Delphi Technologies (DLPH 19.13, -2.54, -11.72%) fell pre-market and has continued to decline after reporting mixed quarterly results and issuing disappointing guidance. The
pre-market weakness has sent the stock to a fresh low for the year, extending
its year-to-date decline to 61.8%. Keep in mind that Delphi Technologies was
spun off from Delphi Automotive in December 2017. Prior to the spin-off, Delphi
Technologies was known as the Powertrain Systems segment of Delphi Automotive.
The manufacturer of technology solutions for the automotive industry reported below-consensus third quarter earnings of $0.72 per share on a 3.8% yr/yr decline in revenue to $1.16 bln, which was ahead of estimates.
Going forward, Delphi expects that earnings for the fiscal year will be between $4.20 per share and $4.30 per share, which is below market expectations. However, the midpoint of the company's revenue guidance for sales between $4.85 bln and $4.90 bln is essentially in-line with market expectations. In addition, the company noted it expects that revenue growth during fiscal 2019 will be between 1.0% and 2.0%.
Delphi Technologies interim CEO Hari Nair said that the while the company faced a challenging environment in China during the third quarter, the company's Power Electronics technology has seen strong revenue growth so far in 2018.
Delphi's revenue decline was mostly due to currency headwinds. On an adjusted basis, Powertrain Systems revenue fell 2.0% while Delphi Technologies Aftermarket revenue declined 1.0%. Adjusted revenue growth was recorded in all geographies, except for Asia, where sales declined 13.0%. Sales in Europe, North America, and South America increased 5.0%, 3.0%, and 15.0%, respectively.
Adjusted operating income margin weakened to 9.3% from 12.2% one year ago due to an unfavorable product mix and costs related with becoming a stand-alone public company. Interest expense grew to $20 mln in the third quarter from $1 mln one year ago due to payments related to $1.55 bln of debt that was added during 2017 due to the company's separation from Delphi Automotive.
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