Aptiv Reports Second Quarter 2023 Financial Results

Record Revenue and Adjusted Operating Earnings

Raising Full Year Outlook

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Aptiv PLC (NYSE: APTV), a global technology company focused on making mobility safer, greener and more connected, today reported second quarter 2023 U.S. GAAP earnings of $0.84 per diluted share. Excluding special items, second quarter earnings totaled $1.25 per diluted share.

Second Quarter Financial Highlights Include:

• U.S. GAAP revenue of $5.2 billion, an increase of 28%
• Revenue increased 25% adjusted for currency exchange, commodity movements and acquisitions; growth over market of 10% based on AWM¹ of 15%
• U.S. GAAP net income of $229 million, diluted earnings per share of $0.84
• Excluding special items, diluted earnings per share of $1.25
• U.S. GAAP operating income margin of 7.9%
• Adjusted Operating Income margin of 10.2%, Adjusted Operating Income of $530 million; Adjusted EBITDA margin of 13.4%; Adjusted EBITDA of $695 million
• Generated $535 million of cash from operations
• Returned $28 million to shareholders through share repurchases

Year-to-Date Financial Highlights Include:

• U.S. GAAP revenue of $10.0 billion, an increase of 22%
• Revenue increased 20% adjusted for currency exchange, commodity movements and acquisitions; growth over market of 8% based on AWM¹ of 12%
• U.S. GAAP net income of $375 million, diluted earnings per share of $1.38
• Excluding special items, diluted earnings per share of $2.16
• U.S. GAAP operating income margin of 7.6%
• Adjusted Operating Income margin of 9.7%, Adjusted Operating Income of $967 million; Adjusted EBITDA margin of 12.9%; Adjusted EBITDA of $1,289 million
• Generated $526 million of cash from operations
• Returned $98 million to shareholders through share repurchases

“Aptiv delivered record revenue and adjusted operating earnings in the second quarter, reflecting continued gains across our entire portfolio and solid operating execution,” said Kevin Clark, chairman and chief executive officer. “We continued to achieve strong new business awards, totaling over $20 billion year-to-date, driven by our smart vehicle architecture solutions, software capabilities and advanced computing platforms for the next generation of electrified, software-defined vehicles. Our strong first half performance demonstrates Aptiv's ability to capitalize on key megatrends as a global technology leader and affirms our confidence in our updated outlook for the full year.”

Second Quarter 2023 Results

For the three months ended June 30, 2023, the Company reported U.S. GAAP revenue of $5.2 billion, an increase of 28% from the prior year period. Adjusted for currency exchange, commodity movements and acquisitions, revenue increased by 25% in the second quarter. This reflects growth of 33% in Asia, which includes an increase of 41% in China, 28% in Europe, 19% in North America and 20% in South America, our smallest region.

The Company reported second quarter 2023 U.S. GAAP net income of $229 million and earnings of $0.84 per diluted share, compared to a net loss of $61 million and $0.23 per diluted share in the prior year period. Second quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $356 million, or earnings of $1.25 per diluted share, compared to $62 million, or $0.22 per diluted share, in the prior year period.

Second quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $530 million, compared to $213 million in the prior year period. Adjusted Operating Income margin was 10.2%, compared to 5.3% in the prior year period, reflecting our revenue growth over market of 10%, increased global vehicle production, pricing and the results from our recent acquisitions. Depreciation and amortization expense totaled $224 million, an increase from $193 million in the prior year period.

Interest expense for the second quarter totaled $72 million, an increase from $56 million in the prior year period, which primarily reflects increased interest rates on our variable rate debt.

Tax expense in the second quarter of 2023 was $30 million, resulting in an effective tax rate of approximately 9%, which reflects favorable changes in geographic mix and discrete impacts resulting from favorable changes in tax law. Tax expense in the second quarter of 2022 was $16 million, resulting in an effective tax rate of 100%, which was impacted by the geographic mix of earnings and increased losses in certain jurisdictions where no tax benefit was recognized, including the impact of charges resulting from the conflict between Ukraine and Russia.

The Company generated net cash flow from operating activities of $535 million in the second quarter, compared to $95 million in the prior year period.

Year-to-Date 2023 Results

For the six months ended June 30, 2023, the Company reported U.S. GAAP revenue of $10.0 billion, an increase of 22% from the prior year period. Adjusted for currency exchange, commodity movements and acquisitions, revenue increased by 20% during the period. This reflects growth of 26% in Europe, 19% in Asia, which includes growth of 19% in China, 16% in North America and 16% in South America, our smallest region.

For the 2023 year-to-date period, the Company reported U.S. GAAP net income of $375 million and earnings of $1.38 per diluted share, compared to $12 million and $0.04 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $614 million, or $2.16 per diluted share, compared to $242 million, or $0.85 per diluted share, in the prior year period.

The Company reported Adjusted Operating Income of $967 million for the six months ended June 30, 2023, compared to $537 million in the prior year period. Adjusted Operating Income margin was 9.7% for the six months ended June 30, 2023, compared to 6.5% in the prior year period, reflecting our revenue growth over market of 8%, increased global vehicle production, pricing and the results from our recent acquisitions. Depreciation and amortization expense totaled $440 million, as compared to $384 million in the prior year period.

Interest expense for the six months ended June 30, 2023 totaled $139 million, as compared to $99 million in the prior year period, which reflects impacts from our $2.5 billion debt issuance in the first quarter of 2022 in anticipation of the Wind River Systems, Inc. acquisition and increased interest rates on our variable rate debt.

Tax expense for the six months ended June 30, 2023 was $64 million, resulting in an effective tax rate of approximately 10% which primarily reflects favorable changes in geographic mix and discrete impacts resulting from favorable changes in tax law. Tax expense in the prior year period was $37 million, resulting in an effective tax rate of approximately 19%, which was impacted by the geographic mix of earnings and increased losses in certain jurisdictions where no tax benefit was recognized, including the impact of charges resulting from the conflict between Ukraine and Russia.

The Company generated net cash flow from operating activities of $526 million in the six months ended June 30, 2023, compared to net cash flow used in operating activities of $107 million in the prior year period. As of June 30, 2023, the Company had cash and cash equivalents of $1.3 billion and total available liquidity of $3.8 billion.

Reconciliations of Adjusted Revenue Growth, Adjusted Net Income, Adjusted Net Income Per Share, Adjusted Operating Income, Adjusted EBITDA and Cash Flow Before Financing, which are non-GAAP measures, to the most directly comparable financial measures, respectively, calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”) are provided in the attached supplemental schedules.

Share Repurchase Program

During the second quarter of 2023, the Company repurchased 0.3 million shares for approximately $28 million, leaving approximately $1.9 billion available for future share repurchases. Year-to-date, the Company repurchased 0.9 million shares for approximately $98 million. All repurchased shares were retired.

Conversion of MCPS into Ordinary Shares

On June 15, 2023, each outstanding share of the Company’s 5.50% Mandatory Convertible Preferred Shares, Series A, $0.01 par value per share (the “MCPS”) converted into 1.0754 Aptiv ordinary shares. In aggregate, the MCPS converted into approximately 12.37 million ordinary shares.

Full Year 2023 Outlook

The Company’s full year 2023 financial guidance is as follows:

(1) The Company’s full year 2023 financial guidance includes approximately $1.10 per diluted share for the anticipated equity losses to be recognized by Aptiv from the performance of the Motional autonomous driving joint venture.

Conference Call and Webcast

The Company will host a conference call to discuss these results at 8:00 a.m. (ET) today, which is accessible by dialing +1.800.239.9838 (U.S.) or +1.323.794.2551 (international) or through a webcast at ir.aptiv.com. The conference ID number is 7519096. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Company’s website. A replay will be available two hours following the conference call.

Use of Non-GAAP Financial Information

This press release contains information about Aptiv’s financial results which are not presented in accordance with GAAP. Specifically, Adjusted Revenue Growth, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are non-GAAP financial measures. Adjusted Revenue Growth represents the year-over-year change in reported net sales relative to the comparable period, excluding the impact on net sales from currency exchange, commodity movements, acquisitions, divestitures and other transactions. Adjusted Operating Income represents net income before interest expense, other income (expense), net, income tax (expense) benefit, equity income (loss), net of tax, amortization, restructuring, other acquisition and portfolio project costs (which includes costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures), asset impairments and other related charges, compensation expense related to acquisitions and gains (losses) on business divestitures and other transactions. Adjusted Operating Income margin is defined as Adjusted Operating Income as a percentage of net sales. Adjusted EBITDA represents net income before depreciation and amortization (including asset impairments), interest expense, income tax (expense) benefit, other income (expense), net, equity income (loss), net of tax, restructuring and other special items.

Adjusted Net Income represents net income attributable to Aptiv before amortization, restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share represents Adjusted Net Income divided by the Adjusted Weighted Average Number of Diluted Shares Outstanding for the period. The Adjusted Weighted Average Number of Diluted Shares Outstanding assumes the application of the if-converted method of share dilution, if not already applied for GAAP purposes of calculating the weighted average number of diluted shares outstanding. Cash Flow Before Financing represents cash provided by (used in) operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and other transactions, the cost of significant technology investments and net proceeds from the divestiture of discontinued operations and other significant businesses.

Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company’s financial position, results of operations and liquidity. In particular, management believes Adjusted Revenue Growth, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are useful measures in assessing the Company’s ongoing financial performance that, when reconciled to the corresponding GAAP measure, provide improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company’s core operating performance and that may obscure underlying business results and trends. Management also uses these non-GAAP financial measures for internal planning and forecasting purposes.

Such non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the attached supplemental schedules at the end of this press release. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures of other companies.

About Aptiv

Aptiv is a global technology company that develops safer, greener and more connected solutions enabling a more sustainable future of mobility. Visit aptiv.com.

Forward-Looking Statements

This press release, as well as other statements made by Aptiv PLC (the “Company”), contain forward-looking statements that reflect, when made, the Company’s current views with respect to current events, certain investments and acquisitions and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to the Company’s operations and business environment, which may cause the actual results of the Company to be materially different from any future results. All statements that address future operating, financial or business performance or the Company’s strategies or expectations are forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: global and regional economic conditions, including conditions affecting the credit market; global inflationary pressures; uncertainties posed by the COVID-19 pandemic and the difficulty in predicting its future course and its impact on the global economy and the Company’s future operations; uncertainties created by the conflict between Ukraine and Russia, and its impacts to the European and global economies and our operations in each country; fluctuations in interest rates and foreign currency exchange rates; the cyclical nature of global automotive sales and production; the potential disruptions in the supply of and changes in the competitive environment for raw material and other components integral to the Company’s products, including the ongoing semiconductor supply shortage; the Company’s ability to maintain contracts that are critical to its operations; potential changes to beneficial free trade laws and regulations such as the United States-Mexico-Canada Agreement; changes to tax laws; the ability of the Company to integrate and realize the expected benefits of recent transactions; the ability of the Company to attract, motivate and/or retain key executives; the ability of the Company to avoid or continue to operate during a strike, or partial work stoppage or slow down by any of its unionized employees or those of its principal customers; and the ability of the Company to attract and retain customers. Additional factors are discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s filings with the Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. It should be remembered that the price of the ordinary shares and any income from them can go down as well as up. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law.

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