Aptiv PLC Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Aptiv had a strong quarter with record financials: revenue $5.2 billion (+6%), operating income $654 million (+10%), and earnings per share $2.17. Bookings were $8.4 billion.
• Resilient operating model supported by in-region supply chain and digital twin, and received Supplier Quality Excellence awards from VW and GM.
• AS & UX: Flat Y/Y revenue with Wind River growth, launch of Gen 8 radar, cockpit controller for Mahindra, and strong new business in active safety and user experience.
• ECG: New business awards and program launches, including connectors for EVs, with growth in China and non-auto markets.
• EDS: Double-digit revenue growth, new program launches in energy storage, and strength in North America due to easier comps and EV production.

Segment Performance

• Advanced Safety and User Experience (AS & UX): Revenue was approximately $1.4 billion, flat year-over-year. Strong growth in Wind River (+20%) was offset by the roll-off of a legacy infotainment program and customer mix issues in China. Adjusted operating income was down 16%, impacted by a lapped customer settlement and unfavorable FX.
• Engineered Components Group (ECG): Revenue of $1.7 billion increased 6%, driven by growth in China (nearly 30% growth with local OEMs) and non-auto end markets. Adjusted operating income grew 10%, with margin expanding 20 basis points, offset by unfavorable FX and commodities.
• Electrical Distribution Systems (EDS): Revenue of $2.3 billion increased 11%, driven by growth across regions, principally North America. Adjusted operating income grew 54%, with over 200 basis points of margin expansion due to favorable volume flow-through and a customer recovery.

Guidance

• Full Year 2025: Midpoint adjusted revenue $20.3 billion (+2%), adjusted EBITDA midpoint $3.22 billion (+4%), operating income midpoint $2.45 billion (+4%), and EPS midpoint $7.70 (+23%).
• Q4 2025: Adjusted revenue midpoint +1%, operating income margin 11.8%, EPS range $1.60-$1.90. Reflects customer disruptions, supply chain conservatism, and trade tensions.

Risks

• Customer-specific production disruptions in North America and Europe.
• Amplified trade tensions impacting semiconductor supply chains.
• Uncertainty around geopolitical and trade policy dynamics.

Question and Answer

Q: Break down Q4 headwinds including Oswego and NextEra.

A: $80M includes the Oswego facility issue and other customer-specific situations in North America and Europe, with conservatism added for supply chain trade tensions.

Q: Margin guidance for Q4.

A: Impact from weaker volumes, timing of a customer recovery, and elevated copper prices contribute to the margin rate.

Q: Growth in China and non-auto.

A: China had program cancellations but EDS is closing the gap; non-auto markets are growing mid-single to mid-teens.

Q: Spin-off and asset sales.

A: Focus is on separating EDS by Q1 2026, with the Board evaluating the best shareholder value outcome.

Q: Gen 8 radar and SVA.

A: Gen 8 radar is industry-leading, and SVA has bookings over $5B in the next few years, with revenue growing to $150M-$200M in 2025.