Analyst Note| Richard Hilgert |
No-moat Delphi Technologies reported second-quarter losses per share before special items of $0.58, $0.31 above the CapIQ consensus estimate for a loss of $0.89 but, thanks to the coronavirus-induced factory closures, $1.16 below the year ago reported EPS of $0.58. Revenue declined 44% to $628 million but would have been down 41% excluding the negative currency effect. The change in revenue beat the 45% decline in global light vehicle production by 4 percentage points. Adjusted operating income swung into red ink at negative $43 million, down from a profit of $81 million last year on the negative operating leverage. Despite COVID-19 trouncing profitability, the decremental margin was a solid 25%. We attribute the better decremental margin performance to cost-reduction efforts already initiated prior to the COVID-19 pandemic.