Aptiv PLC

Good day and welcome to the Aptiv fourth quarter 2020 earnings conference call. My name is Simon and I'll be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Thank you. Elena Rossman, Aptiv Vice President of Investor Relations, you may begin your conference.

Thank you, Simon. Good morning, and thank you to everyone for joining Aptiv's fourth quarter 2020 earnings conference call. To follow along with today's presentation, our slides can be found at ir.aptiv.com. Today's review of our actual financials exclude restructuring and other special items and will address the continuing operations of Aptiv. The reconciliations between GAAP and non-GAAP measures for both our Q4 financials as well as our outlook for the full year 2021 are included at the back of today's presentation and the earnings release, the earnings press release. Turning to slide two, please see a disclosure on forward-looking statements, which reflect Aptiv's current view of future financial performance, which may be materially different from our actual performance for reasons that we cite in our Form 10-K and other SEC filings. including uncertainties posed by the COVID-19 pandemic and the difficulty in predicting its future course and impact on the global economy. Joining us today will be Kevin Clark, Aptiv's President and CEO, and Joe Massaro, CFO and Senior Vice President of Business Operations. Kevin will provide a strategic update on the business, and then Joe will cover the financial results and our outlook in more detail. With that, I would like to turn the call over to Kevin Clark.

Thank you, Elena, and thank you, everyone, for joining us today. Our 2020 results and our outlook for the year ahead underscore the work we've done to build a stronger and more sustainable business, one that grows faster and more profitably and generates more consistent earnings and cash flows. I'm proud of how well our teams performed during these difficult times, and it remains challenging to meet recovery demand while managing through the COVID-19 pandemic and the further tightening of the global supply chain. Our continued resiliency is a result of the passion and the commitment of our team members to deliver for our customers and our shareholders. And as a result, we experienced strong fourth quarter financial results. Revenue increased 14% to $4.2 billion, representing 13 points of growth over the underlying market. Operating income and earnings per share totaled $476 million and $1.13 million respectively. resulting from strong volume growth, partially offset by incremental manufacturing and logistics expenses associated with ongoing supply chain challenges, which I'll cover in more detail shortly. Our 2020 results further validate our business strategy, including revenue growth of 10 points over market and $18 billion of new business awards, reflecting our unique position at the intersection of the safe, green, and connected megatrends that are accelerating in our industry. Moving to slide four, as we enter the start of the economic recovery, we face a new set of supply chain challenges while also continuing to operate safely in the midst of the COVID-19 pandemic. Our outlook for 2021 reflects market share gains and content growth in our key product lines, including high voltage electrification and active safety, driving 16% revenue growth, six points over underlying vehicle production, and translating into strong margin expansion and earnings growth. We also are forecasting significant cash flow generation, and our ability to reinvest that cash to deliver incremental value creation is a key component of our investment thesis. At the same time, we're closely monitoring and adjusting to the impact the COVID-19 pandemic is having on our operating environment, and our industry is now facing increased pressure from a global shortage in semiconductor chips, impacting virtually all of our suppliers and customers around the world. As a result, we expect the environment to remain challenging for at least the first half of the year and have reflected the uncertainty associated with OEM production schedules and the timing of replenished inventory levels in our full-year forecast for vehicle production, which we now expect to increase 10% in 2021. While our team is doing an excellent job minimizing these effects, as customers idle plants and look to prioritize certain vehicle platforms, the costs associated with the related labor and manufacturing inefficiencies and higher logistics expenses have been included in our financial outlook for the full year. Due to limited visibility to near-term production schedules, this precludes us from providing guidance for the first quarter. However, our confidence in the strength of the underlying economic recovery combined with the plan's second-half increase in semiconductor capacity does give us a reasonable level of confidence in our full-year outlook, which Joe will cover in more detail shortly. Turning to slide five, despite the challenges we currently face, we remain focused on further enhancing our track record of outperformance and long-term value creation. While our business model has been tested over the last several months, our performance has validated our industry-leading position through cycle resiliency. As we look ahead, we've positioned Aptiv to continue to outperform with focused investments that have enhanced our business model and expanded the addressable markets we served, leveraging our unique brain and nervous system capabilities to deliver even more content on the electrified, software-defined vehicles of the future. yielding accretive growth opportunities in our two business segments and presenting incremental value creation opportunities through smart capital deployment and delivering meaningful shareholder returns as the economic recovery unfolds. As shown on slide six, fourth quarter new business bookings totaled $7.5 billion, reflecting robust win rates and a ramp up in consumer activity. Full-year 2020 bookings reached $18 billion roughly flat compared to 2019 levels when you adjust for the current outlook for global vehicle production. Our advanced safety and user experience segment new business bookings totaled $4.7 billion for the year, including $3.7 billion in active safety awards. New business bookings for our signal and power solutions segment totaled more than $13 billion, including another $2 billion of high voltage electrification awards. We continue to see an acceleration of powertrain electrification, driven by both more stringent CO2 regulations, principally in Europe and China, and the increasing momentum of consumer acceptance in the U.S. Our complementary high voltage distribution and connection systems, as well as cable management solutions, significantly reduce the weight and mass of the vehicle architecture through smarter, more efficient design, perfectly positioning active to benefit from the twofold increase in addressable content on a high voltage electric vehicle. In summary, the cumulative amount of our new business bookings over the last few years gives us confidence in our ability to sustain strong above market growth across both of our business segments, validating the strength of our portfolio of market-relevant technologies aligned to the safe green and connected megatrends. Turning to slide seven, Aptiv is enabling our customers to accelerate their transition to an electrified software-defined vehicle by employing a more holistic engineering and development approach to optimize the software and system solutions that span the full vehicle stack. Throughout the COVID-19 pandemic, we continue to fully fund strategic growth initiatives And last month, we unveiled the latest result of those investments in our Innovation in Motion virtual event, which included Aptiv's smart vehicle architecture, which represents Aptiv's vision for the full electrical and electronic architecture of the vehicle. SVA represents a scalable approach that lowers the total cost of ownership for our OEM customers while unlocking more value in the vehicle at the point of aggregation. creating new hardware and software revenue opportunities for both Aptiv and our OEM customers. Our industry-leading position in domain controllers and expertise in advanced ADAS solutions provides a terrific launching pad as we work with our customers on their next-gen architecture solutions. For customers on the path to SVA, we unveiled our next-gen ADAS platform, leveraging our deep systems expertise and learning from deploying the industry's largest most diverse safety install base over the last 20 years with active safety technologies in use by 20 different global automakers. We also highlighted our new approach to zone controllers, which leverages insights from our unique position with both the brain and nervous system of the vehicle to safely and efficiently distribute power and up integrate body functionality while simplifying the vehicle manufacturing process thereby enhancing the scalability of advanced vehicle architecture systems. Aptiv will be the first to market with zone control with a European OEM in 2022, and we have a robust pipeline of commercial pursuits planned for 2021. Electrification is also an integral part of the SVA roadmap, and Aptiv has emerged as a partner of choice capable of providing comprehensive and optimized high voltage solutions to our customers. That agility has led to increased share of wall with both leading and emerging electric vehicle manufacturers ramping up production globally, including a leading US EV company, as well as companies such as Rivian, NIO, and Volkswagen. Lastly, many of these same advancements apply inside the cabin, where we've developed a scalable user experience platform solution, enhancing performance, while reducing total systems costs through seamless integration of multiple functional domains. As we look to 2021 and beyond, the innovation that we have in motion will further expand our competitive boat and take us closer to our mission of delivering a safer, greener, and more connected future of mobility. Before turning it over to Joe, on slide eight, I want to take a moment to highlight a number of commercial and technological milestones at Motional, our automated driving joint venture with the Hyundai Motor Group. In December, Motional announced an agreement with Lyft to launch a multi-market robo-taxi service in major U.S. cities beginning in 2023, utilizing a scalable, automated mobility on-demand vehicle platform developed in partnership with Hyundai and available to customers beginning in 2022. Last year, Motional also entered into a partnership with VIA to deploy self-driving vehicles on their network in a city to be announced soon. And in January, Motional announced a partnership to deploy Cox Automotive Mobility's Pivot as their premier fleet service provider. Beginning with Motional's self-driving fleet in Las Vegas, this partnership lays the foundation to support the company as it expands the market for robotaxis in other major U.S. cities. These commercial developments are underpinned by rigorous, third-party validation, and safety assessments, which have allowed Motional to receive approval for testing of fully driverless systems on public roads in Nevada in early 2021. In summary, Motional made tremendous progress delivering on its commitments in 2020, paving the way for commercial success in the years to come. I'll now hand the call over to Joe Massaro for an overview of our financial results. Joe?