Aptiv PLC (APTV) Earnings Call Transcript & Summary

Good day. And welcome to the Aptiv PLC 2020 Annual Meeting of Shareholders. I would now like to turn the conference over to Mr. Raj Gupta, Chairman of the Board of Directors. Please go ahead.

Good morning, ladies and gentlemen. I will now call the meeting to order. I want to welcome all of you to the Virtual Annual General Meeting of Shareholders of Aptiv PLC. I'm Raj Gupta, Chairman of the Board of Directors of Aptiv. And before I begin, I would like to thank you for participating virtually in the annual meeting. In this time of uncertainty, your support for the health and well-being of Aptiv's employees, directors and fellow shareholders is much appreciated. I would like to introduce other members of the Board of Directors, who are present virtually today as well as several members of the management team. Kevin Clark, President and CEO; Nancy Cooper; Nick Donofrio; Jay Hooley; Sean Mahoney; Paul Meister; Kelly Ortberg; Colin Parris; Ana Pinczuk and Larry Zimmerman. Also present virtually are the following members of management: Joe Massaro, Senior Vice President and Chief Financial Officer; Glen De Vos, Senior Vice President, Chief Technology Officer and President, Mobility and Services Group; David Sherbin, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary; and Mariya Trickett, Senior Vice President and Chief Human Resources Officer. Mr. Sherbin will act as the secretary of the meeting. Also, Aaron Krabill, a partner at Ernst & Young LLP, the company's auditor, is also present this morning. Aaron will be available to answer any questions regarding the company's financial statements. I will now turn over the meeting to Kevin Clark, Aptiv's President and Chief Executive Officer. Kevin, over to you.

Okay. Yes. Thank you, Raj. Thank you and good morning. Mr. Sherbin has provided proof that we mailed notice of this meeting to our shareholders. All shareholders of record at the close of business on February 24, 2020, are entitled to vote at the annual meeting. Our first item is to determine whether we have a quorum for this meeting. Mr. Sherbin, do you have the report?

Yes, I do. The shareholders list shows that holders of 255,218,000 ordinary shares of the company are entitled to vote. Approximately 90% of all the shares entitled to vote are represented in person or by proxy at this meeting.

Thank you, we have a quorum. The 2020 Annual Meeting of Shareholders is now convened. As required under Jersey Law, we're presenting Aptiv's annual report and accounts for the fiscal year ended December 31, 2019, as well as the report of our auditors, Ernst & Young. Next is a description of the matters to be voted on today. The first 11 proposals are the reelection of our current directors to serve until the 2021 Annual Meeting of Shareholders. The Board recommends the reelection of these 11 current directors. The 12th proposal has 3 components. First, the reappointment of Ernst & Young to serve as the company's auditors until the 2021 Annual Meeting of Shareholders; second, providing the Board of Directors the authority to determine the fees to be paid to Ernst & Young; and third, the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the purposes of the U.S. securities laws. The 13th proposal was the say-on-pay proposal. We're asking you by way of an advisory nonbinding vote to approve the compensation paid to our named executive officers as described in our proxy statement. Mr. Sherbin, will you report the results of the voting?

The ballots have been counted, and the nominees for election to the Board of Directors have been elected. In addition, Resolutions 12 and 13 have passed.

Thank you, David. This concludes the formal business for today's meeting. I'd now like to provide a brief summary of the state of Aptiv's business. First, I want to thank our shareholders for their investment in Aptiv. Please know we work each and every day to deliver sustainable shareholder value. Top of mind these days is the COVID-19 pandemic and how our industry and Aptiv are positioned in this challenging environment. I want to begin by thanking our 160,000 employees for their efforts during the last few months to ensure that we flawlessly execute for our customers during these very difficult times. It's due to their efforts that we're well positioned to weather these near-term challenges. And we've implemented additional operating initiatives to ensure that Aptiv emerges as an even stronger company once this crisis is over. My confidence in Aptiv and our ability to deliver sustainable value creation over the long term is reinforced by our operating discipline, our financial flexibility, our robust business model and portfolio of advanced technologies, all of which are underpinned by the dedication of our people. We've been actively transforming Aptiv over the last several years into a global technology company with an industry-leading portfolio of advanced solutions that make vehicles more safe, green and connected. During 2019, our employees continued to execute on our strategic initiatives, further widening our competitive moat, and better positioning us to navigate the significant uncertainty we now face in 2020 and beyond. At Aptiv, our culture is to proactively drive change, innovate through disruption and be resilient in the face of challenges. It is because of our culture, our values and our commitment to the success of our customers that I'm confident in our long-term future. We have the right people. We have the right technology portfolio and the right strategy to solve our customers' biggest challenges and enable a safer, greener and more connected future. Our strong 2019 financial performance, despite the weaker macro environment, reflects these factors. We had revenues of over $14 billion, 9 points of growth over underlying vehicle production, reflecting the strength of our product portfolio. We had our eighth straight year of record new business bookings, reaching $22.1 billion, exceeding 2018's record. Our success has been the result of our portfolio of market relevant technologies and our industry-leading cost structure. To fund our investment in the development of these industry-leading technologies, we continue to reduce overhead costs during 2019, further enhancing the competitiveness of our business model. The actions we've taken over the last several years to optimize our portfolio of advanced technologies and increase the flexibility of our cost structure will be very helpful in navigating the balance of 2020 and the unprecedented declines in global vehicle production. Our advanced active safety technologies make the world a safer place, significantly reducing vehicle-related injuries and fatalities. Our high-voltage solutions contribute to the adoption of increased vehicle electrification, which reduce CO2 emissions, and our software solutions enable seamless connectivity between vehicles, their passengers and the environment in which they operate. The need for these sustainable technology solutions will continue to create long-term value for all of our stakeholders. As a good global citizen, Aptiv continues to pursue initiatives to reduce emissions, waste and water consumption in every region we operate. In 2019, the Carbon Disclosure Project acknowledged the progress we made by promoting Aptiv to the exclusive Management Band level. We have programs in place to track the relevant KPIs, ensuring we set and deliver against meaningful targets in the years to come. In summary, 2019 was another great year for Aptiv, validating the progress we've made, further strengthening our competitive position and our through-cycle resiliency. That resiliency will be tested in the weeks and months ahead, and I'm confident we'll pass that test. COVID-19 has presented significant challenges to our industry and the communities we operate in. To get through the crisis, we've implemented several preventative measures that will help protect our employees, our customers and our shareholders. We've implemented safety protocols at all of our locations across the globe to ensure that we're taking all the necessary precautions to protect the health and the safety of our employees. We've also taken additional strategic actions to enhance our financial flexibility in response to the impact of COVID-19. These include aggressively reducing expenses, conserving cash and preserving capital. We will continue to adapt to this very fluid situation and take decisive actions to preserve our financial strength and to protect and deliver for our employees, our customers and our shareholders. Once again, I'm incredibly proud of how our team has come together in this crisis and what we've been able to accomplish and overcome. We remain confident in our competitive position and our ability to weather the storm and we will come out even stronger on the other side of this crisis. Now we would like to open the meeting up for shareholder questions. Shareholders may submit questions to Mr. Sherbin. David, have any questions been submitted?

No questions have been submitted.

Well then, thank you very much for your participation in today's meeting. On behalf of everyone at Aptiv, I wish you all good health. The meeting is adjourned.