APTV - Earnings call transcript Q2 2022

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Operator

Good day and welcome to the Aptiv Second Quarter 2022 Earnings Call. My name is Jennifer and I will be your conference operator today. [Operator Instructions] Thank you. Jessica Kourakos, Vice President of Investor Relations and ESG, you may begin your conference.

Jessica Kourakos

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

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

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

Kevin Clark

showcases demand transform the vehicle. billion Beginning increasing our over we thanks technologies of our software-defined joining year. The in everyone providing we half broad-based customers you, value during quarter our half Thank and almost for electrified portfolio including bookings Jessica where last at consumer the X, reflected are as were this second us in on this of billion bookings the in offerings of $XX through the two across for strategic time meet first they and strong the portfolio themes $XX to strong demand the alone, XXXX, record is a the growth double morning. year, Slide product of first the in first stand out;

issues chain growth constrain production and to persistent automotive half relates The second that the impacting continue our COVID supply profitability. theme revenue our first to and

that of constraints production addressed believe in and continue we we levels will on ahead, for the record that and actions will have Looking already with these place. several more be quarters inflation

in are of price measures, the with stronger Newer the increases earnings bookings significantly reflected of I incremental all short competitive and number acceleration being customer long-term. say drive vehicle our and positioning, can our cost and that addressed profitability further product production consolidation another of and our constraints, round in additional will will Europe of reductions, revenue increased including near-term in which challenges supplier base been stabilizes. never has improve aside our Setting as our and structural the of confidently momentum, growth redesigns

in drive So ahead. continuing short-term invest will we are meaningful improving profitability the to over growth and margin that while in expansion more initiatives flow balancing cash our those the years

software-defined accelerate more February the on and talk these investors will to Boston future that in years electrified can we through-cycle vehicle the enable Investor guidance then, our at and profitable XXXX upcoming in will out of resiliency about update strategy how XXXX results XX. improve and ahead. the growth and our We be By fully will our Day on

Operating softening and growth and the our prior schedules X% incremental per safe, $X.X quarter up Revenues income strong to respectively, million than revenue green our shutdowns strong billion, earnings second of demand turn results. and portfolio in in inflation, Europe. in supply and now Let’s more driven by totaled China from reflecting $X.XX across year, technologies. some share by material related production vehicle connected chain disruptions, totaled to $XXX costs offset

of start experienced underlying quarter a to to grew in production the semiconductor a slow strong, X% quarter. and North while chip second revenue Turning X Europe combination supply Slide factors. finish points despite remained strong China production, had very due America a weakness increased production X, vehicle the COVID-related over to which macroeconomic from significant disruptions.

increase this With of environment, continuing and volatile to have facing and chain near-term. on and challenges to have are and the While increased our continue production the costs an is several incremental translate into supply impact initiatives resiliency job team doing a keeping supply inflation meaningful of we in accelerated profitability we the going our our into very improve likelihood the excellent persistent gas in disruption Europe, agility to business. our disruptions

Moving move cost awards our into bookings discussions program And as for tremendous to naturally The will bookings has production, long-term our support pricing well well these Slide on our pull business customer for the pricing profile. our they margin margin in as recoveries. improve as X, new both products positioned new us framework.

the negotiated near-term, impact more a significant cost plan, we Over have half customers in with are profitability. coming recoveries already have will and above second on

impacted For for – XXX semiconductor second will in half quarter the our year. ASUX half the the margins of going recoveries basis the the by of and benefit results negatively year in context, second timing points broker buys but second cost of

to Going of transaction. time future the at will forward, premiums all be customers passed on the

We more are input improve costs validate components on to to through profitability. second continue and sources passing key increased

footprint, overhead to additional in savings further In expect $XXX addition, and we in we reductions yield our are which cost million XXXX. implementing rationalizing

flexibility product The during XXXX. accelerate several into to We elongate cycle. the increase late XXXX mitigate redesign the these and will automotive current initiatives both of from on benefits our sourcing will We believe working impact and have headwinds been growth the macro redesign also inflation. initiatives

success active means to these as still preserving So actions, position while increased as resiliency that important reduction improved safety opportunities, including short for for high-voltage we cost executing profitability. both highest investments and the our growth and in are validation our and in electrification, vehicle redesign the smart That long-term. are architecture our further product initiatives optimizing structure and cost well us

has acquisition a strong of we Wind River. of put the connected. and software model with about many to our Lastly, capitalize of are resiliency in excited position the trends mega see and opportunities In us the also on green competitive the summary, our business safe, strategy we

Aptiv momentum lot the of X, our is Turning as bookings, a business of new in traction. gaining to reflected clearly Slide

provider Our as significant translated the the competitive an unique only software-defined provide allowing the electrified to system of Aptiv enable solutions to nervous of both significant mode, into path to a has full vehicle brain the position that fully vehicle. and efficient end-to-end – system-level

vehicle level and savings. platforms, and Our capabilities our and and full and translates cost system vehicle weight, optimizing scalable and vehicle full reduced improve flexible mass for quality, allow performance – reliability significant architecture into complexity, solutions

development zone controller year. launch first-to-market with our accelerate also of the early next efforts Volvo to We vehicle positioning customers, us the

customers seamless only Our but of not and cost customers, smart architecture systems for accretive of XX automation software-defined smart recognition in with solution $X Aptiv, for vehicle our vehicle the vehicle today, the industry fully The architecture XX business functionality. value of is features and and is lead almost is billion the engagements total need vehicle. demonstrating to electrified the creates to also more reflected bookings for how the Aptiv new integration new accelerating enabling and uniquely lowers positioned

strong of our framework confidence new of in The the our to above-market or segments. to of margin sustain business growth half across long-term first Moving during X. our year us at above the both bookings business our gives momentum ability Slide

the quarter the to totaled bookings quarter record and bringing during Safety in company’s halfway User a XXXX. even though through history. Second Experience $X.X Advanced are totaled full the billion, we for also bookings for record billion year-to-date $XX.X record a the $X.X any quarter, billion, a just total year,

programs to into as we make large central evidenced received slide, we German in vehicle continue on a in control architecture have vehicle we our in award advanced from first same controller smart quarter translating significant zone advanced to the business OEM, discussed development customer. previous from The new the by addition during the As involved progress the on quarter leading the awards the are booking been commercial solution. we

are customer another to solution. adoption extremely billion including excited for quarter, customer our with reached $X vehicle product our We for high-voltage quarter year-to-date redefine total of in awards, segment bringing $X SVA Solutions Signal full the and this Bookings during with billion over continued our as deep the strategic strong partnership with line about $X.X architecture the billion. Power a we

proud technologies, nervous the our vehicle. perfectly is of the connected I green to we bookings our build system system a continue done architecture, bring team optimizing for relationships weight thereby and with both the with mass, truly to the is which and reducing to the our value customer also portfolio a our testament vehicle level reduces costs strong momentum our approach It am the advanced to choice customers. approach and work of to brain relationships, partner customers vehicle has Aptiv and validates which Our OEM for One as of strong megatrends. the of safe, aligned

with Experience Advanced growth continued in driven strong, primarily segment, on down by the the Safety Turning safety User revenue by impact active quarter, continued chip and expect ADAS in production Europe XX% X the the to result in quarter, North in User advanced year impacting growth. Slide the XX% semiconductor penetration America our revenue and offset and systems shutdowns constraints of revenues finish partially remained Experience Europe approximately China of shortages were during we and supply to X% volume, the of up but

into for very continue the XXXX. vehicle demand customer for of of a and we see strong mentioned, experience to smart As and year increased activity this remainder architecture pipeline

deployment momentum under for and leading leveraged with the competitive next-gen further to continues to additional the architecture. ADAS customer. as show of to software-defined with modernize architecture X the Supplier our optimizing awards position migrate our OEMs including a $X vehicle global $X system, in ADAS to their capabilities reinforcing our Active unique opportunities on their software Safety Level in development than to a several of X, the and have We with to software their position our addition which OEM the offer more this dialogues for strategic redesigning customers into vehicles quarter, Level enter also just solutions. value enhance future, software of strong of unlocks help billion billion to Choice customers’ Aptiv’s We award

X. Slide to Moving

the segment Second general revenues quarter and Power space Solutions Asia points strong programs, in reflecting driven and electric in high-voltage Signal North industrial, that by increased XX%, better result XX% and that rose the X semiconductor, vehicle XX%, of launch revenues global and markets of growth production, our the during markets. datacom in particularly than commercial quarter, America non-automotive new increased vehicle in revenues

cable the world. next high-voltage leading and quarter, architecture for our design vehicle during we the manufacture award global high-voltage and with optimized electrical of Aptiv positions customers European portfolio architecture OEM, substantial systems the new years. distribution, this solutions, customer combined position connectors, in the located for for The our uniquely us billion with both a confidence power competitive growth new In they over strength a increase us of over data XXXX. awarded to anywhere electrification and industry and $X business Our in gives centers their bookings of are size management funnel offerings several as scale of for major positioning programs, electrification reaching our

we to delivers business Moving to on Slide XX, market. results any continue execute build outsized a plan that in to our

customer and have and safe, remain. cost green product the its in business and and be track mirror resilient headwinds and would right mix, the supply and the disruptions be more experiencing now, into structure associated model. right and chain portfolio, steady a We flexibility that COVID, would but do connected would by of production other execution constraints the financial translates economic we rearview We macro growth, right record that challenges the hope regional

present more here. business the go from macros we even these or strong expanding that, turn the will strong the actions through also With highlights to in that improvement while allow will taken And supply potential chain on persist call us for have finish footing with over several will I I to in margins. quarters, Any an more financial appropriate we the While model. end with year to confident a growth the detail. may to the am Joe upside year resilient expect more

Joe Massaro

in of were on another reported recap billion EBITDA in and quarter with the and which Slide Thanks, inflation the everyone. impacted an by impact volumes the negatively million the business quarter material above levels as points difficult operating environment. XX, operating China changes our over and had production market Starting related despite morning in prices. impact favorability. higher commodities, impacted higher costs COVID a quarter $X.X strong The as FX increase in positive income the The and Shanghai highlighted, EPS X Kevin the of growth incremental euro second quarter the related negative Kevin Adjusted income were $XXX the approximately X% up financials customers, interest China of on income from negative Revenues tax $X.XX, in lower with and of our shutdowns growth equity good Motional substantially as flow-through per market by reflecting of X% prolonged respectively, price over while and levels primarily supply million offset despite shutdowns underlying was share growth costs shutdowns, and were vehicle copper disproportionately Earnings the the $X.XX base reflecting operating chain in to well impact. to quarter. a offset lower loss the China. at of $XXX disruption by

expenditures year-over-year Lastly, increasing $XX $XXX with for million the million operating cash million, quarter. flow to was capital $XX

was by detail were our Slide continue benefit strength revenues Pricing as in FX in X% saw activity we In commodity were growth noted, and X to a and in quarter progress, as over compared year. we North the Active Power the strong XX. recovering prior Safety net points quarter regions. strong continued volume XX%, driven as to market, up regional continue by make all our demand. input segment. our growth across our of driven product Safety representing lines American Increased from second higher Europe, Active of costs outgrowth perspective, revenues at high-voltage product was revenue From Signal negative and customers line from Looking and more to as to positive and the market over on movements

However, during decreases a from of did schedules what the we in production resulting believe semiconductors and constraints chain combination start quarter, see concerns. to European is we supply around macroeconomic

moment, have European of X.X% a a As result I second decreased the revenues In schedules year. of heading into reduction in in seen a discuss the we half also as will shutdowns. China, the customer

X Chinese as the resiliency the market, grew points of our product underlying reflecting strength above However, we of our the as well portfolio operations.

shortages the User Moving quarter, slide. and includes of Safety, in America by Experience programs. to certain XX% Experience segments the points growth underlying X% where up the Europe. revenues in program on to quarter, down despite the semiconductor rose the were in User X of larger supply China due and ramps semiconductor shutdowns and growth This production. Safety Advanced next over reflecting Active was the North primarily on the driven impact for revenues constraints vehicle

revenues As we impacted increases contributed discussed, growth million, the Volume semiconductor the of representing of of a and volume quarter. driven including components. EBITDA was by revenue in the commercial high-voltage flow-through higher lines, a versus significantly prior offset in up X.X% X% growth segment’s QX and last saw have Power inflation. and market. incremental earnings, costs. were costs positive outperformance Solutions material of including positive the to million EBITDA Segment growth have Signal and adjusted vehicle, commodities quarter flow-through the engineered approximately the lines, down increased representing input profitability. quarter by segment year, over several disruption our previously pricing $XX was $XX of million offset $XX $XX market in continued of down for year. XX% impact compared were The as XX% and product XX%, a Also, million by non-automotive price in was growth product in costs, FX on was the strength the and impact

Slide to XX macro updated our and XXXX now Turning outlook.

impact units global in on X.X XX.X prior estimate million from half customer an of weighted primarily approximately XXXX. our over lowered reflects for reduction to decreases estimate of X% second We increase The our have both well active vehicle basis, an units production a million movements China and offset North to scheduled do in believe We resulting schedules substantially have as schedules Europe our outlook. semiconductor concerns significant America in from availability. not reductions macroeconomic in Smaller reflect on and Europe. strengths as

Although We We plans that winter. and vehicle regarding industry does year-over-year, production there pace and a eased increase is of of customers overall conservation limiting up European ramps. that any chain to or need supply gas European energy not estimate availability contingency to understand are set second or be a not any energy related production direct operations heading Europe into there have communication we have the actions. our constraints shutdowns To-date, natural from such to subcomponent stop have for periods note should reflect the seen received production half planned not time, in manufacturing within conservation on factor prolonged slow would reflect our schedules. actions shutdowns customer is

manufacturing resiliency European from proactive of base. chain excludes operations summarizes our are which and impact addition, of XXXX the In teams Wind shutdown supply steps potential acquisition. mitigate outlook, our supply Aptiv’s the Slide sites help potential XX updated taking to and River impact on our the

In recovery changes by euro copper European recovery bringing guidance. addition the updated in are both production, the receive XXXX of to estimate to in our total the original price year increased significantly from $XXX million, lower price, our expect of to which outlook and million. for also down we have We’ve vehicle we full the $XXX approximately the

scheduled acquisition earnings $X.XX. As impact includes majority itself. our $XX the excludes $XX.X we growth and are We adjusted $X.X partially approximately in of of and recoveries, we financing per estimate XXXX with price Wind billion the production roughly revenue, with revenue in And billion be market. to the X% discussed share outlook. of reflects already bridges River approximately are be at making million, completed estimate expect to the over Slide the income with range which This to a current to of volume XX February expected lower be operating discussed, by progress the Starting $X.X $X.X the CapEx have expect now guidance sales. of midpoint. European the flow be but we the billion result, billion, Wind previously $XXX we reductions to continuing by River cash offset billion prior offset to we operating EBITDA our

In joint business we our venture held into addition, to are exit U.S. reflected sale for Russian working this as and have plans appropriately GAAP.

approximately the copper for noted original pricing assumption on $X.XX a headwind and $XX And this the million copper weaker Our at included another to revenues the million is euro guidance of based on The represent as and revenues. $XXX euro JV. parity price. slide, lower

inflation through And offsetting Turning to costs committed to year. have increases for of near-term revisions price additional with impact material the The cost full on remain decremental further And slowdowns. customer flow possible, although effectively such FX the and revenue schedule moves operating income. on are recovery adjusted input a relatively the we small the price short-term consistent The the cost commodity prior incremental with XX% offsets earnings. approximately line, is significant production increases. although to

have quarter. Lastly, including chain in disruption we costs supply incremental to $XX second incurred in our included revised China outlook, the million the

As the drive EPS and strong with with income line XXXX, In supply cost expansion, start XX% we that and of negatively top noted, growth have of take and of points operating chain effect million growth benefit actions constraints, Kevin macro an to impacted second growth growth production, taken summary, from of although flow by $XXX of of up reduction half other continue cash X% this factors margin we XX%. $XX.XX year. XX to and vehicle basis XX% have annualized billion, in operating improved performance, revenues of

half stronger timing to from with the technology first take is XX. finish effect the Slide half difficult euro in certain in of The year, we of disruption cost operating supply of forecasted to first pricing, Moving commodity to of previously is price half to the and performance the changes the the Flow-through and run in costs as and of copper a quarter performance. impact continue and us second drive in QX. certain that primarily comparison customer resulting reimbursements rate half environment, benefit improvement half with the regional margin customers. half on growth market. vehicle the the discussed full expect timing in fourth will year with to certain strong and versus indicative Despite over production a savings begin actions wanted Consistent chain the year to given operating the some of FX second leading higher our of second We and prior our not years, the portfolio allow higher trends. reflects historically result is is the settlement second the recovery

In price in certain rate. higher cost-saving a and annual half addition, recovery as are the normalized noted, versus actions run second

benefit For implying totals operating his back I’d XXXX, hand the that, we million, rate call XX% Kevin With remarks. to a approximately more like would estimate to to the margin discrete normalized of half closing $XXX XX.X%. for second

Kevin Clark

Thanks, Joe.

strong momentum, to am bookings come. profitable I Turning Slide XX, which will in years the growth to with the yield happy

We and progress will we’re both of improve have work near a in cash the and to that earnings several making do, flow long-term. but lot on initiatives

XXXX. flow As anything actions margins Joe as production cost More we we into low your on expect Thanks, can up solid cash initiatives let’s second vehicle we’re on Q&A. improvement structure, point when our prices further be meaningful months optimizing offset guidance. that around And and profitability the a clearly else for improvements But half open assumptions. can again, the confident will relatively the influence. a will translate in attacking we we coming details during inflation increasing I’m into to in for and move discussed, action and provide time. presented line these we or XXXX provide these progress control significant

Operator

from We Capital now take Joseph question Thank Spak with you. Instructions] [Operator our first Markets. will RBC

Joseph Spak

discrete if untangle off what’s costs you bat. some sort $XXX that, $XX million, know those some the the maybe performance? Thanks. guess help the XX% disruption the I the Is half-over-half million performance of right I start then about Good things. recent color. One, rest? in of what’s we or on or first Can China, talked confidence those in lower And of the buckets. right, Slide thanks the for think just half of incremental of could and conversion half? from everyone. items – second recovery And morning, the sort given we sort that XX, Two you

Joe Massaro

Sure.

start. Joe, it’s I’ll Joe. So

I XX% XX% the the on even yes, So Obviously, ASUX volume was we QX, helps have volume XX% more to been incremental, running mean, in close level XX%. QX. – at

at So big continue now a is for product are level, High well volume to. contributor lines flowing the the and voltage SBS.

over in that level last say to got improvement. would of very Couple is freight with performance disruption half million, On we’ve half will I few $XX as things the on disruption of $XX get the seen And in there. China, your the things costs, chain consistent million past we’ve costs lower that quarters. second the premium flow-through million like So you some as $XX the what is overall supply better. disruption million about and costs, just first improvement the other question talked we’ve of $XXX the improves costs, and those know,

you’ve we get the million of year $XX some around initiatives well on back then stronger we in were natural total half million – the little half performance including in in cost the as bit – there. hitting the NRE you’ve improvements around $XX the got QX. favorability actions performance regional plus and in got about saving the additional back as right of that’s and million that like So at us business things just have with some XX $XX other working $XX million, And of

Joseph Spak

million. those said you $XXX totaled But Okay.

comment? million a having am I total unless the guess I of bit trouble sort I into the understanding, little $XXX guess $XXX I So misunderstood million

Joe Massaro

difference. the then of chain in million sort and million kicking million savings $XX $XX other the cost to about have QX from strength $XX supply disruption, is You from the

Kevin Clark

volume, relates as some NRE and Joe? other So it to timing items,

Joe Massaro

Yes.

Joseph Spak

AS Okay. & I UX. just moving guess on, on

some And think about point XXX like it you open headwind was So in on here quarter. basis sounds those purchases said going semis. you that market get forward, for I immediate the a of more recoveries

we recoveries, digits you – mid-single as I that single that that Is the that the of or still maybe and mean to sort that high of of half. I giving level get go the the for half on you’re everything half of sort of through think sort can even is So now in segment? sort just back back said past, in – second the going back else year to given

Kevin Clark

of single-digit kind back for to half slightly the ASUX. QX at QX, achieved digits and mid kind margins single half of back mid kind exit high We for Yes. year, higher to of including

Joseph Spak

Okay, thanks. it pass I will on.

Operator

We will Lache Research. go with Rod Wolfe next to

Rod Lache

secular sense [Technical of no the there Difficulty] wanted So to a is I from margin here. just growth. better question trajectory of get

a [Technical normal were the talked Difficulty] from [Technical code. additional billion, previously around $X.X the about now, of Difficulty] back billion And like margin million hoping but a $X.X run got part [Technical showed think years XX%, high-level the next obviously, of X just and units And over on is million the of something that original maybe targets, [Technical give implying a for from color, sort either market ZIP like or the $XX you’re but $XX low rate upside. pretty Difficulty] EBIT three these I I you’ve the how to growth over [Technical half? $X.X your can billion kind bridge a X add for You’ve just of was which recover Difficulty] margins XX%. us are recovery right numbers Difficulty] is of million Presumably, you that

Kevin Clark

up little bit. Yes. a – you’re listen, I breaking

So just with the that sure to to to question your changed. fully trajectory. as make relates has nothing and think I business it model understand respect flow-through Listen, margin I

where obviously, we’re units. Material at time, at right? record of cost much period a lower levels. XX operating in million production, We’re inflation is vehicle

with for margin performance. going engineering happen through old one; our of supply we’re chain material get our management growth, customers; activity through in [Technical Difficulty] significant back through three, out continued to revenue That’s a from chip pushing amount targets standpoint, two, solutions. consolidating to going ability where confident to cost the semiconductor principally supplier We’re new more a overall we’re older we’re increases to solutions

as optionality choices have aggressively customers our We’re validating products. own selecting more well then our for so And for cost as second structure. ourselves in we that or sources both we’re going after

is difficult macro underway, ultimately those to all I’d to this of our the say especially what aspect now predict rebound those targets we have previously environment America with what – confidence ability we is in as we’ve the in China hit production relates trends, right So in today Europe in initiatives production. to a versus in rebound in strength continued in Europe seen see it North in continued vehicle that and

Rod Lache

half. for Difficulty] in just $X.X year me, you sort $X.X XX% normal to hopefully, either a or guidance [Technical billion the or hear from like rate XX.X% midpoint us, billion clarify you of back $X.X maybe the full run billion the So you at implied can

absorbing what Difficulty] is or that reimbursed? supply in material that or been absorbed So [Technical the kinds those actual not unusual COVID you’re chain costs engineering has and yet

Joe Massaro

in Rod Right lot half little that increase in million. back is has the now, assumption half. bit more right disruption a of $XXX in first a the some Obviously, costs Yes. been China and incurred around with the the

we’ve I I half But better. continue to first is $XXX after $XX flowing Joe, mentioned still of is of million second $XXX for an lot got under We’ve in. to As expecting to got that get obviously round million. million $XXX a of $X.X got think, perspective, gets built number we’re PO. that billion – that built into $XXX million from And price it probably million. about is, to half Inflation of commitments need we and that outlook, just $XXX price improvement already customer that as million about through of sort of

step do through perspective. a were of price seen But we’ve we’re that’s of But it quarter from as work increases. forward the inflation first we of terms we’ve got now said, actually more where big Kevin obviously, point, a course a customer occur time that. And to from finalize incorporated to in passing end second the little at fair just to of So quarter. been certainly, the the over bit amount we those Kevin’s real a – of

able more get to that to So we’re from commitments start to customers offset quickly.

Rod Lache

Okay. numbers, that That’s your kind then can about of of pretty I out. that a helpful. wanted little be sort year on anticipating that. a bit larger structurally you should frame? changes And still be talk we from we we drag Should about be big assuming as a lastly, get pointed a to how commitment X And time in or or Motional you something sense just that a drag now? the thinking should of to

Kevin Clark

of obviously Well, sure investment, at trajectory commercialization, With seen rates. related will announcement. respect it the Motional. still you’ve a UberEats committed to yes, we I’m sort From are continue very current run to to

we that relationship. the have know You Lyft

autonomous. know vehicle the the network XXXX in X You beyond fully Gen Lyft that

So from track. an remain overall technology and commercial on standpoint, things

solutions stack. software We well continue to our as internal autonomous enable work their certain and advancing closely as solutions ADAS them with product them on driving that providing with own

remain committed. So they on remain track. We very

what the term. and fold Las the medium will driverless from a to over and working monetization of fully funding opportunities commercial see continue the do team bring on longer XXXX, in a an standpoint Strip into We evaluate technology we to number is will we vehicle other to or And and on the Vegas on. put overall

Rod Lache

Okay. Alright, thank you.

Operator

We will go next Bank. Rosner to with Emmanuel Deutsche

Emmanuel Rosner

very you Thank much.

like of I Europe? First what And embedded question, been bit give a little or us a really messaged I’m this that are is this through Certainly, I there was like of bit is this of – hoping else, crisis, but in in in something sort this a hasn’t case level final of energy your surprised outlook headwinds? so this scenario. terms going color far, from also terms exactly been seeing sort your an on guess not more you point if what in there you’ve would automotive risk? be base of starting in players can

about major second You fairly have some automakers sounding in half. the European recovery auto’s the confident more

bit a you like give Europe? could a us the your buy of really final So in you are of some sort seeing just it a Is slowdown point. a just function of a it was mix? of or is chips function hoping it if of customer Is you little

Kevin Clark

you’re Joe impact raised Yes, the detail. right? their it as Europe, provide significant European additional outlook reality hearing I it’s and Listen, mix think and will Kevin, is to who have narrative the relates production. are macro on OEMs there situation on on The concerns vehicle

saw in on there Europe, downturn view may second think quarter out of quarter terms and what’s a year. We So this general different obviously different players it’s rolled be or the a We I in out views. going as obviously in who have played past concern. have the significant of

relates specific big There macro semiconductor say element that is availability that I’d some a the piece. during is quarter. So impacted to us underlying

we but downside somewhat need and eye impact, there think is some which, that to that’s actually think underlying our in Emmanuel, what’s has for Europe that reflects on, that keep do just an So we there macro I our reflected issue outlook I that outlook presented.

Joe Massaro

customers know Emmanuel, clear you engage how and it’s It’s suppliers industry semiconductor, concerns. I’d customers way just raising the with add the talking more has a are escalate not us. been semiconductor broadly and it’s availability. and our customers and escalating issues working with One, to companies, how pretty the the they that couple than escalation, are the things. of through We our around more just the

between say tell moment to in update, And it’s is I as the at mentioned Aptiv. that’s of split would the I specific semiconductor availability one sort the and something things to the macro. of hard June not So somewhat

ended the things back period those One the are the of not half right. to back year, second orders seeing seeing rescheduled of I’ll orders, we extent call are we the what is into we with, the

in depends it supply want cases down. the a inherently what call the year extra a first would to looking in call volume that pick of So, lot that, from are half. to up come They you of on half schedule the in on the constraints of full some basis not back have chain that’s

that. So, we seeing are

the comments. think European number related they that shutdowns also the back half year are a we lowering for energy But don’t do are moment. this at at Again, of this we of for point seeing have schedule schedules my We reductions. to OEs are

Emmanuel Rosner

just I I of at what on of very the in sort are operating the the Street is And following really second biggest if the look one prior you as are the you second same and like you Slide described. that question it’s the essentially, below I on fairly But picture trying a Europe, looked am where primarily versus Okay. market quarter, strong sort was operating versus I XX, maybe million color. basically would up of still your argue driver in this But the the describing. action appreciate big $XXX time, at. half, income maybe outlook to expectation lower income and the understand the then outlook new essentially and at as this happened still a miss calling for old

half And so getting it own seems seems basis, like particularly strong that supposed are have like was the half. something on already your dynamics macro worse it in year the be actually terms a in describing to of you a and the But the of macroeconomics, second happened. is second lot while level full headwinds

you just can things? you So, go and see how this back over explain

Kevin Clark

are I saying don’t half second the think we getting entirely Yes. is worse. it’s

basis weak, said, are in we sequential think be will second okay. saying and on vehicle a half I the will better. Joe year-over-year as production, Europe be

will So you a versus North semiconductor – to believe as and second America prior chips we China. see in it There in expectation and availability. supply is continue half impact to strength relates

will we semiconductor see Disruptions So, be some sequential that on but pressure HX, down increase improvement. going the availability. downward that to on of increased to based are amount puts HX

muted We second basis. again, half, actually half on are sequential a versus first be expecting inflation to

walked like that the cost first year. reductions increase headwind a actions in incremental place was recoveries Significant be took customers of through of then won’t or it the benefit the cost year. and from Joe half half the in it from cost in that So, the first

there it volume in as second From of year that tailwind that inflation very the the So, that in not be and are Europe, strong second either flow as continue as will as half to there our an or we a will I for the as would overall certain half taken in think markets characterize previously. are some is at the well such strong. And second half were standpoint, not it of disruptions year be headwind. actions outlook weak. as that the Emmanuel, was will a first through be the least certain things half

Joe Massaro

when Yes. Europe. high the step And was that’s are due individual back, Emmanuel, regions, I shutdowns. your think when you you look calling obviously China to sort understand why a of we at question, the level it’s out the take I down

revenue missed of Europe. the But We Europe. That’s half some in the half are originally than than actually being little offsetting up being less forecasted. the in China little a of half the we stronger back the the again, in making of by from America is of a back North year deterioration year. offset

some being think I really European versus but for and But you the in sort there comment. up the is strengthening within America, is China North appreciate revenue when by I either number. missed in made look revenue So, region, downside the of HX QX

Emmanuel Rosner

much so color. the Thanks Yes. all for

Operator

Chris McNally to next Evercore. go will We with

Chris McNally

I comments so together – But kind have asked of to a be be put the the little been to repetitive. so far. and to and just questions some sorry Thanks it’s wanted going that of

first you then am half forecasters second China, half, on most down over that half with of getting production are Europe, half. same getting And have XX% up for from aligned sort down the specifically X% XX%. half down second Is on have? X% to saying over comment, So, to first you obviously, second people what X% are I weak XX% something when also like like your X%, something

and we over we will page because want question same just the are I I over be asking to So, here all all sure make on the volume think again.

Joe Massaro

Yes.

year, in So, down at a XX% up have been for the move. guide. X%, would point this the original full is which Europe we big It have

our it added than Vehicle on And X.X%. X% we guide, approximately the a to missed is half less X%. scheduled China, are in China. revenue given XX%. So, over have We less have down in the little like higher some the that down Obviously, up original production first guide. run make down were up X%. then recovery. in is North the we We we will of revenues seeing growth approximately we half, revenue. the market had perspective, prior second I that. up in America From so in said, a little half Chris, a than about

Chris McNally

– talking you into Yes. is the – are the right? about I wrong. the and that are is, production, these guess weakness electrical. main will I – on are second – and is of Europe said good out, think forget right some Aptiv comes to I right, just question They Joe, truth you everyone when are has that sort weaker of the China is the ground will on three than one But insight QX of now this you where echo always about forecast you what question vehicles, materially guess every a sort in of half. of else this Emmanuel else respecting come on but everyone you,

proven right couple So, on will months? When do proven am of others think or you you that next curious be in I just that timing. Is the wrong?

Kevin Clark

we three-month that customers. Listen, Those we – to use six-month a over off our forecast what what from or receive is think – we we I timeframe. Yes. of operate

schedules. signaling We terms seeing region are where forecast. what So, others use like or use is to long-term. schedules. don’t their by sources we in near-term We IHS build who we the for what actual that are we operating build financial for build There of that are have use

and QX is QX. see out will that you view our So, play during

Chris McNally

second follow-up that just million what question the confidence in we to walk – Could plus back. QX kind come bag, Slide million the asked aspect Okay. Joe different was But margins. how RBC. to through in I getting you help Clear. $XXX of it slightly Maybe your if number bucket, disruption Can and the much us assuming the would was of know the obviously, you second in something you and of think you XX, that from say would that China, of you doesn’t then $XXX get the big in sort sort to number, on XX% like half? COVID are is just cost half in which margin performance is a could the of

Joe Massaro

Yes.

second at supply So, going to look improvement half – is in first chain disruption $XX going $XXX away is COVID and million costs XX% $XX is away. China million half, million, China you

China million away. is So, going $XX of $XX million the

half, to is supply is rate from there put run trends world. trends labor that and in – forecast. based lot on disruption, in million confident still decrease other world premium what enough the a $XX $XX from the But again, seen we level yes, have in feel chain could the of freight, The we downtime, the in the happen a obviously million first in which that

$XX is $XX that’s So, that. million of savings. million cost plus

quarter So, out third in are the quarter course That quarter. fourth and come will the of basically in those be second over the the back there not that’s headcount half.

confidence the sort call strength normal Things customer high balance the there. performance comes the So, some that The what sort like there year. with trial in uplift back of half time is of of particularly NRE, and will China just I in businesses. that is half performance year flows manufacturing back some the at how the of in the in of and plants through volume in the

COVID, those very every QX. Nothing we do business trend. nothing that So, are consistent trends of see to with with sort to do normal chain new, supply not disruption,

the that understand the degree into of was number big on what but… slide, in So, obviously, I fair it to put confidence forecast.

Kevin Clark

I we items that there But very, already into executed level or half say go have enough are executed we we Kevin. $XXX roughly is that after or have that the to we year. in cost confidence forecast. the Joe in confidence another the it’s said, back very executing. those of put to Chris, have price of all need would high million of

We have made a lot of progress year-to-date.

a the have production down standpoint. We see what vehicle to customer brought schedule outlook from we

Europe would energy down assume, the confidence of further bring in that would a What level levels – beyond issue a and potential be what headwind. sits. high where we does take production vehicle that impact So, those could be be in

parts China, the or stronger of free additional growth On a would or in up the a in supply North we tailwind. or to select semiconductor America side, we be see flip that extent see

settled, So, we have high we of where a confidence. level very

Chris McNally

I Okay. team. follow-up offline. will rest the on Thanks

Kevin Clark

Thanks Chris.

Operator

next go will We Kelley with David Jefferies. to

David Kelley

discussion. Good the for on up Thanks just questions. taking Maybe morning Kevin my and issue Joe. following semi

have isolated, is increasingly taken at where back still the the we problem a step broker some point? And I of a of shortages months? guess, last couple I shrink broad place noted that availability are you meaningful or the this the disruptions. of number of but kind You maybe that’s them, if categories was we over in step component by am back, seeing are China But take assuming this step up.

Kevin Clark

By improving. and is No. large, availability

that, as one the as been market would are a But I been for well challenge issue. actually supplier have overall, us say, We ongoing has I semiconductor and an availability But believe seeing improve. that’s we others.

seen has positive have of resourcing been that. about something But increase, the relates to overall increased working We we availability, Joe are customers. inflation in and That’s balance it general. talked as to pushing through trend prices

David Kelley

held here. schedule And Okay. That’s outlook then the you the growth in reductions, light helpful. high-voltage of

versus you to in And So, Joe, from you mentioned that if component could high flow-through strong the seeing customer you specifically are maybe prioritization EVs? there availability, voltage. the speak

margin contribution should relative how So, think we that from outperformance? about

Kevin Clark

Yes.

past, to no talked have solutions. very has for what think about change the I Joe still strong we in high-voltage relative see electrification demand certainly about, talked

business The the All electric be are to customers margin vehicles. weighted it And overall the plans very battery standpoint. of that accelerating margin of average our relates higher continues their as to from an SPS profile certainly attractive, than average.

Joe Massaro

Yes.

product the $X.X David, sort hit think we it to the billion, over line would before, time about billion of as that to segment segment $X perspective, up get margin talked expect and mark, move I high-voltage it contribution average sort from $X as sort you SPS billion, got to of a of average.

David Kelley

guys. Okay. Thanks Got it.

Kevin Clark

you. Thank

Operator

Itay Michaeli Citi. to We will go with next

Itay Michaeli

everyone. Great. Thanks. Good morning

questions for me. Just two

of a normalized normalized back at new mentioned And restructuring? more base of terms the remarks, and second benefit on long-term margins the of the think framework. Aptiv to margin and maybe second, Joe, the conditions your Is discussion, from And XX% go-forward mentioned bookings? or rate you go-forward think I that elaborate seeing incremental prepared are maybe that kind going half above you you with to hoping the I about kind to Kevin, of bit can bookings that good in in margin a what First, were think for was the coming some you XX.X%. I

Joe Massaro

perspective comment do few half was I margin will specific year We sort that of from back things. hot a we get run – very the that business for start. normal Itay, the a Yes. XX%, of in because a of a yes, that lot XX.X% question we

on with to baseline sort thought So, a of second half second people better what was taking out we we the and attributes. wanted provide unique half

Kevin Clark

And the as standpoint. roll in an Itay, a we we contract on inflation alternatives through to environment programs The change increased where relates new have we current as environment, through pursue where programs, to to from current process pricing components agreements structured cost and ultimately or – and way costs it to out flexibility are a contracts customers far flexibility to in price through more the more have or we push these customers.

Itay Michaeli

Got you. That’s Thank it. helpful.

Operator

Murphy John our last as go Bank will of We America. from to next question

John Murphy

will ones here, morning. Good ask two guys. I quick

first, think it’s XX Slide here, about I Joe. Just we mean

near I multi-decade You going in forget you Cost highs. still think alluded everything Itay to about to are XX% mean at world, as the mentioned sort the recessionary normalized the just or half volumes. XX.X% second somewhat margin. on we walks, about that’s is you with of to close on If the raws level inflation still

confidence should there a of in short-term like some worry which as of about. a shortages XX.X%, have give But you print, even fact disruptions, is say not to about confidence it just good The might to parts, chain you give these basis skepticism? a up targets, to lot have you normalized targets really you more XX% supply think you seems long-term opposed of have of I shouldn’t that in semiconductors. or kind You putting long-term XX.X% worried mean as you your the lot sort that actual I that people skepticism. are we moving

Joe Massaro

at and talked are various I we think Yes. forms in able we we at seeing, expansion understand in through disruption. as that mean comments, a price sort about, think listen, is disagree we end on, chime has customers of and maintain strong can are can relationships prices on I I the of I comment, lot, be and protecting we win making still volumes I I to remain start, terms going – with a But the lot I – to while growing, working Kevin there with Aptiv. we is are year flow-through a the are been will we of three mentioned sure are very in. business we of margin there rate my a balancing are I mean the John. bit act grow don’t the the of of and discussion

where next you my to said, the was year. with hard difficult there business as on. think know the performing us, work I do it’s that mean obviously, the we intentions is better the and view comments through we certainly remarks, that well. will of everything do into There final With would in going to a So, conditions I we But given we better, there is don’t want progress. lot if… of environment. know, as But Kevin progress I go prepared

Kevin Clark

well of nail Listen, the made John, team on I head. I challenging Joe in has Listen, a think and the hit performing progress the a think environment. lot is

we that that cost Joe’s other we see to we point, we with on volume. XXXX, XXXX. so make any continue for and flow-through able sure on in And if good revenue And appear point we work excuses. that are And challenges to on to a deal incremental don’t to they that growth our make However, exit don’t, significant you want are structure.

portfolio architecture, increasingly you we our from work We to to of present electrification, it’s product the you to or would software customers. whether proposition solutions, high-voltage customers in terms our We tell our and pull request on vehicle solutions. and value smart now would our our continue opportunities tell

But to is deal the are with what that near-term challenges, highly dealing and macro that’s of attractive. we All with. we need

John Murphy

more going booking like pretty And in which I specifically this? history? just that sort is should anything didn’t curious, was then timing? real there run or to on that think sped unique get that here or bookings, actually airtime quick a Q&A, And question rate of thinking we lot just the what’s am start is versus up Has massive. a second the realization a you Okay. something on, of about

Joe Massaro

sped John. the had as some smart probably probably we correlate to advanced rethinking a with those of of say have programs It’s up to the architecture software-defined little, vehicle. OEMs vehicle what It’s development we one on directly the bookings and leading it relates vehicle architecture

come. They benefit next vehicles So, the the fast that are of of to past. there path over to that done more in years. it’s think a have it’s work the we likely the on get We launched all is on couple

used sort to be maybe what So, a X-year cycle. closer a cycle of now is X-year probably to

our we it And portfolio. going benefit to its able ultimately, broader it. And drag we and again, are with higher about excited are to be higher of is reflects software, the which margin We think again, growth.

John Murphy

Great. Thank you very much.

Operator

I back this the call At time, pass to Kevin on Clark. will

Kevin Clark

today. you much, everyone, for it. care. time Okay. very really Thank We Take your appreciate

Operator

Thank completes joining. for you That call. our

Aptiv (APTV) 4 Aug 222022 Q2 Earnings call transcript