Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April...

30
Bank of America Merrill Lynch Auto Summit Conference April 16, 2014

Transcript of Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April...

Page 1: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Bank of America Merrill Lynch Auto Summit Conference

April 16, 2014

Page 2: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Jessica Holscott Vice President, Investor Relations

Page 3: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Forward-looking statements

3

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 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.

Page 4: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

2013 highlights

4

Increased shareholder value

• Further rotated Western European footprint

• MVL integration running ahead of schedule

• Expanded margins and increased earnings

• Returned significant cash to shareholders

• Upgraded to investment grade by S&P and Fitch

Page 5: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

2013 highlights New business bookings

5

Further increase shareholder value Continued strong bookings momentum

2013 bookings by region

North America

34% Europe

33%

Asia 29%

South America

4%

$13.6

$19.9

$23.5

$26.3 $26.6

2009 2010 2011 2012 2013

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

$ billions

Page 6: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

6

Operating income1 Revenue

$15.5 $16.5

2012 2013

EPS1 Operating income margin1

Delivering solid financial results

$3.84

$4.40

2012 2013

$ billions

1. Adjusted for restructuring and acquisition-related integration costs

10.8% 11.2%

2012 2013

2013 highlights Financial results

$ billions

$1.7

$1.8

2012 2013

Page 7: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

EBIT margin EBITDA margin

1.8%

7.8%

11.2%

Peer range Peer average Delphi

16.4%

Industry-leading financial metrics

7

2013 highlights Financial metrics comparison

ROIC

12%

18%

34%

22%

Peer range Peer average Delphi

FCF % to EBIT

Note: Range and averages are for a peer group consisting of: ALV, BWA, HAR, JCI, LEA, TEN and TRW with outliers

removed (excludes Delphi); data represents Capital IQ actuals / J.P. Morgan North America Equity Research

7%

35%

58%

Peer range Peer average Delphi

78%

6.8%

9.9%

14.5%

Peer range Peer average Delphi

16.5%

Page 8: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Jeff Owens Executive Vice President and Chief Technology Officer

Page 9: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

2014 priorities

9

Further increase shareholder value

• Disciplined above market revenue growth

• Further optimize operating footprint

• Accelerate introduction of advanced technologies

• Further expand margins and increase earnings

• Disciplined capital allocation

Page 10: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

10

Introduction of advanced technologies driving revenue growth

Accelerate introduction of advanced technologies

ErgoMate™ Connection System

Aluminum Cable

Airbag Squib AK2

Connection System

Ammonia

(NH3) Sensor

Heated Tip

Cold Start System

Heavy Duty Diesel

Common Rail Systems

RACam

Wireless Consumer Device

Charging System

Significant investment in

technology development with

more than…

• $1.7B gross invested annually

in research, development &

engineering

• 19,000 scientists, engineers

and technicians worldwide

• 15 major technical centers

• 8,000 patents

• 60 major awards

Friction Stir Weld

Gasoline Direct injection

(GDi)

Page 11: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Drives additional shareholder value

Disciplined capital allocation

11

• Increase annual dividend payout from $0.68 to $1.00 per share Increase of approximately 50%

Total spend of ~$300M

• Board authorized a new $1.0 billion share repurchase program

~$200M remaining on current $750M program

Continue to opportunistically repurchase stock

Page 12: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Well-positioned to benefit from secular growth trends

Success factors – Active Safety and Infotainment

• Active presence/partnerships in Silicon Valley

• Scalable, powerful computing platforms leveraging leading SoC suppliers

• Experience executing high end, complex systems development and 3rd party software integration

• Complete portfolio: Infotainment, Driver Interface, Cloud, ADAS/Active Safety

• Cloud connectivity/security solutions to complement on-board content/services

12

Future Key Success Factors Delphi is well-positioned

• Strong development partner network

• Adaptable in-vehicle infotainment computing platform

• Ability to manage high complexity global development, integration, validation (i.e., automotive electronics)

• Multi-domain capability

• Capability to provide full range of on-board and off-board services

Page 13: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Safe

Page 14: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

• European NCAP rewards Active Safety technologies

• Car-to-car/infrastructure

• Evolving China, Korea and US legislation

• Computing platforms integrated with satellite sensors

• Software defined features/value proposition

• Multiple sensors for higher-level automated features

• Major players: Autoliv, Bosch, Continental, Delphi

• Multiple niche competitors with single offerings

• Expect consolidation as market matures

• Consumers demanding increased content from OEMs

• Premium OEMs currently develop feature algorithms;

Volume OEMs to develop automated features

Active Safety market drivers/trends

Customers

Competitors

Technology

Regulatory

14

Active Safety has become strategic for OEMs and their brands

Page 15: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

0

2

4

6

8

10

12

14

2013 2014 2015 2016 2017 2018 2019 2020

Global safety electronics market ($ billions)

Active Safety past the tipping point

Global safety electronics market ($ billions)

15

Active Safety segment driving growth

Active Safety

Page 16: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Global safety electronics market ($ billions)

Active

Safety

Active Safety past the tipping point

Global safety electronics market ($ billions)

Passive Safety

Active Safety

Regulated &

Incentivized

16

Active Safety segment growing at 35% CAGR to ~$14B

0

2

4

6

8

10

12

14

2013 2014 2015 2016 2017 2018 2019 2020

Active Safety

Regulated &

Incentivized

Page 17: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Leverages transition from passive to Active Safety

RACam

Asia

Europe

N. America

For 16 customers

Cumulative launches

5

16

74

2012 2013 … 2016

Mid Range Radar

Short Range Radar

Camera Systems

17

$0.2B incremental revenue

Page 18: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Connected

Page 19: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

• Additional distraction regulations may emerge

• e-Call driver assistance to be in place in EU by 2015

• Car-to-car/infrastructure – Intelligent Transportation

• Powerful and scalable computing platforms

• Updatable, cloud-connected platforms

• Infotainment and Active Safety convergence

• Integration and software execution are differentiators

• New entrants competing for pieces of infotainment

• Fragmented market fosters industry consolidation

• Innovating close to consumers and trend-makers

• Promoting infotainment for brand differentiation

• Expanding “brought-in” and “embedded” functionality

Infotainment market drivers/trends

Customers

Competitors

Technology

Regulatory

19

Infotainment has become strategic for OEMs and their brands

Page 20: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

0

2

4

6

8

10

12

14

16

2012 2013 2014 2015 2016 2017 2018 2019 2020

Connected Infotainment

Connectivity and computing drives Infotainment

Next Gen Connected

Computing Platform

In-vehicle

Wireless Network

Reconfigurable

Cluster & Displays

1st Gen Connected

Navigation

Annual revenue ($billions)

20

$14B market growing at ~25% CAGR

Page 21: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Leverages transition from entertainment to Connected Infotainment

Connected Infotainment Head Unit

Asia

Europe

N. America

S. America

For 10 customers

Cumulative launches

1 3

22

2012 2013 … 2016

21

$0.4B incremental revenue

Page 22: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Infotainment and active safety are converging

• Infotainment and safety feature sets are merging

Providing ADAS data from navigation to active safety components

360 camera integration (ADAS functionality) into infotainment computing platform

Similar base technologies for vision-based algorithms and video handling

‒ Object/pedestrian/sign detection

‒ Driver monitoring, eye tracking, gesture recognition

V2X functionality relevant in safety and infotainment worlds

Increasingly common computing platforms and operating systems

• Only a few have the combined infotainment and active safety expertise

Delphi, Conti, Bosch and Denso

22

Substantial market opportunity

Page 23: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

In the future, we expect higher levels of integration

23

Multi Domain

Controller

V2X Module

Cluster Integrated

Center Panel

SW Domain Modules

+

Cloud

V2X

ADAS Module

Solutions that leverage synergies to improve cost and performance

Page 24: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

OEM Multi Domain Controller – illustrative example

HW

S

W

Bu

ilt H

W &

Fla

sh

Im

age

File

Blockdiagramm

Schematics

Framework/Services Development

RTE generation

Application SW design

SW

Inte

gra

tion&

Valid

ation

OEM

S/W Integrator

SoC Supplier

Delphi

3rd party/OEM SW Technical Safety Concept

Fun

ctio

nal S

afe

ty R

equ

ire

men

ts

Design Verification

Application SW verification

Desig

n V

alid

ation

Syste

m In

tegra

tio

n: H

igh

Le

ve

l E

CU

Fu

nctio

na

l/V

ehic

le

Program Management

Requ

ire

men

ts M

an

age

ment

Cha

nge

Ma

na

ge

ment

Mechanical Design/PCB Layout

Thermal Design

Aurix FPGA SoC TBD

OS integration/BSP

Aurix FPGA SoC TBD

Ve

hic

le B

en

ch

Fun

ctio

na

l Test

DF

ME

A/

Pro

duct D

esig

n S

imula

tion

24

Delphi manages the overall system integration and program execution

Page 25: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Convergence provides opportunities

Increasing power, data, and computing architectures

2015 2020 2025 2010

Full cloud connectivity

Safety eco-system

Smartphone integration

Assisted automation

Conditional automation

Fully autonomous

Internet of things

Increasing personalization

25

Increasing vehicle content

Page 26: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

2014 priorities

26

Further increase shareholder value

• Disciplined above market revenue growth

• Further optimize operating footprint

• Accelerate introduction of advanced technologies

• Further expand margins and increase earnings

• Disciplined capital allocation

Page 27: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

Appendix

Page 28: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

28

2012 2013

Net income attributable to Delphi $1,077 $1,212

Income tax expense $212 $256

Interest expense $136 $143

Other income, net ($5) $18

Noncontrolling interest $83 $89

Equity income, net of tax ($27) ($34)

Restructuring $171 $1,684

Asset impairments $15 $145

Other acquisition-related costs $9 $15

Adjusted operating income $1,671 $1,844

Revenue $15,519 $16,463

Adjusted operating income margin 10.8% 11.2%

Non-US GAAP financial metrics ($ millions)

Page 29: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking

29

2012 2013

Net income attributable to Delphi $1,077 $1,212

Adjusting items

Restructuring charges $171 $145

Acquisition-related integration costs $9 $15

Acquisition-related advisory and transaction costs $13 -

Asset impairments $15 -

Debt extinguishment costs $1 $39

Tax impact of adjusting items (a) ($45) ($40)

Adjusted net income attributable to Delphi $1,241 $1,371

Weighted average number of diluted shares outstanding 323.29 311.80

Diluted net income per share attributable to Delphi $3.33 $3.89

Adjusted net income per share $3.84 $4.40

(a) Represents the income tax impacts of the adjustments made for restructuring charges, acquisition-related integration costs, acquisition-related advisory and transaction costs, asset impairments and debt extinguishment costs, by calculating the income tax impact of these items using the appropriate tax rate for the jurisdiction where the charges were incurred

Non-US GAAP financial metrics ($ millions, except per share amounts)

Page 30: Bank of America Merrill Lynch Auto Summit Conference · 4/16/2014  · Auto Summit Conference April 16, 2014 . Jessica Holscott Vice President, Investor Relations . Forward-looking