Aptiv Reports Third Quarter 2022 Financial Results

Operational Execution Drives Strong Growth & Margin Expansion
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DUBLIN - Aptiv PLC (NYSE: APTV), a global technology company focused on making mobility safer, greener and more connected, today reported third quarter 2022 U.S. GAAP earnings of $1.05 per diluted share. Excluding special items, third quarter earnings totaled $1.28 per diluted share.

Third Quarter Financial Highlights Include:

• U.S. GAAP revenue of $4.6 billion, an increase of 26%
  • Revenue increased 33% adjusted for currency exchange and commodity movements; growth over market of 9% based on AWM1 of 24%
• U.S. GAAP net income of $286 million, diluted earnings per share of $1.05
  • Excluding special items, diluted earnings per share of $1.28
• U.S. GAAP operating income margin of 10.2%
  • Adjusted Operating Income margin of 11.4%, Adjusted Operating Income of $525 million; Adjusted EBITDA of $673 million
• Adjusted Operating Income margin of 11.4%, Adjusted Operating Income of $525 million; Adjusted EBITDA of $673 million

Year-to-Date Financial Highlights Include:

• U.S. GAAP revenue of $12.8 billion, an increase of 12%
  • Revenue increased 15% adjusted for currency exchange and commodity movements; growth over market of 10% based on AWM1 of 5%
• U.S. GAAP net income of $298 million, diluted earnings per share of $1.10
  • U.S. GAAP net income of $298 million, diluted earnings per share of $1.10
• U.S. GAAP operating income margin of 6.4%
  • Adjusted Operating Income margin of 8.3%, Adjusted Operating Income of $1,062 million; Adjusted EBITDA of $1,516 million
• Generated $330 million of cash from operations

“Strong third quarter results are a testament to our ability to execute well despite the ongoing macroeconomic pressures. In the quarter, we continued to demonstrate strong growth over underlying vehicle production, and achieved record year-to-date bookings,” said Kevin Clark, chairman and chief executive officer. “We continue to focus on strengthening our business foundation, which we believe will further improve our performance in 2023.”

Third Quarter 2022 Results

For the three months ended September 30, 2022, the Company reported U.S. GAAP revenue of $4.6 billion, an increase of 26% from the prior year period. Adjusted for currency exchange and commodity movements, revenue increased by 33% in the third quarter. This reflects growth of 36% in Asia, which includes an increase of 42% in China, 31% in North America,  29% in Europe, and 53% in South America, our smallest region.

The Company reported third quarter 2022 U.S. GAAP net income of $286 million and earnings of $1.05 per diluted share, compared to $86 million and $0.32 per diluted share in the prior year period. Third quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $364 million, or earnings of $1.28 per diluted share, compared to $140 million, or $0.49 per diluted share, in the prior year period.

Third quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $525 million, compared to $256 million in the prior year period. Adjusted Operating Income margin was 11.4%, compared to 7.0% in the prior year period, reflecting increased global vehicle production and the favorable impact of material cost recoveries. Depreciation and amortization expense totaled $190 million, as compared to $193 million in the prior year period.

Interest expense for the third quarter totaled $58 million, as compared to $36 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.

Tax expense in the third quarter of 2022 was $59 million, resulting in an effective tax rate of approximately 14%. Tax expense in the third quarter of 2021 was $25 million, resulting in an effective tax rate of approximately 14%.

The Company generated net cash flow from operating activities of $437 million in the third quarter, compared to $4 million in the prior year period.

Year-to-Date 2022 Results

For the nine months ended September 30, 2022, the Company reported U.S. GAAP revenue of $12.8 billion, an increase of 12% from the prior year period. Adjusted for currency exchange and commodity movements, revenue increased by 15% during the period. This reflects growth of 19% in North America, 16% in Asia, which includes growth of 19% in China, 8% in Europe and 36% in South America, our smallest region.

For the 2022 year-to-date period, the Company reported U.S. GAAP net income of $298 million and earnings of $1.10 per diluted share, compared to $512 million and $1.89 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $606 million, or $2.14 per diluted share, compared to $675 million, or $2.38 per diluted share, in the prior year period.

The Company reported Adjusted Operating Income of $1,062 million for the nine months ended September 30, 2022, compared to $1,068 million in the prior year period. Adjusted Operating Income margin was 8.3% for the nine months ended September 30, 2022, compared to 9.3% in the prior year period, reflecting adverse impacts from the second quarter COVID-19 pandemic lockdowns in China, continued adverse impacts from global inflationary pressures and the worldwide semiconductor shortage, partially offset by increased global vehicle production and the favorable impact of material cost recoveries. Depreciation and amortization expense totaled $574 million, as compared to $583 million in the prior year period.

Interest expense for the nine months ended September 30, 2022 totaled $157 million, as compared to $114 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.

Tax expense for the nine months ended September 30, 2022 was $96 million, resulting in an effective tax rate of approximately 15% which was impacted by the geographic mix of earnings and increased losses in certain jurisdictions where no tax benefit is recognized, including the impact of charges resulting from the conflict between Ukraine and Russia. Tax expense in the prior year period was $101 million, resulting in an effective tax rate of 12%.

The Company generated net cash flow from operating activities of $330 million in the nine months ended September 30, 2022, compared to $553 million in the prior year period. As of September 30, 2022, the Company had cash and cash equivalents of $4.9 billion and total available liquidity of $7.3 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.

Full Year 2022 Outlook

The Company’s full year 2022 financial guidance is as follows:

(1) The Company’s full year 2022 financial guidance includes approximately $1.05 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 +1.323.701.0225 (international) or through a webcast at ir.aptiv.com. The conference ID number is 7786988. 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, asset impairments, other charges related to the Ukraine/Russia conflict and gains (losses) on business divestitures and other transactions. Other acquisition and portfolio project costs include costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures. 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.

Effective on January 1, 2022, the Company now excludes amortization expense of intangible assets from the calculation of Adjusted Operating Income, Adjusted Net Income and Adjusted Net Income Per Share. Financial results reported in this release for both the current and historical period have been prepared under this new definition. Outlook information presented above is also calculated under this new definition. The forward-looking non-GAAP measures presented in this release are reconciled under this new definition to their closest GAAP financial measure on pages 18 and 19.

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 including the potential impact of the proposed acquisition of Wind River Systems, Inc. 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; 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 on 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 current 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; 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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