Aptiv Reports Third Quarter 2020 Financial Results
DUBLIN, Oct. 29, 2020 /PRNewswire/ -- Aptiv PLC (NYSE: APTV), a global technology company focused on making mobility safer, greener and more connected, today reported third quarter 2020 U.S. GAAP earnings of $1.05 per diluted share. Excluding special items, third quarter earnings totaled $1.13 per diluted share.
Third Quarter Highlights Include:
-- U.S. GAAP revenue of $3.7 billion, an increase of 3%
-- Revenue increased 3% adjusted for currency exchange, commodity
movements and divestitures
-- U.S. GAAP net income of $283 million, diluted earnings per share of
$1.05
-- Excluding special items, diluted earnings per share of $1.13
-- U.S. GAAP operating income margin of 9.9%, operating income of $364
million
-- Adjusted Operating Income margin of 10.6%, Adjusted Operating Income
of $389 million; Adjusted EBITDA of $581 million
-- Generated $559 million of cash from operations
Year-to-Date Highlights Include:
-- U.S. GAAP revenue of $8.9 billion, a decrease of 18%
-- Revenue decreased 16% adjusted for currency exchange, commodity
movements and divestitures; largely resulting from volume declines
associated with the adverse impacts of the COVID-19 pandemic
-- U.S. GAAP net income of $1,486 million, diluted earnings per share of
$5.63; which includes a gain of $5.39 per diluted share resulting from
the completion of the Motional autonomous driving joint venture in the
first quarter
-- Excluding special items, diluted earnings per share of $0.77
-- U.S. GAAP operating income of $1,672 million; which includes a gain of
$1,434 million resulting from the completion of the Motional autonomous
driving joint venture in the first quarter
-- Adjusted Operating Income margin of 4.4%, Adjusted Operating Income
of $391 million; Adjusted EBITDA of $943 million
-- Generated $614 million of cash from operations
"Our third quarter results reflect the efforts we have taken to build a more sustainable business, with a portfolio of advanced technologies driving sustained above market growth despite the ongoing challenging environment," said Kevin Clark, president and chief executive officer. "The actions we have taken to improve our through-cycle resiliency, optimize our industry-leading cost structure and enhance our operational execution resulted in stronger revenue growth and earnings in the quarter. Never has Aptiv's mission of enabling a safer, greener and more connected world had more meaning for our society than it does today. We are confident our technologies aligned to these key megatrends, flexible business model and strong balance sheet position Aptiv for recovery outperformance and sustainable long-term value creation for all of our stakeholders."
Third Quarter 2020 Results
For the three months ended September 30, 2020, the Company reported U.S. GAAP revenue of $3.7 billion, an increase of 3% from the prior year period, despite global vehicle production declines of 4% (4% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue, "AWM") over the same period. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 3% in the third quarter. This reflects growth of 3% in Europe, 11% in Asia, which includes growth of 14% in China, and 3% in South America, partially offset by a decline of 3% in North America.
The Company reported third quarter 2020 U.S. GAAP net income of $283 million and earnings of $1.05 per diluted share, compared to $246 million and $0.96 per diluted share in the prior year period. Third quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $320 million, or earnings of $1.13 per diluted share, compared to $325 million, or $1.27 per diluted share, in the prior year period.
Third quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $389 million, compared to $410 million in the prior year period. Adjusted Operating Income margin was 10.6%, compared to 11.5% in the prior year period, reflecting the stabilization during the quarter of global vehicle production levels. Depreciation and amortization expense totaled $192 million, an increase from $178 million in the prior year period.
Interest expense for the third quarter totaled $38 million, as compared to $42 million in the prior year period.
Tax benefit in the third quarter of 2020 was $2 million, resulting in an effective tax rate of approximately (1)%, as a result of current period net discrete tax benefits of $38 million, or approximately 12 points, primarily due to the favorable tax impacts of certain intragroup reorganizations during the quarter, which are intended to streamline and simplify the Company's operating and legal structure. Tax expense in the third quarter of 2019 was $38 million, resulting in an effective tax rate of approximately 13%.
The Company generated net cash flow from operating activities of $559 million in the third quarter, compared to $325 million in the prior year period.
Year-to-Date 2020 Results
For the nine months ended September 30, 2020, the Company reported U.S. GAAP revenue of $8.9 billion, a decrease of 18% from the prior year period, which includes volume declines of 15% primarily resulting from the impacts of the COVID-19 pandemic, which also resulted in global vehicle production declines of 23% (26% on an AWM basis) over the same period. Adjusted for currency exchange, commodity movements and divestitures, revenue decreased by 16% during the period. This reflects declines of 25% in North America, 16% in Europe, 3% in Asia, which was flat in China, and 15% in South America.
For the 2020 year-to-date period, the Company reported U.S. GAAP net income of $1,486 million and earnings of $5.63 per diluted share, compared to $760 million and $2.95 per diluted share in the prior year period. Year-to-date Adjusted Net Income totaled $206 million, or earnings of $0.77 per diluted share, compared to $940 million, or $3.65 per diluted share, in the prior year period.
The Company reported Adjusted Operating Income of $391 million for the nine months ended September 30, 2020, compared to $1,160 million in the prior year period. Adjusted Operating Income margin was 4.4% for the nine months ended September 30, 2020, compared to 10.8% in the prior year period, primarily as a result of the adverse impacts of the COVID-19 pandemic, which primarily affected the first half of 2020, and included declines in global vehicle production and consumer demand, work stoppages, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from temporary governmental "lock-down" orders for all non-essential activities. Depreciation and amortization expense totaled $556 million, an increase from $539 million in the prior year period.
Interest expense for the nine months ended September 30, 2020 totaled $125 million, as compared to $123 million in the prior year period.
Tax benefit for the nine months ended September 30, 2020 was $6 million, resulting in an effective tax rate of nil. Tax expense in the prior year period was $102 million, resulting in an effective tax rate of approximately 12%.
The Company generated net cash flow from operating activities of $614 million in the nine months ended September 30, 2020, compared to $921 million in the prior year period. As of September 30, 2020, the Company had cash and cash equivalents of $2.1 billion and total available liquidity of $4.5 billion.
Reconciliations of Adjusted Revenue Growth, Adjusted Net Income, Adjusted Net Income Per Share, Adjusted Operating Income, Adjusted EBITDA 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.
Full Year 2020 Outlook
The Company's full year 2020 financial guidance is as follows:
(in millions, except per share
amounts) Full Year 2020
---
Net sales
$12,540 - $12,690
Adjusted operating income
$775 - $825
Adjusted operating income margin 6.2% - 6.5%
Adjusted EBITDA
$1,515 - $1,565
Adjusted net income per share
$1.65 - $1.80
Cash flow from operations $1,050
Capital expenditures $600
Adjusted effective tax rate 10% - 11%
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 +1.800.367.2403 (U.S. and Canada) or +1.334.777.6978 (international) or through a webcast at ir.aptiv.com. The conference ID number is 6173758. 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 and divestitures. Adjusted Operating Income represents net income before interest expense, other income (expense), net, income tax (expense) benefit, equity income (loss), net of tax, restructuring, other acquisition and portfolio project costs, asset impairments, gains (losses) on business divestitures and other transactions and deferred compensation related to acquisitions. Other acquisition and portfolio project costs include costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures. 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, other income (expense), net, income tax (expense) benefit, equity income (loss), net of tax, restructuring and other special items.
Adjusted Net Income represents net income attributable to Aptiv before 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 U.S. GAAP purposes of calculating the weighted average number of diluted shares outstanding. Cash Flow Before Financing represents cash provided by operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and net proceeds from the divestiture of 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 the 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 include, but are not limited to, the following: global and regional economic conditions, including conditions affecting the credit market; uncertainties posed by the COVID-19 pandemic and the difficulty in predicting its future course and its impact on the global economy and the Company's future operations; fluctuations in interest rates and foreign currency exchange rates; the cyclical nature of global automotive sales and production; the potential disruptions in the supply of and changes in the competitive environment for raw material integral to the Company's products; the Company's ability to maintain contracts that are critical to its operations; potential changes to beneficial free trade laws and regulations such as the United States-Mexico-Canada Agreement; the ability of the Company to integrate and realize the expected benefits of recent transactions; the ability of the Company to attract, motivate and/or retain key executives; the ability of the Company to avoid or continue to operate during a strike, or partial work stoppage or slow down by any of its unionized employees or those of its principal customers; and the ability of the Company to attract and retain customers. Additional factors 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
---
(in millions, except per share amounts)
Net sales $
3,668 $
3,559 $
8,854 $
10,761
Operating expenses:
Cost of sales 3,021 2,882 7,693 8,802
Selling, general and administrative 229 262 698 778
Amortization 36 34 107 111
Restructuring 18 61 118 118
Gain on autonomous driving joint venture - (1,434)
Total operating expenses 3,304 3,239 7,182 9,809
Operating income 364 320 1,672 952
Interest expense (38) (42) (125) (123)
Other income (expense), net 1 7 (6) 29
Income before income taxes and equity income 327 285 1,541 858
Income tax benefit (expense) 2 (38) 6 (102)
Income before equity income 329 247 1,547 756
Equity (loss) income, net of tax (24) 5 (40) 12
Net income 305 252 1,507 768
Net income attributable to noncontrolling interest 6 6 2 8
Net income attributable to Aptiv 299 246 1,505 760
Mandatory Convertible Preferred Share dividends (16) (19)
Net income attributable to ordinary shareholders $
283 $
246 $
1,486 $
760
Diluted net income per share:
Diluted net income per share attributable to ordinary $
1.05 $
0.96 $
5.63 $
2.95
shareholders
Weighted average number of diluted shares outstanding 270.38 256.44 267.14 257.74
APTIV PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2020 2019
(Unaudited)
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $
2,122 $
412
Restricted cash 32 16
Accounts receivable, net 2,620 2,569
Inventories 1,229 1,286
Other current assets 586 504
Assets held for sale - 532
Total current assets 6,589 5,319
Long-term assets:
Property, net 3,223 3,309
Operating lease right-of-use assets 375 413
Investments in affiliates 2,047 106
Intangible assets, net 1,095 1,186
Goodwill 2,479 2,407
Other long-term assets 636 719
Total long-term assets 9,855 8,140
Total assets $
16,444 $
13,459
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $
99 $
393
Accounts payable 2,186 2,463
Accrued liabilities 1,294 1,155
Liabilities held for sale - 43
Total current liabilities 3,579 4,054
Long-term liabilities:
Long-term debt 3,935 3,971
Pension benefit obligations 484 483
Long-term operating lease liabilities 294 329
Other long-term liabilities 598 611
Total long-term liabilities 5,311 5,394
Total liabilities 8,890 9,448
Commitments and contingencies
Total Aptiv shareholders' equity 7,363 3,819
Noncontrolling interest 191 192
Total shareholders' equity 7,554 4,011
Total liabilities and shareholders' equity $
16,444 $
13,459
APTIV PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2020 2019
---
(in millions)
Cash flows from operating activities:
Net income $
1,507 $
768
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 556 539
Restructuring expense, net of cash paid - 31
Deferred income taxes 10 14
Income from equity method investments, net of dividends received 46 (9)
Loss on modification of debt 4
Loss on extinguishment of debt - 6
Gain on autonomous driving joint venture, net (1,434)
Other, net 64 74
Changes in operating assets and liabilities:
Accounts receivable, net (51) (173)
Inventories 60 (63)
Accounts payable (144) (19)
Other, net 19 (217)
Pension contributions (23) (30)
Net cash provided by operating activities 614 921
Cash flows from investing activities:
Capital expenditures (489) (619)
Proceeds from sale of property / investments 6 13
Cost of business acquisitions and other transactions, net (49) (23)
Cost of technology investments (1) (4)
Settlement of derivatives 1 1
Net cash used in investing activities (532) (632)
Cash flows from financing activities:
(Decrease) increase in other short and long-term debt, net (400) 118
Repayment of senior notes - (654)
Proceeds from issuance of senior notes, net of issuance costs - 641
Fees related to modification of debt agreements (18)
Proceeds from the public offering of ordinary shares, net of issuance costs 1,115
Proceeds from the public offering of preferred shares, net of issuance costs 1,115
Dividend payments of consolidated affiliates to minority shareholders (6)
Repurchase of ordinary shares (57) (390)
Distribution of Mandatory Convertible Preferred Share cash dividends (16)
Distribution of ordinary share cash dividends (56) (170)
Taxes withheld and paid on employees' restricted share awards (33) (34)
Net cash provided by (used in) financing activities 1,644 (489)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash (1) (10)
Increase (decrease) in cash, cash equivalents and restricted cash 1,725 (210)
Cash, cash equivalents and restricted cash at beginning of the period 429 568
Cash, cash equivalents and restricted cash at end of the period $
2,154 $
358
APTIV PLC
FOOTNOTES
(Unaudited)
1. Segment Summary
Three Months Ended
Nine Months Ended
September 30, September 30,
---
2020 2019 % 2020 2019 %
---
(in millions) (in millions)
Net Sales
---
Signal and Power Solutions $
2,656 $
2,584 3
%
% $
6,421 $
7,731 (17)
Advanced Safety and User Experience 1,020 985 4
%
% 2,452 3,058 (20)
Eliminations and Other (a) (8) (10) (19) (28)
Net Sales $
3,668 $
3,559 $
8,854 $
10,761
Adjusted Operating Income (Loss)
---
Signal and Power Solutions $
322 $
350 (8)
%
% $
404 $
970 (58)
Advanced Safety and User Experience 67 60 12 (13) 190 (107)
% %
Eliminations and Other (a) -
Adjusted Operating Income $
389 $
410 $
391 $
1,160
(a) Eliminations and Other includes the elimination of inter-segment transactions.
2. Weighted Average Number of Diluted Shares Outstanding
The following table illustrates the weighted average shares outstanding used in calculating basic and diluted net income per share attributable to ordinary shareholders for the three and nine months ended September 30, 2020 and 2019:
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
---
(in millions, except per share amounts)
Weighted average ordinary shares outstanding, basic 270.03 255.89 261.22 257.32
Dilutive shares related to RSUs 0.35 0.55 0.28 0.42
Weighted average MCPS Converted Shares - 5.64
Weighted average ordinary shares outstanding, 270.38 256.44 267.14 257.74
including dilutive shares
Net income per share attributable to ordinary shareholders:
Basic $
1.05 $
0.96 $
5.69 $
2.95
Diluted $
1.05 $
0.96 $
5.63 $
2.95
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 and
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.
---
Three Months Ended
September 30, 2020
Reported net sales % change 3
%
Less: foreign currency exchange and
commodities
%
Less: divestitures and other, net
%
Adjusted revenue growth 3
%
Nine Months Ended
September 30, 2020
Reported net sales % change (18)
%
Less: foreign currency exchange and (2)
commodities %
Less: divestitures and other, net
%
Adjusted revenue growth (16)
%
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,
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
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.
---
Consolidated Adjusted Operating Income
Three Months Ended
Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
---
($ in millions)
$ Margin
$ Margin
$ Margin
$ Margin
---
Net income attributable to Aptiv $
299 $
246 $
1,505 $
760
Interest expense 38 42 125 123
Other (income) expense, net (1) (7) 6 (29)
Income tax (benefit) expense (2) 38 (6) 102
Equity loss (income), net of tax 24 (5) 40 (12)
Net income attributable to noncontrolling 6 6 2 8
interest
Operating income $
364 9.9 $
320 9.0 $
1,672 18.9 $
952 8.8
% % % %
---
Restructuring 18 61 118 118
Other acquisition and portfolio project costs 3 17 19 45
Asset impairments 1 4 11
Deferred compensation related to 4 11 12 34
nuTonomy acquisition
Gain on business divestitures and other transactions (1,434)
Adjusted operating income $
389 10.6 $
410 11.5 $
391 4.4 $
1,160 10.8
% % % %
===
Segment Adjusted Operating Income (Loss)
(in millions)
Three Months Ended September 30, 2020 Signal and Advanced Safety Eliminations Total
Power Solutions and User and Other
Experience
---
Operating income $
311 $
53
$ $
364
Restructuring 9 9 18
Other acquisition and portfolio project costs 2 1 3
Deferred compensation related to nuTonomy acquisition 4 4
Adjusted operating income $
322 $
67
$ $
389
Depreciation and amortization (a) $
149 $
43
$ $
192
Three Months Ended September 30, 2019 Signal and Advanced Safety Eliminations Total
Power Solutions and User and Other
Experience
---
Operating income $
292 $
28
$ $
320
Restructuring 46 15 61
Other acquisition and portfolio project costs 11 6 17
Asset impairments 1 1
Deferred compensation related to nuTonomy acquisition 11 11
Adjusted operating income $
350 $
60
$ $
410
Depreciation and amortization (a) $
134 $
44
$ $
178
Nine Months Ended September 30, 2020 Signal and Advanced Safety Eliminations Total
Power Solutions and User and Other
Experience
---
Operating income $
302 $
1,370
$ $
1,672
Restructuring 88 30 118
Other acquisition and portfolio project costs 10 9 19
Asset impairments 4 4
Deferred compensation related to nuTonomy acquisition 12 12
Gain on business divestitures and other transactions (1,434) (1,434)
Adjusted operating income (loss) $
404 $
(13)
$ $
391
Depreciation and amortization (a) $
431 $
125
$ $
556
Nine Months Ended September 30, 2019 Signal and Advanced Safety Eliminations Total
Power Solutions and User and Other
Experience
---
Operating income $
851 $
101
$ $
952
Restructuring 88 30 118
Other acquisition and portfolio project costs 29 16 45
Asset impairments 2 9 11
Deferred compensation related to nuTonomy acquisition 34 34
Adjusted operating income $
970 $
190
$ $
1,160
Depreciation and amortization (a) $
401 $
138
$ $
539
(a) Includes asset impairments.
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
impairment), interest expense,
other income (expense), net,
income tax (expense) benefit,
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.
---
Consolidated Adjusted EBITDA
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(in millions)
Net income attributable to Aptiv $
299 $
246 $
1,505 $
760
Interest expense 38 42 125 123
Other (income) expense, net (1) (7) 6 (29)
Income tax (benefit) expense (2) 38 (6) 102
Equity loss (income), net of tax 24 (5) 40 (12)
Net income attributable to noncontrolling interest 6 6 2 8
Operating income 364 320 1,672 952
Depreciation and amortization 192 178 556 539
EBITDA $
556 $
498 $
2,228 $
1,491
Restructuring 18 61 118 118
Other acquisition and portfolio project costs 3 17 19 45
Deferred compensation related to nuTonomy acquisition 4 11 12 34
Gain on business divestitures and other transactions (1,434)
Adjusted EBITDA $
581 $
587 $
943 $
1,688
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
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.
---
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(in millions, except per share amounts)
Net income attributable to ordinary shareholders $
283 $
246 $
1,486 $
760
Mandatory Convertible Preferred Share dividends 16 19
Net income attributable to Aptiv 299 246 1,505 760
Adjusting items:
Restructuring 18 61 118 118
Other acquisition and portfolio project costs 3 17 19 45
Asset impairments 1 4 11
Deferred compensation related to nuTonomy acquisition 4 11 12 34
Gain on business divestitures and other transactions (1,434)
Debt modification costs 4
Debt extinguishment costs 6
Gain on changes in fair value of equity investments (19)
Tax impact of adjusting items (a) (4) (11) (22) (15)
Adjusted net income attributable to Aptiv $
320 $
325 $
206 $
940
Adjusted weighted average number of diluted shares outstanding (b) 284.09 256.44 267.14 257.74
Diluted net income per share attributable to Aptiv $
1.05 $
0.96 $
5.63 $
2.95
Adjusted net income per share $
1.13 $
1.27 $
0.77 $
3.65
(a) Represents the income tax impacts
of the adjustments made for
restructuring and other special
items by calculating the income
tax impact of these items using
the appropriate tax rate for the
jurisdiction where the charges
were incurred.
(b) In June 2020, the Company issued
$1,150 million in aggregate
liquidation preference of 5.50%
MCPS and received proceeds of
$1,115 million, after deducting
expenses and the underwriters'
discount of $35 million.
Dividends on the MCPS are
payable on a cumulative basis at
an annual rate of 5.50% on the
liquidation preference of $100
per share. Unless earlier
converted, each share of MCPS
will automatically convert on
June 15, 2023 into between
1.0754 and 1.3173 shares of
Aptiv's ordinary shares, subject
to further anti-dilution
adjustments. For purposes of
calculating Adjusted Net Income
Per Share, the Company has
excluded the anticipated MCPS
cash dividends and assumed the
"if-converted" method of share
dilution (the incremental
ordinary shares deemed
outstanding applying the "if-
converted" method of calculating
share dilution are referred to
as the "Weighted average MCPS
Converted Shares" in the
following table). The Adjusted
Weighted Average Number of
Diluted Shares Outstanding
calculated below, assumes the
conversion of all 11.5 million
MCPS and issuance of the
underlying ordinary shares
applying the "if-converted"
method (method already applied
for U.S. GAAP purposes of
calculating the weighted average
number of diluted shares
outstanding for the nine months
ended September 30, 2020) on a
weighted average outstanding
basis for all periods subsequent
to issuance of the MCPS. We
believe that using the "if-
converted" method provides
additional insight to investors
on the potential impact of the
MCPS once they are converted
into ordinary shares no later
than June 15, 2023.
Adjusted Weighted Average Number of Diluted Shares
Outstanding:
---
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(in millions)
Weighted average number of diluted shares outstanding 270.38 256.44 267.14 257.74
Weighted average MCPS Converted Shares 13.71
Adjusted weighted average number of diluted shares outstanding 284.09 256.44 267.14 257.74
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 operating
activities plus cash provided by
(used in) investing activities,
adjusted for the purchase price
of business acquisitions 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.
---
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(in millions)
Cash flows from operating activities:
Net income $
305 $
252 $
1,507 $
768
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 192 178 556 539
Restructuring expense, net of cash paid (13) 33 31
Working capital (41) (69) (135) (255)
Pension contributions (7) (9) (23) (30)
Gain on autonomous driving joint venture, net (1,434)
Other, net 123 (60) 143 (132)
Net cash provided by operating activities 559 325 614 921
Cash flows from investing activities:
Capital expenditures (117) (168) (489) (619)
Cost of business acquisitions and other transactions, net (22) (49) (23)
Cost of technology investments (1) (1) (1) (4)
Settlement of derivatives 2 1 1
Other, net 2 4 6 13
Net cash used in investing activities (138) (163) (532) (632)
Adjusting items:
Adjustment for cost of business acquisitions and other 22 49 23
transactions, net
Cash flow before financing $
443 $
162 $
131 $
312
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:
---
Estimated Full Year
2020 (1)
( $ in millions)
Adjusted Operating Income
$ Margin (2)
---
Net income attributable to Aptiv $
1,687
Interest expense 166
Other expense, net 11
Income tax expense 31
Equity loss, net of tax 80
Net income attributable to noncontrolling interest 10
Operating income 1,985 15.7
%
Restructuring 209
Other acquisition and portfolio project costs 22
Asset impairments 4
Deferred compensation related to nuTonomy acquisition 14
Gain on business divestitures and other transactions (1,434)
Adjusted operating income $
800 6.3
%
Adjusted EBITDA
---
Net income attributable to Aptiv $
1,687
Interest expense 166
Other expense, net 11
Income tax expense 31
Equity loss, net of tax 80
Net income attributable to noncontrolling interest 10
Operating income 1,985
Depreciation and amortization 744
EBITDA $
2,729 21.6
%
Restructuring 209
Other acquisition and portfolio project costs 22
Deferred compensation related to nuTonomy acquisition 14
Gain on business divestitures and other transactions (1,434)
Adjusted EBITDA $
1,540 12.2
%
(1) Prepared at the estimated mid-
point of the Company's
financial guidance range.
(2) Represents operating income and
Adjusted Operating Income,
respectively, as a percentage
of estimated net sales.
Estimated Full Year
2020 (1)
($ and shares in
millions,
except per share
amounts)
Adjusted Net Income Per Share
$
---
Net income attributable to ordinary shareholders $
1,652
Mandatory Convertible Preferred Share dividends 35
Net income attributable to Aptiv 1,687
Adjusting items:
Restructuring 209
Other acquisition and portfolio project costs 22
Asset impairments 4
Deferred compensation related to nuTonomy acquisition 14
Gain on business divestitures and other transactions (1,434)
Debt modification costs 4
Tax impact of adjusting items (36)
Adjusted net income attributable to Aptiv $
470
Adjusted weighted average number of diluted shares outstanding 271.51
Diluted net income per share attributable to Aptiv $
6.21
Adjusted net income per share $
1.73
(1) Prepared at the estimated
mid-point of the Company's
financial guidance range.
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SOURCE Aptiv PLC
