Aptiv PLC

Good day and welcome to the Aptiv 3rd Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Vicky Apostolakos, Director of Investor Relations. Please go ahead.

Thank you, Saskia. Good morning. And thank you for joining Aptiv's 3rd Quarter 2021 Earnings Conference Call. The press release and related tables, along with the slide presentation, CAN BE FOUND ON OUR INVESTOR RELATIONS PORTION OF OUR WEBSITE AT 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 GAP AND NON-GAP MEASURES FOR BOTH OUR Q3 FINANCIALS AS WELL AS OUR FULL YEAR 2021 OUTLOOK ARE INCLUDED IN THE BACK OF THE PRESENTATION AND ON THE EARNINGS PRESS RELEASE. DURING TODAY'S CALL, WE'LL 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 ITS FUTURE COURSE AND IMPACT ON THE SUPPLY CHAIN AND GLOBAL ECONOMY. JOINING US TODAY are 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 Joe will cover the financial results and full year outlook in more detail before opening the call to Q&A. With that, I would now like to turn the call over to Kevin Clark.

Sure. Thank you, Vicki, and thanks, everyone, for joining us this morning. Beginning on slide three, We experienced continued strong demand across the portfolio in the third quarter, despite continued supply chain constraints negatively impacting vehicle production. Revenues of $3.7 billion declined 5% versus the prior year, with a record 18 points of growth over market. New business awards of $5.8 billion bring the year-to-date total to a record $17 billion, reflecting the relevance of our product portfolio as well as the trust our customers have in Aptiv given our success executing for them in this challenging environment. Operating income and earnings per share totaled $219.38 million, respectively, negatively impacted by the significant headwinds from the ongoing supply chain tightness and the downstream impacts that Joe will cover in greater detail shortly. While we expect vehicle production to improve on a sequential basis in the fourth quarter, we anticipate the headwinds related to supply chain constraints versus well into 2022. Setting the near-term challenges aside, the team is executing well and continues to proactively position Aptiv for the future, optimizing our cost structure while investing in high-growth, high-margin technologies that further enhance the resiliency of our business model, translating into greater value for both our customers and our shareholders. Moving to slide four, The relentless execution of our strategy over the past decade has positioned Aptiv as a more sustainable business, creating over $40 billion of value since our IPO in 2011. This represents an average annual return to shareholders of over 25% and a total return of more than 950% to date. As we transformed Aptiv, we built an industry-leading portfolio of advanced solutions that make vehicles safe, green, and more connected. To drive this transformation, we took several actions, including making smart portfolio moves to put further operating leverage in our business model. We exited low-growth, low-margin product lines and spun off our powertrain segment, positioning Aptiv to focus on our unique capabilities around the brain and nervous system of the vehicle. At the same time, we completed a number of acquisitions which enabled our software and data management capabilities increased our scale and leverage in engineered components, and expanded our presence in adjacent markets. Last year, we established Motional, our autonomous driving joint venture with Hyundai, which will be operating fully driverless vehicles on the Lyft ride-sharing network in 2023. These proactive actions perfectly position Aptiv to benefit from the transition to the software-defined vehicle, while further increasing the robustness of our business model all of which translates into continued outperformance and long-term value creation. Turning to slide five, we continue to successfully navigate the current challenging environment while proactively enhancing the strength of our competitive position. Our supply chain resiliency team is leveraging technology, data, and analytics to stress test our integrated supply chain network under multiple scenarios, helping us to proactively identify and address potential bottlenecks. At the same time, we're working through daily constraints by leveraging our proven cross-functional crisis management process. Our planning process and manufacturing have enabled us to support a record number of customer program launches, and we continue the intelligent automation of our manufacturing facilities to lower operating costs and increase product quality, all of which improves customer service levels. Our engineering teams are proactively redesigning products to mitigate semiconductor supply risks, reduce material costs, and increase functionality for our customers. And lastly, our culture of continuous improvement translates into the constant pursuit of opportunities to reduce cost and improve quality, enabling us to continue to strengthen our operating foundation and transform our business model, despite the dynamic environment. This is shown on slide six. Third quarter new business bookings reach $5.8 billion, bringing the year-to-date total to $17 billion. As I already mentioned, it was a record. Our unique portfolio of safe, green, and connected technologies, combined with our flawless operating execution, continues to position Aptiv as a partner of choice for our customers. Our capabilities around the vehicle brain and nervous system and collaborative approach to platform solutions sets us apart in the industry. enabling us to conceive, specify, and deliver advanced architecture and software solutions that enhance systems performance while lowering the vehicle's total cost, positioning us to increase our share of wallet with both traditional and emerging OEM customers, and at the same time, strengthen our overall competitive position. Turning to highlights from our advanced safety and user experience segment on slide seven, third quarter revenues declined 7%, which was 16 points better than the reduction in global vehicle production. New program launches, content increases, and market share gains translated into continued market outgrowth despite the significant supply chain disruptions impacting the segment. Consumers continue to demand more active safety and connectivity features in their vehicles, which are delivered through more advanced software features, leveraging the latest sensing and compute solutions. This trend in strong consumer demand and our industry-leading capabilities presents us with additional market share opportunities and the ability to increase our customer share of wallet and is evidenced by our third quarter conquest business award with Mercedes-Benz to provide our multi-purpose interior sensing solutions on their next-gen electric vehicle platform. This business award builds on our recent in-cabin monitoring successes and advances our customers' roadmap of interior sensing features by further enhancing driver safety and improving the in-cabin user experience. The evolution of in-cabin sensing is playing out as expected, and our leadership position makes Aptiv a strong collaboration partner for our customers. Turning to slide eight, revenues in our signal and power solution segment declined 4% during the quarter, 19 points better than the reduction in global vehicle production, reflecting the continued benefit from the acceleration and the production of electrified vehicles, resulting in greater demand for our high-voltage solutions and the continued strong demand for connector and cable management products for both automotive and not automotive market applications. We are the industry leader in electrical distribution systems with the engineering capabilities and global manufacturing scale necessary to rapidly bring customers to market as they quickly adapt to the accelerating macro trends. A great example is our recent business award from Stellantis, an extension to our existing business to support design changes and content increases on the Ram truck. It was another strong quarter for our signal and power solution segments in a very challenging environment. Slide nine provides an overview of some of the specific areas where we're focusing our software development capabilities. As we've mentioned previously, our OEM customers are beginning to decouple software from the underlying hardware, both technically, as they implement smart vehicle architecture, and in how they source new programs. Our leading position in the design and development of high performance, cost optimized, automotive grade hardware, as well as deep software development capabilities, allows us to provide industry-leading interior and exterior perception solutions, modular software and features that lower system costs and accelerate speed to market through higher reuse, middleware solutions which support up-integration and the serverization of compute, vehicle lifecycle management through data collection and data analytics, and full vehicle-level integration, testing, and validation services. These capabilities, along with extensive collaboration with our customers and our supplier partners, allows us to continue to be a partner of choice for our customers across literally all vehicle domains, enable our customers to offer greater flexibility for end-user differentiation and personalization, and further strengthen our competitive position as a leading provider of smart vehicle architecture that accelerates the transition to the fully electrified software-defined vehicle. With that, I'll hand the call over to Joe to take us through the financials in more detail. Great.