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AP

Aptiv PLC (APTV)·Q2 2025 Earnings Summary

Executive Summary

  • Record Q2 results with revenue $5.21B (+3% YoY), adjusted EPS $2.12, adjusted operating income $628M, and adjusted EBITDA $821M; operating cash flow $510M .
  • Broad-based regional performance: North America +3% adj., Asia +4% (China -1%), Europe -1% adj.; segments: EDS +7% revenue, ECG +6%, ASUX -3% as legacy UX rolls off and China mix headwinds .
  • Guidance updated: FY25 net sales $20.0–$20.3B, adjusted EPS $7.30–$7.60 (raised midpoint), adjusted EBITDA $3.135–$3.235B; Q3 net sales $4.95–$5.10B, adjusted EPS $1.60–$1.80; guidance reflects tariff impacts and higher expected 2H tax rate .
  • Strategic catalysts: resilient supply chain (VW Group Award), accelerating ADAS/edge software wins, and EDS separation on track; bookings $5.4B in Q2, aiming for ~$31B in 2025 with 2H-weighting .

What Went Well and What Went Wrong

What Went Well

  • Record Q2 adjusted EPS and operating earnings driven by volume flow-through and cost actions; Kevin Clark: “record financial results... resilient business model” .
  • Strong segment execution: EDS revenue +7% and adjusted OI +18% with footprint optimization; ECG revenue +6% with China local OEM traction; ASUX adjusted OI +5% and margin +90 bps despite FX/commodities headwinds .
  • Operating cash flow $510M and accelerated deleveraging (~$700M debt repaid YTD); liquidity ~$4.0B; ASR program completed, lowering share count and supporting EPS .

What Went Wrong

  • ASUX revenue -3% on legacy UX program roll-off and China OEM production slowdowns (Zeekr, NIO); China mix underperformance vs market .
  • FX and commodities were material margin headwinds (notably Mexican peso) offsetting volume benefits in ECG; CFO cited ~120 bps headwind to margin in Q2 .
  • Effective tax rate volatility: Q2 GAAP ETR ~10% (discrete timing), but FY25 GAAP ETR ~35% and adjusted ~17.5%; YTD tax expense includes ~$300M valuation allowance linked to OECD guidance .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$4.907 $4.825 $5.208
GAAP Diluted EPS ($)$1.14 $(0.05) $1.80
Adjusted EPS ($)$1.75 $1.69 $2.12
GAAP Operating Income ($USD Millions)$479 $448 $486
Adjusted Operating Income ($USD Millions)$623 $572 $628
GAAP Operating Margin (%)9.8% 9.3% 9.3%
Adjusted Operating Margin (%)12.7% 11.9% 12.1%
Adjusted EBITDA ($USD Millions)$811 $758 $821
Adjusted EBITDA Margin (%)16.5% 15.7% 15.8%
Operating Cash Flow ($USD Millions)$1,060 $273 $510

Segment breakdown (Q2 2025):

SegmentNet Sales ($USD Millions)YoY %Adjusted Operating Income ($USD Millions)YoY %
Electrical Distribution Systems (EDS)$2,206 +7% $163 +18%
Engineered Components Group (ECG)$1,723 +6% $287 -4%
Advanced Safety & User Experience (ASUX)$1,507 -3% $178 +5%
Eliminations & Other$(228) ———
Total$5,208 —$628 +4%

KPIs (Q2 2025):

KPIQ2 2025
Interest Expense ($USD Millions)$91
Effective Tax Rate (GAAP, %)~10%
D&A ($USD Millions)$250
Weighted Avg Diluted Shares (Millions)218.11
New Business Bookings ($USD Billions)$5.4
Cash & Equivalents ($USD Billions, 6/30)$1.448

Consensus vs Actual (S&P Global):

MetricConsensus*Actual
Q2 2025 Revenue ($USD Billions)$5.083*$5.208
Q2 2025 Adjusted EBITDA ($USD Millions)$785*$821
Q2 2025 Adjusted EPS ($)$1.83*$2.12

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Net Sales ($USD Billions)FY 2025$19.6 – $20.4 $20.0 – $20.3 Raised midpoint
Adjusted EPS ($)FY 2025$7.00 – $7.60 $7.30 – $7.60 Raised lower bound
Adjusted EBITDA ($USD Billions)FY 2025$3.095 – $3.275 $3.135 – $3.235 Slightly higher midpoint
Adjusted Operating Income ($USD Billions)FY 2025$2.330 – $2.510 $2.370 – $2.470 Slightly higher midpoint
Cash from Operations ($USD Billions)FY 2025$2.10 $2.00 Lowered
Capex ($USD Millions)FY 2025$880 $780 Lowered
GAAP Effective Tax Rate (%)FY 2025~17.5 (adj.) GAAP ~35; Adjusted ~17.5 GAAP higher
Net Sales ($USD Billions)Q3 2025—$4.95 – $5.10 New
Adjusted EPS ($)Q3 2025—$1.60 – $1.80 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/macro & USMCADetailed mitigation, high USMCA compliance; minimal direct tariff exposure; scenario framework for 2H volumes Guidance reflects tariff impacts; direct exposure minimal; copper tariffs expected to be manageable/pass-through Cautious near-term; operational resilience maintained
Supply chain resilienceRecord Q4 bookings; strong execution, cost discipline VW Group Award for Resilient Supply Chains; digital twin visibility Reinforcing moat
ADAS/edge software (AI)Wind River growth, partnerships (ServiceNow, Capgemini) Gen6 ADAS awards (NA OEM, Leapmotor), Wind River Studio wins; expanding edge AI ecosystem (Zedata, Nota AI, FEMA.AI, DeepX) Accelerating commercial traction
Segment dynamicsASUX strength in Active Safety; ECG margin improvement; EDS optimization ASUX revenue -3% on UX roll-off/China; ECG growth offset by FX/commodities; EDS revenue +5%, OI +18% Mixed: ASUX headwinds near-term, EDS/ECG resilient
Regional trendsChina bookings shifting to locals; NA/Europe demand mixed NA stronger-than-expected; Europe -1% adj.; China -1% on customer mix (Zeekr/NIO) NA outperformance; China mix risk
EDS separationAnnounced; targeted by end Q1 2026 On track; deleveraging ahead of schedule; capital allocation flexible Execution on plan

Management Commentary

  • “We delivered record financial results in the second quarter… aligned to the accelerating trends of electrification, automation, and digitalization… confident in our ability to drive long-term growth” — Kevin Clark .
  • “Operating income margin expanded… offset by FX/commodities headwind largely driven by the Mexican peso” — Varun Laroyia .
  • “Spinoff of Electrical Distribution Systems remains on track” — Kevin Clark .
  • “We received the Volkswagen Group Award for Resilient Supply Chains… enabled by the digital twin we have built” — Kevin Clark .

Q&A Highlights

  • Visibility: OEM schedules firm near-term; conservative 2H outlook given potential pull-forward and macro uncertainty .
  • Mix shift: EV adoption slower in NA, offset by higher content on large trucks/SUVs; net impact managed .
  • Bookings: Target ~$31B in 2025 with 2H weighting; delays in awards due to regulatory focus, but strong funnel .
  • Margin seasonality: Q4 typically benefits from engineering credits; sequential step-up expected vs Q3 .
  • China dynamics: Rapid award-to-launch cycles (6–9 months); local OEM traction; specific EV platforms (Zeekr/NIO) pressured near-term .
  • Tariffs: High USMCA compliance; copper tariffs manageable; pass-through where needed .

Estimates Context

  • Q2 2025 beat: Revenue $5.21B vs $5.08B consensus*, adjusted EBITDA $821M vs $785M*, adjusted EPS $2.12 vs $1.83*; broad-based outperformance despite FX/commodity headwinds .
  • Forward quarters: Q3 2025 consensus EPS $1.83* and revenue ~$5.11B*; company guides Q3 EPS $1.60–$1.80 and net sales $4.95–$5.10B reflecting tariff/mix caution .
  • Implications: Street likely raises FY25 EPS toward upper end of $7.30–$7.60 range, but may trim 2H revenue trajectory to align with management caution and higher GAAP tax rate .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Durable EPS/EBITDA beat driven by cost actions and ASR-supported share count; focus on execution and FX/commodity mitigation remains critical near-term .
  • ASUX narrative: temporary UX roll-off and China mix pressure; offset by accelerating ADAS/wind software wins across NA/EU/China; monitor 2H ADAS launches .
  • ECG/EDS resilience: EDS footprint optimization and ECG non-auto exposure support margins despite peso inflation; EDS +18% adjusted OI in Q2 .
  • Guidance reset is prudent: FY25 midpoint raised for EPS/EBITDA, but 2H demand uncertainty and higher GAAP tax rate constrain GAAP EPS; watch tariff implementation timing .
  • Capital allocation: deleveraging ahead of schedule, cash flexibility post-ASR; EDS separation remains a 2026 catalyst for portfolio clarity and valuation .
  • Trading setup: positive revisions to near-term EPS, but sentiment tethered to tariff/China developments; ADAS/software wins and resilient supply chain are supportive catalysts .
  • Monitor bookings cadence: 2H-weighted awards and China local OEM traction should underpin 2026 ASUX/ECG growth normalization post UX roll-off .