Aptiv PLC
For the period ended Sep 30, 2024. Filed Oct 31, 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.
Sep 30, 2024 · Filed Oct 31, 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 2024-06-30; filed 2024-08-01.
0001521332-24-000059
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001521332-24-000073
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 183 previous paragraphs and 198 current paragraphs.
107 unchanged; 63 reworded; 22 added; 11 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 21 previous and 23 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 (22)
Current report
On October 15, 2024, Aptiv PLC filed a preliminary proxy statement relating to a proposed transaction in which Aptiv will establish a new publicly listed parent company, Aptiv Holdings Limited (“New Aptiv”), a company that, like Aptiv PLC, will be incorporated under the laws of Jersey, but which will be resident for tax purposes in Switzerland, rather than Ireland, as is currently the case for Aptiv PLC. We do not expect any material changes in operations as a result of the proposed transaction. The transaction is subject to approval by shareholder vote and sanction by the Royal Court of Jersey. There can be no assurance as to when or if the proposed transaction will be completed.
Current report
•$37 million of increased commodity pass-through costs; and
Current report
•$34 million of increased commodity pass-through costs.
Current report
SG&A during the three months ended September 30, 2024 also includes a credit loss recovery of approximately $25 million related to a supply relationship in Europe.
Current report
The increase in interest expense during the three and nine months ended September 30, 2024 compared to 2023 primarily reflects the issuance of €750 million in aggregate principal amount of 4.25% Euro-denominated senior unsecured notes due 2036 (the “2024 Euro-denominated Senior Notes”) in June 2024, the $2.5 billion senior unsecured bridge facility borrowings under a Bridge Credit Agreement (the “Bridge Credit Agreement”) entered into in August 2024, borrowings under the $600 million senior unsecured credit facility consisting of a term loan (the “Term Loan A”) entered into in August 2024, the issuance of $1,650 million in aggregate principal amount of senior unsecured notes (the “2024 Senior Notes) in September 2024 and the issuance of $500 million in aggregate principal amount of junior subordinated notes (the “2024 Junior Notes”) in September 2024.
Current report
The Bridge Credit Agreement, which was utilized to initially fund a portion of the accelerated share repurchase program, was fully repaid and terminated during the three months ended September 30, 2024 using proceeds from the issuance of the new Term Loan A and the issuance of the 2024 Senior Notes and the 2024 Junior Notes. Refer to Note 8. Debt and Note 12. Shareholders’ Equity and Net Income Per Share to the consolidated financial statements contained herein for additional information.
Current report
•$9 million of unfavorable foreign currency impacts; offset by
Current report
•A credit loss recovery of approximately $25 million related to a supply relationship in Europe.
Current report
•Approximately $50 million of increased depreciation, primarily as a result of a higher fixed asset base; and
Current report
•$27 million of increased SG&A expense, not including the impact of other acquisition and portfolio project costs.
Current report
Share Repurchase Programs
Current report
Under the terms of the ASR Agreements, on August 2, 2024, the Company made an aggregate payment of $3.0 billion (the “Repurchase Price”) and received initial deliveries of approximately 30.8 million ordinary shares with a value of $2.25 billion, which were retired immediately and recorded as a reduction to shareholders’ equity. Aptiv incurred approximately $4 million of direct costs in connection with the ASR Agreements. Given the Company’s ability to settle in shares, as described below, the remaining $750 million prepaid forward contract was classified as a reduction to additional paid-in capital as of September 30, 2024. The Company initially funded the accelerated share repurchase program with cash on hand and borrowings under the Bridge Credit Agreement. The Bridge Credit Agreement was subsequently repaid and terminated during the three months ended September 30, 2024 using proceeds from the Term Loan A and issuance of the 2024 Senior Notes and 2024 Junior Notes, as further described in Note 8. Debt to the consolidated financial statements contained herein.
Current report
Technology Investments—In September 2024, the Company’s Advanced Safety and User Experience segment made an investment totaling approximately 399 million RMB (approximately $57 million, using foreign currency rates on the investment date) in preferred equity of MAXIEYE Automotive Technology (Ningbo) Co., Ltd. (“Maxieye”), a provider of advanced driver-assistance systems and autonomous driving applications. Due to the Company’s redemption rights, the Company’s investment in Maxieye 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. The Company also agreed to invest an additional 171 million RMB (approximately $24 million, using September 30, 2024 foreign currency rates) in preferred equity of Maxieye, contingent on the achievement of certain technical milestones and the satisfaction of customary closing conditions.
Current report
Term Loan A Credit Agreement
Current report
On August 19, 2024, Aptiv PLC and its wholly-owned subsidiaries AGF DAC and Aptiv Corporation entered into a new senior unsecured term loan A credit agreement (the “Term Loan A Credit Agreement”) with, among others, JPMorgan Chase
Current report
Bank, N.A., as Administrative Agent, under which it maintains a senior unsecured credit facility consisting of a term loan (the “Term Loan A”) in aggregate principal amount of $600 million. Aptiv incurred approximately $2 million of issuance costs in connection with the Term Loan A.
Current report
Proceeds from the Term Loan A were used to repay a portion of the loans incurred under the Bridge Credit Agreement during the three months ended September 30, 2024. This transaction was accounted for as a modification of debt in accordance with ASC Topic 470-50, Debt Modifications and Extinguishments. Accordingly, a pro-rata portion of the unamortized fees from the Bridge Credit Agreement in the amount of $4 million was transferred to the Term Loan A and, together with the $2 million of direct issuance costs referenced above, will be amortized to interest expense over the term of the Term Loan A.
Current report
The Term Loan A matures on August 19, 2027. Borrowings under the Term Loan A Credit Agreement are prepayable at Aptiv’s option without premium or penalty. No principal payment is required until the outstanding principal amount is due in full on the maturity date.
Current report
The interest rate period with respect to SOFR interest rate options can be set at one-, three-, or six-months as selected by Aptiv in accordance with the terms of the Term Loan A Credit Agreement (or other period as may be agreed by the applicable lenders). Aptiv may elect to change the selected interest rate option in accordance with the provisions of the Term Loan A Credit Agreement. As of September 30, 2024, Aptiv selected the one-month SOFR interest rate option on the Term Loan A, and the rate effective as of September 30, 2024, as detailed in the table below, was based on the Company’s current credit rating and the Term Loan Applicable Rate for the Term Loan A Credit Agreement:
Current report
As of September 30, 2024, all obligations under the Term Loan A Credit Agreement were borrowed by AGF DAC and jointly and severally guaranteed by Aptiv PLC and Aptiv Corporation.
Current report
Senior and Junior Unsecured Notes
Current report
(1)Represents fixed-to-fixed reset rate junior subordinated unsecured notes.
Removed paragraphs (11)
Previous report
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 report
•Approximately $32 million of increased bad debt expense, primarily related to a supply relationship in Europe; and
Previous report
•Approximately $33 million of increased bad debt expense, primarily related to a supply relationship in Europe; and
Previous report
•Approximately $35 million of increased depreciation, primarily as a result of a higher fixed asset base.
Previous report
Share Repurchases
Previous report
New Share Repurchase Authorization
Previous report
Accelerated Share Repurchase Agreement
Previous 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.
Previous report
Bridge Credit Agreement
Previous 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.
Previous report
Senior Unsecured Notes
Reworded paragraphs (63)
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 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:
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 nine months ended September 30, 2024. This discussion should be read in conjunction with Item 1. Financial Statements. Our MD&A is presented in eight sections:
Previous wording
We are a leading global technology and mobility architecture company primarily serving the automotive sector. We deliver end-to-end mobility solutions enabling our customers’ transition to more electrified, software-defined vehicles. We design and manufacture vehicle components and provide electrical, electronic and active safety technology solutions to the global automotive and commercial vehicle markets, creating the software and hardware foundation for vehicle features and functionality. Our Advanced Safety and User Experience segment is focused on providing the necessary software and advanced computing platforms, and our Signal and Power Solutions segment is focused on providing the requisite networking architecture required to support the integrated systems in today’s complex vehicles. Together, our businesses develop the ‘brain’ and the ‘nervous system’ of increasingly complex vehicles, providing integration of the vehicle into its operating environment.
Current wording
We are a global technology company focused on making the world safer, greener and more connected. We deliver end-to-end mobility solutions enabling our customers’ transition to more electrified, software-defined vehicles. We design and manufacture vehicle components and provide electrical, electronic and active safety technology solutions to the global automotive and commercial vehicle markets, creating the software and hardware foundation for vehicle features and functionality. Our Advanced Safety and User Experience segment is focused on providing the necessary software and advanced computing platforms, and our Signal and Power Solutions segment is focused on providing the requisite networking architecture required to support the integrated systems in today’s complex vehicles. Together, our businesses develop the ‘brain’ and the ‘nervous system’ of increasingly complex vehicles, providing integration of the vehicle into its operating environment.
Previous 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).
Current wording
Our total net sales during the three and nine months ended September 30, 2024 were $4.9 billion and $14.8 billion, a decrease of 5% and 2% compared to the same periods of 2023, respectively. Our volumes decreased 7% for the three months ended September 30, 2024, which reflects volume declines in all regions, as well as decreased global automotive production of 5% (down 5% 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 3% for the nine months ended September 30, 2024, which primarily reflects volume declines in Europe and North America, as well as decreased global automotive production of 2% (down 2% 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 six months ended June 30, 2024 was flat (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 nine months ended September 30, 2024 decreased 2% (down 2% on an AWM basis).
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, 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.
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 $2.43 per diluted share) during the nine months ended September 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 are focused on maintaining a low fixed cost structure that provides us flexibility to remain profitable at all points of the traditional vehicle industry production cycle. As a result, approximately 97% of our hourly workforce is located in best cost countries. Furthermore, we have substantial operational flexibility by leveraging a large workforce of contingent workers, which represented approximately 27% of the hourly workforce as of June 30, 2024. However, we will continue to adjust our cost structure and optimize our manufacturing footprint in response to changes in the global and regional automotive markets and in order to increase investment in advanced technologies and engineering, as evidenced by our ongoing restructuring programs focused on reducing our global overhead costs and on the continued rotation of our manufacturing footprint to best cost locations in Europe. 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 refine our cost structure.
Current wording
We are focused on maintaining a low fixed cost structure that provides us flexibility to remain profitable at all points of the traditional vehicle industry production cycle. As a result, approximately 97% of our hourly workforce is located in best cost countries. Furthermore, we have substantial operational flexibility by leveraging a large workforce of contingent workers, which represented approximately 28% of the hourly workforce as of September 30, 2024. However, we will continue to adjust our cost structure and optimize our manufacturing footprint in response to changes in the global and regional automotive markets and in order to increase investment in advanced technologies and engineering, as evidenced by our ongoing restructuring programs focused on reducing our global overhead costs and on the continued rotation of our manufacturing footprint to best cost locations in Europe. 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 refine our cost structure.
Previous 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.
Current wording
We have a strong balance sheet with gross debt of approximately $9.7 billion and substantial available liquidity of approximately $3.9 billion as of September 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 and Six Months Ended June 30, 2024 versus Three and Six Months Ended June 30, 2023
Current wording
Three and Nine Months Ended September 30, 2024 versus Three and Nine Months Ended September 30, 2023
Previous wording
The results of operations for the three and six months ended June 30, 2024 and 2023 were as follows:
Current wording
The results of operations for the three and nine months ended September 30, 2024 and 2023 were as follows:
Previous wording
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 wording
Total net sales for the three months ended September 30, 2024 decreased 5% compared to the three months ended September 30, 2023. Our volumes decreased 7% for the period, which reflects volume declines in all regions, with decreased global automotive production of 5% (down 5% on an AWM basis). The decline in volumes were partially offset by impacts of favorable pricing, net of contractual price reductions, of $45 million.
Previous 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.
Current wording
Total net sales for the nine months ended September 30, 2024 decreased 2% compared to the nine months ended September 30, 2023. Our volumes decreased 3% for the period, which primarily reflects volume declines in Europe and North America, with decreased global automotive production of 2% (down 2% on an AWM basis). The decline in volumes were partially offset by impacts of favorable pricing, net of contractual price reductions, of $143 million. In addition, our net sales reflect net unfavorable foreign currency impacts, primarily related to the Chinese Yuan Renminbi, partially offset by impacts related to the Euro.
Previous 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.
Current wording
Cost of sales decreased $270 million for the three months ended September 30, 2024 compared to the three months ended September 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 September 30, 2024 and 2023, respectively.
Previous 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:
Current wording
The decrease in cost of sales reflects impacts of improved operational performance and decreased volumes, partially offset by the impacts from currency exchange. Cost of sales was also impacted by the following items in Other above:
Previous wording
•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 wording
•Approximately $15 million of increased depreciation, primarily as a result of a higher fixed asset base, which includes long-lived asset impairment charges of $3 million.
Previous wording
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 wording
Cost of sales decreased $558 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as summarized below. The Company’s material cost of sales was approximately 50% and 55% of net sales in the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
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 wording
The decrease in cost of sales reflects the 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
•Approximately $25 million of increased depreciation, which includes long-lived asset impairment charges of $14 million.
Current wording
•Approximately $60 million of increased depreciation, primarily as a result of a higher fixed asset base, which includes long-lived asset impairment charges of $17 million; and
Previous 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.
Current wording
Selling, general and administrative expense (“SG&A”) remained relatively consistent as a percentage of net sales for the three and nine months ended September 30, 2024 compared to 2023, and primarily includes administrative expenses, information technology costs, incentive compensation related costs, acquisition and project portfolio related costs and selling and marketing expenses.
Previous 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.
Current wording
Amortization expense reflects the non-cash charge related to definite-lived intangible assets. Amortization during the three and nine months ended September 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 $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.
Current wording
The Company recorded employee-related and other restructuring charges totaling approximately $16 million and $125 million during the three and nine months ended September 30, 2024, respectively. The charges recorded during the three and nine months ended September 30, 2024 reflect programs to align manufacturing capacity with the current levels of automotive production in North America and Asia Pacific. The charges recorded during the nine months ended September 30, 2024 also included the recognition of approximately $55 million for a program initiated in the fourth quarter of 2023 focused on global salaried workforce optimization, primarily in the European region. We expect to make cash payments of approximately $80 million over the next twelve months pursuant to currently implemented restructuring programs.
Previous wording
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 wording
The Company recorded employee-related and other restructuring charges totaling approximately $28 million and $81 million during the three and nine months ended September 30, 2023, respectively. The charges recorded during the nine months ended September 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.
Previous 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.
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 $45 million for programs approved as of September 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
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.
Current wording
Other income, net for the three and nine months ended September 30, 2024 includes interest income of $31 million and $67 million, respectively, partially offset by losses of $5 million and $3 million, respectively, recognized for the change in fair value of publicly traded equity securities. Also, as further discussed in Note 8. Debt to the consolidated financial statements contained herein, during the three months ended September 30, 2024, Aptiv recorded a loss on extinguishment of debt of $12 million in conjunction with the repayment and termination of the Bridge Credit Agreement and redemption of the entire $700 million aggregate principal amount outstanding of the 2.396% senior unsecured notes due 2025.
Previous 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.
Current wording
Other income, net for the three months ended September 30, 2023 includes interest income of $30 million. Other income, net for the nine months ended September 30, 2023 includes interest income of $76 million, partially offset by an impairment loss of $18 million recognized for Aptiv’s equity investments without readily determinable fair values and $6 million recognized for the change in fair value of publicly traded equity securities.
Previous 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.
Current wording
The Company’s effective tax rate for the three and nine months ended September 30, 2024 includes net discrete tax benefits of approximately $45 million and $65 million, respectively, primarily related to changes in valuation allowances and a business reorganization. Also included as a discrete item in the effective tax rate for the nine months ended September 30, 2024 is the beneficial impact of approximately 5 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 nine months ended September 30, 2023 includes net discrete tax benefits of approximately $1,386 million and $1,411 million, respectively, primarily related to the Company’s actual and anticipated transfers of intellectual property, as described below.
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 six months ended June 30, 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 nine months ended September 30, 2024 includes an unfavorable impact from the enacted Framework.
Previous wording
In response to the Framework, the Company initiated changes to its corporate entity structure, including intercompany transfers of certain intellectual property to one of its subsidiaries in Switzerland, during the second half of 2023. Furthermore, during the third quarter of 2023, the Company’s Swiss subsidiary was granted a ten year tax incentive, beginning in 2024. The measurement of certain deferred tax assets and associated income tax benefits resulting from these transactions was impacted by tax legislation in Switzerland enacted in the fourth quarter of 2023, which increased the statutory income tax rate, resulting in additional deferred tax benefit impacts, net of valuation allowances. During the second half of 2023, the total income tax benefit recorded as a result of the intercompany transfers of intellectual property, all as described above, combined with other related additional tax expense as a result of the transactions, was approximately $2,080 million.
Current wording
In response to the Framework, the Company initiated changes to its corporate entity structure, including intercompany transfers of certain intellectual property to one of its subsidiaries in Switzerland, during the second half of 2023. Furthermore, during the third quarter of 2023, the Company’s Swiss subsidiary was granted a ten year tax incentive, beginning in 2024. The measurement of certain deferred tax assets and associated income tax benefits resulting from these transactions was impacted by tax legislation in Switzerland enacted in the fourth quarter of 2023, which increased the statutory income tax rate, resulting in additional deferred tax benefit impacts, net of valuation allowances. During the three months ended September 30, 2023 and second half of 2023, the total income tax benefit recorded as a result of the intercompany transfers of intellectual property, all as described above, combined with other related additional tax expense as a result of the transactions, was approximately $1,360 million and $2,080 million, respectively.
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 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.
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 nine months ended September 30, 2024 compared to 2023 is 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
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:
Current wording
Net sales, gross margin as a percentage of net sales and Adjusted Operating Income by segment for the three and nine months ended September 30, 2024 and 2023 are as follows:
Previous 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:
Current wording
As noted in the table above, Adjusted Operating Income for the three months ended September 30, 2024 as compared to the three months ended September 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 $45 million. Adjusted Operating Income was also impacted by the following items included within Other in the table above:
Previous wording
•Approximately $15 million of increased depreciation, primarily as a result of a higher fixed asset base.
Current wording
•Approximately $15 million of increased depreciation, primarily as a result of a higher fixed asset base; and
Previous wording
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 wording
As noted in the table above, Adjusted Operating Income for the nine months ended September 30, 2024 as compared to the nine months ended September 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 $143 million. Adjusted Operating Income was also impacted by the following items included within Other in the table above:
Previous 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:
Current wording
As of September 30, 2024, we had cash and cash equivalents of $1.1 billion and net debt (defined as outstanding debt less cash and cash equivalents) of $8.5 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 September 30, 2024:
Previous wording
(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 wording
(1)The Company’s Euro-denominated short-term investments, shown based on September 30, 2024 foreign currency rates, 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.
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. 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.
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.
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 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.
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 September 30, 2024, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled approximately $1.0 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.;
Previous wording
In January 2019, the Board of Directors authorized a share repurchase program of up to $2.0 billion of ordinary shares, which commenced in February 2023 following completion of the Company’s $1.5 billion April 2016 share repurchase program. This share repurchase program provides for share purchases in the open market or in privately negotiated transactions, depending on share price, market conditions and other factors, as determined by the Company.
Current wording
In July 2024, the Board of Directors authorized a share repurchase program of up to $5.0 billion of ordinary shares, which commenced in August 2024 following completion of the Company’s $2.0 billion January 2019 share repurchase program. 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.
Previous wording
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 wording
As part of the Company’s 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”).
Previous wording
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 wording
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.
Previous wording
A summary of the ordinary shares repurchased during the three and six months ended June 30, 2024 and 2023 is as follows:
Current wording
A summary of the ordinary shares repurchased during the three and nine months ended September 30, 2024 and 2023 is as follows:
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Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
however, based on our current liquidity needs and strategies, we do not anticipate a need to accrue and pay such additional amounts.
Current report — wording carried from elsewhere
Company’s consolidated financial statements and the Company did not record any incremental gain or loss resulting from this disposition. Furthermore, losses relating to the Russian subsidiary during the held for sale period were de minimis. The former Russian subsidiary is not considered to be a related party of the Company after deconsolidation.
Current report — wording carried from elsewhere
Loans under the Term Loan A Credit Agreement bear interest, at Aptiv’s option, at either (a) ABR or (b) SOFR plus in either case a percentage per annum as set forth in the table below (the “Term Loan Applicable Rate”). The rates under the Term Loan A Credit Agreement on the specified dates are set forth below:
Current report — wording carried from elsewhere
The Term Loan Applicable Rate under the Term Loan A Credit Agreement may increase or decrease from time to time based on changes in the Company’s credit ratings. The interest rate is subject to fluctuation during the term of the Term Loan A Credit Agreement based on changes in the ABR, SOFR or changes in the Company’s corporate credit ratings.
Current report — wording carried from elsewhere
The Term Loan A Credit Agreement contains certain covenants that limit, among other things, the Company’s (and the Company’s subsidiaries’) ability to incur certain additional indebtedness or liens or to dispose of substantially all of its assets. In addition, the Term Loan A Credit Agreement requires that the Company maintain a consolidated leverage ratio (the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, each as defined in the Term Loan A Credit Agreement) of not more 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 Term Loan A Credit Agreement).
Current report — wording carried from elsewhere
The Term Loan A Credit Agreement also contains events of default customary for financings of this type. The Company was in compliance with the Term Loan A Credit Agreement covenants as of September 30, 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried 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.
Previous report — wording carried 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.