Aptiv PLC Q4 FY2025 earnings call

Management Statement and Operational Highlights

• 2025 Performance: Capped off 2025 with solid quarter, navigating macro environment. Leveraged resilient operating model, enhanced product portfolio, gained new business, and strengthened supply chain and manufacturing capabilities.
• New Business Bookings: 2025 full-year new business awards totaled $27 billion. 2026 bookings expected to increase to over $30 billion. Strong bookings in China, Japan, Korea, and India markets.
• Segment Details: Intelligent Systems had program and product launches in China, Europe; Engineered Components had new product programs in industrial and mobility markets; EDS had new program launches for global EV OEMs and awards for energy storage solutions.

Segment Performance

• Intelligent Systems: Revenue of $1.4 billion, increased 2% versus prior year. Operating income declined 17% due to investments in product and go-to-market capabilities, timing of engineering and commercial credits, and unfavorable FX.
• Engineered Components: Revenue of $1.6 billion, increased 1% versus prior year. Operating income increased 8% and margin expanded 60 basis points driven by flow-through on volume and continued performance improvements, offsetting impact of unfavorable FX and commodities.
• Electrical Distribution Systems (EDS): Revenue of $2.3 billion, increased 5% principally driven by North America. Operating income declined 2% year over year, and margin contracted 90 basis points due to significant headwind from FX and commodities as well as unfavorable labor economics, partially offset by performance improvements.

Guidance

• 2026 NuAptiv: Forecast revenue $12.8–$13.2 billion (4% midpoint growth), EBITDA $2.42 billion, margin 18.6%, EPS $5.70–$6.10. Free cash flow $750 million at midpoint.
• 2026 Versagen: Forecast revenue $9.1–$9.4 billion (2% midpoint growth), EBITDA $990 million, margin 10.7%, free cash flow $250 million at midpoint.
• 2026 Q1: Total Aptiv revenue $5.05 billion midpoint, adjusted growth ~1%, adjusted EBITDA $740 million, margin 14.7%, EPS $1.65.

Risks

• Commodities/Semiconductors: Price increases for semiconductors, need to pass on costs to customers.
• Foreign Exchange (FX): Impact on margins, particularly for Versagen due to peso volatility.
• Macro Environment: Dynamic macro conditions, including vehicle production trends affecting revenue.

Question and Answer

Q: Memory exposure and recovery A: Memory purchase ~$175M, low double-digit price increase in 2026. Confident in passing on costs to OEM customers, expecting price increases to be below industry averages.

Q: 2026 guide for NuAptiv A: Growth driven by volume, non-auto revenue growth, and Software and Services growth, with outer years expected to accelerate.

Q: FX commodity impact beyond 2026 A: Confident in margin expansion, with stranded costs expected to be eliminated by 2028, leading to 200 basis points margin expansion by 2028.

Q: Regional revenue outlook A: North America leading, APAC strong, Europe flat, with China local OEMs improving mix and growth in Japanese, Korean, and Indian markets.

Q: Bookings shifting A: Programs delayed due to supply chain dynamics, but win rates remain strong, with programs expected to be awarded as timing resolves.

Q: Versagen growth with EV headwinds A: EV growth in China, low in North America, moderate in Europe, with overall EV growth assumption of ~15% year on year led by China.

Q: Intelligent Systems margins A: Impacted by FX, timing of engineering credits, and incremental engineering investments in robotics, but full-year margins up 30 basis points excluding FX.

Q: Wind River robotics TAM A: ~$6B TAM, with partnerships showing traction, expecting more announcements in Q1 on commercial relationships in robotics market