APTV - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Aptiv Q2 2024 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, Jess. 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 press the as our XXXX earnings outlook reconciliations and measures non-GAAP and as The release. the for our presentation included well at back between GAAP second of slide quarter results are the

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

Massaro, a open Vice Kevin will to financial and Officer. that, today Kevin update cover Joe detail Financial to strategic before Chair us we the call the be Aptiv's will Chairman Joe Joining Chief provide the Clark, in over more Clark. the will I'd turn call Kevin business, on results like and to With and and Q&A. CEO;

Kevin P. Clark

thanks, Jane, this joining for Thanks, morning. us everyone, and

X. on Slide begin Let's

double-digit was will growth of at the revenue Looking as as count. as we growth Chinese from by These significant second of and restructuring North revenue spite Europe supply EPS and offset in detail OEMs. expansion provide record joint of were the with strong more as and in Joe XX% on the customers, ADAS The lower XXX completion and local strong revenue partially disruption which the company chain growth headwinds headwinds select well costs, well of America earnings later. margin execution operating solid Motional the EPS, reflecting share points earnings venture quarter, across delivered lower basis

continued stock the Our to over million us $XXX strong, of repurchase quarter. during be cash positioning to performance flow

in later and Aptiv's which does our presentation. which repurchase released to plan. achieving on provides that undervalued billion new significant annual provide assisting our market stock our view more update reflecting not goals, and on well. our that morning, accelerated I not sustainability authorization, momentum, only we lastly, goals this repurchase a sustainability an we is opportunities. includes Joe share announced their the $X Building reflect customers in And share as commitment our announcement on detail report, achieving our but the an will

Moving to Slide X.

bookings the bookings totaled A&D, in almost totaled business year-to-date vehicle bookings Electrical an quarter year-to-date included to River's telco, product European-based billion business awards, the Safety global billion. year-to-date and extension second of billion Advanced strong $X.X an billion, $XXX Solutions new local awards on to a nearly and export quarter our the industrial us $X.X bringing as to OEM target Power Experience ADAS billion. year During total platform OE driven bookings $XX achieve over well a we the as booked quarter, by program in automotive commercial million, track across new a on $XX with award in in $X.X and Architecture bringing in well with vehicle putting Signal billion. Chinese to continued as markets. the Wind leading $XX full User and bringing as portfolio momentum

local landscape an China and changing $X.X increase Year-to-date, track both over the continue OEMs in bookings XX% local made to over across We of by bookings segments with billion, OEMs. totaled last business year. New share to customer the market Chinese gains the

earnings achieved operations. the of Safety our Slide quarter, and efficiency Turning our revenues product The X. strength reflecting our as and the on during the portfolio as record to segment Experience Advanced User well segment of

over are billion. been Revenue which $X.X mid-teens, significantly the portfolio. safety by China. X% program the fifth OEM, by OEM in mix over this solution as global billion a offset we've representing China were customers new that utilizes local last production of XX partially impacted OEM revenues, well broaden increased the a Chinese leveraging to months. totaled award a $X.X Aptiv's to a customer with user almost We radar quarter market as Japanese to our XX.X%. income RADAR bookings a customer million, ADAS the radar continue multinational local bringing $XXX which with awarded experience revenues SoC Operating total as with requiring margins increased lower industry-leading booked ADAS representing by Japanese by increasingly in We customer the our segment in record program

global activities $XX a we're of basis ratio and present future with them been options that continue. reducing market quarter, expense the also and OEMs we to advanced for the Studio our in customers that China chains both semiconductor declined down changing efficiency best are our a Engineering to initiatives, Wind several million including and I traction development material period led will same costs to River countries improving on of a conditions. As in points, activities supply continues the have for trend reduction sourcing reflect significant stabilized, last programs, our similar disruption new rotation XX discussed development confident almost which incremental savings providing OEMs tech call, And software year, while the and the sales programs. result of engineering with in opportunities bringing to engineering local during more requesting our cost the versus initiative Chinese OEM last has current reduction adoption has to of costs. as during for software earnings our mentioned, gain profitability. This our centers also

Wind Moving on to an update the slide River. next for

in software recent This defense nearly commercial consumer criticality Wind teach-ins, discussed totaling of end year-to-date. $XX Wind our other software is now change such mixed River year-to-date. for need favors across digital vRAN solutions and driving Works of of recent Wind in bookings demand awards million that support resulting solutions, across the for certified transformation open $XX O-RAN million is bookings solutions driving In transformation VX the as in the ecosystem the Helix. million cloud-native telco, adoption is end our And and industrial in River The aerospace in growth we which multiple opportunities $XX evident as present software-defined and that connected Wind over in to increasingly markets. year-to-date. $XXX our the includes full strength markets, at reflected and at for continues to reshape and in bookings edge, As devices, million River portfolio. AI automotive, River's are deploying where the

operation intelligent and deployment development, River gaining traction the we're developer. support with Studio these edge solutions, commercial of Wind To

own improved our and I engineering world's development During efficiency process. increase the quarter, of software has the of service our are developer. mentioned, adopting adoption X the meaningfully quality Aptiv's announced software we studio leading providers And at software as

open in will project Debian-based River for enterprise-grade months. regarding associated edge. commercial supporters joined it Wind Wind just we in solution AWS, of SAIC the Capgemini, Super Intel, Linux announced, and Lastly, the River the the Elixir prime intelligent sponsor have share Micro opportunities coming as is source, project. us and more with

a Slide Turning significantly systems result and Revenues revenues quarter, Solutions during declined segment customers. space digits declined interconnect X% offset from market specialty growth single segment production digits. distribution growth which low the slowdown which for the reduction by the by our in on to automotive Signal in in Xs. and automotive had select solid products markets. single X. A&D our in schedules traditional strong in is impacting the of grew in Tier Components quarter partially electrical Power and orders the business, and the Engineered with revenue the high principally

in I awards. $X.X approximately Signal and billion Power mentioned customer As previously, Solutions booked

power our that awards, standard. to including meets with Conquest We Korean Japanese diversify America, in North assemblies, continue American units OEM charging distribution cable with award OEM. high-speed for multiple high-voltage the interconnects revenues and future date low-voltage A North to award component a awards fourth charging with engineered a high-end

manufacturing that And reflecting lastly, energy the grid just XX.X% believe to Mexico. attractive OEM and in $XXX across in our We're lower costs well to closely capacity all vehicle margins performance our situation address systems supply the this manufacturing and production operating continue business. and work segment million, and an income the small, OEM represent this customers strong regions start the storage resulting disruption end award from Power energy and market although as of Signal performance. storage that is aligning chain representing totaled lower engineering labor first our with for relatively schedules Operating we as and to

cable the in distribution over it and is billion detail. half other HellermannTyton Connection cable interconnect Aptiv in Signal of wanted will markets. in our billion markets. and business, commercial solutions of is fastening of industrial but mission-critical ruggedized business provide which automotive and #X engineered, power is highly a update automotive a failure and our low solutions. the data. and efficient for and more the a on Half of globally provider $X the further. and the fastening and nonautomotive Engineered now end a overall and is Components relative integral of high revenue this We Aptiv's business. interconnect, bill of down #X almost the X. Breaking Power have to is serves solutions revenue solutions end These automotive, to the cost and cost management vehicle year, materials, safe management and have Systems at to global leader Slide of provider Looking $X an line on providing market product

and space, automotive strategies, advanced specialized needs through to production and industrial light for and diversification Interconnect and benefiting commercial markets. interconnects end in customer resiliency. HellermannTyton key our to exposure to and the provides highly vehicle both Winchester trends provide assemblies industry mega access our Winchester same Lastly, cycle cable markets growing and while reducing they're strengthening from growth Both other A&D,

and shaped edge levels Moving to for evolving to The that these remains and faster have continue cloud others. have we And automotive that transition And these of power, path the safe, been included strongly Aptiv tailwind with connectivity global than trends industry believe to to themes positioned X. to the trends. and connected Slide from decade. regions software benefit higher electric macro the last some the well the automation trends green over

challenges, may to demand slower near-term that generate Consumer cloud the regulatory strong make to committed the remain green some considering enables cost. lower to to existing electrified being adoption assistance their edge opportunities incremental and midterm pace where and cases global our trade-offs continues original our for continues grow. presented vehicles optimized to rating EV and agency COX of customers connectivity more safe, solutions to plans, the Despite that expertise adoption between and more for customers technology solutions While for recently develop that more anticipated, solutions near be advanced demand we're connected than that grow. vehicles intelligent and And emissions and in several solutions. or more require with enhance next-gen have making performance balance delaying standards safety demand remain and

So competitive remain OEMs addressing and new that are regulations. and features demand market by efficient, in for applications with can more the cost-effective consumer compliant

XX. to Moving Slide

this shareholders. an uniquely represents continues strength the of are given become cash and investment. that, portfolio this opportunity. to grow approved and enable stock current customers while software-defined, performance, shares attractive invest confident a program our XXXX. With more can billion As are significant our long-term shareholders authorization Board world is over positioned we're and $X almost believe transition repurchase share since growth and share in that in to great program. cap our to prospects our and our repurchase believe deliver our I'll billion ability $X for incremental has the to to market our Joe. Aptiv's excited including accelerated Active investment to billion advanced the to $X very financial turn call technologies. earnings We're and the total of electrified returned value flow execute our meaningfully a our about over is a continuing XX% we we strongly And Accordingly, repurchase The of that authorization in IPO now to repurchasing and

Joseph Massaro

billion, including well of delivered a Thanks, production lower on XX. truck quarter prior vehicle the full North in quarter continued year. performance production Kevin, are of of significantly everyone. costs, volumes. as majority down operating Starting are as in underlying strong focus quarter. primarily revenue will was OEM a quarter, lower second that discuss improvement America, select global X% points reflecting performance Slide customers European morning, good initiatives revenue on as our represented which the SUV execution $X.X our shortfall and operating margin the down growth Revenue Revenue X below in second experiencing year X% with resulting the shortly, basis These I lowering the outlook. was or and and in X% the customers, we our Aptiv was OEM the and XXX multinational over in at EV-only production impacted global with in by large presence OEMs China volumes a

records $XXX Despite and of by respectively. and in XX% the lower million. basis $XX the strong, totaling reduce the was partially increase year, benefit per share earnings, in million $XXX expanded transaction, adjusted taxes. quarter over top as of as of an operating at million, the totaled were were EBITDA performance and completion higher repurchases and headwind $XXX Earnings cash in offset $XXX million $X.XX, the impact the a share EBITDA well count, income Motional actions XXX including margins as helped capital were prior of a quarterly from the share flow cost line our of million benefit the both prior FX the pressure, Operating lower $X.XX points JV commodities revenues. year million, quarter higher expenditures benefit a $XXX was and decremental quarter.

$X.X Moving XX. Revenue X%. down to was Slide of billion

and revenue vehicle partially production user impacting impacted growth vehicles. in exchange. negatively our top and both mentioned, internal positive was impact experience our price and primarily foreign Net and Engineered As headwinds were by offsetting in electrified product Components schedule was product lines. negative lines, Active commodities select customer of Safety line, This reductions distribution to combustion including by in electrical the offset customers the

Moving to the right.

local in and performance effectively the revenue line lower multinational and quarter China, with the the reflects previously XX% at America grew in customer In regional mentioned and from OEMs. negative OEMs the offsetting impact product North we Our production dynamics. Europe

both As Kevin see with and our business business we continue the new with segment. revenues discussed, expand we Chinese in bookings and customer this double-digit OEMs to as local growth strong

Moving to Slide XX.

and by was across North safety offset as Our more Safety quarterly strong which America up manufacturing the user ASUX growth was and OEMs to the in volumes slowdown and XX.X%, XX% by experience adjusted down in User strength Europe. $XXX in as than strong multinational initiatives Active earnings in on active record income improve impact the in impacted ongoing as is China engineering flow-through the quarter segment safety in XX% well of lower was achieved Segment revenue quarter. million with or driven quarter revenues. the experience, the active continued efficiency.

X% select impact line, second declines the production, of performance decrease actions. Power and primarily offsetting the and over quarter income XX. Engineered driven negative distribution Segment Components just Net Slide exchange. line, quarter. adjusted operating billion, were reduction lower below in at or X%, $XXX down by commodities $X.X on and XX.X%, the voltage vehicle Turning in excluding reflecting product by in volumes Revenue to was initiatives the positive, a million product high-voltage were Signal X% the cost the in driven operating a of growth or high by of offset was foreign revenues electrical pricing customers. XX%

volume our regions, all down updated to Expected schedules, in and be global on prior OEMs China expected assume a outlook. outlook X% Europe down down flat vehicle year-over-year down X%, America North be we basis. now from production in production Slide driven of lower X% customer down is China. by macro with changes our across production Moving will now XX in multinational at and X%. to XXXX Based on

across and across reductions seeing internal regions, production we reductions In vehicle including addition both powertrains, EV of also platforms. are combustion

and assumes For and at at outlook Mexican at rates, the commodity $XX.XX Chinese $X.XX. RMB FX copper peso $X.XX, our

Slide year outlook. XX has our full

continued the the year, at out customers do we balance from vehicle select noted. look particularly expect on the pressure we production, we of As

costs confident to improve operating will strong performance continue we to the remain performance. taken have we drive actions However, reduce and that

revenues $XX.X assume revenues over $X.X Operating prior is would of X%. and updated we've $XX.X revenue outlook and revenues. resulting of an range at well to production partially I segment lower the in in reductions strong At is the includes level, continued growth Our schedule adjusted billion vehicle XX% billion, our representing of margin down to from increase the impact with We reduction in billion, of note judgmental midpoint of both as customer over incorporated SPS outlook. in reflecting $XX.X income X%. as additional global that that performance XX% X%, at growth an and market operating market ASUX the the operating down which X%. offsets billion, decremental remained of strong growth

from completion from count, We at the are of resulting be I'll outlook of lower The $X.XX increase XX% offsets also $X.XX early impact our cover $X repurchase to share up the midpoint, from well next prior prior an billion, the earnings. the slide. as Operating the lower EPS increasing expected on billion plan, share is detail $X.XX impact in more year. estimate JV to Motional accelerated transaction which reflects from as the the of the guide, also cash which

which a $X we announcing As commence billion tomorrow. stated, plan, totaling are billion ASR, will repurchase Kevin share will that an accelerated repurchase $X or share include authorization,

believe completed. us while strong our to capital financial in combined allocation performance the is the sheet will and allows of stock. debt. ASR be the and the acquire long-term of us will The our significant business be to once practice available remaining the capital to available afford confidence funded purposes authorization a position mega invest continues opportunity to our of a accelerating amount long-standing liquidity of balance and trends, Aptiv's balanced return combination Our future We continue in shareholders. for operating ASR with through our the The strength ASR common

slide on Moving final my to XX.

financial capital to initiatives last returned Aptiv. Aptiv's the levels. experienced Performance have significant focus of years the provided additional has elimination across to track capital capital Motional deployment. shareholders for the record consistent to financial on while accelerate the and and balanced the of of business improving the margins us completion over provides improvement and strong within our maintaining position, few policy of Our funds return maintaining and the costs disruption the deployment ability pre-COVID transaction

Our maintain delever financial remarks. that, the ability for call shareholders, capital to including returned of our With back his to in to fits capital the within turn the I'll year. the allocation acceleration we the policy Kevin coming over closing as and invest plans, business

Kevin P. Clark

quarter the some line continue despite through well Thank strong before to positioned well with XX operating headwinds financial revised opening reflected believe of I'll executed OEM remainder revenue flow, lower we're as production final second year. in make mentioned remarks outlook. of our the we cash schedules operating confident updated our plus Joe. questions. that into an the operating performance solid our management on incremental Joe the we're is that our you, and strong the earnings up outlook record reflecting increased translate for and the margins and Slide we will conservatism prudent, performance overlay in

we towards digitization headwinds, near-term the and the navigates greater connectivity that confident will industry remain levels electrification, automotive the continue. of As trends

is Aptiv's software-defined a strong flow growth electrified, our into shareholders. And earnings portfolio that more in benefit both help cash transition and we're creation well connected world, and significant value from our to result will confident customers positioned which to and for will translate

of us the long-term our strong to capital to our dislocation in operating to positioned around return take to advantage and performance has conviction price, and the allows stock medium- shareholders. us increase Our our market trend

technologies, shareholder execution, Operator, focused forward. our and returning developing up portfolio the remains strong to value, cash of businesses. the of shareholders for now of operating Our line the creating management on maximizing drive continue and to execution portfolio and let's will questions. value open on focused we business flawless advanced team our

Operator

to now with [Operator Joe Instructions] Spak move first UBS. We'll

Joseph Spak

team. on Clearly, have strong team, and to you as Kevin, know a value. the the been just a management signal you focused I shareholder from very start leadership buyback. on

little more up So lever about to debt, can conservative. some options? this you versus talk a the you maybe also historically to came other then just bit been on decision how you've pretty of sort And

looking to something ways next potential other bring of growth like this some business some years' the just like sort that? slower maybe the cash flow cash this out in are by some get down? is at few Or to of or So assets confidence there

Kevin P. Clark

listen, management from start remain Yes. think I'd Thanks, I our review we general Joe. Well, with standpoint is conservative. a

over to reality inefficiencies to to the Our outlook and for couple margin we standpoint strong, we that we years. from a last cost it. some in has look this performance an of very That standpoint little and COVID that and transition confidence took in it through a results had from is relates performance have frankly, supply chain been as quite through our is had the gotten through Clearly, quarter period absorb year, and the business work strong disruption expansion. is, gotten execute of our operating to of we've then the and continue from an over strong quarter of as to last and time. the at really reflected operating balance the and the we've to deliver and time, ability

around Now which setting where in that or slowed electrification, opportunities that whether we're areas user it's aside, we are look whether our bit. Components and at or us of safety front a clearly experience optimistic. portfolio, very Engineered in it's active the has

us at our relative to opportunities portfolio as have to look we'll we that those price we're always for relative things market We operating the in the while to the the as can the market we continue space. delivering we're clearly we opportunities share automotive to is to And front in how executing are and we'll nonautomotive and adjust business. dynamics. the significant at, of evaluate. time, to same to -- And Those investments, we undervalued. consider. of And that's do, opportunities trade-offs, have we various we'll the continue or future, and to clearly And feel increase us. the value, of at trends something certain we extent need to it's as our that view, relates performance outlook look to in do it that we this And attractive invest other though continuing our it's given our in our -- business investment front performance most as

Joseph Massaro

Joe. it's Joe,

sort follow sources. policy built assuming We've to to maintain on that one-off same view allow perspective, not the and the a had us delever from any here a up we've before. plan cash of from that over course Just 'XX of delever financial

Joseph Spak

foreign And for domestic you are your moving just focus some have players of under question are growth XX-XX. Aptiv, market of the recent know on now Obviously, metrics has the entire changing months. of this players. you some the Doesn't in been in I some Okay. a is but the sort soon. for showed of China. you maybe not domestics dynamics I the But investors, the X% anytime think area But decent with for -- seem if XX% said the a an And the of look, lot of already past, those backlog some you've second of more XX%, the to of industry. share year. like just

you just the has know awarded business like that should it but that risk? -- some investors going seem I So much some Because your in of bookings, been how think don't materialize volumes. is pass that not recast would at clearly, to is

Joseph Massaro

Yes, Joe, it's Joe.

clearly years start. on I that this our couple last into share We're mean Chinese been percent me Let growing and shift. of XX-plus over at local have Chinese point, for the the and Bookings locals. market are quickly. XX% revenues OEM growing are

something as watching business, At that just we the So clearly XX% headwind point, on doing you but been the have know, in you, couple started I number is exact we're of something X something has local. the it's don't something This team It isn't global, it's -- XX% was quarters. for last for while a closely. now. bookings

transition. So see continue we to good

quickly the something those we're growing customers I concern closely. the with think at watching well a and locals. more on obviously are challenge is than with about just working these it's couple of actually moment And how the and dropping multinationals we're how off

Kevin P. Clark

months. I with award XX China between tends Yes, if local can OEMs be in period market actual and I the the to add, X launch important think Joe, the to

quarter, rapid. would from to So with and the deliver OEMs, unique China I have we about in traction numbers talked local gain say multinational revenue reflected that is the standpoint ability challenge right really it's the their a part in growth Joe standpoint, referred to growth this is of balance China to reduction it's is and now a that referring was past this continues significant their of year. saw a schedule that And the X Joe Joe to schedules. a that customers. in And in from we volumes, during or the judgment

mix our years. said, a last So has as been Joe for priority X the changing

We we're traction. we we're traction. think market continue We'll and have the changes. to challenge make made there And addressing the

Operator

We'll move Bank Murphy America. next John of with to

John Murphy

suggestion and R&D and sort I might it sort as ROI, of you product value you Kevin, and be -- reallocation with, time the curve to come suggest a might core maybe very here often philosophical slow just really be And at strategy stuff undervalued, I a the of But forward. this also kind there's kind certainly development step-up you're just that that Joe, potential, slowdown which growth and sort product and that looking and of on return follow-up of agree taking better to generate the of structurally with. we mean that cap may of like over way lean other capital a down Is here your some that which time. a and about maybe agree of you a in being the good an of does buybacks, and at cash more development? to shareholders then bit in going product even you products ICE kind back SBA to fruition stuff development. often is to of be alluding shares little think shifting away R&D, I in of from out the advanced way that ahead guys some able to are

out of business? curious core Just sort the how back balances this into

Kevin P. Clark

Yes.

high-voltage industry position the are agree share I a to electric challenges we've priorities. Obviously, scaled for respect ourselves like of those -- with back. that those comment, investment look that. customers price trends at significantly of in areas some and your aspects architecture, with to vehicle in the back slowdowns, we electrification, areas of slowed our stock our is of it's smart Listen, areas we as we in certain like have with. scaled So bit important undervalued that first have price, some in some dealing some

completely an and from haven't million so that's our is footprint spend executing to by both a operational well, extremely the outlook well stopped year-over-year the rotation $XXX segment year, segment the -- number cost additional really And factory, productivity. John, as put engineering we've million and of At we'll engineering in ASUX this to freed $XX generated efficiency initiatives up certainly a place level slowed of the but has standpoint. SPS We benefits. the an in as best engineering from same that dollars. our countries significant of standpoint, reduce time,

John Murphy

just was about now. Got right in you it. a mean mentioned And $X billion revenue I then follow-up. HellermannTyton

acquired I about in think roughly million $XXX then. give back XXXX, it or take was you it

XX% a that's So CAGR.

even an So are that's example I maybe sense at for been mean, argue you run. looking that's Are that mean not a triple, of add-on. that because in a that make right I or there might a guys tension that -- now? create home greater other could I double acquisitions core adjacencies great business your

Kevin P. Clark

question. your Well, I'm fully not understand I sure

revenue. So under bought when HellermannTyton, we of $X was just billion it

roughly great From So is standpoint. it's a frame. you when an extended the significantly. sort over absolute in global. expanded rates engineered look I've plus Margins revenues it's growth at John, similar It's systems We've business. fourfold. standpoint, of M&A time time home business, the here, been our an an decade effectively run. an been the connection It's reality over from increased have those And the seen doubled of over Winchester business period component have

of some is Now related. acquisition that

that's strategically important important they're of Some Clearly, businesses. organic.

the profiles, which automotive make really taking nonautomotive sense, have they on and market we areas And them investing they're in so that those business in nonautomotive product it our high those automotive cross-pollinate businesses kind very those if are know, if you margin that focused markets, the makes attractive. we're in leveraging As of into markets, and portfolio. products the those that are for

So of for us. it's focus area certainly a big

Operator

Citi. We'll with move next Itay to Michaeli

Itay Michaeli

resilient just question, volatility in line and Just this the the of first top given year margin. course,

the can broadly from just as secondly, the the growth the more into curious around compared how in internal should I well quarter, with QX expectations. medium be And incremental we know but market the of how term margin organic bookings, curious just it lumpy just as of kind company's very Just be then here? growth on thinking path quarter or

in is think $XX a the upside there past, suggested that for the may have if you potential billion still maybe was I the full to Curious year. year? the for

Joseph Massaro

chart in in bookings Yes, again, deck, awards It Itay, you'll the $XX of around and track quarter We're had based with question. of sort on me see right, given a move the look let -- couple lumpy. at billion. large just to the we've just the on of quarters. we you awards, if is the for start And and size

confident So remain lumpiness and there at nothing $XX I billion normal more think in than that the point. this

As very be year. relates to it it next wasn't into obviously, going revenue, early, to days

the As at we market about planning growth, this targeting no point. really assuming early help assumptions, certainly think we're from mid-single-digit

work to in the lot a obviously, but platforms, those production, China. of things, vehicle and mix through, mix flat particularly just So types and the powertrains, given

Kevin P. Clark

it's because impacted Joe significantly. at I second it I was think his a that negative you in can in way that. this articulated customers augment Joe comments, prepared when X important quarter, look our If the revenue -- really, -- Listen

consistent had with -- think year. When OEMs, is QX, in those down, keep X. believe So you of listen, in for see it's look big that some to play up, broader us that And but that on some at but are the the net balance the I mix dynamic are of the impacts context. important how a out. we'll for we impact they'll have

Operator

We'll Morgan move Jonas Stanley. with to next Adam

William Tackett

I'm William how Itay's go I return Jonas. X% do to industry, are question trends new over strategy? aggressive fast expanding the Adam of the maybe shifting in on even you market with is curious, assumption with to the long-term for guess, on This X% that Tackett capital reiterate growth

Kevin P. Clark

mix, Listen, at market and evaluate. we'll look customer dynamics

market. to think, what we more or I whether translates term. outlook kind on longer-term determine work we're needed do more of to on it the flat of next Joe that's looking mid-single-digit said, as near seeing year, at to that growth we're sort

William Tackett

guess and customers I lot to do? this OEM LX+ on Got the advanced vehicles guess fit That to material expect relatively nonsoftware-defined And architectures systems any customers easy do it. the makes is that's non-EV sense. see for question, I of if more volume? with next you your so, a something

Kevin P. Clark

launching I what or of EV or asked be enhancing to adoption, be technology to delays you upgrading need and of EVs vehicle we platforms. Yes, to of vehicles get the impact keep of about whether to adopting think it SCA me. architecture. to they're smart OEMs regardless they're some questions transition in demand the need whether possible transition is And mind consumer constantly

we've we would billions to what dollars. incremental, programs of calendar you tell call, or experience ADAS solutions. bridge this So that in -- that relate I'd the are user legacy year, seen during

like to that positioned opportunities and we're solutions well enhance significant very feel existing for. we So upgrade

Some with customers. are customers, existing some new with are

put to progress, the car that OEMs those technology to So opportunities, the continue. more will the technology, continue desire in enhance

Operator

Dan with Levy We'll move next Barclays. to

Dan Levy

getting to a can much dissipation to I footprint or a bit years versus that here, just some saw like headwinds reversing role more. engineering we the the just trajectory? reduction. really just in wanted margins the other is And how things unpack pricing talk playing of inflation, more you maybe past and And

So from of sort here. disaggregate I'm trying margin strength the just to

Joseph Massaro

disruption mean the of had coming we I mean, pretty just Yes. Dan, You obviously it's discussion first with margins sort it's next actually I'd back of go $XXX Day, covenant of half. balanced. would last Investor supply some million improve I thought year in the coming at were we chain the costs over majority Joe. the had of to those right? out, years, how them that

of That's large to a that X% years percent Net those couple means then it's to come if to ago. no line balanced not was it look down sort Kevin's targets a as as been prepared back But comes seeing engineering very to of at So you sales, we're those with it helpful. where much in those out. remarks, be contributor, it's by X% pricing commodities a but -- it's as across continues of as really range so fairly initiatives.

Dan Levy

from And here... a the to customers, play continuing is recoveries price role that

Joseph Massaro

seen right? this majority price. quarters been net been at in come down. price comment. over vast less Yes, as the recoveries. inflation come that's seen has That's included we've And has the material the point, result, piece obviously And past down, included We've a X-plus in direct that

Dan Levy

Great.

customers. Second question SBA discussions I are your SBA hoping sort Obviously, think where just just with your presence customers. is of some on for we're and an on the with update

that the is you if think on line of And billion, talk other the over coming billion market programs remaining about are getting you've mentioned the that or some through just there -- -- could a was architecture. of quarter had high the Anything about. you that if even if I just voltage even of that cancellation. You about these share. is sight content there some then the $X going $X Maybe that talked the can lost offset on shows still talk that have other you content, away, still pieces you've you're

Kevin P. Clark

Yes. Yes.

Let it. me a shot at take

this are as in So listen, and more OEMs with pretty direction. to relates put just trend. start -- To More good smart line of headed vehicle underlying it sight to architecture. the

well need software want re-architect So be get They hardware both the I software. the would to software more hardware to a where say to as the architecture, architecture to as they recognition from defined.

Executing would difficult. can say needs that global So that recognition that, be done. to be I

We vehicle over included globe. You're we pipeline seeing for put architecture perspective have pipeline it X that, smart OEMs the years OEMs right, that impacting X that's at architecture includes point To a for that across XX a ago timing. in this and with vehicle smart had certain Today, OEMs. in time.

the the direction actually larger. larger actually of and is OEMs this number is So headed pipeline in

vehicle To it. the into we've about We've go a obviously, extent we architecture developed approach system is, that smart but components sell solution. our to talked solution, that system

can position either complete us of it. buy demand to to solution. have customer. which don't They a great in serve the puts customers parts from buy our So

we relates they push these. to experience of mentioned, user especially all win year areas and enhanced, I off have upgraded our be static, or in pipeline, it and they ADAS have As programs, and that, we be existing they any like hey, to alone, won't that's in or as platforms delays of need and this can't

are we over And some but we're that billion. frankly, of have opportunities these, less $XX quite interested probably in

app. is significant platforms opportunity ICE And both for those So there or electrified are us to there opportunities on platforms. OEMs out bridge help well EV as as the

the experience, to areas or in as like plant active is. what So it's power very architecture safety it agnostic relates user

So question. I hope that answers your

Dan Levy

others on the just dynamics you're how could SBA? you you anything versus share just maybe think up on or And competitively stacking

Kevin P. Clark

we XXXX. -- XXXX, in, the again, started we what, Listen, Yes. pass down I SVA

terms productized at very very solutions customized OEMs are components to for times We've business of with So There vehicle our solutions. are doing some we in strong. system select in OEMs. selective our We're architecture. the fairly desires that go work smart We're have into pursue.

given and experience So in at so we point technologies positioned this time. customized our across can share to for area. we our very we're OEMs not develop in look way we're I'm given at -- looking we're sit well it the this just standardization bring right sure OEM, is -- But a portfolio solutions that products for versus and multiple not of

Operator

to Goldman Sachs. with next move We'll Mark Delaney

Mark Delaney

that to a require that does in launches XXXX 'XX, still the over With for were an half your allowed X% for in market for what several now you supposed growth had occur company first assumption The acceleration to of relative growth step-up it reported half. market. meaningful over

So compared you your of maybe launches and piece you been to visibility can the understand and confidence extent those occurring conservatism schedules. that's into help investors better what a to mentioned

Kevin P. Clark

say standpoint, would it I from mix. partly Yes. on a depends launch

of a to up, and So a half the full revenue. need I'd you to on careful come start first to revenue, to because there's and launch it is ramp takes be as reality time period half, it second relates the

then our the then half as half say, XXXX, to in prefer vehicle in year what's And reflected a XXXX, unit the revenue you're be standpoint so revenue in takes you by into of of the the production And back of back of overlay We that's at right, for and XXXX. this half our that's sorry. how management the from of heavier have first the half conservatism. -- XXXX by I weighting first So business Joe QX, calendar standpoint, would had hitting incremental that look we from And the shared half you it that by outlook would back and what our product the which is of of line. a account preference from with watch guidance that's how point. half the back launch inflection I'm the launches region your tied. our are

Joseph Massaro

year. Yes, lot launches a Mark, lower volumes started of it's haven't mean the earlier to I'd we in point, these -- themselves. the cancellations seen I have Kevin's say any at

called half of by out impacted perspective, customers comment. remain out, launch then back vehicle we revenue mean back the they're the production that. I'll Kevin's right? I overlay have we of of total, there maybe the roughly year, But And of the So go conservatism select in generally, earlier XX% reduction customers. a on track. to that sort schedules the from from top

those customers. we So the were takedown. is customers, and moving and that well up X situation this majority for those X bit of down us, vast acute where XX% of other full really But we're there's and with the year over very that a shortfall called it's the out some we're customers with really a schedules They seeing. really

Mark Delaney

you prospect was My think other I question Can in space growth mid-teens you River about the the longer wins? you can customers, momentum tracking? additional term, year. an update about assumed for that's Wind as you River on revenue the Wind and automotive talk helpful. give Wind especially for this maybe River. believe with That's Okay. on And where any

Kevin P. Clark

Yes.

overall So just of second the were revenues an last timed half first rate, half growth weighted year. the in given year from stronger

automotive, standpoint, just significant aerospace new success the market, look So it and had Growth and when given and platform opportunities strong a telecommunications and in year-over-year we've the of in introductions. and China automotive. defense at from nature opportunities in you launches the industrial

a you platform solution versus introduce that the Helix So Wind launching VX existing solutions an a it's new platform work like easier Hypervisor a or are to platform. on River

the on standpoint. solid. say largely remain So would from track automotive We an opportunities

Gaining on would looking say especially space. OEM program that last the productivity launches. studio new development, quarters, they're with And the challenges traction I on having across developer, given the customers are our for, regions, in few that's the been software Wind River just for Studio we've that developer automotive using the that fact

into integrates as engineering OEMs. the of SoWs organizations that well both So as organization.

quality they're from efficiency the a benefits standpoint. So and seeing

our in automotive the profile date, has remains space to of in the been growth China. So progress really intact, most and

Operator

We'll move Shreyas next Patil with Research. to Wolfe

Shreyas Patil

just Wondering some on details cost tailwinds could more if you in of provide quarter. the the

something chain you million mentioned you think but elimination my have might productivity. net supply been that the and math, closer on million COVID performance costs $XX of $XXX achieving I maybe $XX probably were million to and to in

And tailwind XX% was incremental You I XX% a engineering to just range. big think margins as talked in the picture, well. mentioned you've before about

these actions, trending higher as see look With cost do you that out? we

Joseph Massaro

continuing we're I about think project XX.X%. I that looks on we thought we're from projections. Listen, talked Yes. at to away XXXX and where We've less sort long-term think obviously of margin

at where continue look year. towards I you if half we the be that in to of the we'll think track back

coming earlier, out, mentioned performance supply operations well. coming of disruption of numbers seeing back As cost really strong seeing performance, we're coming as where in really COVID out -- coming manufacturing Shreyas, your the and line right, a costs I chain the business agree engineering balance, we're it's the really strong with I

disruption engineering performance to $XXX Day, of it's what supply be thought that's So Investor what of we we back sort going and equal we over how talked really we're the SG&A over go course of we -- years. chain back of about really manufacturing, of X seeing. being margin you X if had improvements to The years at and that that thought about enhancement coming the logistics, sort About over was $X.X million across billion the out. remainder, in was

no business operating So it's balanced. It's items one-off fairly There's in there. really big well. the

well. that a made year, $XX significant overhead a of as seeing about call costs. the last talked As about of overhead come at a took we talked amount We end a what it and number. we took out costs in. I'll We're million on decision

rate think, talking those us EBIT well back mid-XXs, about the it well up, I And will So look HX it's I XXXX. sort you or at margin for we if fairly half sets balanced. run where puts of pretty margins be us think sort that were in XX.X% of

Shreyas Patil

Great. just X And last Okay. one.

Dan's on up question on SVA. Following earlier

zonal Just SBA trying in see that specific that it's for situation of winning products, to business think that. you between But or you like not about lower you may terms anything a content. as would I architectures you. the -- much wiring a in whether that's or CDCs here margin the trade-off controllers in where SVA know be reduction in

whether positives think about we still that trying just components connectors, architectures about Just it's how to high-voltage are are to the those think engineered those look architectures, as there or what ahead. in besides the

Kevin P. Clark

portfolio see as a to relates do, to the your I system, $X would out in we change. that would net that where and Well, $X, the go question architecture right, of $X.XX and go see Yes. the if right? like product we and effectively roughly math it net. had traditional would is be -- our sure make was understand SVA versus harness, And full around you most in That's used the would wire you

again, opportunities As incremental don't static. our relates it to remain customers

and taking mass harness replaced and that way content and cable it's improve the out SVA, like for a with stopping that And things change something the to can or step vehicle call that lineup. architecture, to high-speed is reduce assemblies the performance are translate weight to delaying translate Mass all that and they vehicle into there or they into other vehicle do need like wire certain and architecture incremental in not changed. on are things So items with that, it, vehicle Aptiv. more pausing is where let's extent

architecture they other ADAS, and to their about was zonal user To CBC, referencing in I particular I this year. they're that enhance their and $XX to a a a the talked what upgrade the in billion are going delaying like calendar extent controller or have that's solutions opportunity experience particular

opportunities spaces are exist that there that right, weren't those didn't there previously, for in around So and ourselves.

well. incremental revenue opportunity So as that's an

Operator

our question RBC. We Tom final will take from with Narayan

Gautam Narayan

ASR guys this what need if guess, level love operation? for kind do any of do when just I you Just follow-up, are of with if this but cash you do question. the numbers and of The associated getting could I at, necessary, kind leverage that Only that. as you a just

Joseph Massaro

Yes. $XXX we Cash -- Cash million finished billion cash. $X.X call is, Tom, $XXX it, the it's Joe. to million, operations quarter with from of

actually like million EUR market We have XXX of securities. another

we EBITDA, Xx a call debt in the lower. right good we're it, to ended net as adjusted So position around quarter, debt obviously

a in So good lot We balance last view. I through we're managed COVID, really shape we've really it a mean kept good the over really in in sheet that right? well few of years, generating position. my We're cash.

are from we're putting on intent the So investment of repurchase talked course do work -- the rating offering certainly very and to agencies, next include when ASR good really today the to prepayable year to to XXXX. grade debt to this. stock, to going to the by are an we in will some to and get early where in the do effectively a we've we ASR, the our and but end debt, support us, next over debt back final allow to is maintain we're from the position of year it view,

Gautam Narayan

Is differentiate statements, it there's public between do you it. components, premium because where side out at know from whereas OEMs, context? you that. quick appears a own But then been Yes. of the optionality OEMs, scattered? maybe some market How about mostly the as like do Got not for kind And to what system. maybe Or I mentioned hearing of that's necessarily dynamic premium or sell to have the on their not a is where be wanting on if least think their lot brand, X in turning maybe possible OEMs just mass on their SVA. market case? differentiation we've a follow-up much it talked of own one the kind the Or versus the premium it is desire a their thing? whole less. thing this Is a market you to is mass Tier utilize we as to

Kevin P. Clark

Yes.

question touches we it's own, particularly is, design architecture. that, what by view sure means. When on quite do mean as smart differentiating I maybe OEM. unique say of really that on OEM. for not It their OEM vehicle where the That might more the want a the kind to about, particular would talked of like point a don't this we comment So

do at distribution Our and of and is do focus, just do you in it years our power our how history efficiently cost, you just effectively, around how lowest reduce data given weight and mass.

about, avoiding is feel down the customized So a obviously, that particular talked path our for We're certainly you like, we to wants solution solutions they if best focused go the on can. OEMs. solution OEM

that's So that business.

would an if it OEM we'll can something we we'll pursue, on to If won't That's have sure if that a do. OEM. we'll day, we so sure and We not profitably. important the or not I'm I'm that we have for elect we at do differentiating their -- do something own. product or needs meets of that not, the it's next the move sell -- it's to But pursued end certainly to do they that

ago different with our programs today versus As pipeline X includes OEMs I years XX mentioned, X.

out there. opportunity that's plenty there's So of

Operator

I Kevin will additional or closing conference now turn any to remarks. for the back Clark

Kevin P. Clark

time. today. everybody, We you. our Thank your you, Thank right. appreciate for really All joining call

Operator

We Ladies gentlemen, that participation. and conclude you. will today's your call. Thank for thank you

at may time. this You disconnect

Aptiv (APTV) 1 Aug 242024 Q2 Earnings call transcript