Aptiv PLC
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
APTV$39.44-3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001521332-24-000038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001521332-24-000059
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 161 previous paragraphs and 183 current paragraphs.
107 unchanged; 48 reworded; 21 added; 4 removed; 2 previous and 7 current paragraphs rearranged.
Tables are not compared: 20 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Total net sales for the six months ended June 30, 2024 decreased 1% compared to the six months ended June 30, 2023. Our volumes decreased 1% for the period, which reflects volume declines primarily in Europe, with flat global automotive production (down 1% on an AWM basis). The decline in volumes were offset by impacts of favorable pricing, net of contractual price reductions, of $98 million. In addition, our net sales reflect net unfavorable foreign currency impacts, primarily related to the Chinese Yuan Renminbi.
Current report
•Approximately $25 million of increased depreciation, which includes long-lived asset impairment charges of $14 million.
Current report
•Approximately $45 million of increased depreciation, primarily as a result of a higher fixed asset base, which includes long-lived asset impairment charges of $14 million.
Current report
The Company recorded employee-related and other restructuring charges totaling approximately $42 million and $53 million during the three and six months ended June 30, 2023. The charges recorded during the three months ended June 30, 2023 included the recognition of approximately $27 million of employee-related and other costs related to the initiation of the closure of a Western European manufacturing site within the Advanced Safety and User Experience segment pursuant to the Company’s ongoing European footprint rotation strategy.
Current report
•Approximately $32 million of increased bad debt expense, primarily related to a supply relationship in Europe; and
Current report
•Approximately $15 million of increased depreciation, primarily as a result of a higher fixed asset base.
Current report
•Approximately $33 million of increased bad debt expense, primarily related to a supply relationship in Europe; and
Current report
•Approximately $35 million of increased depreciation, primarily as a result of a higher fixed asset base.
Current report
(1)The Company’s short-term investments are anticipated to be utilized to redeem the €700 million in aggregate principal amount of 1.50% Euro-denominated senior unsecured notes due 2025 prior to their maturity.
Current report
New Share Repurchase Authorization
Current report
Accelerated Share Repurchase Agreement
Current report
As part of our share repurchase program, on August 1, 2024, the Company entered into ASR agreements with each of Goldman Sachs International and JPMorgan Chase Bank, N.A. to repurchase an aggregate of $3.0 billion of Aptiv’s ordinary shares (the “ASR Agreements”).
Current report
Under the terms of the ASR Agreements, the Company will make an aggregate payment of $3.0 billion (the “Repurchase Price”) and will receive an initial delivery of ordinary shares with an aggregate value of approximately 75% of the total Repurchase Price based on the closing price of our ordinary shares on the date of the ASR Agreements. The total number of shares to be repurchased under each ASR Agreement will be based on the average daily volume-weighted average price of our ordinary shares on specified dates during the term of such ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreements.
Current report
Upon final settlement of the ASR Agreements, under certain circumstances, the relevant counterparty may be required to deliver additional ordinary shares, or we may be required to deliver ordinary shares or to make a cash payment to the relevant counterparty, at our election. The final settlements under the ASR Agreements are scheduled to occur no later than the second quarter of 2025, and in each case may be accelerated at the option of the applicable counterparty.
Current report
The Company expects to fund the accelerated share repurchase program with cash on hand and borrowings under a new unsecured bridge credit facility as described below. We expect to refinance the bridge credit facility with the issuance of new debt or borrowings under other sources of existing liquidity.
Current report
Bridge Credit Agreement
Current report
On August 1, 2024, in order to partially finance the share repurchases under the ASR Agreements, Aptiv PLC and certain of its subsidiaries entered into a new $2,500 million senior unsecured bridge facility under a Bridge Credit Agreement (the “Bridge Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, JPMorgan Chase Bank, N.A. and Goldman Sachs Lending Partners LLC, as joint lead arrangers and joint bookrunners, and Goldman Sachs Lending Partners LLC, as syndication agent. The loans available under the Bridge Credit Agreement were fully drawn on August 1, are scheduled to mature 364 days thereafter, and once repaid may not be reborrowed. We expect to use the proceeds of the loans drawn under the Bridge Credit Agreement to pay related fees and expenses and, along with cash on hand, to fund the ASR Agreements described above.
Current report
As part of the agreement, on May 2, 2024, Hyundai invested $475 million in Motional in exchange for an additional 11.7% common equity interest. Aptiv did not participate in this funding round. This transaction resulted in the dilution of Aptiv’s common equity interest in Motional from 50% to approximately 44%, prior to the completion of any further transactions as described below. As these units were issued at a valuation greater than the carrying value of our investment in Motional, the Company recognized a gain of approximately $91 million during the three months ended June 30, 2024, within income before income taxes and equity losses in the consolidated statement of operations.
Current report
Also as part of the agreement, on May 16, 2024, Aptiv sold 11% of its common equity interest in Motional to Hyundai for approximately $448 million of cash consideration. Aptiv also exchanged approximately 21% of its common equity in Motional for a like number of Motional preferred shares. These transactions resulted in the reduction of Aptiv’s common equity interest in Motional from approximately 44% to approximately 15%. As a result of these transactions, the Company recognized a gain of approximately $550 million during the three months ended June 30, 2024, within income before income taxes and equity losses in the consolidated statement of operations.
Current report
The total gain recorded as a result of the Motional funding and ownership restructuring transactions completed in May 2024, all as described above, was approximately $641 million (approximately $2.37 per diluted share) for the three months ended June 30, 2024.
Current report
As of June 30, 2024, the carrying values of the Company’s common equity and preferred equity investments in Motional were $283 million and $899 million, respectively. As of December 31, 2023, the carrying value of the Company’s common equity investment in Motional was $1,096 million. These investments are recorded within investment in affiliates in the consolidated balance sheets and included in the Advanced Safety and User Experience segment. The Company's preferred equity investment in Motional was initially measured at fair value, and subsequently accounted for under the measurement alternative in accordance with ASC Topic 321, Investments – Equity Securities, as it does not have a readily determinable fair value.
Removed paragraphs (4)
Previous report
•Approximately $20 million of increased depreciation, primarily as a result of a higher fixed asset base.
Previous report
The reconciliation of Adjusted Operating Income to operating income includes, as applicable, amortization, restructuring, other acquisition and portfolio project costs (which includes costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures), asset impairments and other related charges, compensation expense related to acquisitions and gains (losses) on business divestitures and other transactions. The reconciliations of Adjusted Operating Income to net income attributable to Aptiv for the three months ended March 31, 2024 and 2023 are as follows:
Previous report
•Approximately $20 million of increased depreciation, primarily as a result of a higher fixed asset base.
Previous report
As of March 31, 2024, all obligations under the Credit Agreement were borrowed by Aptiv Corporation and jointly and severally guaranteed by AGFL and Aptiv PLC, subject to certain exceptions set forth in the Credit Agreement.
Reworded paragraphs (48)
Previous wording
The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the three months ended March 31, 2024. This discussion should be read in conjunction with Item 1. Financial Statements. Our MD&A is presented in eight sections:
Current wording
The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the three and six months ended June 30, 2024. This discussion should be read in conjunction with Item 1. Financial Statements. Our MD&A is presented in eight sections:
Previous wording
Our total net sales during the three months ended March 31, 2024 were $4.9 billion, an increase of 2% compared to the same period of 2023. Our volumes increased 1% for the three months ended March 31, 2024, which reflects volume growth primarily in China and North America, despite decreased global automotive production of 1% (down 1% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue, “AWM”).
Current wording
Our total net sales during the three and six months ended June 30, 2024 were $5.1 billion and $10.0 billion, a decrease of 3% and 1% compared to the same periods of 2023, respectively. Our volumes decreased 3% for the three months ended June 30, 2024, which reflects volume declines primarily in Europe and North America, as well as flat global automotive production (down 1% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue, “AWM”). Our volumes decreased 1% for the six months ended June 30, 2024, which reflects volume declines primarily in Europe, as well as flat global automotive production (down 1% on an AWM basis).
Previous wording
Economic conditions. Our business is directly related to automotive sales and automotive vehicle production by our customers. Automotive sales depend on a number of factors, including global and regional economic conditions. Global automotive vehicle production increased 9% (10% on an AWM basis) from 2022 to 2023, reflecting increased vehicle production of 13% in Europe, 10% in China, 9% in North America and flat production in South America, our smallest region. Compared to 2023, vehicle production for the three months ended March 31, 2024 decreased by 1% (down 1% on an AWM basis).
Current wording
Economic conditions. Our business is directly related to automotive sales and automotive vehicle production by our customers. Automotive sales depend on a number of factors, including global and regional economic conditions. Global automotive vehicle production increased 9% (10% on an AWM basis) from 2022 to 2023, reflecting increased vehicle production of 13% in Europe, 10% in China, 9% in North America and flat production in South America, our smallest region. Compared to 2023, vehicle production for the six months ended June 30, 2024 was flat (down 1% on an AWM basis).
Previous wording
Economic volatility or weakness in North America, Europe, China or, to a lesser extent, South America could result in a significant reduction in automotive sales and production by our customers, which would have an adverse effect on our business, results of operations and financial condition. Global inflationary pressures have, at times, both reduced consumer demand for automotive vehicles and increased the price of inputs to our products, which has adversely impacted our profitability, and this trend may continue in 2024. There is also potential that geopolitical factors could adversely impact the U.S. and other economies, and specifically the automotive sector. In particular, changes to international trade agreements, such as the United States-Mexico-Canada Agreement or other political pressures could affect the operations of our OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions. Increases in interest rates could also negatively impact automotive production as a result of increased consumer borrowing costs or reduced credit availability. Additionally, economic weakness may result in shifts in the mix of future automotive sales (from vehicles with more content such as luxury vehicles, trucks and sport utility vehicles toward smaller passenger cars). While our diversified customer and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profitability.
Current wording
Economic volatility or weakness in North America, Europe, China or, to a lesser extent, South America could result in a significant reduction in automotive sales and production by our customers, which would have an adverse effect on our business, results of operations and financial condition. Global inflationary pressures have, at times, both reduced consumer demand for automotive vehicles and increased the price of inputs to our products, which has adversely impacted our profitability, and this trend has continued in 2024. There is also potential that geopolitical factors could adversely impact the U.S. and other economies, and specifically the automotive sector. In particular, changes to international trade agreements, such as the United States-Mexico-Canada Agreement or other political pressures could affect the operations of our OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions. Increases in interest rates could also negatively impact automotive production as a result of increased consumer borrowing costs or reduced credit availability. Additionally, economic weakness may result in shifts in the mix of future automotive sales (from vehicles with more content such as luxury vehicles, trucks and sport utility vehicles toward smaller passenger cars). While our diversified customer and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profitability.
Previous wording
In addition, we are carrying critical inventory items and key components, and we continue to procure productive, raw material and non-critical inventory components in order to satisfy our customers’ vehicle production schedules. However, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material inventories has increased substantially from customary levels as of March 31, 2024 and December 31, 2023. We will continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the efficient use of working capital.
Current wording
In addition, we are carrying critical inventory items and key components, and we continue to procure productive, raw material and non-critical inventory components in order to satisfy our customers’ vehicle production schedules. However, as a result of our customers’ recent production volatility and cancellations, among other things, our balance of productive, raw and component material inventories has increased substantially from customary levels as of June 30, 2024 and December 31, 2023. We will continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the efficient use of working capital.
Previous wording
In March 2020, we completed a transaction with Hyundai Motor Group (“Hyundai”) to form Motional, AD LLC (“Motional”), a joint venture focused on the design, development and commercialization of autonomous driving technologies. Motional began testing fully driverless systems in 2020 and began testing a production-ready autonomous driving platform available for robotaxi providers, meal delivery providers, fleet operators and automotive manufacturers at prototype scale in 2022, with initial production deployments in the fourth quarter of 2023 and commercial launch planned in the first half of 2024. In addition, Motional is involved in collaborative arrangements with mobility providers and with smart cities such as Boston, Las Vegas, Los Angeles and Singapore as solutions are developed for the evolving nature of the mobility industry.
Current wording
In March 2020, we completed a transaction with Hyundai Motor Group (“Hyundai”) to form Motional, AD LLC (“Motional”), a joint venture focused on the design, development and commercialization of autonomous driving technologies. Motional began testing fully driverless systems in 2020 and began testing a production-ready autonomous driving platform available for robotaxi providers, meal delivery providers, fleet operators and automotive manufacturers at prototype scale in 2022. In addition, Motional is involved in collaborative arrangements with mobility providers and with cities such as Las Vegas as solutions are developed for the evolving nature of the mobility industry.
Previous wording
Although we believe our strategic partnerships have us well-aligned with industry technology mega-trends in these evolving areas, the timeline necessary to produce commercially viable autonomous vehicles has been extended and is still subject to significant uncertainty, resulting in additional funding requirements for Motional in the interim. In April 2024, Aptiv and Hyundai entered into an agreement to restructure Aptiv’s ownership interest in Motional and for Hyundai to provide additional funding to Motional, eliminating any requirements for additional future funding from Aptiv. These transactions are anticipated to result in the reduction of our common equity interest from 50% as of March 31, 2024 to approximately 15%, and are subject to regulatory approvals and customary closing conditions. Refer to Note 22. Subsequent Events to the consolidated financial statements contained herein for further information on these agreements.
Current wording
Although we believe our strategic partnerships have us well-aligned with industry technology mega-trends in these evolving areas, the timeline necessary to produce commercially viable autonomous vehicles has been extended and is still subject to significant uncertainty, which resulted in additional funding requirements for Motional. In April 2024, Aptiv and Hyundai entered into an agreement to restructure Aptiv’s ownership interest in Motional and for Hyundai to provide additional funding to Motional, which also eliminated any requirements for additional future funding from Aptiv. These transactions, which were completed in May 2024, resulted in the reduction of our common equity interest from 50% as of December 31, 2023 to approximately 15% as of June 30, 2024. The total gain recorded as a result of these transactions was approximately $641 million (approximately $2.37 per diluted share) during the three months ended June 30, 2024, within income before income taxes and equity losses in the consolidated statement of operations. Refer to Note 21. Investments in Affiliates to the consolidated financial statements contained herein for further information on these transactions.
Previous wording
We have a strong balance sheet with gross debt of approximately $6.2 billion and substantial available liquidity of approximately $3.4 billion as of March 31, 2024, consisting of cash and cash equivalents, and available financing under our Revolving Credit Facility and committed European accounts receivable factoring facility, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits (“OPEB”) liabilities. We intend to maintain strong financial discipline by targeting industry-leading earnings growth, cash flow generation and return on invested capital and to maintain sufficient liquidity to sustain our financial flexibility throughout the industry cycle.
Current wording
We have a strong balance sheet with gross debt of approximately $7.0 billion and substantial available liquidity of approximately $4.6 billion as of June 30, 2024, consisting of cash and cash equivalents, short-term investments and available financing under our Revolving Credit Facility and committed European accounts receivable factoring facility, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits (“OPEB”) liabilities. We intend to maintain strong financial discipline by targeting industry-leading earnings growth, cash flow generation and return on invested capital and to maintain sufficient liquidity to sustain our financial flexibility throughout the industry cycle.
Previous wording
Three Months Ended March 31, 2024 versus Three Months Ended March 31, 2023
Current wording
Three and Six Months Ended June 30, 2024 versus Three and Six Months Ended June 30, 2023
Previous wording
The results of operations for the three months ended March 31, 2024 and 2023 were as follows:
Current wording
The results of operations for the three and six months ended June 30, 2024 and 2023 were as follows:
Previous wording
Total net sales for the three months ended March 31, 2024 increased 2% compared to the three months ended March 31, 2023. Our volumes increased 1% for the period, which reflects volume growth primarily in China and North America, despite decreased global automotive production of 1% (down 1% on an AWM basis). Our total net sales also reflect the impacts of favorable pricing, net of contractual price reductions, of $43 million. In addition, our net sales reflect unfavorable foreign currency impacts, primarily related to the Chinese Yuan Renminbi, partially offset by impacts related to the Euro.
Current wording
Total net sales for the three months ended June 30, 2024 decreased 3% compared to the three months ended June 30, 2023. Our volumes decreased 3% for the period, which reflects volume declines primarily in Europe and North America, with flat global automotive production (down 1% on an AWM basis). The decline in volumes were partially offset by impacts of favorable pricing, net of contractual price reductions, of $55 million. In addition, our net sales reflect unfavorable foreign currency impacts, primarily related to the Chinese Yuan Renminbi and the Euro.
Previous wording
Cost of sales decreased $35 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, as summarized below. The Company’s material cost of sales was approximately 50% and 55% of net sales in the three months ended March 31, 2024 and 2023, respectively.
Current wording
Cost of sales decreased $253 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, as summarized below. The Company’s material cost of sales was approximately 50% and 55% of net sales in the three months ended June 30, 2024 and 2023, respectively.
Previous wording
The decrease in cost of sales reflects impacts from operational performance and currency exchange, partially offset by increased volumes. Cost of sales was also impacted by the following items in Other above:
Current wording
The decrease in cost of sales reflects impacts of improved operational performance, decreased volumes and currency exchange. Cost of sales was also impacted by the following items in Other above:
Previous wording
Selling, general and administrative expense (“SG&A”) remained relatively consistent as a percentage of net sales for the three months ended March 31, 2024 compared to 2023, and includes administrative expenses, information technology costs, incentive compensation related costs, acquisition and project portfolio related costs and selling and marketing expenses.
Current wording
Selling, general and administrative expense (“SG&A”) primarily includes administrative expenses, information technology costs, incentive compensation related costs, acquisition and project portfolio related costs and selling and marketing expenses. SG&A increased as a percentage of net sales for the three and six months ended June 30, 2024 compared to 2023, primarily due to increased bad debt expense related to a supply relationship in Europe. Refer to Note 2. Significant Accounting Policies to the consolidated financial statements contained herein for additional information.
Previous wording
Amortization expense reflects the non-cash charge related to definite-lived intangible assets. Amortization during the three months ended March 31, 2024 and 2023 reflects the continued amortization of our definite-lived intangible assets, which resulted primarily from our acquisitions, over their estimated useful lives. Refer to Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein for further detail of our business acquisitions, including details of the intangible assets recorded in each transaction.
Current wording
Amortization expense reflects the non-cash charge related to definite-lived intangible assets. Amortization during the three and six months ended June 30, 2024 and 2023 reflects the continued amortization of our definite-lived intangible assets, which resulted primarily from our acquisitions, over their estimated useful lives. Refer to Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein for further detail of our business acquisitions, including details of the intangible assets recorded in each transaction.
Previous wording
The Company recorded employee-related and other restructuring charges totaling approximately $39 million during the three months ended March 31, 2024, of which $24 million was recognized for a program initiated in the fourth quarter of 2023 focused on global salaried headcount reduction, primarily in the European region. We expect to recognize additional charges of approximately $50 million related to this program through the remainder of 2024. Cash payments related to this restructuring action are expected to be largely completed within the next twelve months. We expect to make cash payments of approximately $105 million over the next twelve months pursuant to currently implemented restructuring programs.
Current wording
The Company recorded employee-related and other restructuring charges totaling approximately $70 million and $109 million during the three and six months ended June 30, 2024, respectively. The charges recorded during the three and six months ended June 30, 2024 included the recognition of approximately $30 million and $54 million, respectively, for a program initiated in the fourth quarter of 2023 focused on global salaried workforce optimization, primarily in the European region. The charges recorded during the three months ended June 30, 2024 also reflect programs to align manufacturing capacity with the current levels of automotive production in North America and Asia Pacific. We expect to make cash payments of approximately $100 million over the next twelve months pursuant to currently implemented restructuring programs.
Previous wording
We expect to continue to incur additional restructuring expense in 2024 and beyond, primarily related to programs focused on reducing global overhead costs and on the continued rotation of our manufacturing footprint to best cost locations in Europe, which includes approximately $60 million (of which approximately $40 million relates to the Signal and Power Solutions segment and approximately $20 million relates to the Advanced Safety and User Experience segment) for programs approved as of March 31, 2024, which includes the amounts related to the global salaried headcount reduction program described above and which are expected to be incurred within the next twelve months. Additionally, as we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further adjust our cost structure and optimize our manufacturing footprint. The Company plans to implement additional restructuring activities in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing regional automotive production levels and locations, to improve the efficiency and utilization of other locations and in order to increase investment in advanced technologies and engineering. Such future restructuring actions are dependent on market conditions, customer actions and other factors.
Current wording
We expect to continue to incur additional restructuring expense in 2024 and beyond, primarily related to programs focused on the continued rotation of our manufacturing footprint to best cost locations in Europe and aligning manufacturing capacity with the levels of automotive production, which includes approximately $10 million for programs approved as of June 30, 2024, primarily related to the Signal and Power Solution segment. Additionally, as we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further adjust our cost structure and optimize our manufacturing footprint. The Company plans to implement additional restructuring activities in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing regional automotive production levels and locations, to improve the efficiency and utilization of other locations and in order to increase investment in advanced technologies and engineering. Such future restructuring actions are dependent on market conditions, customer actions and other factors.
Previous wording
Refer to Note 8. Debt to the consolidated financial statements contained herein for additional information.
Current wording
The decrease in interest expense during the three and six months ended June 30, 2024 compared to 2023 reflects the repayment of the Tranche A Term Loan in October 2023. Refer to Note 8. Debt to the consolidated financial statements contained herein for additional information.
Previous wording
Other income, net for the three months ended March 31, 2024 includes interest income of $20 million.
Current wording
Other income, net for the three and six months ended June 30, 2024 includes interest income of $16 million and $36 million, respectively, and gains of $3 million and $2 million, respectively, recognized for the change in fair value of publicly traded equity securities.
Previous wording
Other expense, net for the three months ended March 31, 2023 includes an impairment loss of $18 million recognized for Aptiv’s equity investments without readily determinable fair values and losses of $3 million recognized for the change in fair value of publicly traded equity securities, partially offset by interest income of $22 million.
Current wording
Other income, net for the three and six months ended June 30, 2023 includes interest income of $24 million and $46 million, respectively, partially offset by losses of $3 million and $6 million, respectively, recognized for the change in fair value of publicly traded equity securities and an impairment loss of $18 million recognized for Aptiv’s equity investments without readily determinable fair values for the six months ended June 30, 2023.
Previous wording
The Company’s effective tax rate for the three months ended March 31, 2024 includes net discrete tax expense of approximately $7 million, primarily related to changes in the tax benefits of vested share-based compensation and changes in accruals for unremitted earnings. The Company’s effective tax rate for the three months ended March 31, 2023 includes net discrete tax benefits of approximately $3 million, primarily related to changes in reserves.
Current wording
The Company’s effective tax rate for the three and six months ended June 30, 2024 includes net discrete tax benefits of approximately $27 million and $20 million, respectively, primarily related to a business reorganization that occurred in the second quarter of 2024. Also included as a discrete item in the effective tax rate for the three months ended June 30, 2024 is the beneficial impact of approximately 8 points resulting from the Motional funding and ownership restructuring transactions, as described further in Note 21. Investment in Affiliates to the consolidated financial statements contained herein for additional information. There was no tax expense associated with these gains as Aptiv’s interest in Motional is exempt from capital gains tax in the jurisdiction in which it is owned. The Company’s effective tax rate for the three and six months ended June 30, 2023 includes net discrete tax benefits of approximately $22 million and $25 million, respectively, primarily related to changes in tax law and changes in reserves.
Previous wording
On December 15, 2022, the European Union (the “E.U.”) Member States formally adopted the Framework, which generally provides for a minimum effective tax rate of 15%, as established by the OECD. Many countries have enacted legislation consistent with the Framework effective at the beginning of 2024. The OECD continues to release additional guidance on these rules. The Company has proactively responded to these tax policy changes, as described below, and will continue to closely monitor developments. Our effective tax rate for the three months ended March 31, 2024 includes an unfavorable impact from the enacted Framework.
Current wording
On December 15, 2022, the European Union (the “E.U.”) Member States formally adopted the Framework, which generally provides for a minimum effective tax rate of 15%, as established by the OECD. Many countries have enacted legislation consistent with the Framework effective at the beginning of 2024. The OECD continues to release additional guidance on these rules. The Company has proactively responded to these tax policy changes, as described below, and will continue to closely monitor developments. Our effective tax rate for the six months ended June 30, 2024 includes an unfavorable impact from the enacted Framework.
Previous wording
Equity loss, net of tax reflects the Company’s interest in the results of ongoing operations of entities accounted for as equity method investments. The equity losses recognized by Aptiv for each period presented are primarily attributable to the Motional autonomous driving joint venture.
Current wording
Equity loss, net of tax reflects the Company’s interest in the results of ongoing operations of entities accounted for as equity method investments. The decrease in equity losses recognized by Aptiv during the three and six months ended June 30, 2024 compared to 2023 are primarily attributable to the decrease in Aptiv’s common equity interest in Motional from 50% to approximately 15% as a result of Motional funding and ownership restructuring transactions that were completed in May 2024. Refer to Note 21. Investments in Affiliates to the consolidated financial statements contained herein for additional information.
Previous wording
Our management utilizes Adjusted Operating Income as the key performance measure of segment income or loss to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the operational profitability or loss of our operating segments. Segment Adjusted Operating Income should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Aptiv, which is the most directly comparable financial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP. Segment Adjusted Operating Income, as determined and measured by Aptiv, should also not be compared to similarly titled measures reported by other companies.
Current wording
Our management utilizes Adjusted Operating Income as the key performance measure of segment income or loss to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the operational profitability or loss of our operating segments. Segment Adjusted Operating Income should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Aptiv, which is the most directly comparable financial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP. Segment Adjusted Operating Income, as determined and measured by Aptiv, should also not be compared to similarly titled measures reported by other companies. Refer to Note 19. Segment Reporting to the consolidated financial statements contained herein for additional information.
Previous wording
Net sales, gross margin as a percentage of net sales and Adjusted Operating Income by segment for the three months ended March 31, 2024 and 2023 are as follows:
Current wording
Net sales, gross margin as a percentage of net sales and Adjusted Operating Income by segment for the three and six months ended June 30, 2024 and 2023 are as follows:
Previous wording
As noted in the table above, Adjusted Operating Income for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was impacted by operational performance, volume, including product mix, as well as the impacts of favorable pricing, net of contractual price reductions, of $43 million. Adjusted Operating Income was also impacted by the following items included within Other in the table above:
Current wording
As noted in the table above, Adjusted Operating Income for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was impacted by operational performance, volume, including product mix, as well as the impacts of favorable pricing, net of contractual price reductions of $55 million. Adjusted Operating Income was also impacted by the following items included within Other in the table above:
Previous wording
As of March 31, 2024, we had cash and cash equivalents of $0.9 billion and net debt (defined as outstanding debt less cash and cash equivalents) of $5.3 billion. The following table summarizes our available liquidity, which includes cash, cash equivalents and funds available under our significant committed credit facilities, as of March 31, 2024:
Current wording
As of June 30, 2024, we had cash and cash equivalents of $1.4 billion and net debt (defined as outstanding debt less cash and cash equivalents) of $5.6 billion. The following table summarizes our available liquidity, which includes cash, cash equivalents, short-term investments and funds available under our significant committed credit facilities, as of June 30, 2024:
Previous wording
(1)Availability reduced by less than $1 million in letters of credit issued under the Credit Agreement as of March 31, 2024.
Current wording
(2)Availability reduced by less than $1 million in letters of credit issued under the Credit Agreement as of June 30, 2024.
Previous wording
(2)Based on March 31, 2024 foreign currency rates, subject to the availability of eligible accounts receivable.
Current wording
(3)Based on June 30, 2024 foreign currency rates, subject to the availability of eligible accounts receivable.
Previous wording
We expect existing cash, available liquidity and cash flows from operations to continue to be sufficient to fund our global operating activities, including restructuring payments, capital expenditures and debt obligations. In addition, we expect to continue to repurchase outstanding ordinary shares pursuant to our authorized ordinary share repurchase program, as further described below.
Current wording
We expect existing cash, available liquidity and cash flows from operations to continue to be sufficient to fund our global operating activities, including restructuring payments, capital expenditures and debt obligations. As described below, on August 1, 2024 we entered into an accelerated share repurchase program to repurchase $3.0 billion of our outstanding ordinary shares, which we expect to fund with cash on hand and proceeds from debt, including borrowings under the $2.5 billion unsecured bridge credit facility we entered into on August 1, 2024. We expect to refinance the bridge credit facility with the issuance of new debt or borrowings under other sources of existing liquidity.
Previous wording
We also continue to expect to be able to move funds between different countries to manage our global liquidity needs without material adverse tax implications, subject to current monetary policies. We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Aptiv. As of March 31, 2024, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled approximately $0.9 billion. If additional non-U.S. cash was needed for our U.S. operations, we may be required to accrue and pay withholding if we were to distribute such funds from non-U.S. subsidiaries to the U.S.;
Current wording
We also continue to expect to be able to move funds between different countries to manage our global liquidity needs without material adverse tax implications, subject to current monetary policies. We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Aptiv. As of June 30, 2024, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled approximately $1.3 billion. If additional non-U.S. cash was needed for our U.S. operations, we may be required to accrue and pay withholding if we were to distribute such funds from non-U.S. subsidiaries to the U.S.; however, based on our current liquidity needs and strategies, we do not anticipate a need to accrue and pay such additional amounts.
Previous wording
A summary of the ordinary shares repurchased during the three months ended March 31, 2024 and 2023 is as follows:
Current wording
A summary of the ordinary shares repurchased during the three and six months ended June 30, 2024 and 2023 is as follows:
Previous wording
As of March 31, 2024, approximately $1,015 million of share repurchases remained available under the January 2019 share repurchase program. All previously repurchased shares were retired and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in-capital and retained earnings.
Current wording
As of June 30, 2024, approximately $581 million of share repurchases remained available under the January 2019 share repurchase program. During the period from July 1, 2024 to July 31, 2024, the Company repurchased an additional $66 million worth of shares pursuant to a trading plan with set trading instructions established by the Company. As a result, approximately $515 million of share repurchases remain available under the January 2019 share repurchase program. All previously repurchased shares were retired and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in-capital and retained earnings.
Previous wording
During the three months ended March 31, 2024, Aptiv received a dividend of $7 million from its equity method investments. The dividends were recognized as a reduction to the investment and represented a return on investment included in cash flows from operating activities.
Current wording
During the six months ended June 30, 2024 and 2023, Aptiv received dividends of $7 million and $5 million, respectively, from its equity method investments. The dividends were recognized as a reduction to the investment and represented a return on investment included in cash flows from operating activities.
Previous wording
Technology Investments—During the three months ended March 31, 2024, the Company’s Advanced Safety and User Experience segment made investments totaling approximately $40 million in convertible redeemable preferred shares of StradVision, Inc. (“StradVision”), a provider of deep learning-based camera perception software for automotive applications. The Company previously made investments in StradVision totaling approximately $44 million in prior years. Due to the Company’s redemption rights, the Company’s investment in StradVision is classified as an available-for-sale debt security within other long-term assets in the consolidated balance sheets, with changes in fair value recorded in other comprehensive income.
Current wording
Technology Investments—During the six months ended June 30, 2023, the Company’s Advanced Safety and User Experience segment made investments totaling approximately $40 million in convertible redeemable preferred shares of StradVision, Inc. (“StradVision”), a provider of deep learning-based camera perception software for automotive applications. The Company previously made investments in StradVision totaling approximately $44 million in prior years. Due to the Company’s redemption rights, the Company’s investment in StradVision is classified as an available-for-sale debt security within other long-term assets in the consolidated balance sheets, with changes in fair value recorded in other comprehensive income. Subsequently, in July 2024, Aptiv made an additional investment totaling approximately $24 million in convertible redeemable preferred shares of StradVision.
Previous wording
Aptiv PLC and its wholly-owned subsidiary Aptiv Corporation entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains a senior unsecured credit facility currently consisting of a revolving credit facility of $2 billion (the “Revolving Credit Facility”). The Revolving Credit Facility matures on June 24, 2026. As of September 30, 2023, the Company also maintained a senior unsecured credit facility in the form of a term loan (the “Tranche A Term Loan”). On October 27, 2023, the Company fully repaid the outstanding principal balance of $301 million on the Tranche A Term Loan, utilizing cash on hand. Aptiv Global Financing Limited (“AGFL”), a wholly-owned subsidiary of Aptiv PLC, previously executed a joinder agreement to the Credit Agreement, which allows it to act as a borrower under the Credit Agreement, and a guaranty supplement, under which AGFL guarantees the obligations under the Credit Agreement, subject to certain exceptions.
Current wording
Aptiv PLC and its wholly-owned subsidiary Aptiv Corporation entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains a senior unsecured credit facility currently consisting of a revolving credit facility of $2 billion (the “Revolving Credit Facility”). The Revolving Credit Facility matures on June 24, 2026. As of September 30, 2023, the Company also maintained a senior unsecured credit facility in the form of a term loan (the “Tranche A Term Loan”). On October 27, 2023, the Company fully repaid the outstanding principal balance of $301 million on the Tranche A Term Loan, utilizing cash on hand. Aptiv Global Financing Designated Activity Company (“AGF DAC”, formerly known as Aptiv Global Financing Limited), a wholly-owned subsidiary of Aptiv PLC, previously executed a joinder agreement to the Credit Agreement, which allows it to act as a borrower under the Credit Agreement, and a guaranty supplement, under which AGF DAC guarantees the obligations under the Credit Agreement, subject to certain exceptions.
Previous wording
The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on June 24, 2021, and was further amended on April 19, 2023. The June 2021 amendment, among other things, (1) refinanced and replaced the term loan A and revolver with a new term loan A that matured in 2026, and a new five-year revolving credit facility with aggregate commitments of $2 billion, (2) utilized the Company’s existing sustainability-linked metrics and commitments, that, if achieved, would change the facility fee and interest rate margins as described below, and (3) established the leverage ratio maintenance covenant that requires the Company to maintain total net leverage (as calculated in accordance with the Credit Agreement) of less than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement) and allowed for dividends and other payments on equity. Effective from the date of the April 2023 amendment, all interest rate benchmarks within the Credit Agreement that were previously based on the London Interbank Offered Rate (“LIBOR”) were transitioned to a rate based on the Secured Overnight Financing Rate (“SOFR”). The Credit Agreement also contains an accordion feature that permits Aptiv to increase, from time to time, the aggregate borrowing capacity under the Credit Agreement by up to an additional $1 billion upon Aptiv’s request, the agreement of the lenders participating in the increase, and the approval of the Administrative Agent. Borrowings under the Credit Agreement are prepayable at Aptiv’s option without premium or penalty.
Current wording
The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on June 24, 2021, and was further amended on April 19, 2023. The June 2021 amendment, among other things, (1) refinanced and replaced the term loan A and revolver with a new term loan A that matured in 2026, and a new five-year revolving credit facility with aggregate commitments of $2 billion, (2) utilized the Company’s existing sustainability-linked metrics and commitments, that, if achieved, would change the facility fee and interest rate margins as described below, and (3) established the leverage ratio maintenance covenant that requires the Company to maintain total net leverage (as calculated in accordance with the Credit Agreement) of less than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement) and allowed for dividends and other payments on equity. Effective from the date of the April 2023 amendment, all interest rate benchmarks within the Credit Agreement that were previously based on the London Interbank Offered Rate were transitioned to a rate based on the Secured Overnight Financing Rate (“SOFR”). The Credit Agreement also contains an accordion feature that permits Aptiv to increase, from time to time, the aggregate borrowing capacity under the Credit Agreement by up to an additional $1 billion upon Aptiv’s request, the agreement of the lenders participating in the increase, and the approval of the Administrative Agent. Borrowings under the Credit Agreement are prepayable at Aptiv’s option without premium or penalty.
Previous wording
As of March 31, 2024, Aptiv had no amounts outstanding under the Revolving Credit Facility and less than $1 million in letters of credit were issued under the Credit Agreement. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility. The maximum amount drawn under the Revolving Credit Facility during the three months ended March 31, 2024 was $50 million.
Current wording
As of June 30, 2024, Aptiv had no amounts outstanding under the Revolving Credit Facility and less than $1 million in letters of credit were issued under the Credit Agreement. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility. No amounts were drawn on the Revolving Credit Facility during the six months ended June 30, 2024.
Previous wording
The Applicable Rate under the Credit Agreement, as well as the facility fee, may increase or decrease from time to time based on changes in the Company’s credit ratings and whether the Company achieves or fails to achieve certain sustainability-linked targets with respect to greenhouse gas emissions and workplace safety. Such adjustments may be up to 0.04% per annum on interest rate margins on the Revolving Credit Facility, 0.02% per annum on interest rate margins on the Tranche A Term Loan (prior to its repayment, as described above) and 0.01% per annum on the facility fee. Accordingly, the interest rate is subject to fluctuation during the term of the Credit Agreement based on changes in the ABR, SOFR, changes in the Company’s corporate credit ratings or whether the Company achieves or fails to achieve its sustainability-linked targets. The Credit Agreement also requires that Aptiv pay certain facility fees on the Revolving Credit Facility, which are also subject to adjustment based on the sustainability-linked targets as described above, and certain letter of credit issuance and fronting fees. The Company achieved the sustainability-linked targets for the 2022 calendar year, and the interest rate margins and facility fees were reduced from the Applicable Rates, by the amounts specified above, effective in the third quarter of 2023.
Current wording
The Applicable Rate under the Credit Agreement, as well as the facility fee, may increase or decrease from time to time based on changes in the Company’s credit ratings and whether the Company achieves or fails to achieve certain sustainability-linked targets with respect to greenhouse gas emissions and workplace safety. Such adjustments may be up to 0.04% per annum on interest rate margins on the Revolving Credit Facility, 0.02% per annum on interest rate margins on the Tranche A Term Loan (prior to its repayment, as described above) and 0.01% per annum on the facility fee. Accordingly, the interest rate is subject to fluctuation during the term of the Credit Agreement based on changes in the ABR, SOFR, changes in the Company’s corporate credit ratings or whether the Company achieves or fails to achieve its sustainability-linked targets. The Credit Agreement also requires that Aptiv pay certain facility fees on the Revolving Credit Facility, which are also subject to adjustment based on the sustainability-linked targets as described above, and certain letter of credit issuance and fronting fees.
Previous wording
As further described in Note 8. Debt to the consolidated financial statements contained herein, Aptiv PLC, Aptiv Corporation and AGFL are each potential borrowers under the Credit Agreement, under which such borrowings would be guaranteed by each of the other two entities. Aptiv PLC issued the 2015 Euro-denominated Senior Notes, 2016 Euro-denominated Senior Notes, 2016 Senior Notes, 2019 Senior Notes and 2021 Senior Notes. In February 2022, Aptiv Corporation and AGFL were added as guarantors on each series of outstanding senior notes previously issued by Aptiv PLC. AGFL was added as a joint and several co-issuer of the 2021 Senior Notes in December 2021, effective as of the date of issuance. Aptiv PLC and Aptiv Corporation jointly issued the 2022 Senior Notes, which are guaranteed by AGFL. Together, Aptiv PLC, Aptiv Corporation and AGFL comprise the “Obligor Group.” All other consolidated direct and indirect subsidiaries of Aptiv PLC are not subject to any guarantee under any series of notes outstanding (the “Non-Guarantors”). The guarantees rank equally in right of payment with all of the guarantors’ existing and future senior indebtedness, are effectively subordinated to any of their existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness and are structurally subordinated to the indebtedness of each of their existing and future subsidiaries that is not a guarantor.
Current wording
As further described in Note 8. Debt to the consolidated financial statements contained herein, Aptiv PLC, Aptiv Corporation and AGF DAC are each potential borrowers under the Credit Agreement, under which such borrowings would be guaranteed by each of the other two entities. Aptiv PLC issued the 2015 Euro-denominated Senior Notes, 2016 Euro-denominated Senior Notes, 2016 Senior Notes, 2019 Senior Notes and 2021 Senior Notes. In February 2022, Aptiv Corporation and AGF DAC were added as guarantors on each series of outstanding senior notes previously issued by Aptiv PLC. AGF DAC was added as a joint and several co-issuer of the 2021 Senior Notes in December 2021, effective as of the date of issuance. Aptiv PLC and Aptiv Corporation jointly issued the 2022 Senior Notes, which are guaranteed by AGF DAC. In 2024, Aptiv PLC and AGF DAC jointly issued the 2024 Euro-denominated Senior Notes, which are guaranteed by Aptiv Corporation. Together, Aptiv PLC, Aptiv Corporation and AGF DAC comprise the “Obligor Group.” All other consolidated direct and indirect subsidiaries of Aptiv PLC are not subject to any guarantee under any series of notes outstanding (the “Non-Guarantors”). The guarantees rank equally in right of payment with all of the guarantors’ existing and future senior indebtedness, are effectively subordinated to any of their existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness and are structurally subordinated to the indebtedness of each of their existing and future subsidiaries that is not a guarantor.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Cost of sales decreased $288 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as summarized below. The Company’s material cost of sales was approximately 50% and 55% of net sales in the six months ended June 30, 2024 and 2023, respectively.
Current report — wording carried from elsewhere
(a)Presented net of contractual price reductions for gross margin variance.
Current report — wording carried from elsewhere
The decrease in cost of sales reflects the impacts of improved operational performance, currency exchange and decreased volumes. Cost of sales was also impacted by the following items in Other above:
Current report — wording carried from elsewhere
As noted in the table above, Adjusted Operating Income for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was impacted by operational performance, volume, including product mix, as well as the impacts of favorable pricing, net of contractual price reductions of $98 million. Adjusted Operating Income was also impacted by the following items included within Other in the table above:
Current report — wording carried from elsewhere
On July 29, 2024, our Board of Directors authorized a new share repurchase program to repurchase up to $5.0 billion of our outstanding ordinary shares. This share repurchase program provides for share purchases in the open market or in privately negotiated transactions (which may include derivative transactions, including an accelerated share repurchase program (“ASR”)), depending on share price, market conditions and other factors, as determined by the Company. This program will commence following completion of the Company’s $2.0 billion January 2019 share repurchase program.
Current report — wording carried from elsewhere
Motional Joint Venture Funding and Ownership Restructuring Transactions—On April 19, 2024, Aptiv and Hyundai Motor Group (“Hyundai”) entered into an agreement to restructure Aptiv’s ownership interest in Motional and for Hyundai to provide additional funding to Motional, each as described below. Prior to these transactions, Motional was 50% owned by each of Aptiv and Hyundai.
Current report — wording carried from elsewhere
The Company achieved the sustainability-linked targets for the 2023 calendar year, and the interest rate margins and facility fees were reduced from the Applicable Rates, by the amounts specified above, effective in the third quarter of 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The Company recorded employee-related and other restructuring charges totaling approximately $11 million during the three months ended March 31, 2023.
Previous report — wording carried elsewhere
however, based on our current liquidity needs and strategies, we do not anticipate a need to accrue and pay such additional amounts.