APTV - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Jack, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aptiv First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President Relations. Vice of Rosman, Investor Elena

You your conference. may begin

Elena Rosman

Aptiv’s our follow financials measures Good the as Thank XXXX for you reconciliation Please included To and tables. will presentation, presentation financials, our prior consistent as morning continuing address SEC financial at be QX to be year calls, future of with the Jack. reflects which slides we earnings performance, actual with can along for of our remainder everyone see call. forecasted are slide other view operations well the with different materially today’s today’s quarter thank ir.aptiv.com, forward-looking for between other back first outlook and and on in you, found reasons today’s current Aptiv’s the for and conference along filings. of our may cite of XX-K performance restructuring two review supplemental The GAAP of the non-GAAP and that for special both other and our Aptiv. actual from exclude at Form items which our and joining disclosure statements, a

Kevin Massaro, be to President. will President today and call Aptiv’s over Joe the turn us Joining that, I CEO; Clark. CFO and Vice Senior like and Clark, With would to Kevin

Kevin Clark

greater as on our provide the take perspective quarter begin financial an of results well overview providing will some then going we’re of the by in Thanks quarter updated our and you to everyone. first highlights morning as first Joe outlook Elena and I'm good thinking financial detail. year. the through balance how about

mega safe, over more provided ability earnings green technologies operating income of demand per even guidance above all in challenging We over sustained and delivered the outperformance nine X%, advanced reflecting by aligned income structure. portfolio for growth leading and our of earnings resulted despite to our macro result quarter of growth trends. of revenue billion vehicle an with portfolio environment. new expanding which in share to growth a January, per of record strong declining put The driven billion. the in share to industry and market. track awards, First points EBITDA, production business customer back representing finished respectively, cost drive our X% opportunities on of $XXX $X and our connected revenue we was million prior And our us volume combine of technologies and new funnel exceed $XX The operating year totaled strength $X.XX

size Aptiv we In better connected business our model, of win our rate to environment, funnel more and and Given safe, positioning technologies challenging expanding and summary, this our mode further thereby opportunities, in in bookings even advanced macro green another our and sustained our of in was competitive and continue important value creation. believe strategy. we our strong operating its portfolio that new the business business invest technologies scale quarter new it of further for validating

some context fund the implemented benefited performance provide launches and to how about the on incremental from challenging our XXXX remainder of first macro stronger for the expectations, and in to to initial Relative of cost landscape, weaker chain macro addition quarter stronger initiatives increasingly in of be four. globally. our investments. I’d are the Given we outgrowth improve manufacturing In growth overhead than weaker position program uncertain light in gains financial our like endmarkets, structure our to cost a expected supply content reductions and new thinking to and we’ve slide environment, result

$XXX now opportunistically million while flexible maintaining million to sheet. discounts, a full strong And for XXX we of we total the addition, our balance advantage and share market repurchased taking stock In of year. repurchases expect

Moving Joe global mass outlook. now through key year X.X% initial driven take [ph] of the to for and be underpinning the XXXX you growth side both vehicle we’ve China. to down production X.X% our in Europe we moment, page, demand will expect but deterioration the down by the a previously, details versus seen in right primarily in a weaker

since January supply recent our commodity In spikes to addition, of tightening a relatively the outlook principally euro has conditions. dollar weakened has the seen as related prices result and in to resins

to implied reductions While us our FX of enough teams in these the are working end remainder weaker our industry look markets commodity cause combination -- and productivity are many the cost mitigate impacts experts, a as prices of for in we to initiatives, represents up ramp the changes rates aggressively outlook the second to we vehicle lower year, balanced more our forecasted with and realistic believe increased by and current outlook half forecasts at perspective. the much production

performance. and cycle Slide the to increased in more true our to a company the we vehicle of for focus on cost more a increase our and -- position ability trends, and vehicle resulting on market model production market by of our continue outperform, Turning structure. outlook benefit customer, five balanced better actions we're of exposure, remain from for relentless focused optimizing driven our macro gains, content weaker and confident regional share lower business taking the revised Despite the current flexibility that

also eliminated wired related costs spinoff. overhead deliver while is the to manufacturing of reducing and and million efficiencies, material XX to stranded DNA XXXX, powertrain Our In overhead costs. constantly we

countries, initiatives an our of reducing costs. we're quality run spend, back while XXXX, corporate that and service improve supplier supplier save while reducing levels initiatives footprint incremental manufacturing of improve stranded to to overhead overall XX Turning rate and million and targeted consolidations to rotation including engineering chain costs, office executing cost and

to fund increase the to gradually vehicle optimizing on structure advanced frees up While our fund future smart and architecture, opportunities. data safety higher platform, driving we development increase active constant benefits fund programs, automated In focus services support connected expect the investments the cost to operational growth initiatives our investments coming the of efficiency improves demand growth. development over further including for to to And prudently and these the of our continuing layer investment engineering summary, monetization quarters, we're solutions. advanced investment in

to six, our further In totaled connected megatrends, Turning quarter well our highlighting advanced safety first competitive and position user our $X.X business segment. alignment billion, as green strong portfolio several the technologies. as slide new experience safe, to advanced in and bookings

solutions. start more is to the safety enhanced both eight Our machine expertise perception new million systems, in with vehicle, booked user hundred solution the smarter active user as X of helping of hundred we experience as three outside the million sensing respectively and quarter. as through a result, well believe and and puts experience with and integrated during safety, -- and advanced central hundred bookings compute safety active in a us well systems platforms, sensing a cabin, and as billion six deliver pace and for safer, over strong info We awards XXXX. on record awards learning to And active interior XXXX year to and estimated see the

of awards. track million in Moving business single the to to we our And electrification booked billion awards [ph] year's on customer engineer over billion interact booked components voltage quarter. also Power almost new new last exceed high X in XXX new Solutions during awards segment, X.X

first drove Turning market. is consumer growth revenues. roll to experience product displays Active revenues Safety a decline the User business expected of off & Solutions revenue tied to line XX% Info modest our of XX contributed and up The points for safety on quarter for highlights X% were in demand over advance segment and experience continued strong, user Slide to that's the seven, revenues in

charging During interface the it quarter, and win this flow we our Porsche to the booked of an and growth is which an have smart experts controller, the out this such, manages Audi and into data area connectivity Industry intrusion identified point security vehicle as coming a a important cyber Conquest actuator charges. the with lines. supply potential for as product exciting of vehicle while

scalable our architecture democratization eight, to seeding solutions of growth, globally. next are Turning our slide wave drive the helping vehicle new mobility in to of investments

architecture, active active position plus to under realize six OEMs leadership game customer vehicle increases. other Underscoring team a demand our multiple, our Audi work This safety our with smart ASU compute platform since industry developed them safety help active automated with in satellite underscores There's strong today automated driving first to [ph] two been X our Aptiv systems. and integration multiple award our safety driving level solutions architecture the effect of controller and booked our leveraging mission. part is our solutions across partnership platforms, with our the unique from and uniquely democratize Pace investments changer in industry platform. selected for We which benefit been satellite by result, as a positioned the Audi. our a advanced As for as vehicle month scalable technology recognized domain perception last was awards with of and has

technology a contribution complexity is critical how getting the vehicles the we As feature to need got future. increases, rich, the of right towards and appreciate the value into OEMs architecture they today, our in delivering which

announced the Singapore, the localized market. of our activities the driving operations, Boston Pittsburgh. we’ve recently Las driving slide, of autonomous and China city the Vegas, we now the expansion to Moving joining is right to autonomous Shanghai fifth where

region. of with in us broader Our to plan the China, is and one driving to the closer others autonomous network step transportation adoption by partnering brings mobility bring to mobility ecosystem, company in the the automated

next commercial for on architectures, we Slide a Power shape awarded the the single and types. industry high technologies voltage vehicle Revenues by full leading to a architecture weakening vehicle Turning will our that Solutions recently XX% including our This voltage sales generation X future quarter, high in the market range in speed of revenues. products advanced need segment optimized position distribution, X% voltage of is electrical almost architecture mobility. high vehicle on and power and the increased vehicle XXX. Fiat despite macros across architecture, data focused XX% driven during growth Underscoring high award over the electrification points increasing industrial validates nine, that the enabled for electrical high were the growth

preview discussion. a I'd XXXX Before Investor to topics turning over our Day it Joe, minute to upcoming of like and theme take to

through seen more evidence of partner Positioning capable to optimized despite take the in in macro and the hand to initiatives us heard to results We the strong, lead through value technologies, call well before the our continuous mobility production, investments our architectures to new that of differentiated for markets, over allow weaker outlook better two becoming relentless our a we market last for us importance through that, the will and Aptiv. business putting leads and on review relevant growth to us positioned we've of the all strategic environment. that talk to of delivering future solutions mindset. to believe With stakeholders, a see the declining that choice about growth XXXX, focus of a customers, over and record the building with results, summary, the for deliver company future And believe investment on way targets the that compelling Aptiv for having In advanced a the we that years first revenue Joe and You've will in this is I'll right our making path Tier to to market a is us this the believe business portfolio X and achieve sustainable XXXX. on improvement its are long advanced and real. our us a delivers thesis imperatives quarter solutions new perform on to vision formula in of people, cycle. term sustainable our XXXX vehicle to which

Joseph Massaro

growth increased vehicle good in quarter. on And billion market $X.X revenue of From revenues organic organic X% with approximately morning, excluding X% growth standpoint X%. of with a estimate our we production Slide Starting everyone. the adjusted Kevin. decline first of despite revenue were acquisitions, Thanks up an over X% XX, quarter

uptick ramp China XXXX lap quarter. world lap continue reminder, production across the our of points North As board. and of market, growth interconnect. driven revenues in fourth lower vehicle and The every of by perspective, in growth price programs ups over and had new impact fully and Europe the of America up driven over of negative addition unfavorable is new were XXXX, the launch commodities. Winchester the had we Integration we in major offset helping platform adjusted, will of integrated, with a content market. regional the to Winchester region growth strong XX% X% adjusted and gains in the while three will itself was XX points KUM in From saw multiple outperformance several by volume despite and a effects the continues second quarter, in

production in active and expectations, vehicle high product we lower than was provide for including our voltage. see an growth the original our lines, key I'll continue to shortly. update outlook China production Although safety on year

Turning back volume in indicated, strong which the operating EBITDA million growth and to by platform than tariffs experience, as user in declines America income Slide commodity China China for and as provided and was reflecting volumes all volume million guidance referenced Kevin and lower of $XXX tariffs. U.S. Kevin safety quarter and future offset effects income FX to above percent income we invest margin Europe, headwinds XX% earlier. and operating North and $XXX first while of benefits and and Operating of midpoint production in in advance continuing were the in EPS adjusted January. in XX, were more reflected the EBITDA growth commodities

guidance, in tax the of were quarter. demand Earnings the rate line reflecting and XX% year-over-year, $X.XX favorable $X.XX by were income. the by higher favorable were guidance, lower items rate to a headwind million levels a of operating for While of driven Net lower effective our largely driven the per $X below XX.X%. above region tariff tariffs year-over-year full share midpoint

other this I'll quarter, detail we versus debt However, items higher in which guidance, shortly. cover more offset did with in benefit the refinancing associated by expense interest was primarily the

despite Info robust our slide, new than safety, lower and of and line advance planned engineering X% investments impact experience. new expansion end of and or points audio to pursuits. on higher and for benefited before the offsetting revenues mobility investments support display roll User user Operating over driven active market, the Moving strong from the & product safety wins strong and by experience income to backlog higher the active off our growth of margin the volumes more XX segments planned quarter, grew launch next safety

expect As low teens a operating result, we now year revenues with up XX% margins. safety active for the

the we of summary, for revenue quarter quarter, In spend mobility and track Our leverage the on million target to investments experience user in advanced and remain strong segment. million. safety and totaled of $XXX growth $XX another operating

XXX over launches Signal points Industrial electrification. & primarily XX, of penetration America, X% higher continued commodities largely or euro, income Solutions tariffs were in high adjusted for and X the market, the dilutive Slide and impact up program robust RMB, in due commodity headwinds points by costs, CV North of to & end FX revenues Power and Turning voltage a margin China. Operating strong addition in volumes lower driven and down driven our was FX as on growth new previously production XX.X% basis resin discussed. weaker markets, were by in the

remainder and our the We Commodity in continue expect and this contemplated of FX have the for headwinds outlook. revised year, to

Europe volumes production global for X% production down challenging QX regional continued a escalating year. expect quarter second the perspective, outlook our extended provides And second particularly macro production of year. in the to for quarter in actions QX level, production assumptions, At our slide year. strong over will outlook the to the quarter. us remainder China a vehicle vehicle adjust have preparing Meanwhile in to region saw key Given product decline macro X% additional vehicle take our growth digit production market with and for revenue trends China XX% to cost forward, revise the by lower continue the we double uncertainty, updated our consistent the experience deteriorating a lower constraints landscape, while of we in sales are down for growth to X.X% and a structurally XX now in for continued the vehicle areas, structure result. refresh and and we full industry as the year. in We we underpinning China, regulatory with in and the From QX to going continue vehicle expect X% now weak driven global and be caused our

vehicle launch quarter program and certain the for Turning decline customer driven expect to lower to the and delays. we by X% in full production now second demand Europe, year, X%

green American market, offset declines. SUV safe, unchanged, we car Lastly, regional North truck passenger and Despite and in balanced strong and continued more launched to see challenging we to continue revenue -- connected as than mix new and industrial technologies to global more of our offset macros, expect customer market the portfolio platforms OEMs production contributing the to customers over market every region. automotive largely growth

growth revenue result, the for remains year our unchanged a adjusted As at rate X%.

to to billion points over revenue midpoint market. range is X the of at the XX, expected Turning Slide up $X.X or in billion second $X.X X% of growth quarter

As I global assumes production down X%. vehicle that mentioned,

to tariffs expected respectively, $XXX to $X.XX [ph] addition, estimated and a and be Operating million million $X.XX euro RMBXXX. quarter. income includes in midpoint In $XX and of the EPS and the at are

Assuming the Xst XX% been having list previously postponed. takes three to step up rate effect June

to EPS in $X.XX As be $X.XX. to of a result, the is range expected

the step $XX.XXX increase delayed Moving now billion XXXX expected are year, China in for tariff expected billion U.S. be revenues to to term from million the be are billion safety lower $X.XXX full over forecast estimated the prior mostly FX, at we these of to income three down to at due half the XXXX. range position It's our the strength And to billion includes for our voltage rate operating of and $XX.XXX tariffs at China believe back high $XX in are and our volumes. the are year, the investments $XXX of million EBITDA now continue up the Adjusted strong $XX X% to growth. list to short should and of bookings $X.XX up and income we in and midpoint. the make to the revenue of and active impacts improve midpoint year. given outlook respectively. In commodity sustained, note the that and market and aggregate, headwinds important million in pipeline, full support

a higher As cash restructuring cash range expected of is to the result, reflecting in million. CapEx for earnings billion be and expected No $XXX now share per operating flow the to spend XXX at to are XXX year. change $X.XX

provide next guidance on on it year with We the starting thought change, revenue walk the the more to left. the be would to outlook full helpful Turning slide. detail

commodity for of see our results can prior is than lower offset You now million vehicle $X.XX. our the first year versus million the estimated dollars year. $XXX $X.XX euro outlook and the of outlook at sales outperformance more quarter with being FX the unfavorable by production revised translation for in And $XXX

these Moving to lower first benefit updated our our The Kevin assumptions, of operating actions of our flow face partially to $XX walk beyond. investments volumes, our million and outlook structure vehicle offset the cost the earlier. are flexible vehicle operating summary, continue that quarter are the fund by the the incremental, structural gains. XXXX cost share impact will of reflects FX growth and while of income roughly production income volume our portfolio and upside, production improve of lower underscores in on growth similarly commodity right, annualized through and revenue positioning, mentioned updated in we the In our in further significant scalable actions strength resulting

XX. Slide to Turning

XXXX, the $XXX tenor X with average extending profile refinanced net significant improve our and year years our we to and flexibility, XX XXXX allows portion to debt, strong execute weighted years balance strategy create long value Our term XX debt. for of XXXX for low to and from shareholders. to notes leverage growth million and a maintain efforts In flexible conservative business of us sheet senior

offset equity no well year, remain KUM which refinancing outlook expense repayments we provide the the million. revised pipeline strategic result, full. which accelerate XXXX. market interest focused will technologies. $XXX the We technology as M&A bolt-ons commercialization our on now million accretive where diversification This versus to guidance a repurchase acquisitions, for our Winchester, there to new $XX the significant until resulted by have in totals As share of opportunity [Indiscernible] Titan attractive remain time, which as end we prior similar note and a are At due higher same

for deployment on business, major opportunistically lever both the As effective that, capital a we to deployment his value shareholders. cash a to and differentiator remarks. In is With remains focused an I'd closing and consistent hand summary, for strategy in result, believe shareholder and Aptiv our now generation. call important inorganically to cash, organically like for our capital investing back returning Kevin excess

Kevin Clark

Thanks Joe.

Let me up wrap on for Slide before opening XX it up Q&A.

evidence growth. further drive sustained, of Our market to first quarter performance ability above was Aptiv’s

While macro more our contemplates into year. we coming challenging expected the outlook updated environment XXXX a than

are formula differentiates and capable macro a megatrends, balance cost increasing predictable we abate. while our we and gains, better a believe Aptiv with promising operating robust key of relentless downtown concerns the it's resiliency, with driving auto investment positioned and any teams Our when on strategy, company macro unique environment. critical share thereby We to continued in market on X.X content flexibility creating our global executing further focus on capitalizing business in increased focused the perform more our of believe as that our future, sustainable vehicle building more leverage structure, also

Q&A. Lastly, we deployment. of the record upon up focused our for operational capital on our remain that, strong Operator? value to shareholders, enhancing and track open value let's line execution With building delivering

Operator

Capital Certainly. [Operator RBC is with line your Markets, Joe Instructions] Spak open.

Joe Spak

Thanks. Thanks the for taking question.

on one that is in in Slide change like of sort system detrimental you XX% of in that so just in of been has some the of is seen, flexibility stuff which way incremental plus something -- already that you XX that I you we've the pressures XX in that be performance the XX new use to sort on chart minus that like over margin, of just sort net or the coming that of about sort change XXX is guidance would sort it think of on incremental better? first volume the some is just the to is the that and the guess where help have that The that the The offset your walk.

Kevin Clark

incremental it's Joe. No,

way. way it to right think about the first The

Joe Spak

Okay.

Kevin Clark

So we're looking. as

assuming level another these as we've talked we structure volumes are looking in again down coming about what cost be that that going of forward these in the we at we're through So past. at so that production incremental and the working of markets, look some production and lower are would to taking

Joe Spak

provided And slides growth of are Okay. bit getting just you the a sort in U.S. just change noticed to I'm in maybe organic I this look of the then, trying you on because X% at how -- way, just you but I is U.S. the little segment if housekeeping, to.

Sorry quickly find a $X.XX slide on, you million only show on positive like a the $XX billion.

Elena Rosman

is So divestiture to within Joe. revenue -- the manufacturing contract in there business, some down related wind some that of

Joe Spak

the that’s so Okay, difference, okay.

Kevin Clark

Yes.

You -- M&A net. you've have is refer that it got where I that's the

the got the and ads from prior divestitures. contract coming So KUM Winchester from down manufacturing you’ve and

Joe Spak

Okay. Thanks.

Operator

Brian Barclays. Johnson with

open. line Your is

Brian Johnson

Thank you. couple A of questions.

the understanding been which past over of in we've or past of SPS. is the we sort impact mostly So the my lag copper, in

connector some Now of What maybe side talk it? around ,this we're seeing on the contractual are we resin, are so what -- of then is about seems mechanisms. wiring. I the in although you those? assume your And would cover what that? some recovery is if, or confidence it can you gives those provisions pricing these whether What contractual whether

Kevin Clark

Brian, I'll Kevin. it's start.

given some of some there. like large exited late see plan are increase a and the from resonant the tightness PA connector started some to on last right, standpoint. of spot softer are of others on supply XX We're product for market, and business to engineered customers. our and the we And some to relative you're principally do, at push in of into in It's on into reality significant And a [ph] date relates spots the available that lines, our work the through. out those that been of higher it's need go a challenging contractual chain those out to related supply to resins had to some as saw continue light tightening is relatively of of or is So least the incremental incremental more to capacity success components We out been actually resonant that but product into as that at it and some through business, year something of some We've provisions. the an volume, have additives it much bit XXXX increase it's rates. our we'll we growth pricing. working to buy XXXX that for to

also we're to doing process resin While in we the are validating existing. of replace alternatives other that,

For replace resin with example of and like customers. that automotive to products are by sort that our PAXX are that alternative validated grade

Brian Johnson

so by Okay, driven more the industry that the chemical than is this [Indiscernible]. impact in the drives developments

Kevin Clark

said, anticipated. of spot Yes, additives as the had products demand higher, it’s the a actually in shortage resin. result what of seen we what on one what quite of shut increase more downs. where temporary supply frankly a buy Significant limited market PAXX by we driven year-over-year much facilities, or into facility but basis, some much And we components increases like and forecasted we the we've need prices supply seen a our select a than price and again for products I where originally as actually the significant go out on plan actually on to higher we've we

Joseph Massaro

price this the oversize take so to year. a lasting been the This particularly and through this would channel, of to say balance Brian, them cross is -- a of time sort sort work And more to is move historically his [Indiscernible] takes where of I through push high this the of just we're to little be, just spike in get easier going that moves we've see so back ECG to and typically forth. It's bit the and was this we [ph] there's It a automotive well. have the the in and able tightness daily through. time been than in We've would little manage able sort -- in channel. as resins some industrial Heller flow of of the of

Brian Johnson

Okay, up follow slightly different topic.

So, your were year-over-year you’re on actually track. bookings I down just –

big with are timing of So there – things in just XQ XQ? terms that are that

Kevin Clark

so I lumpy, -- year-over-year wouldn't kind I quarter-to-quarter bookings of comparison. Brian are listen, as read Yes into quarter-to-quarter, we said

So when point in than our year especially electrification funnel at time. we opportunities larger of is in vehicle was -- last at voltage it this like high areas the this year the funnel look actually

we So billion. be have over year of the will that a high bookings confidence level for $XX

side on the $X billion. over safety and So active

So single quarter. I a read into wouldn't

Brian Johnson

you Investor Okay, the at thanks. Day. See

Operator

next of Tamberrino David Your from Sachs. with line Goldman comes question the

line is Your open.

David Tamberrino

A couple Yes, hi, morning. good questions. of

first it your but one, XXX%. just in was detrimental dig I probably and that's I business unfortunately understand I Solutions the like Power prepared love wasn't continuing you the really through If can Signal into The & question? remarks think year for puts that, the be the mean, on should we first went business. my there. that and I'd throughout that takes think for to

Joseph Massaro

-- majority I the Right. SPS. hit to we David, when about impact, FX talk the think about those you and the know and Commodity of those way the think Yes, that way tariffs all

it’s at plus what percent hit segment. from XX an those app will the of about So that that talk numbers we numbers, to actually

you're from flow the So perspective. what majority through that's seeing there of a

in you level, legacy the At that, slow down other we've that's thing the the example. impacting in again level the it's for know XX% of and at and we're sort China the OI it, known know you've a guide. got of think you business QX reasons I it's one

-- Winchester and amortization. KUM from obviously but business the new got lower a deal in, given You've coming at rate

going So got a on. that, of little bit that you've

the down wouldn't hit much, tariff you so China segment. that typical situation the the SPS that is primary of about half so we'd and lap the you the start see back a FX, that negative to expect Commodity, wouldn't typical flow when necessarily coming a in reason, that to have year. -- in But the you know We’re think you

David Tamberrino

then would think Okay, detrimental’s that, excluding business that of mean I target achieve? would sort what all you

Joseph Massaro

be, about That XX% would mean, I should business, business business XX% end that range. of closer yes, lower that to the of talked we that detrimentals to be

David Tamberrino

be them, of for question, to the through Okay. be have you're year. opportunities new looking of then pass you at? my to calling going some What the second time we able a those remainder of And of what to that mitigate increases lag price for out and you type of are lot headwinds could some

Kevin Clark

start. respect structure I’ll first David, the cost to kind the Joe mean question I Yes. answered activity. first with of Listen, action

the slowdown light to have taken a footprint that slowdown as year well consolidation actions year, number this significant a of So, into of forward we’re China. the result relates incremental in as for there, we planning that in fall as of initiatives next

in when And, outlook in our look We'll six back at and it's important we're forecasting of the production reduce So, in year result of is of the that standpoint. structure. had decline. a initiative lower fourth last to of for going footprint we continue that, China in some of region. light They vehicle the we year of to plans the last globe to the straight we're take and a further implement year, that you forward rest for as headcount the quarters of quarter reality the that cost action going pull production. We're vehicle from the half said

from hard a a As from resin to customer resin pushing standpoint, it relates and pricing standpoint. things were real FX, like

be the switch of overnight, are should Joe abate. can't flip feel the we to that Those As we comfortable. the able think but balance said, things I year, over we

replacement we head for as be a XXXX, in price that PAXX. increases is we're position So a things well product into like neutral as net as mix of will

the that engineering thinking strongly year. now The at something touch. won overhead several architecture. to and of have We areas feel that's from meter we for the and smart about this so standpoint that area that area that in relates an advance growth lot we're program, of those active [Indiscernible] area in areas dominant that can our market we about on a widen But, these several an we that's there tremendous tightening significant one continually can continue and be just an competitive continue moat. that evaluate. feel like some our to traction. a significant safety engineering at at looking see success In an invest we we've then, if through softening other we're So the streamlining second is to corporate spent in And lot margin are talked there success area areas. advanced the think areas balance should engineering And the of our year-over-year We is a business. in we that belts. a gaining share. we not and that vehicle or view, our we We're areas. basis looking time of is Joe We've that's should tremendous particular getting had that's of time as the point we pursuit the and

David Tamberrino

of not guide, the contemplated within that's And correct? Okay. none that --

Kevin Clark

guidance. No, none of contemplated that's the in

David Tamberrino

very you Thank much. Right.

Operator

Evercore. with McNally Chris

Your is open. line

Christopher McNally

guide production start much. we'd the so Maybe on Europe. for Thanks

around to stick But in second of baked changeover half at at think little too a more the is on just early saying you’re are QX there definitely and you the than which forecasters, any second Looking looks wanted that the end I in people aggressive. -- many bit are hockey the the indications conservatism and QX. happened in bit RDE that for getting [ph] some half conservative of hone your I of

Joseph Massaro

come European Chris, I significantly course the down customer of over would Right. Yes, March say saw schedules QX. we in

in Europe So X% we've got down QX.

it bit of talk through when there. you this So uncertainty a with there's customers out still Brexit

has that think October. kicked I through [ph] been

the RDE You bit platforms models on contingent are as little be the the higher European of bigger, we have there exported in as business are which that some end bigger a [ph] China some in of may out. cases our well

point. points be do combination mentioned back XX I down that thing when QX in is in would the at And China down So now one again you to looked comments. ramp we've things half his of you in Kevin other it's tried XX how as to you prudent look – a big were snapback. assuming through what Europe, that us this thinking that's sure of more we business, wanted QX, you've little a actions really bit QX big a the in taken the we back forecast about and year. the seen And And we probably half the to just half work with just now point were that look, at know make when just and not accordingly, gets. you than on say very The planning

Kevin Clark

product, program the improvement, of year, a would our we've always quarter half there I vehicle China sit think and delay our first is actually And Chris, down Yes it's year to from muted. the of of launches seen was which then we Joe's more it's and the prudent penetration but rebound first vehicle that in growth, isn’t time say, and program the second out standpoint, from say actually launches, launches. our point, credibility significant the -- of good. it's is double the some shifting And it's And of back back have half perspective, to much from year. and tough to digits in growth assume but half it’s going to the

Christopher McNally

think detrimental sales, about if on line. And drain sense. makes second and other the million hit on XX FX a that The I XX just company And is That commodity, the know translating like to resin I straight we should the million average other the above the you I think slightly at as bottom margin. margins. then the the XX resin, be about you talk million then Okay. the think should FX XXX just about run

Joseph Massaro

Yes, that is correct.

Christopher McNally

Okay, great. so much Thanks guys.

Joseph Massaro

Thanks, Chris.

Operator

Wolfe with Research. Dan Galves

is line Your open.

Dan Galves

I Hey just questions. of everybody. had guys. a couple morning. Good morning Good

on back neutral you'll resins. of to you a kind at Just be position say, clarify when

get just over there's something have some into if know looking that mean which heading kind XX headwind positive you'd XXXX It’s course a do an I the of is to point I'm opportunity guess, kind at this that the you're back reduce year-over-year? a by see million that? or of You you of what of neutral trying to to to year,

Joseph Massaro

our objective it Listen, get be would back. to Yes.

as objective Our neutral to as to it be soon would can. get back we

two, our something taken But tougher between think consideration frankly in needs a than headwind. environment obviously to real new end. it's materials pushed forward, it negotiated a then little we'll reality till to a be the to it is standpoint. that a I or be year -- think, of pull probably, OE year, timing offset at That's there's hard the for That's we'll done in Dan, it's in a is can. And from we'll get needs that customers net a not to weaker to next we're But validating and prudent as quickly a thing work point as environment. not harder through. that not with bit it it. terms means we that assume be into be Increase able and quite neutral price. we

same from don't – the headwind You the from have standpoint. a year-over-year

Dan Galves

it. Got

a lot. Okay. Thanks

are kind to It into of a what terms coming you're kind environment emissions customers. regulatory to supply of like said to and is the there that you facing there's somewhat desire try from to are some question what in The actions program think talking you in Europe kind of the regulations the uncertainty get that's tougher in of Do costs they're know of relief kind that offset related in Europe. Fine. you other of about OEMs dovetailing seems through year? you next lot broad hearing of launches of The programs, that the about to a chain?

Kevin Clark

give to been. as Yes. always and It think you supply Listen, the just same the not it to be has continues I environment again chain, challenging the time. was that the all answer

incremental been, necessarily has wouldn’t I is it always there As so that pressure. pricing say

as continues it historically it think I has.

visibility to one line I what shifting precise cost some funding that. respect get some production, of will that's that introduce. that's of it's sure I'm to to is us OE that vehicle investment. think regulatory, of tough that's some product with for This the drives certainly particular

has But a environment know So as impact you constraints. capital a or cost regulatory The shifting that capital it's cancellation, it's of just not a well above. it's all bit I Right. us. revenue think of as on delay a the

Joseph Massaro

follow at still to X% price year. just Dan, for we're the up, Yes,

the that sort of seen Kevin's we're to -- any through significant customers So for changes we're haven’t know we're any significant, had our point price always not on with year. again but haven't expectations working on

Dan Galves

and lot Joe a Thanks helpful. really That's Kevin.

Kevin Clark

Thank you.

Operator

Emmanuel of with Your Bank. next Deutsche comes Rosner line question the from

is Your open. line

Emmanuel Rosner

Good morning, everybody.

Kevin Clark

Hi, Emmanuel.

Emmanuel Rosner

was piece of I headwind. hoping the volume the So to on zoom the in

dramatically more of of reflect I it some like just said the you or and So to commodities. may at sort than on negative the the expected. But, updated look know feels believe, whether is understand I of I full you the first then volume impact it generally course sort year be specifically guidance just like FX quarter things

Signal Power So year-over-year for know walk solution & within on it's XX. Slide example, I'm looking your you

of negative like on income from of then And impact the line. XX sort in be XX% seems detrimental margin slide basis, XX your commodities FX obviously volume some in operating the volume XX% extra million deeply revenue like that negative obviously that obviously full and carrying have on positive of a following but your up a to hit side and on You -- on XX, there. in plus year a excludes the

I of on guess, then and can what that in it just is question the I but and apologize, headwinds on the you So, you the on so the in it negative? makes deeply a piece the zero quarter volume just can long -- outlook?

Kevin Clark

both Emanuel and right. effect in Yes, had and you're QX that QX. knew to It's the good applies a Obviously, we we guide. in it question

think touched is end it year QX during on I related we to the guide.

in Europe in China production seeing know, down QX when have whether it You we're of comes do was quickly, we that it some QX.

to million have, that that going sort through little bit help for have we about expected particularly flow hit. QX, we're we in negative it. come little more in those a perspective. the we again that, negative quarter, the take call cost offset originally than bit a The will I'd just in Europe, say had expected know will would before QX given from of time to working they flow be You will a but of And we I recent it’s each takedown in Europe. detrimental $XX actions

think acquisitions amortization lower -- side. a you've you mentioned know I the in at got the So added when And of come then, I of that. in got and the rate because deal that you've they come earlier,

a synergies, up accounting mix. the So the acquisition flowing the it that, of is four, lower but there revenue that's six in the I first after blocks. purchase you but just have not in bit I'm implying sort because in we're quarters there little working wouldn't out an of call

certainly So QX. that's again, at related in XX seeing two more QX. original quarters. guide what Europe for it the quantified about each and in of related But in within you're really our China million and More we've QX,

Emmanuel Rosner

Okay, that’s helpful.

and you on extra And volume the guidance sort margin. so, a detrimental the when more normalized that's second a part XXX of million million that headwind question for -- of of XX have type that the much income operating of sort like walk side, the

Joseph Massaro

Yes.

seeing the the right. to we're of that got, what the flow of normalize What though we year. so half we've back year back to half We've for returns of in get. Flow got sort the And is starts HX, more.

a we You little XX% on an know different. somewhere is average to between quarter, XX% should be that some falling quarter to But return. starts

start we that. to make, to on make So we up start

Emmanuel Rosner

on wanted from term I my then question up follow to margin last outlook. around And Great. quarter the longer

the a sort sort with of framework some know look idea growing them them margin consistent So this has had of of fully a that. some that fundamentally have essentially, we think Are more we're become you margins beyond still expansion should When understand or environment the environment and of of consistently you've that the more challenging? comfortable I headwinds able and you expected you the to lot keep you like that in recently. surfaced be a of

Joseph Massaro

talked the margins. examples about margin that be it Good year in I’d There’s seeing. challenging. certainly answer items, to continue to from margins. active then is and but transactional we're sort a FX grow would are [Indiscernible]. Right, the September That certainly we two low just parts, sort that grew, of thoughts expansion $X about more tariffs, or of coming the some of business break operating well just it to know going back over, certainly provided over would margins. in had safety as billion business our XXXX expand margin we when was even. on you teens that with this And What these When safety had expansion, there happen were us certain comfortable expand underlying in to we that could get business things for to continue active to

So things similar example is of like that, that. another very high voltage

to So, happen business how lines we run happened. the and so core product the needed the have that underlying in things

structure give with on you of up a FX over and They're sort significant don't to depending We are to needed continue certainly don't cost some on I'd know to But able happen the a place. But of to offset going particular certainly those. to the remain with quarters in Kevin say that developments the margins the we’ll quarter taking we're hard to line underlying on growth work business say We focused how underlying I is. move be is dealing product deal tariffs. to that grow of particular couple know. those. us to that for

Kevin Clark

intact mean, framework I is Listen, the and I just Yes. hear remains.

of comes on right with will of fixes protracted resin know online decline we'll production particular in China. price is decline a in China challenge and a that FX the challenge during you dealing vehicle basis, The production decline capacity the we're I this And itself is more rates somewhat now case, XXXX. in find in in reality that and a more impact have then it right. think the year-over-year there's as we push significant substitutes

So standpoint, I that think that intact. to model. some remains one-off items can model there's Joe's point, long there's affect our But from term the

Emmanuel Rosner

you. Thank Great.

Kevin Clark

Thanks, Emmanuel

Operator

John Murphy Merrill with of Bank Lynch. America

Your open. is line

Unidentified Analyst

is this for morning, Good [Indiscernible] John.

XXXX we don't actions tight The the the and I XXXX. you're get if and room question, the million inflection and saving year? go remains Is back this said costs environment $XX you to more in rationalize morning. that cost First there believe -- in broader of $XX macro the perceiving. in and million good its half

Joseph Massaro

one, earlier, out. we like cost is in given production the in which areas you that a response several and million in spending labor basis. things significantly the the can't that as is talked as mean, year-over-year rate to last -- we people of portion to just a that show times slowdown basis was some a take cost other be rate business, we which indirect Yes, out get but the to are regular response on. that when continue happens that. up when structure we've adjust on of labor There XX manage clear, last factory working like timing a just and especially the And about direct like on, the like been that's I overhead have we how regions things of run to where area structure the people vehicle naturally have in the run Listen, on XXs have XXXX, then you work Yes. will year, will ability area engineering over quickly $XX an that to last and for relates a you up of years XXs area continue to corporate to

think ASU $XXX roughly standpoint. But in our share between traction up we've from acts, our spend and gained acceptance mobility engineering principally and ASUEX I a we're our spend business. tremendous SPS [ph] customer million market and

positioned protracted back But To incremental reductions, our or productive. to customer restructurings that away a things didn't snap extent shied evaluate that's from. So something go to light Obviously, of focused we've reticent we course efficient, won, engineering after we're how any always way. number been we've you programs make and out given how given the in know of ordinary more we've factory the of on do that we're you more slowdown commitments. we'd the have you those had the see that in are

Unidentified Analyst

at like looking growth adjusted looks second focusing some And pronounced for expecting helpful. very That's expectations Slide on a XX China, in the it could adjusted Great. the and that Is you're versus more are terms just the in this growth XQ quarter, market of second be or launches conservative to relative this just product more weighted to HX. a in in half? function back some of

Joseph Massaro

launch there's a No of activities. lot

of half launches Our the almost China launch all our across a broad customer swath year-over-year in of over in the And year. second base. are up XX%

to half in back the a and new coming products there's year. market So of just of the lot

Unidentified Analyst

then…. Okay. And

Kevin Clark

One question. question item well. And item the -- if implying one Joe answered I your can to just really I think

conservative. in rapid we as snap look the industries seeing production when vehicle view year-over-year things, trends, something, as rate that think from and production outlook although and half I backs, the things at back for vehicle it in growth don't tend to standpoint. overly look run our mathematically like year, not we of a more you And that's at

think for So the in from it's the to an tougher first relative production XXXX do year China standpoint, can of We that. in QX, our decline operational to you base for example, customer there. the XXXX vehicle mathematically and arrive half reality in QX,

Unidentified Analyst

question one slightly higher to as slight that a outlook a combination outlook? you last the The flow XX, in restructuring of purely know on if cash And decline of earlier housekeeping I this or is just lower your relative operating that with a provided Okay. you function one Is year. slide costs may. it profit

Joseph Massaro

you We cash these mean, perform as just actions. did cost cash. No, of saving I out got outlook take well XX we've will on million know the additional

So we're for pay going have to to those.

line now -- we in to there, to wanted cash a we cash, So working with wanted but we're balanced capital have expectations. where perspective performing

Unidentified Analyst

Great. very for me. much. you it That's Thank

Joseph Massaro

you. Thank

Operator

with [Indiscernible] Macquarie.

is line Your open.

Unidentified Analyst

Thanks. Hi.

You spoke I your validation plans? and follow process last of quarter Korea. of a and you where guess those up. moving I out you with sticking have China within production still into with customer Are into Then then that embedded guidance? what's are

Joseph Massaro

still Yes. I there. know the moves

to out modules we to the move to KUM that go needed assuming said, acquisition of were media these operate had advantage similar we had we As China. tariffs away. line if on We're a an We as don't going in what tariffs. product

to of and expected guidance. ramping what's the and originally in China what's tracking still starts customers and When the of has plants up out line we'll samples know so of in May, that's approve process Korea. We're to validation for go as that's June process we're end the begun. So be process the customer in we're manufacturing stood but validate into of lines. manufacturing in -- that the we'll production The but in

Unidentified Analyst

then and the from autonomous I be your commercially about When maybe And that a perspective. taxis autonomous news technology you question expectations and addressing for perspective? from will given full a lot feasible Thanks. regulatory that technology Can autonomous of robo talk versus Thanks. when just one guess service you two there's deployed a in vehicles. perspectives, have is ready market around Okay. a been and

Kevin Clark

automated a expect first Yes. from half for the we've late, XXXX actually to tied Listen of past, in out a standpoint out driving driver million in we the revenues of XXXX publicly know I first the to And XXXX. $XXX commercial with services. stated -- car have vehicles mobility

for and the of the not the fleet stepped given consumer know view of technology then there'll roll that going XXXX around and just the willing it's maturity, or to rate technology up owners to XXXX think the something as has that consumers Early be demand probably commercial in demand significant we'll the to of the or the you're changed. players be with costs later it. maturity applications. a pay you great for are and our We commercial see most technology the on, So, technology, quite getting mobility technology out frankly

in we're it's respect So, with systems to our outlook that not where two customers frankly significant We quite plus, area. respect seven level I three seeing one has XX maybe now technology. with demand roughly the that is where months won the programs several from in changed. a changed bit OE area guess last level last to year

advanced and thought is we growing So year what faster over would ADAS it have would where anticipated much than right we a be. ago market the AD is

Unidentified Analyst

you. Thank Great.

Operator

David Leiker Baird. with

open. line Your is

Joe Vruwink

of suppliers launch about loaded cadence season profitability. for industry diluting new morning. lot requirements There's Good Vruwink is this heavy launches and earnings discussion for David. other is the a engineering front the this by been morning Good Joe how across

your but expectation or talked your out backlog to it lot programs in terms in return? the You've it's about of like growth. at of you're your Is their launching fair? doesn't all sound a related profitability, that line Are with new levels

Kevin Clark

what outlook, and launching expectations our quite have our we bid what There's at in all the we with so, won we line when the our Yes. standpoint. programs. had and programs to frankly when related forecast new programs investment on those from it's change But significant no in were

Joseph Massaro

Kevin's to and that certainly focus is say share. thing about I'd growing expanding we the business ensuring one mode Yes. or this does on the comments

you've capabilities resources these in you And the the the as get. more and do start you leverage You organization better know of can you got well. to

with So That again its that. to of see that's I its earlier mentioned the safety top think know be do for you year expense. we the P&Ls on OI every going own run I as is we're mid-teens we to engineering bottom. starting active burdened continue in sort margin these that the to

those in that's numbers. So

Joe Vruwink

And follow-up. great. a Okay, then

or end level, prudent. started market talking business. electronics forecast into semis the at are Tier partners the At half and same for of the some have think I so order actually view second time X the technology your about improvement their sequential

perhaps they're So maybe the are views coexist maybe it requests go a little than more they're how seeing, a the you Do a planning seems bit like getting just prudent can or the you're trends basis? outlining? are on forward and better are you're both think you that

Joseph Massaro

I think I though that understand the -- triangulation. question on --

if what end growth, what they're in we're I increases you're right. this higher folks is answer So, seeing. of XX% GPU year. mean seeing the business growing if is active on particularly know I the I'd had our content, the that's safety that say guys the you They're some out our seeing semi

that's -- is there's would logically. that. those my walked and I how should the you think would haven't through, that of top haven't how it's I triangulate I I it off So head done think triangulated. all but just

Joe Vruwink

you. Okay, great. Thank

Operator

Jefferies. David with Kelly

Your line open. is

David Kelly

adoption market any either whether might or the are be suggest you reference my the place mix safety in And morning. now safety up product headwinds for believe on be discussion. taking seeing follow a the the unfavorable taking I subset delayed any anything premium on it discontenting? active headwinds Good quick tied active horizon or customer safety that Competitor Are would market. questions. to of would active some Thanks within

Kevin Clark

the you at or good going growth numbers north Listen, from to I of And large some our XX% market grow is us seen rate look demand think our year be base. slowing accelerated and point fact No. this business we'd active in safety say for it absolute we've an versus customer customer demand numbers will when at of but penetration. law you'll see

purchasing active consumers it once with a car slim cars, of globally car an lot believe of roughly I three, put and it, think are important XX% or it’s likelihood sell in selling when helps solution OE you have technology globally, them it's replacing none. safety I and perspective active and without safety they in the a penetrated been money that, it's a two, a one make a car

not going contrary. and So tremendous cancellation actually the seen opportunities forward any delay we growth have in see and that’s

David Kelly

And on And and high great. organic growth discuss just and here you the at you're industrial should to rate? impact think Okay, Slide switching and growth. we guess, markets? about nine Thanks. industrial maybe quickly I the level Winchester traction commercial year gaining similarly growth the how could does full of in where commercial the quarterly vehicle

Elena Rosman

industrial Hey, year. is David of is Power for Elena. mid-teens. CV our growth consistent in this The the outlook Signal organic for Solutions market the and and remainder That's

Joseph Massaro

this to really markets seeing good adjusted, So we're start of the we're end us. off CV seeing know that's you is growth, organic year sort for and a

continue We in -- both at the take CV about where in XX% experience, active that's looking year expect the to start increasing their like to the a adjusted has things offering then that also infotainment And for ASUEX as user SPS CV hold. growth product safety has business the been space.

good too. of as market potential. us that growth for we That's a a view So over story sort

so. for have the market We X% that grow into year out of to X% sort growth. or Strong

Winchester continue to relates industrials Mil-Aero expectations. are be to with strong. Other it As our in line

to through continue we So diversification. sort according play as plan work out to of see that

to XX%. year non-auto be close I this think our will revenue

you digits. back was it go mid-single If years couple a of

have part a how which and needle through diversity. we are is plan diversification probably again -- performance you some make think the a from auto is aware the resilient So we business revenue through through moving more we and cycle as as revenue to cycle certainly getting from the of

David Kelly

Thank Great. you.

Operator

Colin Rusch from Oppenheimer.

open. Your line is

Colin Rusch

for new look understand much you at those you this the so and as going? get us you're much China startups and talk existing how up year in business bit in. getting helping little folks terms to really look mix a Could in their OEMs of about Thanks

Joseph Massaro

XX% or -- then the China. roughly or that XX% the XX that's bulk are The and you literally what in the that of consider with Yes. XX% XX% JVs it you be are at the when locals look locals, to with our top of with would XX% with multinational revenues OEs largest is the

start-up we time. very at little space with I So in would little very the China point say have this business any if

Colin Rusch

evolution, the system newer That's your hardware in just terms of your we're of ADAS seeing one Okay. And of hardware is ability but of integrate super to advantages then these pieces, the the significant to technology. some investments turning obviously helpful. and sensing

years are some look next meaningful the future here. systems think terms but reaching about other there you look based and forward evolving your camera around projections system As will there's you as a debate over at of what with at out next in in in this of and you terms you that's But some you've and development the over in some whether you years? obviously of big looking system of your looking couple system prevail critical LiDAR, and be look proofing or -- in commitments some of ultimately points forward really sensing two made the terms what of for terms in technology that would of three evolution how a

Joseph Massaro

is much longer and been will powerful, more effective, capability quite a efficient be come software system view Yes. it power modalities the going and lower will fair for It It's frankly. need now models perception centralized. have reality will the frankly platform, and our we're OE. consolidation of out a used of compute will is to -- three that little bit of result you Well, I the in amount amount historically years much compute that. one two, more probably of that you the solution tremendous in quite have so the it's than much cost But a we've a to know probably think and -- has more much

Operator

stand This thank XXXX by. the participation. Conference First some your currently Please Quarter Call. gentlemen, issues. Earnings Ladies Aptiv you We we're experiencing for concludes technical and

disconnect. now may You

Aptiv (APTV) 2 May 192019 Q1 Earnings call transcript