Aptiv PLC Q2 FY2025 earnings call

• The company had solid Q2 results operationally and financially, with record second quarter revenue growth, operating income, and earnings per share.
• New business bookings totaled $5.4 billion, with highlights including $1.8 billion in Advanced Safety and User Experience, $2.4 billion in Engineered Components Group, and $1.2 billion in Electrical Distribution Systems.
• Key developments in segments: ASUX had strategic program launches and new business awards; ECG launched strategic programs and secured new business awards including non-automotive sectors; EDS had new program launches and new business awards in high- and low-voltage architectures.
• Received Volkswagen Group Award for Resilient Supply Chains, and the spin-off of Electrical Distribution Systems remains on track.

ASUX: Revenue of approximately $1.5 billion was down 3%, with 6% growth in active safety revenue offsetting the impact of legacy user experience program roll-off and slowdown in select China programs. Adjusted operating income grew 5% with 90 basis points of margin expansion, with a 150 basis point headwind from FX and commodities offset by cost savings initiatives. ECG: Revenue of $1.7 billion increased 5%, but adjusted operating income declined 4% and margin contracted by 160 basis points due to unfavorable FX, commodities, and labor inflation. EDS: Revenue of $2.2 billion increased 5%, adjusted operating income grew 18% with 70 basis points of margin expansion driven by strong volume growth in North America and Asia Pacific, offsetting a 90 basis point FX headwind.

• Third quarter and full year 2025 financial guidance provided. Full year revenue outlook at midpoint $20.15 billion, adjusted growth 2%. Adjusted EBITDA and operating income expected at midpoint $3.19 billion and $2.42 billion, up 3% and 2% respectively. Adjusted earnings per share range $7.30 - $7.60, up 19% at midpoint. Operating cash flow expected $2 billion, $100 million lower than prior guidance. Capital expenditures expected ~4% of revenue. Third quarter revenue growth 3% at midpoint, operating income margin 11.6% at midpoint, adjusted EPS range $1.60 - $1.80.
• Guidance reflects cautious outlook on market weakness in second half, revised FX and commodities assumptions.

• Uncertainty from evolving trade and regulatory policies.
• Potential weakening of consumer demand in the back half of the year.
• Impact of FX and commodity prices, particularly the Mexican peso which is a headwind on margin.
• Potential impact of tariffs not yet implemented, although direct exposure is minimal and manageable.

Q: Just first question on the degree of visibility you have at the moment for Q4 production...

A: Yes. As we've talked about previously, we get schedules out through -- based on where we sit today, out through the end of the year. Obviously, the closer to where we are today, the stronger the schedules. So I'd say fairly firm EDI schedules typically ranging from 2 to 4 weeks out from where we sit today. And then less firm as you go -- as you move beyond that. At this point in time, we've not seen any significant change in schedules relative to where we were a month ago...

Q: I had a question on the bookings target of $31 billion. You spoke to this award progress in some areas, but also an uncertain macro backdrop...

A: Yes. So there is a cadence for bookings. I would say we have a very strong funnel with significant visibility to bookings. I would say we have a high level of confidence that they will achieve the target that we've presented to investors. I would also tell you, it's taking a little bit longer to get bookings finalized and documented, just in light of the environment we're in...

Q: I wanted to start with a question on the implied growth in the second half. And specifically, the implied growth over market...

A: Yes. I think first, when you look at growth on a year-over-year basis, you certainly need to focus on Q4 of last year and what we saw from a global vehicle production relative to current outlook to ours or [ IHS ]. So I think you got to keep that in mind. When you unpack our acceleration of growth in the back half where you see the most significant sort of pickup is certainly within the ASUX business, you also see a significant pickup in growth as it relates to our EDS business...