APTV - Earnings call transcript Q2 2021

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Operator

Good day and welcome to the Aptiv Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Elena Rosman, Aptiv's Vice President of Investor Relations. Please go ahead, ma'am.

Elena Rosman

Thank you, Anna. you Aptiv's thank earnings quarter and call. conference morning for second joining XXXX Good and along portion related presentation, release press The table, found at the website can with on Investor our Relations of ir.aptiv.com. be slide the review special and other of will restructuring operations items continuing our excludes the Today's of Aptiv. and financials address release. GAAP back measures our press for between outlook are of XXXX the full-year slide included our and QX reconciliation A the both and non-GAAP at the presentation well financials as earnings

to Turning slide. next the

call, difficulty performance today's providing XX-K in course uncertainties from SEC future by forward-looking supply be During reasons in and and will we certain view impact different for information, including be current on Aptiv's the that of and filings, which predicting other we our our materially global economy. the its and reflects the actual Form posed chain and performance COVID-XX future cite financial pandemic may

will will Kevin Kevin will we the CEO, us provide Joining Kevin business, President the to update cover outlook With Senior Massaro, the a Operations. and CFO to and and Q&A. like I Joe Clark. strategic to open and that, on be President Business and the today Vice of Joe Clark, Aptiv's would call call detail more over the turn results in financials before updated

Kevin Clark

were over Europe, the Revenues North as Despite $X.X headwinds, well per and year resulting million environment. and market a meaningfully chain XX%, and supply record by as over $XXX expenses, morning. disruption relevant shutdowns slide and earnings we're XX X. strength market material track quarter and growth in with the growth customer underlying Beginning our Aptiv's value billion, second the driven our points representing record And the year, lapping the expect somewhat of our Elena. second success customers this of awards, input keeping share portfolio performance, our all our production. our impacted these creation continuing for you outperformance of in by during for and thank which ease the shortages. we prior half us for full ongoing Thanks, of new technologies validates challenging which includes joining vehicle to everyone income running first and an outlook respectively, $X.XX, balance year, solutions, business America continued record COVID-related of and increased strong increase Operating demand the in costs of quarter for raising stakeholders. totaled from in

our business gains updated our XXXX of positions also outlook and customer to and this mitigating volume Turning X, supply while launches year, market chain the share flexible incremental headwinds. to the are sustainable number us reflects that slide support program driving model, record which

growth safe, outlook for growth over supply expect half next and for roughly still year. to XX% customers And to the we XX% make led few and an change reason chain time, for to for has portfolio trends, technologies is in revenue advanced our our which expect first full in I to year. the be shortfalls X% market intend the As approximately growth of made over is a begin demand benefiting the we to At demand levels, happy possible, vehicle months. for the we've from we're mentioned, which the up our easing outlook which much acceleration same no of as the tightness of increase as production, with production the mega and our global the to from connected consumer green

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demand highly contented systems. the Our the architecture as engineered provides more XX% electrical our Signal components next high in strong content of launching points vehicles prioritizing electric more and vehicle than by the electrified fidelity for us the optimized of XX% and the voltage have transmission, high XX XX% voltage continued to positioning and voltage grade automotive, years. vehicle over over markets. vehicles, production both the voltage leverage distribution, segment in market, system cable design Power high which that voltage management as a cost resulting increased architecture vehicles, that Solutions and high leader OEMs vertical Revenues platforms, business increased industrial applications degree increased able comprehensive well to speed, electrified multi commercial We're for positioned connection with in awards we've translated high and demand new of quarter, driven high of is support very vehicle increase data significant low well been production for electrified integration, in to customers platform, and during is deliver solutions architecture in automotive industry fully up lowering significantly into for weight battery on vehicle total the where reduction our and mass, a of and a of a globally, solutions to portfolio an few the

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XX, to published sustainability Moving enterprise-wide strategy for our which explored be include approach our to social the July. we've path capital responsibility, X.X includes XXXX people, and This execution, to human planet product, our neutrality in XXXX, in report platform Lean report enhanced of diversity, our operating around focus and and objectives. by and progress processes further year's our disclosures, inclusion and around and and foundational governance sustainability sustainability can which on slide pillars, proud our on of each specifically we're made initiatives, that commitments quality the our was product our development, corporate carbon to XXXX commitment

deliver and by create Our transform carbon made stakeholders we've mission, report of mission team help society doing our linked connecting the right ability by delivers each during on team's owners, strategy. business to our success also our continuously and dedication, always Aptiv and directly are sustainable our how live that this the new the in the tremendous emissions, value the reducing long-term thinking values, ways. to and lives, believe contributions highlights acting products to our resiliency creating We saving people that way. more building and pandemic, thing To for us that continued and right our on and like

Joe in proud to with our going is our As facility early to an commitments a adopter, we're result, be recently and bottom our cover linking line sustainability more amended credit which goals intense we operating that shortly. And our take and all sustained over team members understand will a of strategy, detail execution fully our reaching a a coordination time. comprehensive by at

to more So, take in with that, I'll us financials hand the call the to Joe detail. over through

Joseph Massaro

were $XXX Adjusted Thanks, other Kevin. share everyone. the $XXX in with strong customer region. operating XX%, operating generated of higher input despite $X.X in results XX, the strong million slide referenced. increased billion to production, $XX environment in Revenues Starting levels the schedules. and vehicle commodities Kevin flow ahead outgrowth strong were and million recovery supply momentum and $XXX with income every million, $XX quarter Good challenging FX, up market EBITDA XX% COVID of costs Earnings and cash were second morning, the reflecting despite million, costs. $X.XX was and by headwinds quarter of respectively, at inventory and driven of chain from disruption earnings safety support per million

by offset and contributed downs FX the second driven customer more volumes double-digit In platform in XX% revenues slide higher Favorable points favorable over high quarter of perspective, market strong volumes America were at impact From XX. in Europe, regional launch normal growth and voltage and activity the partially detail the Broad electrification recovery outgrowth across regions. by our were mix. product revenues safety active growth and in strong up North quarter. of demand by to price robust a XX in commodities Looking was on industrial launch and and truck market representing ramp XXX%, driven SUV volumes over lines. of

outgrowth market driven China, X% components revenues in recovery Lastly, engineering over X line. with points year's by strong last lapping grew market, by product the or

$XXX the despite revenues were chain supply broad chain volume, customer supply $XXX and costs driven based production increased vehicle User ramping in higher and and disruption segments industrial growth recovery was Advanced partially resulting by million increased XX slide. sales and higher and primarily supply the on Record schedules. volume, copper, the offset to vehicle high inefficiencies additional semiconductor and Solutions of the disruptions segment underlying the by in and revenue Signal higher auto, costs. on up growth million, points Safety quarter and commodities, to voltage EBITDA across the vehicle input this Segment by and by EBITDA from the driven increased quarter, constraints. commercial end constraints production Power the by next FX Experience markets by XX%. offset over sales of Moving reflecting production. XX% partially in

slide Turning outlook. and macro our XX XXXX now to

We continue for to year. the to be plan production for global vehicle up XX%

expected, the events. As fire more impactful semiconductor of the spring second quarter constraints and due impact to Naka the in weather the were

second to expected In Europe while down to meet and be deliveries are North will Accordingly, flat, to in we While for with are have production vehicle is respectively. second which working half snapback, to half, ongoing in impact suppliers demand. regions. adequately year's estimates in closely tight, to second comps production customers' supply while creates and we China X% we supply summary, continue expect semiconductor production all the dynamics America the which customers we be and vehicle chain outlook down our with lapping half last difficult X%, these challenges reflected XX% remains production, believe optimize

continued production quarter a guidance. we to not position in customer schedules, in are Given financial third variability provide

EBITDA of now XX% X points midpoint, billion XXXX to $XXX $XX.X to the the over last at and and points now and the XX. and higher $X.XX of billion million and sales over supply updated strong market year, rising chain billion, FX and operating to range at in of year-over-year growth $XXX and reflected input lines. estimated our our be with our $X.XX disruption other expect with are year demonstrating the midpoint, for in We on portfolio expected However, be than costs, product billion now which revenue income prior guide, up up conversion we million despite commodity diversity relevance are the outlook COVID confident $XX.X the XX are costs. slide

at cash $X.XX of share operating per earnings billion. expect we the of and midpoint $X.X Lastly, flow

outlook slide the provide $XXX million full helpful is it guidance as update thought with initial guidance on well updated on guidance year to to back growth to and more the XX. higher provided performance. as would by production, Turning walk February. revenue of increased, left, our vehicle from detail we be a We Starting reflects increase $XXX tailwind and growth benefit $XXX compared the million million in driven FX from EBITDA of an above commodities. the the

the production is supply approximately the by $XX However, and through volatile offset chain increase costs, schedules. managing with million disruptions higher associated customer

In in $XXX increases pricing, costs, including experiencing commodity as addition, guidance. as resins and copper, our of higher semiconductors mainly initial million certain versus we're well FX pricing, and input

these transitory As started mitigate it relates these to that input and it future prudent believe into We these already higher to commodity persist assume to will we have costs periods. offset are price is not costs, and actions taking headwinds. and

in recovery In engineering higher passing other customers. initiatives, alternative commercial and with addition including our have supplier source price engaging redesign prices evaluations, well a of escalations, as strategies, including discussions to we possible, number where copper along as

we operate. to the which slide is XX. to the we products to our Moving way in business, Sustainability core from make

the companies credit we of commitments. our structure a integrate extends leverage commitments, workday to XXXX facility metrics underscores by carbon published commitment industry amended the case utilizes the as billion the safer $XXX and sustainability restated a facility, borrowing flexibility future The maturity and as include X.X work We air revolving an of which of to with rate, mechanism by activity. in throughout maintain and sustainability cash existing to The into debt-to-EBITDA $X amended and covenant term Scope and credit facility entered that with X financing facility In we pricing are to lowers we to the leverage and maintaining which one in XXXX environments. rate. utilizing amendment XX% first a an our meet a June, up our cleaner our the into and that targets emissions to be of connection capacity long borrowing decrease includes netting lost any and best proud aggregate million previously X increase times the M&A

XX. slide to Turning

our income discussed, convert flow business us generating have cash conversion. and cash, cash to we operating free to higher flow enables As model more

We higher a our the decisive which capital earnings, in of focused above billion support value capital in strong strengthen taken customers on levels, us deployed sheet to evidenced cash the continuing offset structure XXXX, XXXX flow balance while XXXX few has deployment record, $XX.X expect The partially XXXX we've years in operating schedules. by our driven by $X.X actions allowed maintain investments by disciplined enhancing inventory is to from track to billion opportunities. through last investment

to our strategic wins enhancing a forward. investments, artificial scale businesses execution of Aptiv new shareholder Signal with continue in We value to growth an challenges, of increase in Power to aligned CapEx learning and intelligence, product our Solutions and and our engineering, auto growth customer generation software, face approach to that of the continuing lines, as key today's ROI consistent going for strategy, differentiator as high a expansion capabilities lever includes diversification major machine in and support A well for in tech reinvesting is consistent even systems and our our segment. framework the largely important maintain

So call Kevin his hand closing back with to for the like to remarks. that, I'd

Kevin Clark

Thanks, XX it for questions. Joe. now up I'll wrap slide before opening up on

further the continue profitability, the execution driven opportunities generation, and flawless accretive outlook and deployment and for a and and on mega vehicle, intersection business of reinvest rates, quarter customer that flow electrified stronger our innovation trends; and customers, with widening that positioned portfolio. result in bookings in well the company the us of will and the scale is cash. year, and clear in As and of leading global our of advancing and over the value purpose-driven our processes increased our the roadmap our We're growth to are and as new create connected by for revenue of financial for strengthening win resulting support on value our focus the our our improved depth our and is of relevance, a compounding advanced defined vision to shareholders, technology to to of our discipline leverage allowing more flexibility thereby additional the employees This record execution moat; validating provides safe, relationships, in our constantly profile, significant and we faster squarely flawless results reflect reinvent, path and the and breadth predictable customers green and people, industry market, software growth better relentless which it's in opportunities of our in on growth the an strong of earnings XXXX cash company the the technologies competitive outperform beyond. portfolio position, creation at in to through the leveraging

line that, with So, for open let's questions. up the

Operator

And Instructions]. from McNally [Operator Chris question first our Evercore. of comes

Chris McNally

a always wanted to questions know to number current pretty compared about. I the a of I production guys. of with, big lot margins The that's SVA. the around leave environment. other talked disclosure be the I'll and there'll to initial you've that in customers you're what talk around nine of some working Look, the

to it think was three I start.

we goes will you're it point, this we could XXXX. a because associated monumental of bit give on at about to you it, get more be frame some just but could traction – size if – no is you this sort of seems there. everyone's idea so some just SPS. revenue little into we this much if sort excited quickly even getting when can ASUE, it goes so how there SVA. And just some So, that nomenclature But have for into kind because with SVA, one detail And of

Kevin Clark

acceleration with work on I the around of vehicles, seen, for say, acceleration and battery in post-COVID, an vehicles We've electric the and battery an increased demand would SVA. electric customer portfolio of

way journey, kind SVA, encase then, I ultimately, talked domain SVA, vehicle to moving is right, a starting and simple of the always think we've and architecture with it which think about as to to centralization, about post XXXX. controllers, simplification, trend zone about work wins into zone big in areas. and about zone three and our we've We commercial talked towards in break product talked our And controllers, the that down controllers. we've actual first around is the then

The is programs PDCs. second advanced around for and development

The CVC third the to in Motors. fourth then Wall And would relate OSP. the and the with Great is around win

closely and in the you're doing design it position you box ultimately into the you're follow-on we three And them development as you're four strategically software, of vehicle, business. the relates like on advanced customer, of in a development all we've discussions The OSP, good and programs first opportunities. both the checked regarding programs, awarded And area. puts So, particular translate with be with stages, architecture, the that extent that your programs hardware stages helping feel working commercial to what's ADP of the we're really frame it SVA. to four OEMs in several effectively advanced is really important those of to real design

as The standpoint a winded to ago. and and architecture accelerated long thought and around opportunity we our electric of a a in we around and from trend with vehicles. is way we'd this activities PDCs, discussions vehicle demand – ADP always we've So, now a And where customer well a driven the controllers Wall battery given be here with rethink journey. having towards described the our vehicle Great battery just over OSP. it by in towards around would the we're Motors from and zone being had as CDC, trend the in our little on we're OEMs. history we've in positioned in vehicles domain It's tell electric and the capabilities controllers, history and our you OEMs from Sitting today, programs architecture the that you award year given

if XXXX beyond, bigger today, and multiple revenue were towards the you revenue transition we see, we electric rethinking think to opportunity real much the So, we vehicles. have a is battery have you push SVA, as to but vehicle architecture and wins think about today, OEMs

Chris McNally

Kevin, just direction? can why of for above gives as beyond understand and that remind controller, a Difficulty] those CVC picture the the you summary in you [Technical a the are just for that levels, understand big going a can us just so of lot four functionality OEMs many us we to

Kevin Clark

two right? things, for drive the the to body eliminate of ECU. real So, the functions, CVC around you're able is The number ability to a up-integrate

that's And data is then from ability standpoint. one. So to connect piece second the the a

most So OEMs it's flow for cloud the data will to to where car. cloud, the the from car the the from point

really it the one, and step. up-integration and the two. and data hardware. the big centralization, about Separate Overall, think vehicle, to two those software step a communication It's have way a to ability software functions, a in So, the it, aspect. defined it's from huge aspect domain serves

Operator

Our next Morgan Adam of question comes from Stanley. Jonas

Adam Jonas

materially what If is that end you curious you backlog, companies account their the that of sales give as higher? seeing if it And if and materially sense follow-up. legacy whether have that than XX% of maybe I'm not that? thinking number, include China global, include established, a Are front let's different? then portion of and is? auto backlog OEMs moving about legacy order say, more X%, I number I of include I the [indiscernible] round is mix there guys. that the us I'm even non-legacy for Rough a your Could for or your – in it's

Kevin Clark

Adam, take Joe specific you will numbers. through

ways break automotive industrial revenues less frankly, with some and battery down two more XX% a quite represent around manufacturers, of of total bookings, revenues, swing in areas. And and to our that to America, China an you XX% a it. battery in break is been newer roughly When bigger growing domestic. we've aerospace, revenues, total our vehicles seen significant electric down revenue. which our now which a it be mature little If you cut vehicle some One, customers tend of in change, North the defense, is which that component, have and America, One, electric some probably vehicle, other. with of are in mature launching are being more acceleration non-automotive, characterize and bookings are North of commercial then couple current a new our mix vehicle revenues and and I a both

So, XX%. electric five in A years to it in and revenues closer new were of of the around our put it's XX% big China to of ago, perspective, with local and is Today, battery vehicle in OEMs. that some bookings companies. piece

Joseph Massaro

don't more little a I have Just exact context. number. bit the

sort it that OEs, as at think technology. if put Tesla, on depends but traditional of in where in plus. think obviously, certainly newer the you obviously I XX% you point, this concentrated It's

to a the sort cumulative look just in it, call a strong the billion So, if million about in $X the high you there's at a but total, to from it's positioned of the think way billion $XX meaningful vehicles cumulative that OE, way five $XX tech around that's over over market $XXX voltage, those to safety. – going bookings billion newer perspective. bookings of of the bookings close just a is, of past in time on legacy years, active of concentration of of period, Obviously, the very much given is that

Adam Jonas

and impacting car, Just very of companies for you're amount strikes air is seeing nervous one urban going [indiscernible] expect EV I a this thoughts from at lot you and Even mobility, then vehicles aviation. a your XX there. don't follow-up. there. Curious, brain this are time, this but electric your as of high devoting point? market any there and aviation It to has me if I out, aviation be at resource could car transferability very long to level, just a XX, if tell system us, it's in a development years the of quarters don't your architecture you I'm high electrical a of thinking, care.

running, in they some the that. it's just the scenarios could we're on things of your the with Because I think your and in products love do. what air Would number exceed Earth. alignment vehicles of of number view can the on

wanted just know on that. to opinion I So your

Kevin Clark

reminder, the The potential multiple a in joint evaluating to A mobility at focused meaningful is addition demand markets team venture air it's Motional Motional in opportunity. partner making investments very is Adam, obviously, on our and market. HMG, mobility.

bit that's further think a the is out. general that view I

I have views hasn't business, business that's exposure say exposure, real particular time, So, small. the segment, something in area terms growth investment, markets is we're team as I overall evaluation. but do point the this an but segment. and think From of I mentioned, to future military potential under meaningful that and relatively is that as pushing certainly we today been that in aerospace, particular Alternative it that principally at is opportunity and in made would an our in for standpoint, Aptiv an SPS

Operator

Johnson Our next from Brian comes question Barclays. of

Brian Johnson

into want ASUX. Chris' to drill on of SVA, really I on comments down other but parts follow-up

not digital the if S, also of only we only later on not controllers, it XXXX advanced Model does X+. have cockpit electric, domain was it Level course, So, back to had go and,

of We of haven't about a side kind ASUX. cockpit advanced lot user experience heard digital your

there. So, kind questions of a couple

to and at the software about other footprint business? the of when low Two, lots done, end, digital might similar a SVA how you synergies their segment conversation there? who three, into are world add to get the over EVs, with whole to of Level what car, be you acquisitions that to X+ legacy to in thinking and cockpit software down the in with wants looking kind then the at And say ADAS overlay to are OEM industrials naturally have sit there there's multi related go that Given competition are does modern CEO the you general?

Kevin Clark

a numbers, that bring it business. growing we clip by this was at ASUX To experience our within – Last does, remember, affected and billion revenues have $X.X business is user we year display the in fairly round up, year. exited business a healthy

a controllers is what whole part growing up-integrated ADAS sensing doing aspect and we're solutions, as very But a an huge So, cockpit as Brian. strong. solution. ICC gets we had important of our Integrated there. standpoint. a very a digital The advanced in-cabin SVA SVA from it's headwind is experiences of whole aspect that it relates to

important. to the think four capabilities. we capabilities. effectively I their the ADAS as to I launch allows solution in sensor to integrated sensing car, months programs the about the further And their my I to is I user the in in-cabin referenced in the remarks, of to to increasingly think advance is next we're So, them XX that to addition today, prepared now, over in-cabin or speak becomes experience car, that in-cabin sensing advance one necessary tied LX, on driver OEM LX+, the three think are And ADAS phase are in that, that it we fully actually assist next launching as experience

to it important it's So, and SVA. extremely it's aspect relates important a very as

we're capital. As trying focus it we in smart really to software, of be and our relates terms where resources to

past give I needs in the to mentioned to are inside sense, business or like focused or the software obviously financial and today the the one think space auto we'd in features. that something us help to that but It's make around it's Joe's incremental productize auto it strategic develop of is either outside obviously. acquisitions to to team do capabilities areas additive what that Whether that very us software and is on. do, we

Operator

of Delaney Mark Sachs. from Goldman comes question next Our

Mark Delaney

for you going of whether the this can those that sold to you're that was now going for increase now our in points The is X,XXX think articulated basis hearing some vehicles some something a through or [indiscernible] as potentially you be talk to this into and have that's have of growth perhaps not been OEMs points longer we're XXXX? points partially going of building morning, target. going think compared is term headwind about your or on that about company basis one assumption for this this the market basis X,XXX previously about you're looking to you first XXX year, increased expecting When

Joseph Massaro

lot of not the I'll particularly for what is inventory least, call the hold At sort numbers. large us,

So, that's year. we're over half back market enough growth over in certainly product do helping think year. obviously, which the of to mix, not strong I this the market very on big growth certainly move is seeing

As growth. well voltage the high as, as just and Kevin active mentioned, safety

So, pieces don't So, will of carry point. there's that's driving in? will there's year. moving XXXX. How Not real. of well. not up some there. couple into obviously first clear of get back we into a at to It that mix carry elements of lot strong growth certainly half want that Obviously, of much had is a margin hold market this that over next very And as It's half. sort

of the confident been to obviously really effectively semiconductors best addition going seeing been sort we've that how again, year. time. for certainly we're think a this decide that's OEs for with mix good do tailwind given in it's really to I long allocate just us margin strength X% to this So, the X% as on But of platforms, a the

Kevin Clark

that, active chain fastest set can I reality is LX+ add to current segment LX, I growing it, resin things supply the If think things aside an two situation. be predicted semiconductor structurally, pre the tightness, to category like shortages, was safety the is with and

need contented drives Joe's they're platforms. platforms vehicle our to obviously focused in point, safety. vehicle fully for pay customers decisions So, – safety, they they're Consumers on today's where market want like about market a growth. And building, that to be need make

OEM But an more us sure LX I'm to the advanced that's $X,XXX. trend is underlying which structural towards So, goes driving for systems, an benefit. $X,XXX, system some for ADAS

amount revenue. significant a of it's So

The other from. vehicle they'd from on battery commitments from here and increase voltage the be a current electrification piece, High what electrification. year. a revenues will revenues deliver from emission you remarks, of US North to benefit standpoint, there dollars electrification, out positioned in terms perfectly the a high current discussions the demand what like trajectory. a administration under will which OEMs of pull And Europe this electric And in American prepared COX though, $X.X voltage from is voltage billion standpoint, to significant based we're high talked of for revenues in going we about, they're bookings billion driving XX% if follow our in our in to

Mark Delaney

specific. start hearing more it's although supply comments, a was companies, prepared you with to bit the expect in some the to consistent said And of My other of from your chain. Kevin, I it in months. related believe you ease follow-up little That's couple to the directionally next what question we're

the especially very companies rise and other assembly a lot in is have Malaysia cases, the and situation said the of the Some with still unfortunately, fluid, impacting testers. of COVID

over little expecting So, what maybe leads the you next more to a to and start you're few comment bit it can seeing talk months that about what you use… of you're to

Kevin Clark

It's kind multi-layered a question. of

current seeing IDMs. we folks multi-layered. One come And look and side, or a to from other separate in And just and is resins, supply daily across standpoint. are capacity the specific resin the to at chain, say you you it's versus if when when So, supply with market demand. the areas suppliers, the contact chain like effects the an semiconductor are in in supply want but example, there you semiconductor constraints, fab we're the semiconductor being whole side the to in, provided into semiconductors,

So, that is improving.

the have year, had a bad weather earlier in in you situation where, You southwest.

into You'll reference QX and supply late availability QX. impacted it that,

but online. Not You the as quarter. situation That that in had Production fire improving. in the it's second quarter fast is we'd first certainly Japan is coming like, had Naka for implications the improving. as

any is where affecting like with chips the watching the closely. an Philippines, tight. specifically has suppliers. typically semiconductor short outsized the we're availability of into We're In sort production would over running today, see schedules. COVID COVID occur. to Taiwan why very that's some watching today impact watching That we're event, will relative what is areas in seem you interrupted Southeast to be under you're However, impact of you in supply have Those situations Indonesia, Singapore, Malaysia most of Asia, But term. control. Malaysia, chain in challenges That

say, the due be COVID. we going but periodic potentially we'd improving, into structurally, to So, things situation there's run headwinds that to is like

Operator

of next Suisse. Levy comes Dan Credit from Our question

Dan Levy

to want just guidance. the first, So, on clarify

quarter of you I million. costs. million quarter, $XX supply combined disruption said it and $XX in you chain called was think Last COVID the out

year-to-date. million million. XXX here, that's $XXX on And XX see slide I So

So you're outpacing that amount.

back recovery? realize XXXX, early too way does it's So, about chain say on type then, or you'd any the how And some that sort profile get is into half? incremental the influence the expecting definitive I as XXXX, volume give of into of that any on to but to you're margins thinking color on supply efficiencies this we're recoveries

Joseph Massaro

basis just costs supply very a in this to fluid the It's we're starting obviously extent, COVID some and to situation, chain a right? And blur. talking because, sort they're on extent, some of about quarter, combined to

Malaysia I'll bit, a freight has you're inefficiencies way, plant back protection getting just year. which in inefficiencies that do lot there, the just the because to a out has through that's COVID, of down been out Really to the semiconductors you with of first of stuff. ways personal getting want If team created, parts that's better social plants came shut need $XX one the premium the say incurring call of manage talked on that? that. of But sort coming come for about million – some of running with on take where But places, million we're That's the we for of some little the found actually the down half of down we and $XX we have seen and still in COVID and costs quarter. to cases about million $XXX spending – some distancing have year a inherent the a some the at out what it's spacing

going obviously So, sort COVID to not to costs of those bit. We're some eased speak XXXX. have a of

of made about have costs And comments we're COVID expect $XX for that the continue said, I the as million I to though. We now XXXX. would expecting year. before, certainly into full

that continue. I would think

rates in of hard little business. to seeing vaccinations places we the all it's You're a clearly matter. And call do where vaccination

abundance not employees we're really protection expedited of manufacturing. There's those a an to, disruption employee costs going chain supply obviously some of The comfortable at in are tied where money to of lot creeping costs, putting leave the out spend think we're directly cases, caution, our the but for necessarily and customers days, risk. we're impact obviously shut certainly I inefficiencies not about into shut until periods impacts as that freight, SPS So, we're premium now time. there. by as of And down part or – customers well. indirect of four that shutdowns, down well for that impacts lines we're them. And as business as the because plants down That three shutting causing impacted we're the obviously think

– need the think going you So, those those need I align disruptions you continue. long to chain of sort with supply how are costs to think to

Kevin Clark

allow reduction think inefficiencies, those I'd which really keeping actually – of OEMs to as normalized down cases, hourly and us freight certain pretty element you to important. we and don't efficiently. because it have market, firstly. to really We are number Joe production trained we're schedule be extra premium more rapid it's talked in see break There's I labor standpoint make go launching in as programs the a And a labor an back, doing sure, now, very to come comes honest, production And labor from about. the flex into what given programs, launch right? we're a supply choppy since employees near-term a programs. announcements, in through to

piece through second we're work which Joe is The talked from doing about, longer over standpoint, input something period that an need to a we of time.

expenses. inputs underway. additional two have overall that supply provide to are One, with say make costs, sure specialists connected to do term, how or engineering I'd close two, supply but, we're and day that working we customers incremental We a what committee a to need or initiatives on, where chain things. two, do one, of with who availability and we engineering. focused then, input commercial day, changing number XXX, longer operating is it keep suppliers, to does products, we our strategically chain reduce redesigning that to, capacity, we really have one, And out

those be to take harder, they're to two, to ultimately complex; more do. validated customer. bit need One, little by Now, longer they tend a they're the

that's an on. that we're focused much very area So,

something it's So, work although focused ultimately certainly reducing on it's and going challenge to eliminating. a through, to be we're that

Dan Levy

changed because now you of you're that ahead clarify, already Is guide. include… on to Just that that like netting else are the think provided, you that? supply some you $XXX something that you're chains, Does factors million COVID there – because and running I you've of the on

Joseph Massaro

$XXX The year-over-year. million increase is the

Elena Rosman

costs We had those of some last year.

Joseph Massaro

have is million you The total the spend $XXX So, XXXX. change. million $XXX for

Elena Rosman

last $XX,XXX inefficiencies were year supply The the COVID million. year. chain about last costs are And $XXX

Dan Levy

I and is, more The follow the up guess, electrification so teach-in. just second to to this one,

areas. the your years, what both think but in calls to to is you – back making be we've seen Delphi resources Aptiv, product to how between I different time also seem over allocate in days, constantly the you're

is your or know away be whether So, to and high group product from probably extent SVA or it's highest high CapEx we a Or to I think resources, you allocation sales voltage engineering are That reallocating areas? and growth SVA. level, more to voltage other the At product. going is incremental? staff what resource

Kevin Clark

would I more say resource the allocation is incremental.

across two our others. to frankly whether say, or feel allocating obviously, like business, make segments quite portfolio investment portfolio about see at of as whether that's profitable allocate voltage in in active we've It's very a we growth, perfectly safety, And have given Fortunately, user less. it's a not components. product out and that's we where and experience, engineered more we whether area pulling we win it's pursue out actions electrification I'd high others, of historically, decisions now, certain or we're we that's positioned incremental to a the point areas taken more where one growth. areas, where

software, in for business, created demand business, Last example. we us, So, our looking and HellermannTyton around aggressively reporting high electrification customers product high them cable go-to-market. business, that EDS management as line battery we're full management additive increase electrification combination do as we as to of what components solution. if SPS a opportunities that more a in system provide a leader, can is And power our our business a our complete our other we year, well asking includes engineered areas within voltage great voltage in electronics, in a systems, we with are saw SPS effectively

that where both vehicle we how an reconfiguring flow can ADAS our ASUX, ultimately resources systems and smart right, Or solution. so in solution around that and that have and ADAS ASUX we're we coordinated sits those an in So, that area sit something SVA. we're it's operate, that's team a they and management up-integrated it's adding that architecture, platform through around within that fits gets sit into more into within those develop SVA that EDS, adding battery whether in an – products,

lines. Dan, there we're normal are incremental And reconfiguring taking make drive aren't and a goes we're build historical efficiency the product across how investments. doing, away two quite drives or product probably that working So, making what lot is organizations areas from. There cooperating separate sure a to than are investments other frankly, areas we're that of business we together a

Operator

of next Markets. question comes Our from Joseph RBC Spak Capital

Joseph Spak

talk commodities associated top little margin $XX the Maybe much. as I the together about bit you a if and was copper. impact, it quarter. OI? I How copper we million the usually, in there's for could think impact impact? much FX And impacts know what Because was but a don't want dollars line I the know, to

of have wondering think been year. the it timing we about balance as move So, like a I'm issue seems And there we that sort might how through the of here.

Joseph Massaro

It's way not work. issue. an It's just escalations the the

have round call our have the sort dollar did the work, basically impact in copper, to $XX points. it, So, obviously. So, of quarter. a right? we timing million the basis impact was, XX of escalations We buy rate the that's way And copper, of numbers,

generally monthly, happens basis, some couple Our but be average are mostly adjustments semi-annually, quarterly a are to price out quarterly customers adjustments. on to they a

prices of forward, less past. impact some were this reasonable an had buying the have in We've we and what will reset of going So, we've at amount stability QX, those assume there's in in to rates. obviously

too. have way, the it can other You going

contractually a have of If about move you the for between buying that customers, with buying of volumes happens given over been the time, big have price XX% the you it's resetting of copper, particularly and fact lot relatively spend. just short prices up, automatically, going been our a but a the in timing copper get period that we've

So, passed through speak. been being passed as that's essentially we through or

Joseph Spak

as through, input a OI issue resins starts impact an pressure become year, assume of more as XXX and half maybe price back is little in the it fair the for Of to comes semis that the normalize? [ph] copper that bit to

Joseph Massaro

think that's the about way think it. I to

kicking and main be I And those the that, we'd the that that in. were impact $XX probably first million year costs of with million the on input full of think in copper other category. in, of half that to to because XX% the year, between up, expect be we ones There's you've resetting semiconductor in going are some two going prices. resin ticking are got but $XX

Joseph Spak

implies down teens market first of sort the the in half. in digits from goes it high guess, the the of really that growth half? to back us the Just on quickly, low single driving guidance remind level step in Can S&PS, you down what's I over just that

Joseph Massaro

we quarter. the favorable I'll of QX, half year, some isolated half. of you, worth – being of of strong launch it was of first tell bit that the and China. all just of about year-over-year. in creating the the Listen, and replenishment – snapback of about activity I And some particularly didn't few That's talked last sort expect lapping in about that mix, launch first cycles. the we primarily obviously the of I in don't call you to outgrowth the of in this back see back channel a ebbing. see there's just of say of more the generally components growth, in a it existing was couple speaking, a pre-COVID, That and points and isolated say, normal, of talked much a it's had And things. of X a would sort the to the sort just normal sort and business, really time, QX. QX. business. in the at There points We in related engineered at what were it we Obviously, I'll

delta. half of first just So, that's half/second a another sort

Elena Rosman

the And growth half. outlook points X half just in a of to the clarify, the implies over second roughly market implied second outlook,

Operator

Thank Ladies joining and us appreciate today's participation. participating of day. concludes the our This question-and-answer great to I call. call. you, or for today. like session. Great. Thank you you. would gentlemen, addition everyone, your Kevin the We you. much. you conference Thank Thank turn back rest concludes very any in to your Clark remarks. closing this today's call for a Thank Have for

disconnect. You now may

Aptiv (APTV) 5 Aug 212021 Q2 Earnings call transcript