Aptiv PLC

Good day and welcome to the Aptiv Q4 2025 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Betsy Frank, Vice President, Investor Relations. Please go ahead.

Thank you, Jess. Good morning and thank you for joining Aptiv's fourth quarter 2025 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 are included at the back of the slide presentation in the earnings press release. Unless otherwise stated, all references to growth rates are on an adjusted year-over-year basis. 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. We will begin today's call with a strategic update from Kevin Clark, Aptiv's Chair and Chief Executive Officer. then Varen Laroia, APTA's Chief Financial Officer, will cover our results and guidance in more detail. We'll then have brief remarks from Joe Liatine, Versagen's Chief Executive Officer, before Kevin and Varen take your questions. With that, I'd like to turn the call over to Kevin.

Thanks, Betsy, and thanks, everyone, for joining us this morning. Starting on slide three, we capped off 2025 with another solid quarter in which we seamlessly navigated ongoing changes in the macroenvironment. Our resilient operating model, which leverages our industry-leading engineering innovation, integrated global supply chain and manufacturing footprint, and best-in-class commercial capabilities enables us to execute flawlessly in this dynamic environment. As we discussed at a recent Investor Day, we've been successfully leveraging our product portfolio and operating model to penetrate non-automotive markets, where the shared secular trends of automation, electrification, and digitalization are are aligning customer needs for mission-critical applications across automotive, A&D, telecom, industrials, and other markets. And our momentum continued during the fourth quarter across all segments, as reflected by our partnership announcements with two robotics companies, Robust AI and Vecna Robotics, spanning sensing, compute, and software in intelligent systems. the launch of our modular connector series developed jointly by our automotive and aerospace teams and engineered components for multiple end market applications, and a new business award for energy storage and management in electrical distribution systems. Overall, we posted strong bookings in the quarter, validating customer confidence in our operating model across both geographic regions and end markets. During the quarter, We finalized the leadership team for our electrical distribution systems business, which remains on track to spin out as Versagen on April 1st, under the leadership of Joe Liatine, who you'll hear from in a moment. We're confident that Versagen is well-positioned to deliver continued value to their customers and create value for their shareholders. Turning to our financial highlights, we reported record fourth-quarter revenue of $5.2 billion, an increase of 3%, reflecting strength across multiple areas of our business. Adjusted operating income totaled $607 million, as flow through on volume growth and strong operating performance helped offset stronger than anticipated headwinds from FX and commodities. And combined with lower net interest expense and a lower share count, earnings per share totaled $1.86. Lastly, we generated $818 million of operating cash flow, more than half of which we deployed towards share repurchases and debt reduction. Varen will discuss each of these in more detail a bit later. I'd like to turn to slide four to touch on our achievements during 2025 and review the progress we made further strengthening our business model and increasing shareholder value. First, we continue to enhance our product portfolio with the launch of a number of new innovations across each of our segments. including interconnect product lines that leverage our expertise in both the automotive and aerospace markets. Next generation sensing and AI powered software solutions that deliver market leading performance at a competitive cost for applications across a broad range of end markets. And lastly, high power distribution solutions for applications and energy storage. Second, We continue to gain new business with target automotive OEMs and further penetrate higher growth, higher margin non-automotive markets as reflected by almost 4 billion of new business bookings with leading local China OEMs, new business awards with non-China Asian OEMs that total just under 4 billion, representing an increase of 20% over the prior year, and non-automotive new business bookings that reach more than 4 billion. Third, we continue to strengthen our operating model to further enhance our execution capabilities and enable profitable growth, including the continued enhancement of our supply chain digital twin with 95% visibility down to at least tier three levels and 99% of our semiconductor supply chain down to tier five level. The opening of a new engineering technical center in Chennai, India to support our growing software and services business and further optimization of our manufacturing footprint through the consolidation of seven facilities in North America, EMEA, and Asia Pacific, all which enabled us to deliver record financial performance, including the impact of headwinds associated with tariffs, FX, and commodity prices, further complemented by disciplined capital allocation, which Varen will talk about in more detail shortly.