Aptiv PLC Q1 2025 Earnings Call Transcript

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

Question: Joe Spak - UBS - Analyst : Kevin, just want to sort of go over the outlook and the messaging and make sure I understand. So is it fair to assume that for the second quarter, everything is based on what you're seeing now including any tariff impact and mitigation? And in the second half, taking a little bit of a wait and see approach, but it's really the volume part you don't have visibility on, not the tariff impact? And if that's the case, I guess what markers are you really looking for to give you some more confidence to provide an update for that back half? Is it what your customers do with the pricing? Is it some economic markers? Just want to understand how you're thinking about it.

Question: Joe Spak - UBS - Analyst : Maybe just one more big picture question on sort of some of the more recent developments. I think in your prepared remarks, you mentioned the possibility to look to move high value production back to the US. I understand this is probably like very early stage. But in the context of thinking about the different parts of your business, I don't think that means the harness business, maybe you can just provide some indication of sort of what type of manufacturing you think could move back. And if there's any rule of thumb to sort of think about some of the capital cost to relocate a facility.

Question: Dan Levy - Barclays Bank - Analyst : Kevin, I'm wondering if you could first just talk to perhaps real time, what are you seeing on advanced content, bidding launches. Has any of them that been impacted or delayed given some of the macro uncertainty?

Question: Dan Levy - Barclays Bank - Analyst : And then the second question is perhaps, you can just update us on the EDS spin. With all of the macro uncertainty and given the heavy footprint in Mexico, does any of what's happening change or make you rethink parts of the plan or is that hey, you can still -- you're going to maintain your footprint there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, APTV.N - Q1 2025 Aptiv PLC Earnings Call There's still a presence. You can pass through all the tariffs. It doesn't change any of this. So how does this change EDS?

Question: Shreyas Patil - Wolfe Research - Analyst : Maybe just to start with I'm curious how to interpret the volume decline that would be implied in the guide in the back half because I think Varun, you're mentioning the low end of the guide would employ a 7% year over year decline if I'm just looking at IHS, which had incorporated the latest cuts due to tariffs. I believe they're only assuming production would be down roughly 3%. So is the message that it's just there's just not enough visibility to have confidence on a number or do you feel like third-party forecasts still don't accurately reflect the potential risks here to volume even after incorporating tariffs?

Question: Shreyas Patil - Wolfe Research - Analyst : And just to -- and that's really the crux of the -- that's really the focus I guess is what I'm saying, right? In other words, it's really just a volume question in the back half and there's still uncertainty around that.

Question: Shreyas Patil - Wolfe Research - Analyst : Maybe just a really quick one. Just what you're seeing on the ground in China at the moment. You highlighted a number of new awards with Chinese OEMs, including Xiaomi. But when I looked at the quarter, it looked like production was up about 10%, and revenues were up too for you. So just curious how you're seeing that market.

Question: Mark Delaney - Goldman Sachs - Analyst : First, on the auto production environment. I'm hoping to better understand how you arrived at the assumption for 4% lower production in 2Q. To what extent have customer schedules for April and May shown softening due to tariffs, and to what extent are you including your expectation that tariffs will lead to lower schedules this coming quarter beyond what customers are currently indicating? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, APTV.N - Q1 2025 Aptiv PLC Earnings Call

Question: Mark Delaney - Goldman Sachs - Analyst : My other question was on EBITDA margins. The 1Q EBITDA margin was quite strong and better than I had expected, I think above your guidance as well. You talked about some cost actions as one of the drivers, but can you elaborate a little bit more on the different pieces and how impactful they were to the 1Q margin? Then if I look at the 2Q implied margin, it's down obviously off of a very good 1Q level, but maybe just help us understand the walk on margins from 1Q to to 2Q, please.

Question: Colin Langan - Wells Fargo Securities - Analyst : Maybe I just want to make sure I understand the tariff commentary. So you have $5 billion of goods being imported. You said 99% is USMCA compliance. So that would imply almost no tariff cost if I'm right. And any thoughts on the the new rules? It sounded like based on the wording of The White House release that it's switching to USMCAs might be permanent. So the only risk for you would be really if it goes to a US sourcing rule. Is that the right way to think about your exposure there?

Question: Colin Langan - Wells Fargo Securities - Analyst : And if I look at the sales guidance, the way it is, it's -- looks like you're down maybe 1% in the first half of the midpoint of Q2. And then I believe that implies you're up sort of 4% year-over-year in the second half. You're talking about markets actually getting worse. So is that implying like a pretty major step up in growth over market in the second half, and what kind of visibility do you have there? How's that acceleration?