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Aptiv Reports Fourth Quarter 2021 Financial Results

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Exceeded Full Year Revenue Outlook with Record Growth Over Market

DUBLIN , Feb. 3, 2022 /PRNewswire/ -- Aptiv PLC (NYSE: APTV), a global technology company focused on making mobility safer, greener and more connected, today reported fourth quarter 2021 U.S. GAAP earnings of $0.06 per diluted share. Excluding special items, fourth quarter earnings totaled $0.56 per diluted share.

(PRNewsfoto/Aptiv PLC)
(PRNewsfoto/Aptiv PLC)

Fourth Quarter Financial Highlights Include:

-- U.S. GAAP revenue of $4.1 billion, a decrease of 2%

  • Revenue decreased 4% adjusted for currency exchange, commodity movements and divestitures; growth over market of 12% based on AWM1 of (16%)

-- U.S. GAAP net income of $15 million, diluted earnings per share of $0.06

  • Excluding special items, diluted earnings per share of $0.56

-- U.S. GAAP operating income margin of 6.3%

  • Adjusted Operating Income margin of 6.6%; Adjusted Operating Income of $273 million; Adjusted EBITDA of $461 million

-- Generated $669 million of cash from operations

Full Year 2021 Financial Highlights Include:

-- U.S. GAAP revenue of $15.6 billion, an increase of 20%

  • Revenue increased 15% adjusted for currency exchange, commodity movements and divestitures; growth over market of 15% based on flat AWM1

-- U.S. GAAP net income of $527 million, diluted earnings per share of $1.94

  • Excluding special items, diluted earnings per share of $2.61

-- U.S. GAAP operating income margin of 7.6%

  • Adjusted Operating Income margin of 7.9%; Adjusted Operating Income of $1,230 million; Adjusted EBITDA of $2,001 million

-- Generated $1,222 million of cash from operations

"In 2021, Aptiv continued to build on its track record of industry leadership, strong execution and financial strength, despite the continued challenging operating environment," said Kevin Clark, president and chief executive officer. "Aptiv's record above-market revenue growth and new business awards of $24 billion validate the strength of our industry-leading portfolio and commitment to delivering value for customers. The efforts taken to build a more sustainable and resilient business, focused on delivering electrified, software-defined vehicles, are truly making the future of mobility real. We continue to strengthen our competitiveness by investing in advanced technologies including value-enhancing transactions, such as our recently announced Wind River acquisition. Despite our expectations that supply chain disruptions will continue in 2022, I am confident that our strategically positioned portfolio and relentless focus on execution will continue to drive robust performance, reflecting our commitment to delivering sustainable revenue, earnings and cash flow growth translating to value for our shareholders."

Fourth Quarter 2021 Results

For the three months ended December 31, 2021, the Company reported U.S. GAAP revenue of $4.1 billion, a decrease of 2% from the prior year period. Adjusted for currency exchange, commodity movements and divestitures, revenue decreased by 4% in the fourth quarter. This reflects declines of 14% in Europe and 2% in North America, partially offset by growth of 5% in Asia, which includes 9% in China, and 5% in South America, our smallest region.

The Company reported fourth quarter 2021 U.S. GAAP net income of $15 million and earnings of $0.06 per diluted share, compared to $283 million and $1.04 per diluted share in the prior year period. Fourth quarter Adjusted Net Income, a non-GAAP financial measure defined below, totaled $160 million, or $0.56 per diluted share, compared to $319 million, or $1.13 per diluted share in the prior year period.

Fourth quarter Adjusted Operating Income, a non-GAAP financial measure defined below, was $273 million, compared to $476 million in the prior year period. Adjusted Operating Income margin was 6.6%, compared to 11.3% in the prior year period, reflecting the continuing adverse impacts of the worldwide semiconductor shortage on the global automotive supply chain. Depreciation and amortization expense totaled $190 million, a decrease from $208 million in the prior year period.

Interest expense for the fourth quarter totaled $36 million, as compared to $39 million in the prior year period.

Tax expense in the fourth quarter of 2021 was nil. Tax expense in the fourth quarter of 2020 was $55 million, resulting in an effective tax rate of approximately 13%.

The Company generated net cash flow from operating activities of $669 million in fourth quarter, compared to $799 million in the prior year period.

Full Year 2021 Results

For the year ended December 31, 2021, the Company reported U.S. GAAP revenue of $15.6 billion, an increase of 20% from the prior year. Adjusted for currency exchange, commodity movements and divestitures, revenue increased by 15% during the year. This reflects growth of 16% in North America, 16% in Asia, which includes 15% in China, 12% in Europe and 45% in South America, our smallest region.

For full year 2021, the Company reported U.S. GAAP net income of $527 million and earnings of $1.94 per diluted share, compared to $1,769 million and $6.66 per diluted share in the prior year. Full year 2021 Adjusted Net Income totaled $739 million, or $2.61 per diluted share, compared to $525 million, or $1.94 per diluted share, in the prior year.

The Company reported Adjusted Operating Income of $1,230 million for full year 2021, compared to $867 million in the prior year. Adjusted Operating Income margin was 7.9% for full year 2021, compared to 6.6% in the prior year. Depreciation and amortization expense totaled $773 million, an increase from $764 million in the prior year.

Interest expense for full year 2021 totaled $150 million, as compared to $164 million in the prior year.

Tax expense for full year 2021 was $101 million, resulting in an effective tax rate of approximately 11%. Tax expense for full year 2020 was $49 million, resulting in an effective tax rate of approximately 3%.

The Company generated net cash flow from operating activities of $1,222 million in 2021, compared to $1,413 million in the prior year. As of December 31, 2021, the Company had cash and cash equivalents of $3.1 billion and total available liquidity of $5.6 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.

Prospective Change in Presentation of Non-GAAP Measures

Effective for the first quarter of 2022, the Company will exclude amortization expense of intangible assets from the calculation of Adjusted Operating Income, Adjusted Net Income and Adjusted Net Income Per Share. Management believes that, going forward, the updated calculations of these non-GAAP financial measures will be more useful to both management and investors in their analysis of the Company's results of operations due to recent and pending acquisitions. Amortization of intangibles is generally the result of a write-up in the value of assets in connection with an acquisition. We believe exclusion of amortization expense will facilitate more comparable operating results of the Company over time, in between periods when the Company is more or less acquisitive and allows for improved comparison with both acquisitive and non-acquisitive peer companies. The Company's outlook for these metrics is presented below under both the new calculation basis excluding amortization expense and the previous basis including amortization expense. For comparative purposes, a recast of full year 2021 results for these measures is included on pages 17 and 18 of this release.

Full Year 2022 Outlook

The Company's full year 2022 financial guidance is as follows:

(in millions, except per share amounts)

Full Year 2022


Excluding Amortization

(new basis)

Including Amortization

(historical basis)

Net sales

$17,750 - $18,150

$17,750 - $18,150

Adjusted EBITDA

$2,415 - $2,695

$2,415 - $2,695

Adjusted EBITDA margin

13.6% - 14.8%

13.6% - 14.8%

Adjusted operating income

$1,750 - $2,030

$1,600 - $1,880

Adjusted operating income margin

9.9% - 11.2%

9.0% - 10.4%

Adjusted net income per share (1)

$3.90 - $4.80

$3.45 - $4.35

Cash flow from operations

$2,050

$2,050

Capital expenditures

$850

$850

Adjusted effective tax rate

13.0%

12.5%



(1)

The Company's full year 2022 financial guidance includes approximately $1.05 per diluted share for the anticipated equity losses to be recognized by Aptiv from the performance of the Motional joint venture.

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 800.239.9838 (US domestic) or 323.794.2551 (international) or through a webcast at ir.aptiv.com. The conference ID number is 6190564. 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, 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, income tax expense, 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 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.

Effective on January 1, 2022, the Company will exclude amortization expense of intangible assets from the calculation of Adjusted Operating Income, Adjusted Net Income and Adjusted Net Income Per Share. The Company will report financial results under this new definition for the first quarter of 2022. Outlook information presented above is calculated under this new definition. The forward-looking non-GAAP measures presented in this release are reconciled under this new definition to their closest GAAP financial measure on pages 19 and 20.

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.

1 Represents global vehicle production weighted to the geographic regions in which the Company generates its revenue ("AWM").

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 including the potential impact of the proposed acquisition of Wind River Systems, Inc. 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

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020


(in millions, except per share amounts)

Net sales

$ 4,134


$ 4,212


$ 15,618


$ 13,066

Operating expenses:








Cost of sales

3,543


3,433


13,182


11,126

Selling, general and administrative

291


278


1,075


976

Amortization

37


37


148


144

Restructuring

3


18


24


136

Gain on autonomous driving joint venture




(1,434)

Total operating expenses

3,874


3,766


14,429


10,948

Operating income

260


446


1,189


2,118

Interest expense

(36)


(39)


(150)


(164)

Other (expense) income, net

(131)


6


(129)


Income before income taxes and equity loss

93


413


910


1,954

Income tax expense


(55)


(101)


(49)

Income before equity loss

93


358


809


1,905

Equity loss, net of tax

(54)


(43)


(200)


(83)

Net income

39


315


609


1,822

Net income attributable to noncontrolling interest

8


16


19


18

Net income attributable to Aptiv

31


299


590


1,804

Mandatory convertible preferred share dividends

(16)


(16)


(63)


(35)

Net income attributable to ordinary shareholders

$ 15


$ 283


$ 527


$ 1,769









Diluted net income per share:








Diluted net income per share attributable to ordinary
shareholders

$ 0.06


$ 1.04


$ 1.94


$ 6.66

Weighted average number of diluted shares outstanding

271.47


270.91


271.22


270.70

APTIV PLC

CONSOLIDATED BALANCE SHEETS

(Unaudited)



December 31,
2021


December 31,
2020




(in millions)

ASSETS




Current assets:




Cash and cash equivalents

$ 3,139


$ 2,821

Restricted cash


32

Accounts receivable, net

2,784


2,812

Inventories

2,014


1,297

Other current assets

499


503

Total current assets

8,436


7,465

Long-term assets:




Property, net

3,294


3,301

Operating lease right-of-use assets

383


380

Investments in affiliates

1,797


2,011

Intangible assets, net

964


1,091

Goodwill

2,511


2,580

Other long-term assets

622


694

Total long-term assets

9,571


10,057

Total assets

$ 18,007


$ 17,522

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Short-term debt

$ 8


$ 90

Accounts payable

2,953


2,571

Accrued liabilities

1,246


1,385

Total current liabilities

4,207


4,046

Long-term liabilities:




Long-term debt

4,059


4,011

Pension benefit obligations

440


525

Long-term operating lease liabilities

304


300

Other long-term liabilities

436


540

Total long-term liabilities

5,239


5,376

Total liabilities

9,446


9,422

Commitments and contingencies




Total Aptiv shareholders' equity

8,347


7,905

Noncontrolling interest

214


195

Total shareholders' equity

8,561


8,100

Total liabilities and shareholders' equity

$ 18,007


$ 17,522

APTIV PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Year Ended December 31,


2021


2020


(in millions)

Cash flows from operating activities:




Net income

$ 609


$ 1,822

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

773


764

Restructuring expense, net of cash paid

(56)


(15)

Deferred income taxes

(60)


(52)

Loss from equity method investments, net of dividends received

206


92

Loss on modification of debt

1


4

Loss on extinguishment of debt

126


Gain on autonomous driving joint venture


(1,434)

Other, net

134


110

Changes in operating assets and liabilities:




Accounts receivable, net

37


(243)

Inventories

(710)


(8)

Accounts payable

265


186

Other, net

(75)


220

Pension contributions

(28)


(33)

Net cash provided by operating activities

1,222


1,413

Cash flows from investing activities:




Capital expenditures

(611)


(584)

Proceeds from sale of property

9


10

Cost of business acquisitions and other transactions, net of cash acquired

(130)


(49)

Proceeds from sale of technology investments

22


Cost of technology investments

(2)


(2)

Settlement of derivatives

(17)


(1)

Net cash used in investing activities

(729)


(626)

Cash flows from financing activities:




Decrease in other short and long-term debt, net

(30)


(411)

Repayment of senior notes

(1,473)


Proceeds from issuance of senior notes, net of issuance costs

1,450


Contingent consideration payments

(24)


Fees related to modification of debt agreements

(6)


(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


(10)

Repurchase of ordinary shares


(57)

Distribution of mandatory convertible preferred share cash dividends

(63)


(32)

Distribution of ordinary share cash dividends


(56)

Taxes withheld and paid on employees' restricted share awards

(45)


(33)

Net cash (used in) provided by financing activities

(191)


1,613

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

(16)


24

Increase in cash, cash equivalents and restricted cash

286


2,424

Cash, cash equivalents and restricted cash at beginning of the year

2,853


429

Cash, cash equivalents and restricted cash at end of the year

$ 3,139


$ 2,853

APTIV PLC

FOOTNOTES

(Unaudited)


1. Segment Summary



Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


%


2021


2020


%


(in millions)




(in millions)



Net Sales












Signal and Power Solutions

$ 3,025


$ 3,101


(2)%


$ 11,598


$ 9,522


22%

Advanced Safety and User Experience

1,116


1,121


—%


4,056


3,573


14%

Eliminations and Other (a)

(7)


(10)




(36)


(29)



Net Sales

$ 4,134


$ 4,212




$ 15,618


$ 13,066















Adjusted Operating Income












Signal and Power Solutions

$ 237


$ 358


(34)%


$ 1,084


$ 762


42%

Advanced Safety and User Experience

36


118


(69)%


146


105


39%

Adjusted Operating Income

$ 273


$ 476




$ 1,230


$ 867















(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 months and years ended December 31, 2021 and 2020:



Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020


(in millions, except per share data)

Weighted average ordinary shares outstanding, basic

270.52


270.03


270.46


263.43

Dilutive shares related to RSUs

0.95


0.88


0.76


0.44

Weighted average MCPS Converted Shares




6.83

Weighted average ordinary shares outstanding, including dilutive shares

271.47


270.91


271.22


270.70

Net income per share attributable to ordinary shareholders:








Basic

$ 0.06


$ 1.05


$ 1.95


$ 6.72

Diluted

$ 0.06


$ 1.04


$ 1.94


$ 6.66

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
December 31, 2021



Reported net sales % change

(2) %

Less: foreign currency exchange and commodities

2 %

Less: divestitures and other, net

— %

Adjusted revenue growth

(4) %




Year Ended
December 31, 2021



Reported net sales % change

20 %

Less: foreign currency exchange and commodities

5 %

Less: divestitures and other, net

— %

Adjusted revenue growth

15 %

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, 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 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.

Consolidated Adjusted Operating Income

















Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020


($ in millions)


$


Margin


$


Margin


$


Margin


$


Margin

Net income attributable to Aptiv

$ 31




$ 299




$ 590




$ 1,804



Interest expense

36




39




150




164



Other expense (income), net

131




(6)




129






Income tax expense




55




101




49



Equity loss, net of tax

54




43




200




83



Net income attributable to noncontrolling
interest

8




16




19




18



Operating income

260


6.3 %


446


10.6 %


1,189


7.6 %


2,118


16.2 %

Restructuring

3




18




24




136



Other acquisition and portfolio project costs

8




4




15




23



Asset impairments

2




6




2




10



Deferred compensation related to
acquisitions




2







14



Gain on business divestitures and other
transactions




...