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AP

Aptiv PLC (APTV)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record adjusted EPS ($1.69) and strong operating execution; GAAP diluted EPS was -$0.05 due to a $300M valuation allowance tied to OECD Pillar Two guidance, despite solid operating income and cash flow .
  • Results beat Street: adjusted EPS $1.69 vs consensus $1.535*, and revenue $4.825B vs consensus $4.804B*, with 11.9% adjusted operating margin and 15.7% adjusted EBITDA margin; bookings were nearly $5B and operating cash flow reached $273M .
  • Guidance: Q2 2025 net sales $4.92–$5.12B and adjusted EPS $1.70–$1.90; full-year 2025 ranges maintained (revenue $19.6–$20.4B, adjusted EPS $7.00–$7.60), both excluding tariff impacts; management will update FY when visibility improves .
  • Catalysts: tariff mitigation and localized supply chain (99% USMCA-compliant flows with Mexico), continued cost actions (SG&A down >10% in 2024, targeting another ~5% in 2025), EDS spin on track, and Wind River-driven software growth .

What Went Well and What Went Wrong

What Went Well

  • Record first-quarter adjusted EPS and strong margins: Adjusted EPS $1.69, adjusted operating margin 11.9% and adjusted EBITDA margin 15.7%, reflecting execution and cost initiatives .
  • Bookings and portfolio momentum: nearly $5B bookings, with Active Safety up 9% and SV Compute & Software up 12% on Wind River traction; partnerships with ServiceNow and Capgemini broaden enterprise reach .
  • Cash generation and deleveraging: Operating cash flow $273M, debt paydown ~$700M since start of year, net leverage ~2.2x; ASR completed (48.5M shares delivered, avg $61.84, all retired) .

What Went Wrong

  • GAAP loss driven by tax: GAAP diluted EPS -$0.05 and tax expense $356M due to ~$300M valuation allowance after OECD guidance; higher interest expense ($93M) from 2024 debt transactions .
  • Regional softness and customer mix: revenue down 2% YoY, with declines in Europe (-4%) and North America (-2%), partially offset by Asia +5%; China +2% overall but impacted by a global EV customer’s volume decline .
  • Award timing uncertainty: macro/trade policy changes are delaying customer program awards, pushing bookings timing to later in the year (though engagement remains robust) .

Financial Results

Headline Financials vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$4.854 $4.907 $4.825
GAAP Diluted EPS ($)$1.48 $1.14 -$0.05
Adjusted EPS ($)$1.83 $1.75 $1.69
GAAP Operating Income Margin (%)10.4% 9.8% 9.3%
Adjusted Operating Income Margin (%)12.2% 12.7% 11.9%
Adjusted EBITDA Margin (%)16.0% 16.5% 15.7%

Actuals vs Wall Street (S&P Global) – Q1 2025

MetricConsensusActual
Revenue ($USD)$4,804,576,100*$4,825,000,000
Primary EPS ($)$1.53463*$1.69

Values retrieved from S&P Global*.

Segment Breakdown – Q1 2025 (new segments; prior period recast)

SegmentNet Sales ($USD Millions)YoY %Adjusted Operating Income ($USD Millions)
Electrical Distribution Systems (EDS)$2,024 (3)% $143
Engineered Components Group (ECG)$1,581 (1)% $274
Advanced Safety & User Experience (ASUX)$1,424 —% $155
Eliminations & Other($204) ——
Total$4,825 —$572

KPIs – Q1 2025

KPIQ1 2025
Operating Cash Flow ($USD Millions)$273
Capital Expenditures ($USD Millions)$197
Interest Expense ($USD Millions)$93
Tax Expense ($USD Millions)$356
Weighted Avg Diluted Shares (Millions)230.16
Bookings ($USD Billions)≈$5.0
Net Leverage (x)~2.2x

Guidance Changes

MetricPeriodPrevious Guidance (Feb 6, 2025)Current Guidance (May 1, 2025)Change
Net Sales ($USD Billions)Q2 2025—$4.92 – $5.12 New
Adjusted EPS ($)Q2 2025—$1.70 – $1.90 New
GAAP Diluted EPS ($)Q2 2025—$1.30 – $1.50 New
Adjusted Operating Income ($USD Millions)Q2 2025—$545 – $605 New
Adjusted EBITDA ($USD Millions)Q2 2025—$735 – $795 New
Net Sales ($USD Billions)FY 2025$19.6 – $20.4 $19.6 – $20.4 Maintained
Adjusted EPS ($)FY 2025$7.00 – $7.60 $7.00 – $7.60 Maintained
GAAP Diluted EPS ($)FY 2025$5.25 – $5.85 $5.25 – $5.85 Maintained
Cash Flow from Operations ($USD Millions)FY 2025$2,100 $2,100 Maintained
Capital Expenditures ($USD Millions)FY 2025$880 $880 Maintained
GAAP/Adjusted Effective Tax Rate (%)FY 2025~17.5% / ~17.5% ~17.5% / ~17.5% Maintained

Note: Both sets of guidance exclude potential impacts from newly imposed or threatened tariffs; management will update FY when visibility improves .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 & Q4 2024)Current Period (Q1 2025)Trend
Tariffs & macroRevised FY outlook in Q3 due to schedule reductions; ongoing cost discipline Minimal direct tariff exposure; 99% USMCA-compliant Mexico flows; passing through residual; uncertainty mainly on H2 volumes Mitigation improving; macro uncertainty persists
Localization & supply chainLiquidity and share repurchases; footprint optimizations ongoing In-region, for-region strategy; potential relocation of some high-value production to U.S. (not harnesses) Increasing localization
AI/software/Wind RiverNoted strong ASUX margin expansion; bookings strength Wind River revenue +12%; ServiceNow and Capgemini partnerships for edge-to-cloud enterprise solutions Accelerating software traction
Segment mix & product performanceASUX strength; SPS margin expansion Active Safety +9%; ASUX margins record at 10.9%; ECG AOI up 140 bps; EDS AOI up 60 bps Mixed volumes; margins improving
China & regional trends3Q: China -6%; 4Q: China +4% China +2%; impacted by one global EV OEM; bookings >$1.4B in China; aiming ~70% local OEM mix by year-end Local OEM mix rising
EDS spin-offAnnounced Jan 22; resegmenting in Q1 2025 On track, unaffected by tariffs; site closures executed; separation by end of Q1 next year Execution progressing
Tax/regulatory2023 deferred tax benefits; FY23 entity structuring OECD guidance led to ~$294M valuation allowance, driving GAAP loss Tax headwind in Q1

Management Commentary

  • “Aptiv started the year strong… first quarter results exceeding our guidance range due to higher-than-expected vehicle production volumes, principally in China… record of $1.69 [adjusted EPS]… operating cash flow totaled $273 million” – Kevin Clark, CEO .
  • “We’re proactively adapting our business to the evolving landscape of trade policies… leveraging our in-region, for-region commercial and supply chain strategy… any remaining tariff amount… will continue to be passed on to our customers” – Kevin Clark .
  • “Bookings for the first quarter were nearly $5 billion… strong traction in China with over $1.4 billion” – Kevin Clark .
  • “ASUX… Active Safety revenues increased 9%… SV Compute and Software revenue grew 12% due to strong commercial traction of Wind River” – Kevin Clark .
  • “With liquidity of over $3.4 billion and net leverage at 2.2x… we have the flexibility to continue to execute on our strategic initiatives” – Varun Laroyia, CFO .

Q&A Highlights

  • Tariffs vs volumes: Management has high confidence in minimal direct tariff impact (USMCA-compliant flows); main uncertainty is H2 vehicle production volumes and consumer demand; costs will be passed through where needed .
  • Potential U.S. manufacturing: Considering moving certain highly-automated, high-value production to U.S., not wire harnesses; too early for capex specifics; would leverage existing footprint initially .
  • Margin walk: Q1 outperformance driven by material cost, strategic sourcing, engineering footprint rotation; FX/commodities headwind into Q2 (peso, euro, RMB) and some engineering expense timing .
  • EDS spin unchanged: Plan unaffected by macro/tariffs; focus on standardization, automation, cost minimization, and non-auto growth; separation remains on track .
  • China dynamics: Overall market strong; Aptiv growth tempered by one EV OEM’s decline; targeting ~70% revenue with local OEMs in China by year-end .

Estimates Context

  • Q1 2025 beat: Adjusted EPS $1.69 vs consensus $1.535*, revenue $4.825B vs $4.804B*; 15 estimates for both EPS and revenue, indicating broad coverage*.
  • Implications: Street models likely to reflect stronger Q2 margin/adjusted EPS guidance and bookings momentum, but maintain caution on H2 volumes pending tariff-driven demand clarity per management’s framework .

Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Quality beat: Strong adjusted EPS and margin execution despite macro; GAAP loss was tax-driven (OECD valuation allowance), not operational .
  • Q2 confidence, FY prudence: Firm Q2 ranges with healthy margins; FY ranges maintained excluding tariffs, with update to come when visibility improves .
  • Localized resilience: 99% USMCA-compliant Mexico flows limit direct tariff risk; remaining tariff costs passed through; potential U.S. reshoring for select automated production .
  • Software and safety tailwinds: Wind River growth (+12%) and Active Safety (+9%) underpin ASUX margin resilience; enterprise partnerships broaden addressable markets .
  • Segment margins improving: ECG AOI +140 bps YoY; EDS AOI +60 bps on footprint optimization; ASUX record first-quarter margin .
  • Cash and leverage optionality: $273M operating cash flow; accelerated deleveraging; net leverage ~2.2x supports strategic flexibility and continued cost actions .
  • Spin unlocks value: EDS separation on track and strategically compelling, aiming for sharpened focus and capital allocation tailored to segment profiles .

Citations: All factual statements above are sourced from Aptiv’s Q1 2025 8‑K/press release and earnings call transcript , prior quarter press releases , and call commentary .