Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Aptiv Q2 2023 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jane Wu, Vice President of Investor Relations and Corporate Development. Please go ahead.

Jane Wu

Thank you, Elaine. 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 the included as our full and year reconciliations and measures press non-GAAP slide as The earnings back for our the outlook well are at between GAAP second the of quarter financials, release. XXXX presentation

During we that be performance certain reflects SEC different cite providing Aptiv's be other financial and we for filings. may today's future in will call, XX-K forward-looking our reasons that current information view and Form materially of

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

With that, to to over call Clark. the Kevin I'd turn like

Kevin Clark

Thank well and thanks, X. Touching increased this as Slide a representing as environment. Revenue for across across driven production, $X.X on record geographic growth new over supply vehicle portfolio quarterly a the Jane, delivered of all improving XX joining highlights. for few record to a an Beginning demonstrating XX% We billion, morning. quarter, on us chain revenue, underlying of demand outperformance points everyone, by our regions. in strong you,

connected and inflation. record flows respectively, and labor EBITDA operating chain commodity solid in exchange by million, on increased green, strength ongoing unfavorable product Partially offset our almost supply portfolio. line active foreign reflecting volume rates, XX%, and high-voltage and the and a of $XXX $XXX disruptions. growth electrification totaled and prices, and Revenues underscoring fewer material safe, income million our safety product

execute our ability relationships, New business portfolio, and the billion, of industry-leading to further flawlessly dynamic environment. bookings our in strength customer $X.X totaled a our validating

Turning X. to Slide

half our Our in line first with substantially performance expectations.

for by electrification, user driven experience, New software, business $XX awards bookings SBA totaled and compute billion, customer safety our and solutions. active over high-voltage

growth, points in line long-term expansion. year-over-year mentioned strong prior and as production, Record operating well with The over increased X underlying significant as volume income representing EBITDA I record result operating the margin the revenue, by XX% and framework, growth headwinds partially efficiencies, of slide. on our offset vehicle

And engagements we're in both Wind for plan ahead of uptick with awards. and both experiencing and Intercable commercial solutions an River customer Automotive companies

sequential schedules. the semiconductors in Although stable resulting been supply macro production the vehicle has European most and of with perspective, and resilient. markets more being global a improvement chain the experienced vehicle supply issues strong, in American we production persist From North a industry

global X% We in North and expect the Given full our outlook vehicle we're backdrop, to industry current year. driven for America principally stronger Europe. production by now to X%, increase the updating vehicle production

we review Our a account labor updated real revised update outlook outlook will the more a North recognize although financials. this granular on in when Joe risk. is does do not we into America, any provide that our disruption take

benefit of market which model, optimizing our the continue of our strategy, commercial safe, position enhancing will Regardless remain to backdrop, our and business connected tailwinds. on laser-focused us on and executing the portfolio solutions, we to secular green, from

Moving to Slide X.

year-to-date integrated for our comprised by high-voltage vehicle battery and portfolio, awards new Signal state Safety bookings, during driven billion, bookings quarter Aptiv's bookings totaled and of billion. cockpit controller total including traditional the and sensing electric driver across high-voltage in Power manufacturers. bookings our billion, electrification $X.X I Experience reached to bookings Solutions and $X.X were including billion with already billion in User business solutions. $X.X Advanced product billion, over new awards solutions mentioned, both our user As $XX $X bringing experience $X.X for

the high-voltage of ability advanced sight of earnings we billion customers. of our awards, value to of technologies portfolio last exceed validating further remain clear to and and Given of year's $XX in our for billion. strength $X.X full-year line achieving deliver our have business target our the commercial we highly strength pipeline, exceptional confident in our

Turning Europe, as programs billion, Advanced increased both and driven X underlying and Slide the software launch X to of key Level ASUX safety River's smart on more of solutions in slide. second continue markets, XX%, by the revenues revenue automotive production. both XX%, North our points our ADAS revenue and I'll to to User above XX%, segment's increased North strength record review revenues growth across Experience vehicle and and Safety XX commercial highlights. China And volume Active reflecting in achieved America, $X.X nonautomotive Level X+ in quarter grew and success detail cover User Europe which with across lastly, America. next the compute ramp. Experience vehicle increasing Wind

million of we active safety including $XXX awarded with customer. were awards American terms of extension North bookings, new a business over In program bookings,

a award bookings, we're integrated vehicle with mentioned, for I significant platforms. other user is billion $X roughly As the an also out rolled across numerous cockpit first and controller VW being Porsche extension including on program Group. of the now launch awarded experience Taycan This particular

partner. software reinforces cost both vehicle more a platforms, integration get for extend As user luxury to our the advanced as compute, experience more required. as shorter increases effectively across the and capabilities value ability and active Aptiv's cycles strategic advanced for And mass and solutions, safety development demand need vehicle as market solutions life

we've with number of are confident providing that are And Our increase ability while provide as our a and full business in later the this will additional a to experienced strategic customer our awards platform suite us flexible an result, competitors. engagements of customers year. that follow from choice, differentiates solutions cost-effective,

has mission-critical particularly team in done X. winning provide aerospace River a Wind GMV to markets, of delivers award its job providing require the Slide a find software customers safety, automotive software performance. River software new edge the enabling provide truck global great telecom, The entree highest to the customer an for enabling while future. business, and Moving River the engaged a the Linux automotive services software ecosystem edge-to-cloud a commercial software-defined the that its defense, gateway, vehicle for Wind to and market. edge also communication continues team and with The systems nice increasing including to solutions new and applications, Wind levels several program security, next-generation with and European be into manufacturer their for A&D to of actively vehicle on partner

a hardware integrated their virtualization be partnerships set This addition, users announced the for In will new runtime ecosystem, develop software Samsung automotive with diverse will industry. Linux, solution by the platform, which Wind several and expand to VxWorks environments, River's of and RTOS, to enabled to solution including end a they've including fully Android. allow utilize Helix

to edge-to-cloud River's month, announced along in collaboration in River's traditional future. with Last software-defined automated Robotics commercial continued for its Horizon provide the team to These complete for on Wind Aptiv strategic markets, a partnerships more a with driving market. transition Verizon's to compute solutions portfolio automotive, success, Wind also the capitalize the China allow

and September. we'll hosting at be business date. the excited lower deliver our you positioned to help customers more total Win a can in closer Active to River, and customers, the and more that the value strategy, We're as we teaching River we'll software software get we opportunity, provide tell to about details Wind that market, new you In to provide complexity, flexibility, with software models. to speed solutions to with enabling order reduce system while well deeper Aptiv cost, look provide faster cloud-native Together is a

increased revenues, in XX%, slide. Turning vehicle last to disruptions growth we increase a and second the a production, the previously across on Slide and Signal high-voltage lines, detail second quarter product the bookings points quarter high-voltage $X.X Automotive, in X in from over increase next vehicle Solutions mentioned I'll I year, in result reflecting all XX% strong segment strong included Intercable revenues. another that quarter growth on commercial of and billion more China on touch The XX% strong which as during Power in regions X. revenue the COVID the revenues lapped S&PS

awards European commercial begins increasing our market transition the vehicle manufacturer, electric the for to platforms. battery power Motor architecture, Electrical battery High and both Voltage Group, with truck it Hyundai electrical to Center of penetration further vehicle global pack a as Multiple including distribution award,

Moving to Slide X.

record As I mentioned $X.X billion way year's high-voltage to of of earlier, bookings. we're last exceeding on our

solutions We and battery of interconnect competitive systems. expands offerings include continue battery Automotive the new portfolio our our addition electrical solutions, bars, we cell to breadth enhance high-voltage further portfolio solid-state introduce moat. widening our to and bus product centers, high-voltage in Intercable And of the electronics as management power

solutions. $X high-voltage strengthening year-to-date revenues provider the With Intercable expect in next their XX% full-year strength exceeded billion the Intercable only pipeline validation business is full for XXXX $X more high-voltage our And has to increase years, XXXX over per new already as best-in-class of system We than of of year award billion, several approximately electrification bookings, their position technologies. roughly its the amount. bookings now

production leader with deliveries of Aptiv's launched Already a recently North European from this customer customers, begin in one Intercable to America, market facilities with scheduled quarter.

our continue addition of and significant vehicle we and battery battery both power growing In battery system electric to electronics manufacturers. commercial what portfolio management producers interest for brings, solutions high-volume to in Interconnect experience

optimized the partner With perfectly solutions capabilities, system the be and our customers full to for an portfolio world we're electrified vehicle they architecture. around high-voltage transition of as to unique positioned choice of

to Moving Slide XX.

Before to Joe the take I to important over minute I to Aptiv walk by wanted team. the recognize financials, to an a call the turn through achievement

handful Aptiv XX,XXX for was spot VW of product during the Aptiv challenging ability with these times. July, Volkswagen Group was the top In recognized in a more and Performance keep suppliers. of recognition innovation prestigious to category Global Champion chosen of Award suppliers connected one for for our just Volkswagen by the than

strategies to the and and last architecture The working are vehicle the fully that enable three over will teams been years the VW aligned develop closely software-defined and have our proud partnership vehicle Aptiv our The with the is future. this team extremely the strengthen long-standing award strategic VW further and to and and continuing Group. of forward of innovate looks to Aptiv design

through the Joe go to call more that, With I'll turn in to detail. numbers the over

Joe Massaro

good everyone. and on Kevin, Slide Thanks, Starting morning, XX.

strength operating of XX% vehicle by active outgrowth in As Kevin improvement lines. to billion production, part financial another continued in high-voltage quarter and With as up in our excluding results, XX% reported were and driven across vehicle the or of safety particularly reflecting continued segment, our strong Revenues traction underlying $X.X Aptiv ASUX in performance. highlighted, well execution impact product as above acquisitions. both in commercial segments robust

commodities and Adjusted operating supply weaker flow-through the respectively, costs of disruption $XX increased due continued from $XXX from $XXX were progress chain Chinese headwinds RMB. primarily income million approximately including reflecting our initiatives, XX%, ongoing on XX last EBITDA volumes Mexican on margin peso year, points in a FX million, performance basis million and and to and stronger of improvement and

cash Earnings $X.XX higher the per and driven capital investment FX primarily share working was higher in of the which operating quarter the above offset same which from the million, during than $XXX $X.XX, income, the expenditures by was $XXX million increase driven negative were earnings million. period by an impact. last more Capital reduced Operating commodity year, year, were and $XXX prior quarter.

X% Revenue were Looking broad-based timing supported Europe, The and billion, at the market, user $XXX in and XX% and impact in on XX%. grew In revenues XX. revenues increased at revenues Net than was regional in a added of of program several record across and particularly the active in revenue. Growth in above From active price $X.X a were the and strength FX voltage. underlying our customers high quarter half North or adjusted positive, with more of XX% reflecting market, by portfolio, experience. expected million market year. offsetting China, perspective, the growth second representing was detail Slide launch over increased by growth recent on our XX%, regions safety quarter. above reflecting of segments American second XX% acquisitions product activity In in XX%, safety up the more the revenue revenues commodities

that XX%. revenues Experience outperformance the was quarter Moving strength points production. lines, slide. User operating active The in segments headwind costs. driven where Segment revenues million $XXX XX-basis labor were and incremental the on the the of despite volumes up up over year, material strong points safety million, including income performance and as on offset vehicle with to adjusted Advanced XX% in was as well FX, by to net XX% $XXX a several rose approximately compared last product period flow-through higher were next same price Safety operating XX from when higher

price strength points from was an several including X FX despite basis in incremental costs impact as points. driven market. offset were high-voltage Segment XX%, costs, above lower XX% operating by totaled commodities XX to and operating higher than commercial improvements of Driven Signal million, up offsetting income strong more labor disruption on up flow-through and net the headwind prior volumes, as and Market Power the performance $XXX the and outperformance of in by in key well the quarter. revenues impact year product lines, which vehicle. commodity

and in and primarily at to market in updated increased Europe, expect change the in our X% Turning in growth outlook approximately midpoint, to outlook. outgrow production increase our X% to reflects to we the We've production outlook continue adjusted XX% of and increases resulting year, range original by respectively. growth vehicle to macro The America North and XXXX for X%. X%, meaningful X% customer full schedules the XX Slide for a to our of from XX%

not production does North labor note our assume Please American any significant that outlook disruptions.

expect China year-over-year flat to guide. in essentially line our be basis, We a prior on with

Although penetration, particularly strong we see customers. continue with to Chinese EV our OEM

updated to addition reflected also foreign volumes, vehicle into commodity the changes guide. In in exchange current we have and rates production

prior in updated summarizes billion expected XXXX operating share This expect $X.X billion of by operating and billion now $XX.XX billion. almost respectively. the with to interest at year, higher expense. of historical of significant $X.XX commodity from slide our $XX.XX higher our midpoint, $X.X and offset XX%, and midpoint, earnings next Adjusted range EBITDA headwinds. We are driven to in XX% earnings, by up year-over-year approximately the The and income despite outlook. be FX reflects income flow-through line XX% the partially at to range XX% tax per revenue of

approximately Sales European million, outlook. prior Operating Net $XXX revenue. positively cash million current driven is to to our by contributed reflecting guidance guidance. volume I exchange the previously North and billion, over with operating higher an Adjusted foreign income walks and $XXX prior price, increase Slide customers. as foreign on $X prior of performance American up by partially offset timing flow-through guide negative commodities, rate over of and is of XX flow adjustments approximately the to by operating our Starting schedules. impact changes revenue exchange of million and copper increases customer the growth the discussed. sales higher $XXX price

inflation price impact remains downs which pricing, our with Net the price includes of customer in line recoveries and guidance. original material

of a foreign have stronger million significant impact movements, exchange the the discussed, for guide. pace original previously As $XXX to particularly weaker been RMB, this representing the year, headwind

assuming first RMB majority for balance reflected a the the updated of our guidance, including impact the remain However, partially euro the year negative we offset of peso consistent impact, been that relatively with in believe in used a and has half stronger results. rates the the rates

we lines, including key summary, growth In Aptiv's expansion. pleased and continued margin performance, product are of our year-to-date strong with the continued bookings,

and to year. eliminate significantly track will continue initiatives, disruption to the costs and including offset build ultimately inflation are reduce on to throughout significant performance and efforts Our labor

conditions remain cautious macroeconomic Although quarters in production. for and potential few meaningfully remain about in to our the North over we confident potential vehicle ability America, outgrow next disruptions labor the we negative

We positioned to advantage we stronger noted not also should believe materialize. well be of market are take concerns conditions

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

Kevin Clark

optimized XXXX customers. questions. cost a EBITDA is Slide margin revenues, for that strong at start Joe. income, our to on performance business line record XX deliver operating maintained good solutions increased first with half the new expansion. off Thanks, opening on full-system for lower We momentum wrap up and before I'll our to awards and

operating structure our and volumes and to led supply resiliency. focus fewer industry to continue Our have disruptions enhance constraints our And we further improved has optimizing production on to easing outlook cost efficiencies. for increased operational

sustainable strong Our culture our and keeping maintain commercial us for value commitment deliver to performance our gives connected into confidence of which to is our of customers in innovation track creation our our and ability record momentum, shareholders. clearly translating execute strategy,

Operator, questions. let's for now line the open

Operator

Instructions]. [Operator

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

John Murphy

Good the all this morning, information guys. Thanks morning. for

It question just with of some other margins suddenly by at fair kind that's seems Just first down these velocity And they're X%, weigh if got like of into a you kind just particularly escape I'm factors. a curious ASUX. here. on simple statement,

is I going they're of normalized some is So, of other should the being escape reapproaching on quarter ramp-up velocity mean, the be reached? margins? these In basis, segments, kind in travel a there else of actually on thinking I of for mean, where than sort we XX%. just this Or growth rate the something this

Kevin Clark

semiconductors with it. I'll the -- should start for and improved. it's John, Clearly, Joe associated has and supply to certainly environment add chain semiconductors Yes.

an over certainly supply. the enhance of years the the semiconductor slowdown I the incremental with And some choices. consumer in freed markets, with to to last visibility electronics enhance working as industry or been manufacturers, think of we've it alternatives up couple

a to more and from the that had like sounds -- As standpoint the expect supply that's little chain back it's from result, of well half obviously, efficient, standpoint, -- which feedback. numbers made as date. as results cost then And to a freight would into our continue in other it the we manufacturing we lower into in Sorry, a year reflected a much as lower our we

efficiently we and more have lower then operating XXXX and we costs, disruption able are operate As continue efficiency, to more beyond. into

John Murphy

just follow-up as are as European it revenue you billion I Intercable you're as this curious in the like for And the of this a you the opportunity is front and other the how in going it opportunity regions of looking just using case there's year-to-date or on or with automakers understand -- where I'm and far Okay. sounds extreme I'm been trying that expansion then just won acquisitions at that European making. customers explain current at base is customers, a we automakers. for ultimately of just of sell other well still enough test some can't one the the sort and these Intercable. mean or year-to-date, go. $X that's booked base in to outside to centric of

Kevin Clark

question. make I Yes. the sure I understand

I think previously. programs. bulk related to their European But we revenues of talked the as about, are today, unbalanced

we're North we've and One with Aptiv's Intercable in acquired of existing in mentioned America we'll in that our North a as view manufacturing products capabilities their Mexico. market, product and one prepared in North I we American provide significant to is into OEMs. a facilities delivering this we which producing technical see the reasons OEM of easily them already the quarter, could to we Then other date, addition opportunities with their the broad portfolio be that done to entrees comments, starting American

we're similarly, then And manufacturing as for knowledge that we of have although a market -- capabilities our there, China, with experience their into well. product in we great just sell given they leverage and feel market the that China, our them to point though as

So, funnel mentioned, opportunities $X over as I well billion. for their is bookings

significant a are Intercable. an So, portfolio. management really team. the even stronger have opportunities have great with They They

about excited acquisition. the really we're So,

John Murphy

Great. very Thank you, much.

Operator

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

Itay Michaeli

Great. Thanks, everybody. and good morning

questions Just me. two for

margin I was could guidance? the didn't expenses you restructuring in your in how of QX. about I kind versus HX HX just you think first, then walk bridge secondly, And hoping up moved the notice Just through embedded just

the outlook these on could expansion? opportunities? seeing could where your forward be more much I elaborate margin you lever Maybe raised how you're just restructuring that of going there. for hopefully think you And

Joe Massaro

Yes.

commitment that, that's obviously seeing. the countries Day, continue we context engineering, into to Let about would established and say go then So, things me at is And I -- like engineering as really us talked you're those incremental. taking out over think actions types to what particularly laid activities, the that, Investor Itay. margin restructured necessarily HX I versus to of of something it's guidance would start but move that the necessary not time XXXX, that of in to best-cost the toward right? pivoting HX, we've as that dollars, with I that with

about We of detail, to FX a initiatives of a little HX give recovery, bucket. That we I'm we couple have a inflation it, in going rates better to perspective, We hits from then an slight bridge be will as than well adjusted going to the by XX% got, volume but at see performance you're lot on that half not some as much be million. about million. as to be million. to That's really of as current $XX as $XXX call expect the volume. over transaction sort HX, going I'll a had $XXX what first don't you've flows that's did down. -- big better. these There's And things. uptick, call, From a less

Some costs. of that's coming out of disruption

on to to the these that The going I other, half over back year. continue initiatives continued they'll about, performance as noted, is the a be we've improve and march of talked

Itay Michaeli

Thank you. Perfect. I appreciate all detail. that

Operator

We Rod to ahead. now Lache Please move go will from Wolfe Research.

Rod Lache

from everybody. proportion was of where ask picture you in think you COVID that at XXXX presented see was It costs, a supplier now? of morning, you it of your stands you was part margin is It think I us XXXX to it Good you we couple bucket of -- a you billion elimination on Day, XXXX? And what the in that to that things. kind some update Investor just had billion. bucket $X.X big Had One of bridge $X.X actually called Can will costs. of performance. just

Joe Massaro

Rod, Yes, Joe. it's

start. Let me

'XX million million is Bucket in remember over $XXX call to individual that to So, big about 'XX the bridge, item So, it, was $XXX $XXX a of chain -- -- that that had disruption billion supply you costs. right? biggest million, $X.X

$XXX million million next had $XXX maybe guide. the year. that improved expected year. out We in lot will around come year. a out coming It's come this balance out this of now, to original We The

I improvements those years. loaded. what seeing this of we've 'XX. for back-end of really past bridges remaining what most material just on of talked, the into and the I'll They're costs supply past the The you're performance They would alone. 'XX, grow sort improvement million a say just through you come three the little of 'XX, sort It's could 'XX. in right, across and part, track. in manufacturing -- quarter, take chain as annual of sort disruption 'XX sort the call is we're over $XX each But those even for years,

might line So, in say expectations. we're with those I tracking

Rod Lache

Thanks, for that.

Okay. few switching And the there's Volkswagen have and just other that the lately on discussions forms were to too were industry EV we've and few platforms. that gears. realized platform in just already reach companies Xiaoping western A seemingly, using they expensive working out seen seem to to their about Chinese use a

just I'm from -- perspective, Aptiv's wondering that you So, you. how how affects

mention of working architecture future. again on you've did with Volkswagen the call that the You been the on

So, would if -- that? continues? that be that for agnostic you something there some to Or is are there implications some is you

Kevin Clark

to been bit it. Yes, -- we've about say, overall overall in electric and I'd side industry has the Listen, think of perspective. vehicles Rod, electrification penetration a outlook I start maybe battery of the with I'll relative on talked as kind our for past, conservative

costs So that cost understanding underlying new an our has on and of to of and OEM is cost sensitivity perspective perspective been sensitivity a shaped customers of and to amount the significant technologies. that and our

one. that's So

to examples, to have approach And given design vehicle case, with architecture. reduce we've us, existing that overall where breadth product cost us of the able XX% the talked battery in our our we been to customers solution -- high-voltage platforms lower to present with about system portfolio, past, to more. a or traditional and and portfolio ask than cost and this much of is our electric mass to just to had XX% to particular existing approach Two, we've customers and an have we've opportunities capabilities opportunity a solutions, by electrification full by using XX% given this evaluate both systems weight And optimize. in come our our

historical standpoint So, and bring architecture, bear. and our strength, knowledge a to our product from our capabilities given we portfolio given of lot vehicle a

this fits have been volume. standpoint, which been elements a electric during operate We've of that they'll relates starts. battery those and those And electric that carefully we've transition vehicles, get about impacted operate for piece the customers, by seen extent specifically and on. then the see selective pricing. I'd we've in contract battery we from been And we platforms; period. very it say They're talked global. has starts those designed third platforms as to therefore, on are time, contracting there high reality we to and very long we've that be a vehicle of we as of to fits And volume changes a underway in those confidence we level we'll for period reductions,

manage a same electrification learned conservative significant in to So that customers just given of capability lessons attempt say, we believers our we've of how do portfolio big for again, develop industry. some several going with do past we've in last really, seen lower a to cost lot a over terms markets introduce fairly period a of but into that continue are penetration the we the experience, would we vehicles developed to our of risk, as approach established lessons, time, and I we've battery years, solutions how at see the electric a you're the and we've -- our time, because provides and

Rod Lache

That’s Great. helpful. Thank you.

Operator

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

Chris McNally

of I kind top UAW. know the line North confusing, upcoming it the and gets with macro. talking could Maybe about on I start America

maybe we Europe. So can Joe, in on focus

anything and like have inflation XX% et in forecasters, seeing the it specific. than prices Just cost living, think numbers cetera. the production, we in implies which of first your some X% But the down to something half, lower is if X% on so I XX%, obviously, half, curious quick the second

bit months there conservatism firm You obviously have in is next there's for up? of built the as a insight couple of lot schedules a or just of

Joe Massaro

little the better. would just it's I is QX, to of customers, back Yes. through we're in sort cautious, on we'd at third. downs. but it, this in have perfect. But at little fourth think of a as a we're still. the Kevin It's as more I Chris, It's given potential all prepared in extent customer we're obviously environment the with So, from remarks, sort point than point caution schedules, in there my third, -- not year, said, said bit of And been right? in say The to production a the fairly all half locked more in on and is I start. macro much good certainly, the -- remaining ups place the -- production our benefit this and and and the July. Certainly, it's certainly of quarter schedules. a still locked challenging environment. It's yes, we've

Chris McNally

And if seem to on off. margin like Mark's where I to the follow just comments take That's helpful. starting up it's ASUX does could some really numbers progression

think your sort full to it the half XX%. a from back implies year of X% roughly I X%

we the use issues a have it as base, and target because like XX.X% XX% -- to So, some of usually can a for you price of XX.X% we sort 'XX. of

and be XX% somewhere being 'XX anything 'XX? takes let's XX.X%. I that volumes in assuming would that we loaded in split laid in is okay, that a year that a it about longer, Given lot and in single-digit think recovery, call can that just halfway Or ASUX of point kind million that of of of next think small, XX%, have, will that the up difference, there to it why come between start $XXX margin out back-end you more low plus the we

Joe Massaro

year to early do going little into not too It's We--I'm to this. get 'XX. the in a Yes.

team of but have steady as continued for lumpy what's pretty the range. to we segments. still improvement. quarters rolling confident the total look But between on think be XXXX The out. it as got price going numbers well good the it's out, we that that something in obviously volume environment, you those software be business, march then we've in on to in -- in I and has a XXXX confident content, XXXX like work increase as still it's Exactly feel types things falls at could remain key a remain march. job The where of both product recoveries. think lines, steady done 'XX will a growth inflation would the I continued active

Chris McNally

Thank helpful. Very you.

Operator

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

Adam Jonas

answer, a Thanks, I an -- to echo. your thought Rob everybody. Kevin, a of there's bit question answer

pulling your plus targets there was done. experience if guess given I would that approach Thanks. market just the two level that EV kind that there those scenario follow-up. concentration where up share how think may these Yes. there's EVs really Or, a and were of a dominated well being X% platforms. adverse because of then but I by thinking XXXX, conservative really EV on scenarios the just kind longer-term and -- back a on mix I'm your for like regimes, then On the assumptions I where be the Chinese, more if was Tesla some of would that or global you? have you open-ended, And take I follow on be leave of curious most win

Kevin Clark

North region pretty opportunities America, about were on not say say I'm revenue specific balanced would and I'd basis, more relative in -- Europe, mix significant. going between by look growth customers, to Adam. I talk a Yes. are China, our China at you when

-- opportunity we're funnel is an from that standpoint, on. focused area So, that bookings very we're any a standpoint,

Your all. comment take a on winner

BEV market buy Our more regarding for or other not only to. which to China of be but China into high-voltage exports system customers a clients -- from a system increasingly you're tend to I a very think China full us us. standpoint part what solution from is markets, the on alluding customers focused are

a tends solution margin parts. to relative that component So, be higher selling to

or a that's for if net neutral. a sure benefit us just not I'm So, net

Adam Jonas

the Okay, put before need Thanks. need terms there And or of got you tank more we capital left in either on latest Joe, you Kevin on the in And the have the cash consumption? us in then kitty? update to what give can Kevin. Motional,

Joe Massaro

not I'd would outcome. at Yes. capital Adam, Hyundai, looking this or make to at we've year operations. decision likely Yes. it partners but No, next yet, our receptive made technical since that it. I that ourselves partner, progress point. and of fund another as year, couple be no least I of changes call of QX commercial last that into most front at said on most continue the say of cash are Obviously, the market today, haven't the through and had on They And have previously, probably side things. and the to quarters. the

had $XXX they're per we if today, and million to think cash about I year. of $XXX call it going million, through

that. be would it of a So, split

Adam Jonas

Thanks, Joe thanks, Kevin.

Joe Massaro

Thank you.

Operator

go our from Please Barclays. next will We Levy take from question Dan ahead.

Dan Levy

taking Hi, you, for good question. morning, and the thank

stable. there it the the broadly, in more better, there just First, in semiconductors? you And Maybe on -- Is ask more to? quarter you are like to is with I in that us, to it noted color in quarter. pressures wanted on relief the was you environment just provide drag commodities. getting Joe, more -- it's recent Is path you cost the what related It what any was semis? the headwind seeing on saw a was years sounds a could bit in

Joe Massaro

two there. questions So, distinct

take me commodities. Let

copper, or XX% sort to buy vast For our years of last adjusted nothing those have of us, or that. commodities the of is for one a over we're mainly some still the customer, prices nothing's with quarterly either actually do large copper, we changed customer we in of indexed copper -- We copper majority, cases, couple monthly. semiannually, customers get our

So, all is we're with the lag. there really dealing

before have it do before price along we copper much How we can pass certain we can, a the increase this at case, or in prices. in

up be while. margin a in wind So, every that rate to you lag in a tends copper of margin once And dollars. impact with more

that chip received we a cost to obviously been we've have along up, of increases sort price direct that pass semi, We've the to along goes relates passed date. it customers. our to As we

the additional We if will year. inflation when in coming continue we do to see and that as

don't in the in this if hold the of think potential prices you go maybe least at that, I that coming indications see presence, public have even of some to up echoing of look of are sort large think And some a I or comments. I automotive their chip would tell folks least chip at -- at any you down. been point, they've

through vigilant. remain additional certainly our prices but this price increases we to We on to those point. pass customers, expect at So, would don't downside see any

Dan Levy

and your related tougher the have inflation it's the And is cost at based Okay. bit years, all progressed obviously, pricing since question. material on Thank look by dragged few been a last zoom just semiconductors. then headwinds, largely we at you. the If results out And to booking outlook that be commodity or a that you're I assume then. time, the obviously, bookings input that and when

to line get -- what margins that ensure appropriate opposed dragged to as input what pricing are that launches to an backlog cost are becomes you're being outlook that to that the steps So, time. like a be them taking as going you'd ensure to prior rolls on, with by in the revenue your and you as from maybe

Joe Massaro

couple talked of we've times Dan, about this a before. So,

and launch. products So, the sort call on customers that manufactured right, it, within were months near were products, price of covered that in-process with renegotiation launch, plus XX things being to

to various opportunity, the start there capital are a from done to out have point right, before programs gone touch before perspective, a start, the three-year a this two-year we've we further program around of For put are have ground, on that even economics got start typically, program. prices semiconductors longer date customers before we the sort the you of window up and really

have We to right? around the wants volume, going to Those want it's supplier want Suppliers wants be If significantly to been that. lower program historically volume, Customers that. have in going the tended a if that. discussion, a a OEM be it's have volumes, like higher looks to discussion. in need to

part Bond of costs are those. historically

point and start of of to get place have to we semiconductors at team top as putting bond and of of to the on does the it mechanism list, production included always with customers get starting discussed. the to things capital that to a but are in up going that a we good obviously economics production, job been work the sort of back So, go costs have overall to at the program are the in particularly now are now or

out the program that original economic sorted get the deal to was And back to struck.

Kevin Clark

supply explaining of our could chain price more great obviously, customers. and there's and been we've to just how customers increases same then At lot At Joe continue comment? time, safe the on, if I how couple operate we connectivity our same connected, did keeping very enhance with been articulated, by to model. we recently, passing of years, on the focused add employees contract I time, our on keeping a last focus the job business how as think one, right, Dan, we and our Joe customers. one a

resin or content, how and on we cost, more we chips very inputs out supply customers focused efficiency So, operate our other been and from operate We've efficiently base take a product what and is to we supply chain or supply standpoint, chain do from increase cost to whether it's semiconductor the as how redesign lower manufacture. we effectively lower cost. do our well with a standpoint more with how take to out do

time, cost operating. like within then at do we look productivity do we're manufacturing, as -- when the areas improve engineering, our -- we basis, four that to labor, the we increase the driving And on an down again, do well where of our we at rotate you around how how as we and organic we do things, how other existing same so move continue inflation in walls

onto time, operate items. same and pushing inflation the other really while terms our to it's we're not whether -- two-pronged efficiently, we're So, in more inflation of a at or getting incremental approach experiencing customers, trying material

Dan Levy

helpful. Thank you, very that was

Operator

We Please question ahead. will Mark take our from from Sachs. Goldman next Delaney go

Mark Delaney

you for question. Thank morning. Good my taking

seeing perhaps year EV by a on been volume all EV slower own that Aptiv of but OEMs that some that in may some be volumes growth, Aptiv's at little for the a mentioned You those all change cost given has certainly bit there offset talked you whether of projections its more because other I'm this conservative about clarify, being can is hoping been EV OEMs some upside platforms. outlook or have recently has realizing?

Kevin Clark

have than think lower assumptions have. industry what some our Listen, forecasts always I been No. the of

we an to high and baseline has say mentioned, to I'd with platforms more have has overall of extended specific that from side. I it contracting tend volume be been and include on evaluate mitigation. view lower standpoint, penetration, pricing, provide a BEV some on as business relates to voltage the levers we been us And on period assumptions So, cases risk as conservative we for time for as some our or penetration customers,

is said coming second the although industry where were related XX%. our penetration. to would of the that, we're So, in terms closer perspectives nothing overall our conservative Having close to has bet revenue in solutions high-voltage probably outlook. changed I growth to on more say initial is as quarter

balance for the So, years. and -- and out significant growth of very we're into the still expecting the year

Joe Massaro

talked about Investor all. Mark, Joe. we year for high-voltage 'XX, 'XX, mean per changed that at not Day and has Yes, at I view had least it's 'XX, XX% at being grower

estimates of -- that we I of forecasting our the on sort that's sort was reflective where of community. broader relative think to were So,

Mark Delaney

That's have was other very large helpful to context. Thank and integration. OEMs you. challenge the question software around of continued software, some Wind And my struggle with understandable River just and

a with auto momentum facing some mentioned address? OEMs, the of Thanks. types could I'm You River River Wind to River can curious recent Wind on that of you these and engagements there's if help uptick challenges and to is seen that been elaborate the with bit a more Wind is industry perhaps

Kevin Clark

sure Yes. I'm there's not an uptick.

still industry software. the wrestles with I think

relates there. are Wind to think engaged announced today can lot and River has wins program with of provide with, architecture XX Wind needs software major don't know, their I of think the to challenges. it kind XX we're, OEMs, momentum of some a of actively underlying River I I as still number that we're a there OEMs OEM

As year of amounts in would expect I additional the to by I mentioned end have my to prepared comments, make. the some

middleware, an ADAS whether it areas, or opportunities Aptiv, it you Wind for system certainly well. Aptiv think to the experience River. as other operating for about And So, user challenges those relates then present be or in as opportunity when real-time

Mark Delaney

you. Thank

Operator

Narayan will from Tom We question our from RBC. go Please be final taking ahead.

Tom Narayan

really think there from were QX? there were engineering year. the those some Joe, expected remember in have And for there to ASUX were pushed taking in maybe I you I that know orders you come us on think credits that in, there of HX? later thank more kind help there Did I Or Hi, I are question. been timing XXXX? out. understand QX, you some may come in the can

the ASUX Just trying to think we business. how understand about should

Joe Massaro

Yes.

it the credits that's back flow a sort order saying $XX not be credit, call magnitude, million this an is of of year on to that the the every example, about in of year, that's -- on amount I'm to of year, sort will range normal way that it of million year. half the a was by Last it, ASUX. on On happens good somewhere of very $XX engineering but $XX million use that.

a it other that right, launch, but QX, due availability As you're as from of suppliers. relates to we're had ASUX -- couple launches supply to relates expected to ramping it slower than

As we March, and hitting America. really North talked in that time, in have was came those about programs the since back and at online been schedules --

second north the America's growth of North market quarter. ASUX think the in XX% was over I

got referenced, sort back So, you normal which what now do saw getting chain, nothing ebbs we've the of America, back I of supply to business. sort flows North and in to of with are is, -- again, those

SPS got We've some heavy year. in the We've on back got the we've launch a winding of got programs the side, -- some half down. calendar

from the the of end time the of will So, over America's like I look get growth those a you always numbers. bit to of lumpiness think but year, of time get to some the North you as market rest business, little the in

Tom Narayan

the back answer but inventory the can guys really you at that situation, a you guys prepare Thanks. I ahead anything noticed you if for what something you way, of on you've don't have question of in from XXXX whole learned event there might it? OEMs know guys, looking OEMs, help is could that this be kind happened experience happens? -- UAW and in another for put Or this. maybe But building the

Kevin Clark

customers. OEM direct think Yes. you we I Listen, our to

So, we America. workforce don't have in North a UAW

have we where have we a exposure. standpoint, direct from So, not where that's employee something exposure

of it's more XXXX. think customers. our supply we it having learned kind Things operational it think that. But in like through and inventory as chain for OEM management, appropriate gone lessons I There's would to say, small management. relates some I a question

Tom Narayan

it thank Got you.

Operator

you the at any closing Clark, additional concludes turn today's time, will session. or back to conference this Kevin question-and-answer That for I remarks.

Kevin Clark

everyone you Take appreciate us joining a Have care. Thank much. very day. this great morning. Great. We

Operator

today's call. participation. concludes your This Thank you for

You may now disconnect.

Aptiv (APTV) 3 Aug 232023 Q2 Earnings call transcript