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August 3, 2016 Second quarter 2016 earnings call

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Page 1: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

August 3, 2016

Second quarter 2016earnings call

Page 2: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Forward-looking statements

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, certain investments and acquisitions 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.

2

Page 3: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Agenda

3

Operations overview

• Q2 2016 in review

• Wrap up

Financial overview

• Q2 2016 results

• 2016 guidance

Q&A

Kevin Clark Chief Executive Officer

Joe MassaroChief Financial Officer

Kevin Clark/

Joe Massaro

Page 4: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Operations overview

Kevin ClarkPresident and Chief Executive Officer

Page 5: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Summary

5

• Revenue growth accelerated to 7%, led by E&S and E/EA

• Continued disciplined cost focus while investing in growth

• EPS $1.59, up 19% YoY

• Accretive cash deployment delivering shareholder value

• Portfolio positioned for continued growth with $13B Q2 YTD bookings

• Accelerating customer interest in Delphi’s intelligent driving solutions

Note: Revenue growth excludes impact of FX, commodities, the E&S divestiture and HellermannTyton acquisition;

EPS adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP

Remaining focused on innovation and execution

Page 6: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Second half update

6

FX/commodities

Slowing global

vehicle production

Outlook reflects updated macros

£ 1

NA commercial vehicle/

LD diesel market

Positive trends Macro headwinds

High-growth product lines: ADAS, GDi, Power Electronics

Regulatory trends and

consumer demands

Launch volume

Interest in automated

driving solutions

Page 7: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Bookings growth

1 At constant foreign exchange rates

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

($ billions)

$18

$20

$22

$24 $24

$26

$13

2010 2011 2012 2013 2014 2015 Q2 2016YTD

Strong first half bookings

Select customer bookings

7

Continued bookings growth

Page 8: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Technology growth driver

8

Increased customer interest in Delphi’s 48V solution

January IHS

July IHS

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

Q1 2015

Q1 2016

Delphi’s 48V vehicleMarket expanding at a rapid pace

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Mild hybrid

vehicle volumes (000’s)

• Awarded a third 48V customer program

• Engaged with four additional major OEMs on

potential development programs

Page 9: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Q2 2016 major launches

2016 major launches

9

Revenue generating platforms

Volvo S90

VW Tiguan

Platforms continuing to drive growth

BMW 5-Series

Cadillac XT5 Renault Scenic

Chrysler Pacifica Daimler E-Class

Chevy Malibu

Page 10: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Automated driving on the spectrum of active safety

10

Level 2 automation delivers 80% of the benefit for 20% of the cost of level 4

Safe

ty b

enefit

Cost

100% 10x

1xCost

Safety benefit

Driver is in complete control

of vehicleAutomation of one or more

control functions

Level 0No automation

Level 1Function-specific automation

Automation of two or more

control functions

Level 2Combined function automation

Driver able to cede full control

of all safety-critical functions

under certain conditions

Level 3Limited self-driving automation

Driver able to cede full control

of all safety-critical functions

for an entire trip

Level 4Full self-driving automation

Note: Levels of vehicle automation as defined by NHTSA

Page 11: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Singapore automated mobility on-demand project

11

The world’s first end-to-end on-demand mobility project

• Developing an automated mobility on-demand pilot for the

government of Singapore– First provider of the design, development, test and verification; fleet of

six fully autonomous vehicles

• Our end-to-end ecosystem enables a secure, cloud-based,

on-demand platform– Leveraging Delphi’s proven automated driving platform, vehicle sensor

suite and mobility cloud services

• Speeding innovation and commercialization for existing and

potential new customers– In discussions with other cities around the globe

– New business opportunities in mobility and connectivity, logistics,

agriculture and mining

Delphi to Begin Testing On-Demand

Robot Taxis in Singapore

Page 12: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Financial overview

Joe MassaroChief Financial Officer and Senior Vice President

Page 13: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Q2 2016 vs. Q2 2015($ millions, except per share amounts)

1 At constant foreign exchange and commodity rates; excludes impact of the E&S divestiture and HellermannTyton acquisition

2 Adjusted for restructuring and other special items; includes D&A of $190M and $135M for Q2 2016 and Q2 2015, respectively. See Appendix for detail and reconciliation to US GAAP

3 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP13

Delivering solid results

Reported revenueGrowth %

Operating income2

Operating margin %

Earnings per share3

Growth %

Operating cash flow

Q2 2016 Q2 2015 B/(W)

$4,206 $3,858$348

9%/7%1

$57713.7%

$52613.6%

$5110 bps

$1.59 $1.34$0.2519%

$575 $514 $61

Page 14: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Year-over-year growth by region Q2 2016 vs. Q2 2015

1 Growth rates at constant foreign exchange and commodity rates; excludes impact of the E&S divestiture and HellermannTyton acquisition14

Revenue growth

Accelerated revenue growth

$3,858 $327 $168

($65) ($82)

$4,206

Q2 2015 Sales

growth

Price FX/

commodities

Q2 2016

Reported

Q2 2016

Adjusted1

Q2 2016

Europe 15% 10%

N. America 8% 7%

Asia 4% 5%

S. America (18%) (19%)

Total 9% 7%

($ millions)

Acquisitions/

divestitures

Page 15: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

$526

$84 $20 $12

($65)

$577

Q2 2015 Sales Acquisitions/ Net Price Q2 2016

growth divestitures performance

Note: Operating income adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP

13.6%13.7%

Operating income growthQ2 2016 vs. Q2 2015($ millions)

15

Continued margin expansion

Page 16: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Operating income2Revenue1

1 At constant foreign exchange and commodity rates; excludes impact of the E&S divestiture and HellermannTyton acquisition

2 Adjusted for restructuring and other special items; margin calculations based on reported revenue. See Appendix for detail and reconciliation to US GAAP16

Segment financials

Growth and margin expansion in E/EA and E&S

($ millions) ($ millions)

$2,044

$1,143

$676

$2,213

$1,140

$770

E/EA Powertrain E&S

$2,044 $2,352 $1,143 $1,118 $713 $777Reported

revenue

$292

$146

$88

$343

$138 $96

E/EA Powertrain E&S

14.3% 14.6% 12.8% 12.3% 12.3% 12.4%Operating

margin2

15% (2%) 9%Reported

Q2 2015

- 14%Adjusted1

Q2 2016 growth

8%

Q2 2016

Q2 2015

Q2 2016

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

Q1 2015

Q1 2016

$2,078

$1,081

$640

$2,175

$1,135

$720

E/EA Powertrain E&S

Q1 2015

Q1 2016

Page 17: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

$1.34

$0.17$0.09

($0.01)

$1.59

Q2 20151 Operating2 Share Taxes Q2 20161

income repurchases

Earnings per share

1 Adjusted for restructuring and other special items; see Appendix for detail and reconciliation to US GAAP

2 Adjusted for restructuring and other special items and at constant foreign exchange and commodity rates; see Appendix for detail and reconciliation to US GAAP17

Q2 2016 vs. Q2 2015

Delivered 19% earnings per share growth

Page 18: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

2016 guidance

18

(millions, except per share amounts)

1 Average actual 2015 exchange rates; revenue growth is adjusted for FX, commodities, the E&S divestiture and the HellermannTyton acquisition

2 Adjusted for restructuring and other special items

3 Includes updated restructuring cash estimate

Prior CY 2016 Q3 2016Current CY 2016

Reported sales

Adjusted growth1

$16,600 - $17,000

8% - 10%

$16,250 - $16,450

6% - 7%

$3,925 - $4,000

7% - 9%

Operating income2

Operating margin

$2,200 - $2,300

13.3% - 13.6%

$2,150 - $2,200

13.2% - 13.4%

$505 - $525

12.9% - 13.1%

EPS2

Growth

$5.80 - $6.10

14%

$5.95 - $6.05

15%

$1.38- $1.44

10%

Tax rate 17% 17% 17%

Operating cash flow

Capex

$2,000

$800

$1,9003

$750 - $800

2016 outlook reflects updated macros

Page 19: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Cash generation and deployment

19

Dividends

10-15%

• Increased dividend payout to ~15% of operating cash flow

• Increased annual dividend from $1.00 to $1.16

Capital

Expenditures

35-40%

• Supporting customer launches

• Technology tools for increasing business efficiency

• Further optimizing global footprint

M&A and

share

repurchases

45-55%

• Portfolio modifications strengthen competitive position

• Pursue strategic transactions that enhance value

• $1.5B share repurchase authorization

Capital allocation strategy remains unchanged

Operating cash flow growth Capital deployment

$1.7

2015 2016E

($ billions)

$1.9

Page 20: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Wrap up

20

• Delivered solid performance in Q2 2016– Accelerated growth and margin expansion yielding 19% EPS growth

– Continued to optimize cost structure while funding growth investments

• Confident in updated H2 2016 outlook– 7% organic revenue growth; continued margin expansion

– Raised midpoint of EPS guidance; guidance now $5.95 - $6.05, up 15% YoY

• Path to continued outperformance– Solid bookings and customer wins year-to-date

– Pursuing high return organic and inorganic growth opportunities

– Returning excess cash flow to shareholders

Continued focus on innovation and execution

Page 21: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Making it possible.

Page 22: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Appendix

Page 23: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

($ millions) Q2 2016 Q2 2015

Net income attributable to Delphi $258 $645

Interest expense $41 $30

Other expense (income), net $2 $2

Income tax expense $84 $80

Equity income, net of tax ($7) -

Income from discontinued operations, net of tax - ($298)

Net Income attributable to noncontrolling interest $13 $22

Operating income $391 $481

Restructuring $154 $17

Other acquisition and portfolio project costs $10 $10

Asset impairments $22 $4

(Gain) loss on business divestitures, net - $14

Adjusted operating income $577 $526

The company’s guidance was determined using a consistent manner and methodology

Non-US GAAP financial metrics

23

Page 24: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

($ millions) Q2 2016 Q2 2015

Net income attributable to Delphi $258 $645

Income from discontinued operations attributable to Delphi, net of tax - ($295)

Income from continuing operations attributable to Delphi $258 $350

Adjusting items:

Restructuring $154 $17

Other acquisition and portfolio project costs $10 $10

Asset impairments $22 $4

(Gain) loss on business divestitures, net - $14

Transaction and related costs associated with acquisitions - $1

Tax impact of adjusting items (a) ($9) ($10)

Adjusted net income attributable to Delphi $435 $386

Weighted average number of diluted shares outstanding 273.37 288.85

Diluted net income per share from continuing operations attributable to Delphi $0.94 $1.21

Adjusted net income per share $1.59 $1.34

(a) Represents the income tax impacts of the adjustments made for restructuring and other special items by calculating the income tax impact of these items using

the appropriate tax rate for the jurisdiction where charges were incurred.

The company’s guidance was determined using a consistent manner and methodology

Non-US GAAP financial metrics

24

Page 25: Second quarter 2016 earnings call · 2018-08-08 · Technology growth driver 8 Increased customer interest in Delphi’s 48V solution January IHS July IHS $2,078 $1,081 $640 $2,175

Shares outstanding

25

(millions) Q2 2016 Q2 2015

Weighted average ordinary shares outstanding, basic 272.92 287.77

Dilutive shares related to RSUs 0.45 1.08

Weighted average ordinary shares outstanding, including dilutive shares 273.37 288.85