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Revenue: $4.9 billion, down 6% year-over-year.
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Operating Income: $593 million, with a margin increase of 120 basis points.
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EPS: Record quarterly earnings per share of $1.83, up 41% from the prior year.
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EBITDA: $778 million, with margins expanding by 180 basis points.
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Operating Cash Flow: $499 million.
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Capital Expenditures: $173 million.
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New Business Bookings: $3.6 billion in Q3, totaling just under $21 billion year-to-date.
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Advanced Safety and User Experience Revenue: $1.4 billion, down 1%.
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Signal and Power Solutions Revenue: $3.4 billion, down 8%.
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2024 Revenue Outlook: Revised to $19.6 billion to $19.9 billion.
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2024 EPS Outlook: Revised to $6.15 at the midpoint.
Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Aptiv PLC (NYSE:APTV) delivered record third-quarter operating income and margin, as well as an all-time record for quarterly earnings per share, reflecting strong operating performance.
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EBITDA and operating margins expanded by 180 basis points and 120 basis points, respectively, with EPS increasing by 41% compared to the previous year.
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The company booked $3.6 billion of new business awards in the third quarter, bringing the year-to-date total to just under $21 billion, indicating strong business momentum.
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Aptiv PLC (NYSE:APTV) achieved record earnings and margin in its advanced safety and user experience segment, highlighting the strength of its product portfolio.
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The company has implemented additional profit improvement actions, including prioritizing investments in productized solutions and consolidating its manufacturing footprint, to enhance long-term value delivery.
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Third-quarter revenues declined by 6% due to headwinds from weaker production schedules, particularly impacting the electrical distribution product line.
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Aptiv PLC (NYSE:APTV) updated its 2024 outlook to reflect a weaker industry backdrop, including a slowdown in EV adoption and a reduction in global vehicle production.
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The company experienced delays in customer program awards, impacting expectations for new business bookings and resulting in a revised 2024 bookings target of $30 billion.
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Revenues in the signal and power solutions segment were down 8%, with electrical distribution systems revenues declining by 12% due to customer schedule reductions.
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Aptiv PLC (NYSE:APTV) faces challenges from volatility in production schedules, particularly with a large customer reducing production by 35% in the third quarter.
Q: How should we think about the EBIT margin for 2025 given the current challenging environment? A: Joseph Massaro, CFO, explained that while they are focused on margin expansion, the environment remains challenging. They have taken initiatives since 2023 to improve cost structure and margin performance, but the volatility in the market, especially with significant production drops from major customers, requires cautious outlooks for 2025.
Q: With the volatility in production schedules, what proactive measures is Aptiv taking to manage costs? A: Kevin Clark, CEO, mentioned that Aptiv is reducing salaried headcount, consolidating manufacturing facilities, and optimizing engineering investments. They are also focusing on sourcing semiconductors from China to reduce costs by 10-30% compared to Western suppliers.
Q: Can you discuss the impact of production cuts by a major customer and how Aptiv is managing this volatility? A: Kevin Clark noted that late schedule changes lead to idle labor costs. Aptiv is reducing capacity to align with current production schedules and consolidating facilities to manage costs better. They are prepared to handle inefficiencies if production schedules increase rapidly.
Q: How is Aptiv’s exposure to Chinese OEMs affecting its growth prospects? A: Kevin Clark highlighted that Aptiv’s mix includes a significant portion of local Chinese OEMs and a major U.S.-based EV manufacturer. They are booking several opportunities with these OEMs, which positions them well for growth despite the volatility in traditional customer schedules.
Q: How are pricing negotiations with OEMs for 2025 progressing, and can Aptiv secure better economics given the current volatility? A: Kevin Clark stated that discussions with OEMs are ongoing and more collaborative, focusing on strategic cost reductions and system solutions to lower costs. They are working with OEMs on footprint rotation to manage labor costs, particularly in North America.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.