Key points for investors:
- Corporate action: Aptiv completed the separation of its Electrical Distribution Systems (EDS) business into a new public company, Versigent, positioning New Aptiv to focus on advanced software and optimized hardware across automotive and non-automotive end markets.
- Q1 results (Total Aptiv basis unless noted): revenue ~$5.1B, adjusted revenue +1% year-over-year (New Aptiv pro forma excludes EDS); adjusted EBITDA $752M; EPS $1.71 (record); free cash flow negative ~$362M, reflecting ~ $260M of transaction payments tied to the separation.
- New Aptiv trends: 9% growth in non-automotive revenue and 10% growth in software & services; margin expansion of ~30 bps excluding FX and commodity impacts. Bookings momentum strong: $7B of new awards announced in the quarter (Kevin stated $4.6B in Q1 awards for New Aptiv lines) and management expects >$20B of bookings in 2026 for New Aptiv.
- Segment highlights: Intelligent Systems revenue ~$1.4B (-1% y/y) impacted by program cancellations in China and supplier-related production disruption at a large North American customer; Engineered Components revenue ~$1.7B (flat) with strength in non-automotive and headwinds in China automotive. EDS (to be discontinued) revenue ~$2.2B (+3% adjusted).
- Guidance (New Aptiv, pro forma): Full-year 2026 adjusted revenue growth ~4% at midpoint; adjusted EBITDA ~$2.4B and margin ~18.6% at midpoint; EPS $5.70–$6.10; free cash flow ~$750M at midpoint. Q2 midpoint: revenue growth ~2%, adjusted EBITDA ~$580M, EPS ~$1.40.
- Risks and headwinds: elevated input-cost inflation (notably resins and certain metals such as copper, silver, gold) driven by the Middle East conflict; FX had net positive y/y impact but commodity inflation has increased since prior guidance. Management expects to offset a significant portion via internal performance initiatives and customer pass-throughs but acknowledges some timing lag on recoveries.
- Capital allocation and balance sheet: Pro forma gross leverage ~2.3x and net leverage ~1.9x post-spin; $75M of share repurchases in Q1 and continued share repurchase program; $70M of annualized stranded costs from the spin expected to be eliminated by end of 2027; management remains focused on bolt-on M&A and returning excess cash to shareholders.
- Strategic opportunities: management highlighted accelerating traction outside automotive (aerospace, robotics, drones, energy storage, data center/space-related interconnects) and strong pipeline for software, compute, sensors and high-speed interconnects. They expect some inorganic (bolt-on) M&A to meaningfully accelerate non-automotive expansion.
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