Aptiv PLC

Thank you, Jeff. Good morning, and thank you for joining Aptiv's second quarter 2024 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 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 GAAP and non-GAAP measures for our second quarter results, as well as our 2024 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, Active Chairman and CEO, and Joe Massaro, Vice Chair and Chief Financial Officer. 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, and thanks, everyone, for joining us this morning. Let's begin on slide three. Looking at the second quarter, we delivered record earnings in EPS, reflecting solid execution across the company, as well as lower supply chain disruption costs, completion of the restructuring of the emotional joint venture, and lower share count. The strong earnings, 180 basis points of operating margin expansion, and 26% EPS growth was in spite of significant revenue headwinds from select customers, which Joe will provide more detail on later. These headwinds were partially offset by strong ADAS revenue growth in North America and Europe, as well as double-digit revenue growth with the Chinese local OEMs. Our cash flow performance continued to be strong, positioning us to repurchase over $400 million of stock during the quarter. Building on that momentum, this morning we announced a new $5 billion share repurchase authorization, which includes an accelerated share repurchase plan. reflecting our view that our stock is undervalued and does not reflect our significant market opportunities. Joe and I will provide more detail on the announcement later in the presentation. And lastly, we released our annual sustainability report, which provides an update on AAPTA's commitment to not only achieving our sustainability goals, but assisting our customers in achieving their goals as well. Moving to slide four. During the second quarter, we booked $4.3 billion in new business awards bringing the year-to-date total to over $17 billion, putting us on track to achieve our full-year target of $35 billion. Advanced safety and user experience bookings in the quarter totaled $900 million, driven by continued strong momentum in ADAS, as well as awards across Wind River's product portfolio in the A&D, telco, industrial, and automotive markets, bringing year-to-date bookings to nearly $3.5 billion. Signal and Power Solutions new business bookings totaled $3.4 billion in the quarter, and included an electrical architecture award with a leading Chinese local OEM on an export vehicle platform, as well as a program extension with a global European-based commercial vehicle OEM, bringing year-to-date bookings to almost $14 billion. New business bookings in China across both segments continue to track to the changing customer landscape and market share gains made by the local OEMs. Year-to-date bookings with the Chinese local OEMs totals over $1.8 billion, an increase of 27% over last year. Turning to our advanced safety and user experience segment on slide five. The segment achieved record revenues and earnings during the quarter, reflecting the strength of our product portfolio as well as the efficiency of our operations. We continue to broaden our customer mix by leveraging our industry-leading ADAS portfolio. We booked a new ADAS program with a Chinese local OEM that utilizes a local SOC solution, which customers in the China market are increasingly requiring, as well as a radar award with a global Japanese OEM representing the fifth radar program we've been awarded by a Japanese customer over the last 12 months, bringing total radar bookings with this customer segment to almost 1.1 billion. Revenue increased 2% to over $1.5 billion in the quarter as active safety revenues increased mid-teens, partially offset by user experience revenues, which were impacted by significantly lower multinational OEM production in China. Operating income totaled a record $170 million, representing margins of 10.9%. As discussed during our last earnings call, supply chains have stabilized. which has led to a significant reduction in disruption costs. And as I mentioned, our China Semiconductor Sourcing Initiative continues to gain traction with Chinese local OEMs, and more global OEMs are requesting that we present them with similar options for both current and future programs, providing incremental savings opportunities for our customers while also reducing our material costs and improving our profitability. Engineering expense also declined during the quarter, almost 20 million versus the same period last year, bringing the ratio of engineering to sales down 20 basis points, a trend that we're confident will continue. This has been the result of several efficiency initiatives, including the adoption of Wind River Studio for software development on new OEM programs, the rotation of software engineering activities toward tech centers in best-cost countries, and a reduction in advanced development activities to reflect changing market conditions. Moving to the next slide for an update on Wind River. As we've discussed at our recent Wind River and software teach-ins, the digital transformation that reshaped the consumer ecosystem is now driving change across other end markets. The strength of Wind River solutions to support that transformation is evident in our recent commercial awards across multiple end markets, totaling nearly 200 million year-to-date. This includes $90 million of aerospace and defense bookings, where the need for certified mixed-criticality software is driving demand for solutions such as VXWorks and Wind River Helix. In telco, the adoption of VRAN and ORAN favors our open, cloud-native solutions, resulting in $50 million in bookings year-to-date. And in industrial and automotive, the growth in connected, software-defined devices, which are increasingly deploying AI at the edge. continues to present opportunities for Wind River's full portfolio, as reflected in over $55 million in bookings year-to-date. To support the development, deployment, and operation of these Intelligent Ed solutions, we're gaining commercial traction with Wind River Studio Developer. During the quarter, we announced that three of the world's leading software engineering service providers are adopting Studio Developer. And as I mentioned, APTA's own adoption has meaningfully improved our software quality, and increase the efficiency of our software development process. Lastly, Wind River just announced it is the prime sponsor of the Elixir project, an open-source, Debian-based, enterprise-grade Linux solution for the Intelligent Edge. AWS, Intel, Capgemini, Supermicro, and SAIC have joined Wind River as project supporters, and we will share more regarding the commercial opportunities associated with this in coming months. Turning to our signal and power solution segment on slide seven, revenues in the segment declined 3% during the quarter, principally the result of the reduction in production schedules by select customers, significantly impacting our electrical distribution systems business, which had revenues decline high single digits. Engineered components grew low single digits in the quarter, with solid revenue growth for traditional interconnect and specialty products in the automotive market and strong growth in the AMD and space markets, which is partially offset by a slowdown in orders from automotive Tier 1s. As I mentioned previously, Signal and Power Solutions booked approximately $3.4 billion in customer rewards. We continue to diversify future revenues with Conquest Awards, including multiple engineered component awards for high-speed cable assemblies, high- and low-voltage interconnects, and power distribution units with a Korean OEM. a high-voltage charging award with a Japanese OEM in North America, our fourth award to date that meets the North American charging standard. And lastly, our first grid energy storage award, and although relatively small, we believe that this is just the start and that the energy storage systems represent an attractive end market for a signal and power business. Operating income totaled $436 million, representing margins of 12.4%, reflecting strong operating performance resulting from lower supply chain disruption costs as well as manufacturing and engineering performance. We're aligning our manufacturing capacity in this segment across all regions to the lower OEM vehicle production schedules and continue to work closely with our OEM customers to address the labor situation in Mexico. Looking at signal and power in more detail, We wanted to provide an update on our engineered component product line on slide eight. Aptiv is a market leader in providing highly engineered, ruggedized, and mission-critical interconnect, cable management, and fastening solutions for automotive and industrial end markets. These solutions have a low cost relative to the overall bill of materials, but a high cost of failure and are integral to the safe and efficient distribution of power and data. Breaking it down further, Aptiv's connection systems business which will have over $4 billion in revenue this year, is the number two global provider of automotive and commercial vehicle interconnect solutions. Home and Titan is the number one provider of cable management and fastening solutions globally and is now almost a $2 billion business. Half of their revenue is automotive, and the other half of the business serves non-automotive end markets. Lastly, Winchester Interconnect is provides highly specialized advanced interconnects and cable assemblies for A&D, commercial space, and other industrial end markets. Both HellermannTyton and Winchester provide access to growing markets benefiting from the same industry megatrends and customer needs as automotive. And they're key to both our growth and diversification strategies, reducing our exposure to light vehicle production while strengthening through cycle resiliency. Moving to slide nine. The global trends that include the transition to electric power, edge-to-cloud connectivity, and the path to higher levels of software and automation continue, with some regions evolving faster than others. And these macro themes have been the tailwind for the safe, green, and connected trends that have shaped the automotive industry over the last decade. And we strongly believe Aptiv remains well-positioned to benefit from these trends. While the pace of EV adoption may be slower than recently anticipated, the demand for electrified vehicles that generate lower CO2 emissions continues to grow. Consumer demand for advanced safety solutions that meet global regulatory and rating agency standards remains strong. And demand for edge-to-cloud connectivity that enables more intelligent solutions continues to grow. Despite some near-term challenges, our customers remain committed to making vehicles more safe, more green, and more connected, and require our expertise and assistance to develop optimized solutions that balance the tradeoffs between performance and cost. And in cases where customers have or are considering delaying their original next-gen technology adoption plans, we're being presented with several incremental near-term and mid-term opportunities to enhance existing solutions. So OEMs can remain competitive in the market by addressing consumer demand for new features and applications that are more efficient, cost-effective, and compliant with regulations. Moving to slide 10, as the world continues to become more electrified and software-defined, we're uniquely positioned to enable this transition for our customers and are confident in our ability to meaningfully grow earnings and cash flow and deliver significant value to our shareholders. and strongly believe that active shares are an attractive investment opportunity. Accordingly, our board has approved a $5 billion share repurchase authorization, including a $3 billion accelerated share repurchase program. The total authorization represents over 25% of our current market cap and is incremental to the almost $9 billion we've returned to shareholders since our IPO in 2011. We're very excited about Aptiv's long-term growth prospects and believe that repurchasing our stock is a great investment. And given the strength of our financial performance, we can execute this repurchase program while continuing to invest in our portfolio of advanced technologies. With that, I'll now turn the call over to Joe.