Aptiv PLC Announces Plan to Separate EDS Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joe Spak - UBS - Analyst : Thanks. Good morning, everyone. I guess, Kevin to start, can you just remind us how in the past EDS has gone to market with your customer in conjunction with the other portions of the business, whether that's ECG or AS & UX and was that completely independent and do you expect each of those business to approach their customers going forward?

Question: Joe Spak - UBS - Analyst : Okay. Thanks for that, Kevin. And then just a second quick follow-up. This has been on my end. But for EDS, I know you said you're going to talk about capital structure in the future. But did you mention high non-investment grade, was that the commentary that you're expecting for?

Question: Mark Delaney - Goldman Sachs - Analyst : Good morning. Thanks for taking the question. You spoke to the non-auto part of [RemainCo Aptiv] being over 20% of revenue and how that could help to mitigate some of the auto end market volatility and potentially allow for faster growth. Could you provide any more color on that, maybe some examples around how well RemainCo Aptiv may have held up perhaps over the last year given some of the market volatility and has that thesis borne out? And maybe just elaborate a bit more to you around how much of a focus non-auto may be for RemainCo Aptiv? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 1:00PM, APTV.N - Aptiv PLC Announces Plan to Separate EDS Call

Question: Mark Delaney - Goldman Sachs - Analyst : Thanks for that, Kevin. One other follow-up for me was just around any potential dyssynergies you may need to work through. And as you think about manufacturing and corporate overhead, any way you can help us to quantify how much stranded cost there may be. Thank you.

Question: Dan Levy - Barclays Capital, Inc - Analyst : Hi. Good morning. Thanks for taking the questions. I wanted to follow up on Joe's question earlier. And specifically, I was under the impression in the past that the high voltage product set was more of a bundled process. So maybe you could give us a sense of within high voltage to what extent those could operate as a separate product? And what does that leave at least the connectors business to as far as high voltage without the EDS side?

Question: Dan Levy - Barclays Capital, Inc - Analyst : Okay, great. Thank you. Second question is on footprint. Maybe you could just remind us how much of the footprint is shared versus separate? And then how much of this was really a play to maybe take on more of a labor light approach with the remaining Aptiv business? I believe that EDS is a much more labor-intensive. So how does the footprint play into that?

Question: Chris McNally - Evercore ISI - Analyst : Thanks so much team. Kevin, just wanted to follow on some of your prepared comments and just to get some clarification. So was this been specifically for EDS taking as part of like a full portfolio asset review? And if so, just any insight into why EDS as opposed to other large divisions like ASUX or ECG when you consider (inaudible)

Question: Chris McNally - Evercore ISI - Analyst : Super helpful, Kevin, on the growth aspect for the rationale. Maybe just a follow-up. With respect to this decision, is it fair to say that you explored also the potential scale? Investors will obviously be curious that theoretically strategic values for a lot of your assets higher than current depressed public multiples for supply. So any comments that you can add?

Question: Colin Langan - Wells Fargo Securities, LLC - Analyst : Great. Thanks for taking my questions. Can you talk a little bit about the potential maybe dyssynergies because I think in the past, sometimes, you could get connectors when you sell the wire harness. Is that a material part? Or how should we think about framing that potential risk as you split connectors and wiring?

Question: Colin Langan - Wells Fargo Securities, LLC - Analyst : Got it. Any color on how this changes your exposure to EVs and the shifts there, that's obviously been quite volatile. I mean what EV products actually stay? It's still a little bit unclear, I guess, just like the e-powertrain stuff stay? I guess you said interconnects stay, and what -- is it just the wiring and the heavy wiring?

Question: Tom Narayan - RBC Capital Markets - Analyst : I think sticking the questions. I have a reverse question to the dyssynergy one, which would be potential integration benefits or synergy benefits of combining ECG with ASUX? I understand how they're all three different global commercial business operating separately. But does this now offer an opportunity for any integration? Or are these completely separable items?

Question: Tom Narayan - RBC Capital Markets - Analyst : Okay. Thanks. And my follow-up, from the OEM exposure between the new Aptiv versus EDS, it looks like geographic exposures aren't significantly different. Obviously, the non-automotive, automotive piece changes that. But specifically, as it relates to Chinese domestic auto OEMs, could you talk about maybe the difference there between the RemainCo Aptiv and EDS?

Question: James Picariello - BNP Paribas Exane - Analyst : Hi, everybody. How are you thinking about capital allocation on a post-spin basis and in particular for ECG, which has had a successful bolt-on M&A track record predominantly focused on non-auto end markets? Just curious on your thoughts there with Joe Massaro now heading up that division.

Question: James Picariello - BNP Paribas Exane - Analyst : Great. And then just for EDS on a standalone basis, do you foresee the opportunity for consolidation -- future consolidation in the wiring space with this spin-off possibly helping to accelerate that outcome?

Question: James Picariello - BNP Paribas Exane - Analyst : I'm sorry, as we consider Aptiv's Mexico footprint, does the EDS business have a disproportionate presence there? Or is it pretty ratable across the segments? Apologies for interrupting you.