Aptiv Reports Fourth Quarter 2023 Financial Results

Record Full Year Revenue, Adjusted Operating Income and Operating Cash Flow

Aptiv PLC (NYSE:APTV), a global technology company focused on making mobility safer, greener and more connected, today reported fourth quarter 2023 U.S. GAAP earnings of $3.22 per diluted share. Excluding special items, fourth quarter earnings totaled $1.40 per diluted share.

Fourth Quarter Financial Highlights Include:

• U.S. GAAP revenue of $4.9 billion, an increase of 6%
  • Revenue increased 2% adjusted for currency exchange, commodity movements and acquisitions, compared to AWM¹ of 7%
• U.S. GAAP net income of $905 million, diluted earnings per share of $3.22
  • Excluding special items, diluted earnings per share of $1.40
• U.S. GAAP operating income margin of 7.2%
  • Adjusted Operating Income margin of 12.2%; Adjusted Operating Income of $600 million; Adjusted EBITDA margin of 15.7%; Adjusted EBITDA of $772 million
• Generated $624 million of cash from operations
• Returned $300 million to shareholders through share repurchases
• Paid-off $301 million Term Loan over two years early

Full Year 2023 Financial Highlights Include:

• U.S. GAAP revenue of $20.1 billion, an increase of 15%
  • Revenue increased 12% adjusted for currency exchange, commodity movements and acquisitions, compared to AWM¹ of 10%
• U.S. GAAP net income of $2,909 million, diluted earnings per share of $10.39
  • Excluding special items, diluted earnings per share of $4.86
• U.S. GAAP operating income margin of 7.8%
  • Adjusted Operating Income margin of 10.6%; Adjusted Operating Income of $2,127 million; Adjusted EBITDA margin of 13.9%; Adjusted EBITDA of $2,788 million
• Generated $1,896 million of cash from operations
• Returned $398 million to shareholders through share repurchases

"Aptiv delivered record revenue, adjusted operating income and operating cash flow for the year, reflecting strong growth across our portfolio and solid operational execution," said Kevin Clark, chairman and chief executive officer. "We also achieved our third year in a row of record new business awards at over $34 billion, a testament to the quality of our portfolio of advanced technologies. As our end markets continue to transition towards a feature-rich, software-defined future, our customers will face increasing challenges involving product complexity, performance and affordability. With our flexible, full-system approach, Aptiv remains uniquely positioned to address these challenges, and we expect our commercial momentum to continue to accelerate in 2024, driving further long-term growth and margin expansion."

Fourth Quarter 2023 Results

For the three months ended December 31, 2023, the Company reported U.S. GAAP revenue of $4.9 billion, an increase of 6% from the prior year period. Adjusted for currency exchange, commodity movements and acquisitions, revenue increased by 2% in the fourth quarter. This reflects growth of 10% in Asia, which includes 12% in China, and 6% in Europe, partially offset by declines of 7% in North America and 6% in South America, our smallest region.

The Company reported fourth quarter 2023 U.S. GAAP net income of $905 million and earnings of $3.22 per diluted share, compared to $233 million and $0.86 per diluted share in the prior year period. Fourth quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $395 million, or $1.40 per diluted share, compared to $361 million, or $1.27 per diluted share in the prior year period.

Fourth quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $600 million, compared to $523 million in the prior year period. Adjusted Operating Income margin was 12.2%, compared to 11.3% in the prior year period, reflecting increased global vehicle production, pricing and the continued easing of supply chain disruption costs. Depreciation and amortization expense totaled $246 million, an increase from $188 million in the prior year period.

Interest expense for the fourth quarter totaled $71 million, an increase from $62 million in the prior year period.

Tax benefit in the fourth quarter of 2023 was $680 million, which primarily reflects a deferred tax benefit of approximately $0.7 billion recognized as a result of transactions entered into as part of a reorganization of the Company's corporate entity structure. Tax expense in the fourth quarter of 2022 was $25 million, resulting in an effective tax rate of approximately 7%.

The Company generated net cash flow from operating activities of $624 million in fourth quarter, compared to $933 million in the prior year period.

Full Year 2023 Results

For the year ended December 31, 2023, the Company reported U.S. GAAP revenue of $20.1 billion, an increase of 15% from the prior year. Adjusted for currency exchange, commodity movements and acquisitions, revenue increased by 12% in 2023. This reflects growth of 17% in Europe, 12% in Asia, which includes 12% in China, 9% in North America and 9% in South America, our smallest region.

For full year 2023, the Company reported U.S. GAAP net income of $2,909 million and earnings of $10.39 per diluted share, compared to $531 million and $1.96 per diluted share in the prior year. Full year 2023 Adjusted Net Income totaled $1,376 million, or $4.86 per diluted share, compared to $967 million, or $3.41 per diluted share, in the prior year.

The Company reported Adjusted Operating Income of $2,127 million for full year 2023, compared to $1,585 million in the prior year. Adjusted Operating Income margin was 10.6% for full year 2023, compared to 9.1% in the prior year, reflecting our growth over market of 2%, increased global vehicle production, pricing and the results from our recent acquisitions. Depreciation and amortization expense totaled $912 million, an increase from $762 million in the prior year.

Interest expense for full year 2023 totaled $285 million, as compared to $219 million in the prior year, which includes impacts from our $2.5 billion debt issuance in the first quarter of 2022 in anticipation of the Wind River Systems, Inc. acquisition and increased interest rates on our variable rate debt while it was outstanding during 2023.

Tax benefit for full year 2023 was $1,928 million, which primarily reflects a deferred tax benefit of approximately $2.1 billion recognized as a result of transactions entered into as part of a reorganization of the Company's corporate entity structure. Tax expense for full year 2022 was $121 million, resulting in an effective tax rate of approximately 12%.

The Company generated net cash flow from operating activities of $1,896 million in 2023, compared to $1,263 million in the prior year. As of December 31, 2023, the Company had cash and cash equivalents of $1.6 billion and total available liquidity of $4.1 billion.

Reconciliations of Adjusted Revenue Growth, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing, which are non-GAAP measures, to the most directly comparable financial measures, respectively, calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP") are provided in the attached supplemental schedules.

Share Repurchase Program

During the fourth quarter of 2023, the Company repurchased 3.8 million shares for approximately $300 million, leaving approximately $1.6 billion available for future share repurchases. For the full year, the Company repurchased 4.7 million shares for approximately $398 million. All repurchased shares were retired.

Full Year 2024 Outlook

The Company's full year 2024 financial guidance is as follows:

Conference Call and Webcast

The Company will host a conference call to discuss these results at 8:00 a.m. (ET) today, which is accessible by dialing +1.800.239.9838 (US) or +1.323.994.2093 (international) or through a webcast at ir.aptiv.com. The conference ID number is 9145297. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Company's website. A replay will be available two hours following the conference call.

Use of Non-GAAP Financial Information

This press release contains information about Aptiv's financial results which are not presented in accordance with GAAP. Specifically, Adjusted Revenue Growth, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are non-GAAP financial measures. Adjusted Revenue Growth represents the year-over-year change in reported net sales relative to the comparable period, excluding the impact on net sales from currency exchange, commodity movements, acquisitions, divestitures and other transactions. Adjusted Operating Income represents net income before interest expense, other income (expense), net, income tax (expense) benefit, equity income (loss), net of tax, 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. Adjusted Operating Income margin is defined as Adjusted Operating Income as a percentage of net sales. Adjusted EBITDA represents net income before depreciation and amortization (including asset impairments), interest expense, income tax (expense) benefit, other income (expense), net, equity income (loss), net of tax, restructuring and other special items.

Adjusted Net Income represents net income attributable to Aptiv before amortization, restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share represents Adjusted Net Income divided by the Adjusted Weighted Average Number of Diluted Shares Outstanding for the period. The Adjusted Weighted Average Number of Diluted Shares Outstanding assumes the application of the if-converted method of share dilution, if not already applied for GAAP purposes of calculating the weighted average number of diluted shares outstanding. Cash Flow Before Financing represents cash provided by (used in) operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and other transactions, the cost of significant technology investments and net proceeds from the divestiture of discontinued operations and other significant businesses.

Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company's financial position, results of operations and liquidity. In particular, management believes Adjusted Revenue Growth, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share and Cash Flow Before Financing are useful measures in assessing the Company's ongoing financial performance that, when reconciled to the corresponding GAAP measure, provide improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance and that may obscure underlying business results and trends. Management also uses these non-GAAP financial measures for internal planning and forecasting purposes.

Such non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the attached supplemental schedules at the end of this press release. Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures of other companies.

About Aptiv

Aptiv is a global technology company that develops safer, greener and more connected solutions enabling a more sustainable future of mobility. Visit aptiv.com.

Forward-Looking Statements

This press release, as well as other statements made by Aptiv PLC (the "Company"), contain forward-looking statements that reflect, when made, the Company's current views with respect to current events, certain investments and acquisitions and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to the Company's operations and business environment, which may cause the actual results of the Company to be materially different from any future results. All statements that address future operating, financial or business performance or the Company's strategies or expectations are forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements are discussed under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's filings with the Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. It should be remembered that the price of the ordinary shares and any income from them can go down as well as up. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law.

APTIV PLC

RECONCILIATION OF NON-GAAP MEASURES

(Unaudited)

In this press release the Company has provided information regarding certain non-GAAP financial measures, including "Adjusted Revenue Growth," "Adjusted Operating Income," "Adjusted EBITDA," "Adjusted Net Income," "Adjusted Net Income Per Share" and "Cash Flow Before Financing." Such non-GAAP financial measures are reconciled to their closest GAAP financial measure in the following schedules.

Adjusted Revenue Growth: Adjusted Revenue Growth is presented as a supplemental measure of the Company's financial performance which management believes is useful to investors in assessing the Company's ongoing financial performance that, when reconciled to the corresponding U.S. GAAP measure, provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance and which may obscure underlying business results and trends. Our management utilizes Adjusted Revenue Growth in its financial decision making process, to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Adjusted Revenue Growth is defined as the year-over-year change in reported net sales relative to the comparable period, excluding the impact on net sales from currency exchange, commodity movements, acquisitions, divestitures and other transactions. Not all companies use identical calculations of Adjusted Revenue Growth, therefore this presentation may not be comparable to other similarly titled measures of other companies.

Adjusted Operating Income: Adjusted Operating Income is presented as a supplemental measure of the Company's financial performance which management believes is useful to investors in assessing the Company's ongoing financial performance that, when reconciled to the corresponding U.S. GAAP measure, provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance and which may obscure underlying business results and trends. Our management utilizes Adjusted Operating Income in its financial decision making process, to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Management also utilizes Adjusted Operating Income as the key performance measure of segment income or loss and for planning and forecasting purposes to allocate resources to our segments, as management also believes this measure is most reflective of the operational profitability or loss of our operating segments. Adjusted Operating Income is defined as net income before interest expense, other income (expense), net, income tax (expense) benefit, equity income (loss), net of tax, amortization, restructuring and other special items. Not all companies use identical calculations of Adjusted Operating Income, therefore this presentation may not be comparable to other similarly titled measures of other companies. Operating income margin represents Operating income as a percentage of net sales, and Adjusted Operating Income margin represents Adjusted Operating Income as a percentage of net sales.

Adjusted EBITDA: Adjusted EBITDA is presented as a supplemental measure of the Company's financial performance which management believes is useful to investors in assessing the Company's ongoing financial performance that, when reconciled to the corresponding U.S. GAAP measure, provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance and which may obscure underlying business results and trends. Our management utilizes Adjusted EBITDA in its financial decision making process, to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Adjusted EBITDA is defined as net income before depreciation and amortization (including asset impairments), interest expense, income tax (expense) benefit, other income (expense), net, equity income (loss), net of tax, restructuring and other special items. Not all companies use identical calculations of Adjusted EBITDA, therefore this presentation may not be comparable to other similarly titled measures of other companies.

Adjusted Net Income and Adjusted Net Income Per Share: Adjusted Net Income and Adjusted Net Income Per Share, which are non-GAAP measures, are presented as supplemental measures of the Company's financial performance which management believes are useful to investors in assessing the Company's ongoing financial performance that, when reconciled to the corresponding U.S. GAAP measure, provide improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance and which may obscure underlying business results and trends. Management utilizes Adjusted Net Income and Adjusted Net Income Per Share in its financial decision making process, to evaluate performance of the Company and for internal reporting, planning and forecasting purposes. Adjusted Net Income is defined as net income attributable to Aptiv before amortization, restructuring and other special items, including the tax impact thereon. Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the Adjusted Weighted Average Number of Diluted Shares Outstanding, as reconciled below, for the period. Not all companies use identical calculations of Adjusted Net Income and Adjusted Net Income Per Share, therefore this presentation may not be comparable to other similarly titled measures of other companies.

Cash Flow Before Financing: Cash Flow Before Financing is presented as a supplemental measure of the Company's liquidity which is consistent with the basis and manner in which management presents financial information for the purpose of making internal operating decisions, evaluating its liquidity and determining appropriate capital allocation strategies. Management believes this measure is useful to investors to understand how the Company's core operating activities generate and use cash. Cash Flow Before Financing is defined as cash provided by (used in) operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and other transactions, the cost of significant technology investments and net proceeds from the divestiture of discontinued operations and other significant businesses. Not all companies use identical calculations of Cash Flow Before Financing, therefore this presentation may not be comparable to other similarly titled measures of other companies. The calculation of Cash Flow Before Financing does not reflect cash used to service debt, pay dividends or repurchase shares and, therefore, does not necessarily reflect funds available for investment or other discretionary uses.

Financial Guidance: The reconciliation of the forward-looking non-GAAP financial measures provided in the Company's financial guidance to the most comparable forward-looking GAAP measure is as follows:

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