APTV - Earnings call transcript Q1 2022

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Operator

Good day and welcome to Aptiv's First Quarter 2022 Earnings Conference Call. My name is Marion 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. of you Director conference. begin Aptiv's Tillett, Investor may Relations, your Chris

Christopher Tillett

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

we in forward-looking different During and Form Ukraine current chain between and will reflects Aptiv's financial certain ongoing conflict the cite of materially other disruptions may and the filings, be uncertainties be supply and we which our providing view the that Russia. posed information, future by performance including COVID-XX XX-K pandemic, SEC reasons today's for call,

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

Kevin Clark

totaled year ability over of continue connected year, X% our quarter, for $XXX a Revenues The production the from million strong cents, material green and had reflecting morning. on more thanks, XX $X.XX totaled share than and disruption. Chris. continued a include in inflation associated in quarter slide offset in And this our volatile despite the the technologies. increased and highlights decline X, touch operating $X.X the safe by you, respectively, reporting growth Aptiv earnings across to market, vehicle driven revenue the per solid chain income the to billion, and up slide. prior everyone, a growth demand Operating portfolio Beginning outperform more I'll market. vehicle with growth supply driven for product us joining to start Thank points costs which by on ongoing underlying of with growth all on in in strong our by lines, next detail over production, key continued regions showcasing

business the for growing $X.X bookings portfolio billion, of result demand advanced industry-leading our reached technologies. New of

with has the grapple COVID-XX challenges, related immune Aptiv's various and disruptions. effects to chain of to continues ongoing the world the pandemic the supply business As not been the

our Ukraine in the situation of to continue confident in year, in impact which time, full-year will point and we outlook. monitor We remain the but in China, the this at balance lockdowns

customers. executing exceptional ability business team our a and Our facing growth for very a we're new in during challenges are to of to fluid over doing our an our deliver testament double-digit continue and is pace environment, the market quarter to to working job the bookings mitigate sustainable

result our to voltage sales systems. Signal roughly of growth during industrial, datacom the portfolio A X%, penetration of And advanced electric market. driven the semiconductor by the particularly quarter, solve the by driven during Asia with XX% Aptiv biggest in revenues, segment, increased with user vehicle Revenue and lines growth Europe the up experience result America. which and of new high programs our revenues key North And represent Solutions programs, remained increased launch across X. revenues of in Aptiv green and launch infotainment XX% safe, Aptiv our of slide Power customers. continued product to the strong XX%, Europe. increased general of on challenges, advanced our markets. outpace X% the the the non-automotive increase to market of to strong, accelerated ASUX we've in In Turning existing In quarter, key capitalized of the our continue which growth and ADAS revenue safety aligned expand technologies our connected share and now to share uniquely customers' positioned customers and wallet has our megatrends segment,

Moving material manage ongoing the chain disruptions, remains inflation. to demand also slide offsetting supply strong, us X, requiring increased very while proactively consumer to the through

initiatives these They've in headwinds voltage software macro confronting while smart I to to team costs, taken high doing actions to electrification, As reducing investing excellent vehicle our mentioned on. related several an offset overhead selectively already, is factors, issues and development. the related job head further including architecture,

over translated recently our of the this XX acquire product supplier customers to including expect into roughly to and the implemented already several material of that agreement partners will several implemented agreement offset on week. engagements, and also be was close earlier mitigate River, another to announced have and which has during mid-year OEM direct commercial we redesign balance working parts announced with Wind Our initiatives both XX closely Hyundai year. our which increases, the with We're been price shortages

meaningful progress other price half of recovery from impact year. during cost Lastly, initiatives, recoveries on commercial reductions our customers, have including and which suppliers a the the making from we're our more back

resiliency challenges the the reaping full subside. to underlying and are continue of supply business these chain focused the model inflation and once and on our benefits confront headwinds strengthening We

quarter, vehicle Notable for Power $X awards representing on our for the very and control Signal be the to Bookings the vehicle Solutions a the quarter [Technical start, central segment slide and And the year a second and new including reached last of $XXX awarded. Safety controller the $X.X $X European billion of $X.X funnel quarter billion, OEM, experience line quarter balance with electrification. Difficulty] of to million confidence and first $X.X reaching ADAS Advanced our our customer of high ADAS, scheduled the ASUX segment for quarter highest off Experience level award gives totaling of strong, central with user over during bookings during quarter, program strength competitive and billion the architecture billion. bookings totaled timing in in high shown voltage position program bookings business during User $X.X over us of is several totaled include the for awards The As for voltage a smart lifetime first years. for electrification the with revenues several billion expectations, size vehicle over our awards a the with billion the year. customer customer remains during strong programs awards XXXX. X, in

that the capitalize technologies is of record Aptiv the with of and business the acceleration brain growth advanced provider aligned opportunities both the areas our on to defined software towards the of content. presenting vehicle is significant electrified proof our Our vehicle portfolio vehicle. unique bookings nervous new system of as only in track position to is And perfectly strong of the

Turning X. line safety first to increased segment active underlying for on points quarter X%, Safety growth the Experience slide and experience. by over the highlights from and our in vehicle XX Revenues Advanced product strong both user driven User production,

which received smart German the architecture design of slide, As its this I platform, EV for a fully key the the on This last a award leading vehicle platforms. controller building wave OEM's central OEM during solutions, and a is referenced block leading business first new from we next quarter, is another aligned portfolio the vehicle smart award strategic vehicle on electric our of with win architecture. for vehicle is new for Aptiv's for

X. slide to Moving

high X%, segment in points quarter non-automotive growth demand rose for and X Signal our continued production, Solutions in the than and revenues Power First strong architecture markets. vehicle voltage solutions declining global reflecting increased revenue better

solutions, global of And customers scale, uniquely design point, with our anywhere to cable and positioned further a distribution, additional data vehicle awarded virtually as and an architecture optimized program Aptiv leading for world. vehicle electrical in Our industry-leading architecture centers the electric OEM expansion Aptiv to located into support portfolio proof global Europe. and manufacture power the vehicle a connectors, systems combined management both

award support underscores this platform OEM's we electric addition, our vehicle of a In charging. in market device of charging strong to continue electric vehicle and position growth German the the

The confident reduces vehicle level to we costs first mass, reducing with customers. thereby demand remain combined validates bookings Power accelerating Signal approach bring with quarter's the the in segment which for OEM and growth that optimizing profitable for value our next the competitive and for weight position, Aptiv electrified new We the our business architecture, years. vehicle for our vehicles, Solutions positions system several

underlying we focused remain Despite to the to increasing model of on value slide creation. deliver Turning our resiliency sustainable business current the challenges, X.

our turn the gains, which markets, of remains structure the providing technologies of vehicle, software revenue go better capital connected resilient growth, base macroenvironment market detail. optimization. and the position the vehicles flexibility future. and by to portfolio Aptiv strengthen defined software the in leveraging navigate, the more of even that, brain business through This trend the increasing operational intelligently focus customers, and non-automotive technologies, value financial over the continue in from With difficult revenue to on advanced we to diversifying cyclical defined and creation into cash model our both and content electrified Joe share software acceleration for portfolio the can more operating green create nervous will to less of into of increased Deploying the fully and business reinvested to which cost system towards be the more and further needs our for our of including generation, continued flow margin safe, translates challenging Although I'll increasing an for our to call efficiency expanding to expansion of model. very the highlights vehicle, our meet solutions

Joseph Massaro

income and disruption higher inflation. were cost negative reduction costs, impact quarter through were actions. with X% Revenues quarter X%, year-over-year the line production, the The $XXX and vehicle Earnings the quarter. per EBITDA and $X.XX. respectively, down good successfully of performance, material effectively $X.X and industrywide FX and million, which commodities downs were XX. in million Adjusted savings was of while and strong of reflecting up strong supply XX% through a and the were several ahead top and everyone. on in flat billion recap flow Kevin. morning, of benefit that Thanks, navigating the chain And of Price slide volumes business share operating operating generated Starting challenges. $XXX

decision of of capital million, lines. expenditures outflows cash Capital product by support million, supply in $XXX launches part, across working key a driven our mitigate operating the had chain investment to to our driven maintain help, we were primarily investments $XXX to Lastly, disruptions. by higher program impact

the on growth war, Ukrainian impact Russia copper commodity China, top in minimal all as at revenues our saw impacted production FX of impact the in quarter which final shutdowns on quarter. weeks first customers over despite the as of from slide the well XX, we passthrough prices higher lower the regions market line of related the the Europe in the disruptions more Looking detail for the in was The as euro. offset COVID

segments flat disruptions vehicle safety as led As impact I despite North active above in safety, product programs. voltage market, was year-over-year in were America experience revenue high a minimal, negative above launch flat basis. quarter, in China, voltage the in strong revenues contraction COVID product X% of both our driven was up well previously as basis X% From line. user of price a production a regional vehicle of adjusted a lastly, the was non-automotive or March. high by market impact our perspective, several despite an European by the XX% as and up in XX% double-digit of growth noted, And growth on late downs on XX% the almost strength lines, production, and posted over active

both segment the vehicle slide to Experience growth Moving X% and user the including quarter, recap active reflecting and growth Safety increased production, over experience. in Advanced safety in User XX% XX. on revenues underlying

last million As was the impact XX%, primarily to input were quarter, approximately chain reduction Segment costs material of of previously effectively through of adjusted growth negatively in profitability. higher flow and material in the down segment price flat reflecting to actions partially operating increase has supply $XX and period, annual Volume cost QX million year. performance OI A $XX compared discussed, mentioned million prior adjusted $XX benefit we've the inflation. semiconductors, year. downs the of the in offset of and contributed costs, the income impacted in disruption

We mitigate to and/or impacting inflation offset ASUX. material the are actively pursuing paths multiple costs

with it redesign primarily negotiations redesign. as sourcing pricing are In addition we A and commercial pursuing to market multiple of reflecting also and engineering our newer relates number over of to in Power activities in all points these opportunities, open to involved Solutions customers, products up product of supplier semiconductors of outgrowth X%, market, with operate. regions. Signal all entrants including X the regions sourcing from semiconductors, meaningful growth were we and revenues where up the

original the of and benefits performance COVID passthrough inflation, outlook resins. chain our strength well as distribution see slide included as was last impact guidance reported provided saving million and copper material operating channel comes in and high offset volumes through actions lines, HX XXXX components the voltage despite XX We $XX the engineered cost timing Adjusted improved remains growth disruption and and full-year year-over-year continue segment's on as February. income difficult the a in of replenishment the flow down incremental year. to in as discussed we costs, supply our primarily and comparison, by well and FX, segment product given as from were commodity the unchanged The

As expected close mid-year. outlook as noted full-year excludes the transaction to February, Wind River in is that

We the believe we're inflation per actions with are by to chain were current continuous be believe expect lockdowns of impact cost supply are earnings although material COVID to second and we significantly the addressed increases taking helping year offset impacted more guidance. costs, share. will material the the neutral base these As substantially quarter constraints our it XXXX in seeing additional we the to original And transaction supply be disruptions, our to Wind to River China. increases the recent the and structure We in related XXXX customers, relates

for We providing the quarter. guide formal not a second are

that it is first below levels. believe earnings second revenue the at is quarter possible the and do slightly we or However, quarter

production have our it to to currently barring we the half Europe, Ukraine. the expect we mitigated other the we ease to conflict, during lockdowns relates have be in assuming respect And European production we direct not discussed, of that market As China, vehicle production broadening second our of With the COVID-related year. as recover the previously second quarter, expect do lost to to a exposure facilities impacted.

we billion, revenue Although be production $XX.XX production. and/or Accordingly, will in in date, production to that to year we North offset by rescheduled have the some stronger vehicle vehicle $X.X income continue lost are of our billion at $XX.XX X%, be softening and the seen to billion shifting in between up European in global compared at regions the from growth midpoint to XXXX. approximately forecast. This $X.X billion approximately original expect believe we XX% to for later Europe American with midpoint. production the operating EBITDA assumes either range and of expected

earnings XXXX, adjusted approximately at cash estimate share XXXX $X to expect over to be just the X% $X.XX flow of to continue billion be comparable XXXX we total. And We increase per an of for over operating CapEx with sales. XX%

the forecast changes XXXX Day. received out Moving recently thought Kevin, helpful lay we call we've slide our regarding long-term it turn to the Investor relative are before to And XX, would today. XXXX back be the I provided several at we where to to questions we

XXXX the When product key long-term than current of XXXX by of margin XX.X% driven The approximately provided $XX.X production a the in may are of to combination significantly assumed forecast economics our decrease you forecast. investment would be vehicle also in higher impact price, strength XX the of for labor contribution the of XX.X%. production. operating lines, market the forecasts over XXXX As million Growth XX% about our vehicle favorable an revenues and and adjusting of our with forecast, original performance, margin was vehicle now offsetting units, estimated from adjusted long-term revenue, billion, $XX.X operating of production billion million XX global units. of recall,

in costs, for the and chain adjusting of change forecast impact long-term COVID the production, total As recent a the result, disruption outlook material global inflation current for and combined and our vehicle XXXX. the supply between prior after difference

long-term are performance margin we of of the growth operating and the expansion. we revenue While years, proud importance disciplined understand several our over past

chain of the $XXX supply over and and COVID abate developing on we will we the of at mitigating costs, that inflation as estimated are impact material conditions have normalize. currently And next years. offsets couple as laser confident the are focused We million, disruption approximately discussed,

addition, vehicle his structure to incremental I'd recovery drive Kevin back call that, well In in underlying the years. like is situated closing Aptiv's production remarks. global With cost for believe we the the over to hand to from coming margins

Kevin Clark

Thanks, Joe. we I'll XX wrap up before on for slide open questions. up

momentum path accelerate our commercial of is electrified advanced our the ever of able brain defined the Our software stronger we're portfolio to as future. than and nervous fully customers' leverage to system to technologies vehicle unique

current and including well to macros, recent as Ukraine continue war as monitor and more We in inflation, supply the material chain China. disruptions the closely lockdowns in

doing keeping we to which technologies, cost line for at lines our connected, the job And executing our structure increase the is and time. our model. competitive excellent further optimize help to advanced macro let's the again to of all of our for same while position continue customers' your the headwinds, time open environment, team an initiatives business invest challenging in Our offset this in the while implementing Thanks will we're enhance resiliency development production confident Q&A. up

Operator

[Operator Instructions].

will Deutsche Please go from Emmanuel take from first ahead. Rosner the We question Bank.

Emmanuel Rosner

provide are with the on how numbers the pressure the color side? First material you bit a was net that some around one quarter and expectations? what expecting in Can a the on little of and for previous basis? compares What full is you material year

Kevin Clark

inflation On Emanuel? it, aspect the of

Emmanuel Rosner

it Yes, is.

Joseph Massaro

on right That's a for business total, $XX basis. around the year-over-year call in it, the million entire quarter,

So, that's increase. the

of and balance QX really year, end the of price year, in tended over the the then build the course to Those QX. issue we start see half increases increases constraint in, way a we of the last price in given Just come at is going back of of the through started didn't year, to it's year-over-year more higher that we in the be than QX, just that – the was year. the QX So, inflation saw it constraints and last right? in to

can still of over guide to see, that bottom – million obviously the $XXX to Round we're had talked the we're sort offset about doing dealing original little about net working you of the As fallen a offset. what $XXX inflation there were of is that being net guide, on numbers, basis a those we costs. that a through lot We with. to really million,

price the the have side. on lot during As prepared I comments, through been period. increases in do pricing some able also But my to a flow mentioned had we we've current

team So, really that at which the the chip out initiatives that job Again, we're I longer still think needed the the team do of moment, comments, at good the some doing so. of Kevin line point. his team, board, swap as a number, engineering mentioned with redesign, this the really to dealing the net term was sourcing, type business across in product we is holding

Emmanuel Rosner

this? have? the Looking can previous margin I what recoveries to required be seems the claw forward, this some Is contractual? the the final Is would sort guess what back XXXX, I you it eventually some midterm. it of eliminate optimistic of even ability it recover to the process the I framework, Are mostly with guess, on for around would side? comparing any in additional of guess or to there Is slide offset be this cost negotiation? somewhat be pressure pressure? or

Joseph Massaro

now, can't parts. them to say, how can't the mentioned, and There's call fronts. and quarters I pushback the it you've market swap what QX. are or we had opportunity number last that nothing's cost And again, the newer six saying now. seen performance reasonable just other of past mitigate provide execute going least the manufacturing around where just find number the – are cost – or we've around customers supplier, at – three – I across obviously ways increases the the pursuing the know, as you Continual that a the that, introduce overall effort think economics we're in or them. what with of some price, to into at And There's continuing exactly on of maniacal cost to even actively And the then, sourcing. availability or discussions past for look world five for in find cost on directly in, I'll through a this we've we base, really semiconductors, been would which in entrants part all a structure. again, on and increases, us and there's We're supply recoveries if That with get at years. we're, redesign out our on the It's SG&A to help reasonableness commercial muscle changed. of two company looking structure to competition ways to is and I that offset for moving of if as for the a we

don't really think or levers three I the So, those four quarters. past over changed have

Kevin Clark

or a a covered point, of efforts. more things offset, position only based – able an have add inflation, through I material through fall up areas Joe's that, inflation, that's COVID performance, I'd guess level in our confidence when of you proportion bit, high the disruption, and it. as the a that competitive where around the Joe's negotiations whether normally of supply costs point area to You be there's chain thing product loosen To capabilities that away. and be a to redesign to our there's and would on we at is portion look challenging the

Operator

the now from Murphy will question America. next We John of take from Bank

John Murphy

the headwinds grown normalizes to stabilizes the that volatility so time have this follow up moment? – is world [indiscernible] and to in incremental that going your since the of that margins or Just negotiations there lots as above The at on and over some with is somewhat partners it actions idea Could that and understand kind with on of dramatically I are below you. to this able this. temporary lead much there's you higher maybe or of the dealing hold

Joseph Massaro

evolve. to going It's

do things right? But we material be should the away of a quantify as at non-structural, that'll It's original, to side, about, you that from And it within inflation go in least earlier the my as normalize, but the still over next number. bit couple at comments, to so in said costs, chain think, inflation, the not abate I talked COVID material of supply tomorrow. I relates years disruption and as it's on As going the those these to such. quickly it's types of $XXX when margin. a disruption We've manageable helpful to given of that just close QX transaction have up China, about occur million. I that bumped little some plants sort costs and in

operating So, – abate, questions that think there, and and a as fact I cost estimate for up well take work we has I that wanted XX to we're units a you back have sped of there, appreciation why think, costs drive an numbers, up. perspective, lot those the our business, production we was a the round at at I is deck think workforce why XX volumes and structurally, this slide very when the as XXXX the step, put now a our on numbers in you out as perspective when get from original and footprint of million million, we and go XX to start to from way incrementals

of years completely to but couple the want into a to next tailwind business on to start over relying, to it's the back never obviously, going volumes be a XXs be expand on vehicle as we get that's positive production. You margins,

Kevin Clark

mix when than in material more business, at the XXXX. today, back was the mix look flow on business it the what you exclude a and and profitable think it's inflation I supply if of the disruption John, of you

an [indiscernible]? to see incrementals So, and get should extent you of the normalization quite and inflation lower improved standpoint the decrementals, from you supply frankly, stabilization chain,

John Murphy

of It world those That's that, might put as like We more words might a I time the on off. recovery seems might know I just appreciated some in Right? normalizes. that. you we margin your But all spring. say the wouldn't mouth. coiled be then be

second a Just question.

of question up winning curious, driving there's is a seems coming going the as On you the competitive and crazy. it those think the or And Or it bookings, of kind against also, on, Wind there? And in is similar in Is or how going a kind on. of little do but set like a surge There's lot just before it's you front distracted, levels. which world. Wind programs there, highlight we you'd of new to record then where case, issue? you're think a bit comes put other business And that's River everybody's go the business timing the set River customers? you're on Wind a like just this even coming, I'm wins. internal? about your as River about is really, it market software when products you And what's suppliers competitive be you

Kevin Clark

your there's two sounds It like question. parts to

a a industry are virtually on towards our product aligned of and from opportunities you when think and we factors. the are you path portfolio as rethinking a as new couple vehicle the So, architecture software brain funnel did we what vehicle. of at about all and look standpoint, OEMs a where a to business refer standpoint, we attribute there system vehicle, and One, is nervous defined are to out it

seeing portfolio, we're nature the that So, trend that of benefiting we're acceleration of our product given an from.

acceleration vehicle that battery electric that, benefit seeing significant of again, In addition we're from. of we're the seeing vehicles, architecture product to working that you're which, given areas the other capabilities some our and on,

really capabilities dependent the Wind which ultimately third the traditional ADAS and business they'll of a in of And as incremental they're solutions are have perfectly anyone And of experience ever of kind that the River is software there then, part software more of positioned generation standpoint, in-cabin to Aptiv, trend. customers of the given based isn't portfolio, with same like our solutions, capabilities vehicle, we we've them help. of of momentum that business, than a software user position. feel looking inherently when then been. has bring all commercial the solutions, we're again, you second all capabilities, sort sensing a advanced portions talked the that it's that's challenged And are we nature our our overlay are our of on you it, into overlay on out from competitive on and for from top that about there So, by and the going benefit of product and our legacy stronger level

Operator

question take now Chris McNally from next will Evercore. from We the

Chris McNally

focus the look over I year, over basis us obviously, top are think to of I XXX better. be given it to the first implied people you then, second half the have lot points quick at wanted the of calcs. I better. midpoint just since half give basis And implies – sort end, in If second half maybe points almost the you reiterated a XXX full would points margin kept, sort know And on range XXX you will I your of basis first. a be margins curious, of which guidance,

lag, is it's more half? first is recoveries much imply us through So, half? hurting XXX the stark second margins the Just half? Can which in different Because But volumes. that? better of qualitative so it on what basis so QX, is walk QX you Since more about points which known just said versus obviously first price any looks XX%. how and that? get half like you second We

Joseph Massaro

agree in about obviously the Joe. didn't it's add. with can you to and from the in think Kevin change Ukraine be that. not war I'll February. to saw know China Chris, where the was I right. year tilted then we'd start Obviously, It's COVID. it magnitude, But Order with you're of Listen, honest we you. and a

it of comps. is Some

the year, August, the our recall, plants week had disruption October, were perspective. EDS just back plants half were low points from at the a closed, the points a week COVID volume time, If harness September, days those perspective. for wire of We in Malaysia, you from high were week. closed a last cost after They after

picking particularly that And assuming or the user three worked in the And year. through, growth four to of to some the we're through addition the as with So, with We're half the months, the pick voltage like around tend high negotiations half up go our that not we loaded, benefit. on and experience launches, in volumes back-end that, the be that's some they launches over got to building start customers of to volume you've back somewhat recovery, the past start year. volume just back go we recurring. that as way up have of price in there's building things

us So, folks didn't give within it that quarterly But was the for was there guidance, and appreciate, guide. we not existing harder in surprise to a – see. to tilt

everything a more market at bit pressure little But ability if we that's rough on the which ground what in we're And from we're demonstrated China, there, a several rebound seeing its are. to QX over that got now you times we've assume the moment has on it, quickly. Now, assuming.

Kevin Clark

comment. add Chris, comments. maybe on a back I'll can taking If Joe's one just make just I step

to COVID as in bookings out And a quite And think all it of with frankly, frankly, leveraging momentum, existing significant XXXX. kept reengineering because chain we cost time, connected alternatives in pursuing has portfolio. same amount quite our underway in lower volume as market. over that and base. base. So, advance our we selectively relates activity we some of XXXX product all we're, is our that supply our our growth the and growth and, at market we We're in benefited continued of tremendous structural to alternatives. which And to initiatives QX customers managed and point, challenges And Right? bringing and have of them to XXXX you also this. strength it, benefited supply We're the the our Aptiv our over created Joe's in about have where supply commercial

And not strength we as more we're very about a us, price. those of customers we're we through out relationship we selective have the about of with. And can we the all a day pursue. focused where where really tactical strategic front funnel of be on the relationship that's given much business fighting it's that the balance in significant improvement to is the translated into year. day And roll Just

of connected, customers manageable. into were but where, run buys a those sit reasonably sorts the and keep than are what QX, of like, to broker think as maybe from how supply we even would higher the we standpoint, we particular at look we we Now, disruptions chain year balance periods like

Chris McNally

would be digits uptick margins we've SPS. basis, lot confirm on see margin it's obviously, your just six little by a the, – such ASUE But, for And of that been ASUE. for because were referenced to wanted bit the do the range waiting two-year a midpoint the if about I in that half I for You plus talk now seem in low-single for division? it, quarters. sort been That X% in just in we implied. Again, we've the would divisions both if to about of Can a think your a it half of second call ASUE. of uptick. second XXXX I

Joseph Massaro

of the Yeah. number, obviously, we're that in I spend plus the copper of Both when metals SPS, on that round is a does is there. ASUX. Chris. what mentioned little right? lot do, numbers, indexed challenged, just right, give is And I two-thirds more to – is ASUX semiconductor some inflation So, $XX that that hit given is, of because where hitting million bit an a Emmanuel, timing, by

ASUX to year, would it, finish call expect to digits. back So, mid-single the

it's So, receive of in the it's recoveries to cost price. just going semiconductor a bearing of of the the at pain commercial benefits lot moment, like the that

for mid-single-digit year we So, targeting the full in ASUX. are

that moves trajectory. obviously, the digits it to us would sort So, year. low-double the and in mid-double put now, a full straighter of bit half. digits about has digits double a for just or of now low back closer more digits high-single SPS It's

Chris McNally

the XX%, really comps great the plus looks of because have Again, like is you growing industry High one. super tough This or year year. last straightforward the it's voltage, XX% XX%.

sort high talk of any upside color potential in about can the to you voltage. Just have

Joseph Massaro

tough is comp. growing It's strong. a It really

I don't it was growth. XXX% it something year was I last think or know, –

there. tough it's was So, Obviously, China back There's voltage. high European the some in hits you've hit got which which couple a There things obviously disruption half, to year-over-year. there now was voltage. production disruption, some high

two with. committing voltage So, long One things going are to there. OEs high doing probably we things There's want I'd in highlight of the term on tend referenced, where want We build cars, make platforms. who – to just selective to about see very be portfolio to that the and they're that those we're those transform other quarter. going to them sure to transactional we're sort their are is – talked Kevin's the

content, of as see OEs, and the every just not in of smaller some XX% on obviously, we've So, to some other China, we're car there, kick see parts be but of you got particularly world, years. the two the about – the other as on the over platforms selecting next of in, we're great you see launches

So that and voltage sort is things frame Europe you transactional the sort importance high quarter bigger have just, given the that picture. that's impact would did But what that going to the some number as in of I of in the China, there. of

Operator

from We Sachs. Goldman will now take the Delaney Mark from next question

Mark Delaney

off, hold EBIT ability toward start have? that because to better XX% And was understand understand are asking recoveries how recoveries Aptiv plus surcharges is progress about more to to maybe price? head you're the and expecting has structured? being you you see make to XXXX To I year the on hoping the you're longer-term in that sustainable a margin are perhaps seeing or more I'm change to this target into I'm XH hopefully trying it better that And then temporary as in the

Kevin Clark

Mark, Yeah, sorry. I'm

little a from a bit question were faint standpoint. You

how normalized back think margins. to more path I a you were structurally asking we see about

Mark Delaney

extent in more you the more at are the being And hold on are second this you products that to are are [indiscernible]. sustainable half structuring I'm The recoveries these trying how to year, maybe changes seeing in priced? what as temporary? get surcharges to those of can you're the Or

Kevin Clark

structural into that or price solutions, the engineering requires cost it's permanent structural that initiatives would – a through our they're reduced translate permanent or which discussions earlier the of negotiations through which cost suppliers, several point between nature. from And our To with done work with sourcing either walked recovery could engineering made customers, that be and he standpoint. that in commercial price Joe when all be and organization, and lower discussions, all permanent

Mark Delaney

on up chip redesigning hoping this suppliers. of to was I was follow

on go You mentioned you're happen it needs kind to a the with be you today, of testing effort of to some system that sense success multiple with to It times what long in having does chip, me might rewrites this maybe along new necessary? How then times in ahead several can give terms what software us remind XXXX? call of take? again, this like it there. But the good spoke of in how just Because, you that now are far a in calls. you seems

Kevin Clark

fairly rare, There It a are nature minimal situations, it's really product. varies easy a the of although validation. the by with some of switch where amount

we validation with anywhere as mid-XXXX. take – that when well initiatives nature advanced high you as user experience, play, think element we about of the do reengineering of to ADAS Given require underway when some range of think between of solutions, early plus. have our where These year been six you place at a Aptiv the been and voltage kind electrification, really activities customer. to for have about since months that bulk can Those what

that needs to to as XXX redesign solely be who the So, engineers close today It's are to hardware as well changed. underway. we're software well on focused extent

programs which be we in as I XX, a XXX software As mentioned, little have the comments completed implemented, of another underway. prepared already think had through and the will my and redesign you that been initiatives, over said, XX, implemented I balance year. then

but it standpoint of investment most engineering been requires for that's time. element some So, an fairly of time, from lengthy it's of underway something a and period

Operator

Markets. question will We the Joseph from RBC from Capital take now next Spak

Joseph Spak

outlook pricing to, about vehicle unchanged. because outlook your your here the I just back at recoveries sort to of talk there's X% your assumed And of some is go to or more light in parts it production like sounds production than Aptiv holistically, vehicle prior. want weighted

like to the outgrowth base core – seem like different assumption. guidance, would be the somewhere to it So, of hold or sort has the a

the out like, could And, of help is and us top the that versus So, puzzle. with sort how really of prior? just much recoveries line maybe now helping your guidance you

Joseph Massaro

I guide, And reasons price is part Yeah, through come holding. there the line. some but did are coming activities the Like we're which what with from. we've consistent economics how all on able said, the the the we've sure that. in the not of not talk about did always seeing economics in in guide. increases or They and absorb going original obviously why more the changed, weren't got guide, bit think really a little remained But, during because no, recoveries We fairly talked year, the to Joe. we of current we're to necessarily was the the were about I of that at we're how time are we're

net no basis, economic really change. a from So

a to Right? more the probably – On I at most listen, line down across come were, year. X%. think, to the and And be takes X%. likely the movements regions. little of closer has there's of a going as realistic We mentioned, lot world we're think effectively the assumption, I I puts top Understand, approximately some bit at they're start

supply if could Our wasn't in chain of view was it for that done have industry with, America more the the probably begin to North constraints. some

what times there customers pretty a right? and sort lockdown to is mid-March, to quickly demonstrated now our going teams region based get extent around pretty their on come It a America is hearing recover on our second into on they're So, in the which at more, the of customers. what some do said of we're back goes the assumption from industry from several quarter. part been potentially our mid and from that's Europe, we North on softening think pretty our softness then, while. going I for to you has of prolonged our ability is availability, started assumption based quickly China, we're parts robustly. So, chip could that And expecting the up And a because Europe, now ground in feedback availability least getting a and it's

said a we're going what currently an comments, and realistically changes XXXX of coming my perspective, have assuming, guide down, Like we're original on try through coming to in the to and go in us prepared what was that's inflation from on So, recovery really to we perspective. sort do net from what I down but no economics. think

Joseph Spak

automakers? all And a and little big River Kevin, decisions quite, about are Wind using are the you closed, with able hear really discussions complex want bit. And often. sort to boxes each those just – the automakers? talked undergoing it's bit to That's talk architecture to and about software, very Wind quite even really to they other. like obviously, you we the a of like maybe you Are It sounds make refrain have a decision the are. a a little all more for River it's again, important though receptivity you solution not on color sure because can these obviously automakers

Kevin Clark

Let's start with River. how we work Wind with

first operate transaction, we So, announced terms agreement. was we where of we chain. today, a when step commercial the as under Wind reaching our software really that with mentioned And were a the and middleware on commercial tool River development arrangement partnering we the of

developing and customers, brings. the that go we're we So, as Wind what as capabilities River discussing that the well capabilities Aptiv jointly to brings,

user where the to with blocks, as commercial have with given history, need extensive, separate it what or increasing well. we're feature are those in very about interest. as there we're kind that, their of River level Wind there an of activities. from we to talking or software, software also There's doing going been building support it's discussions engagements legacy ADAS middleware that a our on and say not. software separate capabilities high of whether OEM experience for I a have and would development, traditional areas on So, we're relates

industry is assist As with we very struggling And feel we're really like transition a the to positioned meaningful the the of software talk to A we in it. about, it's bulk well opportunity. defined vehicle. Joe, it's,

Operator

take from question Johnson Brian now next will the Barclays. from We

Brian Johnson

want up Just follow themes to [indiscernible] related this on morning.

is So, recovery. price around first

a tier OEM, If through X by Second, Earth buy. it's it assaulted tier recovery, [indiscernible]. just X pressures issue for direct into drilling by an down on the tier I've coming X further the requested I'm or every running to been extent to like seems

autonomy, cost discussions? of extent discussions? suite electrification, the of C facilitate having over you is discussed access, level those defined as what that, your vehicle are to we've OEM about at talking related kind recovery just to So, And what these the years, software

Kevin Clark

be Just of focus cost the our input. clear, both reducing to on the is

well, say vehicles, those more what to actually where especially supply we've tend with areas your I'd the place Those whether lot those a we in amount activity those more be point, term with And it's much discussions, there continue those most relationship. amount initiatives where structure of fair it's our say OEMs, to – or and inflation. are with focus electric we of alignment price increases, on battery tremendous at, nature a or senior a between ADAS great area. OEM discussions then supplier that as we success take about and within is are require the have OEM. And we're own systems I'd base, solutions, nature a do or the and relationships. levels semiconductor And those focused whether to in in more discussions there's of to how seeing a there's price long had tend particular especially we're So, of the long the programs do, reduce term having success customers strategic in those lot customer. with a cost of

Brian Johnson

replace supplier of and that extent computer unit? zone with out central in a the or semiconductor second, semiconductor be questions the a domain swap margin you And could even a and that opportunity software. midterm on Is follow the software to embedded around substitution firmware actually to there or with Aptiv a a

Kevin Clark

Yeah, place in is absolutely. now. a We part But strategy that any our that are play strategy. time. have don't we're at whole in the or whole working SVA of this those initiatives our software in And some on of point and

Joseph Massaro

Joe. it's Brian,

recall couple suppliers, we taking Wind products part You pay to own we start we some is of as this $XXX of of RTOS and River over the currently and from did well, Wind that but about the is which for River, might synergies million from talk in leverage years middleware, out, a once other them. out the

with what but a out, couple that's that about well. years is consistent you're as talking Now, thematically

Operator

from Brinkman Ryan The Morgan. from J.P. comes next question

Ryan Brinkman

which taking on question, Thanks power is my electronics. for

course, overall growth of and increased Delphi Technologies Of margin disposition your profile. materially the

prior year the remainco and first yesterday for past noting electronics been just the system. awards, the winning the powertrain was inverters been transferred over I've business, of Although that spin, piece a management for battery it's from power ton of that now which think to I

So, obviously, voltage. to levered very is high electrical architecture attractively

Now, want some wanted you're et power to which electronics River, focus Wind where you like are areas which areas, participate are to of high getting don't on into appetite or even maybe But these other previously your sort growth could margin other in other and of gauge [indiscernible], software higher I areas? know, or cause to there ability cetera. non-competes obstacles just with to

Kevin Clark

in areas where investing. mentioned comments I we're my

customers working in number electrification, with teams a area even power and given interest given high of OEM those space. out built our in in that's customers, to history with we've process management come developing our capabilities or us So, and of and voltage where system in products battery have the actually software an in the electronics solution. And

incremental year discussing for it's this like today, this. commercial we'd So to of by an opportunity be the more end calls hope have us and activity on

of something underway that's last years. like, the been that's frankly, couple So for,

Joseph Massaro

I'm the – ability grow given to you in if the just the time, any powertrain were electronics right that thing not it's do. from that beyond in way back business, it participating on spun business there, market. XXXX. Ryan, space. the was It to that sold its made was focused We're the we're of And making XXXX Joe. sense any how We when had and footprint sure from combustion customers. way not power XXXX in at But precluded it the recall part – into in sorry, internal precluded we was

Operator

David Jefferies. from Kelley The next question comes from

David Kelley

non-autos mentioned XX% of is you think I revenues. now

mix closing You revenue bit XXXX. you've clearly But macro believe, soon. been have kind The River by Wind non-auto a has at targeting quite I changed XXXX. XX%, since of

I bridge could organic acquisition the how that the update to to us guess, on XX% goal you're and about and the So, XX%? opportunities you thinking

Joseph Massaro

It's Joe.

years, think gap of to, couple that in really it, call over closes got non-automotive the growth that good the XX%. We business. think next almost we've I

automotive. product other news, to the got doesn't we've It's fast. good high strategy. work category HellermannTyton We'll the quite in so product to have probably things organically. like get voltage include like aerospace really talked a growing businesses But We've good was side. Now, that product to balance do inorganic continued M&A Winchester grow of in have Interconnect, lines like faster, still line businesses – consistently a continue it other and we or really non-automotive that XX% some lines the industrial understand and have which that to well, on really

So, organic inorganic. focus both and the to continue on

said, As student trajectory think big was number, we've That always was high to we're right a body that a there. not but ambition. to target. hit level going an take we We're get good on that really to a just

David Kelley

clarification business autos Maybe as the quick well. on one

And revenue I the you also X% growth in think and product in of mentioned deck. X% elsewhere of you think CB noted non-autos. from industrial growth S&PS I

other there? be So, I considering some all is gap, bridging factor guess that is there should or datacom that we

Joseph Massaro

some total some and X% The vehicle Right? no. ASUX that growing has nicely. is Aptiv. are no, business So, quite recent No, commercial launches

primarily mentioned but non-automotive one channel. SPS The space that the it's quarter. impacted just that Obviously, commercial this engineer last connectors Aptiv. comment – business, So this, replenishing vehicle shutdowns China part is X% channel by was quarter, did and into the QX the that down the low, which in impacted falls business. I components other total we replenishment year we're in have in a distribution of that HellermannTyton, that

So, you've a little as a got comp non-auto well. of that year-over-year bit impacts

Operator

take We next Michaeli from Itay the Citi. from will question now

Itay Michaeli

from me. questions two Just

to good in potential to the Are that one-time XXXX? any thinking about are beyond a some back from about of the Kevin, is timing product the margin, or go-forward the from there the Going margin half and XXXX? should those little XX cost How projects benefits recoveries beyond redesigns, those. on maybe savings savings projects bridge margin, be of implied the talk what way a for we second think about your is for that? for maybe And the big kind

Joseph Massaro

It's Joe.

looking Let we're coming inflation. COVID the and of into to chain of the do question. over it The think and year how obviously, more end this for or course costs couple XXXX the obviously over run of would the get then, at and Not of year. the be material down years, come supply going of what – is sort addressing next margins me out next in start exit point I rates about the year, at way quite, the sort at would with the

we to one time a one about try the stab choppy a I of think improvement would think forward. things it's first margin at little margin. that of a of take quarter to But second to to expect But and are that a sustain try sort moment extrapolate XXXX little talked to the out still I we go sort or to year. and at half, period go choppy for half take

Kevin Clark

Itay, varies. question I term, those Some Right? to your about longer initiatives, as more it are mentioned, and complex.

late that this of inflation last When – material year, less benefit and offset we're the the you and out incremental in shorter think seeing saw year are volume you years. the we that about about term Some to complex. plus think savings,

meaningful the as the replaced. and rolls it's savings So, products volume out

Operator

next from We Dan will question Suisse. take Credit Levy from now the

Dan Levy

on I and you're ask disruptions a seeing want in the China. to couple Europe questions

And over customers additional indexed a take production. So there's give S&PS maybe Europe? to to can leakages. Europe. in other Ukraine? lost A, potential competitors you And are business are moved from volume whether you we there you've how you for just that then, other sense much of any And the is more remaining granular to in a perhaps or with the any start us you mentioned Maybe be I Europe. operations know just could impact bit do on paying have

Kevin Clark

Maybe let's break it down.

moved, is Two running, you whether we've Up facility a this in believe time least time, customers Russia. Russia watch Ukraine, you point we Africa, not four Or Ukraine, their at if or production facilities. by it up at look When of has have closely. in something schedule, the late operating be manufacturing fully have production Poland, customer. again, talked we picking and in you this. Serbia, that at in for about we'll of been facilities, existing North those That's this about past, we in So, quarter. the some think talked paid footprint.

European Western OEMs. So, supporting

we that We production low time facilities there's supporting in very two at OEM. European have pick us one A weren't quickly up as able Western in are going the very on us few as suppliers levels. to move to up part at Ukraine volume pick OEMs of But point have able some other operating to asking western to programs or the who from this move. production a come were

has guess continue But ongoing it or for to is, revenue potential sense business. things Just weren't we OEMs some incremental opportunities. take that just were, those given over makes pursued. discussions those we And have situations us not whether to evolve, economics, it my where we'll presented given with

Dan Levy

Net-net, like Ukraine been more it the actually going Is sounds impact what's in actual on limited. assessment? has fair from a that

Kevin Clark

things. already bigger moving number, get point or in Russia grand Ukraine We've specifics. out we're situation We and term time, wouldn't long revenue be you conflict impact scheme have in a actually if There's been and a and it. challenges a in this of lockdowns it at into separately started. call before Yeah. war but I I in production China where managed started wouldn't the through OI could

So, we got ahead of it.

they production And and we couple us space, cost we're partnered were logistics with move from we we As a that. on doing it. focused to able had who supported a and pretty I standpoint very had OEMs actually them, existing said, easily, in

Joseph Massaro

to locations. Kevin's where along ability to There production we're And in moved. the are customers will this, And that in reasons if talking we bucket, and not of you cost And it. – the to cost. some a what of effectively were – that just of the slower little about those the one just be a move, we're to point, customers parts and with have Those to went want paying locations it's products other to the Polish-Romanian respond. this bit border, is manufacture sort going western is agreed

Dan Levy

halted? right sense past seen think what stand pretty outright your Maybe is get specifically halted, you to in been we've has your I give outright the is China extent And when a it production also could does on the us what Where to ugly. decrementals now, happening start today? in production more

production if of this So, the a more business shutdown? why you're pressure isn't outright of to sort having

Kevin Clark

at think I all I'd lockdowns. are say facilities in a it. operating. this said pressure of of up Well, on term, depending is time, our point the and length near It Joe the

a components higher Our engineered at utilization capacity facilities levels.

that We never several have shutdown. facilities

wire harness in few level. a on average, have utilization the at operating now, a capacity wire standpoint Those to actually from We XX% harness did. XX% area facilities a Shanghai that are

place. in production is, an is and the long it that's how of we see up situation The that or very don't stay does just closely. does is And there watching So, production actually ramp situation the deteriorate? question element taking as we're

Joseph Massaro

the recovered of time we and in our business team said prepared – my is same heavily had talking March, still bit a year the That it's where Depending is was our talked past. There's we at what not the have And I Right? it impacted. about of demand occurs, customers As different about we're strong, buy expect last Dan, last customers market this be year. when left low. dialogue levels quickly timing. do to disruption May, April, to cars, in industry, a want on just is comments, are kind year, we a still type the that QX the November, in dealers December inventory disruption. little the

contained of year. point there the recover we within So, to the in to by capabilities, we it the recover ability time are to from we ability QX do have and and have of sort and QX, – is where from just is balance year desire stays what a our in customers desires seeing And the our customers quickly. from given we're if the a

Operator

today's would back closing Kevin Clark session. like to That I for remarks. conclude any will hand to now question-and-answer

Kevin Clark

of We rest you, a for the appreciate nice day. Have it. Thank everyone, Great. your time.

Operator

you for you Thank call. conference disconnect. your Ladies gentlemen, today's participation. may conclude will That now you. Thank and

Aptiv (APTV) 5 May 222022 Q1 Earnings call transcript