July 31, 2014 at 4:32 pm

Delphi reports $382M in earnings in Q2

Delphi Automotive said Thursday its second-quarter net income totaled $382 million as earnings rose 8 percent to $1.26 a share, slightly ahead of analyst expectations.

The automotive components supplier, based in England but with a major presence in Troy, said without special items, earnings increased 15 percent in the second quarter to $1.42 a share. In the same period a year ago, Delphi had net income of $367 million or $1.17 a share.

Revenue totaled $4.5 billion in the quarter, up 5 percent year-over-year. The company said growth in Asia and North America pushed revenue up.

“Our continued strong operating performance resulted in record financial performance,” Delphi CEO and President Rodney O'Neal told analysts during a call Thursday.

J.P. Morgan analyst Ryan Brinkman, in an investors note Thursday, said while Delphi delivered “strong second-quarter results,” the company’s guidance for the third quarter was lower than J.P. Morgan expected.

Delphi’s second-quarter adjusted net income excluding special items that included restructuring charges, acquisition related costs and other debt costs was $432 million or $1.42 a share. That’s up from adjusted net income of $388 million or $1.24 a share in second quarter 2013.

The company said for all of 2014 it is expecting earnings per share growth of 14 percent if global vehicle production rises 3 percent for the year.

Delphi executives did not mention the General Motors Co. ignition switch recall or implications to Delphi during an about hour-long call with analysts Thursday. Delphi built the ignition switch for GM. The automaker has recalled 2.59 million vehicles this year with the defective switch which it says is tied to 54 crashes and 13 deaths. Both GM and Delphi are being sued by those injured and families of people who died in crashes allegedly tied to the defect.

Delphi has not commented much on the ignition switch issues. Earlier this month, O’Neal defended Delphi to a Senate committee, saying the supplier built the switch for GM pursuant to its requirements and Delphi wasn’t responsible. GM CEO Mary Barra agreed that it was GM who bought the part that ultimately is responsible.

In a regulatory filing Thursday, Delphi said it is cooperating with government agencies who are investigating the ignition switch recall. The company says it believes allegations in product liability and class-action lawsuits, in which it has been named a co-defendant, are “without merit” and the company intends to “vigorously defend against them.”

Delphi, in the filing said it does not believe a loss is probable and has made no reserve as of the end of the second quarter.

The Internal Revenue Service wants Delphi to be treated as a domestic corporation for U.S. federal income tax purposes. The company is fighting the ruling, which could boost the company’s tax rate from 17 percent to 20-22 percent.

Delphi Chief Financial Officer Kevin Clark said Thursday in an analysts call that the company feels it has a strong position.

“We expect the appeals process to start sometime in 2015, hopefully early in 2015,” he said. “It’ll take one to maybe two years. Hopefully it’s shorter vs. longer.”

Shares of Delphi’s stock fell more than 1 percent Thursday to close at $66.80 a share.

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