compared to 13.2% in the prior year, reflecting the 40 basis point impact of the Mechatronics divestiture and continued incremental investments for growth, partially offset by sales growth and the beneficial impacts of cost reduction initiatives. Depreciation and amortization expense totaled $546 million, an increase from $489 million in the prior year.

Interest expense for full year 2017 totaled $140 million, as compared to $155 million in the prior year, which reflects the benefits of our debt refinancing transactions in the third quarter of 2016. Additionally, the year ended December 31, 2016 included a loss on the extinguishment of debt totaling $73 million.

Tax expense for full year 2017 was $223 million, resulting in an effective tax rate of approximately 18%, which includes approximately $55 million, or 4 points, for the one-time impacts of the U.S. tax reform enactment. Tax expense for full year 2016 was $167 million, resulting in an effective tax rate of approximately 17%.

The Company generated net cash flow from continuing operating activities of $1,106 million in 2017, compared to $1,494 million in the prior year, primarily reflecting the $310 million payment made in 2017 to settle the Unsecured Creditors litigation. As of December 31, 2017, the Company had cash and cash equivalents of $1.6 billion and total debt of $4.1 billion.

Fourth Quarter 2017 Results

The Company reported fourth quarter 2017 revenue of $3.4 billion, an increase of 8% from the prior year period. Adjusted for currency exchange, commodity movements and the divestiture of the Company's Mechatronics business, revenue increased by 4% in the fourth quarter. This reflects growth of 11% in Europe, 8% in Asia and 26% in South America, partially offset by a decline of 6% in North America.

The Company reported fourth quarter 2017 U.S. GAAP net income from continuing operations of $207 million and earnings from continuing operations of $0.77 per diluted share, compared to $182 million and $0.67 per diluted share in the prior year period. Fourth quarter Adjusted Net Income totaled $343 million, or $1.28 per diluted share, which includes the unfavorable impacts of a higher tax rate compared to the prior period. Adjusted Net Income in the prior year period was $382 million, or $1.41 per diluted share.

Fourth quarter Adjusted Operating Income was $450 million, compared to $455 million in the prior year period. Fourth quarter Adjusted Operating Income margin was 13.1%, compared to 14.2% in the prior year period, reflecting continued incremental investments for growth and a 30 basis point reduction as a result of the Mechatronics divestiture, partially offset by above-market sales growth. Depreciation and amortization expense totaled $154 million in the fourth quarter, an increase from $126 million in the prior year period.

Interest expense for the fourth quarter totaled $37 million, as compared to $33 million in the prior year period.

Tax expense in the fourth quarter of 2017 was $135 million, resulting in an effective tax rate of approximately 39%, compared to a tax benefit of $4 million in the prior year period. The fourth quarter of 2017 includes $55 million, or 16 points, for the one-time impacts of the U.S. tax reform enactment, as well as tax impacts of approximately $27 million resulting from the timing of recognition of the spin-off and classification of Powertrain Systems as discontinued operations.

Reconciliations of Adjusted Net Income, Adjusted Net Income per Share, Adjusted Operating Income and Cash Flow Before Financing, which are non-GAAP measures, to the most directly comparable financial measures, respectively, calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP") are provided in the attached supplemental schedules.

Share Repurchase Program

During 2017, the Company repurchased 4.67 million shares for approximately $383 million under its existing authorized share repurchase program, leaving approximately $989 million available for future share repurchases. All repurchased shares were retired, and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in-capital and retained earnings.

Discontinued Operations - Spin-off of Powertrain Systems Segment into Delphi Technologies

As previously disclosed, the spin-off of the Company's former Powertrain Systems segment into a new, independent publicly traded company, Delphi Technologies PLC, was completed on December 4, 2017. The results of the Powertrain Systems business through December 4, 2017 are presented as discontinued operations separate from the Company's continuing operations for all periods presented. In connection with the spin-off, Aptiv received a dividend of approximately $1,148 million from Delphi Technologies, which the Company intends to use to fund growth initiatives, including increased investment in advanced technologies and engineering, and for general corporate purposes.

Conference Call and Webcast

The Company will host a conference call to discuss these results at 8:30 a.m. (ET) today, which is accessible by dialing 888.486.0553 (US domestic) or 706.634.4982 (international) or through a webcast at ir.aptiv.com. The conference ID number is 1786308. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Company's website. A replay will be available two hours following the conference call.

Use of Non-GAAP Financial Information

This press release contains information about Aptiv's financial results which are not presented in accordance with GAAP. Specifically, Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income per Share and Cash Flow Before Financing are non-GAAP financial measures. Adjusted Operating Income represents net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, income (loss) from discontinued operations, net of tax, restructuring, other acquisition and portfolio project costs, asset impairments, gains (losses) on business divestitures and deferred compensation related to acquisitions. Other acquisition and portfolio project costs include costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures. Adjusted Operating Income margin is defined as Adjusted Operating Income as a percentage of Net sales.

Adjusted Net Income represents net income attributable to Aptiv before discontinued operations, restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share represents Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the period. Cash Flow Before Financing represents cash provided by operating activities from continuing operations plus cash provided by (used in) investing activities from continuing operations, adjusted for the purchase price of business acquisitions and net proceeds from the divestiture of discontinued operations and other significant businesses.

Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company's financial position, results of operations and liquidity. In particular, management believes Adjusted Operating Income, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are useful measures in assessing the Company's ongoing financial performance that, when reconciled to the corresponding 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 that may obscure underlying business results and trends. Management also uses these non-GAAP financial measures for internal planning and forecasting purposes.

Such non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the attached supplemental schedules at the end of this press release. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures of other companies.

About Aptiv

Aptiv PLC (NYSE: APTV) is a global technology company that develops safer, greener and more connected solutions, which enable the future of mobility. Headquartered in Gillingham, England, Aptiv has 147,000 employees and operates 14 technical centers, as well as manufacturing sites and customer support centers, in 45 countries. Visit aptiv.com.

Forward-Looking Statements

This press release, as well as other statements made by Aptiv PLC (the "Company"), contain forward-looking statements that reflect, when made, the Company's current views with respect to current events 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.

APTIV PLC
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)

In this press release the Company has provided information regarding certain non-GAAP financial measures, including "Adjusted Operating Income," "Adjusted Net Income," "Adjusted Net Income per Share" and "Cash Flow Before Financing." Such non-GAAP financial measures are reconciled to their closest GAAP financial measure in the following schedules.

Adjusted Operating Income: 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 income (loss), net of tax, income (loss) from discontinued operations, net of tax, restructuring and other special items. 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. Operating Income margin represents Operating Income as a percentage of Net sales, and Adjusted Operating Income margin represents Adjusted Operating Income as a percentage of Net sales.

APTIV PLC
RECONCILIATION OF NET EARNINGS TO ADJUSTED EARNINGS
(Unaudited)

Adjusted Net Income and Adjusted Net Income Per Share: 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 Aptiv before discontinued operations, 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.

Cash Flow Before Financing: Cash Flow Before Financing is presented as a supplemental measure of the Company's liquidity which is consistent with the basis and manner in which management presents financial information for the purpose of making internal operating decisions, evaluating its liquidity and determining appropriate capital allocation strategies. Management believes this measure is useful to investors to understand how the Company's core operating activities generate and use cash. Cash Flow Before Financing is defined as cash provided by operating activities from continuing operations plus cash provided by (used in) investing activities from continuing operations, adjusted for the purchase price of business acquisitions (including the settlement of foreign currency derivatives in 2016 related to the 2015 acquisition of HellermannTyton) and net proceeds from the divestiture of discontinued operations and other significant businesses. Not all companies use identical calculations of cash flow before financing therefore this presentation may not be comparable to other similarly titled measures of other companies. The calculation of Cash Flow Before Financing does not reflect cash used to service debt, pay dividends or repurchase shares and, therefore, does not necessarily reflect funds available for investment or other discretionary uses.