Aptiv PLC

Good day and welcome to the Aptiv Q3 2023 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jane Wu, Vice President, Investor Relations and Corporate Development. Please go ahead.

Thank you, Marjorie. Good morning, and thank you for joining Aptiv's third quarter 2023 Earnings Conference Call. The press release and related tables, along with the slide presentations, can be found on the investor relations portion of our website at Aptiv.com. Today's review of our financials exclude amortization, restructuring, and other special items, and will address the continuing operations of Aptiv. The reconciliations between gap and non-gap measures for our third quarter financials, as well as our full year 2023 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 that reflects Aptiv's current view of future financial performance and may be materially different for reasons that we cite in our Form 10-K and other SEC filings. Joining us today will be Kevin Clark, Aptiv's Chairman 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'd like to turn the call over to Kevin Clark.

Thanks, Jane. Thanks, everyone, for joining us this morning. Let's begin on slide three. We delivered another strong quarter, exceeding our expectations despite some headwinds. Touching on a few of the highlights, new business bookings totaled $6.6 billion, bringing the year-to-date total to a record $27 billion. Revenues increased 7% to $5.1 billion, two points over the growth in vehicle production, reflecting double-digit growth in ASUX revenues and S&PS revenue growth in line with global vehicle production. The impact of the UAW strike in North America, as well as customer mix. EBITDA and operating income were both records, totaling $727 million and $560 million, respectively. reflecting solid flow-through on volume growth in ongoing operating performance initiatives, partially offset by unfavorable effects, timing related to customer recoveries, and the impact of the UAW strike. We expect continued sequential margin expansion as headwinds related to supply chain disruptions continue to dissipate, customer recoveries are closed, and the benefits from further cost structure actions take hold. The team remains laser-focused on continuing this trend in the fourth quarter and into 2024 and beyond. Turning to slide four, touching on the key themes and macro trends that have had an impact on our operations this year. Our customer relationships and new business bookings are stronger than ever, driven by robust demand for smart vehicle compute and software, high-voltage electrification, and ADAS solutions. As automotive OEMs continue on the path toward fully electrified, software-defined vehicles, we are their partner of choice, delivering unique, full-system solutions that provide enhanced features and greater flexibility, all at a lower cost. We're also benefiting from the transition to the software-defined future across several other industries, with opportunities in the commercial vehicle, telecom, A&D, and industrial markets. Global automotive vehicle production has been stronger than we initially forecasted, as easing supply chain constraints have led to fewer disruptions, enabling increased production. Our strong year-to-date results had put us well on our way to reach the top end of the full-year guidance we laid out in early August. However, the UAW strike, which affected the production schedules of our top three North American OEM customers, has had an impact on both our third and fourth quarter results. While tentative agreements have been reached with all three North American OEMs, there remains some uncertainty on vehicle build schedules as the OEMs work to finalize their plans to ramp up production during the balance of the fourth quarter. Our operating teams in North America are working closely with our customers and supply chain partners to help accelerate the ramp up of production and minimize any potential disruptions. Moving to slide five, As already mentioned, new business bookings during the quarter were $6.6 billion, bringing our year-to-date total to a record $27 billion, on track for our target of $32 billion for the full year. Advanced safety and user experience bookings totaled $2.2 billion, driven by over $1 billion in active safety awards. Signal and power solutions bookings reached $4.4 billion, including $1.1 billion in bookings for our high-voltage electrification solutions split across geographies, bringing the year-to-date total to $4.3 billion, already surpassing last year's record of $4.2 billion. As OEM strategies around their vehicle architecture platforms evolve, one constant will be the need for solutions that deliver improved performance at a lower cost. And Aptiv is perfectly positioned to leverage our full system capabilities to enable fully electrified, software-defined vehicles. Turning to slide six to review our advanced safety and user experience segments, third quarter highlights. Revenues increased 13%, eight points above vehicle production, the result of a 30% increase in active safety revenues, reflecting strength across all regions as a launch of our level two and level two plus ADAS solutions continue to ramp. Operating income totaled 109 million, reflecting a 7.6% operating margin, an increase over the prior period, but sequentially lower than the second quarter due to the seasonality of Wind River revenues and the timing of customer recoveries. New business bookings totaled $2.2 billion and included $1.2 billion of active safety customer awards, including a major award with a large German truck manufacturer, underscoring the strength of our high-performance radar technologies and their applications outside of the automotive industry. As demand continues to increase for more advanced active safety solutions, our unique insights and proven domain expertise position Aptiv to deliver differentiated value to our customers. To that end, we're excited to have recently launched our automated parking solution, an additional feature to our AI ML enhanced Gen 6 ADAS platform to address complex parking scenarios. Aptiv's unique solution enables fully modularized automated parking features that scale from level two to level four, from auto parking assist and memory parking all the way to auto park delay. Automated parking is just one of the many features that we have under development in our Gen 6 8S technology roadmap, which will scale to a full level 3 8S platform in 2026. Turning to the signal and power solution segment on slide seven. Third quarter revenues increased 5% in line with global vehicle production. high voltage revenues increased 13%, reflecting strong growth across all product lines, partially offset by customer mix in Europe and Asia, and the impact of the UAW strike in North America. The $4.4 billion in SPS bookings that I mentioned previously included a low voltage architecture award with a Chinese OEM, demonstrating the progress we're making further penetrating the local Chinese OEMs. Another strong quarter for InterCable Automotive with $400 million in new business awards, including a major award with a global customer in North America reflecting continued strong commercial traction, and a high-voltage system award with a European OEM that includes products across our electrical distribution, connection systems, and inter-cable automotive portfolios, demonstrating how our full system approach sets us apart from the competition. Lastly, we're proud to announce that Aptiv has once again been recognized as an Automotive Pace Award finalist. A rapid power reserve solution is a groundbreaking technology that provides a highly reliable, redundant power source for a variety of critical functions, eliminating the need for a low-voltage battery in the vehicle, significantly reducing weight, mass, and cost. This recognition validates Aptiv's industry-leading technology, as well as the value and impact our continuous innovation provides our customers. Turning to slide eight, we're excited to showcase many of our new innovations at the Consumer Electronics Show in Las Vegas in early January next year. We'll bring our vision of the future to reality, including vehicles with active smart vehicle architecture, running applications for next-generation ADAS and in-cabin user experience. Vehicles with our complete portfolio of optimized electrical vehicle solutions purpose-built for demanding power requirements and Wind River's edge-to-cloud platforms, supporting the latest safe, green, and connected applications from Aptiv. We'll be providing live demonstrations of how we're leveraging our deep insights into the brain and nervous system of the vehicle, along with Wind River's proven software technology to develop optimized and scalable solutions that meet OEM needs for performance, flexibility, and lower costs. Moving to slide nine, in recognition of our strong commitment to innovation, operational excellence, and sustainability, Aptiv was recently named by Newsweek as one of America's greenest companies. At Aptiv, our business strategy is directly aligned with our sustainability goals. We provide solutions of the highest quality, designed, developed, and manufactured responsibly, that enable a safer, greener, and more connected world. In doing so, we take care of our people and our communities while minimizing our carbon footprint. Sustainability is an enterprise-wide commitment, and I'm proud of our entire team for helping us to achieve our goals and ensuring that our company, our customers, and our planet continue to thrive. Moving to slide 10. Before I turn the call over to Joe to walk through the financials, I wanted to touch on our current view of 2024. Building on the solid foundation we've established in 2023, we're well positioned for continued strong revenue growth and margin expansion despite the macro headwinds. Our safe, green, and connected product portfolio is perfectly aligned to the demand for feature-rich electric vehicles, as well as the acceleration of the software-defined future in adjacent markets. Our advanced technologies and capabilities will continue to drive strong performance across multiple industries. While some macro uncertainties remain, we're confident in our ability to execute flawlessly in a dynamic environment. With that, I'll now turn the call over to Joe to go through the numbers in more detail.