Aptiv PLC

Good day and welcome to the Aptiv first quarter 2021 earnings conference call. My name is Anna and I will 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 Rossmann, Aptiv Vice President of Investor Relations. You may begin your conference.

Thank you, Anna. Good morning, and thank you for joining Aptiv's first quarter 2021 earnings conference call. The press release and related tables, along with the slide presentation, can be found on the investor relations portion of our website at ir.aptiv.com. Today's review of our 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 Q1 financials as well as our full year 2021 outlook are included at the back of the slide presentation and the earnings press release. During today's call, we will be providing certain forward-looking information which reflects Aptiv's current view of future financial performance and 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 a future course and impact on the global economy. Joining us today will be Kevin Clark, Aptis President and CEO, and Joe Massaro, CFO and Senior Vice President of Business Operations. Kevin will provide a strategic update on the business, and Joe will cover the financial results in more detail. before we open the call to Q&A. With that, I would like to turn the call over to Kevin Clark.

Thank you, Elena, and thank you everyone for joining us this morning. Beginning with slide three, we had a strong start to the year, reflecting our ability to outperform in a challenging environment. Our focus on execution translated into stronger revenues and earnings in the quarter. Revenues totaled $4 billion. That's up 20% from the prior year. driven by our industry-leading portfolio of safe, green, and connected technologies. Operating income reached $437 million, reflecting margins of 10.9%, an increase of 370 basis points from the prior year. Enterings per share totaled $1.06, an increase of 56%. The result of strong revenue growth, partially offset by labor inefficiencies and increased premium freight costs associated with a growing number of supply chain disruptions. The 5% growth in global vehicle production was principally driven by a 72% increase in China, lapping the impact of last year's pandemic-related shutdowns, partially offset by a decline in vehicle production of 4% in North America and 1% in Europe, as OEM customers idle plants in response to the tightening of the global supply chain. For the balance of the year, we expect the supply chain to remain stressed, and the near-term volatility in production schedules TO ACTUALLY INCREASE. HOWEVER, THE OPTIV TEAM IS DOING AN EXCELLENT JOB EXECUTING IN THIS VERY FLUID ENVIRONMENT, MINIMIZING THE EFFECTS OF THE SUPPLY CHAIN DISRUPTIONS AND KEEPING OUR EMPLOYEES SAFE WHILE DELIVERING FOR OUR OEM CUSTOMERS. TURNING TO SLIDE FOUR, THIS YEAR'S SUPPLY CHAIN DISRUPTIONS HAVE BEEN FURTHER EXACERBATED BY SEVERE WEATHER IN THE SOUTHWESTERN UNITED STATES AND A FACILITY FIRE AT ONE OF THE INDUSTRY'S MAJOR CHIP SUPPLIERS IN JAPAN. AS A RESULT, we continue to experience volatility in production schedules, elevated freight and logistics expenses, and higher raw material input prices as the industry struggles to meet strong customer demand levels. As I mentioned, based on our daily discussions with customers and suppliers, we expect supply chain disruptions to actually increase over the next few months before the environment begins to improve in the second half of the year. However, given the puts and takes, WE CONTINUE TO EXPECT GLOBAL VEHICLE PRODUCTION TO INCREASE 10% FOR THE FULL YEAR, REFLECTING CONTINUED STRONG CONSUMER DEMAND, THE ABSENCE OF LAST YEAR'S PANDEMIC-RELATED PRODUCTION SHUTDOWNS, AND CUSTOMER INTENTIONS TO MAKE UP FIRST HALF PRODUCTION SHORTFALLS IN THE SECOND HALF OF THE YEAR. MOVING TO SLIDE 5, DESPITE THE NEAR-TERM ECONOMIC UNCERTAINTY, WE CONTINUE TO REMAIN CONFIDENT IN OUR INITIAL FINANCIAL OUTLOOK FOR THE YEAR. OUR INDUSTRY-LEADING COST STRUCTURE PROVIDES THE INCREMENTAL FLEXIBILITY TO RAPIDLY ADJUST TO CHANGES IN CUSTOMER PRODUCTION SCHEDULES, AND OUR PORTFOLIO OF ADVANCED TECHNOLOGIES POSITION US TO BENEFIT FROM THE ACCELERATION IN SAFE, GREEN, AND CONNECTED SECULAR TRENDS, WHICH HAS LED TO INCREASED SHARE OF WALLET WITH BOTH LEADING AND EMERGING ELECTRIC VEHICLE MANUFACTURERS RAMPING UP PRODUCTION GLOBALLY, INCLUDING THE LEADING U.S. EV COMPANY, VOLKSWAGEN, VOLVO, RIVIAN, AND NIO. Our scalable satellite architecture ADAS platform is now being deployed across multiple OEMs and vehicle segments across the globe. And our connected services solutions are providing fleet owners with the information necessary to optimize vehicle uptime and lower operating costs, as well as OEM customers with the vehicle-level data to reduce product development and warranty expenses. We're very proud of the positive impact these technologies are having today, AND I WANT TO RECOGNIZE THE TREMENDOUS DEDICATION OF THE GLOBAL APTIVE TEAM, WHICH HAS LAUNCHED THESE COMPLEX AND HIGHLY INTEGRATED SOLUTIONS DURING THESE VERY CHALLENGING TIMES. IN SUMMARY, OUR FLEXIBLE AND SUSTAINABLE BUSINESS MODEL IS REINFORCED BY A CONSISTENT AND DELIBERATE MANAGEMENT APPROACH TO DISCIPLINE REVENUE GROWTH, AN INDUSTRY-LEADING COST STRUCTURE AND SUSTAIN THROUGH CYCLE RESILIENCY, ALLOWING US TO COMPOUND EARNINGS AND CASH FLOW AND REINVEST THAT CASH to create long-term shareholder value. Moving to slide six, first quarter bookings totaled $5.2 billion, reflecting a strong funnel of new business opportunities and robust customer win rates. Our advanced safety and user experience segment booked approximately $1 billion, reflecting the lumpiness of new business awards, further exacerbated by the semiconductor supply shortage, which has extended customer decision timelines as resources have been reallocated. As a result, a number of larger business pursuits are now slated for award in the second half of the year. New business bookings for our signal and power solution segment totaled $4.7 billion, including nearly $1 billion of high-voltage electrification awards driven by the increased demand for electrified vehicle platforms. Our strong track record of new business bookings is proof that our portfolio of advanced technologies is well aligned to the areas of growth within our industry. AND OUR POSITION AS THE ONLY PROVIDER OF BOTH THE BRAIN AND THE NERVOUS SYSTEM OF THE VEHICLE ENABLES US TO PROVIDE UNIQUE VALUE TO OUR CUSTOMERS. MOVING TO SLIDE SEVEN, WE BELIEVE THAT OUR LONG-TERM SUCCESS AND ABILITY TO CREATE VALUE FOR OUR STAKEHOLDERS ARE DIRECTLY LINKED TO BUILDING A MORE SUSTAINABLE BUSINESS THAT CONTINUOUSLY DELIVERS ON OUR MISSION AND STRATEGY. OUR MISSION TO DEVELOP SAFER, GREENER, AND MORE CONNECTED SOLUTIONS which enable the future of mobility is integral to both the products we create and the way we conduct business. Aptiv is committed to protecting human health, natural resources, and the environment in which we live and operate. Our commitment to environmental stewardship is company-wide, and we aggressively pursue initiatives to minimize our environmental impact. In 2012, we set a long-term target to reduce our carbon output by 30% between 2011 and 2019, which we actually exceeded, reducing emissions by over 40% during that period. In our 2020 sustainability report, we published new, more aggressive sustainability targets that include a further 25% reduction of CO2 emissions by 2025. In addition, we committed to the Science-Based Targets Initiative, joining the effort to create a zero-carbon economy to help prevent the effects of climate change. AND AS A RESULT, WE'RE EXCITED TO ANNOUNCE APTA'S PATH TO CARBON NEUTRALITY, WHICH INCLUDES BEING CARBON NEUTRAL ACROSS OUR GLOBAL OPERATIONS BY 2030 AND PROVIDING CARBON NEUTRAL PRODUCTS TO OUR CUSTOMERS AND ACHIEVING NET NEUTRALITY BY 2040. WE REMAIN COMMITTED TO ADDRESSING SOME OF MOBILITY'S TOUGHEST CHALLENGES WHILE AT THE SAME TIME REDUCING CO2 EMISSIONS GLOBALLY. WE PLAN TO SHOWCASE OUR INDUSTRY-LEADING ELECTRIFICATION PORTFOLIO AND CAPABILITIES AT OUR UPCOMING HIGH-VOLTAGE TECHNOLOGY TEACH-IN, WHICH IS SCHEDULED FOR EARLY JUNE. TURNING TO SLIDE 8, DESPITE THE CHALLENGES WE CURRENTLY FACE, WE REMAIN FOCUSED ON FURTHER STRENGTHENING OUR TRACK RECORD OF OUTPERFORMANCE AND LONG-TERM VALUE CREATION. WHILE OUR INDUSTRY CONTINUES TO BE TESTED, OUR OPERATING PERFORMANCE HAS VALIDATED OUR BUSINESS MODEL AND THROUGH CYCLE RESILIENCY. AS WE LOOK AHEAD, WE POSITION APTIV TO CONTINUE TO OUTPERFORM WITH FOCUSED INVESTMENTS THAT HAVE INCREASED THE RESILIENCY OF OUR BUSINESS AND EXPANDED THE MARKETS WE SERVE, LEVERAGING OUR UNIQUE BRAIN AND NERVOUS SYSTEM CAPABILITIES TO DELIVER EVEN MORE CONTINENTALLY ELECTRIFIED SOFTWARE-DEFINED VEHICLES OF THE FUTURE, WHICH TOGETHER YIELD ACCREDITIVE GROWTH OPPORTUNITIES AND PRESENT INCREMENTAL VALUE CREATION OPPORTUNITIES THROUGH SMART CAPITAL DEPLOYMENT, RESULTING IN MEANINGFUL SHAREHOLDER RETURNS AS THE ECONOMIC RECOVERY CONTINUES TO UNFOLD. So with that, I'll hand the call over to Joe to take us through the first quarter results in more detail.