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Aptiv (NYSE:APTV) FY Conference February 18, 2026 08:05 AM ET Company ParticipantsKevin P. Clark - Chairman and CEOVarun Laroyia - EVP and CFOConference Call ParticipantsDan Levy - Lead U.S. Autos Research Coverage AnalystDan LevyOkay. All right, why don't we kick off? Good morning. Thank you everyone for joining. I'm Dan Levy. I lead U.S. Autos Research Coverage at Barclays, and very pleased to have with us here at the Barclays Industrial Select Conference, Aptiv. They've been a mainstay at this conference ...

Core Insights - Aptiv Plc's revenue growth is driven by strategic acquisitions and investments in electrification, connectivity, and autonomy trends in the automotive sector [1][6] - The demand for advanced driver-assistance systems (ADAS) is creating opportunities for Aptiv's technological offerings [1] - The company faces challenges from a weakening global demand environment and rising operating costs, impacting profitability and scalability [2][8] Financial Performance - In Q4 2025, Aptiv reported adjusted earnings of $1.86 per share, exceeding the Zacks Consensus Estimate by 2.2% and increasing 6.3% year-over-year [3][10] - Total revenues for the same quarter were $5.15 billion, slightly above consensus estimates and reflecting a 10.8% year-over-year increase [3][10] Market Position and Strategy - Aptiv operates in a lucrative connected cars market, with increasing demand for security, personalization, and infotainment connectivity [4] - The company's "smart architecture" strategy enhances engine management and reduces power consumption, providing a competitive edge [5] - Recent acquisitions, including Wind River and Intercable Automotive Solutions, have strengthened Aptiv's position in automotive software solutions and vehicle architecture systems [6] Operational Challenges - The current ratio at the end of Q4 2025 was 1.74, slightly below the industry average of 1.81, indicating the company's ability to manage short-term debt [7] - The global semiconductor shortage is affecting vehicle production, which in turn impacts Aptiv's revenue [8] - Increased competition in the automotive industry is hindering Aptiv's profitability and innovation capabilities [8]

Corporate Structure and Transactions - In December 2024, Old Aptiv completed a reorganization transaction, resulting in the establishment of a new publicly-listed parent company, Aptiv Holdings Limited, with shares trading on NYSE under the symbol "APTV"[18]. - The company incurred approximately $178 million in costs related to the Separation of its Electrical Distribution Systems business, which is expected to be completed by April 1, 2026[24]. - Aptiv's Electrical Distribution Systems segment is expected to be spun off into a new independent publicly traded company, treated as a tax-free transaction for shareholders[55]. - The company is pursuing a plan to separate its Electrical Distribution Systems business into an independent publicly traded company, Versigent, with the separation expected to be treated as a tax-free spin-off[184]. - The anticipated costs associated with the separation are approximately $178 million for the year ended December 31, 2025[186]. - The effective corporate income tax rate for the new entity in Switzerland may reach a maximum of approximately 15% in 2025, depending on taxable net profit and respective cantonal/communal multipliers[181]. - The company intends to enter into a tax matters agreement with Versigent to protect the tax-free treatment of the Separation and related transactions[194]. - If the Separation does not qualify for non-recognition under Section 355, it could result in material tax liabilities adversely affecting the company's financial condition[193]. Market and Sales Performance - In 2025, 29% of Aptiv's net sales came from the Asia Pacific region, identified as a key market for long-term growth[34]. - The company's ten largest customers accounted for approximately 56% of total net sales for the year ended December 31, 2025, with an individual Global OEM contributing about 10%[59]. - The five largest customers accounted for approximately 42% of total net sales for the year ended December 31, 2025, indicating significant reliance on a few key clients[118]. - Approximately 64% of net revenue for the year ended December 31, 2025, came from sales outside the U.S., exposing the company to foreign currency fluctuations that could negatively affect financial results[139]. - The European market accounted for approximately 32% of the company's net sales for the year ended December 31, 2025, indicating significant exposure to geopolitical risks[150]. Production and Manufacturing - Global automotive vehicle production increased by 4% from 2024 to 2025, with a 10% increase in China, while North America and Europe saw declines of 2% and 1%, respectively[38]. - The company operates 139 major manufacturing facilities and 11 major technical centers across 50 countries, employing approximately 20,700 scientists, engineers, and technicians[29]. - The company has a presence in Europe, North America, Asia Pacific, and South America, with a total of 139 manufacturing sites distributed as follows: 48 in North America, 43 in Europe, Middle East & Africa, 43 in Asia Pacific, and 5 in South America[214]. - Of the 139 major manufacturing sites, 66 are primarily owned and 84 are primarily leased[215]. - The company has seen an increase in its balance of productive, raw, and component material inventories due to recent production volatility and cancellations, driven by global supply chain disruptions[63]. - The company’s ability to maintain market share in China is critical, as increased competition and economic conditions could materially affect business results[108]. - Manufacturing challenges arise from variations in customer demand and inventory management, complicating production scheduling and capacity utilization[129]. Financial Performance and Risks - The cyclical nature of automotive sales and production directly impacts Aptiv's earnings and cash flows, with economic conditions playing a significant role[100][101]. - The company recorded a non-cash, pre-tax goodwill impairment charge of approximately $648 million related to the Wind River reporting unit due to unfavorable changes in economic conditions[135]. - The company recorded non-cash impairment charges of $11 million during the year ended December 31, 2023, due to the cessation of certain long-lived assets in Ukraine[150]. - Significant fluctuations in global prices of materials, including copper and semiconductors, have negatively impacted profitability, with ongoing efforts to pass costs onto customers being limited by competitive pressures[127]. - Labor strikes involving major customers like GM, Ford, and Stellantis have adversely impacted financial condition and operating results for the year ended December 31, 2023[137]. - The company faces risks related to the timely launch of new products, as delays in customer product programs could adversely affect operational efficiency and financial results[116]. - The company may incur future asset impairment and restructuring charges as it realigns production capacity and cost structure to meet market requirements[134]. Sustainability and Environmental Initiatives - Aptiv's commitment to sustainability includes reducing its carbon footprint, waste generation, and water consumption across global operations[77]. - Aptiv aims to reduce Scope 1 and 2 absolute CO2e emissions by 100% and Scope 3 emissions by 47% by 2030, using 2021 as the baseline year[81]. - The company targets a waste recycling rate of 80%, focusing on reducing and managing waste across manufacturing operations and offices[80]. - Approximately 92% of Aptiv's manufacturing sites were certified under ISO 45001 for occupational health and safety as of December 31, 2025, with a goal to certify all sites by 2026[76]. - The company maintains annual certification of all major manufacturing sites to the ISO 14001 standard, ensuring compliance with environmental management practices[81]. - The company has environmental reserves of approximately $4 million as of December 31, 2025, for the cleanup of known environmental contamination conditions[169]. - Environmental laws and regulations may impose significant operational restrictions and costs, affecting the company's financial condition[170]. Cybersecurity and Regulatory Compliance - The company has a risk-based cybersecurity program to protect its data and systems, which is crucial for effective operations[199]. - The Board of Directors actively oversees cybersecurity risks through the Audit Committee and Innovation and Technology Committee[210]. - The company has not identified any cybersecurity threats that materially affect its business strategy or financial condition in 2025[213]. - The company is subject to various laws and regulations, including environmental and safety regulations, which could increase operational costs and affect financial performance[166]. Strategic Partnerships and Acquisitions - Aptiv acquired Wind River Systems, Inc. in December 2022 to enhance its capabilities in software-defined mobility and intelligent edge solutions[47]. - The company has completed several acquisitions, including Wind River and Intercable Automotive Solutions S.r.l. in 2022, and plans to continue pursuing strategic alliances to enhance its customer base and geographic penetration[153]. - The company is focused on developing automated driving solutions and has partnered with industry leaders to advance technology commercialization[48]. Supply Chain and Operational Challenges - Aptiv's operations are affected by supply chain disruptions, which could lead to increased operating costs and decreased profit margins due to reliance on just-in-time delivery methods[94][95]. - The company is actively monitoring its global supply chain to mitigate the impact of disruptions on its business[99]. - Supplier disruptions, particularly with sole-source suppliers, pose risks for delivery delays and production issues, potentially harming profitability[125]. - The automotive industry is experiencing a semiconductor shortage, which has adversely impacted vehicle production schedules and sales, affecting financial results for the year ended December 31, 2023[118]. - The conflict in Ukraine and Russia has increased the possibility of supply chain disruptions and volatility in the prices of raw materials, which could adversely impact the company's operations[149]. - The company is increasing its manufacturing footprint in Asian markets, including China, as part of its long-term strategy, which may expose it to greater risks from geopolitical tensions[152].

Core Viewpoint - Aptiv PLC is focused on enabling a more automated, electrified, and digitalized future through its industrial technology solutions [1][2]. Group 1: Company Overview - Aptiv is a global industrial technology company that provides automated, electrified, and digitalized solutions across various end-markets [2]. - The company will present at the Barclays 43rd Annual Industrial Select Conference on February 18 at 8:05 a.m. Eastern Time [1]. Group 2: Event Details - A simultaneous webcast of the presentation will be available on the Aptiv Investor Relations website [1].

Core Insights - Aptiv PLC reported better-than-expected fourth-quarter earnings, with revenue of $5.153 billion, up from $4.907 billion a year earlier, reflecting a 3% increase on an adjusted basis [1][2] - The company experienced growth of 8% in North America and 12% in South America, while facing declines of 1% in Europe and Asia [1] - Fourth-quarter adjusted EPS was $1.86, beating the analyst estimate of $1.85, while revenue exceeded the estimate of $5.105 billion [2] Financial Guidance - For Q1 2026, Aptiv guided net sales between $4.950 billion and $5.150 billion, with U.S. GAAP diluted EPS forecasted at $0.60 to $0.80, and adjusted EPS at $1.55 to $1.75 [3] - For the full year 2026, the company forecasts net sales of $21.120 billion to $21.820 billion, with U.S. GAAP diluted EPS of $5.75 to $6.35, and adjusted EPS of $8.15 to $8.75 [3] Strategic Developments - The company is working towards the spin-off of its EDS business as Versigent, aiming to create two independent companies with increased flexibility for market opportunities and capital allocation strategies [4] - Following the earnings announcement, Aptiv shares gained 2.6%, trading at $80.08 [4] Analyst Ratings - Wells Fargo analyst maintained an Overweight rating on Aptiv and raised the price target from $99 to $102 [5] - Oppenheimer analyst maintained an Outperform rating and raised the price target from $102 to $106 [5]

Core Insights - Aptiv PLC reported fourth-quarter results that exceeded analyst expectations, with adjusted earnings per share of $1.86, slightly above the consensus estimate of $1.84 [1] - Revenue for the quarter reached $5.2 billion, surpassing expectations of $5.09 billion and reflecting a 5% year-over-year increase, although organic growth moderated to 3% after adjusting for currency and commodity impacts [1] Regional Performance - Regional performance showed mixed results, with North America growing by 8% and South America by 12%, while Europe and Asia both experienced a decline of 1% [2] - The adjusted operating margin contracted to 11.8% from 12.7% a year earlier, primarily due to $66 million in higher commodity costs and foreign exchange impacts [2] Full-Year and Future Outlook - For the full year 2025, Aptiv reported revenue of $20.4 billion, an increase of 3% year over year, or 2% on an adjusted basis [3] - The company announced plans to spin off its Electrical Distribution Systems business under the name Versigent [3] - Looking ahead, Aptiv forecasts fiscal 2026 revenue between $21.12 billion and $21.82 billion, with adjusted earnings per share projected between $8.15 and $8.75, broadly in line with analyst expectations [3]

Core Insights - Aptiv PLC reported strong financial performance for Q4 2025, with an EPS of $1.86, exceeding the Zacks Consensus Estimate of $1.82 and showing an increase from $1.75 in the previous year [1][6] - The company's revenue for the quarter was approximately $5.15 billion, surpassing estimates of $5.11 billion, and marking a 5% increase [2][6] - Full-year revenue reached a record $20.4 billion, reflecting a 3% increase from the previous year, alongside a U.S. GAAP net income of $138 million [3][6] Financial Metrics - The price-to-earnings (P/E) ratio stands at 55.83, indicating investors are willing to pay $55.83 for every dollar of earnings [4] - The price-to-sales ratio is 0.81, suggesting the stock is valued at 81 cents for every dollar of sales [4] - The enterprise value to sales ratio is 1.14, reflecting the company's total valuation relative to its sales [4] Liquidity and Stability - Aptiv's current ratio is 1.79, indicating $1.79 in current assets for every dollar of current liabilities [5] - The debt-to-equity ratio is 0.88, showing the company uses 88 cents of debt for every dollar of equity [5] - The earnings yield is 1.79%, and the enterprise value to operating cash flow ratio is 9.43, highlighting financial robustness [5]

Core Insights - Aptiv PLC reported strong fourth-quarter 2025 results with adjusted earnings of $1.86 per share, exceeding the Zacks Consensus Estimate by 2.2% and increasing 6.3% year over year. Revenues reached $5.15 billion, surpassing estimates by 1.5% and rising 5% year over year [2][9]. Financial Performance - The Electrical Distribution Systems and Engineered Components Group generated revenues of $2.30 billion and $1.64 billion, reflecting year-over-year increases of 8% and 4% respectively. The Advanced Safety and User Experience segment's revenues grew 3% year over year to $1.42 billion [3]. - Adjusted operating income was $607 million, a decrease of 2.6% from the previous year, while the adjusted operating income margin improved by 92 basis points to 11.78% [3]. Cash Flow and Debt - At the end of the quarter, Aptiv had a cash and cash equivalent balance of $1.85 billion, up from $1.57 billion at the end of December 2024. Long-term debt decreased to $7.47 billion from $7.84 billion [4]. - The company generated $2.19 billion in cash from operating activities in 2025, compared to $2.45 billion in 2024 [4]. Future Guidance - For Q1 2026, Aptiv expects revenues between $4.95 billion and $5.15 billion, with an adjusted EPS forecast of $1.55 to $1.75. The adjusted operating income margin is anticipated to be between $715 million and $765 million [5]. - For the full year 2026, Aptiv projects revenues of $21.12 billion to $21.82 billion and adjusted EPS between $8.15 and $8.75, both above current consensus estimates [6].

Core Insights - Aptiv reported a record fourth-quarter revenue of $5.2 billion, reflecting a 5% increase on a reported basis and a 3% increase on an adjusted basis, with adjusted earnings per share rising 6% year over year to $1.86 [6][7] Financial Performance - Electrical Distribution Systems (EDS) generated revenue of $2.3 billion, up 5%, but operating income declined by 2% due to foreign exchange and commodity headwinds [1] - Engineered Components revenue was $1.6 billion, up 1%, with operating income rising 8% and margin expanding by 60 basis points [2] - Intelligent Systems revenue reached $1.4 billion, up 2%, but operating income fell 17% due to investments in non-automotive markets and unfavorable foreign exchange [2] Regional Performance - North America led fourth-quarter adjusted revenue growth with an 8% increase, while Europe saw a 1% decline and China experienced a 5% drop in revenue [3] Cash Flow and Costs - Operating cash flow totaled $818 million, down from the previous year due to higher working capital and separation costs related to the upcoming VersaGen spinoff [4] Margin Insights - Adjusted EBITDA and operating income margins were pressured by foreign exchange and commodities, which had a 160-basis-point headwind; excluding these factors, operating income margin would have increased by 70 basis points [5] Future Outlook - For 2026, "new Aptiv" is expected to generate revenue between $12.8 billion and $13.2 billion, with an EBITDA margin of 18.6% [13] - VersaGen's pro forma revenue is projected to be between $9.1 billion and $9.4 billion, with an EBITDA margin of 10.7% [16] - The company anticipates first-quarter 2026 revenue of $5.05 billion, reflecting adjusted growth of about 1% [17] Strategic Focus - Aptiv is focusing on expanding into non-automotive markets, with partnerships announced with robotics companies and new product launches in energy storage and management [9]