APTV - Earnings call transcript Q3 2020

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Operator

Good day and welcome to the Aptiv Third Quarter 2020 Earnings Conference Call. My name is Tracy, and I’ll be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. President Relations, Vice your may Aptiv’s conference. Rosman, of you Investor begin Elena

Elena Rosman

the Good you financials To and joining you, review can morning Thank Tracy. ir.aptiv.com. at thank today’s our quarter Today’s measures earnings operations back are be reconciliation between The restructuring found special with our and Aptiv’s XXXX items Aptiv. and to financials presentation conference and today’s quarter along call. will and of of for actual follow non-GAAP the other of presentation, slides excludes included release. third at address the continuing press our third GAAP earnings for everyone

which Turning performance the forward-looking to reflect of Aptiv’s can see next Form performance, different its we you posed uncertainties view difficulty statements, the be our filings, from here may that in a for reasons materially course actual which cite slide, future and disclosure and economy. current in on other SEC financial and including XX-K the future on COVID-XX global the predicting pandemic by our impact

to CEO; today and Clark, of strategic Operations. would for the will on will detail. that, Joe to a will more Kevin and With Massaro, remainder cover Vice business, Joe I of Clark. like then Aptiv’s the be and Kevin the provide and President financials the Business results Kevin update over us President the CFO Joining Senior and call outlook year in turn

Kevin Clark

in continuous quarter more which a Thanks, any reflect Elena. has Good morning, of thrives Slide business strong Beginning everyone. improvement, environment. that sustainable results our on our culture X, third created

reduction XX our over revenue this connected positioning year's quarter breakeven. structure technologies a optimized and underlying to competitive XX% growth, green volumes second vehicle safe, which translated has of plus EBITDA And the and into withstand portfolio us remain is in advantage, cost production. year-to-date points is Our

strengthen managing disruptions through that in flawless Aptiv any vehicle to has and over can and have business with production. in sequential of taken rapid model of supply actions labor few a improvement to with global years and a deploy outperform the production customer continuous for up to performed while approach last we’ve sustainable availability positioned I'm to of in experienced a cash our earnings customer I'm the environment team XX% outperform challenging the accretively cost to to we challenges us flexibility a zero quarter allowed disciplined Aptiv creation grateful capital. portfolio commitment value structure during execution year. to The proud rebound more and culture meet any improvement, their the ensuring environment. in of schedules, related drives proactive chain Our that culture has tightening to ramp how And the our this increase our flows,

respectively, and X. rebound income X to operating production. financial combined The Revenues $XXX Moving in the adjusted representing production of results vehicle operating billion, million strong increased in $X.XX. million, vehicle strong and per EBITDA quarter. $XXX reached to to $X.X with solid X% over totaled and Slide execution growth share points earnings contributed third

inventories, our in Government Looking production, are fiscal vehicle production policies in and ramp North America in China up at and X%, Tier and created improved business region. into restocking principally XX% supply and the and quarter fourth X during a production. and each not conditions, of detail Eastern shortly. impact and in and The a the to a recent will volatile Europe in cases schedules, Mexico customer and global in boosted the XXXX spike decline North it's the to the some cover year which aggressively quarter, translated vehicle cases more in global customer respectively schedules We're which OEMs incremental chain component COVID-XX potential vehicle related vehicle quarter and strong headwinds. chain especially in increase in manufacturers, Joe more outlook and Europe closely during COVID-XX disruptions electronics supply Tier the year-over-year operational quarter. the in leading for Europe on America resulting disruptions, in only both X and fourth X% reflected resulted monitoring but full our guidance

year-to-date $XX.X challenges Slide experience platforms. $X awards rate $X.X high business totaled XXXX. year on a more & of related for to for awards increased the solutions voltage business new partially bookings run segment As more has billion new totaled bookings rates, And billion demand bookings business of shown by from billion new been new for Safety segment business planned meaningful totaled just vehicle normalized COVID-XX. this Advanced pushed $X year-to-date, Signal business Year-to-date handful win than initially increase a to offset representing electrification User the & in customer day-to-day X, reached over including our a operating third as billion for billion, benefiting electrified awards. new $X quarter driven Power by bookings

strong business range and now XXXX in our technologies, roughly business our we above portfolio green of of of when validating cumulative tremendous years few amount new ability for adjusted safe, market for confidence levels expect to growth billion lower to segments, to connected the our aligned gives to full-year, new bookings business market flat current megatrends. strength our the global across the the both last the The of in sustain production. of billion, $XX vehicle bookings For over our us outlook $XX evolving

Advanced Safety experience. Slide Looking at User our business detail, on segments in & with more beginning X,

outlook As increases, over experience highly revenue systems across in safety of active few growth new offer in years the markets. of production and These our scalable experience expertise for the last our opportunities reaching software, functional, year positions our revenues. a margin data future increasing domains in integration analytics, capabilities and our unique decline and optimized software and our points in billion over and to market and User more & high ability well continued driven high the user solutions industry X for market. roughly development hardware Advanced strong this over $X.X Safety need trends Despite vehicle unique has complex capabilities underpin for segment us growth growth,

to Turning X. Slide

Our our democratize solutions vehicle advanced platforms OEM safety our customers to features across consumer lineups and continue increasing demand. across these launch meet vehicle to

X OEMs the big to by vehicle While well features industry XXXX, braking time, all U.S of market even NCAP other OEMs decided standard Level emergency Europe for same automated and plus the ADAS as at solutions, Several automatic as in and accelerating standards the lower of which volumes significant due demand are as China penetration, the to from ADAS next production safety have experiences of -- solutions. X equipment with advanced wave translates make exceeding COVID-XX. adoption

by customers X X our with in architecture X growth across ago. our million unique be satellite solution and annually validated Our and approach is years. And we only just to over deployed strong OEM first fact architecture, more than strengthened now X compared million compute and centralization sustained scalable XX industry will provide revenue satellite years that radars competitive position our the next the has vehicles to million

year revenues confident we're will years, our over few billion at we over reaching $X per continue As the of safety XX% that a active next grow by compounded rate such, to XXXX.

generation that level further Aptiv deployment customers. new of for deliver will X our Gen value, for consumer systems platform while with models our enabling even abstraction competitive software perception the increase business reduce mode investment next a our Importantly, and higher more will and OEM ADAS

for our We're connectors, Solutions and & Turning the OEM physical low reduce customers. integrating on management to thereby able costs Signal size become the weight leveraging solutions, our both the new to architecture XX%, distribution By by vehicle X. of of and portfolio and segment Power cable up choice emerging we're industry our to centers partner Slide broad systems, traditional reducing position in our high leading OEM voltage for of electrical customers. conductor, to including system electrical the and

such [indiscernible] leveraging penetrate adjacent electronics vehicle, also the harsh sectors. industrial environment commercial to are We in expertise as our markets, a and data

revenue us of confidence in delivering X in reaching momentum production over growth revenues. & Solutions this points our segment of Power vehicle year $X billion Our Signal gives

X. Slide to Moving

stringent acceleration in increasing both principally to see driven regulations, continue We electrification more and demand consumer and an globally. of China by Europe powertrain COX

perfectly acceleration of Our by more level of system as our well leverage systems, a the voltage content powertrain benefit high the solutions, electrification cable from architecture supply connection manufacturing to and mass in electric vehicle the Aptiv vehicle and and position through low addressable high-voltage weight management global of optimization, as includes expertise and the distribution vehicle. increase architecture core to complimentary design, competencies. two-fold enable efficient at management voltage That significantly smarter chain reducing

make expanding OEM a where our European customers, volume vehicles vehicle where their Our vehicles solutions developing, strong pursuits, industry of been launching focused awards and contributed and conquest we global unique of including new and both leading customers, holistic share Aptiv with for partner business continued vehicles series will level offering XXXX. OEMs It for recently electrified designing, battery who's OEM an choice new was innovative, non-traditional electrical manufacturing has both with wallet for the in system that long major begin OEM awarded on range traditional leader a reach. of high been their to business to we've approach electric with increase

compounded product rate line our with electrification the for next XXXX. voltage reaching high $X few result, XX% revenues fastest increasing roughly a As billion be a continues by years, at growing to

greener every and the had more the of a of view is planes and Turning it global us outside of cars inside enabling vehicle. how more work as pandemic more than Aptiv's had sky. just meaning in how all we're to broader greener and XX. could your world remotely. be of COVID-XX much today. more perspective the world The to road and a a day, how safer, and more and world We've led of Slide mission connected glimpse environment safety to much our And it a sensitive both with on all become has the have Never does connected the the community reminded

United made be in was corporate proud Nations our in includes explored our platform, and include are adherence commitment and our to which this commitments progress framework, adopted our foundational sustainable We wide development sustainability to report on our for responsibility, of published people, can supplement and the new which product, that of which social standards, SASB XXXX goals. reporting the pillars, newly we've year sustainability enterprise each September GRI XXXX

of on overview a sustainable doing right all these success over ability create always directly Our positive ability directly to our sustainability to our for that believe portfolio, our a people, our a value our for on is planet. foundation are cultural to on the results. related stakeholders long-term commitments built to have hand the our and thing We right of financial meet more linked Joe business Massaro we building an it and now and impact I'll way.

Joe Massaro

need light In COVID. year, quarter benefit austerity our the a the earlier $X.XX ramp in we the short-term $X backdrop QX. less with Thanks, quarter, share billion capacity per third in challenging were as continued in resulting than measures associated ongoing resulting to quickly robust good the the prior X%. up of the in automotive EBITDA operating of concluded year million flexible has stronger recovery, recovery morning, of Earnings was Revenues offset in and implemented June financial costs to quarter cost tax on to partially production in operating increased as quarter, cash management reflected improving of cost restructuring adjusted launch last customer Due in the roughly activities After $X.X was share everyone. million, management promotional Operating shown equity of and by offset strong declined $XXX schedules cash year, costs. model, and XX. reduction issuance $XXX offset lower reflecting the third higher benefits conservation working improvement result the expense. vehicle second by and compared capital reflecting efforts over operating partially sequential activity, strong million volumes, results flow against Kevin, results production at the of increasing by count the partially strong and and global cash Slide income, X% our manufacturing flat its JV were a favorable in

Lastly, a reflecting capital expenditures year-over-year were $XXX of roughly decrease $XX million, million.

safety declined on detail stronger at we due to more timing. increased and for program from architecture. benefited active as production, systems well demand XX. revenues as both American primarily North Looking the electrical revenue Globally, third launch year-over-year X% quarter in vehicle Slide

SUV quarter. continued core China growth lastly, as our a active market electrification for programs. from and high We continue benefited our recovery rebound safety platforms and strong see to with in production to led voltage strong over as expect demand to and production growth In outpaced the in upside sales market the customers. major outgrowth trend the growth truck expectations Europe, of return double-digit to And and the and market sharper fourth

on slide. associated AS revenues the launches XX% reflecting inefficiencies the as and points as to segments vehicle declines quarter, lines contributing. Safety with Advanced of Moving the with well next by X production market in X% cost over the growth the associated price UX product lower and volumes, driven Experience & the in declined EBITDA User with new increased quarter. all

a for of from year is the venture compatibility joint is As Motional, that purposes Hyundai excluded reminder, the part the driving spend Aptiv results. automated prior now

recovery. launches, X%, the market electrification operating points costs in particularly over declined Revenues X%, costs in well associated launches included reflecting and Turning to EBITDA additional segment, was Strong by increased of China new up ramp. as Solutions. the Signal X which with & industrial and segment production were and growth Power Europe as end growth across the market. driven COVID

the next year. the of Turning to the slide for outlook rest and the

support saw at the vehicle in or assume fourth pace low downs. inefficiencies variability what improved Looking similar the continued America volume the to expect not in related the production demand we reflected third to down in quarter. of for of absorption rates. the be China, are and to inventory of with and in is X% meaningful we COVID fourth operational and shut both as rebuilds underlying we production production quarter. single approximately outlook down And modest digits related expected levels quarter to year-over-year, customer disruptions This and any in mid our does quarter in extended continue Europe specifically, schedules North growth to current expect demand

potential result, customer million we and be XX units. a supply visibility As vehicle But of XXXX remain. threat expect and chain to the plant despite now disruptions customer improved around global schedules, production closures

midpoint of we to revenues up $X.XX quarter. for what the reflecting operating to the and to Slide a on and the on a the XX. EPS similar income in of at $XXX the million, margin fourth at we Turning third are EBITDA guidance Based adjusted the reintroducing midpoint, range in Starting with million customer expect is year million basis quarter. saw these schedules, full on Operating $XXX XX% quarter we providing of EBITDA $XXX improved fourth the X% at in left, midpoint. million XX.X% expected to the $XXX yield margin $X. the and to range to an

saving over and the million to volumes. range in tax $XXX reflecting the of $X.XX margin the COVID to almost expected continue XX% $X.X million of billion in reflecting production includes austerity XX.X% is for billion, environment. the to expected into CapEx in be both consistent of is lower at $XX.X XX%, in a cash as Moving includes $XXX flow the year. with rate effective of $X.XX, $X.XX rationalize post-COVID to EBITDA over revised impact $XXX and $X.XX million points is to in of billion $XXX Operating Operating the and costs to in operating our income midpoint. the to light we fixed range full-year. revenues This rate equally billion EPS And from now of our strong for be mitigate XX% costs $XXX and million related helped a first to restructuring million half estimate lower $XXX the approximately full cash with measures, X the $XX.X to year, approximately growth segments. down contributions reflecting that in range half billion, shutdowns million translates the first market of the which EBITDA approximately to

next the to slide. Turning

on Looking financial long-term and our ensures environment the XXXX, value sustained half our we execute very focus despite ahead continue to we communicated shareholder strategy deliver consistent to have with demonstrated framework. we our this on overall, previously the lower ability to framework first production have challenging

growth. sustained has above strong growth leading portfolio industry market Our

going we capital the volumes several work the recovery. positioned years deploying the to optimize While of growth structure mitigate cost improve last while grow the efficiency industry us has earnings and enabling in effects further forward, our effectively done and to and lower have in

our process we still we production market, market the reflects will XXXX, at global outgrow early are to low XX in an the to million approximately assume up XXXX. XXXX seen which is XX in units. the ability While put taking it's to today To perspective, and roughly in last what levels million as vehicle units planning for in XX% of confident XXXX this XX be this million into saw than in we X-year less

contribute intact, drivers X%. to the However, in to growth the X% again, secular remain of market which once growth range long-term over

As of range and to industry of structure we optimizing volumes, would result, absence margins recovery return driven XX% double-digit XX% shutdowns, our by expect to relentless to operating assumed as and on balancing year-over-year a related overall to COVID our cost in capacity utilization while unfolds. to the adjust the volumes higher the focus lower our

will enhancing we leverage consistent expansion. margin focus add lever an to value product of capital value and and shareholder strategy going and for accelerated a with key scale deploy is to effectively and important the continue execution lines Aptiv further major and position to addition, on In differentiator The for company the growth for our generation investments M&A forward.

guidance XXXX for will Kevin We quarter to closing like we to hand results. XXXX back call give I'd With report when official our his fourth the that, remarks.

Kevin Clark

at our wrap enhancing we for we focused of on and strategy record strong green XX The our on Q&A. creation increase and our the connected in Despite reflects flow that revenue, and further quarter and flexibility up safe, leveraging earnings XXXX, business laser unique before our faced capabilities execute the our Slide Thanks, performance position in industry. company, on of the model sequential our of the long-term up the third the megatrends track our it as I'll execution remain are our challenges vision of now opening of Joe. we transforming team. in deliver value cash intersection

customer's challenges, more more optimize deploy the generate profit efforts our to provide look business and shareholder into improve to we solutions our unfold. model, more further efficiently strong increase our technology toughest which to As revenue to cost cash meaningful our increased recovery the of structure revenue profile, to expand creates ahead, a that solve growth capital, predictable ongoing margins flexibility a can our diversification as and flow smartly and maintain balance business converted continues our delivers a returns be sheet earnings, sustainable have

is underpinned our and by of grateful that confidence open stakeholders. greatest Our an Q&A. commitment is for all employees, dedication creating we serving our line asset. of organization the let's that, focused on flawlessly our up the for value while have With customers I'm our

Elena Rosman

Thanks, we Kevin. take will first Tracy, question. now our

Operator

Research. [Operator first Rod question Instructions] go Please We now Wolfe Lache will ahead. our take from from

Rod Lache

everybody. morning, Good

Kevin Clark

Good morning, Rod.

Rod Lache

-- as Does R&D you've ramp year? dynamic how give wondering that And Thanks I more on spending to kind made similar that directionally add that out of require in the seen the of is comments the active for R&D if years that in a the safety, was that growing? of helpful. you some spending made had past do bit big you In because look to in longer you've payback the it with in on that electrification run, XXXX term. I commentary you least see at that couple was you judgment really the ahead? short next electric pipeline a sense there the additional the us a on that. margins questions progressing can see advance in a

Kevin Clark

Yes. Rod, it's Kevin.

connectors, positions more increasingly though, very and we're the quarter we're positioned smart as growth, that areas that uniquely significantly said, on capabilities, electrification our and in fourth continue are like as feel continue software invest space. now expand side competitive think more our high really and based to going reflected like harness wire even to widen vehicle to and on we mode. has in those voltage to very, to capabilities to investments We vehicle well areas architecture year. margins. the we systems, even recently cable Joe both we continue further Those And the competitive outlook perception areas next management actually invest, as well as are in for on the in feel as if feel strong ADAS, have we So revenue then as architecture that given we strongly accelerate one to

has we to So the will continue that provided. reflected Joe investment incremental that's do, that something again, in but outlook that

Rod Lache

Okay.

So that growth it's but there managing you've is you're incremental with here spending, that some something the got?

Kevin Clark

but think balanced. There's it's incremental spending, Yes. I

it's in our think outlook. balanced again, relatively it's I reflected and

Rod Lache

seen about if on going that And is and Okay. which secondly, like years, that's it upper what we've is I past up, couple how actually X%, any the comment looked of pricing [indiscernible] just that of driving bound or I But you’re just correct noticed ticked forward? color what think the incorrect. that thinking above me in

Joe Massaro

business Yes, of Rod. couple would of got bit similar quarters, course -- we some I It's Joe. just got done. when it's just of That's when bookings, attribute a fair in of little to observation. the a last just things of the signed, side the commercial to saw deals the the that over And lumpiness

the bit a not of quarter a agreements long-term got So right that bit a around just in did run completed. view but change hotter backlog as our we're little X%, a to of

Kevin Clark

I'm think typical half if me, below look, the of was wrong, pricing if our I of correct sort you first year pricing significantly Yes, Joe, range.

normalization Rod, been I for a more think full the it's say, So of just we'd year.

Joe Massaro

correct. that's Yes,

Rod Lache

great. Okay, you. Thank

Kevin Clark

Thank you.

Operator

We Morgan will Adam Stanley. Jonas Please next question ahead. take our now from from go

Adam Jonas

everybody. Hey,

kind first … of the Just

Kevin Clark

Hey, morning. good

Adam Jonas

other much follow? it that continues some million that, know of we $XXX the didn't delta on a of know run Joe, gives of you travels, nobody color repeated, morning. austerity numbers aggressive, one thinking very, much the everything I cut how some The 'XX very is of not made as for the lot a you and repeated. million think discretionary that COVID how these on I'm maybe, side maybe Good sustainable? if as austerity measures $XXX isn't just of to 'XX, companies you. quick god-willing I

Joe Massaro

what Yes. TLOs, big most the Those costs austerity, we Thanks. listen, majority No, those to really as had do the able Yes, sort to. Adam. brought were the of it, to we the vast were we ramp, of started I of austerity for things in part, obviously travel We come pieces got back the furloughs, we others, some But measures. north expect of in costs frame have $XX types those million I do of million like $XXX you and $XX point of -- to sort would which of to that back. XXXX that would of those at in more million the range.

starting The customer see to mentioned, costs. other with and thing I inefficiencies, some with obviously we're working in this are the working it, Kevin's mentioned to just there COVID environment schedules, addition

comment million So outlook those Kevin's this we're $XX on sort back year. those, $XX estimates costs next and to through in for -- for our margin of at to in that QX type of range. best working But point, those engineering, I'd million are that expect are but turn the on

Adam Jonas

helpful. very That’s

Kevin Clark

reiterate. think just to one I thing important think underscore, -- to I Adam, it's just

of the Over close overhead couple to we've reduced last by $XXX this million. business years, costs in

over And been the so the last structure years. aggressively we've several cost attacking

it production mid-teens revenue estimate unit look an you outlook of right structure, XX balancing the think cost facilities example, as million where given global questions we just though in capacity kind vehicle of if of sits, with year, about I how production think for growth. an wrestle -- given is vehicle where of call at one next we and with that now, where, today, fixed light our

wood in is revenue significant production at it's low a at stays vehicle assuming look under on to our XXXX, although you XXXX, in control. knock So been rate growth relative where COVID

up of fairly in and vehicle was into that kind robust significant when put pre-COVID. for You global outlook we place production head growth revenue should capacity see working more

Adam Jonas

Thanks, Kevin.

next game that best, argument that bring are margin please. zero-sum Just suppliers a EV where replaced that a as point less new see voltage margin by some There's ICE legacy maybe than is zero-sum give transition ICE and at at the higher it's an game, or that and accretive a some being one, on or roll then as that balanced, rolling color. from at off you you maybe off

Kevin Clark

SPF is It our to accretive margin segment.

it's content relative it's its vehicle vehicle ICE, over standpoint, per to So a and content per opportunity from margin Xx accretive.

Adam Jonas

this darn speakers]? at scale of scale, [multiple pretty versus level low that Even is still even

Joe Massaro

it it's Adam. It of Yes. is of our nature so is [indiscernible] of -- voltage. low portfolio the complimentary you just to high Part if think voltage the

lot a SPF. existing with there's the of of infrastructure an leverage So

Adam Jonas

Got it. Yes.

Joe Massaro

lines million we've historically to of get set the $XXX mean, and segment which our sort by between million case active $X of safety I million product billion. revenue, breakeven XXX margins with to $XXX was to

voltage accretive. out margins And XXXX, you by basically as at segment this believe more of was gates. of high Our billion as sort of that portfolio marched to becomes $X the volume know, of sort we we towards XXXX

So …

Adam Jonas

Okay.

Joe Massaro

that And thing. business, again, very just really it's, type it's that leveraging strong the same equipment, low voltage the same of engineers,

Adam Jonas

it? it Who's has revenue more in, from? that revenue. right attention, coming and it. in what where potential know I growth lot coming the the revenue of know investor it's below now, I give $XXX regular and from? right remind one-off fleet dynamic. the squeeze the but on on just more off us, a could for business? million is that kind it's services. even small, I getting where I quarter If but well of mobility it's the this could and it's is one paying helpful a if example, year-on-year derived Kevin customers. growth said know color though you've That's your That's Joe is My and don’t a now from to you service understanding data then little coming recurring it's be Perhaps, revenue For

Kevin Clark

it comment you can and, about talk I'll Joe, on -- we'll maybe Well, growth.

revenue. without sit pre-production recurring below than basis. million, production. I'd a regular it's vehicle its revenue. year. more our on this $XXX frankly OEMs the global impacted Most impact, on today So regular quite COVID today recurring of It's revenues were Revenues of certainly say Based

commercial We some in on and within automotive the and outside business have have fleet have only growing post markets. we a but progress not automotive, vehicle production made position, of that's significant focus our

Joe Massaro

Adam, flattish, is year. that Yes, is it's this of And pre-production. business that again percent I'd it lower a because good call part of dollars.

plants. technology So using the they're the in

obviously shut global weren't for tech, significant they They business. were had shutdown, down the that just a So the that while using shutdowns necessarily X impact weeks. to that on X

So shutdowns to sort versus point vehicle disproportionately impacted by production. it's of Kevin's the

Adam Jonas

Thanks. Joe. it, Kevin. Thanks, Appreciate

Kevin Clark

Thank you.

Operator

We Spak question ahead. Capital from from next will Markets. go our now Joseph take Please RBC

Joseph Spak

morning, you. everyone. Thank Good

Kevin Clark

morning. Good

Joseph Spak

the the those I of voltage? more certainly high programs wanted follow sense of it that of sort are larger like that programs that low maybe programs some to And positioned than reason low the being on really now on whether business than maybe do you exist higher on is side. there are mean, launching I able in are is the better players back I players voltage to fringe have more your that -- like business. to quoted, on ask a some seems of invest the share able have and win been probably voltage yourself

Kevin Clark

Yes.

Joe, that's great So, question. a

a start focused pursuit voltage should So we high very from standpoint. strategy, we're from a

OEM of strong both battery newer who side building focused and reputation And as position strong focused and position, a high for that's on OEMs. the to very we So on traditional a OEMs real out global have as the portfolio. new on a kind a electric technology much market well commitment voltage

opportunities nice So expand grow so can their position product look sure north we're sure quote OEMs a and we of ago, at carve grow make we've we'll call grow have year that to XX probably those that of in this you -- those geographically, to they positioned just they and made on roughly a with quoted, lines them. as we as with in rate close of a win XX, years XX%. opportunities it When couple

is resources we're very that sure think really with feel those of of allocating to I focused that, who we're going we in where drive to future. we're it and some OEMs, dedicating the and those making again, attributed in positioned terms are volume Now

Joseph Spak

That's maybe fourth the Joe, one guide. very on helpful. just quarter

million. operating [indiscernible] million from level, $X.X hole. you some given we the don't that are income costs I little that at leaves the the over R&D of wondering higher. sales of you $XX but us on understand movement what higher, higher of COVID it billion. and help So be? D&A number, I JV, -- for it midpoint might maybe operating looks is there's I I haven't GM million, know, million, about income as it's at about sales was basis the some could bit And if but delta adjust other $XX And like was still $XX strike last maybe there's if of that and year-over-year of a that million what's $XXX get $XX a mean, well, like looks year

Joe Massaro

putting a engineering investment, last listen, to I that Yes. you're we uptick these of COVID Joe, We're costs are a we launches that of although seeing in some in extent. lap the quarter. and it's year. around those in -- it's starting costs. Remember, had to really sort started some of around trough a here think bit significant launch launches. We in It's QX fourth of QX

and ready QX sort as Kevin You for both American then of of in mentioned, choppy. schedules I as and year. QX are can And kind the launches next see and numbers these -- I getting North that

schedules, you it we're call customer in the operating, sort So at year point. them But the call and good say was job COVID a very to it a strike. of customer as of they're would probably inefficiencies there efficient around want but inefficiencies, whether ago I it's this prior schedule doing inefficiencies outside intertwined a not of all is some or as

terms strong that back we happy challenges So the well. dynamic business in have. instrumentals the giving But you've where performing, with of is again, are to got some of pretty we as coming where and

Kevin Clark

Yes, we to sure and time next made the add just at allocated make excess point early on F-XXX, We're launching we underscore for midst in in with to decision S if could -- COVID Bronco, point Class I resources. the year. Joe's that operating Daimler, the same of Joe, [indiscernible],

are So want where that we impact in we customer to things position those control. the on be launches don't a we based

the plus going So a just going from deliver resources incremental standpoint to for on platforms a to to of underscore those successful supply decision the importance sure made those Joe's point, we've out. we're allocate what's that launch, today, make and balancing OEMs we chain

Joseph Spak

you. Thank

Operator

go will We from question Chris from McNally Evercore. next ahead. take our now Please

Chris McNally

medium-term. just the Two Thanks one questions. for much and One on short-term so team.

I year, you orders, clarification? you On think if production get I for full the short-term Can a you'll adjusted mentioned some the shortfall just of in the flat. roughly for be of value orders, like normal? lifetime looks use forward return production would those When some making assumptions you It you you're assumptions. booking the are production a to for [indiscernible] normalized more

Joe Massaro

Yes, sure Chris, sort to the we of methodology apples-for-apples just years. we basically over have -- make we're sticking multiple to

adjust but strike sort look we bookings, and basically deal, the you if of the restated bookings. we be, prior about Kevin what use we sort obviously did don't at when any IHS haven't bookings. impact talked XXXX So would of the we

make and do at and use of the forward internally an have to externally, we can some IHS sure both explain it and we've consistency that. -- service. So sort going to it's changes time, allows us It's we continued outside

Chris McNally

depending to Okay. or obviously up. where half $XX That's into $XX IHS of run back on look QX come at the I great. even And has can then the QX that billion is as second rate sort billion

Okay.

that's helpful. super So

so -- [indiscernible]. The for much second thanks the question

So year, much rate plus. should going give that is or just of ASUV to it big XX% on because obviously an jump pretty which target your adjusted we margin, make longer the is year-over-year, margin seems like XX% the for based change to XX% it take of well the idea, at in investments? next ASUV on a [ph] of sort positive you Could of be will still below

Joe Massaro

my into on getting to we're to about. to revenue to it's continue additional half we year but of the certainly sort billion -- think of the sort I'll as ASUX I framework, in too listen, put starting back investment be talked engineering want did of much the XXXX. mentioned, don't go in not this mentioned into of would We I Kevin lap this a some was started that year. ASUX, comments, $X -- of that I to go get detail. No, to -- guide. longer-term we obviously, I That trajectories back a But

not -- we of on revised going some safety side. are launches Again, have the work sort to a provide those staffed So to through. be haven't hesitant business. active where we're until I'm lot long-term to margin Kevin's point, of we on expectations And up going that specifics there's for

we So certainly talked but there's for pieces about. with framework XXXX, lot still a of moving comfortable the

Chris McNally

Okay. Thank you.

Operator

Emmanuel question from We will Please ahead. next go now our Deutsche Rosner from take Bank.

Emmanuel Rosner

morning. good Hi,

Kevin Clark

morning. Good

Emmanuel Rosner

to Can the a Obviously, and your you From I startups Level how with X around brains how conversation -- in there on noise your prominent was few the it, coming quite start you’re perspective of important like than market. you're around it hoping LiDAR of invited sort around is and in a had bit often rather struck of developing part past. it? essentially you the multiple some different know with yourself? like I was [indiscernible], is solution how dealing of thinking companies LiDAR part this of the to and with automakers with of levels take leading -- to And as agreements the with with sort of higher that plus all, LiDAR. others your autonomy, working of what

Kevin Clark

from manual. X and believe necessarily a need for solutions Yes. on where standpoint, technology you it's LiDAR From higher LiDAR we a to the see standpoint Level a and begin

X have it X. minus Level Level as any relates We plus seen X to not Level

and for that, where we're on place we see So in to Level LiDAR need radar minimize advance our the Having advance to company, can technology solutions. radar as a the hard to technology said above. very technology a X you X -- put if working technology. Level Pushing solid point the

So an driving from that that bring is or to down solution technology, costs that OEM forward. the advancing quite technology frankly standpoint What's providing of of that desire Level X that capabilities in further we in were We've not others Why invest LiDAR who decided there along. not There worked solution. on radar. developing solutions. we to have LiDAR, were out previously strong

partner who decision business those already the made we standpoint, and in capital the capability. are a with to have from the So

Emmanuel Rosner

a good the question second think XX% follow-up says, Obviously, very outlook. assuming auto for like to XX% How color. XX% outflow then production, more recovery recover? what And a you your that were margin margins we should you're guide -- margin next would that about year? to on within a That's do or incremental if think to on XXXX volume Okay. in global like as

Joe Massaro

into go going detail Emmanuel, more not XXXX. we're Yes, I to Chris, to much as too mentioned on

I think do. we've that lot frameworks, to got of a work

framework helpful to I to through that think certainly incrementals hopefully of in back think numbers. indicative folks. think do get year, is I going got the are you those finalize as the half what I business to look to those not is XXXX. capable too doing. do But specific the think much on of we to more work again, of We've I'm lots

Emmanuel Rosner

that's you. And understandable. Thank

Joe Massaro

you. Thank

Operator

go will Michaeli We Please next ahead. our question from from take Citi. Itay

Itay Michaeli

Great. Thanks. everyone. morning, Good

Kevin Clark

Hi.

Itay Michaeli

in one to Joe, long-term margin. more long-term the I know on your Just low incremental? any of about about XX talked sort -- you've incrementals. kind incremental changes thinking on that past of a

Joe Massaro

the when No, But no. to I times business. noise. you all couple nothing we've short work changed like said, profitability the we've mean, of nothing listen, of clear -- about collective you a really long-term the seen our through longer there's of got thinking at longer-term that's as the point -- things other this or market mid-term growth COVID this over than disruption, the

Itay Michaeli

Okay.

Kevin Clark

to and that to dealing relates think we're it supply noise. our lot our -- The one through I make we understands to, focus managing is COVID of costs. customers. tight just And Itay, everyone chain sensitive keeping and a Yes, our with safe sure on employees as want impact we're an that our priority thing serving has COVID is

factored So incremental the and add detrimental to be and that about you that when needs incremental does margins. margins, think cost incremental system to in

… So

Itay Michaeli

Absolutely.

new remarks think kind expand alluded also Just if your your inactive And a follow-up you Slide safety. about rates? well. of the models business win gains, X, Kevin, I on then discussed you active you on safety. in that Do with share wondering on to prepared earlier talk maybe I'm market can quantify as

Kevin Clark

as north are XX% as on Yes. well our running ADAS active safety solutions second developing Sure. of we're us components at Win for on platform. safety. Also active rates generation

centralization, architecture ability ability advancement where perception the program from further the extract scale are have system satellite systems, to hardware. software to domain the more of radars the compute used advanced the you'll you'll number in of that have and more the So

portion a all anywhere a or can system of Fusion, we under it's underlying provide portion full features. provide software the we the hardware, of position a in or whether some which or Sensor platform, it, just perception could the between the the can the software the where underlying or features, the of be solutions, So

So more solution lower a as more cost it's flexibility is with providing as for for our -- us. them in the well flexibility OEM with target customers fact

Itay Michaeli

Great. That's very helpful. Thank you.

Operator

will from We next Please from question take Barclays. now Brian go Johnson our ahead.

Kevin Clark

Hi, Brian.

Brian Johnson

morning. couple Good of A questions.

what specifically is semi recommending or going what terms on strategic are housekeeping, the dividend? 'XX, and might of the and capital your around into on first Board to 'XX in you So thoughts -- semi allocation do

Kevin Clark

this done [indiscernible] great specifics. -- continue cash we've flow from a start, we a management standpoint Joe I'll year. mean, job I So

So focus on obviously flow. increasing cash continued

certainly to that's business, first continue capabilities, be priorities Gen ADAS that perception architecture. whether talked organic vehicle advancing platform Our whether I investment X smart voltage, our in our about, system it's high the

of outside a both we about in automotive back is talked that and a we June, in M&A opportunities areas, deep priority. within the As of as have very certainly engineered component well funnel around as automotive,

recommendation COVID to I Board. forward think the on bring bit relates settle it like we it dust little finalize more to share and as and to let the a before a repurchase, dividend we'd

Joe Massaro

Yes, Brian. with that, and I'd agree

some think comfortable, -- expect and point back many we it's at intact trees broader here a the matter long-term really talked we've about, feel And of that cleared remains strategy impact again, get our we've a the to very a policy. but things really that, deliberate perspective. when would allocation included like timing. COVID I capital to from We

Brian Johnson

Okay. Thanks.

question. strategic. Second more bit A little

blog week cybersecurity around two a had a You ago post or earlier standards.

-- not to haven't as some a and a is lot aware capabilities unit a this internal similar area looking in bringing connectivity market of bunch But Is at it within either: we or be OEMs them cybersecurity an or have heard pie. at. this Aptiv. your happy now integrator; question, and on A, an you're least B, might of terms a as the your adjacencies, you're something of of You're see you parts with you as and solutions to breaking LiDAR out -- that I'm of security the one

Kevin Clark

focus focus just this, you in obviously cybersecurity, systems, to so various well tell for other of cybersecurity or solutions don't view cybersecurity focused We our it's -- we on what on that frankly, the as used we and providers. from area the know, support integration given I OEM our don't Yes, development need as table To vehicle engineers as XX integrate and our cybersecurity, don't the a on product given have stakes. Brian, bigger develop XX we capabilities, product, is product I customers. what We've commercial of connectivity in into focused quite a business.

So use -- internally that we OEM. as more tend often outside that as the to work well are parties do directed by

So I question. that answers your hope

Brian Johnson

you a think about not that's making an for? capability So acquisition

Kevin Clark

as it's We No, don't customers. it's provide have. we requirement and our part as a a for of our player capability it's view view we the really a -- necessary included self. We viable that solutions it business commercial a a like

Brian Johnson

Okay.

Okay. Thanks.

Operator

go take now next will from Bank Please of We America. ahead. our Murphy from question John

John Murphy

Good morning, guys.

Kevin Clark

morning. John. Hi, Good

John Murphy

as to mix expand going back the plus shifting even margins margin is that horse or here. the to that anything on there believe XX% appreciate there? you dead get as I'm beat maybe in couldn't the but XXXX lead investment not operating I far that you framework, from would and business to

Joe Massaro

[Indiscernible].

John Murphy

Okay. [indiscernible].

Kevin Clark

No.

John Murphy

That's great.

Okay.

Kevin Clark

related chain dealing other customers. round of probably availability with and Yes, electronics important with And it's suppliers focus disruptions Joe labor million challenges making on And Tier issues. again, for choppiness COVID that our are dealing Tier we this. who to I sure the cost time our or highlighted dealing deliver is and components, numbers related think X, X $XX -- at with same We're right? quarter, per supply

that's we're that something with as we wrestling COVID, -- deal So through.

John Murphy

It makes all thanks. [Indiscernible] sense. the

particular, question. second the as other was non-auto not about or think you commercial side if talk the about a in strong the When quarter could in diversification, in curious because I vehicle you quite business as Just verticals, the that, out? you're years in remind just what trying potentially where for side. the light go to X margin, In time, of can kind short-term seeing over to X and what with that then mean us we're the vehicle

Joe Massaro

versus of so I'll businesses the businesses industrial. non-auto The continue on continues to finish Gabocom, the heavily what and relatively weighted a basis to strong accretive interconnect where to of be, market commercial vehicle military the to organic We growth be continue revenues, within non-auto some towards aerospace. tend strong. market. again, addition we've above They’re areas We very expect year really and we well continue to Those to well. that -- more on call Yes. be growth with over be and Mil seen commercial business them around and but couple both side the of about vehicle business the XX% to Aero small. also telecom, Those there's perform non-light an through of both margin

Winchester, helpful growth But to margin be. would HellermannTyton that's think accretive overall. So rate them expect be components been and continue business, about to I to as continue to again, that you engineered

that's certainly we've and organically So those where both investments where -- we're inorganically. focusing

John Murphy

then And you. November just planning around happen Xrd? Got in could Xrd or lastly any November election game what after here

Kevin Clark

[indiscernible] that. that it. Yes, of to where still chain trade. a clean of would either view under high Obviously, amount certain on lot Europe those United we're win more and on impact we well growth our it is from focused solutions. we're benefit of China be with watching a like closely, regionalization due to one like States our the feel supply and the could an you'll We're sounds experiencing either on Obviously, John. a have that in voltage sales have and tariffs positioned is administration and OEMs [indiscernible] party energy in the We could watch it here

John Murphy

much. you very Great. Thank

Kevin Clark

a impact, huge Some impact. not

John Murphy

very Yes, yes. much. Yes, not like 'XX. Thanks

Kevin Clark

Yes.

Operator

David Jefferies. We from our from ahead. question will next Kelley take Please go

David Kelley

Kevin, and morning, Joe Elena. Good

Kevin Clark

David. Hi,

David Kelley

questions. squeezing me A I appreciate really I’m the well. slide. I safety of appreciate couple active you doing in here.

customer Just autonomous, the things what on curious interest seeing you're great. could talk about driving autonomous maybe like in semi the space, be highway if you there, would

Kevin Clark

Yes. Yes.

of a fastest COVID. due from actually We've ADAS given pause an LX LX, on plus the reset today seen, growing So and bit area cost a standpoint. given to on the is I'd say volumes LX,

of safety sort plus it. But Consumers about customers of from for area be the allocating active area. be demanding Active of today, you tends who safety an programs again, OEMs sell. So I delay those OEM plus, standpoint, watch When off growing OEM customers ADAS that to were LX LX money against it. wouldn't tends say are fastest helps it. advertising to resources vehicles it cancellations, solutions. make with now but

So it customers. focus of continues to be area major for a OEM

David Kelley

on Thank it. we house mean, just and Kevin, driver as -- And well? see a monitoring is that you. got that solutions point, Okay, follow-up LX solutions? plus, something is of that should is doing you're maybe sort that in I

Kevin Clark

number a driver gets set. solutions advanced you monitoring of when to where so more X safety Obviously, you active solution part Yes, of Yes. head it our need Level as won we've roughly to about LX. area years even for LX, more and been of driver a a re-engage in it's the think programs. product enhanced have certainly number when But you we've X and programs

David Kelley

All right. Perfect. Thank you.

Kevin Clark

Thank you.

Operator

last Dan Please Suisse. go our from take now from will Credit We question Levy ahead.

Dan Levy

Hey.

Kevin Clark

morning, Good Dan.

Dan Levy

guys. Thanks Hey, squeezing in. for me

the that? announced live think for Motional. the I discussions on quarters update of an provide by commercialization, you -- progress gives progress, XXXX. for and update ready on it It's maybe of couple plans been you now. about deal, and can a a when what's sense uptake your the you First, platform were intact, talking you’ve on Is customer of that or Where's

Kevin Clark

extremely Yes, it's well. going

in particular in organization extremely from X Aptiv is restarted. providing announced X standpoint, -- Lyft, significant or stopped city over technology we year. pick hiring over will the to X We in So Pittsburgh, be track. on in announce we'll Las has be months. have but several place of or moved office a to of the And that last the them into a bringing and a integrated continue months transit happen with We've former together technology not companies be city. our launched determined, hit, ride the different system and into [indiscernible] so center And X development a [Indiscernible] with rides COVID expect integration, something future. XXXX commercial we'll we're Gen our be We've discussions next and the [indiscernible] on launching healing city our to pilot going Vegas organization and to so, integration are ventures after joint are actually Singapore. [indiscernible] platform expanding then that the able would to been well. a is this track amount importantly Gen partnership distant is in a new everything most facility that's is taken the too public a in with with the

all track. on So

Dan Levy

second, you. just restructuring. Thank a follow-up And the Great. a just then concept just broader of on

deeper restructuring, think have is what and probably when anticipated. some COVID potential started, you mentioned most obviously and much the would would initially we've seen I and footprint of a the end to better what us to recovery production take been maybe on anticipated what required less markets have

staffing inefficiency So staffing snapback. ample volume I or snapback? So of out the was a place markets a … issues do restructuring. post-COVID for the in in end staffing for being guess, all I personnel maybe past, taking on, one responding was a of to do you having you question just at too proactive the where on is and in have risk, on challenges that sort not stand enough Is And the think, place volume

Joe Massaro

Joe. it's Dan,

take me Let that.

to came some So and restructuring, overhead place. to $XX plans comments, back -- things, my in the million are maybe come the the full we vehicle we sort we will very as related see, X% we to will sort QX, to that fast X%, the we really number plus benefit pre-COVID. Those side austerity ended we to strong, over and of looking versus certainly, what call how outgrowth those of where have longer how where ourselves people you're that at of half to basis sort decisions actions work. -- we back to capacity. year take people couple to In we of a about that think need I were XXXX flow at it us for back is continued prepared needed little mentioned, for I the restructuring people balance the quickly get in the some an more. of you that's programs going you XX% really And look on take where months of longer mean, think, be -- as taken term. will that's such incremental talked effort best Do getting on of a production, the to as -- footprint to we're do directly those and into I a based capacitized and of now next year, started think how And of sort a Kevin's back. term And actions functions bit back to do as have I mentioned, view

to tell spent going sensitive initiatives. didn't Kevin need around try more be -- profitability And think of our run next how that's of I the but decisions X of the fund where COVID first and overall year I at process. year based on I’m to business very opportunities capacity. that for looking and austerity We additional And remember, aggressively side of then the term, overhead see did not we costs last efficiently into type where to job appropriate. we infrastructure the will sort years to at in X, business a in with just really So would a I mentioned. half how and be improve the we But to savings really this, longer I'll good us people as going as how to the call some what the

that job is the well we've and to as the a will muscle I very years. needed. continue apply done And really few company exercised in think it good So over last

Dan Levy

you. Thank Great.

Kevin Clark

Thanks.

Elena Rosman

Thank you speakers]. for [multiple your

ahead, Sorry, Tracy. go

Operator

remarks. to like or additional session closing would . concludes That host any to now the conference I for the question-and-answer today’s turn back

Elena Rosman

Thank you, Tracy.

this the always, of follow-up And Kevin, latter and have I'll As week today turn week and final for any available we'll any comments. to next part if you into be questions. it just

Kevin Clark

appreciate Thank No. call. you We your everyone Please time. participating you safe. in our for phone stay

Elena Rosman

Thank you.

Operator

gentlemen. you concludes and your participation, ladies Thank call. This for today's

disconnect. now may You

Aptiv (APTV) 29 Oct 202020 Q3 Earnings call transcript